The year 1944 saw the publication of the widely read and influential book, The Road to Serfdom. The author, Friedrich Hayek, an Austrian-born economist, warned that the crimes of the German National Socialists and Soviet Communists were the inevitable result of growing state control over the economy. Hayek was fortunate enough to live to see the defeat of both totalitarian regimes. Unfortunately, there are still places where Hayek's most dire warnings remain relevant. Robert Mugabe's Zimbabwe is one such place.

As Hayek explained, central planning leads to massive inefficiencies and long queues outside empty shops. A state of perpetual economic crisis then leads to calls for more planning. But economic planning is inimical to freedom. As there can be no agreement on a single plan in a free society, the centralisation of economic decision-making has to be accompanied by centralisation of political power in the hands of a small elite. When, in the end, the failure of central planning becomes undeniable, totalitarian regimes tend to silence the dissenters - sometimes through mass murder.

Fast-forward to Zimbabwe in the 21st century. Between 1999 and 2003, its economy contracted by more than 30 per cent. Last year, unemployment stood at 80 per cent for the economically active population, and income per head was lower than in 1980 - the year Mr Mugabe came to power. Life expectancy fell from 56 years in 1985 to 33 years in 2003. Inflation, after rising to 500 per cent in 2004, continues at triple digits. Foreign direct investment and tourism have plummeted. In January, more than half of Zimbabwe's population needed emergency food aid. Of a total 13m population, 3m to 4m Zimbabweans have emigrated abroad.

What led to this? In 2000, Mr Mugabe gave the green light to his supporters to invade commercial farms, many of them held by white Zimbabweans. Private property rights of commercial farmers were revoked and the state resettled the confiscated lands with subsistence producers - many with no previous farming experience. Agricultural production plummeted.

The farm invasions had economic ripple effects. The banking sector, which used farm land as collateral, was hit by bad debt and curtailed the issuing of new loans. The manufacturing sector, which relied heavily on processing agricultural goods, went into a tailspin. Declining domestic production deprived Zimbabwe of the ability to earn foreign currency and buy food overseas. Famine ensued.

Mr Mugabe's response was to rig elections and tighten the government's noose around the economy through price controls. Many prices — including those of bread and gas — were set too low. That led to shortages and the emergence of black markets. As more of Zimbabwe's economy moved underground, tax revenue dried up and the government coffers emptied.

The emergence of the black markets was partly why Mr Mugabe decided to launch operation Murambatsvina in May. The security forces arrested more than 20,000 vendors and destroyed their vending sites. They levelled entire townships where the government was unable to exercise control over the shadow economy, leaving some 700,000 people homeless. Zimbabwe's Catholic bishops warned: "We have on our hands a complete recipe for genocide; we're witnessing a tragedy of unprecedented enormity." They may yet be proven right. According to Didymus Mutasa, one of Mr Mugabe's ministers of state, Zimbabwe would be better off with only 6m people, with our own people who support the liberation struggle." The rest are evidently expendable.

Just as Hayek warned, the government's initial attack on private property led to intervention in the economy and, concomitantly, the destruction of political freedom in Zimbabwe. If Mr Mugabe continues along the path marked by other socialist dictators, the world may yet see Zimbabwe descend into an orgy of violence.

In a report last week, the United Nations condemned the latest abuses in Zimbabwe, calling the government's decision to demolish settlements a violation of international law and urging prosecution of those responsible. Kofi Annan, UN secretary-general, called the policy a "catastrophic injustice". In contrast, the African Union has washed its hands of Zimbabwe, stating it would not be "proper" to interfere in the internal affairs of AU member states. That is a terrible indictment of those who rule over the continent. It is time they followed Mr Annan's example and spoke out against Mr Mugabe.

This article originally appeared in the Financial Times
Copyright 2005 The Financial Times Limited

7/28/2005 9:26:08 AM

7/28/2005 9:53:38 AM

is this supposed to be some kind of tongue twister

7/28/2005 9:56:52 AM

7/28/2005 12:31:29 PM

i dont get this guy

i think he lives inside an economics book or something

7/28/2005 12:42:31 PM

I just realized how fucking hot salma hayek is in that picture.

Goddamn.

7/28/2005 12:50:27 PM

The financial times wrote it, I just posted it.

I hadn't posted anything recently. But PBS had a show on tuesday about the electrified fence being constructed on the border between Zimbabwe and Botswana, figured I'd draw some attention to the plight of Zimbabwe's citizens.

7/28/2005 12:53:44 PM

oh, i agree, mugabe should be stopped. im with you fully on this issue.

to tell the truth, i posted that comment w/o reading what you wrote. 99% of the time it seems your stuff is econ. related tho.

7/28/2005 12:55:39 PM

Reasonable observation... My father teaches economics at Methodist College, I guess some of it rubbed off.

7/28/2005 1:02:20 PM

Salma Hayek was the first thing I thought of.

Damn that bitch fine.

7/28/2005 1:03:06 PM

I wonder how many people have actually read the Road to Serfdom, because for all the props it gets none of Hayek's predictions came true. Hayek wasn't talking about some country in Africa, he was talking about the West. I'm still waiting for our puney welfare state to morph into a statist genocide machine.

I put that book along withother Austrian alarmist works ala Schumpeter and Mises. Far from Hayek's best.

[Edited on July 28, 2005 at 3:21 PM. Reason : ``]

7/28/2005 3:18:33 PM

Socks, your point is only marginally valid. While you are right that it did not come to pass, it almost did in Britain (which was the country he was writting it for). But, as Englishmen tend to do, the course was abandoned before it was too late.

7/28/2005 4:54:31 PM

^ the UK never came close to the fearful distopia Hayek described. And even if it was "on the course" (an unprovable assertion), the fact that it could be derailed with peaceful elections throws Hayek's slippery slope argument out the window--it does not follow that a mild welfare state will invariably lead to facisim.

Like I said alarmist rhetoric mistaken for reasoned argument. i believe hayek's contributions to the philosophy of science as applied to economics is much more important and interesting (something i'm just now discovering) and i would argue that his contribution to the socialist calculation debate (the informational role of prices) was much more important.

Bu alot of important people ate that shit up. Thatcher, Friedman, Reagan, etc. I guess your book doesn;t have to be good to be important.

[Edited on July 30, 2005 at 4:04 AM. Reason : ``]

7/30/2005 4:01:40 AM

Quote :

"it does not follow that a mild welfare state will invariably lead to facisim."

Of course not, Friedman didn't say it did. He said his book was a warning. If he believed it was "inevitable" he wouldn't have bothered writing the book!

His goal was to disuade people from that path, not argue that it was not irreversible.

His point was also that the only way to fix statist control was to abandon it, because attempts to fix the problems associating with statist control simply bring one closer to fascism. But as you already know, democracies, especially Britain, are often quite good at abandoning failed ideas. Even if they simply pick them back up four years later.

7/31/2005 11:16:32 AM

7/31/2005 9:47:17 PM

Quote :

"Of course not, Friedman didn't say it did. He said his book was a warning. If he believed it was "inevitable" he wouldn't have bothered writing the book! His goal was to disuade people from that path, not argue that it was not irreversible. His point was also that the only way to fix statist control was to abandon it, because attempts to fix the problems associating with statist control simply bring one closer to fascism. But as you already know, democracies, especially Britain, are often quite good at abandoning failed ideas. Even if they simply pick them back up four years later."

Neither Brittian nor the United States abandoned what Hayek would call satism, therefore the fact that they would eventually fall into facism is inevitable. Hayek claimed that from the well meaning welfare state we would tumble down the slippery slope to facism. THAT HASN'T HAPPENED.

So yes, I would say that time has proven Hayek's argument wrong. The libertarians waiting for the evil big Brother of Hayek's nightmares are the free market corallaries of the communists waiting for Capitalism to descend into classless anarchy.

I believe it's clear that a small welfare state doesn't necc. lead to facism, and if it doesn't then Hayek's point is moot. I'm suprised YOU would actually fall for such a simple logical error as the slippery slope fallacy.

Hayek had so much more to offer and I hate that his most influencial work is really his worst.

[Edited on August 1, 2005 at 10:30 AM. Reason : ``]

8/1/2005 10:30:24 AM

Perhaps we read two different books. Hayek did not write about a simple homely welfare state. He was writting against state planning of the economy, or socialism. A welfare state is nothing of the sort as it is merely transfer payments, it does not attempt to compete with private enterprise.

Hayek wrote that the public sector of a mixed economy would invariable come into conflict with the private sector for resources and planning, the two making each others operations difficult. The public sector because it does not respond to price signals and the private sector because it is going to engender corruption. Hayek believed the two systems could not co-exist because of this conflict, and ultimately one must prevail to prevent economic stagnation.

In the case of Europe, even the most socialist country has a relatively small public sector. Yes, the welfare state may constitute 50% or more of the economy, but the means of production are still vastly in the hands of private individuals.

So, while any slippery slope argument is probably false, I do not believe Hayek's conclusion is such.

[Edited on August 1, 2005 at 12:31 PM. Reason : .]

8/1/2005 12:30:41 PM

^ I only ment a form of government as in the United States and Britian (both mixed economies, though more so in the UK). I am still waiting for the UK-Nazi party to get off the ground and I will probably keep waiting, because even after the tory reforms of the '80s the UK economy is still quite mixed and there is no big facist movement so far.

Face it. Hayek's argument is basically a slippery slope fallacy rapped up with libertarian guilt tripping. And I've said this 15 times now and NOTHING you've said has made Hayek's argument any more reasonable.

8/1/2005 3:03:14 PM

ok. What do you want me to say? It is my opinion that Great Britain today is a mixed economy, to be sure, but not as much as you let on. What means of production are still nationalized in Great Britain? Transportation, Energy, Post Office, and what?

If you want to prove Hayek wrong, find a vastly state run economy whose government is not becoming Nazi like. Venezuela is becoming more state run everyday (the fastest growing grocery retailer is state run). If Venezuela does not go fascist, some argue it already has, then you are right and Hayek was dead wrong. The other thing he could have been wrong about is his assertion that a mixed-economy, split 50-50, is doomed to failure. I'm sure India came close, didn't really collapsed... Of course, maybe they didn't try it long enough.

8/1/2005 5:17:03 PM

Quote :

"Zimbabwe's Catholic bishops warned: "We have on our hands a complete recipe for genocide; we're witnessing a tragedy of unprecedented enormity." They may yet be proven right. According to Didymus Mutasa, one of Mr Mugabe's ministers of state, Zimbabwe would be better off with only 6m people, with our own people who support the liberation struggle." The rest are evidently expendable."

this is what bothers me the most

8/1/2005 5:31:39 PM

Quote :

"If you want to prove Hayek wrong, find a vastly state run economy whose government is not becoming Nazi like."

That wasn't Hayek's story. Hayek said that mixed economies fell into Nazi-esque governments, by their very nature. So far, that doesn't seem to be the case. It seems very much possible to have a mixed economy and not be the distopia of Hayek's dellusional liberatian nightmares.

What you're saying is that a government already very much like the Nazi government (vastly state run economy) will continue to be much like the Nazi government. Hayek's story was the process it takes to get there.

Once again, Hayek's slippery slope only leads us to lazy thinking.

8/1/2005 5:35:53 PM

Quote :

"this is what bothers me the most"

-ssjamid

I agree and i'm thinking your implying that our discussion distracts from the horrible nature of the crimes taking place. But, it doesn't. It is a discussion of the process taken to arrive at these tragedies (as described by Hayek).

Also...one can't really have a discussion about the crimes themselves. Don't believe me? Here's an example of what it would look like.

"I think genocide is bad."
"I agree."
"so do I."

plz to jump off your high horse.

8/1/2005 5:39:58 PM

ssjamind

8/1/2005 6:20:07 PM

http://www.guardian.co.uk/famine/story/0,12128,1540214,00.html

8/1/2005 7:33:50 PM

Quote :

"That wasn't Hayek's story. Hayek said that mixed economies fell into Nazi-esque governments, by their very nature. So far, that doesn't seem to be the case. It seems very much possible to have a mixed economy and not be the distopia of Hayek's dellusional liberatian nightmares."

It is a matter of degrees. His reasoning hinges on two points: 1. pure state ownership societies tend to be fascist. 2. economies tend towards one region or the other.

Now, point 1 is, I think, a reasonable assumption.

Point 2 is more complex and hinges on the problem-solving aspects of government.
Let us make up a scale of 0 to 100, 0 being privately run and 100 being pure state ownership. We can imagine a country where the government owns nothing, but regulates heavily and engages in rampant transfer payments, on this scale it would still be rated 0. A nation only gets a higher rating by owning the means of production.

Hayek theorized, if I remember properly, that at these two extremes an equilibrium could be achieved because either the large private sector rarely interacts (much less conflicts) with the public sector, or vice versa.

However, towards the middle of this scale, the two economies (public and private) would come into conflict, as I stated above, causing economic stagnation and political turmoil. Once this has happened, it is the tendency for private business to go bankrupt and get nationalized in the process. It is an assumption, sure enough, but not an irrational one: if private businesses fail outright, the public sector has grown relatively, if government nationalizes to prevent closure, then the public sector grows outright.

Now, you evidently either belive assumption 1 is false, and a majority state owned economy is not necessary fascist, or assumption 2, that a large and growing public sector tends to canibalize the private sector. Am I framing the disagreement right?

Now, I'll admit, I like Hayek's point because it sounds like reasonable scenarios. I wouldn't accept it as a scientific proof, obviously human beings can change their priorities if they sense they might be coming to harm. Now, what you might be saying is that there is a third fundamental tendency of humans to avoid tyranny, thus even if 1 and 2 are correct the nations politicians and bound to reverse course before it is too late... Which also sounds like a reasonable scenario.

8/1/2005 9:39:15 PM

^ I believe Hayek's point was much more strong than that, since even in the '30's and '40's the UK and the US were hardly "boarding on facism", and as it turned out they didn't "tend" toward facism later. So I really don't know what else you want me to say. Hayek turned out to be wrong. *shrug*

And I figure you like his point for the same reason other libertarians like it...it supports "the cause". If you like the conclusion, then that's all that matters, since I certainly can't find a decent argument in the entire book.

8/1/2005 11:31:55 PM

8/10/2005 12:49:23 PM