Neoliberalism

Friedrich Hayek

Hayek saw free markets as vital to individual liberty because free markets ensured that individuals could not manipulate the resources of a given environment for their own advantage. By communicating information in environments of uncertainty, markets, Hayek argued, facilitate a harmonious order where no individual is able to amass all the complex information required to manipulate the world to his or her own advantage. Writing in 1944 on the relationship between collective forms of social and economic organization and tyranny, Hayek viewed economies that relied on markets to allocate resources as more democratic than those where the distribution of resources was determined by states. In his famous book The Road to Serfdom, Hayek argued that centrally planned economies, such as the Soviet Union and Nazi Germany, were more likely to resort to coercive restrictions on individual freedom than capitalist economies because they relied on states rather than markets to determine how resources were allocated. He believed that the impossibility of amassing all the information needed to efficiently and fairly distribute resources inevitably led states to use coercive means to achieve economic control. For Hayek, state intervention in the allocation of resources in an economy was deeply problematic. Hayek argued, “Economic control is not merely control of a sector of human life which can be separated from the rest … it is the control of the means for all our ends” (1944, pp. 91–92).

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