Does Socialism Lead to Dictatorship? -- A
Hayek’s The Road to Serfdom
and the Debate over Socialism and Democracy
In the 1920’s, 1930’s, and 1940’s, the prospects for capitalism and democracy were not very
The years after WWI, starting in the late 1920s with the onset of the worldwide
Depression, did not look good.
The Depression led many people, both intellectuals and mass citizenry, to think
that capitalism simply could not manage the economic problems that industrial
societies were facing.
The inability of democratic governments in Britain, France, and the U.S. to end the
Depression also led intellectuals and the mass public to think that democracy
could not cope with these problems.
Thus, the 1920’s, 1930’s, and 1940’s were an era in which the doctrines of capitalism and
democracy came under vigorous attack.
Intellectuals attacking them.
The mass publics were attacking them.
Politicians were attacking them.
Hence, there was a widespread belief that capitalism and democracy were doctrines of the
One further reason for this was that there was an increasingly attractive economic
socialism and central economic planning were seen as necessary to make these
modern economies work.
There was also an increasingly attractive political alternative: a more authoritarian,
executive-centered political system typified by Stalin the Soviet Union, Hitler in
Germany, and Mussolini in Italy.
Authoritarian forms of government seen as were necessary to solve the complex
problems of modern society.
As it was said about Mussolini in the 1930s, “He made the trains run on time.”
Friedrich A. Hayek was an Austrian-born economist who, starting in the 1920s, began to
make a series of important contributions to microeconomic theory, especially involving the
theory of money.
Seeing the course that Hitler was setting for Europe in the late 1930s, he fled Europe for
Britain, where he spent the years of WWII.
He ultimately spent a decade or so in the U.S. in the 1950s and 1960s before
returning to Europe.
By the late 1930s he was drawn into the debates over the merits of capitalism and
democracy versus socialism and dictatorship.