People generally think that serfdom is poverty. This is certainly true but to Hayek and myself it is something far worse. It means someone who is not free and in poverty. Poverty is a necessary but insufficient condition of serfdom for you lawyers/philosophers out there. Hayek believed that they were on the road to serfdom meaning that the people would be impoverished and lack the freedoms that generations had taken for granted.
People believe that we are on this road right now because the opposite of absence of freedom is random order. Random order is when I operate in my best interest free of any governmental coercion and you do the same. The result is an extremely limited government and people responding to work together in a Smithian sense. A good, and commonly used example, is that of a pencil. If I am a pencil manufacturer I need to buy graphite for the middle of the pencil, wood for the outside, rubber for the eraser, metal to hold the eraser, yellow paint, etc. The pencil manufacturer buys goods to fill these needs from around the world. The rubber manufacturer might hate the paint manufacturer but they will both sell to me because I am offering them the highest prices. From this comes my pencil. We have all operated in our own self interest by all working together. There is no order from above to make a pencil, to buy goods from any one person but it just happens that we work together because the incentives tell us to.
The road to serfdom is "walked down" when random order is replaced with directions and coercions. If I have to buy my eraser from certain government approved manufacturers, that will certainly increase my costs. If the government tells me I can only sell my pencils at certain locations the customer will have a tougher time buying my pencil, and will likely be forced to spend more. The consumer is going to become more comparatively impoverished and will suffer from a lack of freedom.
We are currently on this road. The financial bailouts have forced us to become shareholders in poorly run companies; financial reform has limited what types of securities we may purchase; taxes have limited our income; health care reform has forced us to spend our money on a certain good and pay higher rates, etc. There is no doubt our freedoms are being taken away and we are becoming increasingly impoverished.
The hope that is hidden lies in the book itself. The road to serfdom was never meant to be a top selling book. It started to as a small letter to a friend arguing that fascism was capitalism in it's last throes. Capitalism was all but proclaimed dead in a way that my generation can never understand. The two choices were socialism with it's freedom-killing and soul-crushing central planning or fascism which offered the same but with a different title. From all of this came Hayek storming on to the scene as one of the last to defend freedom and capitalism. My generation has not yet seen it's Hayek. We are losing the battle right now. Socialism and central planning are on the rise but there is hope. Someone will stand up and fight. The free market can never truly be killed becuase we will always desire goods and the government will never be able to provide all of them, no matter the orders.
Russia fell because central planning cannot succeed. Mises talked about why when he said there was a calculation problem. I think that Mises shortchanged his own thoughts. Socialism and central planning must fail not only because of the calculation problem but because people desire to be free. Capitalism is under attack again. This generation will have a Hayek. It must.
"Collectivism is slavery." - Hayek
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