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Friedrich von Hayek and Leo Rosten Part I (U1003) - Full Video — Transcript

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0:33The Idea Channel
1:01Well, Dr. von Hayek, it's a
1:02pleasure to see you after years
1:05of reading you and, indeed,
1:07listening to you. I was one of
1:10the auditors of a course you
1:12gave at the London School of
1:13Economics many, many years ago.
1:16Tell me, did you begin, in your
1:19intellectual life as an adult,
1:23did you begin as a Fabian? Were
1:24you a socialist? Were you an
1:26Adam Smith man? Oh, no. You
1:31could describe it as Fabian.
1:32Well, there were, in fact,
1:34Fabians in Austria, too, but I
1:36didn't know them. The influence
1:38which led me to economics was
1:40really Walter Rathenau's
1:43conception of a planned economy.
1:45He had himself been the raw
1:47materials dictator in Germany,
1:48and he wrote some very
1:50persuasive books about the
1:52reconstruction after the war.
1:55And they are, of course,
1:58socialist of a sort--central
2:00planning, at least, but not a
2:02proletarian socialism. They were
2:04very persuasive, indeed. And I
2:07found that really to understand
2:09this I had to study economics.
2:12The first two books of
2:13economics, which I read while I
2:14was fighting in Italy, were so
2:17bad that I'm surprised they
2:18didn't put me permanently off
2:20economics; but when I got back
2:23to Vienna somebody put me on to
2:25Karl Menger and that caught me
2:27definitely. Had you read the
2:30English economists, the
2:31classical economists? At that
2:32time, no. Adam Smith I had read
2:35fairly early, but that's the
2:36only one--and in German
2:38translation. You see, English is
2:40really the third foreign
2:41language I learned; it's now the
2:43only one I can speak. But I was
2:47tortured all my childhood being
2:49taught French--irregular verbs
2:52and nothing else--and
2:54consequently never learned to
2:55speak it really. I picked up
2:57Italian during the war in
2:59Italy--well, sort of Italian,
3:02Venetian dialect. Very
3:04different. I don't dare to speak
3:06it in polite society. That gave
3:10me the confidence to take up
3:11English, and ultimately, of
3:14course, I really learned it when
3:16as a young man after my degree I
3:18went to the United States. My
3:20first experience with American
3:21English was in New York in 1923
3:23and '24. I didn't know you'd
3:26come to the United States that
3:27early. It was before the time of
3:29the Rockefeller Foundation; so
3:31it was at my own risk and
3:33expense. I arrived in New York
3:36in March 1923 with twenty-five
3:38dollars in my pocket, with a
3:40series of letters of
3:42recommendation by Schumpeter
3:44which each earned me a lunch and
3:46nothing else. Had you known
3:49Schumpeter in Vienna? Not
3:50really, but he was a visiting
3:54professor at Columbia before the
3:57war; so when Mises and Wieser
4:01learned that I wanted to go,
4:03they sent me to Schumpeter, who
4:04was then a chairman of the bank.
4:07He had just been minister of
4:08finance and was now chairman,
4:10and he equipped me with a number
4:12of letters of ministerial size,
4:15which I had to get a separate
4:17folder for to carry them to
4:18America. I delivered them all;
4:20so I met all the famous old
4:22economists. They all were very
4:24kind to me, but did nothing. I'd
4:26gone over there for promise of a
4:28job from Jeremiah W. Jenks, the
4:31head trust specialist. But when
4:33I arrived, he was away on
4:35holiday; so I ran out of money.
4:37I then was greatly relieved that
4:43the very morning I was to start
4:45as a dishwasher in a Sixth
4:46Avenue restaurant, a telephone
4:48call came that Jenks had
4:49returned and was willing to -- I
4:51have ever since bitterly
4:52regretted that I cannot say I
4:54started my career in America.
4:56Now, you say you began as a
4:59Fabian socialist, under the
5:01influence of Walter Rathenau. In
5:04those days, of course, this was
5:05a kind of intellectual
5:07socialism, and you mentioned the
5:09fact that it wasn't proletarian.
5:11Did it interest you that so many
5:14of the German, Russian, Austrian
5:19intellectuals were the ones who
5:22became the Marxists, not the
5:24masses. It was an intellectual
5:28movement that spread with
5:30enormous-- Well, you see, I
5:32spent my university days already
5:34arguing with these Marxists--my
5:36opponents were Marxist and
5:38Freudians. We had endless
5:42discussions, and it was really
5:45what I thought was the poverty
5:46of the arguments of the Marxists
5:48which turned me against
5:49socialism. Incidentally, I'll
5:51let you in on another thing:
5:54both the Marxists and the
5:56Freudians had the dreadful habit
5:58of insisting that their theories
5:59were irrefutable--logically,
6:02absolutely cogent. That led me
6:05to see that a theory which
6:07cannot be refuted is not
6:09scientific, and that made me
6:11later embrace Popper when he
6:13spelled the same idea out, which
6:15he had gained in the same
6:17experience. He was few years
6:18younger; so we didn't know each
6:19other. But we both went through
6:21this experience, arguing all the
6:23time as Marxist and Freudians.
6:25They were both ideologists of a
6:27very strong sort. Oh, very
6:29strong, all very good arguers,
6:34and very anxious to discuss.
6:36They also had, I think, the
6:39power of an evangelical movement
6:44and a humane movement. By this I
6:47mean that those of us who
6:50listened to you and read you, or
6:54studied under people like Jacob
6:55Viner or Frank Knight or Lionel
6:58Robins, always had to come to
7:02terms with the fact that the
7:05system, a free market system,
7:08whatever you want, was not
7:09humane, and that we felt that
7:14the society had to undertake
7:18something. Remember, this was
7:20the Depression, and we were
7:22seeing unemployment and poverty,
7:25banks failing, people scared and
7:29people killing themselves
7:30because their earnings had been
7:32wiped out; and when the New Deal
7:34came along, it seemed that here
7:37was the humane answer. And,
7:39indeed, my parents, who were
7:40socialists, stopped voting
7:42socialist, even though they like
7:44and loved Norman Thomas, and
7:46began to vote for Roosevelt.
7:47We all felt that at last
7:49government had developed a
7:51"heart." Does any of this make--
7:55Well, I didn't see it that way,
7:57but of course it tallies
7:59completely with what I am doing
8:00at the moment. You may be amused
8:02that a few days ago, before I
8:04was returning the last volume of
8:06Law, Legislation and Liberty for
8:08being printed, I inserted one
8:10sentence into it, and it runs:
8:13"Man was civilized very much
8:15against his wishes." It's really
8:17the innate instincts which are
8:19coming out. That's a very
8:21Freudian statement. In a way.
8:23Well, it's Freudian and
8:24anti-Freudian, because Freud, of
8:26course, wanted to relieve us of
8:27these repressions, and my
8:30argument is that by these
8:31repressions we became civilized.
8:33Well, his whole point is that
8:34civilization is the repression
8:36of guilt, and that without that
8:38you can't have -- In his old
8:39age, of course. -- and the
8:41repression of aggression, of the
8:43hostility. When he wrote
8:45Civilization and Its
8:47Discontents, he was already
8:48getting upset by what his pupils
8:50were making of his original
8:51ideas. Quite so. I was
8:54interested that your works in
8:58the last ten years have become,
9:00or have returned to, a much more
9:03social-philosophical scale than
9:07your earlier ones. But let's
9:08start with the earlier ones. You
9:10created a furor in the United
9:13States, England, and I imagine
9:14around the world, with The Road
9:16to Serfdom, because it came out
9:19at a time when you were a lone
9:21voice speaking in the wilderness
9:23about the terrible dangers which
9:25were inherent in turning over to
9:27government--even good
9:29government, even by a good and
9:31well-intentioned people--powers
9:34which were both dangerous and
9:35inexorable. If you were to write
9:39that book over again, first,
9:41would you make any changes? And
9:43secondly, what would you call
9:44it? Well, I suppose I would
9:48still call it the same, although
9:52I was never quite happy with the
9:54title, which I really adopted
9:56for sound, because the idea came
10:01from Tocqueville, who speaks
10:02about the road to servitude; I
10:04would like to have chosen that
10:06title, but it doesn't sound well
10:08for the title. So I changed
10:09"servitude" into "serfdom," for
10:11merely phonetic reasons. Has it
10:13occurred to you since then that
10:15this was one reason there was so
10:17much vicious response, because
10:22the English and the Americans
10:24could not believe that they were
10:27in danger of becoming serfs? It
10:29seemed unthinkable. There wasn't
10:30the vicious reaction in England.
10:33In fact, the English socialists,
10:35or most of them, had all
10:38themselves become a little
10:39apprehensive already at the
10:40time. That early? Oh, yes. The
10:42book was received in England in
10:44the spirit in which I meant it
10:46to be understood: as a serious
10:48argument. In fact, I'll tell you
10:49one story: Barbara Wootton, who
10:52wrote one book against me, told
10:53me, "You know, I had been at the
10:55point of writing a rather
10:56similar book, but you have now
10:58so overstated the case that I
11:00have to turn against you." She
11:02said you had overstated the
11:04case--- --against socialism.
11:05--against planning. The United
11:08States reception was completely
11:10different. Of course, it came
11:11here at the height of the
11:13enthusiasm for the New Deal.
11:15All the intellectuals had just
11:16discovered their new great idea,
11:20and the extent to which I was
11:21abused here-- worst,
11:23incidentally, by a man who had
11:26been my colleague at the--
11:27Herman Finer. I think that's the
11:30most savage book I've ever read.
11:32But there's a comic part.
11:34I think I can now tell you the
11:35story behind it. Herman Finer
11:37had come to hate the London
11:39School of Economics, and
11:40particularly Harold Laski,
11:43because when he had come to the
11:44United States and war broke out,
11:46he asked for a leave, an
11:47extension of leave, and it was
11:49denied him because he was needed
11:52for teaching, and he was so
11:54upset about this that he turned
11:56against it on the London School
11:57of Economics and particularly
11:58Laski. Then so happened that I
12:00was the first member of the
12:02London School of Economics on
12:03which he could release all his
12:06hatred of the place. So I had to
12:08suffer for Harold Laski. I am
12:11horrified to hear you adopt so
12:13simple a psychological point of
12:15view. It was contributory. May I
12:18suggest another point. It takes
12:21a good deal of sophistication
12:26and poise to accept a system
12:31which is full of apparent
12:32paradoxes. The socialist system
12:35is very persuasive and very
12:38simple to explain to people. The
12:40government will take care of
12:42making sure that resources are
12:45sensibly, rationally
12:47distributed, that people will
12:49get what they deserve. There
12:50will be no unemployment; there
12:52will be no war; there will be no
12:54depression. The system that you
12:57have described, and that
12:58actually is in the great
12:59tradition in economics, is one
13:02which demands a very high degree
13:06of equilibrium, in the presence
13:09not only of complexity but of
13:12apparent indifference to human
13:14happiness. That is, profits are
13:17wicked and cruel; workers are
13:19exploited; imperialism, the
13:22search for profits, brings war.
13:24And the evidence seems visible.
13:27What I'm trying to suggest is
13:28that people like Finer, and many
13:31political scientists and
13:32sociologists, were reacting to
13:35what they believed--or felt
13:38threatened by--as an
13:41intellectual performance of
13:43great complexity which, quote,
13:46"ignored the human problems of
13:48the time." Is this correct? You
13:49know, we're coming up to what I
13:51am doing at the moment. In fact,
13:53what I am writing at the moment
13:55is called The Reactionary
13:57Character of the Socialist
13:59Conception. My argument there is
14:01essentially that our instincts
14:03were all formed in the small
14:04face-to-face society where we
14:06are taught and our instincts
14:09formed, to serve visible needs
14:11of other people. Now, the big
14:14society was built up by our
14:15obeying signals which enabled us
14:18to serve unknown persons, and to
14:21use unknown resources for that
14:23purpose. It became a purely
14:25abstract thing. Now our instinct
14:27still is we want to see whom we
14:29do good, and we want to join
14:32with our immediate fellows in
14:33serving common purposes. Now,
14:35both of these things are
14:37incompatible with the great
14:39society. The great society
14:40became possible, instead of
14:42aiming at new needs of known
14:44people, to be guided by the
14:46abstract signals of prices; and
14:49no longer working for the same
14:50purposes with your friends, but
14:52following your own purposes.
14:53Both things are according to our
14:55instincts, still very bad, and
14:58these "bad" things which have
15:00built up the modern society. May
15:02I ask you to comment on the fact
15:04that it isn't the instinct,
15:07because we have been raised that
15:08way-- and I don't think that
15:09instincts vary very much
15:10according to how you're raised,
15:11except in intensity--but that
15:14the fact of the need of people
15:18to have some kind of religious
15:20structure. Now, you can qualify
15:22the word religion, some scale of
15:24what is good and what is evil,
15:27some scale of what is worth and
15:30not worth living for. Our
15:33Judeo-Christian tradition tells
15:35us "Love thy neighbor," "Am I my
15:39brother's keeper?" and as you
15:41very shrewdly pointed out, we
15:43start with family as a little
15:45society in which we take care of
15:46each other. And the mother gives
15:48food from her plate to the
15:50child, or says to the child,
15:52"Now, don't be greedy; give a
15:53little to so-and-so. Just
15:55because you're older and
15:57stronger does not mean that you
15:58have a right to it." And the
16:00whole structure of a religiously
16:04supported and religiously
16:06cemented social system is
16:09involved when you come to deal
16:11with-- Oh, exactly, exactly. But
16:14it's that very characteristic
16:16which refers to the neighbor,
16:17the known fellow man. And our
16:20society is built on the fact
16:22that we serve people whom we do
16:23not know. Roosevelt was shrewd
16:25enough to say to Latin America,
16:29"We shall be your good
16:31neighbors. We want to be good
16:34neighbors." He didn't realize he
16:37was so confirming Hayek. But how
16:41do you respond to this? Do you
16:42find that in societies which
16:44have a different religious
16:45structure, or a different ethos,
16:49that it is permissible to run
16:51the society without such values
16:53or that power is in and of
16:56itself sufficient? Well, that's
16:58a very long story: I almost
17:00hesitate to talk about it. After
17:02all, we had succeeded, so long
17:05as the great mass of the people
17:07were all earning their living in
17:10the market, either as heads of a
17:13household or of a small shop and
17:16so on. Everybody learned and
17:18unquestionably accepted that
17:19what had evolved was what I
17:22called--the capitalist ethic was
17:24much older than capitalism--the
17:25ethics of the market. It's only
17:28with the growth of the large
17:29organizations and the
17:31ever-increasing population no
17:32longer is brought up in that
17:34ethic. At the same time as it no
17:37longer learned the traditional
17:39ethics of the market, the
17:40philosophers were certainly
17:42telling them, "Oh, you must not
17:44accept any ethical laws which
17:46are not rationally justifiable."
17:48And these two different
17:49effects--no longer learning the
17:52traditional ethics, and actually
17:54being told by the philosophers
17:55it's all nonsense you ought not
17:56to accept any rules which we do
17:57not see have a visible
17:59purpose--led to the present
18:00situation, which is only a 150
18:03year event. The beginning of it
18:04was 150 years ago. Before that,
18:07there was never any serious
18:08revolt against the market
18:09society, because every farmer
18:11knew he had to sell his grain.
18:16Do you think that Marx, who was
18:19not alone and who, after all,
18:21had his own predecessors-- First
18:24of all, his misreading of
18:26history was always to me so
18:28astonishing, even when I first
18:29read it. When he suggests, in
18:32effect, that all wars are
18:34carried on for purposes of
18:35profit as part of the
18:36profit-making system-- And all
18:39you had to do was pick up a map
18:40of the world and look at the
18:41ferocity and the horrors of wars
18:44in the East, say, or in Africa,
18:46or a history book of the
18:48religious wars, which were very,
18:50very harsh wars, and so on. It
18:53is interesting that he captured,
18:55and that his disciples then
18:58captured, a kind of an umbrella,
19:01all of our troubles. They did
19:05not distinguish society from a
19:07capitalist society; they did not
19:09distinguish the group from a
19:12capitalist group. They found a
19:15convenient way of saying to
19:16people, "The reason you are
19:18miserable, or inadequate, or
19:21short, or weak, is because the
19:25system has been so unjust." And
19:29this appeal, then not so much to
19:32the Germans as to the Russians,
19:34was that it was implemented by
19:39to me one of the great tragic
19:42disasters of the human race,
19:43Lenin, who taught Hitler. Oh,
19:47sure. Yes, of course. Well, you
19:51see, I think the intellectual
19:53history of all this is
19:54frightfully complex, because
19:56this idea of necessary laws of
19:58historical development appears
20:00at the same time in Hegel and
20:01Comte. And you had two
20:03philosophical traditions--
20:05Hegelian idealism and French
20:07positivism--really aiming at a
20:11science which was supposed to
20:15discover necessary laws of
20:17historical development, which is
20:20for purely science for many
20:21reasons. But it caught the
20:24imagination--and not only the
20:26imagination it pleased certain
20:31traditional feelings and
20:32emotions. As I said before, once
20:37you put it out that the market
20:40society does not satisfy our
20:41instincts, and once people
20:45became aware of this and were
20:47not from childhood taught that
20:49these rules of the market are
20:50essential, of course they
20:52revolted against it. The
20:55interesting thing is the
20:57unawareness that people can have
21:02about the impersonal
21:04consequences of a system.
21:06My own intellectual history was
21:10enormously affected by the book
21:14that you edited, in which you
21:16have a chapter, Capitalism and
21:18the Historians. That's a
21:20remarkable book because, in
21:22effect, what it says is that all
21:24that my generation had been
21:25taught about the horrors of the
21:27Industrial Revolution, based
21:29almost entirely on the work of
21:30the Hammonds that this was a
21:33terribly incorrect and a
21:36terribly superficial statement.
21:38But then that, I think it was
21:40Ashton who points out that, of
21:43course, if you went into the
21:44slums of London and saw the
21:47poverty there, you thought these
21:49people were poorly off; but they
21:51thought they were very well off.
21:53He quotes the letters of the
21:55clergyman, who would come to
21:57visit London, and say, "I just
21:59saw the Jenkinses. Isn't it
22:01marvelous? Only last year they
22:03were starving in the ditches and
22:05sleeping in the barns and had no
22:07shoes; their children now are
22:09shod and go to school," and so
22:11on. Well, I've long believed
22:13that misery becoming visible,
22:16not appearing for the first time
22:18but being drawn to the attention
22:21of the urban population, was
22:22really the cause even of an
22:25improvement of the status of the
22:27poorest class. But so long as
22:29they-- You mean it improved the
22:31status of the privileged
22:32classes. Oh, it did improve.
22:33But, you see, the people who
22:37lived so miserably in town
22:39really had been drawn to the
22:41town because they were so much
22:42better off than they had been
22:43before. You mentioned this book
22:49which I edited. Again, as in the
22:51former instance of the one on
22:53collectivist economic planning,
22:54it was that I found that the
22:56general public just did not know
22:58the most important work which
23:00was being done by the
23:01historians. In this case, not
23:02only Ashton but Hutt. Hutt's
23:05study of the early
23:08industrialization and the
23:10misrepresentation by certain
23:14parliamentary commissions in
23:17inquiring into the state of the
23:20poor, which for purely political
23:22reasons had distorted the real
23:23facts. Have you ever run across
23:26a book by a young Cambridge
23:30graduate called Prelude to
23:34Imperialism? I've only seen the
23:36title; no, I don't know the
23:38book. It's an extraordinary
23:39book, because it's in the
23:40tradition of Ashton and Hutt.
23:42What he did was to examine the
23:45letters of the Christian
23:47missionaries who went to
23:49Africa--the letters back to
23:50their societies--and what
23:52emerges is as startling a
23:55transformation of our
23:57impressions of what went on in
23:59Africa as the one dealing with
24:02the Industrial Revolution. The
24:04most exploited group in Africa
24:08were the wives of the
24:09missionaries. They worked much
24:12harder than the natives, because
24:14they had to teach them their own
24:16language, and make a vocabulary,
24:18and sing the songs, raise the
24:19vegetables, and be the nurses
24:22and the doctors, and settle the
24:24quarrels. I can quite believe
24:27it; it never occurred to me.
24:29But the book is full of
24:30extraordinary examples of what I
24:32like to say are the non visible
24:37and much more significant
24:38consequences. For example, if
24:42you were to take 90 percent of
24:44the graduating students of the
24:46colleges of the United States
24:49and ask them what a bank or a
24:51banker does, what percentage do
24:53you think would answer to your
24:55satisfaction? Hardly any. Yet
25:01they have all been exposed to
25:02banks, bankers, economics, and
25:04professors. How many of them
25:07would know what an executive
25:09does? Well, that is
25:11extraordinarily difficult to
25:13explain-- that I know from my
25:14own experience. The business
25:17schools are doing quite a good
25:18job, but the economics students
25:20know nothing about it. The
25:26ignorance of people about the
25:29things they vote about is, of
25:31course, very depressing. The
25:35feeling that one must temper
25:37one's disillusionment with the
25:40fact that these are very
25:42complicated, and to utter a
25:44heresy not all people are
25:47intelligent. And you run into
25:50the problem of what the fate of
25:53the democracy will be when the
25:56crises become more acute and
25:58depend on more "technical
26:00signals," to use your word, or
26:02"information," to use mine.
26:05Well, I'm very pessimistic about
26:06this. You see, my concern has
26:08increasingly become that we call
26:10democracy a system in which it
26:13isn't really the opinion of some
26:14majority which governs but the
26:16necessity of paying off any
26:18number of special interests.
26:20Unless we change the
26:24organization of our democratic
26:25system, democracy will-- I
26:28believe in democracy as a system
26:30of peaceful change of
26:31government; but that's all its
26:33whole advantage is, no other. It
26:35just makes it possible to get
26:37rid of what government we
26:38dislike, but that omnipotent
26:41democracy which we have is not
26:43going to last long. What I fear
26:46is that people will be so
26:47disgusted with democracy that
26:49even they will abandon even its
26:51good features. If you had
26:56magical powers and were to set
26:57about restructuring the system--
27:01A friend of mine, in making a
27:04witticism, prompted me to retort
27:06by saying, "That's a good rule;
27:09let's pass a law that for every
27:11law that Congress passes it must
27:14simultaneously repeal twenty
27:16others." Twenty others; yes, I
27:18agree. At least twenty. But what
27:22would you do? Oh, in the long
27:27run, the only chance is to alter
27:31our constitutional structure and
27:33have no omnipotent single
27:36representative assembly, but
27:38divide the powers on the
27:40traditional idea of a separation
27:43of powers, have one which is
27:45confined into true legislation
27:47in the sense of general rules of
27:48conduct, and the other a
27:50governmental assembly being
27:52under the laws laid down by the
27:53first: the first being unable to
27:56discriminate; the second, in
27:57consequence, being unable to
27:59take any coercive action except
28:01to enforce general laws. Because
28:04of the present system, see, I
28:06believe Schumpeter is right in
28:08the sense that while socialism
28:10can never satisfy what people
28:12expect, our present political
28:15structure inevitably drives us
28:16into socialism, even if people
28:18do not want it in the majority.
28:21That can only be prevented by
28:24altering the structure of our
28:26so-called democratic system. But
28:30that's not necessarily a very,
28:32very slow process, and I don't
28:34think that an effort toward
28:36reform will come in time. So I
28:38rather fear that we shall have a
28:40return to some sort of
28:43dictatorial democracy, I would
28:45say, where democracy merely
28:49serves to authorize the actions
28:51of a dictator. And if the system
28:55is going to break down, it will
28:56be a very long period before
28:59real democracy can reemerge. Two
29:03points, if I may: the Schumpeter
29:05book--I assume you mean
29:06Socialism, Capitalism and
29:08Democracy--which was to me a
29:09stupendous piece of work, makes
29:11the horrifying point that
29:13capitalism will be destroyed
29:15because of its successes. In a
29:18way it's true. Would you comment
29:20on that? Well, capitalism has,
29:24of course, raised expectations
29:27which it cannot fulfill. And,
29:31unless we take from government
29:34the powers to meet the demand of
29:39particular groups, which are
29:41raised by their success, I think
29:43it will destroy itself. This
29:45applies to both capitalism and
29:49democracy. Does it strike you as
29:51ironic that perhaps the most
29:54influential group, in terms of
29:56political leverage, is not the
29:59business group or the capitalist
30:01group in the United States at
30:02all, but the unions? Oh, you
30:04know, my main interest is
30:06England; so I cannot be unaware
30:09of this. I hope that we're in
30:12better shape than England.
30:14In that respect, you are still a
30:15little behind the English
30:17development. But I used to say,
30:21when I knew the States better
30:22than I do now, that in America,
30:26fortunately, the unions are just
30:27a capitalist racket; but it's no
30:29longer true. Unions are part of
30:31the establishment in the United
30:32States. Well, so they are in
30:34England--much more so. But they
30:38did believe, basically, in
30:40capitalism, but I fear this is
30:43changing. In the United States,
30:45certainly, the unions have been
30:47much more flexible and less
30:49doctrinaire. Yes. And it would
30:53seem to me that no matter how
30:54one read history, in a free
30:56society it's impossible to
30:58prevent people from meeting out
31:02of a feeling of their joint
31:03interests in order to-- Oh, I
31:05have no objection against unions
31:06as such. I am for--what is the
31:14classical phrase?--freedom of
31:16association, of course, but not
31:20the right to use power to force
31:22other people to join and to keep
31:24other people out. It's the
31:25privileges which have been
31:27granted to unions in America
31:29only by the judicature--in
31:32England by law, seventy years
31:35ago--that they can use force to
31:38prevent people from doing the
31:39work they would like, which is
31:41the crux, the dangerous aspect
31:44of it. While I think unions are
31:47fully justified-- matter of
31:49fact, I support freedom of
31:52association--freedom of
31:54association means free to join
31:56and not to join. Freedom of
31:58non-association. Yes, yes. One
32:02interesting fact about this is
32:05that the Communist party tried
32:08to infiltrate the unions in the
32:10United States in the early
32:12thirties and the late twenties,
32:15and were quite savagely and
32:18quite successfully--and I think
32:19quite intelligently--kept out of
32:21the leadership. This was to a
32:24much lesser degree true in
32:26England. They don't call
32:27themselves Communists; they say
32:29they're Marxists. No, but they
32:31do want to destroy the present
32:33capitalist system. And the
32:34stewards, or what we would call
32:36the foremen, are surprisingly
32:39candid about that. The responses
32:42in the polls-- For instance, a
32:44friend of ours, Mark Abrams, who
32:46is also at the London School,
32:48did a poll in which he asked a
32:51group of stewards at one of the
32:53large factories--I think it was
32:54Leyland, which was in very
32:56serious trouble; it was really
32:58bankrupt and was being held up
32:59by the government--he said, "But
33:02if your demands are met, don't
33:04you realize it will wreck the
33:05company, and that will wreck the
33:06industry?" They said, "But
33:08that's exactly what we want!"
33:11I don't think you would find an
33:13American labor leader who's
33:14responsible who would say that.
33:17They certainly wouldn't admit
33:19it. No, I have the feeling you
33:23wouldn't have it anyway.
33:24Probably, yes; you're probably
33:25right. That's why I said, to a
33:28degree, that the experience in
33:30England--to which I have
33:31returned often; it's a country I
33:33love--the depth of the class
33:37distinction, which is just
33:39beginning to disappear, has
33:41created degrees of bitterness
33:43which I've never found in the
33:44United States. There is a
33:46hatred. See, my impression of
33:50England may be wrong in the
33:51sense that I only really know
33:52the south. All you are speaking
33:55about is the north of England,
33:56where I think this feeling
33:57prevails. But if you live in
33:59London-- Right now my relations
34:01are mainly to the southwest of
34:03England, where my children live,
34:05I don't find any of this sharp
34:09resentment. And the curious
34:10thing is that in the countryside
34:12of southwest England, the class
34:14distinctions are very sharp, but
34:16they're not resented. They're
34:18still accepted as part of the
34:19natural order. That is so, and
34:22one puzzles about that. But as
34:25in all of these social things,
34:26you can make certain guesses.
34:29Are you impressed, as you get
34:32older, as I get older, by the
34:35unbelievable intensity with
34:38which people maintain their
34:40beliefs, and the difficulty of
34:43getting people to change their
34:44minds in the face of the most
34:46extraordinarily powerful
34:48evidence? Well, one has to be if
34:50one has preached this thing for
34:51fifty years without succeeding
34:53in persuading. You mean you
34:55still are the voice in the
34:56wilderness? Well, you can hardly
34:58say that. No, you see, now I'm
35:01in the habit of saying that when
35:03I was young only the very old
35:05people believed in the sort of
35:07libertarian principles in which
35:09I believe: when I was in my
35:10middle age nobody else did, and
35:13I was the only one; I have now
35:15lived long enough to have the
35:16great pleasure of seeing it
35:17reviving among the younger
35:19generation, people in their
35:20twenties and early thirties.
35:22There is an increasing number
35:23who are turning to our position.
35:26So my conclusion is that I've
35:27said once or twice in these
35:29interviews, if the politicians
35:31do not destroy the world in the
35:33next twenty years, there is good
35:34hope, because there's another
35:36generation coming up which
35:38reacts against this. But the
35:40chance that they will destroy
35:42the world in the next twenty
35:43years, I'm afraid, is fairly
35:44high. The difficulty of
35:48contending with government
35:49power, when even the press is
35:54dominantly committed to the
35:57faith or the ideology that you
35:59think wrong, only increases the
36:02difficulties of the problem.
36:06That is, we do have a very, very
36:08free press, a free radio, and a
36:10free television, but the system
36:13which has produced the people
36:15who do the writing and the
36:16thinking and the talking and so
36:17on is such that your hope for a
36:22rise of the libertarians, let us
36:24call it, seems to me to be a
36:26faint one, given the opposition.
36:30Well, I'm not so pessimistic as
36:32I used to be on this subject, as
36:34a result of recent experience.
36:42It has long been a puzzle to me
36:44why what one commonly calls the
36:48intellectuals, by which I don't
36:50mean the original thinkers but
36:51what I once called the
36:53secondhand dealers in ideas,
36:56were so overwhelmingly on the
36:59left. And there, of course,
37:01provides sufficient explanation
37:04of why a whole generation
37:05influenced by this has grown up.
37:08And I have long been convinced
37:10that unless we convince this
37:14class which makes public
37:15opinion, there's no hope. But it
37:19does seem now that it's
37:20beginning to operate. There is
37:22now a reaction taking place in
37:24that very same class. While even
37:28ten years ago there was hardly a
37:30respectable journal--either
37:33newspaper or periodical--to be
37:36found which was not more or less
37:38on the left, that is changing
37:41now. And I seriously believe
37:45that this sort of thing in
37:47twenty or thirty years may have
37:49changed public opinion. The
37:51question is whether we have so
37:52much time. When you think of the
37:57likelihood of a recession, which
38:01most economists say will happen,
38:03whether we're in it now or we'll
38:05have it at the beginning of '79,
38:08you think of the human responses
38:10to that recession. You think of
38:11the man and his wife and three
38:13children, and he's thrown out of
38:15work, and there isn't a job
38:16anywhere except 500 miles away,
38:18and it's in a different
38:19business, and so on. Will you
38:20not have a revival then of the
38:23feeling that the system has let
38:26them down, the system has
38:28failed, that again we are having
38:31unemployment, again we are
38:33having inequity? There will
38:36certainly be a reaction of this
38:37sort, but I rather hope that for
38:43the idea of the system,
38:45government will be substituted.
38:49I think people are beginning to
38:50see that the government is doing
38:53a great deal of harm, and this
38:56myth of the system: which is
39:00responsible for everything can
39:03be exposed, and I think is
39:05gradually being weakened. I may
39:07be over optimistic on this, but
39:13I believe government is now
39:14destroying its reputation by
39:16inflation. Isn't that because
39:19inflation is the easiest way in
39:22which to meet the demands of the
39:24interest groups? Oh, surely, but
39:26at the same time people do see
39:27that this is a constant
39:31concession to the expediency of
39:34the moment, at the price of
39:36destroying the whole system. Are
39:38you a complete monetarist?
39:44Yes, in the sense that I am
39:45absolutely convinced that
39:46inflation is done by government;
39:49nobody else can do anything
39:50about it. By printing of money.
39:52Yes. Of that I have no doubt; I
39:54believe Milton does oversimplify
39:56a little... Milton Friedman, I
39:58should say. ...by concentrating
40:03too much on the statistical-
40:04magnitude relation between the
40:06total quantity of money and the
40:08price level. It isn't quite as
40:09simple as this. But for all
40:11practical purposes we are
40:12really, I mean, our differences
40:15are fine points of abstruse
40:17theory--but for practical
40:21purposes, we're on the same
40:23side. The political uses of
40:29inflation are so attractive and
40:31so powerful, but as you say,
40:34people begin to realize that
40:37they're being gulled, they're
40:39being cheated. Sure they get ten
40:41dollars a week more, but look at
40:43how much more they pay in social
40:44security withholding, and how
40:46much more they pay-- Two things
40:48that astound me that parallel
40:51with the growing awareness about
40:55what inflation does: there has
40:57not been a growing awareness
40:59about the appalling shabbiness
41:03of official figures on almost
41:05everything. That is, the figures
41:08on inflation itself are
41:10outrageously underestimated--
41:12The figures on unemployment, on
41:14the other hand-- Unemployment is
41:17overestimated because they ask a
41:19person if he's employed or
41:21unemployed, and the person says
41:23he's unemployed, and that
41:24includes many housewives who
41:27don't want a job, or don't care
41:28about the job. But it's morally
41:30more justifiable to say, "Oh,
41:33I've been trying to get a job:
41:35than to say "Who wants to work?"
41:39But it's surprising to me that
41:40the figures on both of these
41:43very significant indices are
41:46continually being put out, the
41:49president has regular press
41:50conferences, every member of the
41:52cabinet, and no one says, "Tell
41:54us, how did you get these
41:56figures? And how much faith do
41:58you put in them? And can we
41:59believe them?" Do you read the
42:05Wall Street Journal? Oh, yes!
42:06There you get all the facts very
42:08clearly put, and it has no
42:09effect. When you were talking
42:11about the growth of new voices--
42:15The Wall Street Journal has
42:16become a national newspaper in a
42:19way that it wasn't; it was
42:20thought of as a trade journal. I
42:22often think that just as you
42:24might have chosen a different
42:26name for The Road to Serfdom,
42:28they would be better off if it
42:29wasn't the Wall Street Journal,
42:31because to the Midwest that
42:33already means bankers and so on.
42:36Of course, yes. But also the
42:37rise of a magazine like the
42:38Public Interest, which has
42:41become influential far beyond
42:45its circulation, and in the
42:47intellectual community. I was
42:51interested that one of your
42:54fellow Nobel laureates, who I
42:57think would be classed as a
42:59liberal, was Paul Samuelson, in
43:03a column several years ago--it
43:06was quite a startle--because he
43:08raised the question as to
43:10whether imperialism really pays.
43:14He had been reading people like
43:16Hutt, I suspect, and Jewkes, I
43:19suspect, and possibly Cairns,
43:24and he came to this
43:25extraordinary conclusion. He
43:26said, "I would be hard-put to
43:28know how to prove it," and
43:30explains why. He says on balance
43:33it would be very hard to
43:34say--this is not to say that, of
43:37course, some Englishmen
43:38profited--but on balance whether
43:40the total input, as compared to
43:44where it might have gone, that
43:45this necessarily represented
43:49English interests as against
43:52Indian. He said, "I couldn't try
43:54to make that case." What he in
43:55effect said was we really can no
43:57longer continue to hold that
44:00position, which was one of the
44:01great props, I think, in
44:03socialism. Well, you see,
44:06Samuelson--I think he's an
44:09honest person, and he's moving
44:12in the right direction. He
44:14probably started--well, I
44:16wouldn't say far on the
44:18Left--but anyhow it was
44:19predominately what you here call
44:22liberal, and what I call
44:23socialist ideas. But he does see
44:28the problems; there are others
44:30who don't. Even Nobel laureates.
44:34Well, you were a co-laureate
44:36with a man who probably didn't
44:38agree at all with you, am I
44:40right? Well, Myrdal. But he's
44:42not really an economist, is he?
44:45Oh, yes. I always thought of him
44:47as a sociologist because of his
44:48work on the American Negro. He
44:50started with exactly the same
44:51sort of problems I did. Is that
44:53right? Forty years or fifty
44:55years ago. Which of the English
44:58economists do you feel are
45:01beginning to follow the pattern
45:03or reexamining what you would
45:06call the socialist, what I would
45:07call the liberal, tradition?
45:11Well, among the young people, no
45:14single very eminent person, but
45:16the work being done by the
45:18Institute of Economic Affairs in
45:20London is, of course, absolutely
45:22first class. They are so very
45:25good because they are taking up
45:26particular problems and
45:28illustrating in point after
45:29point how the present system
45:33doesn't work. I think they have
45:35gradually achieved a position of
45:37very great influence indeed, and
45:41that is really the main source
45:43of resistance. It creates a
45:46coherent body of opinion which
45:50is probably more important than
45:52any of the periodicals or
45:54newspapers in England. You had
45:57said earlier that with
45:59Schumpeter you agreed that one
46:00of the problems of the free
46:02market, or the free society, is
46:05that the economic base thereof,
46:07capitalism, arouses expectations
46:11it cannot fulfill. I wish you
46:14would comment on the passion,
46:19the drive, or the delusion, or
46:22whatever you want to call it,
46:23but the power of the movement
46:24for equality. Well, it's, I
46:31think, basically a confusion.
46:34The idea of equality before the
46:36law is an essential basis of a
46:39civilized society, but equality
46:43before the law is not compatible
46:45with trying to make people
46:46equal. To not make people who
46:48are inevitably, unfortunately,
46:51very different in thousands of
46:52respects, to make them equal you
46:54have to treat them differently.
46:56So between these two conceptions
46:58of equality is an irreconcilable
47:01conflict. Material equality
47:03requires political
47:05discrimination, and ultimately
47:08really a sort of dictatorial
47:10government in which people are
47:12told what they must do. I think
47:14egalitarianism-- Well, I would
47:18even go further: our whole
47:20morals have been based on our
47:23esteeming people differently
47:26according to how they behave,
47:28and the modern kind of
47:30egalitarianism is destructive of
47:33all moral conceptions which we
47:36have had. Coming to that problem
47:39from an entirely different
47:40discipline, since I was in
47:43political science and political
47:44theory, two comments: That in
47:47all of the debates on the
47:48Constitution--And in the
47:52Federalists the United States
47:54had a collection of political
47:56brains such as I think existed
47:57nowhere in history except in
47:59Athens. I entirely agree, yes.
48:00The most unbelievable
48:02brilliance, resilience, and
48:04flexibility. Two very
48:05interesting things: nowhere did
48:07they worry about the growth of
48:08federal power--on the contrary,
48:10they were reasonably convinced
48:13that the states would be so
48:15jealous of their sovereign
48:16rights that they had to coax
48:17them into the union, coax them
48:19and bring them dragging their
48:22heels. But the idea of a federal
48:24system, which has become a
48:26Leviathan, so far as I remember,
48:29is nowhere to be found. It's one
48:31of the few examples in which
48:33their predictive activities were
48:36blank. Yes. Now, the
48:39equalitarian idea would have
48:42seemed to them ludicrous,
48:44because what they said was that
48:47the kind of society we're trying
48:49to form, the very diversity and
48:52richness of life, of the farmer
48:56to till his soil, of the hunter
48:58to do this, and so on-- The
48:59awareness that they had of the
49:03fact that freedom would give
49:05people an opportunity to express
49:07themselves and live their kind
49:09of lives, even unto what they
49:12believed in or what church they
49:13went to, or whether they went to
49:15church or not-- None of them,
49:16incidentally, used the word God,
49:18you know, but rather Providence,
49:21Divine Providence. Well, the one
49:24who I think came nearest to
49:26seeing the danger of excessive
49:29power of the federal government
49:30was Madison, a man of whom I
49:32think most highly. He wrote the
49:34Fifth. Yes. As for the others,
49:37certainly, you're quite right.
49:40He also picked up the point of
49:43Aristotle about the middle
49:45class. Yes. In a most powerful
49:47way. Incidentally, it just
49:49occurred to me-- We're sitting
49:50here talking and I couldn't help
49:53but think how few economists I
49:56know with whom I could carry on
49:57this kind of discussion. In that
50:00sense, if I may say so, you are
50:03unique, and I'm reminded of the
50:06fact that in the United States
50:09there were not separate fields
50:10called economics and political
50:12science. It was called political
50:14economy, and it seems to me a
50:15great tragedy that the fields
50:17were split. I agree, and I even
50:20more regret that there's a
50:22complete split between economics
50:24and law. You see, in my time on
50:28the Continent, you could study
50:30economics only as part of a law
50:32degree. That was very
50:33beneficial, and I still
50:36maintain, as I once put it, that
50:39an economist who is only an
50:40economist cannot even be a good
50:42economist. I'm so glad to hear
50:44you say that. Incidentally, just
50:47as you mentioned the rise of a
50:50libertarian movement among the
50:52young economists, it's
50:53interesting how many new centers
50:55there are called the study of
50:56law and economics, or economics
50:59and law. There's one down in
51:00Florida. I'm going there in
51:01February, yes. I always
51:03anticipate you, or I'm behind
51:06you. Let me ask you this
51:08question: What would you think
51:10if you were talking to a group
51:12of working men who would say,
51:15"Well, these two eggheads and
51:18highbrows, they talk on a high
51:20level, but I've got a wife and
51:22kids to support, and I can't
51:25possibly raise them on the
51:27salary I'm getting today. It's a
51:30rotten society. We have moved
51:32twenty times, we were burned
51:33out, insurance didn't pay,"
51:35whatever. What do you think a
51:38society owes, if you want to use
51:41that term? I'm not talking about
51:43The Social Contract, which was
51:45written by another very talented
51:49but, I think, crazy man. What do
51:52you think the society owes those
51:54of its members who are
51:56law-abiding? Well, "owes," I
52:00think, is a somewhat
52:02inappropriate expression; but
52:05you can reasonably expect a
52:09tolerably wealthy society to
52:11guarantee a uniform minimum
52:15floor below which nobody need
52:18descent. The people who cannot
52:21earn a certain very low minimum
52:24in the market should be assured
52:27of physical maintenance beyond
52:30this. But I'm afraid even this
52:34cannot be generalized, because
52:35only a tolerably wealthy society
52:37can physically do it. When the
52:39Indians couldn't possibly do it,
52:42and many others-- You mean
52:43India, not the American Indians.
52:45Eastern Indians, yes. The same
52:48is true of many of the
52:49underdeveloped countries. But
52:51once you have reached a certain
52:54level of wealth, I think it's in
52:55the common interest of all
52:56citizens to be assured that if
53:01their widows or their children
53:02by some circumstances became
53:04unable to support themselves,
53:06they would be assured of a
53:09certain very low minimum, which
53:12on current standards would be
53:15miserable but still would secure
53:17them against extreme
53:20deprivations. But beyond that I
53:23don't think we can do anything.
53:25Do you say we can't do it
53:26because we really don't have the
53:28resources, or the GNP, or- No,
53:32it would destroy the motive to
53:34keep our system going. Yes. Now,
53:36if people who were getting this
53:38minimum income-- I should hasten
53:40to add that I'm sure you do not
53:41mean the minimum wage, which is
53:43a different animal. Oh, no. On
53:46the contrary. But if people
53:47could supplement that income by
53:48part-time work, handyman work
53:51and so on-- Oh, that's all
53:52right. I wouldn't object to
53:54that. You wouldn't deduct that?
53:55No. When most of the people I
54:01have in mind would really not be
54:03able to make much of an extra
54:06income. But if some widow who
54:10had to live on that small
54:12minimum income did take in some
54:15washing in addition, I just
54:17would not notice it. I asked
54:25what does the society owe, and I
54:28feel that, in that sense, a
54:30society does owe its people
54:34certain things. First military
54:35protection. Oh, yes, of course.
54:38You can't go out and buy a few
54:40bombs to protect your house and
54:42so on. We owe, the society owes,
54:46and the legislators and the
54:47people who have been elected
54:49freely-- That would reform the
54:51society before we get this
54:52protection. Exactly. We don't
54:54want to be eaten by the nearby
54:56cannibals, whatever name they
54:58may have. Yes. Incidentally, you
55:00were surprisingly lenient, it
55:03seemed to me, on the Soviet
55:04Union. In The Road to Serfdom?
55:07Yes. Well, you forget that it
55:09was our ally in war at the time
55:12I wrote and published it. Well,
55:13what year did it come out? In
55:16'44. This was just shortly after
55:18the execution of Ehrlich and
55:21Alter and the Katine Forest and
55:23all of that. No, I'm not
55:24criticizing you. We didn't know
55:26about these things yet. You see,
55:28in fact, I say it came out in
55:29'44, but it was mostly written
55:31in '41 and '42. I see. And you
55:33felt that it was unwise-- I just
55:35had to restrain myself to get
55:37any hearing. Everybody was
55:39enthusiastic about the Russians
55:40at that time, and to get a
55:42hearing, I just had to tune down
55:44what I had said about Russia. I
55:46see, yes. You asked me before
55:48whether there is anything I
55:50would do differently to the book
55:51now. Apart from that which is
55:54directed against the sort of
55:55socialism which is largely
55:56abandoned by the official
55:58Socialist party. I would
56:01certainly speak much more openly
56:03about the communist system that
56:04I did in that book.

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