Does the Scandinavian economic model disprove Hayek‘s assertion that planned economies lead to totalitarianism? Don Boudreax argues that far from being centrally planned the Swedish system is compatible with Hayek’s vision for a liberal economy and society.
Hayek said that “the planning against which all our criticism is directed is solely the planning against competition – the planning which is to be substituted for competition.” So because Scandinavian countries emphatically do not plan in this way, Samuelson was mistaken to say that their socialism is of the sort that Hayek believed paved the road to serfdom. Those countries have reasonably free trade, only light regulation of capital markets and business, and strong private property rights. In short, all Scandinavia retains what for Hayek was the most significant protection against serfdom: competitive economies.
And while Hayek would disapprove of the size of Scandinavian welfare states, he stated explicitly that “Nor is the preservation of competition incompatible with an extensive system of social services.”
I think this raises an interesting point, because what separates Sweden from the USSR is precisely it’s liberal economic model. What separates Sweden from us is not only the generosity of her welfare state but, often, also the willingness of the Swedes (and other Scandinavians) to apply liberal ideas to the delivery of public services. With Labour riding high in the Irish polls, is Ireland about to lurch ‘left’-wards? And if so, to where? Scandinavia or a little further east?
PS The abridged version of Hayek’s classis appears to be freely available online : The Road To Serfdom
Update See also – Constantin Gurdgiev’s analysis of Sweden and Ireland.