Hayek’s 1945 periodical essay, reprinted in 2013, proposes a postwar settlement combining political decentralisation, compulsory free trade, and intellectual reconstruction led by independent German scholars. Originally published with the subtitle “Decentralisation Offers Some Basis for Independence,” it moves from the punishment of Nazi perpetrators through constitutional and economic arrangements to a historical diagnosis of German political culture and a proposal for an international scholarly society. Its governing concern is how Allied intervention can make Germany peaceful without creating either another centralised power state or a nationalist movement against externally imposed dismemberment.
The opening sharply separates retribution from reconstruction. Hayek endorses extensive executions, treats Nazi rank as an almost certain measure of guilt, and dismisses legal and humanitarian objections. This punitive position matters to the argument: he fears that incomplete immediate punishment will allow the desire for revenge to distort long-term policy. Once perpetrators have been punished, effectiveness rather than continuing retribution should govern the settlement. Germany’s geographical position and population make its recovery indispensable to Europe:
The Germans will still be numerous and seated in the heart of Europe; and unless we can regain them for Western civilisation, the war will have been lost in the long run.
Hayek rejects both the claim that Nazism affected only a minority and the belief that Germans have always possessed their present political character. He traces their estrangement from Western civilisation to a historical process beginning with Bismarck’s unification. The immediate obstacle is not simply Nazi conviction but cynicism, ignorance, and the destruction of shared moral traditions. Isolated Germans who resisted this corruption provide the indispensable starting point, although goodwill alone cannot rebuild a political community.
The constitutional proposal turns independence into an incentive for decentralisation. Forced partition would make reunification the overriding nationalist ambition; an Allied-controlled central administration could inadvertently prepare a powerful apparatus for a future German government. Hayek therefore proposes indefinite Allied supervision of the centre, alongside progressive emancipation of individual states as they develop representative institutions. His criterion for durability is explicit:
But in the long run no measure will succeed which does not rest on the acquiescence of the Germans; and it surely must be our fundamental maxim that any successful settlement must have a chance of continuing when we are no longer ready to maintain it by the continuous exercise of force.
Prussia must be broken up, reviving states such as Hanover and Westphalia. Hayek distinguishes this from dismembering Germany itself: he expects regional traditions to support the former rather than provoke the latter’s nationalist reaction. States would regain autonomy at different speeds, with western regions and Hanseatic cities benefiting from surviving democratic traditions. Allied authority would gradually assume a federal or confederal role, backed by a small effective striking force. Preferably, emancipated states would enter federations with non-German neighbours, eventually contributing to a wider European federation. Even if that prospect proved utopian, regional autonomy and cross-border economic connections might weaken the attraction of a restored centralised Reich.
Free trade supplies the economic counterpart. Neither separate state tariffs nor a common German protective system would serve the plan: the first would give regional governments excessive economic control, while the second would reconstruct national self-sufficiency. Hayek instead advocates imposing free trade throughout Germany:
Germany would thereby be given a chance of becoming prosperous again without becoming dangerous.
Prosperity would depend on manufacturing exports and imported food and raw materials. Commercial interdependence is thus a security mechanism, not merely an efficiency argument. Hayek also regards trade restrictions as unusually observable: excluded foreign suppliers would immediately notice them. The proposal nevertheless retains a significant coercive element. Allied power would enforce the economic framework within which Germany’s dependence on international exchange would develop.
Education is the third and, for Hayek, most important dimension. He rejects Allied textbooks and an imposed official creed as both counterproductive and themselves totalitarian. Durable change must originate within Germany:
What we have to aim at is not a new indoctrination but a revival of the belief in truth and objective moral standards, not only in private life but in politics, and a readiness to receive and to examine new ideals, which is not encouraged by forcing down a people's throat a ready-made set of principles.
The historical discussion explains why scholars occupy such a central position. Bismarck’s success converted critics of his lawlessness into admirers, binding national achievement to deception, coercion, and the subordination of morality to political ends. Historians then helped turn this vindication of successful power into an authoritative national outlook. Hayek’s account is historical rather than an assertion of innate German depravity; the supplementary editorial notes also reproduce his recognition that foreign observers succumbed to comparable admiration.
The remedy mirrors this diagnosis. Independent scholars should identify trustworthy German colleagues and restore their access to books, intellectual exchange, travel, and international recognition. Crucially, assistance must not turn them into Allied agents or compromise their credibility. Hayek proposes an Acton-Tocqueville Society whose members share commitments to historical truth, moral standards in politics, and liberal civilisation. The essay’s distinctive move is therefore to connect institutional decentralisation with the independence of intellectual authority. Governments can establish conditions for recovery, but the convictions sustaining a free political order must be regenerated through inquiry and persuasion beyond governmental command.
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