The Neoliberal Inhabitants of Mont Pelerin

 

 

In this post, I talked about the intersection of neoliberalism and neoclassical economics. There is a lot of talk on the left about neoliberalism, and a number of ideas about what it is. For me, neoliberalism refers to the general program of a group of economists, lawyers and othes loosely grouped around the Mont Pelerin Society. This description is used by Philip Mirowski in his book, Never Let a Serious Crisis go to Waste. Mirowski did a Book Salon at FDL, here; the introduction gives a good overview of the book, and Mirowski answers a number of interesting questions.

The writer Gaius Publius provides an historical perspective here.  Classical liberalism is based on the idea that property rights are central to the freedom of the individual, an idea espoused by John Locke, as the Theologian Elizabeth Bruenig explains here.

John Locke’s 1689 discussion of property in his Second Treatise on Civil Government establishes ownership as a fundamental relationship between the self and the outside world, with important implications for governance. In Locke’s thought, the justification for private property hinges upon one’s self-ownership, which is then applied to other objects. “Every man,” Locke writes in the Second Treatise, “has a property in his own person: this no body has any right to but himself.” Through labor, Locke continues, the individual mixes a piece of herself with the outside world. Primordial self-ownership commingles with material objects to transform them into property.

In this view, property is the central element that structures individual lives and then society as a whole. Those who have it are entitled to total control over it, just as they are over their own person. Perhaps they should even be in charge of operating the state. When you think about that era, you can see why that formulation would be popular: it solved the problem facing newly rich merchants and others under a monarchy. They were in constant danger that royalty would seize their property from them without fair compensation. Locke’s argument provides a framework to limit the power of the monarch. It also explains the relation between slaves and owners, and women and men. And, as Bruenig points out, it can be extended to justify protection of property with the same force allowed in self-protection.

The defense of property from interference by the State leads directly to the idea of small government. Government shouldn’t interfere with markets any more than it should interfere with any other use of property. The combination of these ideas leads to the principles of classical liberalism: nearly absolute personal freedom for those with property, and a tightly limited sphere of government action. This is the classical formulation of liberalism.

It lasted until the Great Depression and the New Deal. Franklin Roosevelt was faced with the rich on one side, and with angry and miserable workers on the other. These workers and unemployed people, and most of the citizenry were looking at the massive damage done by capitalists and their capitalist system, and saw that the system did not work for them. They were listening to the leftists of the day, socialists and communists; independent smart people like Francis Townsend; and powerful speakers and populists like Huey Long  and Father Coughlin. The elites were frightened of the power of these people to inform and structure the rage of the average citizen, and FDR was able to force them to capitulate to modest regulation of the rich and powerful and their corporations, including highly progressive tax rates.

FDR and the Democrats embraced the term liberalism, and the meaning of the term changed to include a more active state, to some extent guided by Keynesian economic theory. In this version of liberalism, the government becomes a tool used by a society to achieve the goals of that society. People who stuck with the old definition of small government coupled with massive force in the protection of property and rejected all Keynesian ideas were labeled conservatives.

The reformulation of the definition of liberal did not sit well with a segment of the conservatives. Friedrich Hayek and his rich supporters launched the Mont Pelerin Society in 1947. The point of the MPS is to preserve and extend classical liberalism, in an effort to prevent FDR-style liberalism from turning the US and other countries to socialism or something even worse. It is a diffuse group, not secretive, but it doesn’t seek publicity. It seems to content itself with publishing papers and having meetings at which like-minded people can talk to each other and feel good about their brilliance.

The name neoliberal comes from their desire to recapture the glory of small government capitalism. This is from a speech delivered by Edwin J. Feulner, the outgoing president of the group, in 1998:

But with the onset of Progressivism and the New Deal, many Americans became attracted to a political philosophy that was diametrically opposed to Jefferson’s. The new statist philosophy had great faith in public man, but was deeply distrustful of private man. It maintained, quite incorrectly, that the uncoordinated activities of ordinary individuals were bound to culminate in economic catastrophes like the Great Depression, and it looked to an all-good, all-wise and increasingly all-powerful central government to set things right. In the view of these statists — who brazenly hijacked the term “liberal” to describe their very illiberal philosophy — what we Americans needed was more government, not less.

The FDR socialists and communists brazenly hijacked the term “liberal” to cover their assault on the principles of small state property protection. That gives you some idea of the ressentiment of the neoliberals. They have a strong sense of entitlement, and they cling to grudges for decades. Hayek was perhaps most famous for his book The Road to Serfdom, written in the wake of World War II, a screed warning against socialism. That wasn’t going to happen, but it fit neatly with the ressentiment of the filthy rich capitalists who never forgave the Class Traitor FDR.

The Statement of Aims of the MPS is here.  It describes a limited choice: Communism or Free Market Capitalism This stark choice has

… been fostered by the growth of a view of history which denies all absolute moral standards and by the growth of theories which question the desirability of the rule of law.  It holds further that they have been fostered by a decline of belief in private property and the competitive market; for without the diffused power and initiative associated with these institutions it is difficult to imagine a society in which freedom may be effectively preserved.

This statement shows why the filthy rich love neoliberalism: it feeds there sense of self-glorification. That it lends itself to exploitation for their cash benefit is a lovely side benefit.

 

 

 

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18 replies
  1. Ben Franklin says:

    I’ve not seen you here, so if this is your first post, welcome.

    David Koch apparently sees himself as a classical liberal with his social liberal self-description and it’s just one of many labels which lack perspective when it comes to the notion of ‘property versus people’. Such persons suggest the people benefit from that semantic nonsense. It’s a simple question to ask, but ABC fails to follow with the question; “which takes precedent, when a conflict occurs?”

    Simply asked; but only the most extreme will argue that the ideology has resonance with any liberal values, other than the other ethnocentric labels confounding the identity politics of our generation. Abe Lincoln’s most painful carbuncles originated from his contemporary ‘Democrats’ to the angst of late 19th century Republicans.

    • earlofhuntingdon says:

      Ed, as Masaccio, has been around for a long time, here and at Firedoglake. It’s a delight to have him here regularly and more often. He brings an informed directness about economics, policy and law – the three are unavoidably linked, notwithstanding Friedmanite suggestions to the contrary – that is refreshing as a well-structured antitrust case. The latter, unlike Ed, is something no one has seen in several decades.

  2. bevin says:

    Then, as now, the acquisition of private property involved theft. The English society in which Locke lived, was halfway through a process in which the land was being de-communalised and privatised. The land and with it other common rights, over the woodland, for example and over wild creatures (the right to take a rabbit or partridge being redefined as poaching).

    Locke, notoriously, was like his Aristocratic patrons and connections, deeply involved in the Colonies (‘In the beginning all the world was America”) where the establishment of private property through plunder and piracy – mixing labour- was much less complex, and where those challenging it were disqualified on the grounds of savagery and idolatry.

    Neo-liberalism is often mistaken for conservatism but it is the complete opposite: a radical and novel denial of the rights of humanity and indeed of nature itself. It is a position which is untenable intellectually and only survives as a cynical ideology for criminals.

    • Neil says:

      It this how you win all your arguments? I can imagine you don’t find too many people willing to take the other side. I’m not sure where I would find myself in this taxonomy of liberalisms, but for sure Hayek has a better rap then Keynes.

      • Ed Walker says:

        If you really think Hayek makes any sense, then you do not want to read any more of my work. As far as I am concerned, he is a hack, whose prominence was purchased by people who hated Keynes personally, and hated his ideas. and stopped at nothing to discredit the smartest man of his generation. Hayek’s screed against the evils of socialism is funny in the exact same way the tortured prose of Ayn Rand is funny: it uses lots of words to hide selfishness and loathing for 99% of humanity.

        For a kinder view, read Keynes Hayek: the Clash that Defined Modern Economics, by Nicholas Wapshot. I have. That’s how I know about the source of Hayek’s influence. He was literally dragged from obscurity by the rich who support the selfish egoistic forms of economics that dominate today’s economic discourse, and which are the direct cause of the loss of the middle class.

        You can easily skip over my posts. On the other hand, think how much fun it is to prove I’m wrong.

        • Neil says:

          Examining the links you provided, I note that point 3 of the 6 enumerated topics of study for the Mont Pelerin Society includes this sentence:

          3. Methods of re-establishing the rule of law and of assuring its development in such manner that individuals and groups are not in a position to encroach upon the freedom of others and private rights are not allowed to become a basis of predatory power.

          This appears to be a basis for building a common ground with the Mont Pelerin society if your goal is to prevent the domination of society by a select group (i.e. the filthy rich).

          Has to how Hayek regarded Keynes, some of his thoughts on the matter are available on youtube, and I don’t think your description is apt.

  3. bloopie2 says:

    Interesting article, thank you. A couple comments.

    You say, “In this view, property is the central element that structures individual lives and then society as a whole.” I‘m not sure that statement follows from what goes before in your article. I can see property and self-ownership and such as being ‘good things’, but not as necessarily becoming “the central element that structures … society as a whole”. Is that impossible? It seems to me that life in most states is a series of compromises among community members. The ideas of property and self-ownership should be able to flourish in a non-absolute-capitalist society. Are you saying that they can’t or shouldn’t? Where’s the middle ground?

    Also, perhaps not the best thing to say, “It seems to content itself with publishing papers and having meetings at which like-minded people can talk to each other and feel good about their brilliance.” Those people are not like us, of course. (Just sayin’).

    A good read, thank you.

    • Christopher John says:

      Property rights in Locke structure society in theory because they structure the government and the law. Locke conceived of property as part of the immutable triad of “natural rights” which governments are created – and contractually obligated to protect. Further, Locke imposed limits on the power of government (including, in extremis, the right of the people to abolish it) so as to protect those same natural rights. Hence, the right of property structures society in a very literal sense, so long as one’s political constitution follows Lockean principles.

      Moreover, since historically the protections extended to property by government were enjoyed only by the minority that actually ownedit (mainly in the form of land), that meant that the property owning elite was specially privileged in law, protected by government, and able to dominate society with a degree of impunity granted by the sanction of law and the submission of government to their will.

      But Locke is not all bad! Indeed, most of the section “On Property” in the Second Treatise of Government clarifies in very useful (e.g. to Marx) terms, and with good practical examples, why property should be considered a ‘natural’ right: because without it, there IS no life, nor meaningful liberty. If the hunter in the forest cannot call the deer he shot his own, his life is jeopardized. The point here is not merely that fruit of his labor is rightly his. The more powerful underlying principle is that property is provisioning, is sustenance: only those secure in their property can be secure in life (existence) or in liberty (freedom of conscience and of action).

      Shorn of its thin defense of baronial privilege (the paragraphs on money at the end of “On Property”), Locke’s notion of property has been a very powerful and important principle of justice, which stands at the heart both of the socialist critique of capitalism and of the later ideologies of social democracy (including the New Deal – cf FDR’s “Economic Bill of Rights”). If we are serious about guaranteeing liberty (in a meaningful way) to all, then we either have to have collective ownership of productive property (socialism) or collective entitlement to the wealth of the nation (social democracy, with guarantees of a minimum standard of living to all).

  4. DWBartoo says:

    Ah, masaccio, so very good to see you here. Your perspectives and insights, are, as you know, much appreciated.

    DW

    • Ed Walker says:

      Thanks, DW. Good to see you here. I’ve been thinking about these issues for some time, and doing a lot of reading about neoliberalism and its intersection with neoclassical economics. You will remember from FDL that I don’t think much of mainstream economics, which forms the basis for neoliberalism. Piketty goes through a number of the ideas of neoclassical economics and dismantles them, and he encourages everyone to look carefully at the armchair speculations divorced from data mainstream economists love and teach. We have to do the same thing with neoliberalism as a form for organization of society. Personally I loathe it, as you know, and I hope to show why over a series of posts.

      • DWBartoo says:

        Clearly, masaccio, you are enjoying this process of education, which is only fair as I thoroughly enjoy and appreciate what you are sharing. As you know, I am in complete agreement with you and have loathed neoliberalism since first I encountered the term, in the early 1990’s, as it explained what was increasingly obvious to me by the late middle 1960’s, which was simply that it was apparent that little new wealth was actually being created, that it was the commonwealth of societies that was to be extracted. Now I had by the 1990’s come to agree with the view that we needed to change our approach to the use of land-based resources from extensive use to intense use … that is, for example, to change our approach to a forest from clear-cutting to managed selective cutting … to actually see the trees as the forest, both as it is and as it might be managed for sustained productivity and the health of the forest, as well as its value as watershed, home to wildlife, flora and fauna, and a sacred place for those human beings with the wit to recognize that we’ve not been out of our trees for all that long a time, as a place for re-creation, as well as recreation. At some point, it became clear that money didn’t give a damn for or about long-term resource management plans OR the state of the earth itself … Money only cares about money … maximizing its short-term “growth” and resisting any attempt to thwart money’s interest in controlling everything. Not because money and the astute that love it really care what we think, because the Big Players, too many of whom I have encountered, do consider themselves brilliant beyond measure and rightfully entitled to be as greedy as they wish. Those whom I now term the neoliberal elite, have attained, in the USA, and elsewhere, the five hundred-year-old wish of the obscenely wealthy … virtual control of the world’s economy and political systems everywhere … and that is revealed in the blatantly arrogant phrase which marked the first public “face” of neoliberalism, “Greed is Good”.
        The mask has now slipped off that face as it leers its contempt …as it ignores existing Rule of Law with impunity, writes new, self-serving laws and dictates budgets that the political class, all bought, and on short leashes, rush to pass in ordered bipartisan compliance.

        DW

  5. Ed Walker says:

    It might be easier to see this point if you read the discussions of Bruenig, who looks at these issues from a Christian point of view. As I read her essays, and there are others besides the one I linked, she thinks that for Locke and classical liberals, property rights are a central feature of the composition of the self. That is, in her view, different from the idea of property in Christian ethics and theology. Perhaps the Christian view would be one form of middle ground.

    There are others.

    I think societies have a right to set themselves up as they wish. I think the current form of US capitalism is the road to serfdom, and that there are perfectly sensible ways to organize ownership of property that don’t give all the money to a few people. In the US, 16000 households own as much wealth as the bottom 90%. Is that a good way to organize a society? What should we do about it if it isn’t?

  6. c1ue says:

    I would simply note that there is a huge difference between ideology and practice.
    Ideologically – the rule of law seems to make perfect sense. Operationally, the rule of law as it evolves over time inevitably devolves into an affair of specialists – which in turn directly benefits the wealthy who are best able to procure and deploy the best specialists.
    Ideologically – property rights also seem to make perfect sense. Operationally, said property rights evolve into means of avoiding societal obligations – which also best benefit the wealthy because they are most able to replace the benefits of society via private means.
    Thus to me, much of the conflict between neoliberalism and other “schools” is merely Sturm und Drang.
    What matters most is the stage of evolution of said ideology: They’re all fine to start with, and they all get worse as time goes on.

  7. Neil says:

    I do not believe in fate, either for myself or for societies. I am also uncertain as to whether an ideology can be said to evolve. But even if evolution is an appropriate metaphor, this does not give us any predictive power.

    I think this quote that is widely attributed to Keynes is relevant to your point:

    “The ideas of economists and political philosophers, both when they are right and when they are wrong are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually slaves of some defunct economist.”

    ( http://www.goodreads.com/quotes/158386-the-ideas-of-economists-and-political-philosophers-both-when-they )

    • c1ue says:

      You may note that I separate ideology from practice.
      The ideology of Free Markets may not change, but the practice of how Free Markets actually operate in the real world very much does. There are many examples including the various anti-trust legislations and their railroad act opposites.
      Equally the quote from Keynes fails to note that those in wealth and power continually seeks ways to extend and justify this wealth and power. Thus it is difficult to dogmatically say that ideology or ideas rule, when there are numerous examples of wealth choosing ideology or ideas for its own purposes.
      The Koch brothers and the various environmental NGOs are good examples of this.

  8. Jeremy Grimm says:

    Mirowski’s book opened my eyes to many ideas entirely new to me. I am still absorbing it. It was a difficult but worthwhile read … need to read it again. I am pleased to see the discussion of neoliberalism continued here and hope to see further posts. The book seemed to live briefly after it came out only to flicker to a dulling glow far too quickly.
    I also appreciate your reference to Bruenig. I do not know of her or her writings but will seek them out. I share your loathing for neoliberalism and appreciate gathering all the ammunition available for attacking neoliberal ideology. I believe social and economic philosophy and ideology have much greater importance than they commonly receive, strongly agreeing with the quote from Keynes which Neil cited in the comments above.
    Reading your post called to mind some vague notions I picked up from other readings. Many theories of society begin with a theory of human nature.
    Veblen’s “Theory of the Leisure Class” displayed many predatory even parasitic characteristics of the leisure class. His discussion was suggestive of a theory of human nature, of different types of individuals motivated by different ends. I thought of makers and builders of things as a contrast to the leisure class. This idea connects to the Protestant idea of a calling, which broadens the scope of human natures.
    Barry Lynn’s books, “End of the Line” and “Cornered”, suggest an entrepreneurial nature … a human nature different than the predator or parasite. The entrepreneur is the maker and builder of enterprise. These books document the consolidation of markets and power and the ways in which that consolidation stifles entrepreneurs and stifles another type of nature, that of inventors and creators. Lynn described the freedom to create an enterprise as something a society provided through its laws, customs and savings as part of a shared common. This idea undermines the neoliberal idea of the entrepreneur heroically creating an enterprise from nothing.
    Many theories of society include a theory of justice. When I still read Krugman, I read one of his op-eds that referred to Rawls’s Justice as Fairness. As I recall, he discussed Rawls in connection with the mal-distribution of wealth resulting from the neoliberal idea all the income from an enterprise, above costs determined by the free market, should belong to the entrepreneur.
    But all the ideas I noted stem from critiques. Are there any syntheses of such ideas which counter Hayek and Rand you might refer me to? An ideology should contain more than a critique of another ideology.

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