Tuesday, June 30, 2009

Ludwig von Mises On the Formation of the Mont Pelerin Society

I recently came across a copy of a private paper written by Ludwig von Mises in 1946, and titled, Observations On Professor Hayek's Plan. "The Plan" was the formation of what has become the Mont Pelerin Society. The paper is archived at Grove City College.

The paper is only 3 and 1/2 pages long but contains many interesting nuggets.

First, I have seen more than once the statement that Murray Rothbard advanced Misesian theory by pointing out that only governments can create monopolies. Not to take anything away from the genius that Rothbard was, but Mises wrote this paper in 1946, and it is there in black and white, Mises comes pretty close to saying the same thing. He writes in the paper "Not the unhampered market, but the governments foster monopolization."

It is also obvious in the paper that Mises is very concerned about bringing into Hayek's proposed organization those who are willing to compromise with the "foes of liberty." Mises calls them, "frightened intellectuals."

He further writes (Mises emphasis): "The practical politician must take into account the voters' reaction to his program if he wants to succeed in the short run. He must compromise. But the intellectual pioneer of a better world is not restricted by the concerns of Realpolitik. His program must be a sound program that triumphs in the long run. "

Mises sees that bringing in compromisers is a problem with Hayek's plan. Mises writes (Mises emphasis):

The weak point in Professor Hayek's plan is that it relies upon the cooperation of many men who are known for their endorsement of interventionism. It is necessary to clarify this before the meeting starts. As I understand the plan, it is not the task of this meeting to discuss anew whether or not a government decree or a union dictate has the power to raise the standard of living of the masses. If somebody wants to discuss these problems, there is no need for him to make a pilgrimage to Mont Pelerin. He can find in his neighborhood ample opportunity to do so.
Clearly, Mises saw trouble. Thus, when Mises stormed out at one point during part of the founding meeting of the Mont Pelerin Society in 1947, saying: “You’re all a bunch of socialists,” this action can be seen in better perspective.

It wasn't a spur of the moment action of a hot head, as is sometimes implied. It was the response of a careful thinking scholar who was concerned that the organization would fall under the influence of "frightened intellectuals."

It turns out Mises fears were well justified, see DiLorenzo.


The paper is now online here (pdf).

1 comment:

  1. The paper you refer to shows Mises' position to have been something other than the kneejerk reaction of a hot head. More of a thoughtful response.

    I read some discussion somewhere that had Mises referring to Hayek and Friedman and co as "neoliberals".

    This term is usually thrown around today by left social democrats who think the state and 'the community' are the same thing (except for when conservatives run it). You know the sort of analysis that blurs Hayek, Friedman, Reagan, Thatcher and Bush together and somehow (despite the evidence) sees Reagan as instigating an era of free markets.

    However this (and I believe earlier) use of the term "neo-liberal" by Mises was different. He was drawing a distinction between his own authentic classical liberalism (a.k.a. libertarianism) and the younger generation of WW2 / post-WW2 'liberals' who had been born and raised since WW1, in an era of (relatively) big government. And whom Mises saw as too willing to compromise with big government.

    I can't find the reference but I think it is discussed in Hulsmann's "Last Knight of Liberalism".

    I think a case can be made, at least notionally, that Mises was one of the first to use the term "neo-liberalism" and who first applied it to the Pelerin-ites. I'd first need to dig through Hulsmann to build a case. But if so it would be something of an irony.

    Another explanation of the origin of the term "neo-liberalism" can be found here (article and PDF). The case made in the article is stronger than my hunch, but Mises' early usage is still noteworthy.