In the 1970s and ’80s, the world’s most advanced economies were reconstructed on the basis of principles that had until recently been thought the “prattle of outmoded cranks,” as the Johns Hopkins historian Angus Burgin puts it. But the cranks had a point, and in The Great Persuasion, Burgin gives a sympathetic account of how they went about making it. When John Maynard Keynes’s General Theory appeared in 1936, it won the apostleship of an entire rising generation of economists and the allegiance of Western policy makers. Only in a few isolated redoubts—notably the London School of Economics and the University of Chicago—did economists continue to worry that Keynes and his followers were throwing out the constitutional baby with the fiscal bathwater. None could manage a cogent critique of Keynesianism, or more generally of what they called “planning,” before the Second World War broke out. The wartime explosion of government planning and deficit spending seemed to validate Keynes’s precepts.
The most philosophical of Keynes’s detractors, the Austrian exile Friedrich Hayek, saw planning as a threat to the freedoms of the modern West. His elegantly argued book The Road to Serfdom (1944) depicted social democracy as a gateway drug to totalitarianism. “More and more people,” he said at the time, “feel that we are ineluctably moving towards a kind of social order which nobody wants and which we have yet no power to avert.” In hopes of developing that power, Hayek convened a meeting of like-minded intellectuals in Switzerland in 1947. The annual gatherings of the Mont Pèlerin Society would provide the seedbed for Reaganism and Thatcherism. How that happened involves a grand story about intellectuals in the wilderness, about the peculiarities that led conservatives to develop their ideas more in think tanks than in universities, and about how politics and conformism eventually smother all intellectual movements, even those built explicitly on independent thinking.
The early free-market revivalists were not, for the most part, dogmatic. Chicago professor Frank Knight admitted that under capitalism “a considerable fraction of the most noble and sensitive characters will lead unhappy and even futile lives.” His colleague Jacob Viner wrote, “Nothing in the history of American business justifies undue confidence on the part of the American public that it can trust big business to take care of the community without supervision, regulation, or eternal vigilance.” The star-crossed libertarian Henry Simons warned that the “great enemy of democracy is monopoly, in all its forms,” and called for a “steeply progressive” income tax. Walter Lippmann’s skeptical book The Good Society (1937) was, Burgin writes, a “foundational text” for Hayekians. That a prominent progressive and a founder of the New Republic would defend markets was emboldening. “It is a rare find for them to catch a Lippmann,” wrote the historian Charles Beard, “and they are tickled to death, like a child with new boots.” Hayek himself dedicated The Road to Serfdom to “socialists of all parties.”
In order to counter the political doctrines that had taken over in the academy, Hayek aimed to found an organization “half-way between a scholarly association and a political society.” What this meant was unclear at first. Burgin is interested in the ins and outs of institution building—from the role of foundations in financing Hayek to the “reputational risk” young academics felt they were courting in exposing themselves to him. Frank Knight, who believed “the very concept of discussion excludes all use of force, including persuasion, in any form,” worried that the project was too strident. Many of those who gathered around the brilliant Viennese exile Ludwig von Mises at NYU believed there was nothing in nineteenth-century laissez-faire that required fixing. They saw Hayek as a trimmer and a sellout. You might call the Mont Pèlerin Society the nucleus of the best thinking done in the social sciences in the generation after the war. You might also call it the original sin of the conservative movement: It tended intellectually toward complexity and politically toward simplification.
Postwar conservatism would be built around answering the basic question Hayek posed—whether there was any link between social and economic freedom. This question split the first conferences neatly in two. The American delegations (including the Central Europeans who had moved there) were made up largely of academic economists, eventually led by Milton Friedman and George Stigler. Their focus on unleashing capitalism would lead to supply-side economics.
While the Americans were careening giddily into their imperial future, the Europeans were clambering out of the moral abyss. They could be forgiven for thinking regulatory reform and tax cuts were off the point. They were a more varied lot of intellectuals, including the Hungarian philosopher of science Michael Polanyi, the German sociologist Alexander Rüstow, the French sociologist Raymond Aron, and his philosopher compatriot Bertrand de Jouvenel. The German economist Wilhelm Röpke spoke for them when he said, “The disintegration of the moral foundation of our system is the most important and most sinister aspect of the process of the present disintegration.” He and those who thought like him invented the novel mix of capitalism and social democracy known in Germany as the social-market economy.
There is no natural alliance between moralistic conservatives and free marketers. Burgin is well aware of the observations of Joseph Schumpeter, Daniel Bell, and others about capitalism’s tendency to embolden those who oppose it and enervate those who defend it. But this does not make Hayek’s project incoherent, either. On the contrary. Hayek, following Hume’s “Idea of a Perfect Commonwealth,” approached the question from an epistemological angle. As Burgin puts it, Hayek “increasingly represented himself as a theorist of ignorance.”
Hayek’s argument, roughly, is that the more complex society gets, the less adequate individual reason is as an instrument for comprehending it. Markets and social traditions can remedy this problem somewhat. They give the individual working access to more wisdom than he can generate himself. Markets amass price information from buyers and sellers who will never meet. Social traditions (and, par excellence, religions) build ethical and metaphysical consensus across generations that don’t inhabit the earth at the same time. If you accept this, a lot of conservative beliefs follow quite naturally. Socialist planning is antidemocratic. Hedonism is ignorance. And institutional change more often means vandalism than emancipation.
So one common hostile view of cultural conservatism—as something larded onto a basically plutocratic enterprise in order to make it more appealing to the plebs—is historically wrong, at least in the case of the Mont Pèlerin Society. Values were there at the beginning. Only later were they stripped away. It was by making common cause with consumerist hedonism, not by fighting it, that the society turned into a political force. Milton Friedman, who took over its leadership from an aging Hayek in the 1960s, is the symbol of this reorientation. He appears in Burgin’s telling as the Lenin of postwar conservatism. His accession meant the triumph of dogmatism and politics. Friedman’s political instincts were as good as his economic ones. He was almost alone among economists in predicting the stagflation of the 1970s. Although he supported Goldwater and Reagan, it would be too simple to say that he moved the society to the “right.” Friedman was an intellectual forefather of income-tax withholding, open immigration, the earned-income tax credit, the all-volunteer army, and carbon taxes.
But where Hayek had been diffident and tragical, Friedman was ebullient and constructive. His rise marked an end to the Mont Pèlerin Society’s—and to conservatism’s—attempt to reconcile capitalism and traditional values. Friedman didn’t solve the contradictions; he just failed to see them. As Bertrand de Jouvenel put it around this time, the society “had turned increasingly to a Manicheism according to which the State can do no good and private enterprise can do no wrong.” It was now a much more efficient engine of battle and a much less interesting intellectual movement. People such as Aron, Polanyi, Rüstow, and Röpke, who had gladly called themselves conservatives when it meant liberating the human spirit from soulless and incompetent technocrats, ceased to call themselves conservatives when it meant cheerleading for tycoons.
Failing to see these contradictions, Friedman asserted that markets served ends that all people could agree on—only more efficiently. In Burgin’s excellent formulation: “His was not a Spencerian or Sumnerian world in which free markets dealt crushing blows to some in order to contribute to the greater advancement of humanity. Rather, it was one in which incontrovertible benefits redounded, in a display of spectacular bounty, to people of all kinds and in all situations.” About this Friedman was wrong—but for conservatives it was a vitalizing falsehood. It allowed them to dodge certain contentious cultural issues for a very long time. In this sense, Milton Friedman laid the groundwork not just for Ronald Reagan’s presidency but also for Barack Obama’s.
Many people, cheerleaders and detractors alike, have made careers flapping their mouths about the meaning of postwar conservatism without bothering to acquire half the understanding of it that Burgin has. He writes a crisp prose, even if he sometimes uses “endeavor” when “try” will do, and “commence” instead of “begin.” He loves economics and its arguments and rivalries enough to have mastered a pile of minutes, monographs, and personal correspondence and turned it all into a great ideological drama. He has written a terrific book. Original and judicious, it never loses sight of the philosophical arguments economics conceals, sometimes accidentally, sometimes on purpose.
Christopher Caldwell is a senior editor at the Weekly Standard and a columnist for the Financial Times.
