Samuelson on Hayek

Pete Leeson point to a quite extraordinary article by Paul Samuelson on FA Hayek in this months JEBO (download it here). Much of it I found illegible, but once more I'm underwhelmed by how The Road to Serfdom is so easily dismissed:

Consider only Sweden’s fig-leaf middle way. As I write in 2007, Sweden and other Scandivanian places have somewhat lowered the fraction of GDP they use to devote through government. But still they are the most “socialistic” by Hayek’s crude definition. Where are their horror camps? Have the vilest elements risen there to absolute power? When reports are compiled on “measurable unhappiness,” do places like Sweden, Denmark, Finland and Norway best epitomize serfdoms?

Hayek's argument is that there are structural reasons why a lack of economic freedom can lead to a lack of political freedom. Hayek of course was European, and had in mind the totalitarianism of the time. But the absence of disctatorship in c21st Europe does no disprove his thesis. Why is it that the likes of Samuelson (who is, in his own words, "a centrist") and Joe Stiglitz simply ignore countries like Belarus, Turkmenistan and Uzbekistan? We have indices that attempt to measure economic (and indeed political) freedom. They are not perfect, but no aggregate measures are - if you discount them I suggest you dispense with GDP figures, and the CPI first. According to these indices Sweden is an economically free country. This may strike you as surprising, but try to remember that the US and Europe are not the only parts of the world. At the end of class the other day I was talking to a student about Venezuela. This is a country that over the last few decades has seen a dramtic decline in economic freedom (for example the state confiscation of private oil and gas companies) under the pretext of "for the people". Would *you* like to be a journalist there? A dissident? How "free and fair" are their elections for office?
I am not an expert and not claiming to be one. But if you want to test Hayek's thesis, I think Venezuala - and not Sweden - would be where to look.

As I said in November:

To really prove Hayek wrong (which I think misunderstands the book since it's not about prediction) you need to list countries that have had a lack of economic freedom for a period of time and not seen a loss in political freedom. Lawson made convincing empirical claims that (i) Chile's drastic increase in economic freedom was soon followed by increases in political freedom; (ii) Israel's lack of political freedom in the 1970s/1980s didn't last, and relatively free-market policies have coincided with a steady increase in political freedom; (iii) Venezuela really began to lose economic freedom from 1990-1995 and since then political freedom has fallen (and is falling). This latter case - Venezuela - is the Road to Serfdom before our eyes. Recourse to countries like Sweden that rank high in terms of economic freedom can blind us to the genuine affronts to liberty.

Comments

[Eric Crampton]

In order for Road to Serfdom to hold, it has to be the case that European planners prefer totalitarianism to markets once a rights-preserving socialism fails. If they don't, they retreat from full-blown socialism (as did all of western Europe in the mid-20th C.) Chavez always preferred totalitarianism when push came to shove, and Brit Labour Party types didn't. RTS did more than just point out that full scale planning required full scale totalitarianism, it insinuated that European would-be planners preferred full scale totalitarianism when push came to shove.

[Jim]

"it insinuated that European would-be planners preferred full scale totalitarianism when push came to shove."

So was he wrong, or did push never come to shove (and if not, why not?)

[dearieem]

Always worth pointing out that Sweden was doing compulsory eugenic abortions into the 1970s.

[dearieme]

Oh, and sterilisations too.