Largely because of F.A. Hayek’s THE ROAD TO SURFDOM, the legacy of Bismarck is in ill-repute. His “cradle to the grave” policies of providing a safety net to all Germans is somehow considered the origin of the destruction of human liberty. But there is another interpretation of Bismarck that contradicts this and America would do well to heed its lessons.
Bismarck orchestrated the unification of the German Empire and became Chancellor under Wilhelm I. He detested Socialism so much that he drove Socialists from their homes. His anti-Socialist Laws outlawed the Social Democratic Party. He then concluded that the only effective way to defeat Socialism was through a limited form of self-government that provided sufficiently for its citizens in a capitalist society so they would never be tempted to adopt collectivism as a solution to their problems. He had the good fortune to have an ally in the Kaiser, who was relatively enlightened and who trusted Bismarck. When the Kaiser died, Frederick III, a representative of the great, now largely forgotten German liberal tradition succeeded him. He had no desire to engage in aggressive war and renounced any intention by Germany to build a large and powerful navy, something Great Britain feared. Germany was becoming a brilliant success, a leader in industry and commerce with the world’s greatest universities. Tragically, Frederick died of cancer after ninety days and Willy, the one with the withered arm and a temper, succeeded him as Kaiser Wilhelm II. One of his first acts was to fire Bismarck, who had warned him against starting another war in Europe. He memorably remarked, “If another war starts in Europe, it will be because of some silly thing in the Balkans.”
The road to serfdom was not Bismarck’s fault. Willy was responsible, bungling Germany into the Great War, leading to defeat and the ultimate rise of Hitler and Nazi Germany. Unlike Bismarck, Hitler imposed a command model economy. Had Frederick lived, none of this would have happened.
For a while it looked as if Germany was going to win. The Germans humiliated Russia and the
Russians blamed the Czar who became hugely unpopular, ultimately enabling Lenin to stage the Bolshevik revolution. Creating the world’s first Communist state, he set about nationalizing private property and creating a global threat to Capitalism.
It was in this environment that the Russian Communists seized Ayn Rand’s father’s pharmacy. She never forgot that. More than Hayek, Rand’s condemnation of any kind of state action, including social welfare, shaped the minds of countless Americans. For Rand, the solution to the problems of the human condition was laissez-faire capitalism. Her influence can be felt very much today amongst the Tea Party activists who condemn every program offered by Obama as Socialist. He is denounced as a Marxist, determined to lead America on the road to serfdom. It was Glenn Beck’s calling attention to Hayek’s THE ROAD TO SERFDOM that drove it to number one on Amazon.com, which surely would have delighted the old-school Austrian gentleman. But they are wrong and Bismarck was right.
Capitalism can only succeed if there is a safety net for the citizens of a country in which a free market economy prevails. Unemployment insurance and Social Security both help in a time of economic contraction and recession by enabling great numbers of people to keep spending. Margaret Thatcher, Britain’s most conservative prime minister, supported the National Health as well, recognizing that in the end it is cheaper than having vast numbers of people unable to work because of illness. Ronald Reagan, America’s most conservative president and a close friend of Margaret Thatcher, endorsed the safety net. He worked closely with the Democrats in Congress, particularly Patrick Moynihan, in rescuing Social Security.
In this context it should be remembered that Hayek supported Social Security as well, even going so far as to say “probably nothing has done so much harm to the liberal cause as the wooden insistence of some liberals on certain rules of thumb, above all the principle of laissez-faire capitalism.” (Here he is referring to the 19th-century free market liberalism). Hayek writes that the government has a role to play in the economy through the monetary system (a view that he later withdrew), work-hours regulation, social welfare, and institutions for the flow of proper information. Hayek even dedicated THE ROAD TO SERFDOM to “my fellow socialists.” So, to a certain extent, Hayek argues against the very basic premises of his own book. In any event, it would appear that Beck and his ilk have never read it. Which is terribly unfair to Bismark… and to America.