Chapter Fourteen: Material Conditions and Ideal Ends

This chapter is about what England should expect as it recovers from World War Two.

This chapter is, perhaps, the most irrelevant to modern times of all the chapters, but what is relevant is the social choice between economic security on one hand, and liberty and growth on the other.

Hayek points out that there was a lot of push in England to have the government plan the post-war recovery, much as it planned the war effort. He argues that this is a recipe for slow growth and laying the foundation for a future totalitarian takeover, as happened in Germany.

For historical perspective, keep in mind that as World War Two wound to a close many thinkers of the developed world figured that post-World War Two would repeat post-World War One. There would be violence, continued revolution, and wild economic swings. And because of this similarity, likely a World War Three, complete with nukes. It was really a spooky scenario!

What happened instead was violence and revolution continued in the third world areas, China's Civil War and the Korean War being examples, but rapid and steady prosperity in the developed world. This was a big and delightful surprise! It made a bit of news when the 40th anniversary of the start of World War Two passed peacefully in 1979.

The relevance of this chapter to the 2010's is how the US government is handling the recovery from the Great Recession. The more the government plans the recovery by enacting micro-managing legislation, the more hampered organic forces, such as small business entrepreneurship, are from bringing about the deep readjustments needed to bring growth back to the US economy.

What is needed for recovery is more rule of law, not more economic security, or more "rights" for various special interest groups. In this particular case I'm thinking of the housing crisis. The sooner the government gives that market place a chance to work through the twenty plus years of distortions it has been living with, the sooner it will grow again and the sooner it will liberate the rest of the economy.