Hayek's Slippery Slope, the Stability of the Mixed Economy and the Dynamics of Rent Seeking
| Author | André Azevedo Alves,John Meadowcroft |
| Date | 01 December 2014 |
| DOI | 10.1111/1467-9248.12043 |
| Published date | 01 December 2014 |
| Subject Matter | Article |
Hayek’s Slippery Slope, the Stability of the Mixed
Economy and the Dynamics of Rent Seeking
André Azevedo Alves
Universidade Católica Portuguesa, Porto
John Meadowcroft
King’s College London
F. A. Hayek’s The Road to Serfdom continues to provoke intense scholarly debate focused on the validity of Hayek’s
central claim that a mixed economy is inherently unstable and economic intervention will inexorably lead to
totalitarianism if pursued for a sustained period.This ar ticle presentsempir ical evidence which showsconclusively that
it is the mixed economy that has proved remarkably stable,whereas laissez-faire and totalitarian regimes have proved
inherently unstable. It is argued that this empirical outcome can be explained by the dynamics of rent seeking and
Hayek’s failure to anticipate that the state could control more than half of national income without requiring a
totalitarian apparatus to control and direct production and consumption.The implications of the failure of Hayek’s
argument for our conceptualisation of freedom and power in the context of the modern democratic state and our
understanding of the relationship between economic and political freedom are considered.
Keywords: Hayek; interventionism; rent seeking; classical liberalism; freedom
In his 1944 book The Road to Serfdom, F.A. Hayek famously argued that a mixed economy
is inherently unstable; if pursued for a sustained period economic intervention will inexo-
rably lead to totalitarianism.This argument has become a leading theme in classical liberal
thought and has generally been interpreted in the sense summarised by Norman Bar ry
(1984, p. 52) as:
[T]he claim that piecemeal acts of intervention by government in a free economy and society
will, if continued over an unspecified period of time, bring about the transformation of that
society into a totalitarian regime in which all but the most trivial decisions affecting an
individual are taken by the state.
What might be termed the Hayekian ‘slippery slope argument’ is especially powerful in that
it postulates that totalitarianism does not result from the sudden overthrow of a democratic
regime by an authoritarian party or f action, but is likely to be brought about as an
unintended consequence of successive government interventions whose proponents do not
desire the totalitarian outcome that their actions produce.
If valid,the argument logically implies that advocates of government intervention beyond
the threshold deemed strictly necessary for the operation of a free economy are unwittingly
pushing their society along ‘the road to serfdom’ towards totalitarianism.Assuming that the
vast majority of the advocates of government intervention do not desire a totalitarian
society, it follows that all those who value individual liberty should support laissez-faire
policies if the descent into totalitarianism is to be avoided.
Hayek’s argument has been politically important since the book’s publication. The Road
to Serfdom generated immediate and extended critiques from two important contemporary
socialist thinkers: Barbara Wootton (1945) and Herman Finer (1945), who argued – albeit
in markedly different tones – that Hayek had seriously underestimated the compatibility of
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doi: 10.1111/1467-9248.12043
POLITICAL STUDIES: 2014 VOL 62, 843–861
© 2013The Authors. Political Studies © 2013 Political StudiesAssociation
democracy and economic planning. The book is also said to have inspired Conservative
Prime Minister Winston Churchill’s ill-judged and ill-fated claim during the 1945 Br itish
general election that a Labour government would require a Gestapo-like organisation in
order to put its economic plans into effect (Shearmur, 2006). It would go on to be an
important inspiration for the new right in academia, think tanks and within the political
parties of the right (Cockett, 1995; Shearmur, 2006).More recently, following the election
of Barack Obama in 2008 the book enjoyed a revival after it was recommended by a
number of American talk show hosts as a text that would explain the likely consequences
of the new President’s social policies (Caldwell, 2011; Farrant and McPhail, 2010).
This article seeks to confront Hayek’s slippery slope argument with the apparent
empirical resilience of the mixed economy, to put forth an explanation for this discrepancy
and to consider some of the theoretical and conceptual implications of the empirical failure
of Hayek’s argument.After this introduction,the ar ticle revisits Hayek’s The Road to Serfdom
to lay out in precise terms the original slippery slope argument and consider recent
scholarly debates regarding the intended meaning of Hayek’s central argument in the book.
Next, the slippery slope claim is confronted with empirical data in order to evaluate it from
a historical perspective. Based on the findings, a possible theoretical explanation for the
relative stability of the mixed economy and the relative instability of both laissez-faire and
totalitarianism based upon the dynamics of rent seeking is put forward. The article then
discusses the principal implications of the weakness of the Hayekian slippery slope argu-
ment for our understanding of economic and political freedom and the relationship
between the two. A short final section concludes.
It should be noted at the outset that there are important conceptual challenges in
defining a mixed economy, laissez-faire and totalitarianism. Like most concepts in the social
sciences these categories are not clear-cut and precise meanings of the terms may be
contested. For the purposes of this article, we define laissez-faire as the classical liberal ideal
of limited government, free trade and established political rights such as that found in
Britain immediately following the abolition of the Corn Laws or in late nineteenth-century
Sweden.Totalitarianism is defined as a regime in which the state controls almost all aspects
of economic, social and political life, and where the basic rights of citizens may be
summarily dismissed, such as in Nazi Germany or the Soviet Union under Stalin. The
mixed economy may be defined as occupying the space between laissez-faire and totalitari-
anism. It describes contemporary social democracy in which the state is a major economic
player and basic political rights and civil liberties are respected.
Hayek’s Slippery Slope Argument in The Road to Serfdom
To a significant extent the whole of The Road to Serfdom is guided by Hayek’s slippery slope
argument.This is made clear right from the start by the title chosen for the book but, even
more importantly, by the concerns and objectives Hayek identified as the key motivations
for writing the book. Thus, in the preface to the 1956 edition Hayek (1994 [1944], p. xlii)
stated:
What I have argued in this book, and what the British experience convinces me even more
to be true, is that the unforeseenbut inevitable consequences of socialist planning create a state
of affairs in which, if the policy is to be pursued, totalitarian forces will get the upper hand.
844 ANDRÉ AZEVEDO ALVES AND JOHN MEADOWCROFT
© 2013The Authors. Political Studies © 2013 Political StudiesAssociation
POLITICAL STUDIES: 2014, 62(4)
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