Hayek and Rosten: Democracy, Special Interests, and Dictatorships

ROSTEN: If you were to take 90 percent of
the graduating students of the colleges of the United States and ask them what a bank or a banker does, what percentage do you think would answer to your satisfaction? HAYEK: Hardly any. (Both laugh) ROSTEN: Yet they have all been exposed to
banks, bankers, economics, and professors. How many of them would know what an executive
does? HAYEK: Well, that is extraordinarily difficult
to explain– that I know from my own experience. The business schools are doing quite a good job, but the economics students know nothing about it. ROSTEN: The ignorance of people about the things they vote about is, of course, very
depressing. The feeling that one must temper one’s disillusionment with the fact that these
are very complicated, and to utter a heresy not all people are intelligent. And you run
into the problem of what the fate of the democracy will be when the crises become more acute
and depend on more “technical signals,” to use your word, or “information,” to use mine. HAYEK: Well, I’m very pessimistic about this. You see, my concern has increasingly become
that we call democracy a system in which it isn’t really the opinion of some majority
which governs but the necessity of paying off any number of special interests. Unless
we change the organization of our democratic system, democracy will– I believe in democracy
as a system of peaceful change of government; but that’s all its whole advantage is, no
other. It just makes it possible to get rid of what government we dislike, but that omnipotent
democracy which we have is not going to last long. What I fear is that people will be so
disgusted with democracy that even they will abandon even its good features. ROSTEN: If you had magical powers and were to set about restructuring the system– A
friend of mine, in making a witticism, prompted me to retort by saying, “That’s a good rule;
let’s pass a law that for every law that Congress passes it must simultaneously repeal twenty
others.” HAYEK: Twenty others; yes, I agree. (Laughs) ROSTEN: At least twenty. But what would you do? HAYEK: Oh, in the long run, the only chance is to alter our constitutional structure and
have no omnipotent single representative assembly, but divide the powers on the traditional idea
of a separation of powers, have one which is confined into true legislation in the sense
of general rules of conduct, and the other a governmental assembly being under the laws
laid down by the first: the first being unable to discriminate; the second, in consequence,
being unable to take any coercive action except to enforce general laws.
Because of the present system, see, I believe Schumpeter is right in the sense that while
socialism can never satisfy what people expect, our present political structure inevitably
drives us into socialism, even if people do not want it in the majority. That can only
be prevented by altering the structure of our so-called democratic system. But that’s
not necessarily a very, very slow process, and I don’t think that an effort toward reform
will come in time. So I rather fear that we shall have a return to some sort of dictatorial
democracy, I would say, where democracy merely serves to authorize the actions of a dictator.
And if the system is going to break down, it will be a very long period before real
democracy can reemerge.

Maurice Vega

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