"Constraints on Government"

Mont Pelerin Society-1980


Picture the scene, if you will: A grand dining room with perhaps 60 tables, each seating 10 people. As you walk across the room to your seat, you rub elbows with Leonard Read, Robert Chitester, George Stigler, and David Friedman. Off to your left is Barron's editor Robert Bleiberg, talking with legendary currency trader Nicholas Deak. At the next table you find columnist John Chamberlain, writer Jude Wanniski, and think-tank founder Antony Fisher. And up on the dais at the head table are William Simon, Rose and Milton Friedman, and a distinguished-looking man who turns out to be Manuel Ayau, president of a free-market university in Guatemala.

You pinch yourself, but the scene refuses to vanish. Similar luminaries are all around—economists, political scientists, institute presidents, foundation administrators, and writers whose reputation has preceded them. What you've encountered is the 23rd general meeting of the Mont Pelerin Society, founded in 1947 by F.A. Hayek. Dedicated to advancing the ideals of a free society, the organization has grown from a handful at its founding to over 400 today, representing over 30 countries. And as the failures of Keynesian economics and the welfare state have become more obvious, the society's free-market views have become increasingly listened to, debated, and in some quarters even accepted.

The theme of this year's meeting, held September 7-13 at the Hoover Institution at Stanford University, was "Constraints on Government." The various sessions were devoted to such topics as:

  • Can monetary policy make a difference?
  • Denationalization and deregulation
  • International migration
  • The underground economy
  • Do conservative governments make a difference?
  • Limits on taxation
  • How can government be restricted?

Some of these sessions led to spirited exchanges of views. David Friedman took to task the two presenters of papers on international migration for not espousing the classical liberal position of open borders. A lively discussion took place over the fact that denationalization and deregulation have gone considerably further in Chile under an enlightened military government than in countries like Australia, Canada, Britain, and the United States, where interest-group democracy has the upper hand. Sir Keith Joseph—Margaret Thatcher's industries minister—came under fire for the cautious pace of British denationalization.

In several of the sessions the divergence between conservative, classical liberal, and libertarian strains of thought became evident. On the underground economy, for example, some discussants seemed uneasy with the fact that people are engaging in wholesale tax evasion by such activities; others seemed delighted by it. Italian Antonio Martino called that country's underground economy "another Italian economic miracle" and Sweden's Sven Rydenfelt called it a resistance movement striking back at the repressive nature of his country's welfare state. Similar tensions—generally between older, more conservative participants and younger, more libertarian ones—were evident over immigration policy.

One of the most exciting aspects of the conference was its international nature. Achieving a free society is obviously of concern to writers and scholars in Europe, Latin America, South Africa, Australia, and Canada, as much as it is in the United States. The first-time observer was delighted to see the large contingent from Japan (complete with simultaneous translation services) and to learn of the Japanese success in dramatically reducing inflation by controlling the money supply. One learned firsthand about the deregulation of broadcasting in Italy, the wave of nationalizations in Sweden since a "conservative" government took over five years ago, the fact that a totally unregulated electric company had served Caracas, Venezuela, until this year (when regulation was introduced despite a history of declining prices), and about the complete deregulation of taxis and jitneys in Chile.

REASON was well represented at the meeting. From abroad came foreign correspondents Leon Louw (South Africa), Ole-Jacob Hoff (Norway), Michael van Notten (Holland), Joachim Maitre (Germany), and Fernando Linares (Guatemala). Also present were contributing editors Henry Manne, Alan Reynolds, and Murray Rothbard, senior editors Klausner and Machan, and this writer.

As was the case two years ago, libertarians from around the world got together one evening to bring each other up to date on the status of liberty in their countries. Organized by Murray Rothbard, the meeting heard reports from South Africa, England, Australia, Holland, Belgium, Denmark, Guatemala, Argentina, Iceland, and Canada, as well as the United States. The most optimistic report, surprisingly, was Leon Louw's from South Africa, where the Free Market Foundation is having a significant impact. Chris Tame reported on the success of his libertarian bookstore in London but cautioned against expecting very much from the Thatcher government. The delegate from Iceland told of an ambitious program of translating books by people such as Hayek and Friedman.

All in all, the tenor of the meeting was far more optimistic than that of the Hong Kong meeting two years ago ("Meeting of the [Free] Minds," REASON, December 1978). While the speakers were generally disappointed in the efforts of conservative governments to give more than lip service to rolling back Leviathan, the emphasis on such topics as deregulation, denationalization, tax limitation, and the underground economy reflected the direction in which the tide seems to be running: away from statism. In the final day's session Milton Friedman discussed the "economic bill of rights" proposed in his book Free to Choose. Pointing out that such constitutional changes could not guarantee freedom, he reminded the group that the process of arguing for and enacting such amendments would contribute to the intellectual battle needed to achieve a free society.

Responding to Friedman (and to a paper by F.A. Hayek, who could not be present due to illness), Thomas Sowell made a stirring case for developing a moral vision of a free society, rather than relying solely on economic arguments. The liberal left has such a vision, he reminded us, and has been promoting it for generations. You can't successfully fight rent control or minimum wage laws, for example, strictly on a case-by-case basis, he maintained: "It takes a vision to beat a vision. Fighting issue-by-issue is the equivalent of getting bogged down in a land war in Asia." Thus, Sowell is not as optimistic as Friedman about the value of piecemeal constitutional changes.

The closing banquet capped the week's events, which included, in addition to the many formal discussions, frequent occasions for informal camaraderie. Outgoing president Ayau surprised and delighted the group by singing an original song ("Is It True What They Say about Planning?"). The new president, Chiaki Nishiyama of Japan, was introduced by Milton Friedman. Nishiyama received his Ph.D. at Chicago under Hayek and participated in Friedman's money and banking workshop there. He has gone on to become one of the leading free-market advocates in Japan. His election symbolizes the fact that the movement for freedom is truly worldwide. And the Mont Pelerin Society's growth should give us all a ray of hope for the future of freedom everywhere.

Robert Poole is the editor of REASON and the author, most recently, of Cutting Back City Hall (Universe Books).