- The Washington Times - Tuesday, March 30, 2010


Edited by Philip Mirowski and Dieter Plehwe

Harvard University Press, $55, 480 pages

Reviewed by Greg Kaza

Idealists committed to the idea of an open society faced serious obstacles in 1945. Two world wars and the 20th century’s worst economic contraction - the Great Depression - within three decades, left many Western intellectuals doubting the viability of market-based capitalism. Extreme socialism made major inroads in Europe: France and Italy had strong Communist parties, a Greek civil war raged and an Iron Curtain descended upon half the continent. Germany was divided, its economy in shambles.

Into this void stepped Friedrich A. Hayek (1899-1992), later (1974) a Nobel laureate. Hayek wrote the 1944 best-seller “The Road to Serfdom,” which popularized his academic work that found socialist economic calculation was implausible; an idea pioneered by fellow Austrian economist Ludwig von Mises. Hayek, at World War II’s end, organized a voluntary group, the Mont Pelerin Society (MPS) to debate neo-liberal concepts like peace and free trade.

Neo-liberalism is used here in its original, European meaning. Postwar free world leaders like West German Chancellor Ludwig Erhard, British Prime Minister Margaret Thatcher and President Reagan were keenly aware of Hayek’s ideas. But Hayek’s lasting legacy is the realm of ideas, not politics, and his substantial organizational skills underlie this book, which examines the MPS, a private academy that has met on every continent except Antarctica since its first session in 1947 at Vevey, Switzerland.

Editors Dieter Plehwe, a Berlin researcher; Phillip Mirowski, a University of Michigan graduate; and nine contributors attempt to deconstruct MPS-style neo-liberal ideas and their dissemination via a worldwide network of think tanks and universities. They face an apparent moving target.

“Neo-liberalism,” Mr. Plehwe notes, “is anything but a succinctly, clearly defined philosophy.” The MPS, he observes, “mostly sail under the flags of libertarianism and conservatism.” But neo-liberal intellectuals, Mr. Plehwe writes, were “never parochial, “and “deeply suspicious of the opportunistic pragmatism of postwar business leaders, many of whom had embraced corporatism and planning.”

Mr. Mirowski acknowledges neo-liberalism is “not a conspiracy.” It is “cosmopolitan,” yet “a radical leveling philosophy, denigrating expertise and elite pretensions to hard-won knowledge, instead praising the wisdom of crowds.” This apparent contradiction is unresolved.

Chapters on Europe trace the Society’s roots to the Colloque Walter Lippmann, an international conference in 1938 in Paris. Francois Denord notes Wilhelm Ropke, a key figure in the MPS’ early history, was one participant. “Ropke and Walter Rustow (both exiled from Germany by the Nazis), violated disciplinary boundaries in an effort to provide the socio-cultural foundations necessary for a liberal economic order,” Ralf Ptak observes. “They argued persuasively that a regulatory order comprised of legal and state institutions was not sufficient to properly embed the market economy in society.”

Ropke, Rustow and fellow German ordo-liberals developed an alternative solution: the social market economy. Ropke worked with MPS member Ludwig Erhard, then-minister of economics, to achieve “market-oriented economic reforms” (currency reform and the end of price controls) in the late 1940s. These reforms, Mr. Ptak writes, “were to a great extent stabilized and politically accepted because they were intellectually wedded to the concept of the social market economy,” which included the “independent middle strata” of German society as crucial to stability.

Two complaints: The book’s treatment of European neo-liberalism should extend to the eastern half liberated from Soviet socialism; and is it asking too much to use the word matryoshka, not “Russian” dolls when discussing Wikipedia?

MPS members are associated with market-based think tanks. British think tanks, especially the Institute for Economic Affairs in London, became a fixture in public administration under Mrs. Thatcher, Keith Tribe notes, “cutting out academic economists and diminishing their authority.”

Jennifer Bair observes the Heritage Foundation in Washington criticized the U.N. Center on Transnational Corporations, an abortive regulatory scheme. Kim Phillips-Fein explores the different strategic approaches of American business conservatives and European neo-liberals, and their disagreements. Hayek, through private diplomacy, held the idea initiative together.

Story Continues →