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This is a condensed edition of 'The Road to Serfdom' republished in this edition with 'The Intellectuals and Socialism' (originally published in 1949). In 'The Road to Serfdom' F. A. Hayek set out the danger posed to freedom by attempts to apply the principles of wartime economic and social planning to the problems of peacetime. Hayek argued that the rise of Nazism was not due to any character failure on the part of the German people, but was a consequence of the socialist ideas that had gained common currency in Germany in the decades preceding the outbreak of war. Such ideas, Hayek argued, were now becoming similarly accepted in Britain and the USA. On its publication in 1944, 'The Road to Serfdom' caused a sensation. Its publishers could not keep up with demand, owing to wartime paper rationing. Then, in April 1945, Reader's Digest published a condensed version of the book and Hayek's work found a mass audience. This condensed edition was republished for the first time by the IEA in 1999. Since then it has been frequently reprinted. There is an enduring demand for Hayek's relevant and accessible message.The 'Road to Serfdom' is republished in this impression with 'The Intellectuals and Socialism' originally published in 1949, in which Hayek explained the appeal of socialist ideas to intellectuals - the 'second-hand dealers in ideas'. Intellectuals, Hayek argued, are attracted to socialism because it involves the rational application of the intellect to the organisation of society, while its utopianism captures their imagination and satisfies their desire to make the world submit to their own design.

In this monograph, Professor Gissurarson explains the Icelandic model of fisheries management, Individual Transferable Share Quotas (ITQs), implemented in 1979 to reverse the decline in Icelandic fish stocks. Access to Icelandic fisheries was traditionally open to all. In the 1960s and 1970s excessive catches of herring and then cod led to a decline in stocks of these important species in Iceland's waters. In response, Iceland's government imposed restrictions on the number of days trawlers could put to sea to catch certain species. This led to fishing Derbies, where fishermen competed to catch as many fish as possible in the limited time available. Inevitably, catches continued to exceed sustainable levels. Starting in 1979, the Icelandic government gradually introduced a system of individual transferable share quotas (ITQs), which essentially give boat owners the right to catch a specific proportion of the total allowable catch (TAC) of certain species. If a boat owner does not wish to use all his ITQ he can sell part of it to someone else. This encourages more efficient use of the capital invested in boats and equipment.Because ITQs entitle their owners to a specific share of the future stock of fish, they create incentives to ensure that stocks are sustainable. Since the introduction of ITQs, capital invested in Icelandic fisheries (boats and equipment) has been gradually falling and catches have fallen to sustainable levels, whilst the value of catches has risen. Because of the success of the ITQ system and the wealth it has created, there is now political pressure for an imposition of a resource rent tax. But such a tax would be contrary to the interests of effective conservation of fish stocks. A more appropriate next step would be to introduce a cost-recovery charge and, as a quid pro quo, give ITQ owners greater say in the administration and enforcement of the system. Owners of ITQ would have stronger incentives to ensure that catch levels were set at the economically optimal level.

In Saving Our Streams, Roger Bate explains the history of an unusual and remarkably effective 'environmental' organisation - the Anglers' Conservation Association (ACA). Founded in 1948, the ACA is a voluntary association of angling clubs and individual anglers which brings civil suits against polluters who harm fishing. Dr Bate's original and instructive history explores how the ACA, using the common law, has operated to indemnify its members against the cost of litigation, bringing thousands of actions and being awarded hundreds of injunctions and millions of pounds in damages for plaintiffs. Most cases end in out-of-court settlement which, though efficient, brings little public recognition to the ACA. The ACA has not sought the limelight, unlike other environmental groups, but, argues Dr Bate, it is the most efficient and determined pollution prevention body in Britain. Its success demonstrates the value of private initiatives against polluters.

The first edition of this pioneering book produced surprising conclusions from research around the world into the extent of private education. James Tooley challenged the prevailing wisdom that private education fosters social and economic inequality. On the contrary, he found that the private sector, as well as being innovative, often provides creative social responsibility programmes, subsidised places and student loan schemes. He concluded with a proposal about the role of for-profit education enterprises in promoting equitable development. In this second edition, Professor Tooley contributes a new preface which shows how his work has developed and extended into other countries. In particular, he provides a fascinating account of how private education is flourishing in China.

This volume, edited by Dennis O'Keeffe and with a foreword by David Willetts, explores the relationship between virtue, morality and alternative forms of economic organisation. It should be read by anybody who is interested in the relationship between morality and economic order. Despite the obvious success of the market economy in generating wealth, many commentators accept this success only grudgingly, and unthinkingly criticise the moral underpinnings of capitalist societies. "Economy and Virtue" takes such critics on and finds their criticisms wanting. It analyses how a free society both relies on and promotes values. Unless people can choose between good and evil in conditions of freedom, there is no morality in performing an action that helps another person. A market economy promotes cooperation and restrains selfishness because it relies on contracting by consenting parties, and because its legal system protects the property rights of the vulnerable, just as it does the property rights of the powerful.The authors argue that we cannot judge the market economy by observing the obvious process of 'getting and spending', because this process alone tells us nothing about the motives and character of those involved. There is much more to the market economy than material acquisition: the eminent authors in this volume discuss lucidly and convincingly the moral justifications of the market order.

For many years, Dr Irwin Stelzer, the economic commentator and journalist, has been stimulating audiences around the world with lectures on a range of economic topics. In this volume, the IEA reprints revised versions of twelve lectures in three areas where Dr Stelzer is acknowledged as an expert - competition policy and the form it should take; the proper place of regulation in competitive and monopolised markets; and the content of energy and environmental policies. The essays contain many positive proposals for extending the reach of competitive markets and they comprehensively refute some major economic fallacies. This is a stimulating collection of ideas from one of the foremost economic commentators of the day.

This book provides an analysis of the current problems of pension provision in the UK and a radical plan for reform. The authors believe that the system of retirement income provision in the UK is so mired in complexity that nothing less than wholesale change is necessary. The authors believe that state pensions should only be offered on a contributory basis - there should be no automatic right to a 'citizen's pension', as has been proposed by many commentators. Attention should also be paid to the social security system to remove the perverse incentives of means testing. Anomalies and special treatment of favoured groups in the tax system should also be removed. The Way Out of the Pensions Quagmire proposes a holistic approach to pension reform that takes proper account of the interaction between pensions, tax, social security and financial regulation.

This book is a collection of papers from the Beesley Lecture series on regulation held jointly by the IEA and the London Business School in the autumn of 2000. The chapters in this volume are revised versions of the papers given in the series and they are, as usual, followed by comments made by the chairman; the chairman in most cases being the regulator.

Peter Bauer (Lord Bauer) was an economist of considerable influence, particularly on the prevailing wisdom about the value of foreign aid ('government-to-government transfers', as he preferred to call it). Shortly before his death in May 2002, he received the first award of the prestigious Milton Friedman Prize for Advancing Liberty from the Cato Institute in Washington DC. The volume begins with a transcript of a conversation with Lord Bauer in which he speaks about his career, his interactions with other economists and his contributions to economic analysis. Following that, there is a speech given by John Blundell at the Friedman Prize award ceremony that came just after Lord Bauer's death. The final sections contain ten tributes to Lord Bauer, written by distinguished economists who knew him well, who appreciated his influence and who saw his work from different perspectives. They provide an appraisal of the life and work of a great economist who fundamentally affected the analysis of economic development.

The teaching of economic history is in decline in our schools and universities. Yet much can be learned from the analysis of historical economic events. In railway.com Robert Miller combines such analysis with an explanation of the technological developments in order to draw parallels between the early British railways and the ICT revolution. Study of the former enables us to understand likely trends in the latter. Furthermore, a number of important policy implications can be drawn from the study of the economic history of both events. Robert Miller shows too how stock market bubbles do not necessarily lead to economic losses. The use of central planning for allocating capital in network development has simply led to technological networks being under-provided. The author also considers the issues of technology 'lock in' and examines how markets, even in apparently unsophisticated economies, can solve complex resource allocation problems.

Governments have been taking control of activities - 'public' goods, 'public' utilities, welfare and local government services - which would have been better left to the private sector. Most of them were being privately provided before the state crowded out private initiatives. People will increasingly escape to non-state suppliers unless the government withdraws from many of these activities. Government should reduce its share of national income from 40 per cent to 20 per cent. Arthur Seldon, for many years the IEA's editorial director, argues that attempts to correct market 'imperfections' have created over-government. But the 'escapable power of political government' is up against the 'irresistible economic force of the market'. Sir Samuel Brittan contributes a comment in which he says that Seldon's paper reveals 'a deep belief in the superior ability of ordinary citizens to make their own choices and decisions better than governments or experts or committees'.

There are at least three requirements for an economy to maintain stable prices. Policy markers and opinion formers must understand that inflation brings no medium or long-term economic benefit; the causes of inflation -- monetary growth -must be also be understood; and there needs to be a stable and credible institutional structure that will deliver a sound monetary policy. This book brings together two classic IEA papers by Nobel Prize winner Milton Friedman with a new work by Charles Goodhart who is a Bank of England Advisor and former member of the Monetary Policy Committee. In doing so, 'Money, Inflation and the Constitutional Position of the Central Bank' provides a thorough yet accessible text appropriate for anybody who wants to understand inflation and how it should be controlled. Friedman's paper, 'Unemployment Versus Inflation?' is a lucid explanation of why higher inflation does not lead to lower unemployment, and his 'The Counter-Revolution in Monetary Theory', the first Wincott lecture, explains why excess monetary growth is the only cause of sustained inflation. Goodhart's paper 'The Constitutional Position of the Central Bank' was the 32nd Wincott Memorial Lecture.It explains how the Institutional arrangements for central banks should be developed to deliver stable prices and, importantly, to influence inflation expectations. Professor Geoffrey Wood sets the historical perspective in his introduction and also links the work of Goodhart and Friedman to the current thinking of the new Governor of the Bank of England, Mervyn King.

This book charts the development of the new rural economy and considers whether government policy has similarly developed. In the rural economy, tourism now employs more people that agriculture, and the agricultural sector itself has become much more diverse. But the government bodies charged with delivering countryside policy very often seem wedded to a view of the rural economy and the traditional agricultural sector as synonymous. In "The New Rural Economy", Professor Berkeley Hill of Imperial College London analyzes the appropriate roles of the public and private sectors in the developing rural economy and questions whether evidence of 'market failure' necessarily justifies government intervention, if 'government failure' imposes greater costs than the problems intervention was intended to remedy.This book is an essential reading for those concerned with the development of the countryside and the proper role of government in creating a sustainable, long-term future for those living and working in rural Britain.

It is now a widely held view that a new era has dawned in which businesses must adopt a new conception of their mission, purpose and conduct, by endorsing and implementing corporate social responsibility. In The Role of Business in the Modern World, Professor David Henderson argues if we ask businesses to achieve broader social goals, we risk undermining the very system in which business activity leads to opportunity and prosperity. Professor Henderson describes the unprecedented material progress that has occurred in the last century as a result of the wide-ranging entrepreneurial opportunities and competitive pressures that exist within a market economy. The material prosperity created by the activities of business is threatened by the 'global salvationist consensus' that has arisen in recent years and which seeks to change the role of business via the doctrine of corporate social responsibility. Professor Henderson shows that this consensus is based upon a set of fallacious beliefs about the nature of capitalism, profiteering and business enterprise.

The existing system of land use planning in the UK dates back to the 1947 Town and Country Planning Act and is therefore now well over half a century old. However, there have been indications that government is beginning to take seriously the case for radical reform. This Hobart Paper examines some of the government's proposals against economic evaluation criteria. The principal deficiencies are found to be that the proposals do not properly address important topics such as the internalisation of environmental externalities or land betterment taxation. The author discusses various options for change to the land use planning system primarily designed to introduce voluntary trading and the privatisation of development decisions. He argues that these options, and also market-based instruments such as tradable development rights, have the capacity to achieve a greater degree of allocative efficiency and to take some of the political heat out of the land use planning process.

Socialists have never been shy of sketching out their dreams of a better world, but that better world has never materialised in socialist countries. Indeed, socialism has frequently achieved the precise opposite of what was intended by its architects. The first part of Towards a Liberal Utopia? outlines the dreams of liberal economists and political scientists. These are not the dreams of people who wish to achieve their plans through central direction and who believe they know the precise outcome of the process called liberalisation. Rather our liberal thinkers sketch out frameworks for policy, which, in increasing the domain for individual action, will give rise to beneficial results that cannot be foreseen in detail. This will not lead to utopia, but the authors are confident that greater freedom will lead to better and more prosperous society. The second part of the book shows how an earlier generation of liberal economists turned ideas into action. Led by Ralph Harris and Arthur Seldon, the authors writing for the Institute of Economic Affairs helped to turn back the tide of collectivism by undermining its intellectual foundations.They were so successful that no serious political party now proposes a platform of central planning. As the authors featured in the first part of the book make clear, however, that does not mean that there are no new dragons of collectivism to slay. Some battles may have been won, but the war of ideas continues. Towards a Liberal Utopia? is essential reading for all those who are curious to know how the liberal economic agenda will develop over the coming generation. I trust you get some satisfaction from how far the influence of the IEA has spread, directly and indirectly. Milton Friedman, 6th October 2004.

The debate on rail privatisation often seems to focus on very narrow issues. Those on both sides of the argument seem to be able to employ a mass of statistics to prove their point. Proponents of privatisation suggest, with some credibility, that all was reasonably well with the privatised railways until the Hatfield disaster. Opponents point to spiralling costs since privatisation. The authors of this monograph examine privatisation in the context of the long history of continual government intervention. The government imposed upon the industry a particular structure - separation of track and wheel. It also wrapped it up in increasing amounts of regulation. After examining the history of government intervention in the railways and the privatisation process, the authors of this monograph then examine the future of railway policy. Should the industry be allowed to evolve its own structure - remerging the ownership of track and wheel if it wishes? What aspects of a railway should be regulated? Who should own the various parts of the infrastructure? This monograph is essential reading for all with an interest in railway policy and the process of privatisation.

Governments, Competition and Utility Regulation continues the series of annual books, published in association with the IEA and the London Business School, which critically reviews the state of utility regulation and competition policy. The book contains incisive chapters on competition policy and trade, antitrust and consumer welfare, merger control and efficiency, regulating the labour market, Ofcom and convergence, energy regulation and competition, regulating the London Underground, the future of water regulation and European merger control. Chapters on each topic are followed by comments from regulators, competition authority chairmen and other experts in the relevant fields. The book provides analysis of and commentaries on the most significant developments in regulation and competition policy, drawing on experiences in Britain, United States and the European Union, as well as in international trade negotiations, It will be of value to practitioners, policymakers and academics who are concerned with regulation, deregulation and policies to promote competition.

In a new study, Patricia Morgan shows how tax and benefits policy has undermined family life in Britain and encouraged fraud and dishonesty. The study shows how the tax and benefits systems are particularly harsh on single-earner couples who have to earn over GBP50,000 before there is no loss from declaring their relationship to the authorities. This situation encourages couples not to marry and, if they are living together, to lie to the authorities about their family situation. In 2004/05, the government paid credits and benefits to 200,000 more lone parents than actually live in the UK -- fraud is widespread. The tax and benefits system encourages such fraud. In the most extreme case, a couple can gain nearly GBP10,000 a year by not declaring their relationship. Family life has been discouraged over 25 years by both Conservative and Labour governments. In the Thatcher years, the Conservative government gave lone parents special financial benefits and priority entitlement to council housing. In the Labour years, the state increasingly became the child-care provider.As Patricia Morgan comments, "Under Thatcher, the state became the bread-winner for lone parents; under Brown the state became the child carer. The consequences are obvious -- couples are strongly encouraged not to commit to each other because, by doing so, they will lose out financially. Both Conservative and Labour governments also removed any offsetting compensation in the tax system that had previously helped two-parent families." Government policy penalising two-parent families has had a disastrous economic and social effect. Couples who describe themselves as "closely involved" are twelve times more likely than married couples to split up in the first three years of a childs life. There are also higher levels of worklessness and benefit dependency -- lone parent families receiving an average of 66% of their income in benefits and tax credits. Morgan shows how it is clear from international evidence, examining trends over time and by looking at the behaviour of individuals on different levels of income, that the tax and benefits system has caused the increase in lone parent families.Where there are no incentives for lone parenthood, couples tend to stay together, marry and ensure that they can support their children independently of the state. Individuals and couples respond rationally to the incentives they face -- currently the government is giving families perverse incentives, encouraging them not to form stable family units. Major changes in the tax and benefit system are necessary. Benefits to lone parents could be reduced. Also, the perverse incentives in the benefits system that discourage couples from committing together should be offset by a tax system that recognises families. In particular, families should be allowed to allocate the income of the main earner to non-earners in the family for tax purposes. Reforms to the tax and benefits system should be bolstered by reforms to the "no fault" divorce laws that currently allow a guilty party to walk away from their marriage contract whilst imposing financial penalties on the injured party.

This is the latest book in the annual series published by the IEA and the London Business School, which critically reviews the state of utility regulation and competition policy. The strength of the series is that each chapter is followed by a comment by the relevant regulator or a prominent expert in the field. This new volume contains chapters on a number of prominent concerns, including changes in the British system of utility regulation, the spectrum allocation question, liberalisation of EU energy markets, security of supply issues, reform in the European postal sector, the future of rail regulation, the cost of capital and Ofcoms strategic approach to regulation.

This paper discusses how 'wars of ideas' can be waged, using the author's extensive experience, both as director general of the Institute of Economic Affairs (IEA) and at other classical liberal think tanks. John Blundell begins his stimulating collection of published essays, reviews and introductions by showing how the founders of the IEA successfully fought the conventional 'planning' wisdom of the 1960s and 1970s, providing the ideas which, by the 1980s and 1990s, had brought about increased freedom and a revival in the use of markets. He draws lessons from those days and then surveys the contemporary scene, showing how the anti-liberal ideas emerging now are different from those which prevailed in the early years of the IEA. As well as giving a valuable view of the IEA's development in the past, these essays also offer advice on how to continue winning in the new circumstances of the present. "Waging the War of ldeas" has been constantly in demand since it was first published in 2001. This new and expanded edition contains three new chapters and is introduced by Professor Walter Williams.

The recent accession of the former communist countries of Central and Eastern Europe to the European Union significantly changed many of its social and economic characteristics. For example, a situation was created where income differences between regions in the EU are on a par with those between Britain and some African countries. Regional differences in productivity and employment levels within the EU are even more stark than income differences. This monograph examines the policies that should be used to address the poor economic performance of New Europe's old industrial and agricultural regions. The author finds traditional regional policy wanting, but feels there might be a role for the 'new regionalism' that is focused on trying to boost the productivity of peripheral regions. However, using Poland as a case study, he is able to show that, if new-style regional policies are introduced without policies aimed at liberalisation, lower taxes and reduced employment protection, then nothing of substance will be achieved. This analysis has profound implications for the EU more widely.If there is to be economic liberalisation within the EU then there probably has to be political reform too. This study is essential reading for anybody interested in the future of the EU and the role of regional policy in economic development.

The author covers the Northern Rock affair and the subsequent instability in the UK financial system in the context of the history and desired future role of the Bank of England as a central bank. Tim Congdon, a respected monetary economist, shows how the Bank of England failed in its duties to provide Northern Rock with proper lender-of-last resort facilities. This helped bring down the bank itself and created instability in financial markets. Congdon argues that the mistakes by the Bank of England arose directly from Gordon Brown's decision to dismember the Bank in 1997. As a result, the Bank lost all its experience in commercial banking. Furthermore, the government and the Bank were unable to coordinate their actions in the way that had been envisaged by the government when it reformed the Bank of England. Congdon proposes a radical new settlement. The Bank of England should be privatised; its capital should be provided by the commercial banks; and it should regulate banks as well as providing them with lender-of-last-resort facilities.He shows how this new structure provides just the right incentives to regulate the banking system in a way that will ensure financial stability whilst allowing banks to provide efficient services to the public.

The UK government in common with the governments of many Western countries is in the midst of implementing policies to reform education. However, the government has, as a matter of principle, decided that profit-making schools cannot provide state-funded education even if they would lead to substantial improvements in quality. This monograph makes the case for widespread acceptance of the profit motive in education. It does so not by presenting statistics that demonstrate that profit-making organisations could drive up quality there is already a substantial literatureon this. Instead, the authors show how profit-making organisations could create an entirely new dynamic of entrepreneurship and innovation. As well as improving quality and reducing costs within existing models, such an approach could lead to the development of completely new ways ofproviding education. The authors of this monograph have a range of international experience. Many of them have run profit-making schools in countries more accepting of the profit motive than the UK, suchas Sweden. Others have struggled against the odds to participate in education reform programmes in the UK.Overall, this collection makes an important contribution to the international debate about education reform

This book attempts to correct many of the economic myths that prevail in public discourse and which are often promoted in schools and even universities. It begins by examining straw men, such as the assertion that economists believe that people behave selfishly or that economists think that GDP is all that matters. The fact that economists do not believe these things at all is easily established and it is surprising that scholars with good publication records (albeit not in the philosophy of economics) can honestly argue otherwise. The author then moves on to look at myths that can be subjected to empirical analysis and easily shown to be false. These myths, such as the idea that the poor are getting poorer while the rich get richer, or that we are working longer hours, are easily rebutted. This is not a book about economic theory, nor does it attempt to settle major controversies. On the few occasions where the subject matter touches on a genuine academic debate, this is acknowledged in the text.For the most part, however, the questions posed can be answered by consulting evidence that is widely available or - in the case of the straw men - listening to what economists actually say.

Recent surveys reveal a large portion of the British population to have a dim view of capitalism. And many on the political left, including the current leadership of the Labour Party, are committed to overthrowing it. That would be a disaster because, as Eamonn Butler argues in this introduction to capitalism, it is the foundation of our prosperity and of our liberal, cooperative and dynamic society.Many criticisms of capitalism are based on common misunderstandings of it, some of them even shared by supporters of capitalism. Written in plain English and assuming no prior knowledge of economics, this book helps readers overcome these confusions. It explains the nature of capital – its creation, preservation and destruction – and the roles played by markets and property rights in making capitalism work.

Top pay has risen much faster than average pay in the past 20 years. Today there's widespread public concern about the apparent excesses of some pay deals in the corporate sector - although people are more forgiving of the rewards to entrepreneurs, entertainers and sports stars. This collection of essays puts various aspects of this debate under the spotlight. It looks at the role of shareholders in awarding executive pay, examines how pay data are produced and used, and asks whether Long-Term Incentive Plans have created unnecessary inflation of executive pay. It also looks at high pay in the public sector and in areas where government funding plays a major role - such as universities and charities. And it investigates the disparity in pay between men and women among very high earners.

Raising the Roof addresses one of the key issues of our era - the UK's housing crisis. Housing costs in the United Kingdom are among the highest on the planet, with London virtually the most expensive major city in the world for renting or buying a home. At the core of this is one of the most centralised planning systems in the democratic world - a system that plainly doesn't work. A system that has resulted in too few houses, which are too small, which people do not like and which are in the wrong places, a system that stifles movement and breeds Nimbyism. The IEA's 2018 Richard Koch Breakthrough Prize, with a first prize of GBP50,000, sought free-market solutions to this complex and divisive problem. Here, Breakthrough Prize judge Jacob Rees-Mogg and IEA Senior Research Analyst Radomir Tylecote critique a complex system of planning and taxation that has signally failed to provide homes, preserve an attractive environment and enhance our cities. They then draw from the winning entries to the Breakthrough Prize, and previous IEA research, to put forward a series of radical and innovative measures - from releasing vast swathes of government-owned land to relaxing the suffocating grip of the green belt. Together with cutting and devolving tax, and reforms to allow cities to both densify and beautify, this would create many more homes and help restore property-owning democracy in the UK.

Almost every schoolchild learns that Thomas Edison invented the light bulb. But did he? And if he hadn’t invented it, would we be still living in the dark? Acclaimed author Matt Ridley (The Rational Optimist, The Evolution of Everything) explains that at least 20 other people can lay claim to this breakthrough moment. Ridley argues that the light bulb emerged from the combined technologies and accumulated knowledge of the day – it was bound to emerge sooner or later. Based on his 2018 Hayek Memorial Lecture, Ridley contends that innovation – from invention through to development and commercialisation – is the most important unsolved problem in all of human society. We rely on it – but we do not fully understand it, we cannot predict it and we cannot direct it. In How Many Light Bulbs Does It Take to Change the World? Ridley examines the nature of innovation – and how people often fear its consequences. He dispels the myth that automation destroys jobs – and demonstrates how innovation leads to economic growth. And he argues that intellectual property rights, originally intended to encourage innovation, are now being used by big business to defend their monopolies. Ridley concludes that innovation is a mysterious and under-appreciated process that we discuss too rarely, hamper too much and value too little.