Property and Freedom Society and the proliferation of Ludwig von Mises Institutes
In light of ongoing controversies related to the rise of right-wing populism and the state of neoliberalism following the global financial and epidemic crises it continues to be of great importance to examine the world of organized neoliberalism rather than merely speculating on the demise of a powerful worldview. With the following first post on the Property and Freedom Society founded in 2006 in critical distance to the Mont Pèlerin Society, a longstanding division between paleoliberals and neoliberals has been institutionalized at the global level. A closer examination of the relationship between neoliberalism and paleoliberalism is useful to observe differences and commonalities of neoliberalism and right-wing populism as well. A second blogpost will be devoted to the sprawling community of Ludwig von Mises Institutes tied to the Property and Freedom Society. Following the first institute founded in 1984 in Auburn, Alabama, a number of new institutes have been founded in the aftermath of the global financial crisis. A third post will be dedicated to the efforts of the paleoliberal movement in the field of climate change politics. Rigid anti-interventionism and a peculiar epistemological tradition of science skepticism appears to conspire with a peculiar interest position of “gold bugs” (from mining to finance). It was Ludwig von Mises in the late 1960s, of course, who advocated the return to the gold standard in opposition to Milton Friedman, Fritz Machlup and others who helped to orchestrate the transition from the gold-exchange standard of Bretton Woods to the flexible exchange rate regime in global monetary politics. Ever since, the community of Mises followers loathes the vagaries and alleged inherent danger of “paper money”.
Part 1: The origins of the paleoliberal movement
The reign of Trump-Republicans, Brexit-Tories, Bolzonaro’s Alliance and a wide variety of right-wing “populist” movements and parties across the world has placed new ideological emphasis on “neo-nationalist” and “social conservative” if not outright reactionary (racist, misogynist and homophobic) political ideologies. Many scholars have set neoliberal positions apart from the new right gamut, which generated the paradoxical new descriptor of “progressive neoliberalism”. Although Nancy Fraser has attached this label to Clinton and other (Social) Democratic heirs of Thatcherism and Reaganomics, and although the distinction between the new “populist” right and many neoliberals must certainly be considered important in the field of human rights, legal equality or global warming, major elements of the reactionary new right groups continue rather than break with neoliberal traditions of property rights, regressive taxation and attacks on ambitious social and environmental regulation, for example. The continuing commitment of neoliberals and other elements of the new right potpourri to defending social inequality and the advocacy of exclusionary “solidarity” can also hardly be missed. The creation of insiders and outsiders, those who belong and those who may or may not be tolerated must be considered a common trait: deserving versus undeserving poor, legitimate refugees and those driven by poverty, citizens and non-citizens, compatible (Judeo-Christian) and incompatible (Islamic) religion and culture etc. Both neoliberals and social or cultural conservatives embrace the concept of community rather than (Republican) society.
Instead of pitting the new right against neoliberalism, “progressive” or not, it is important to observe more closely how the ideological mix of the new right grows out of splits within the neoliberal universe such as one that occurred in 1981 in the United States with the expulsion of Murray Rothbard from the CATO Institute board. A student of Ludwig von Mises, Rothbard was a founding member of the new neoliberal flagship think tank CATO in 1977 together with the billionaire Charles Koch and CATO’s CEO Edward Crane, both members of the Mont Pèlerin Society. The split was further institutionalized in the United States with the founding of the Ludwig von Mises Institute in Auburn, Alabama, by Rothbard and his libertarian party ally Lew Rockwell (Ron Paul’s chief of staff) in 1982. The Mises-Rothbard wing has been taken international in 2006 with the founding of the Property and Freedom Society by Rothbard’s long time disciple, the German philosopher Hans Hermann Hoppe.
Neoliberal family feuds – the birth of the property and freedom circle
The history of this momentous split has recently been told by Janek Wasserman (2019) in his book on the Austrian school of economics “The Marginal Revolutionaries”. Contrary to the main street mosaic neoliberalism represented by the Mont Pèlerin Society (MPS), which inter alia combines approaches like Ordoliberalism, Chicago School of Economics, Virginia Public Choice, Neo-Schumpeterian Economic Geography and Austrian Economics and attempts to maintain a certain demarcation between academic debate and political activism, the Mises-Rothbard-Hoppe trajectory can be considered a new attempt at ideological purity, self-professed intellectual radicalism and frank partisan science. Rothbard had differed with Koch and Crane and the MPS mainstream in the early 1980s on “what should be done”. Rothbard continued to support a “Leninist” vanguard libertarian perspective combined with popular and indeed populist activism. Charles Koch gave up on placing his hope (and money) in fledgling libertarian party activities to move into the major (Republican) party political field and from there further into the mainstream – albeit originally rather right-wing corners of the academic and public sphere such as the Hoover Institution or right wing media like Breitbart. Rothbard loathed the incipient reformism of the emerging register of conventional neoliberal elites.
In terms of academic perspectives, the new Mises wing also took the occasion to clarify a certain intellectual distance from mainstream neoliberalism. Leading scholars of the Mont Pèlerin fold had always considered Ludwig von Mises with a certain amount of ambivalence. Probably best known is Mises attack on Milton Friedman, Friedrich von Hayek and others who dared to discuss the issue of progressive taxation at a Mont Pèlerin Society meeting earning them the label “a bunch of socialists”. In turn, Ludwig von Mises had been attacked by neoliberals who considered him not really as a member of the neoliberal crowd in good standing, deserving the title of paleo (= stone age) liberalism instead. For Mises, social science starts from a priori axioms that are not subject to questioning. Beyond economics, he generalized a theory of “Human Action” based on such claims to individualism, subjective choice and rationality not based on experience or subject to empirical validation. Contrary to the dedicated effort of mosaic neoliberalism to connect to mainstream epistemology and academic standards via Popper’s critical rationalism, for example, the new Austrian crowd appreciated the fortress of praxeology Mises had created and stubbornly defended against all criticism. Among the converts to Mises praxeology were Rothbard and Ayn Rand. Converting from his earlier flirt with the Frankfurt School of social theory, Hans Hermann Hoppe also joined Rothbard in the 1980s.
Rothbard
and Hoppe henceforth were moving further away from the mainstream neoliberal
conversation in the 1980s and 1990s. Instead of participating in the broadening
of neoliberal theorizing that was going on at the time, the Rothbard-Hoppe wing
distanced itself from Hayek’s information economics and the neoliberal cultural
turn to keep their own approach based on Mises pure and simple. Within the Mont
Pèlerin family, Mises had been considered the weird uncle who still lived in
the past. However, his dismissal by the neoliberal mainstream led many to
underestimate his contribution to the intellectual and political movement. It
was unclear to neoliberal reformists in the post-war era, that his
unreconstructed support for straightforward Capitalism, his unapologetic
defense of profit seeking and entrepreneurship, and the legitimizing consumer
ideology held enormous potential for the future development of neoliberalism
writ large.[1]
Mises Revival
Mises saw entrepreneurship as a general feature of human behavior due to the need to make choices under conditions of unavoidable uncertainty. For him, the entrepreneur was literally everyone. In Human Action, Mises defined the entrepreneur as “acting man in regard to the changes occurring in the data of the market.” (Mises, Human Action 255). At the center of his entrepreneurial function is the anticipation of the future demand of the consumer. Unlike Schumpeter’s focus on innovation, for Mises, the entrepreneur needs nothing but market relations to perform the relevant role of connecting supply and demand. The performance earns profit for the entrepreneur, which is merely the acknowledgment of the capacity for making the price function work. This is why Mises reacted with hostility when profits were considered expressions of malfunctioning markets to be overcome by equilibrium. He saw the defense of profit (and loss) opportunity as central to a free economy and society. Since the customer expressed his or her preferences, they were ultimately considered in the driving seat on a daily basis. Mises also considered the unrestricted market with everyday choices way more democratic than the parliamentarian system of democracy offering the individual an occasional vote only. Beyond the notion of market conforming democracy popular today, democracy à la Mises can be judged only by the capacity to enable an unrestricted market place to work. Economic freedom is everything; political rights are meaningful only if they come to serve this priority.[2]
Unlike his most successful academic student and respected entrepreneurship scholar Israel Kirzner, fervent Mises followers Rothbard and Hoppe rejected normative and epistemological reflexivity in science. They reached out to a range of right-wing groups considered compatible with their own views of the Mises heritage, which they self-confidently believed on top to constitute the true Austrian legacy. In the U.S., such right-wing groups include (anti-federal) state rights activists, and historical revisionists including the field of race theory. In Europe, such groups include anti-EU clusters or regional separatists and, similar to the U.S., a revisionist spectrum of social conservatives and reactionaries like Gerd Habermann (German Hayek Society) opposing even moderate reforms of gender relations like gender mainstreaming, for example. Both American Rothbardians and European Hoppeians moved far towards nativist and anti-democratic positions prevalent in the right-wing populist parties and the alt-right wing of the political spectrum.
Neoliberals and Paleoliberals: Difference and Commonalities
Rothbard and Hoppe positively embraced the pejorative notion of paleo-liberalism that developed alongside the upsurge of paleo-conservatism. Their wing of the weirdly misnamed “anarcho-libertarianism”[3] can be considered operating outside the range of neoliberal ideologies since neoliberalism was born to overcome the limits of laisser-faire liberalism and the naturalist understanding of social order as well as rigid conservatism. Neoliberals acknowledged the need to provide external (social!) stability to free market capitalism, which required a reformist approach to direct the state to capitalist dynamics of change. Academic neoliberals were keen to connect to modern science philosophy, even developing mainstream epistemology and experimental reformism, as Martin Beddeleem explains in a recent 2020 chapter. But two aspects need to be discussed to observe the ways in which paleo-liberalism and neoliberalism continue to be connected.
Firstly, historical ambiguities of both liberalism and neoliberalism concerning ideological and practical concerns need to be acknowledged. The beautiful liberal commitment to cosmopolitanism, freedom, equality and peace went along with chauvinism, classism, racism, sexism and war. Way back in 1934, Herbert Marcuse noted in his essay “Der Kampf gegen den Liberalismus in der totalitären Staatsauffassung” (“the fight against Liberalism in the totalitarian understanding of the state”) that liberalism in all its structural variations over time and across countries maintained one common base element only, namely freedom of the perusal of property and legal-political protection of such property rights. All the other economic and political demands of liberalism are variable around this stable core, Marcuse said – “variable to the point of self-cancellation” (p.166). Regarding the contingent relation of capitalism and democracy or the conditional support for open borders and markets, Marcuse’s historical reading helps guarding against problematic efforts to essentialize (neo)liberalism. Ludwig von Mises’s famous praise for fascism in the 1930s due to Mussolini’s successful efforts to get rid of communism in Italy at the time corresponds to Hayek’s praise for authoritarian government in Chile getting rid of Allende.
Secondly, Murray Rothbard in 1992 explained his program of “Right- Wing Populism: A Strategy for the Paleo Movement” in the Rockwell-Rothbard Report. His project of anti-statist right wing populism was designed in opposition to the “establishment” from left to right, including main street mosaic neoliberalism of the Mont Pèlerin variety. The Hayek model of generating long term influence of libertarian ideas was not considered wrong as such. But Rothbard diagnosed the very Hayekian intellectuals as a part of the problem since they tended to end up in the Koch funded think tanks, dancing cheek to cheek with the other members of the establishment community. But which ingredients offered Rothbard’s recipe for change? His eight commandments laid out in the Rockwell-Rothbard Report are: 1.) slash taxes, 2.) slash welfare, 3.) Abolish racial or group privileges, i.e. policies designed to overcome racism and sexism by means of affirmative action and so on, 4.) crush criminals, 5.) get rid of the bumps, 6.) abolish the Fed (central bank), 7.) America first, 8.) defend family values. Rothbard thus embraced many key objectives of “roll-back neoliberalism”, cutting back benefits and services of the welfare state. Rothbardians at the same time preach flexibility. They advocate decentral coalition politics in favor of community standards in areas where radical principles turn out to be in conflict with each other (family values and pro-choice support for pornography or prostitution, for example). The agenda’s abstinence from issues of international law and human rights raises doubt with regard to the universality principles of neoliberal property rights and the lack of willingness to subscribe to an order characterized by the rule of law beyond local property rights concerns. The agenda is not even neo-nationalist in reality since the “America first” objective refers to the rejection of international aide and globalization, not to a social construction of social bonds within the confines of the nation state. The close links to neo-confederate groups indicate the willingness to embrace secession rather than state building. The resulting positive vision amounts to small unit or community neoliberalism always ready to compete or even fight other units to defend the local ways against change and intruders. Little to no concern is expressed regarding global challenges resulting from climate change or migration. Due to the overlap with Malthusian concerns with overpopulation we have called this approach “life-boat neoliberalism”. On the positive side, the Rothbard-Hoppe wing is very critical of U.S. foreign policy and military interventions harking back to isolationist instincts of old school U.S. Republicanism.
To sum up: It is not easy to place the Rothbard and Hoppe wing fully within the neoliberal circle, but there continues to be a lot of overlap between paleoliberalism and more or less cosmopolitan versions of mainstream mosaic neoliberalism. Economic freedom and protection of property rights, limiting burdens on corporations and property owners, defending social inequality and limiting tax and regulatory burdens resulting from social and environmental regulation as well as support for strong police forces to protect property owners and contracts can all be considered common territory. Beyond theoretical division and programmatic overlap, it is instructive to take a closer look at the Mises-Rothbard-Hoppe circles and to situate paleoliberalism in the space of organized civil society. The second part of this blog-post series on neoliberal radicalizations will take a closer look at the Property and Freedom Society and the sprawling Mises Institute networks around the world.
[1] On Mises see Niklas Olsen, The Sovereign Consumer. A New Intellectual History of Neoliberalism (Heidelberg: Springer, 2020).
[2] For more on the key role of Mises ideas in the revival of entrepreneurship see https://www.econstor.eu/bitstream/10419/215869/1/Full-text-chapter-Plehwe-Schumpeter-Revival.pdf
[3] Anarchy means the absence of domination, not just the absence of government.
