The Other Road to Serfdom by Eric Zencey

Why are neoconservatives so unswaveringly dedicated to (supposedly) free markets, even in the face of clear evidence that unregulated markets produce some nasty things (like global climate change and regular financial crises) that we'd be better off without?  Why this knee-jerk answer "free markets! Free markets!" to every policy problem?
The answer, I think, has to do with the influence of an Austrian economist, F. A. Hayek.  Though he didn't support totally unregulated market capitalism, he did make a strong case against government intervention and control.  His book, The Road to Serfdom, was an indictment of the Soviet system with its centrallly planned economies, and was read by millions.  Neoconservatives still think of Hayek (and his progeny:  Friedman, Greenspan et al.) as having made the definitive case that civil freedom depends on unregulated economic activity.
But Hayek's argument is flawed.  Because of that flaw, the course he set us on turned out to be just The Other Road to Serfdom.

This is a repost of a diary published a few days ago; several commenters recommended I republish it, so here it is.  I've added some links.
Let's begin with one of my favorite thinkers, John Stuart Mill.  A hundred and fifty years ago, in his Principles of Political Economy, he looked ahead to the sort of world we'd have if human population and economic activity continued the growth rates he was seeing in 1848.  He did this in order to argue against the idea that more is always better, but today his reductio ad absurdum reads like dismally accurate prediction.  There isn't much to like, he said, in a world

with nothing left to the spontaneous activity of nature; with every rood of land brought into cultivation, which is capable of growing food for human beings; [with] every flowery waste or natural pasture ploughed up, all quadrupeds or birds which are not domesticated for man's use exterminated as his rivals for food, [with] every hedgerow or superfluous tree rooted out, and scarcely a place left where a wild shrub or flower could grow without being eradicated in the name of improved agriculture.

It's not quite literally true to say that we have exterminated every animal we haven't domesticated, or that "every rood of land" has been brought into cultivation.  The human estate continues to expand, as forests are clear-cut to make way for cattle, as rocky slopes and other marginal lands are brought under the plow.  But this growth in arable land has slowed in the past decade, and it now no longer outpaces the rate at which arable land is lost (mostly through salinization from irrigation) to desertification.  Total cultivated acreage is declining.  As population continues to grow, arable land per person is declining even more rapidly.  One result:  land that's farmed has to be farmed hard--with techniques that amount to "soil mining" (to use the phrase that Edward Hyams coined)-- an unsustainable draw-down of soil fertility that will reduce further the amount of arable land in the future.
And, while there are non-domesticated species that continue to share our planet with us today, they are there largely because we allow them to be--or because there's a time lag between our acts (like dumping CO2 into the atmosphere) and the consequences of our acts (like the disappearance of polar bear habitat from global climate change), or because extinction-producing processes currently underway (the cutting of rainforest, for instance) have not yet reached their full expression in the world.
In many places, including the U.S., the few remaining ecosystems that register as "wild" are not large enough to support the spontaneous operation of nature within their juridicially defined borders.   We have to manage the wilderness in order to sustain it--and the oxymoron inherent in "wilderness management" has long since faded from view, as necessity makes routine what logical consistency would have forbidden.
To many of us who were born into the fossil fuel era, it seems normal and ordinary that we should have vast energies available to us to effect our will in nature.  It's all we've ever known, and the pages in history books that tell us it was ever different can be dismissed as reporting a remote, quaint and benighted time.  But the handful of centuries that comprise the fossil fuel era are just an instant in geological time, the time scheme in which life evolved, the time scheme in which the natural processes of the planet largely operate.
To put things in a bit of historical perspective:  biologists speak of the Net Primary Productivity of ecosystems, the amount of food energy present within them that comes from the conversion of solar energy into biomass through photosynthesis.  It's the planet's energy budget, the fuel for all life. Two centuries ago humans made an insignificant dent in Net Primary Productivity, taking a fraction of one percent, with the rest being available to power Mill's "spontaneous operation of nature."  Today, biologists estimate that humans are responsible for consuming or destroying an astounding forty percent of the Net Primary Productivity of planetary ecosystems.  The remnants of nature that we have so far allowed to remain must make do with what's left.  Many ecologists and biologists fear it isn't enough; systems that evolution designed to make maximum efficient use of 100% of the available solar energy are having difficulty adapting to little more than half of that.  To keep those ecosystems alive and operating in something like a stable (albeit stripped-down) state requires human intervention:  management, regulation, husbandry, legal protection, seeding, stocking, subsidy.
Because of the power unleashed by oil, the dystopia that Mill envisioned in 1848 is very much the world we have today----not an Edenic  paradise, not even a garden planet, but a world in which the "spontaneous activity of nature" has been circumscribed, bounded, broken, eliminated.
Call it Factory Planet:  a world in which natural processes are treated as parts of a vast world-machine operated to produce a maximum amount of wealth for humans.
It's a world that King Midas  would have recognized.  Having built our economy beyond the limits of what the planet can sustainably give to us in the form of resource inputs, and sustainably take from us in the form of the wastes it struggles to absorb, we face the problem Midas faced.  He enjoyed his power to transform everything he touched into gold until he sat down to dinner and touched his daughter; that's when he learned that an unlimited power to create wealth was neither sustainable nor especially desireable.
I think that like Midas, we're headed for a similar epiphany.
Factory Planet, as it's operated now, is not sustainable.  But even were we to make it so--even were we to rein in our productive engines to the level the planet can sustainably support-there's another problem:  our conversion of nature into wealth at the maximum rate practicable within environmental limits would still leave very little room for something we cherish as much as Midas cherished his daughter.  I don't mean wilderness hikes or the possibility of encountering whales or polar bears or virgin forest --things that only some of us seem to cherish-but something more far-reaching and widely valued:  democracy and civil liberty.
One strong principle underlying our freedoms--the rights encoded into our Bill of Rights--is the idea that citizens should be left alone in all things except those that directly affect others.  (This distinction between what's public and what's private, and not the false ground of release from work or duty or responsibility, is the true foundation of our experience of freedom, Wendell Berry tells us.)  This democratic ideal, fresh and new three hundred years ago, evolved on Garden Planet:  a world in which there was a vast distance between what culture took from nature and what nature could sustainably provide.  Back then, humans lived in ecosystems that were lush, healthy, resilient.  But on Factory Planet the ecosystems that support civilization are strained to the breaking point.  In consequence, acts that were private on Garden Planet have public consequences that make them legitimate subjects of public regulation and control.
For instance:  two hundred years ago if you burned a bit of carbon fuel or clear-cut a forest, it was pretty much nobody's business but your own.  (This simplifies things:  English kings and nobles did reserve forests and game for their own use and harvest, and some civilizations disappeared because they cut down the forests and mined the soils that sustained them. But the point is valid:  on Garden Planet, humans generally had more discretion to do with nature what they wanted.)  In our era, when every ton of CO2 emissions puts a burden on the planet's limited ability to absorb it, and when forests and their necessary services to civilization are becoming scarcer and scarcer worldwide, its clear that carbon emissions and deforestation impose real and measurable damage on us all, and are therefore legitimately controlled by public authority in pursuit of the public good.
Or, suppose you live in Colorado and want to catch the rainwater falling on your roof for use to water your lawn.  This is a fundamental prerogative; rain is the free gift of nature, right?  Not in Colorado River Compact States.  In the watershed of the Colorado River every drop (and then some) of the river is assigned to a use--mostly irrigation to grow food,  pace Mill--and law forbids property owners to impede the flow of rainwater to the river.
Or suppose you fancy making a living as a fisherman or lobsterer.  Sorry--there's no room for you on the water anymore, not unless you can be taken on by one of the existing quota holders.  Every ton of many species of fish, every pound of lobster that nature is capable of producing has been anticipated, counted, assigned to a harvester, a market, a use.
Because our economy exceeds the limits of what nature can sustain, we are experiencing an increasing need for resource regimes:  an International Whaling Commission to limit the harvest of whales, a Fishing Treaty to apportion tonnages of catch from world oceans, a Green House Gas treaty to apportion the planet's strained carbon-absorption capacity, international water compacts to apportion river flow among users, and on and on.
The alternative to this kind of rule of law is the absence of the rule of law--and a world in which "extra-legal" conflict over increasingly scarce resources will flourish.  Countries in a state of war find it difficult to hang on to civil liberties.  Resource shortages displace populations, create failed states, breed resentments on which terrorism feeds, and send nations to war--circumstances under which we'll see  further erosion of civil liberties.
The one option that is not available is to continue things as they once were:  no  resource regimes telling us what we can and can't do, and economic growth without apparent limit.  The sad truth is there are limits to sustainable economic activity: the planet can support only a finite amount of throughupt.  Our transgression of those limits will force change of one sort or another upon us.
The conclusion is inescapable:  if we grow farther beyond the planet's ability to support us, the best option we face is that more and more of our lives will be hemmed in by the imperative to control our collective environmental impact while maximizing our production of food and wealth.  To extend the metaphor:  factories are marvelously efficient, but they are not generally places where humans are given much room to exercise prerogative, discretion, choice or free will.  A factory planet, budgeted right up to the edge of what's ecologically sustainable, and run for the sole purpose of maximizing the wealth that the human species enjoys, is a planet from which we've eliminated the literal ground on which democratic freedoms flourish.
And this is where Hayek's argument, and its flaw, enter in.  Fifty years ago Hayek argued that centralized economic planning like that being done in Soviet style socialist countries was The Road to Serfdom. There is, he said, "an irreducible clash between planning and democracy."  He argued that a country can maintain its democratic institutions and civil liberties only if it has a free-market economy and the egalitarian free-for-all of (relatively) unregulated capitalism.
His argument has a great deal of merit and influenced generations of neoconservatives, many of whom have cheapened it quite a bit.  Hayek was not opposed to government regulation of the economy, though the million-selling Reader's Digest Condensed Version of his long, dry treatise didn't dwell on that element, and so Hayek's delineation of the legitimate grounds for governmental control of markets went largely unread and generally underappreciated.  Today many conservatives take Hayek to have supported an idea he would have found abhorrent, that there is no public good other than the one that emerges from the cumulation of private greeds expressed in markets. (Or, as Reagan famously put it, "government is not the solution to our problem; government is the problem.")
Even correctly understood, Hayek's argument has a serious flaw.  Hayek, unlike Mill, implicitly and comfortably assumed that we could have infinite economic growth on a finite planet; ecological limits to economic development played no part in his theory.  From our perspective fifty years later it's easier to see this truth:  

planning is planning whether it's done to minimize poverty and injustice, as socialists were advocating then, or to preserve the minimum flow of ecosystem services that civilization requires, as we are finding increasingly necessary today.

 In the absence of limits on population growth and resource uptake, the free-market economic development that Hayek advocated turns out to have been just The Other Road to Serfdom.
It's going to take some work to preserve democracy in an era of ecological constraint.  A key element is achieving a sustainable, stable level of human population; if we need to budget ourselves to a finite, sustainable level of resource throughput, then continued growth in the human population will reduce the average standard of living that humans can enjoy, and democracy doesn't flourish when the standard of living is in decline.  World wide, education of women and girls has an effect in depressing birth rates, (though the linkage is not as strong and direct as UN agencies have long asserted.  But because there is a linkage, women's equal access to education world-wide should be seen not just as a civil right, but as a necessary step toward ecological sustainability--and, therefore, a necessary step toward the preservation of democratic liberties for all of us.
Also paramount is the development of a sustainable economic infrastructure--the smart grid, energy from renewable sources, and conservation of all forms of energy through retrofitting and the gradual redesign of how and where we live, work, travel, shop, grow food, recreate.  Under a stable rate of throughput, such technical change and innovation will be our only avenue of increasing output--a process ecological economists call development to distinguish it from footprint-increasing growth. There is an enormous amount of waste of resources in our system because resources, particularly energy, were underpriced for most of the twentieth century.  We need to pick that low-hanging fruit-and then we'll need to pick quite a bit more.
But these changes, alone, won't be enough.  We need, also, a green intellectual infrastructure:  reconstruction and adaptation of the mistaken ideas on which our unsustainable institutions and practices were built.
What ideas needs changing?  First and foremost, economic theory.  I've written elsewhere about the need to devise a better measure of our standard of well-being than the current default, GDP, which was never designed to perform that service.  Among the other places in which economic theory presumes that an economy's ecological footprint can grow forever is the concept of Pareto Optimality.  Back at the close of the nineteenth century Wilfred Pareto helped split Political Economy in two, separating "scientific" economic theory from the messier, less-easily-quantified realm of political theory.  Crucial to the split was his notion that because satisfactions and pleasures are subjective and not interpersonally comparable, all an economist can say, scientifically, is that one system is better than another if it satisfies more needs and wants than another.  The implication:  we cannot be confident that we improve the level of satisfaction in the world if we take a dollar from a billionaire and give it to a starving man to buy food.  For all we know the billionaire might derive as much satisfaction from that last dollar spent as the starving man does buying food.  This counter-intuitive result, as hard-hearted and absurd as it is on its face, remains fundamental to economics as it is practiced today.  It is one strong impetus pushing us toward unsustainable growth.   Thanks to Pareto, in economic circles (and among policy makers who listen to economists), all talk of income redistribution is off the table.  If you care about the starving masses of the world, economics tells you, the only solution is to work to increase production, to produce two dollars where before there was only one.  Thus, through Pareto, a supposedly value-free science became committed to infinite economic growth--a value-laden, quixotic ideal if ever there was one.
Once we recognize that the planet is finite, and that there is a limit to the stream of resources that can sustainably be used to make wealth, we have to face the difficult questions of distribution of wealth instead of simply--childishly, romantically-assuming the problem away.
And, in our calculations of the minimum amount of nature that should be left alone to preserve a necessary flow of ecosystem services, we need to remember Hayek's warning:  democracy and planning are irreducibly in conflict.  If we want to avoid the technocratic administration and centralized economic planning of Factory Planet, if we want to make unnecessary the development of an international technocratic elite who manage our interactions with earth's ecosystems in order to preserve the grand project of industrial civilization, we need to preserve some substantial and additional measure of Mill's "spontaneous activity of nature."  Only by doing so will we inhabit a planet on which civil liberties remain possible.