However, in what is probably the most famous book to emerge from the Austrian School, The Road to Serfdom, Hayek explained why nice people are unlikely to remain in charge of a socialist state. A centrally planned society requires that a single will direct all its members’ efforts. It might be the will of a sole dictator, of a ruling committee, or even of “society as a whole,” as represented by opinion polls or elections. In any case, all productive efforts must contribute to a single master plan.
However that plan is formulated, it is inevitable that many people will disagree with at least some part of it. How should dissent be handled? For instance, the nation’s coal miners might find the wage assigned to them by the plan to be too low. They refuse to work for such paltry pay.
In a market society, the miners would be free to seek other employment offering a higher wage. Free competition between employers seeking to attract workers will tend to move wages toward a level where it just barely profits an employer to engage the last worker he hires. (That is the marginal worker.) If someone can’t find work at the pay he believes he deserves, the workings of the market process don’t guarantee that he really isn’t worth as much as he thinks he is. But in a market, entrepreneurs will continually be searching for such undervalued resources, thereby raising the price they fetch.
However, in a socialist state, the coal workers can’t go look for other work—the plan has assigned them to the coal mines. If 10,000 coal miners are in the plan, then 10,000 there must be—otherwise, the plan becomes irrelevant. And the planners cannot simply raise the miners’ wages until they agree to work—the level of those wages is already in the plan. Raising it will require re-planning the entire economy.
What can the directors of the socialist economy do? The inclination of the well-meaning, decent socialists will be to talk things over with the miners. The planners should find out what grievances the miners have, determine what conditions would make them happier, and inspire them to work because of their patriotic duty to contribute to the common good. Based on the outcome of such a dialogue, the plan can be modified. But once several similar dialogues are underway in different industries, production will slow to a crawl throughout the economy.
The residents of a nation attempting to centrally plan the economy soon will be faced with a choice. They can either abandon their march toward socialism, or opt for a strongman who promises to get things done. If they do not turn away from central planning, then a strongman will soon be in charge, as happened in Germany in the 1930s, when Hitler came to power. Then, when the coal miners refuse to dig coal at the wage allotted to them in the master plan, the solution is simple: “Shoot them!” As Hayek says, “the totalitarian dictator would soon have to choose between disregard of ordinary morals and failure.” Under a strongman, the people believe that they have some hope of being able to heat their houses, even if the hope comes at the cost of the coal miners’ liberty, and, ultimately, the liberty of everyone.
A market-based society may seem harsh at times. If miners don’t accept the wage offered by a mine owner, he might fire them and hire replacements. But at least the miners have the opportunity to seek work elsewhere, at the highest wage they can find. When the government is the only employer, there is nowhere else to go, and no one else with whom to negotiate.
As Hayek says in The Road to Serfdom, the dream of non-totalitarian socialists relies on “the miracle of a majority’s agreeing on a particular plan for the organization of the whole of society.” Absent such a miracle, it is “the lowest common denominator which unites the largest number of people.” Whatever set of prejudices can most easily connect with the most ignorant members of society will tend to win the most allegiance. Social interaction is increasingly reduced to a contest over who can mug whom most quickly.
As that happens, it behooves minorities to watch their backs. The temptation for the leaders to organize a pogrom against some minority group will be tremendous. As Hayek says, “it seems to be almost a law of human nature that it is easier for people to agree on a negative program—on the hatred of an enemy, on the envy of those better off—than on any positive task.” Totalitarian regimes tend to demonize some unpopular minority, such as Jews in Nazi Germany, kulaks in the Soviet Union, intellectuals in Pol Pot’s Cambodia, or East Asians in Idi Amin’s Uganda.