The Road to Serfdom 2.0
From Central Planning to Funny Money
In 1944, as the Second World War ravaged Europe, an Austrian economist named Friedrich Hayek published a book that would become a defining text of classical liberalism. It was titled “The Road to Serfdom”. His warning was stark, urgent, and terrifyingly simple. He argued that the centralised planning of the economy, even when driven by the best of intentions, inevitably leads to tyranny.
Today, we face a similar threat, but it is not just about the production of widgets or the price of bread. It is about the money itself. The modern fiat currency experiment is the ultimate form of central planning, and it is paving a new road to serfdom.
Who Was Friedrich Hayek?
Hayek was a giant of the Austrian School of Economics, a body of thought that emphasises the power of the individual and the limitations of state control. Unlike his rival John Maynard Keynes, who believed the government should steer the economy like a ship, Hayek believed the economy was more like a natural ecosystem.
His core insight was the knowledge problem. He argued that no single central authority could ever possess the millions of dispersed bits of information held by individuals in a market. When a government tries to set prices or production targets, it is operating in the dark. It distorts the signals that people use to make decisions, leading to chaos, shortages, and eventually, the need for even more authoritarian control to fix the mess it created.
The Funny Money Parallel
If we look at our modern financial system, we see the exact mechanism Hayek warned against. Central banks are the ultimate central planners. They gather in boardrooms to decide the “price” of money (interest rates) and the quantity of money (quantitative easing). This is “funny money”. It is currency that is not rooted in the reality of scarce resources but is instead conjured into existence by decree. Just as Hayek predicted for the wider economy, this central planning of money creates massive distortions.
False Signals: Artificially low interest rates tell entrepreneurs that there is plenty of capital to invest, leading to “malinvestments” in bubbles that eventually burst.
Inflation as Theft: When the state prints money, it dilutes the value of the pounds or dollars in your pocket. It is a hidden tax that transfers wealth from the prudent saver to the government and its closest cronies.
The dependency trap: As the currency weakens, people become poorer and more reliant on state handouts to survive. This creates the very dependency that Hayek feared would lead to a loss of political freedom.
The Case for Sound Money and Bitcoin
This is where Bitcoin enters the conversation. Bitcoin is arguably the realisation of Hayek’s later dream, which he outlined in his 1976 book, “The Denationalisation of Money”. Hayek famously asked why we should let the government have a monopoly on issuing currency. He argued that if we could have competing currencies, the market would choose the one that remained most stable.
Bitcoin represents the return of sound money.
It has a fixed supply. There will only ever be 21 million bitcoin. No central banker can print more to fund a war or a failed government programme.
It is decentralised. There is no “head office” to shut down or coerce.
It is voluntary. No one is forced to use it, yet millions choose to because it preserves their purchasing power over time.
For modern Austrians, Bitcoin is the off-ramp from the road to serfdom. It strips the state of its ability to manipulate the economy through the printing press.
Advocates and Criticism
Hayek’s theories, and their application to Bitcoin, are a battleground of ideas.
The Advocates Modern proponents often overlap with the Bitcoin community. Authors like Saifedean Ammous, who wrote “The Bitcoin Standard”, draw a direct line from Austrian economics to blockchain technology. They argue that the separation of money and state is as vital as the separation of church and state. To them, “fiat” is not just poor economics, it is a moral hazard that corrupts society.
The Critics On the other side, we have the Keynesian mainstream and modern critics who argue that Hayek was too pessimistic. They point out that Western nations adopted welfare states and central banking without sliding into Nazi-style totalitarianism. They argue that the state must control the money supply to smooth out the business cycle and prevent depressions. To them, a fixed supply currency is a “barbarous relic” that would leave the government helpless during a crisis.
Conclusion
Hayek’s warning echoes through the decades. He taught us that when we surrender economic control to a central authority, we surrender our freedom. We have surrendered control of our money for over 50 years, and the result is inflation, inequality, and fragility. We now have a choice. We can continue down the path of funny money, trusting the planners to get it right this time, or we can choose sound money. Bitcoin offers a way out. It is a tool for liberty that even Hayek might not have imagined, but would undoubtedly have recognised.