No Third Way Out

Creating A Capitalist Czechoslovakia

John Fund from the June 1990 issue

(Page 3 of 4)

I very much enjoyed sharing ideas with people at the conference such as Robert Poole, George Gilder, and Alvin Rabushka. That was very intellectually stimulating.

Reason: How did you first become interested in the ideas of classical liberalism?

Klaus: I was 25 years old and pursuing my doctorate in economics when I was allowed to spend six months of postgraduate studies in Naples, Italy. I read the Western economic textbooks and also the more general work of people like Hayek. By the time I returned to Czechoslovakia, I had an understanding of the principles of the market. In 1968, I was glad at the political liberalism of the Dubcek Prague Spring, but I was very critical of the Third Way they pursued in economics.

I worked in a department of the Economics Ministry that was meant to criticize non-Marxist economic theories. I was paid to read Western economic texts. In a way, the regime paid for their own undermining.

Then in 1969, I spent the spring term at Cornell University in New York. The invasion of August 1968 had already happened, but the hardline regime took several months to crack down on dissidents.

Reason: Did you remain quiet and hope the regime would not punish you?

Klaus: No, I remember very much enjoying the entries I wrote for the first Czechoslovakian Encyclopedia of Economics in 1969 and 1970. I prepared an entry on John Kenneth Galbraith that dismissed him as a social critic, rather than a serious economist. I was criticized for that. I also wrote the entry on "economic liberalism," and I enjoyed making that a dramatic and stirring attack of the role of government.

Eventually, they found me. In 1970, I was identified as the leading counterrevo- lutionary in the ministry and fired. They took special pains at my hearing to point out I was the worst one in the whole place.

Reason: What did you do then?

Klaus: I worked in very menial jobs for a while at the state bank. Gradually, the clirnate changed, and by the 1980s I was the unofficial adviser to the chairman of the state bank.

Reason: How did you come to know Vaclav Havel?

Klaus: We served on the editorial board of a literary monthly called Face in 1968 and 1969. He was a young writer, and I was also interested in broad cultural issues. We agreed on all major issues and became friends.

Reason: What was your role in the revolution of November 1989? How did you become involved?

Klaus: On November 17, the revolution began when the police beat demonstrators in Wenceslas Square. It galvanized the nation. I had been in Austria that day, giving lectures attacking government economic policy. You see, the regime already could not control its critics. I returned to the train station in Prague about 11:00 that night, unaware of what the police had done. As I walked up to my house, I met my 20-year-old son, Vaclav, Jr., coming from the other direction. He had been a victim of the evening's events and had barely escaped. He was white with fright.

We had a discussion right outside the house. "I saw you on Austrian television," he told me. "You make very good sense as a literary playboy, talking about what needs to change. But we students were beaten in the square tonight. We children did our job, and now it is the role of the parents to do somethinsg." The events in the square, of course, made a deep impression on me and many other parents. Two days later, Civic Forum [the umbrella political opposition group that overthrew the Communist regime] was started.