On the Impossibility of Working with Government Agents and Economic Ignoramuses

On the occassion of the fifth anniversary of the The Property And Freedom Society, Society founder Hans Hermann Hoppe spoke to the group about his experiences and thinking that lead up to his founding of the Society. As always, Hoppe's remarks are no-holds barred, thought provoking. Here are a few snippets:

To be sure, I met many bright and interesting people. But essentially, Mont Pelerin Society meetings were junkets for “free-market” and “limited-government” think-tank and foundation staffers, their various professorial affiliates and protégées, and the principal donor-financiers of it all, mostly from the U.S., and more specifically from Washington D.C.

True, occasionally a few strange birds are invited to speak[ at Mont Pelerin], but the meetings are dominated and the range of acceptable discourse is delineated by certified state-interventionists: by the heads of government-funded or connected foundations and think-tanks, by central bank payrollees, paper-money enthusiasts, and assorted international educrats and researchocrats in and out of government. No discussion in the hallowed halls of the Mont Pelerin Society of U.S. imperialism or the Bush war crimes, for instance, or of the financial crimes committed by the Federal Reserve Bank—and no discussion of any sensitive race issue, of course.

Hayek did have much to do with what the Mont Pelerin Society had become. For, as Mises could have known already then, and as would become apparent at last in 1960, with the publication of Hayek’s Constitution of Liberty, Hayek himself was a proven interventionist. In the third part of this famous book, Hayek had laid out a plan for a “free” society so riddled with interventionist designs that every moderate social-democrat—of the Scandinavian-German variety—could easily subscribe. When, at the occasion of Hayek’s 80th birthday in 1979, the Social Democratic then-Chancellor of West Germany, Helmut Schmidt, sent Hayek a congratulatory note proclaiming “we are all Hayekians now”, this was not an empty phrase. It was true, and Schmidt meant it.

What I came to realize, then, was this: The deplorable development—as judged from a classic-liberal vantage point—of the Mont Pelerin Society was not an accident. Rather, it was the necessary consequence of a fundamental theoretical flaw committed not only by Hayek but, ultimately, also by Mises, with his idea of a minimal state.

For decades, the limited government movement has been a growth industry. Its annual expenditures currently run in the hundreds of millions of dollars, and billions of dollars likely have been spent in total. All the while, government expenditures never and nowhere fell, not even once, but instead always and uninterruptedly increased to ever more dizzying heights.And yet, this glaring failure of the industry to deliver the promised good of limited government is not punished but, perversely, rewarded with still more ample funds. The more the think tanks fail, the more money they get.The State and the free market think tank industry thus live in perfect harmony with each other. They grow together, in tandem.

Moreover, through its cooperation with the free market industry, the State could enhance its own legitimacy and intellectual respectability as an “economically enlightened”, institution—and thus open up still further room for State growth.

Essentially, as with all so-called NGOs [non-government organizations], the State managed to transform the limited government industry into just another vehicle for its own aggrandizement.

As a territorial monopolist of legislation and the money-printing press, the State has a natural tendency to grow: to use its “fiat” laws and “fiat” money to gain increasing control of society and social institutions. With “fiat laws”, the State has the unique power of threatening and punishing or incentivizing and rewarding whatever it pleases. And with its “fiat money”, it can buy-up support, bribe, and corrupt more easily than anyone else.

Certainly, an extraordinary institution such as this will have the means at its disposal, legal and financial, to deal with the challenge posed by a limited government industry. Historically, the State has successfully dealt with far more formidable opponents—like organized religion, for instance.

Unlike the Church or churches, however, the limited government industry is conveniently located and concentrated at or near the center of State power, and the industry’s entire raison d’etre is to talk and have access to the State. That is what its donor-financiers typically expect.

Yet so much the easier, then, was it for the State to target and effectively control this industry. The State only had to set up its own bureaucracy in charge of free-market-relations and lure the limited-government NGOs with conferences, invitations, sponsorships, grants, money and employment prospects. Without having to resort to threats, these measures alone were sufficient to ensure compliance on the part of the free-market think-tank industry and its associated intellectuals. The market demand for intellectual services is low and fickle and hence intellectuals can be bought up cheaply!

Do not put your trust in politicians and do not get distracted by politics. [Pat] Buchanan, notwithstanding his many appealing personal qualities, was still at heart a politician who believed in government, above all, as a means of effecting social change. Second and more generally, however, I learned that it is impossible to have a lasting intellectual association with people who are either unwilling or incapable of grasping the principles of economics. Economics—the logic of action—is the queen of the social sciences. It is by no means sufficient for an understanding of social reality, but it is necessary and indispensable. Without a solid grasp of economic principles, say on the level of Henry Hazlitt’s Economics in One Lesson, one is bound to commit serious blunders of historical explanation and interpretation.

I concluded that the Property and Freedom Society not only had to exclude all politicians and government agents and propagandists as objects of ridicule and contempt, as emperors without clothes and the butt of all jokes rather than objects of admiration and emulation, but it also had to exclude all economic ignoramuses.

Read Hoppe's full speech here.