… is from page 209 of F.A. Hayek’s 1939 University of Chicago monograph, “Freedom and the Economic System,” as this monograph is reprinted as chapter nine of the 1997 collection, edited by Bruce Caldwell, Socialism and War:
Economic activity is not a sector of human life which can be separated from the rest; it is the administration of the means with which we seek to accomplish all our different ends. Whoever takes charge of these means must determine which ends shall be served, which values are to be rated higher and which lower – in short, what men should believe and strive for.
DBx: The greater the control of the state over the allocation of resources, the greater is the control of the state over the ends that individuals are able to pursue. And so contrary to the assertions of many people, it’s not true that this dangerous control becomes effective only under full-on socialism. The moment the state obstructs a property-owner’s use of his or her property – including, of course, the use of his or her labor – the state obstructs the ends that that person can pursue.
While scattered, small-time interventions – a few protective tariffs here, some occupational-licensing restrictions there, minimum wages set at low levels – will perhaps not pinch noticeably on individuals’ ability to pursue ends of their own choosing, the pinching is nevertheless real. And the fact that this pinching is indeed largely unnoticed creates the false impression that further interventions will in no real way interfere with individuals’ freedom to pursue ends of their own choosing.
Industrial policy, for example, involves greater state obstruction of the use of property than do ordinary protective tariffs (which are typically ‘merely’ the nasty fruits of interest-group politics rather than part of a broad system-wide ‘plan’ for industrial activity). Therefore, industrial policy, with its greater obstruction of the use of private property, necessarily narrows more than do ordinary tariffs the range of ends that individuals’ can pursue.
Industrial-policy advocates, of course, focus not on the unseen shrinkage of ends that can be pursued but, instead, on the enhanced ability of a small handful of people to pursue their particular ends. For instance, workers in existing manufacturing plants might be protected from having to find new jobs. “See! Industrial policy works!” proclaim industrial-policy proponents. Left unnoticed, though, is the corresponding shrinkage of the ability of larger numbers of fellow citizens to pursue ends of their own choosing.
Even if you agree, say, with modern ‘national conservatives’ that America should have more jobs in manufacturing plants – and, to achieve this goal, support industrial policy – you cannot legitimately deny that the pursuit of industrial policy ranks the ends of particular workers more highly than those of other workers (and consumers, investors, and entrepreneurs). Industrial policy compels many people to serve others’ ends – others’ ends that the many would not voluntarily serve. Industrial policy necessarily partially enslaves some people to others.
