The Free Exchange Economist blog recently published a nice celebration of Hayek's "The Road to Serfdom", that was published some 70 years ago. It might not be Hayek's best book, but it is still the most popular one. It enjoyed a tremendous success, largely thanks to the abridged, Reader's Digest version. It is appropriate to remember that Keynes had nice words for his old friend/foe's work, not least because the book was not welcomed with great enthusiasm by many academics (just check the transcript of the radio discussion Hayek had with Maynard Krueger and Charles Merriam, in "Hayek on Hayek").
The Free Exchange Economist blog quotes a letter Keynes sent to Hayek on June 28, 1944. Keynes' letter was friendly and by and large complimentary. He suggested Hayek should not have deprecated "all the talk about plenty just round the corner". He recognised the two of them have "a different view about the facts" (think about Keynes' "Economic Possibilities for our Grandchildren"), but he also tried to "nudge" Hayek in his direction with the following argument:
The line of argument you yourself take depends on the very doubtful assumption that planning is not more efficient. Quite likely from the purely economic view it is efficient. That is why I say that it would be more in line with your general argument to point out that even if the extreme planners can claim their technique to be the more efficient, nevertheless technical advancement even in a less planned community is so considerable that we do not today require the superfluous sacrifice of liberties which they themselves would admit to have some value.
Here Keynes seems to maintain that there is a trade off between liberty and planning: we could preserve individual freedom at the cost of some economic efficiency, and we could do so just because, after all, the age of scarcity is going to be over soon. All in all, it is hard to think of a less Hayekian argument than this one.
The conclusion of the letter deserves to be quoted in full:
What we need therefore, in my opinion, is not a change in our economic programmes, which would only lead in practice to disillusion with the results of your philosophy; but perhaps even the contrary, namely, an enlargement of them. Your greatest danger ahead is the probable practical failure of the application of your philosophy in the US in a fairly extreme form. No, what we need is the restoration of right moral thinking - a return to proper moral values in our social philosophy. If only you could turn your crusade in that direction you would not look of feel quite so much like Don Quixote. I accuse you of perhaps confusing a little bit the moral and the material issues. Dangerous acts can be done safely in a community which thinks and feels rightly, which would be the way to hell if they were execute by those who think and feel wrongly.
Keynes' problem was not, thus, to decide where to "draw the line" and set a reasonable limit to state action. His problem was to make sure the best were in charge. Government can be unlimited, insofar as the best people are in charge. This is enough to make sure that "dangerous acts can be done safely". Hayek, in "The Road to Serfdom", tried to figure out "why the worst get on top".
In their masterful treatment of Keynes's political legacy, Buchanan and Wagner showed how he always held dear "the presuppositions of Harvey road" - that is, the "idea that the government of Britain was and could continue to be in the hands of an intellectual aristocracy using the method of persuasion" (Harrod). A well-meaning paternalism on one hand, an appreciation for freedom also in its less predictable off-springs: it is very difficult to reconcile these two attitudes, that have often (and understandably) been identified respectively with Keynes and Hayek.