How Free-Market Thought Succeeded By Getting More Radical

A brilliant history shows libertarianism, even when uncredited, changing the world.

The Great Persuasion: Reinventing Free Markets Since the Depression, by Angus Burgin, Harvard University Press, 303 pages, $29.95

Angus Burgin, an historian at Johns Hopkins University, has produced a well-researched, well-written, and largely well-thought-out study. The Great Persuasion chronicles the intellectual adventures of F.A. Hayek, Milton Friedman, and the other market-supporting academics, think tankers, and businessmen who comprised the Mont Pelerin Society, founded in 1947. It also offers Burgin’s accounts of who he thinks were Pelerin's most important intellectual predecessors. The book’s only overarching flaw is that Burgin at times seems confused about what ideology his book is a history of, conflating conservatism with libertarianism. It’s a mistake I strove to correct with my 2007 book Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement, which reports on many of the same characters and stories as Burgin.

Burgin knows there is a distinction between the two ideologies—he mentions libertarianism a few times—but he misses the importance of the distinction in ways that complicate his efforts to link post-Pelerin developments to pre-Pelerin forebears. In many respects Hayek and especially Friedman represented something new, or at least long missing in action, under the intellectual sun. So Burgin talks about evolutions in a body of thought that are more fruitfully explained by imagining a new species inhabiting fresh ideological space. When Burgin writes of a “they”—the free-market advocates he traces from the ‘30s to now—who saw “their assumptions and arguments discreetly but decisively transformed” in the direction of greater acceptance of untramelled free markets, I’d argue that there is no “they” there; that Burgin is really telling the story of the rise of libertarianism from its ur-roots, without crediting it as such or widening out its story from Hayek and Friedman.

Burgin starts with the king of 20th century interventionist economists, John Maynard Keynes, lamenting in 1924 that the popular mind had embraced a vulgar simplification of economists’ thinking and thus believed in unrestricted free markets. (Those were the days: laissez-faire, allegedly the unconsidered prejudice of the masses.) Keynes declared laissez-faire intellectually dead among the more educated class and the economics profession, and by the end of World War II that death sentence seemed so obviously true that an international group of economists, philosophers, and businessmen who still believed in the competitive market (though even they tended to reject pure 19th-century laissez-faire) felt so embattled and lonely they create a brotherhood, the Mont Pelerin Society, to keep the flame of those ideas guttering in their professions and countries. While in and of itself the group, which met regularly to discuss and hash out ideas related to markets and liberty, did no persuading and produced no branded work, its members—especially Friedman—often identified the sense of fellowship, intellectual exchange, and connections it provided with helping cement their ideas and strengthen their intellectual work.

Burgin tries to create a direct lineage for Pelerin in the early 20th century, citing the first-wave Chicago School economists Frank Knight, Jacob Viner, and Henry Simons. Those figures did teach a second wave of strong free-market defenders, most importantly Friedman. But in modern, post-Friedman terms, they barely qualify as free-market advocates at all. As Burgin writes, “they varyingly embraced the prospects of public works programs, progressive taxation, social insurance, and vigorous antitrust policies.” Knight was aggravated by the pro-market writings of the London School of Economics' Lionel Robbins (who brought Hayek to teach at the LSE), believing he promoted a “picture of laissez-faire bordering on the conception of a worldwide anarchist utopia...a vision of universal freedom and brotherhood, if only governments would cease from troubling and politicians go out and die, except for police functions.”

Knight also worried over the morality of markets, sounding less like an ancestor of Milton Friedman than an ancestor of a Brooklyn lit-zine editor with his lament that “a considerable fraction of the most noble and sensitive characters will lead unhappy and even futile lives” in modern capitalism. When Knight wrote that neither “freedom nor truth can be treated as an absolute,” he could have passed as an Ayn Rand villain. At best, these first-generation Chicagoites endorsed free markets as a least-bad solution; none saw particular virtue or creative power in them, and none saw himself as a part of a movement promoting them. Friedman when young believed Henry Simons was a free-market guy, but when he re-read Simons later he was shocked to think he had ever thought so.

Burgin admits that this generation’s “measured approach proved ineffective in preventing the rapid expansion of the state,” which is why a distinctly libertarian tradition arose not just from Hayek but from the more strongly free-market Austrian economist Ludwig von Mises, who gets too little attention in this book. This tradition spread through characters and institutions that Burgin only alludes to, from Rand to Leonard Read and the Foundation for Economic Education.

But Burgin's scholarship breaks some fresh ground in the popular history of market ideas. He rescues, and tells in as fine a detail as I’ve seen, the story of how the American star journalist Walter Lippmann rose then quickly fell from a position as leader of an ur-libertarian movement in the late 1930s. Lippmann was the direct inspiration when Hayek and others formed a proto-Mont Pelerin Society, which they threw together in 1938 for just one meeting under the name “Colloque Lippmann.” Lippmann also inspired the strategy pushed by both Pelerin and the 1940s-’50s libertarian funding organization the Volker Fund (which funded Americans’ travel to Mont Pelerin meetings): In a world where market advocates were scattered and alone, find them and get them communicating with each other, across national and disciplinary boundaries.

Lippmann pulled proto-libertarian thought together in accessible form in his 1937 book Inquiry into the Principles of the Good Society. He was no radical, explicitly distancing himself from Herbert Spencer, the 19th-century classical liberal who most closely resembles a modern libertarian. (While Spencer was willing to argue that, say, the state didn’t have the right to protect people preemptively from quack medicine through licensing, Lippmann found such conclusions embarrassing.) It is a telling sign of the moribund quality of this pro-market crowd that when Mont Pelerin launched a decade after the Colloque Lippmann, a nearly identical team was responsible; hardly anyone new had arisen in defense of these ideas. Lippmann’s work failed to gin up many new defenders. That perhaps justifies the general desuetude in which his reputation has fallen in the historiography of 20th-century market popularization, a fall Burgin laments. Lippmann was chary of seeming either a propagandist or tool of any moneyed interests, and by the end of World War II wanted nothing to do with any organized promotion of market ideas; Hayek, annoyed that Lippman refused to meet with him on his 1945 Road to Serfdom book tour, and noting Lippman was generally being aloof with all "our other friends in America with whom he used to agree," decided that Lippman had turned against his ideas; certainly he was never again an enthusiastic promotor of them. 

Burgin admits that despite all their talk—and there was much such talk, though non-libertarian historians of the Pelerines make more of it than is warranted—about moving above and beyond 19th-century liberalism, the Mont Pelerin crew was “remarkably vague” about how or what needed changing in it. They never “identified precisely what the [non-laissez-faire but non-socialist] vision entailed,” he wrote; nor is there a lot of evidence they tried very rigorously. 

The Pelerines—according to a founding statement crafted by Lionel Robbins—claimed to believe in “moral absolutes,” but they never dared make the anarchist leap of applying the moral standards of individual behavior to the state. Between the lines in Burgin one detects the aching need for the libertarian project that Rand and Murray Rothbard made popular; defenders of free markets needed the moral base and the outrageous consistency of their thinking.

These post-Pelerin libertarians who Burgin barely mentions, especially Rand and Rothbard, really did what he says the Pelerines strove for—“provide a convincing account of the ethical foundation of a market-centered world.” An attempt to defend free markets without defending freedom—the ability to do what you want with your life and property as long as you aren’t directly harming others—is going to seem wan, confused, or incomplete. One might question the rigor or success of Rand or Rothbard’s project, but at least they really did it. Unfortunately for some of the Pelerines, who seemed to be dying for an airtight intellectual excuse for at least some interventionism, their side never succeeded in a complex defense of their non-laissez-faire attitudes.

Embedded in the original Pelerin group were the likes of the German-born economist Wilhelm Röpke, with his belief in, as Burgin categorizes it, “forceful state interventions” to guarantee a properly artisanal and agricultural economy. But rather than wonder how a Röpke perspective evolved into a Friedman one, it’s better to recognize, as Mises did, that Röpke just didn’t belong in the Mont Pelerin Society to begin with as far as its core commitments go. The stated distaste for laissez-faire and for market defenders who went “too far” is a real element of the early Mont Pelerin mix, and much beloved by those seeking surprising ironies in intellectual history. But too much is made of it, especially in the context of the important and lasting things that came out of Pelerin. Who today remembers Röpke?

Burgin interestingly contrasts Hayek and Friedman’s two most popular early works, Road to Serfdom (1944) and Capitalism and Freedom (1962): Serfdom was “a defensive manifesto for an ideology in a state of retreat and disarray” while Friedman’s work “provided a platform for a movement that was prepared for an aggressive offense.” Friedman is presenting as evolving from institutions such as Pelerin and the Volker Fund with a bolder, more libertarian defense of markets, willing to admit he thinks “society needs a few kooks, a few extremists” and willing to argue that the supposed historical defects of 19th-century laissez faire might be largely mythical. Despite all this, his ideas shaped a lot of the modern Republican Party’s stated views on everything from taxes to welfare to the draft to inflation. Burgin makes a convincing case that rhetorically, Milton Friedman created Ronald Reagan. Despite the president’s failures, this might explain why so many libertarians still have deep affection for Ronnie. Burgin makes the case that Friedman succeeded with the public beyond the dreams of most other founding Pelerines even as he strode ever closer to true laissez-faire.

All my arguments with this book are presented in the spirit of engaging with a fine and important work. It is a very smart volume, well worth the time of anyone who cares about free-market thought, and Burgin almost never tips his hand about whether he believes his subjects were right or wrong. Even this libertarian partisan thinks Burgin somewhat overestimates the extent to which the Pelerines succeeded in reversing the victories of the Fabian socialists whose techniques they emulated. But they certainly played a role in forming what the British historian A.V. Dicey, who shaped Friedman's theories of social change, called the “spirit of an age,” what Burgin colorfully calls “an implicit rebuke to the fatalism engendered by encounters with the real.” They did it, contra what Burgin sometimes implies, not by being conservatives, but by being libertarians.

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  • ||

    A brilliant history shows libertarianism, even when uncredited, changing the world.

    Libertarianism, libertarianism everywhere and not a drop to drink.

  • mtrueman||

    Haven´t read this book, but I have read noted libertarian Alan Greenspan´s ¨Age of Turbulence.¨ Greenspan has an interesting section on the history of Economic thought in America. It begins with Adam Smith, naturally enough, and then goes on to Robert Owen, the founder of the Utopian commune of New Harmony, Indiana in the early 19th century.

    Astonishingly, he skips over Alexander Hamilton completely. The man who did more to shape the early American economy than anyone else. Hamilton was a notorious protectionist of course, and I suppose is an embarrassment to libertarian economic historians.

    I get the impression that this book is not much better than Greenspan´s. Where the 19th century is discussed in the review, it is in glowing terms of a ¨pure laissez faire capitalism,¨ completely obscuring the legacy of Hamilton.

  • Killazontherun||

    Legacy of Hamilton? Like the First Bank of the United States? Can you say bust?

    The wholesale price index for 1791 was at 85, by 1796 it was at 146 an increase of 72%. That isn't growth we are counting there but the effects of insane monetary policy.

  • mtrueman||

    OK, you convinced me that Hamilton, unlike Smith and Owen, doesn´t deserve a mention in a libertarian economic history of America.

  • Killazontherun||

    For one, economic history, in America or elsewhere, doesn't begin with Smith, and for another, your proposition that free market economist avoid Hamilton is preposterous.

  • mtrueman||

    I´m only reporting what I came across in Greenspan´s book. As I said in my first post, I haven´t read the book by Bergin, so I don´t know if he mentions Hamilton.

  • Ken Shultz||

    "Friedman is presenting as evolving from institutions such as Pelerin and the Volker Fund with a bolder, more libertarian defense of markets, willing to admit he thinks “society needs a few kooks, a few extremists” and willing to argue that the supposed historical defects of 19th-century laissez faire might be largely mythical."

    And people still find that thinking about the laissez faire of the 19th-century controversial.

    As if the government's failure to protect the rights of workers, minorities, and women were somehow the fault of the free market!

    Such is life when you're one of the "few kooks" or "extremists": people credit the market's successes to the government--and the government's failures are somehow really the fault of laissez faire.

  • A Serious Man||

    Remember: the notion that other people aren't your property and that people ought to be free from as much authority as possible is kooky and extreme.

    The belief that we need centralized planning and government control and regulation by Top Men in all aspects of our lives is bold and visionary.

  • SIV||

    tl;dr

  • Anonymous Coward||

    OT:

    Watchdogs, conservatives rap Obama's new advocacy group

    Watchdog groups and President Obama's conservative foes alike are criticizing his decision to transform his vaunted campaign operation into a non-profit advocacy group that will fight for Obama's second-term agenda.

    The new group, Organizing for Action, will take unlimited donations from corporations and individuals as it mobilizes volunteers to advocate on key policy issues such as gun control, immigration and climate change. In a preview of the upcoming battles, executive director Jon Carson told supporters over the weekend that the new group would target lawmakers endorsed by the pro-gun National Rifle Association with commercials — as part of a larger administration campaign to reduce gun violence.

    Obama's decision to transform his vast campaign operation into a tax-exempt organization that will advance his policy initiatives is unprecedented for a sitting president. In an e-mail to supporters, Obama vowed to make the group "an unparalleled force in American politics."

    Perpetual war, perpetual increased spending, perpetual campaigning.

  • A Serious Man||

    So instead of having the government do it, his PAC will be the ones plastering the Dear Leader's face and image all over the airwaves and billboards of America.

    I don't think it'll change public opinion much, though. And the GOP just has to keep blocking shit like that in the House and Senate and wait for the blowback against Obama and the Dems over the gun issue in the midterms.

  • sloopyinca||

    I support their free speech rights. I just hope Americans are wise enough to wake up and smell the bullshit.

  • A Serious Man||

    Remember, PACs are the ones that really up the levels of bullshittery. I fully expect to see gun control ads featuring children reciting talking points and global warming ads featuring children and polar bears or some such shit.

  • sloopyinca||

    So do I. And I hope people in the media call ti out for what it is: bullshit pandering.

    The NRA needs to get out ahead of this and trot out real life cases where guns have saved lives. Sticking Wayne LaPierre on TV instead isn't doing them any fucking good.

  • Killazontherun||

    ^This can't be stressed enough. That assburger is the incarnation of negative charisma.

  • Whahappan?||

    Actually, the Libertarian Party has ads running in the New York talk radio market doing just that. I was pleasantly surprised.

  • nicole||

    I fully expect to see gun control ads featuring children reciting talking points and global warming ads featuring children and polar bears or some such shit.

    Someone should start a libertarian PAC that does nothing but air commercials about Korematsu. "Your government reserves the right to put you in a concentration camp. Bet you didn't learn that in your government school."

  • sloopyinca||

    I'd donate to that.

  • BakedPenguin||

    Second.

    I wanted to do a fake commercial about the War on Drugs - first, show a housewife putting groceries on her kitchen table: "I have children, and I don't want them making the mistake of doing drugs. [pause] And if they do make that mistake, and get caught, I want to make sure they get raped and brutalized in prison. That's why I'm for the war on drugs."
    Cut to some worker in a hard hat: "I like knowing that police and prison guards are often corrupt, and that dealers are often the ones paying them money. That's why I'm for the war on drugs."
    Some guy at a computer: "I have a website that posts before and after pictures of meth users. If meth were legal, it would be of much better quality and wouldn't devastate its users like that. That's why I'm for the war on drugs."
    An old woman: "I like knowing our public policy guarantees that violent foreign criminals get rich. That's why I'm for the war on drugs."
    Then, each of them in one corner of the screen: "That's why I'm for the war on drugs."

  • Pi Guy||

    I'd like to play the guy on the computer in your infomercial. Or the mother. Whichever.

  • Nuked||

    ^^ great idea.

  • Gene||

    The next PSA in the series should be- shows a bug eyed cop holstering his gun then panning down to a dead dog: "I'm basically a psychopath and yet I receive a great pay and benefits. The best part is that I am called a hero. That's why I am for the war on drugs"

  • TheZeitgeist||

    ...points and global warming ads featuring children and polar bears or some such shit.

    Polar bears and tots gunning down Exxon Mobile execs with AK's would short-circuit a liberal's brain sparking both a dream and nightmare same time. Perhaps such ad products are in order.

  • BakedPenguin||

    They should get uniforms with matching brown shirts.

  • Romulus Augustus||

    Who should we nominate as their Horst Wessel?

  • The Immaculate Trouser||

    Sandra Fluke.

  • Romulus Augustus||

    That name occurred to me too, but she has yet to be martyred.

  • Heroic Mulatto||

    It's going to be, he of the open casket, Noah Pozner.

    I hear they've already begun construction of his mausoleum.

  • Russell||

    Mount Pelerin has, for the last decade or more been mightily imposed upon by corporate PR hacks. Some few of the funder's proteges have found there's more money in arguing unreasonably on behalf of their clients than attending to the Reason party line.

  • Palin's Buttplug||

    George Soros is the last in the Mt. Pelerin lineage.

    Many here (Beckerheads) despise him for it.

  • The Immaculate Trouser||

    What does that even mean?

  • Palin's Buttplug||

    Soros is despised here due to Glenn Beck's hatred of his rationalism/atheism.

    The conservatives here follow Beck. They are 'Beckerheads' - like Limpy's 'dittoheads'.

    John (the poster here) is a Beckerhead.

  • iggy||

    Has anyone ever actually claimed to listen to Glenn Beck on this site? This is almost as delusional as when you claimed that the National Bureau of Economic Research was a front for AM radio.

  • ||

    Soros is despised (you know he's a convicted felon in France for insider trading, right?) because he's a faux-liberal with no moral compass.

    I learned to view him with indifferent skepticism him during my time in financial services. I learned to despise him when he played compassionate politics.

    The left are a bunch of hypocritical idiots for babbling on and on and on and on about Koch and Haliburton but remain silent on this piece of work.

    He PROFITS of the misery of entire nations. He's a currency pirate.

    So stuff your Beckerhead theory. And for the record, if you ask me, between Matthews and Beck, the former is by far the biggest piece of shit on TV.

  • ||

    Sorry, profits "off." And one to many "hims" in paragraph two. I learned to view him with indifferent skepticism during my time in financial services. Once REMOVED from that cocoon, I learned to despise him politically.

  • Palin's Buttplug||

    Soros PROFITS because other nations debase their currency.

    Just like the goldbugs claim should happen.

    And Soros is LP 99%.

    Go suck Beck's dick then - he hates liberty and our GDP rebound.

  • ||

    And Soros is LP 99%.

    Yeah, just like you are. Speaking of dicks that need sucking...

  • Red Rocks Rockin||

    LOL at your "GDP rebound" accomplished with nothing but deficit spending.

    Funny how you suck the current admin's cock on this while excoriating dubya for doing the exact same thing.

    You're such an easily refuted little bitch, shrike. Give me a chance to teach you 5th grade math again.

  • iggy||

    I love people claiming we've had a 'GDP rebound' when we have 1.5% annual GDP growth and we're running deficits of 6% of our total GDP. We'd have negative GDP growth without absurd, unsustainable government spending.

    That's quite a rebound.

  • iggy||

    Also, George Soros once said that he has feels no guilt for working with the Nazis as a kid because if he hadn't done so, someone else would have. Now I don't think we can blame Soros as a fourteen year old for protecting himself in a very dangerous situation. But if you go and look at the 60 Minutes interview where he talked about this, he comes off as so staggeringly callous and doesn't seem to actually care about what happened to other people.

    I mean look at this, from the 60 Minutes Soros interview:

    KROFT: Went out, in fact, and helped in the confiscation of property from the Jews.

    Mr. SOROS: Yes. That's right. Yes.

    KROFT: I mean, that's - that sounds like an experience that would send lots of people to the psychiatric couch for many, many years. Was it difficult?

    Mr. SOROS: Not - not at all. Not at all. Maybe as a child you don't - you don't see the connection. But it was - it created no - no problem at all.

    KROFT: No feeling of guilt?

    Mr. SOROS: No.

    Again, I'm not blaming Soros for what he did in that situation. But he clearly doesn't give a damn about the fate of anyone not named George Soros.

  • JeremyR||

    To be honest, I think he probably enjoyed it. Which is why he made a career of attacking other people's property.

  • ||

    How's that team blue cock taste you slimy little demfag?

  • The Immaculate Trouser||

    What does that even mean?

  • Kreel Sarloo||

    Palin's Buttplug| 1.26.13 @ 8:05PM |#

    Soros PROFITS because other nations debase their currency.

    Soros does not just PROFIT because other nations debase their currency, he advocates to exact political policies that cause the debasement of those currencies.

  • Robert||

    Burgin at times seems confused about what ideology his book is a history of, conflating conservatism with libertarianism.


    That's what vexed me so about the TV mini-series on this subject, "The Commanding Heights".

  • waaminn||

    Sometimes dude, you jsut gotta roll with it man!

    www.ImAnon.tk

  • Max||

    The problem is thinking historically Libertarianism was cooked up by Rand and Rothbard, something they denied. When modern Libertarianism was created by Gilson with help from Hospers, Nolan and others creating a political movement, Rothbard refused to have anything to do with it at the beginning.

    See www.libertarianinternational.org for the world Libertarian movement.

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