All Commentary
Wednesday, September 21, 2011

The Road from Mont Pelerin: The Making of the Neoliberal Thought Collective

This collection of essays tries to trace the influence, define the ideology, and question the validity or propriety of the philosophy known as “neoliberalism.” The book is structured around the notion that this term can be fruitfully defined as the ideas promoted by the Mont Pelerin Society (MPS).

The MPS was an organization of academics and some businessmen founded in 1947 by F. A. Hayek. Hayek is considered one of the founding fathers of and influences on the American political ideology “libertarianism”—which posits that the proper role of government is, at most, the preservation of private property and personal liberty.

The term “libertarianism” is barely used in this book, and the various authors (most of whom are clearly opposed to what they are studying) are conflicted or confused about how that pro-liberty, small-government notion defines the MPS/neoliberal perspective.

Various writers conflate their own theoretical assumptions with reality. Far more evidence is needed than coeditor Dieter Plehwe provides to insist that MPS intellectuals attempted to “develop an agenda diverging from classical liberalism.” Indeed, beyond Hayek himself, that sort of deep concern with intellectual history was rarely part of the working agenda of most major MPS thinkers. And other parts of the book correctly note that a strongly classical-liberal view of the State defined many Pelerines in the 1940s and now.

They undoubtedly saw liberalism as an unfinished intellectual project facing new problems in the postwar world. But to stress that point as much as this book does—coeditor Philip Mirowski cites “laissez-faire classical liberalism” along with socialism as one of neoliberalism’s “primary foes”—makes too much of the interesting gaps between a Hayek and, say, his uneasy MPS ally Leonard Read, the purist libertarian founder of FEE.

That the MPS mentality privileged freedom cannot be avoided. Plehwe quotes the original draft statement of aims for MPS, which states that freedom can only be preserved “in a society in which an effective competitive market is the main agency for the direction of economic activity” and promotes private property, “complete intellectual freedom,” and the nondiscretionary rule of law.

But Plehwe and Mirowski think all that freedom talk was a dodge, hiding the neoliberals’ aim to give strong power to a State they’d control in order to construct the unnatural world the Pelerines craved, largely to privilege corporate power. Yet the curious list of goals betraying an alleged “engineering mentality,” discussed by Mirowski and Rob Van Horn in their essay on the Chicago school, includes such things as eliminating conscription and allowing educational consumers a choice about where to spend the money the State steers to education. The difference between preventing the State from acting in certain ways and the State’s enforcing particular outcomes or income shifts eludes the authors, but it is key to understanding neoliberal thought.

The book’s first section traces the history and personalities behind neoliberal ideas in France, England, Germany, and the United States, all linked with MPS members. The chapter on England by Keith Tribe posits that the spread of democracy there in the twentieth century killed classical liberalism since strict limited-government principles were so politically unpopular that pushing for them became utopian. The chapter on the United States boldly attempts to rewrite the history of the Chicago school, claiming Hayek as its true founder, by weirdly conflating one Volker Fund-supported project at the University of Chicago to write an American version of Road to Serfdom with the Chicago school of economics writ large. (That the same chapter later points out that Hayek, the school’s alleged linchpin, wasn’t even able to get a job in the actual University of Chicago economics department doesn’t deter the authors from their strange and unsupportable thesis.)

The second section traces the evolution of MPS ideas toward unions, monopoly, and development, showing in all cases a shift toward greater advocacy of markets free of prescriptive rules from above or State-forced transfers of wealth or power.

The third section traces neoliberal ideas and alleged figures in the world of policy, including Chile’s Pinochet and Hernando de Soto’s promotion of property rights as the most effective way out of Third World poverty. The link between certain neoliberal economists and the hated Pinochet regime in Chile is used to condemn free-market policies as inherently authoritarian (even though Pinochet’s economic policy departed greatly from free-market prescriptions). Most of the intellectual weight of the critique of neoliberalism here comes from an overly clever insistence that the Pelerine belief in private property and minimal government comprises its own authoritarian project by rejecting majoritarian democracy.

If you wish to learn the history of MPS without a deceptive attack on its founders’ motives, look elsewhere.