This chapter is an essay that was written during World War Two, it is one of the last chapters written, and is mostly about the failure of the intellectuals of England to recognize that the various socialisms of Germany, Italy and Russia were not strange aberrations, but very reasonable evolutions of socialist trends that long predated World War One. It is also about how Liberalism, as defined in England in the 1930's, had failed to deliver on steadily continuing mankind's progress – something it had been quite reliable at doing prior to World War One. And how, as a result, and worryingly, English progressive intellectuals were also slipping into supporting socialist thinking, as well.
In these days, the 2010's, it is not appreciated how shocking the two world wars were to the social thinking of the first half of the 20th century. From the Napoleonic Wars ending with Waterloo in 1815 to The Great War starting in 1914, Europe had not experienced a long, grinding coalition war. Instead Europe had experienced steady and substantial material progress as the second phase of the Industrial Revolution spread eastward. This was the era of building steel mills, railroads and textile factories. (For comparison, the auto building and home appliance building era started in the 1920’s and hit full stride in the 1950’s.) It was an era of growing trade. Refrigeration, for instance, made it possible for newly settled Australia, New Zealand and Argentina to become some of the world’s richest nations per capita by exporting sheep and beef products.
Much more so than today, the turn of the century 1900’s were times of unbounded optimism in Western Europe. Sure there had been problems, but there had always been solutions, and the solutions always elevated mankind to a higher level of prosperity than had ever been achieved before.
The twin effects of industrialization and liberalization were so decisive that western European ideas spread world-wide, and showed the rest of the world how to be a better place… or so it seemed to western Europeans in 1910. This was the era of the White Man's Burden in England, when Imperialism was seen as good because it was teaching the rest of the world how to live better and better.
And then the era shattered decisively. The Great War (now called World War One) was long, grinding and it changed the relation of many things. Its effect was similar to how the long and grinding Iraq/Afghan War changed thinking in and about the US in the 2000’s, but on steroids.
World War One was a Blunder. The cost on all sides was huge, and varied, and it left scars. There was the physical cost of the damage done and paying for the war. In addition there was the horror of experiencing millions of deaths and casualties. And in western Europe there was the sinking recognition that liberalism didn't always produce steady and orderly human advancement -- optimism was dramatically replaced with guilt among the intellectuals.
(Note: The war was a Blunder not because it was started, but because it was not ended quickly. If it had ended in six weeks to six months, as was the original plan (on all sides), it would not have been a Blunder, it would have been a blip in history comparable to the War of 1870.)
In the rest of the world, in addition to all of the above, there was recognition that there may be other ways of advancing besides liberalism and capitalism. The war started a time of vigorous experimenting with other social systems. And there was even more horror and violence -- instead of ending in 1918, the violence in central and eastern Europe ran well into the twenties in the forms of civil unrest, brush fire wars, and full-blooded civil wars. The Russian Civil War, for instance, ran on into 1923.
What central and eastern Europe experimented with as an alternative to liberalism was various forms of socialism and nationalism, and this is what Hayek is writing about in this essay.
He is pointing to the failure of progressives in England to recognize that while liberalism seems to have failed, the collectivist alternatives weren't working any better. He also points out that National Socialism, Nazism, was not some weird out-of-the-blue hybrid political movement, but a logical extension of German socialism as it had been developing since the days of Bismarck in the 1880’s.
What he doesn't point out, but is worth mentioning because so few contemporary historians do point it out, is that Germany of the 1920’s and 30’s was having a German Revolution that was just as deep and sweeping as the Russian Revolution of that same time frame. It was doing the same kind of vigorous social experimenting, and it was encountering the same kinds of deeply disturbing social unrest as it did so.
Hitler was the German Revolution’s version of Napoleon, just as Stalin was the Russian Revolution’s version -- these were all leaders who became wildly popular in their time because they seemed to end the decade or more of rising violence and uncertainty that had preceded their rise to power -- they were willing and able to kick ass and take names, and that was what their communities were ready to see happen at that time in their respective revolutions.
But I digress...
Hayek talks about the rise of liberalism in the first place. How difficult it was for liberalism to replace monarchy-based despotism and how important the rise of scientific thinking was to the rise of liberalism. It only happened in a few places at first, such as England and the Low Countries. He then describes how liberal thinking spread east from England and seemed to reach its peak of influence in the 1870’s, and how the rise of socialism was both bringing despotism back and moving the center of progressive thinking eastward to central Europe. And further, how the rise of socialist thinking was springing mostly from this same Germany that had just created Nazism. This was a Germany where a lot of innovative thinking on both science and social systems had been happening. It was a proud and innovative place.