Hayek denies that Nazism is mindlessly irrational. Instead, it is the distillation of an important trend of political thought, “simply collectivism freed from all traces of an individualist tradition which might hamper its realization” (181). Hayek cites a number of intellectuals outside Germany, including Thomas Carlyle, who helped lay the foundations of what grew into the Third Reich. But the main influence came from socialists inside Germany.

These believers finally saw that their collectivist dream could not be realized as long as socialism contained precepts of individual liberty: “It was the union of the anticapitalist forces of the Right and of the Left, the fusion of radical and conservative socialism, which drove out from Germany everything that was liberal” (182).

Hayek mentions several important 19th- and early 20th-century socialist thinkers who believed that, under a collectivist system, “the individual has no rights but only duties” (183). During World War I, socialist authors argued that the Germans ought to regain their warlike spirit in a battle against decadent British commercialism. One socialist believed the ideal of freedom and the ideal of organization were in conflict, that organization ought to win out, and that Germany would lead the way as the ideal industrial seedbed for socialism.