Continued from page 1

Mr. Plehwe, in one of the book’s best chapters, finds “a growing self-confidence within the neoliberal camp” in the early MPS with regard to Third World economic development. MPS member Peter Bauer condemned foreign aid, and “clarified,” Mr. Plehwe writes, “the neoliberal vision with regard to foreign aid.”

Bauer “overcame the previous lack of confidence in entrepreneurship and market relations in the developing world” among neo-liberal scholars, and “documents a neoliberal reasoning in which economic considerations are no longer subordinate to security concerns.”

Other chapters explore Peru’s urban property rights movement, and the privatization of Chile’s social security system, a “window of opportunity” that opened during the 1975 recession. Other neo-liberal policy advances occurred when conventional Keynesian economic interpretations, in periods of recession or above-average inflation proved inadequate.

One example: the United States circa 1973-82. The book explains differences between market-based schools (Chicago, Austrian and Virginia). But it does an inadequate job of exploring monetary policy’s importance to the MPS over a multidecade period. Milton Friedman, another Nobel laureate, was a founding MPS member, and few topics received more attention than monetary policy.

The creation of a broad, stable middle class is crucial to market economies, whether postwar Germany (late 1940s), Eastern Europe (post-1991) or Latin America (today). Credible monetary policy, a neo-liberal goal, is important to prevent hyperinflation, which destabilizes the middle class.

A greater weakness is the description of the MPS as a “thought collective.” This phrase, if meant as a double entendre, falls flat. A close reading reveals diversity within the MPS on a broad range of topics. Chicago and Austrian school economists disagreed about floating- and fixed-exchange rates. Hayek and Ropke diverged on unions. Both supported a broader social safety net than their American counterparts. Thought initiative is a more apt MPS descriptor.

Ultimately, the book fails to come to terms with the historical context and reasons why the MPS was established. Mr. Plehwe, of all contributors, is perhaps best capable of overcoming this shortcoming. He might begin by considering an apparent enigma: Why were the ideas of the Mont Pelerin Society, whose original membership lacked practicing Catholics, embraced by German Christian Democrats and other Christians seeking to rebuild Europe, a continent ravaged by the horrors of depression and war?

Greg Kaza is executive director of the Arkansas Policy Foundation, a Little Rock think tank founded in 1995.