by Jacob G. Hornberger, August 1992
In 1944, Friedrich A. Hayek wrote one of the most thought-provoking books of our time — The Road to Serfdom. Hayek warned that Great Britain and the United States were abandoning their heritage of liberty and adopting the economic principles of the Nazis, fascists, and socialists. It was not a message which the politicians, bureaucrats, and social planners of that time wanted to hear. Hayek, who would later win the Nobel Memorial Prize in Economics Science, was vilified as an old-fashioned reactionary.
No one today can seriously dispute that Hayek was right. Although Americans, for example, continue to operate under the delusion that they live in a free-enterprise nation, for the last sixty years they have traveled the same moral, philosophical, and economic mad as their enemies — the road to the welfare-state, regulated-economy way of life — the road to serfdom.
Hayek was also a lawyer. In fact, some of his greatest contributions have been in the area of law. Among his finest books are The Constitution of Liberty and his three-volume work, Law, Legislation, and Liberty.
Two of the most important legal concepts that Hayek underscored were, first, the nature and purposes of political constitutions and, second, the legal principle known as "the rule of law."
Few Americans today understand the true idea and purpose of the U.S. Constitution. They have been taught to believe — and do believe — that their rights emanate from the Constitution.
Hayek pointed out the true nature of rights and the Constitution. He observed that our American ancestors subscribed to the most radical principles of individualism and liberty ever known to man. They truly believed the ideas set forth by John Locke and Thomas Jefferson — that people have certain fundamental and inherent rights — life, liberty, property, and the pursuit of happiness — and that these rights have been endowed by "Nature and Nature's God," not by government.
To protect themselves and their property from the violent acts of others, and to provide a means by which people could peacefully resolve their disputes, our ancestors established a national government. But there was one overriding concern: what would prevent our government from becoming destructive of the very ends for which it was formed?
The goal, then, was to institute a government which could be kept within a very narrow purpose: to protect, not regulate or destroy, the natural, God-given rights of the people.
So, while the Constitution instituted government, it also straightjacketed it. The Constitution set forth a very specific list of enumerated powers, as well as express prohibitions on the powers of the national government. As Hayek observes, the Constitution did not give the people rights. Instead, the Constitution was a law — a higher law — imposed on the officials of the national government to prevent them from interfering with preexisting rights.
In a series of judicial decisions in the 1800s and early 1900s, the concept of "substantive due process" came to be an established judicial doctrine. It held that life, liberty, and property were extensions of each other. A person has the fundamental right to sustain and improve his life through labor, engage in any economic enterprise without political interference, enter into mutually beneficial exchanges with others ("liberty of contract"), and accumulate unlimited amounts of wealth from these endeavors. The courts held that the exercise of these rights were beyond the reach of the majority — beyond the constitutionally granted powers of the government.
Equally important, the legal concept of "the rule of law" was incorporated into our judicial system. As Hayek explains, the rule of law means that people do not have to answer to the arbitrary decisions of governmental officials; instead, they guide their actions by what is prohibited by a clearly defined law. Freedom, therefore, means answering only to a well-defined, previously established law, rather than to the arbitrary and discretionary edicts of some.
Today, of course, the thinking of the American people is entirely different. Believing that their rights come from government, they believe that government can rightfully regulate or take them away. Thus, since the 1930s, the American people have lived under a political order in which governmental officials have omnipotent power over their lives and fortunes.
Moreover, unlike their ancestors, Americans today believe that politicians and bureaucrats can be trusted with unlimited political power. "We should elect the best people to public office and then trust them to do the right thing," is the prevailing attitude, for example, in the War on Drugs, War on Poverty, War on Illiteracy, and so forth. Americans believe that the constraints of the Constitution should be curtailed, if not ended. The idea that life, liberty, property, and the pursuit of happiness are fundamental, preexisting rights with which no governmental official can legitimately interfere is an alien notion to our fellow Americans. The belief is that Caesar — the state — should have the power to regulate and take away that which he has given.
And, unfortunately, the rule of law is also now considered an outdated legal concept. Today, people must answer to hundreds of thousands of arbitrary, unclear edicts from the politicians and bureaucrats rather than to clearly defined laws. For example, take the rules against "unfair business practices." If a businessman sells his product at a price lower than his competitors, he is subject to being prosecuted for predatory business practices. If he sells his product at the same price as others, he can be prosecuted for antitrust violations. Thus, since every businessman is always subject to a criminal prosecution which inevitably entails hundreds of thousands of dollars in legal fees, he must always kowtow to his political and bureaucratic masters. He must answer to them rather than to a clearly defined law.
And the tax code is no different. Once a person bypasses the "standard deduction," he enters into the nether world of potential prosecution for tax violations. That is the beautiful thing (in the mind of the governmental official) about hundreds of thousands of rules and regulations — there is no way that a person can ever be in full compliance with all of them. Thus, each person who works his way through the maze of the IRS Code is always subject to criminal prosecution for violating one of the myriad of rules and regulations.
Let's look at a couple of real-world examples. Michael Milken, now serving jail time, is a good example of the hazards of abandoning the rule of law. Despite all the years that Milken worked on Wall Street, and all of the billions of dollars with which he dealt, the government was able to get him for violating only a few ridiculous and inane regulations. Another example — Leona Helmsley. Although paying several millions of dollars in income taxes, she supposedly committed the heinous crime of taking some improper deductions on her income-tax return, thereby depriving the politicians and bureaucrats of their milk; and so now she must serve four years in a federal penitentiary.
And why Milken and Helmsley? Two reasons. First, they make good victims, for they are rich — and Americans are taught in their public schools to hate the rich and covet their wealth. Second, wealthy people are the best vehicle by which the government can send its not-so-subtle message to us "regular' people: "Listen up, you little people — if the wealthiest and most influential among you cannot stand against us, then certainly neither can you. And if you try, we will smash you, just as we have smashed them — only a little faster. Obey and pay — or suffer the consequences."
Thus, even though they will never admit it openly, the American people live their lives filled with fear and terror. In public, they say, "I'm proud to be an American." In private, they shudder at the thought of having their doors bashed down by IRS agents or of having to &fend themselves in court against the mighty power of the U.S. government.
What will it take to abandon the road to serfdom which Americans have traveled during the last sixty years? The fast step is for people to pierce through to reality — to realize that what Hayek said was true — that the U.S. has, in fact, adopted the Nazi, fascist, and socialist economic principles of regulation of property and redistribution of wealth. The second step is to lose what the Russian people have lost — the terrifying and paralyzing fear of politicians and bureaucrats. And, third, since our government has become destructive of the ends for which it was formed, to alter or abolish it and implement new government designed to protect, not destroy, our lives and fortunes. Herein lies the road to freedom.
Mr. Hornberger is founder and president of The Future of Freedom Foundation.