I'm reading the Road to Serfdom this week. The only thing by Hayek I've read before is his the Use of Knowledge in Society paper. It was written years after The Road to Serfdom was published and famously influenced Jimmy Wales' thinking about the development of Wikipedia. Here I collected some excerpts from the first half of the book that I particularly enjoyed.
The result of this growth surpassed all expectations. Wherever the barriers to the free execercise of human ingenuity were removed, man became rapidly able to satisfy ever widening ranges of desire. And while the rising standard soon led to the discovery of very dark spots in society, spots which men were no longer willing to tolerate, there was probably no class that did not substantially benefit from the general advance. We cannot do justice to this astonishing growth if we measure it by our present standards, which themselves result from this growth and now make many defects obvious. To appreciate what it meant to those who took part in it, we must measure by the hopes and wishes men held when it began: and there can be no doubt that its success surpassed man's wildest dreams, that by the beginning of the twentieth century the working-man in the Western world had reached a degreee of material comfort, security, and personal independence which a hundred years before had seemed scarcely possible.
What in the future will probably appear the most significant and far-reaching effect of this success is the new sense of power over their own fate, the belief in the unbounded possibilities of improving their own lot, which the success already achieved created among men. With the success grew ambition — and man had every right to be ambitious. What had been an inspiring promise seemed no longer enough, the rate of progress far too slow; and the principles which had made this progress possible in the past came to be regarded more as obstacles to speedier progress, impatiently to be brushed away, than as the conditions for the preservation and development of what had laready been achieved.
I find that many people in the Western world take economic growth for granted. Being an immigrant myself, I can clearly see the stark contrast in wealth between where I live and where I'm from. What many have in some countries today will still be inconceivable in other countries even years from now.
It is important not to confuse opposition against this kind of planning with a dogmatic laissez faire attitude. The liberal argument is in favor of making the best possible use of the forces of competition as a means of coordinating human efforts, not an argument for leaving things just as they are. It is based on the conviction that, where effective competition can be created, it is a better way of guiding individual efforts than any other. It does not deny, but even emphasizes, that, in order that competition should work beneficially, a carefully thought-out legal framework is required and that neither the existing nor the past legal rules are free from grave defects. Nor does it deny that, where it is impossible to create the conditions necessary to make competition effective, we must resort to other methods of guiding economic activity. Economic liberalism is opposed, however, to competition's being supplanted by inferior methods of coordinating individual efforts. And it regards competition as superior not only because it is in most circumstances the most efficient method known but even more because it is the only method by which our activities can be adjusted to each other without coercive or abitrary intervention of authority. Indeed, one of the main arguments in favor of competition is that it dispenses with the need for "conscious social control" and that it gives the individuals a chance to decide whether the prospects of a particular occupation are sufficient to compensate for the disadvantages and risks connected with it.
From what I've gathered, Hayek is commonly misinterpreted as a proponent of libertarianism. I don't know how true that is, but what's clear from this paragraph is that there is an argument to be made in favor of limited regulation and governmental interference. Later in this book he calls this "planning for competition", contrasting it with "planning against competition".
It is regrettable, though not difficult to explain, that in the past much less attention has been given to the positive requirements of a successful working of the competitive system than to these negative points. The functioning of a competition not only requires adeqate organization of certain institutions like money, markets, and channels of informations — some of which can never be adequately provided by private enterprise — but it depends, above all on the existence of an appropriate legal system, a legal system designed both to preserve competition and to make it operate as beneficially as posssible. It is by no means sufficient that the law should recognize the principle of private property and freedom of contract; much depends on the precise definition of the right of property as applied to different things. The systematic study of the forms of legal insitutions which will make the competitive system work efficiently has been sadly neglected; and strong arguments can be advanced that serious shorcomings here, particularly with regard to the law of corporation and of patents, not only have made competition work much less effectively than it might have done but have even led to the destruction of competition in many spheres.
Where, for example, it is impracticable to make the enjoyment of certain services dependent on the payment of a price, competition will not produce the services; and the price system becomes similarly ineffective when the damage caused to others by certain uses of property cannot be effectively changed to the owner of that property. <..> Thus neither the provision of signposts on the roads nor, in most circumstances, that of the roads themselves can be paid for by every individual user. Nor can certain harmful effects of deforestation, of some methods of farming, or of the smoke and noise of factories be confined to the owner of the property in question or to those who are willing to submit to the damage for an agreed compensation.
Here Hayek again goes over some of the things that are necessary for a competitive system to exist that no one but a central authority can arrange. In the second paragraph, he also touches on the problems of rent seeking and tragedy of the commons.
Although competition can bear some admixture of regulation, it cannot be combined with planning to any extent we like without ceasing to operate as an effective guide to production. Nor is "planning" a medicine which, taken in small doses, can produce the effects for which one might hope from its thoroughgoing application. Both competition and central direction become poor and inefficient tools if they are incomplete; they are alternative principles used to solve the same problem, and a mixture of the two means that neither will really work and that the result will be worse than if either systems had been consistently relied upon. Or, to express it differently, planning and competition can be combined only by planning for competition but not planning against competition.