Introduction: ‘How We Developed a Consistent Doctrine and Some International Circles of Communication’

Abstract

Hayek claimed that he ‘always made it’ his ‘rule not to be concerned with current politics, but to try to operate on public opinion.’ But the evidence suggests that he was a party political operative—he targeted cabinet ministers for Margaret Thatcher to sack. ‘Free’ market ‘scholarship’ was the vehicle through which he sought—and achieved—party political influence. Two years after Mises promoted inter-war ‘Fascists’ (including ‘Ludendorff and Hitler’), Hayek complained that British ‘free’ market promoters hadn’t developed ‘economic liberalism to its ultimate consequences with the same ruthless consistency as Mises’ (a card-carrying Austro-Fascist). But the ‘main purpose’ of the post-war Mont Pelerin Society had ‘been wholly achieved. We developed a consistent doctrine and some international circles of communication. The Austrian School of Economics supported General Pinochet’s brutal dictatorship and continues to maintain a ‘united front’ with ‘Neo-Nazis.’ This chapter places their ‘free’ market promotion in the context of the post-1965 neo-Fascist ‘Strategy of Tension.’

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The ‘Thing Taking Over’: Climate Change

Outlining his deceitful ‘rule,’ Friedrich ‘von’ Hayek (1978) told Jack High that the

Intellectual movement is wholly in the right direction. But it will take another twenty years before they will have any influence on policy, and it’s quite possible in the meantime that the politicians will destroy the world so thoroughly that there’s no chance of the thing taking over. But I’ve always made it my rule [emphases added] not to be concerned with current politics, but to try to operate on public opinion. As far as the movement of intellectual opinion is concerned, it is now for the first time in my life moving in the right direction.¹

The evidence suggests that he was a party political operative—he targeted cabinet ministers for Margaret Thatcher to sack (Leeson 2017). ‘Free’ market ‘scholarship’ was the vehicle through which he sought—and achieved—party political influence.

No other Nobel laureate has recruited the ‘worst inferior mediocrities’ to do his ‘bidding’:

Of course, scientists are pretty bad, but they’re not as bad as what I call the intellectual, a certain dealer in ideas, you know. They are really the worst part. But I think the man who’s learned a little science, the little general problems, lacks the humility the real scientist gradually acquires. The typical intellectual believes everything must be explainable, while the scientist knows that a great many things are not, in our present state of knowledge. The good scientist is essentially a humble person. (Hayek 1949, 1978)²

Bruce Caldwell (2010), the fifth official (and ‘definitive’) biographer, informed readers of The Washington Post: ‘Hayek himself disdained having his ideas attached to either party.’³ This was part of the Mont Pelerin Society (MPS) ‘consistent doctrine’—Ralph Harris and Arthur Seldon informed the 1992 MPS meeting that Hayek ‘remained scrupulously aloof from politics.’⁴ But at the 1984 MPS meeting, Hayek (1985, 8) stated: ‘Of course each of us has a duty as a citizen of his particular country to take part in political programs.’

Policy advocates often co-align on multiple fronts: market failure deniers (and climate change deniers in particular) are often proponents of ‘free’ market ‘liberty’ for the financial sector. Hayek referred to the Greens as the new barbarians in our midst⁵; and informed a correspondent that had he been a younger man, he would have concentrated on exposing Greens, instead of focusing almost exclusively on exposing Reds.⁶

The Nazi penal code stated that the ‘first condition for the new legal order must be that henceforth no Jew, Negroes, or other coloured people can be absorbed into the German blood’ (cited by Gilbert 1964, 78). Hayek (5 March 1975)—whose obsession with his own Ahnenpass (ancestor passport) predated Hitler’s—told the Liberty Fund’s Neil McLeod that he didn’t want non-whites to touch his money—his Chicago bank had ‘gone negro’ and he needed to find an alternative.⁷ Caldwell’s (2004, xi, 344, n. 16) Hayek’s Challenge was funded by the John W. Pope Foundation and the Liberty Fund (who hosted a conference to discuss a preliminary draft of the volume). According to its 2013–2014 Annual Report, Duke University’s Centre for the History of Political Economy (CHOPE) was ‘founded in 2008 with a significant grant from the John W. Pope Foundation’ (Caldwell 2014); and in fiscal year 2014–2015, CHOPE received $175,000 from the Pope Foundation.⁸

According to its mission statement, ‘The Pope Foundation supports organizations that work to advance free enterprise—the same system that allowed Variety Wholesalers to flourish—for future generations of Americans. To achieve those ends, the Pope Foundation supports a network of organizations in North Carolina that advocate for free markets, limited government, individual responsibility, and government transparency.’ With regard to ‘Education support,’ the ‘Pope Foundation believes that Americans have a duty to teach the next generation about the blessings of liberty.’⁹

The Pope Foundation is the sixth largest contributor to what Robert Brulle (2014, 681, 687, Fig. 1) described as the ‘Climate Change Counter Movement’ (CCCM). Referring to private sector transparency, Bruelle reported that ‘there is evidence of a trend toward concealing the sources of CCCM funding through the use of donor directed philanthropies.’ In December 2013, Whitney Ball, the president of the Donors Trust and Donors Capital Fund, ‘said the organisation had no say in deciding which projects would receive funding. However, Ball told the Guardian last February that Donors offered funders the assurance their money would never go to Greenpeace’ (Goldberg 2013). Instead, they are committed to ‘Building a Legacy of Liberty.’¹⁰ Lawson Bader, Ball’s successor as president of both DonorsTrust and Donors Capital Fund, was formerly president of the Competitive Enterprise Institute and Vice President at the Mercatus Centre, George Mason University (GMU).¹¹ In recent years, DonorsTrust have received more than $3.2 million from the ‘Knowledge and Progress Fund,’ which is chaired by Charles Koch (Bennett 2012).¹² In fiscal year 2014–2015, the Pope Foundation provided the Institute for Humane Studies (IHS) with $655,000.¹³

According to The New Yorker, between 2007 and 2011 the Koch brothers

donated $41.2 million to ninety tax-exempt organizations promoting the ultra-libertarian policies that the brothers favor—policies that are often highly advantageous to their corporate interests. In addition, during this same period they gave $30.5 million to two hundred and twenty-one colleges and universities, often to fund academic programs advocating their worldview. Among the positions embraced by the Kochs are fewer government regulations on business, lower taxes, and skepticism about the causes and impact of climate change. (Mayer 2013)

In 1991, the Soviet Union collapsed and the anti-Pigouvian, Ronald Coase (who had been repeatedly nominated by Hayek) was awarded the Nobel Prize for Economic Sciences. But Pigouvians continued to exert influence: in 1992, the United Nations Framework Convention on Climate Change aimed to ‘stabilize greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.’ According to Murray Rothbard (1992)—Hayek’s co-leader of the fourth generation Austrian School of Economics—this was the work of a ‘few left-wing hysterics’: ‘most real scientists have a very different view of such environmental questions.’

In addition to organizing the 1974 Austrian School revivalist conference and teaching at GMU, Edwin Dolan played a major role in creating the ‘free’ market climate of opinion that drove post-communist reconstruction: ‘State Finance Academy (Moscow, Russia, 1990–1991), Moscow State University (Moscow, Russia, 1992), American Institute of Business and Economics (Moscow, Russia, 1993–2001), National Bank of Kazakstan (Almaty, Kazakstan, staff training, 1996), Stockholm School of Economics (Riga, Latvia, 1999–2013), Central European University (Budapest, Hungary, 2002–2003), International Graduate School of Business (Zagreb, Croatia, 2003), American University in Bulgaria (Blagoevgrad, Bulgaria, 2004), University of Economics (Prague, Czech Republic, 2005–2008) and Tallinn Technical University School of Business (Tallinn, Estonia, 2008).’¹⁴ In his Ludwig von Mises Institute F. A. Hayek Memorial Lecture on ‘Environmental Economics: Theory and Practice,’ Dolan (2014)—invoking two authorities—declared that ‘three components of the Austrian paradigm lead naturally to policy prescriptions that envision a minimal role for government.’ Dolan’s first authority was Graham Dawson (2011, 19), who asserted in the un-refereed Libertarian Papers that if, for example, Bangladesh disappears its former inhabitants can appeal to the courts for compensation: the ‘policy implication’ is that government has

no cause to intervene in market exchange where property rights have been allocated and legislative procedures exist that that make it possible for the victim to take legal action against the polluter … The Austrian or libertarian policy must therefore be to privatise ‘climate change policy,’ repealing all existing climate change legislation … There simply should not be a public policy towards ‘climate change.’ Instead, the courts should build up a body of common law and establish precedents to guide the actions of the users of fossil fuels.

Dolan’s second authority was Art Carden (2013, 30), who asserted in the Quarterly Journal of Austrian Economics that ‘Tradable permits and Pigovian taxes are market-like, but they still rest on a planner’s conceit that the optimal amount of a particular activity can be known.’ Carden is an Associate Professor of Economics at Samford University’s Brock School of Business and a Senior Research Fellow with the Institute for Faith, Work, and Economics which is devoted to ‘making a positive, sustainable difference in the world for the flourishing of all mankind and the glory of God!’ by offering a ‘refreshing biblical perspective about the importance of work and how it helps accomplish God’s plan for people and the planet.’¹⁵

Referring to the ‘very great achievement’ of Hayek’s (2007a [1941]) The Pure Theory of Capital, G.L.S. Shackle (1981, 253) insisted that a scholar ‘must be seized by faith.’ In cults, rules and morals are for ‘secondhand’ followers—not for ‘original’ leaders. Hayek (1978) objected to

rationalism telling people, ‘Don’t believe anything which cannot be explained to you.’¹⁶

But personally, Hayek (1978) was a rationalist:

Quite frankly, at a very early stage when I tried [to get] people to explain to me what they meant by the word God, and nobody could, I lost access to the whole field. I still don’t know what people mean by God. I am in a curious conflict because I have very strong positive feelings on the need of an ‘un-understood’ moral tradition, but all the factual assertions of religion, which are crude because they all believe in ghosts of some kind, have become completely unintelligible to me. I can never sympathize with it, still less explain it.

When Robert Chitester asked ‘Do you get questions about religion? I would assume a lot of people confuse your interest in a moral structure with religion’; Hayek (1978) replied

Very rarely. It so happens that an Indian girl [Sudha Shenoy 1943–2006], who is trying to write a biography of myself, finally and very hesitantly came up with the question which was put to Faust: ‘How do you hold it with religion?’ [laughter] But that was rather an exceptional occasion. Generally people do not ask. I suppose you understand I practically never talk about it. I hate offending people on things which are very dear to them and which doesn’t do any harm.

When Hayek fills

out the form I say ‘Roman Catholic,’ merely because this is the tradition in which I have grown up. I don’t believe a word of it. [laughter]¹⁷

Presuppositionalist public stoning theocrats like Gary North (the Mises Institute Rothbard ‘Medal of Freedom’ holder) have been recruited to defend the ‘spontaneous’ order and the ‘un-understood’ ‘moral tradition.’

The ‘Thing Taking Over’: ‘Spontaneous’ Order, Civilization and the Constitution of the United States

A legitimate noble title requires a legitimate royal source: a fons honorum (the ‘fountainhead’ or ‘source of honor’). The ‘Great’ War was a ‘great break’ in ‘von’ Hayek’s (1978) ‘recollected history … The economic decline’ in Austria ‘already was fairly dreadful [emphasis added]’, as was ‘cultural decline.’¹⁸ It also broke the Habsburg nobility: coats of arms and titles (‘von,’ ‘Archduke,’ ‘Count’ etc.) were abolished on 3 April 1919 by the Adelsaufhebungsgesetz, the Law on the Abolition of Nobility. Violators face fines or six months jail.

The Habsburg-born, Austrian-educated Arthur Koestler (1950, 19) described the affected: ‘Those who refused to admit that they had become déclassé, who clung to the empty shell of gentility, joined the Nazis and found comfort in blaming their fate on Versailles and the Jews. Many did not even have that consolation; they lived on pointlessly, like a great black swarm of tired winter flies crawling over the dim windows of Europe, members of a class displaced by history.’ Friedrich ‘von’ Wieser (1983 [1926], xxxix) expressed similar sentiments: ‘The inconceivability of the World War was followed by the inconceivability of inner decay … How could this all have happened? Had life not lost all of its meaning?’

In 1918–1919, ‘von’ Hayek (1978) initially found the University of Vienna to be ‘dreadful.’ But then ‘Wieser came back, and he became my teacher. He was a most impressive teacher, a very distinguished man whom I came to admire very much, I think it’s the only instance where, as very young men do, I fell for a particular teacher. He was the great admired figure, sort of a grandfather figure of the two generations between us. He was a very kindly man who usually, I would say, floated high above the students as a sort of God … he was for a long time my ideal in the field, from whom I got my main general introduction to economics.’¹⁹

In tracing the development of ‘extreme rationalism, or as I now call it, constructivism, from Descartes through Comte and positivism,’ Hayek (1978) had planned a ‘second volume, on the decline of reason, showing the effects, leading to totalitarianism and so on. I had all these ready when I had the practical purpose of explaining to the English intellectuals that they were completely mistaken in their interpretation of what the Nazi system meant, and that it was just another form of socialism. So I wrote up an advance sketch of what was then meant to be volume two of the large work on the abuse and decline of reason, which I never completed in that form, very largely because the next historical chapter would have had to deal with Hegel and Marx, and I couldn’t stand then once more diving into that dreadful [emphasis added] stuff. [laughter]’²⁰

Hayek (1978)—described by Shackle (1981, 234) as ‘aristocratic in temper and origins’—told Chitester: ‘The whole traditional concept of aristocracy, of which I have a certain conception—I have moved, to some extent, in aristocratic circles, and I like their style of life.’²¹ Wieser (1983 [1926], 257, 363) described ‘The Modern Plutocracy’: ‘The Law of Small Numbers found in the economy a field of application of equally great effect as it once had in the victory of arms. While the multitude of the weak was pressed down, out of the bourgeois middle class there arose to dizzying heights the elite of the capitalists, joining the rulers of earlier times and exceeding them still in wealth and finally even in social influence. The great economic rulers had won under the slogan of liberty [emphasis added], which opened for them the road to unchecked activity. They demanded ever more impetuously the green light for themselves, but the uninhibited unfolding of their energies meant coercion for all the weak who stepped into their way. Could the [classical] liberals still talk about freedom?’

Republics transform ‘subjects’ into ‘citizens’: in 1919, the status of

‘German Austrian citizens’ equal before the law in all respects was forcibly imposed on Austrian nobles. (Gusejnova 2012, 115)

The defining, dreadful trauma of ‘von’ Hayek’s (1978) life had been inflicted by what he dismissed as a ‘republic of peasants and workers.’²² Hayek provided a ‘catchword’ or ‘slogan of liberty’: ‘There used to be a traditional conception of law, in which law was a general rule of individual conduct, equally applicable to all citizens.’²³ But being left ‘equal before the law in all respects’ left ‘von’ Hayek sympathetic to dictators.

Herman Finer (1945, ix, 210) detected in Hayek (his LSE colleague) a ‘thoroughly Hitlerian contempt for the democratic man.’ According to Hitler, ‘the Jewish doctrine of Marxism repudiates the aristocratic principle of nature’ (cited by Bullock 1962, 40). As ‘von’ Hayek (2007b [1944]) was writing The Road to Serfdom, the Austrian School philosopher, Erik ‘Ritter von’ Kuehnelt-Leddihn (alias Campbell 1978 [1943]), published The Menace of the Herd. Austrian School economists and philosophers openly embraced ‘natural aristocracy’ (Rockwell 1994, 19), monarchy, or anything but democracy (Hoppe 2001), and a ‘small, self-perpetuating oligarchy of the ablest and most interested’ (Rothbard 1994, 10). As the President of the Ludwig von Miss Institute put it,

democracy is a sham that should be opposed by all liberty-loving people. Voting and elections confer no legitimacy whatsoever on any government, and to the extent a democratic political process replaces outright war it should be seen as only slightly less horrific. (Deist 2017)

In Liberalism: An Attempt to State the Principles and Proposals of Contemporary Liberalism in Britain, Herbert Samuel (1902, 23) reflected: ‘Now democracy has been substituted for aristocracy as the root principle of the constitution. Court influence and the grosser kinds of corruption have disappeared.’ In ‘many ways,’ Mises was ‘still attached to the old world: he had a color picture of the Emperor Franz Josef II hanging on the wall’ of his three bedroom rent-controlled Manhattan apartment (Koether 2000, 5). Like ‘von’ Hayek, ‘von’ Mises generally referred to Otto the Hapsburg Pretender as ‘His Majesty, Kaiser Otto’ and ‘Imperial Highness’—long after the prospect of a restoration of the Austrian monarchy had disappeared (Hülmann 2007, 818). Hayek (1978) described the gross corruption of the University of Vienna (see below).

Referring to nineteenth-century utilitarianism (which Pareto ‘efficiency’ sought to overturn), Hayek (1978) complained to James Buchanan:

The whole history of constitutionalism till then was a restraint on government, not by confining it to particular issues but by limiting the form in which government could interfere. The conception was still very large then that coercion could be used only in the enforcement of general rules which applied equally to all, and the government had no powers of discriminatory assistance or prevention of particular people. Now, the dreadful [emphasis added] thing about the forgetting of this is that it’s, of course, no longer the will of the majority, or the opinion of the majority, I prefer to say, which determines what the government does, but the government is forced to satisfy all kinds of special interests in order to build up a majority. It’s as a process. There’s not a majority which agrees, but the problem of building up a majority by satisfying particular groups. So I feel that a modern kind of democracy, which I call unlimited democracy, is probably more subject to the influence of special interests than any former form of government was. Even a dictator can say no, but this kind of government cannot say no to any splinter group which it needs to be a majority.²⁴

Using one of his dissembling words, ‘curious,’ Hayek (1978) told Chitester that ‘the curious thing is that in the countryside of southwest England, the class distinctions are very sharp, but they’re not resented. [laughter] They’re still accepted as part of the natural order.’²⁵ Hayek explained that it was deference—‘surrounding rules’—that he was referring to.

In this context, Hayek may have been influenced by the Fabian LSE political scientist, Graham Wallace (1858–1932), who published ‘Property Under Socialism (1889), Human Nature in Politics (1908), Great Society (1914), Our Social Heritage (1921), The Art of Thought (1926) and Social Judgment (1934)—all themes which he later explored. Wallace (1908, Introduction) emphasized the irrational in politics; and denigrated the

shallow dogmatism by which well-to-do people in the first half of Queen Victoria’s reign tried to convince working me that any change in the distribution of the good things in life was ‘scientifically impossible.’

From 1815 to 1870, the ‘laws of political economy’ stood ‘like gigantic stuffed policemen, on guard over rent and profit.’

Hayek (1978) dissented from Mises who was a ‘rationalist utilitarian, and I am not. He trusted the intelligent insight of people pursuing their known goals, rather disregarding the traditional element, the element of surrounding rules.’ Hayek objected to ‘contempt for traditional rules,’ because ‘it is traditional rules which secure our [emphasis added] freedom.’²⁶ ‘I don’t think the evolutionary aspect, which is very strongly in Menger, was preserved in the later members of the Austrian school. I must say till I came, really, in between there was very little of it.’²⁷

Wallace (1908) also noted that in America, ‘politicians have learnt more successfully than elsewhere the art of controlling other men’s unconscious impulses from without.’ On a Road to Serfdom book sales tour, Hayek (1978) got up

without the slightest idea of what I was going to say. But I began with a tone of profound conviction, not knowing how I would end the sentence, and it turned out that the American public is an exceedingly grateful and easy public … I went through the United States for five weeks doing that stunt [laughter] everyday, more or less … I didn’t know in the end what I had said, but evidently it was a very successful lecture … I think I ought to have added that what I did in America was a very corrupting experience. You become an actor, and I didn’t know I had it in me. But given the opportunity to play with an audience, I began enjoying it. [laughter]²⁸

Hayek (1978) told High, that ‘there are certainly many ordering principles operating in forming society, and each is of its own kind.’²⁹ The Washington Post reported that Hayek ‘is everything you want an 83-year-old Viennese conservative economist to be. Tall and rumpled. A pearl stickpin in his tie. A watch chain across his vest, even though he wears a digital on his wrist. An accent which melds German Z’s with British O’s.’ With ‘lovely aristocratic ease,’ he became a ‘favorite of conservative economists from Irving Kristol to William Buckley.’ While Hayek described the ‘spontaneous formation of an order’ as ‘extremely complex structures’ and the market as ‘an exo-somatic sense organ,’ the staff of the Heritage Foundation ‘hover around him with a combination of delight and awe that makes them seem like small boys around a football hero’ (Allen 1982).

Football hero and war hero. Shackle (1981, 234) described him as ‘physically, morally and intellectually fearless.’ In ‘Claremont, California Hosts Two Conferences,’ High (1977) reported that Hayek had participated in the May 1977 ‘Economic Coordination Conference’ and June 1977 ‘Carl Menger Conference.’ High asked: ‘I seem to recall you telling a story in Claremont. You presided over the retreat of some troops. You were a lieutenant and ran into quite an interesting-.’ Hayek (1978) interrupted: ‘Well, it wasn’t very interesting … I had to attack a firing machine gun. In the night, by the time I had got to the machine gun, they had gone. But it was an unpleasant experience. [laughter]’³⁰ Was the teenage Hayek (1899–1992) a Lieutenant?

According to Erik Ritter von Kuehnelt-Leddihn (no date), during the ‘Great’ War, Hayek and Mises fought

to prevent the ‘world from being made safe for democracy.’

According to Kurt Leube (2004), Hayek intentionally left high school early and was ‘immediately drawn to the Italian front’ where he ‘fought for the monarchy, for the Empire.’ Hayek also allegedly told Leube (2003, 12) in a taped interview that he ‘never doubted that there are things in life worth fighting for and risking one’s own life for.’ Leube added that Hayek had been ‘born into an aristocratic family that could not only lay claim to a long academic tradition but also to a long and dutiful service to the Empire … Thus, consciously devoted to the vision and splendour of the Habsburg Empire he joined up in March 1917 … he was anxious to be sent as an artillery sergeant cadet to the intensely embattled Italian front … much to his dislike he missed by a few days the Battle of Caporetto in October/November 1917 that left many dead and wounded.’

A different impression emerges from Hayek’s (1978) University of California Los Angeles oral history interviews:

I had decided to enter the diplomatic academy, but for a very peculiar reason. We all felt the war would go on indefinitely, and I wanted to get out of the army, but I didn’t want to be a coward. So I decided, in the end, to volunteer for the air force in order to prove that I wasn’t a coward. But it gave me the opportunity to study for what I expected to be the entrance examination for the diplomatic academy, and if I had lived through six months as an air fighter, I thought I would be entitled to clear out. Now, all that collapsed because of the end of the war. In fact, I got as far as having my orders to join the flying school, which I never did in the end. And of course Hungary collapsed, the diplomatic academy disappeared, and the motivation, which had been really to get honorably out of the fighting, lapsed. [laughter]³¹

If Hayek didn’t join the flying school this raises questions about not only about his flying stories but also the stories he told to a ‘fascinated’ Gerald Radnitzky about ‘war experiences, especially that of parachuting’ (Cubitt 2006, 91, n. 91).

His disciples refer to Hayek’s ‘wonderful love story’ with his cousin whose cooking and conversation he could barely tolerate: Radnitzky suggested that it should be made into a movie (Cubitt 2006, 50, 106, 119, 211). Caldwell (2011) sketched the second part of his ‘definitive’ nuanced hagiography: there was a ‘great deal of romance about the Soviet Union that turned out to be quite untrue but at the time was seen as a great goal … The bloom was off the rose. So, he writes The Road to Serfdom, it comes out in 1944 as part of this [Abuse of Reason] project. 1947, we have the Mont Pelerin Society; and he leaves LSE in 1950. Goes for a semester to the U. of Arkansas. Why? Because they had very relaxed divorce laws in that state. That would make a good movie! Love story for Friedrich Hayek! Goes on to the U. of Chicago, where he is on the Committee for Social Thought. Not in the Economics Department. That’s another one of those juicy stories that we wish we had more information about–exactly why the economics department declined to invite him when it was first being proposed in 1948 or so.’

Hayek told his third appointed biographer, William Warren Bartley III: ‘There are only three things that sell books namely sex, money and violence. As to sex, well, I left my first wife for my first girlfriend. As to money, well, I never had any. And as to violence, let me tell you how I came to bayonet a man to death in World War One!’ (cited by Blundell 2014, 100). Hayek (1994, 153), who attempted to dictate his own biography to Bartley, reflected: ‘You have made me think about the past. I hesitate because it sounds a little like self-praise, but it isn’t, its self-discovery. In a sense I am fearless, physically, I mean. It’s not courage. It is just that I have never really been afraid. I noticed it in the war.’ Bartley asked: ‘You must have been fearless to go on those airplane expeditions in the Great War where you were acting as an artillery spotter’; to which Hayek replied: ‘Excitement, in a sense; but not a matter of fear. Once the Italians practically caught us. One in front, firing through the propeller. When they started firing, my pilot, a Czech, spiralled down. I unbelted myself, climbed on the rail. My pilot succeeded in correcting the spin just above the ground. It was exciting … I lack nerves. I believe this is a thing I inherited from my mother.’³²

Hayek’s (1978) ‘determination to become a scholar was certainly affected by the unsatisfied ambition of my father to become a university professor.’ His Privatdozent allowed him to ‘lecture but practically to earn no money. When I finally achieved it, what I got from student fees just served to pay my taxi, which I had to take once a week from my office to give a lecture at the university. That’s all I got from the university.’ When Earlene Craver asked about ‘roadblocks even in getting accepted as a Privatdozent,’ Hayek described the Viennese academic corruption that he ‘imported’ into the London School of Economics (LSE), and universities in Chicago, Salzburg, Freiburg and wherever else his recommendations held sway:

Oh, yes, of course. You were very much dependent on the sympathy, or otherwise, of the professor in charge. You had to find what was called a Habilitations-Vater, a man who would sponsor you. And if you didn’t happen to agree with the professor in charge, and there were usually only two or three–in fact, even in a big subject like economics, there were only two or three professors–unless one of them liked you, well there was just no possibility.³³

Buchanan asked about ‘a piece that you wrote in Encounter [1975] maybe a decade ago, in which you talked about two kinds of mind.’ Hayek (1978) replied:

Oh, it’s a very old idea of mine which, as I explained at the beginning of that article, I never wrote up because it would sound so frightfully egotistic in speaking about myself–why I feel I think in a different manner. But then, of course, I found a good many instances of this in real life.

Hayek (1978) illustrated his ‘frightfully egotistic’ feeling by referring to four leaders of the Second and Third Generation Austrian School of Economics, Eugen Böhm Ritter von Bawerk (1851–1914), ‘von’ Wieser (1851–1926), Lionel Robbins (1898–1984) and Machlup (1902–1983):

The first observed instance of other people was the relation between Böhm-Bawerk and Friedrich, who were of these two types: the one, whom I call the ‘master’ of his subject, who had complete command of all his subject areas, and who can give you a prompt answer about what is the answer of current theory to this-and-this problem … Then, later in life, I have known two types who are typical masters of the subject, and who, because they have the answer for everything ready, have not done as much original work as they would have been capable of. The one is Lionel Robbins; the other is Fritz Machlup. They both, to an extent, have command of the present state of economics which I could never claim to. But it’s just because I don’t remember what is the standard answer to a problem and have to think it out anew that occasionally I get an original idea.³⁴

Referring to ‘the intellectuals, by which I don’t mean the original thinkers but what I once called the secondhand dealers in ideas,’ Hayek (1978) explained that he had ‘long been convinced that unless we convince [emphasis added] this class which makes public opinion, there’s no hope.’ Lionel Robbins, an unoriginal secondhand dealer, ‘might have written the textbook for this generation.’³⁵

Lionel Robbins (2012 [1931]) and Machlup (1974) helped create the Austrian revival of the 1970s by being sufficiently ‘convinced’ to repeat Hayek’s fraud about having predicted the Great Depression—which provided the foundation of his 1974 Nobel Prize for Economic Sciences (Klausinger 2010, 227, 2012, 172, n. 10; Leeson 2018a).³⁶ In 1984, Hayek used his Nobel status to assert that externalities had been invented by a gunrunner for Stalin, A. C. Pigou (Leeson 2015a)—a fraud that had been first been aired in The British Connection: Russia’s Manipulation of British Individuals and Institutions by Donald McCormick, aka Richard Deacon (1979).

In his Inaugural University of London Professorial Lecture on ‘The Trend of Economic Thinking,’ Hayek (1933, 122, 124, 128) contrasted Pigou’s ‘social enthusiasm’ with the ‘wonder’ associated with the movement of ‘heavenly bodies … today it is regarded almost as a sign of moral depravity if the economists finds anything to marvel at in his science; i.e. he finds an unsuspected order in things which arouses his wonder.’ The economy was a mysterious ‘organism’—but interventionist economists had focused on the ‘unsatisfactory aspects of economics life, rather than what was owed to the working of the system.’ As a result, ‘the non economist … is always likely to feel injured if the economist implies that there are inter-relations between things which he does not see … When we begin to understand their working, we discover again and again that necessary functions are discharged by spontaneous institutions. If we try to run the system by deliberate regulation, we should have to invent such institutions, and yet at first we did not even understand them when we saw them.’ To defend the ‘spontaneous’ order, Hayek created an institution, the Mont Pelerin Society (MPS, 1947–).

Hayek (1978) told Leo Rosten:

We can build up beautiful theories which would explain everything, if we could fit into the blanks of the formulae the specific information; but we never have all the specific information. Therefore, all we can explain is what I like to call ‘pattern prediction.’ You can predict what sort of pattern will form itself [emphasis added], but the specific manifestation of it depends on the number of specific data, which you can never completely ascertain. Therefore, in that intermediate field–intermediate between the fields where you can ascertain all the data and the fields where you can substitute probabilities for the data–you are very limited in your predictive capacities. This really leads to the fact, as one of my students once told me, that nearly everything I say about the methodology of economics amounts to a limitation of the possible knowledge. It’s true; I admit it. I have come to the conclusion that we’re in that field which someone has called organized complexity, as distinct from disorganized complexity.³⁷

The MPS appeared to ‘form itself’ into a species of denationalized money—tenured Professorships at public universities for academically unqualified members, swapped for membership nominations: a ‘free’ market win–win for everyone except students and the taxpayer.

Buchanan—the ‘George Mason Nobel Laureate’—asked about restricting the ‘franchise’ and the ‘delusion of democracy: ‘we’ve got ourselves into a situation where people who are direct recipients of government largesse, government transfers, are given the franchise; people who work directly for government are given the franchise; and we wouldn’t question them not having it. Yet, to me, there’s no more overt conflict of interest than the franchise [given] to those groups. Do you agree with me?’ Hayek (1978) replied that he preferred the ‘Model Constitution’ (Hayek 1984 [1979], 382–405) that he had just sent in draft form to General Augusto Pinochet:

in a sense, the conception of democracy was an artifact which captured public opinion after it had been a speculation of the philosophers. Why shouldn’t–as a proper heading–the need for restoring the rule of law become an equally effective catchword, once people become aware of the essential arbitrariness of the present government.

Buchanan asked: ‘Well, how would you see this coming about, though? Would you see us somehow getting in a position where we call a new constitutional convention and then set up this second body with separate powers? Or how would you see this happening?’ Hayek (1978) replied that the spontaneous order would have to be reconstructed: ‘I think by several experiments in new amendments in the right direction, which gradually prove to be beneficial, but not enough, until people feel constrained to reconstruct the whole thing.’

Hayek told Buchanan that he sought to overthrow the Constitution of the United States and replace it by a single sentence written by a dictator-promoting European aristocrat:

After all, the one phrase in the American Constitution, or rather in the First Amendment, which I think most highly of is the phrase, ‘Congress shall make no law….’ Now, that’s unique, but unfortunately [it goes] only to a particular point. I think the phrase ought to read, ‘Congress should make no law authorizing government to take any discriminatory measures of coercion.’ I think this would make all the other rights unnecessary and create the sort of conditions which I want to see.³⁸

George Mason (1725–1792) is regarded as the ‘father’ of the United States Bill of Rights. Hayek (1978) told Robert Bork:

I believe that, instead of having the Bill of Rights, you need a single clause saying that coercion can be exercised only according to and now following a definition of law which is of some language which of course explicates what I, in a brief phrase, call general rules. That would, in the first instance, make all special protected rights unnecessary, and it would include all. It excludes all discriminatory action on the part of government, and it would, of course, give the court guidance.

Bork provided an interpretative summary: ‘what you’re saying is that, at the same time, we’re becoming more heavily regulated in our property rights, which are crucial, and these other freedoms will prove illusory if we lose our control of property rights.’³⁹

In 1962, Hayek sent his Constitution of Liberty to Portugal’s ‘Fascist’ dictator, António de Oliveira Salazar, with an accompanying note stating that this ‘preliminary sketch of new constitutional principles’ may ‘assist’ him ‘in his endeavour to design a constitution which is proof against the abuses of democracy’ (cited by Farrant et al. 2012; Robin 2015). But Hayek was completely indifferent to human rights abuses—dismissing Amnesty International’s documentary evidence about Pinochet’s torture-based Junta as the outpouring of a ‘bunch of leftists’ (cited by Farrant and McPhail 2017).

One of Hayek’s (1978) ‘two inventions in the economics field’ was ‘my proposal for a system of really limited democracy.’⁴⁰ Pierre Vidal Naquet’s (1962) Torture: Cancer of Democracy, France and Algeria, 1954–1962 described unintended consequences—torture limited French democracy; but the causal sequence could also be promoted to achieve intended consequences.

In 1973, Pinochet overthrew Chile’s democratically elected government. Mises (1985 [1927], 48, 154) supported ‘Fascists’ because they proposed to make use of the ‘same unscrupulous methods in the struggle against the Third International as the latter employs against its opponents. The Third International seeks to exterminate its adversaries and their ideas in the same way that the hygienist strives to exterminate a pestilential bacillus; it considers itself in no way bound by the terms of any compact that it may conclude with opponents, and it deems any crime, any lie, and any calumny permissible in carrying on its struggle. The Fascists, at least in principle, profess the same intentions.’ Countries where the ‘knout and the prison-camp’ dominate could be ‘safely’ left ‘alone.’⁴¹

Hayek (1979, 202–203, n. 42) referred to human rights as a ‘trick’ perpetrated by Marxists:

In view of the latest trick of the Left to turn the old liberal tradition of human rights in the sense of limits to the powers both of government and of other persons over the individual into positive claims for particular benefits (like the ‘freedom from want’ invented by the greatest of modern demagogues) it should be stressed here that in a society of free men the goals of collective action can always only aim to provide opportunities for unknown people, means of which anyone can avail himself for his purposes, but no concrete national goals which anyone is obliged to serve.

In Law, Legislation and Liberty: The Mirage of Social Justice, Hayek (1976, 103) expressed sarcasm about human rights: to the

negative rights which are merely a complement of the rules protecting individual domains and which have been institutionalized in the charters of organization of governments, and to the positive rights of the citizens to participate in the direction of this organization, there have recently been added new positive ‘social and economic’ human rights for which an equal or even higher dignity is claimed!

The Universal Declaration of Human Rights (adopted by the General Assembly of the United Nations in 1948) proclaimed that ‘disregard and contempt for human rights have resulted in barbarous acts which have outraged the conscience of mankind.’ The Pinochet regime systematically violated the Universal Declaration of Human Rights:

• Everyone has the right to life, liberty and security of person (Article 3).

• No one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment (Article 5).

• No one shall be subjected to arbitrary arrest, detention or exile punishment (Article 9).

• Everyone has the right to leave any country, including his own, and to return to his country (Article 13.2).

• Everyone has the right to freedom of peaceful assembly and association (Article 20.1).

• Everyone has the right to take part in the government of his country, directly or through freely chosen representatives (Article 21.1).

• The will of the people shall be the basis of the authority of government; this will shall be expressed in periodic and genuine elections which shall be by universal and equal suffrage and shall be held by secret vote or by equivalent free voting procedures (Article 21.3).

• Everyone has the right to form and to join trade unions for the protection of his interests (Article 23.4).⁴²

Hayek (1976, 103) complained that these are claims to particular benefits to which ‘every’ human being ‘as such’ is ‘presumed to be entitled.’ Yet, there was no indication as to who is obliged to provide those benefits nor is there any specification of the ‘process’ by which they are to be provided.

It is, of course, meaningless to describe them as claims on ‘society’ because ‘society’ cannot think, act, value, or ‘treat’ anybody in a particular way.

Meeting these claims would end the ‘spontaneous’ order:

If such claims are to be met, the spontaneous order which we call society must be replaced by a deliberately directed organization: the cosmos of the market would have to be replaced by a taxis whose members would have to do what they are instructed to do. They could not be allowed to use their knowledge for their own purposes but would have to carry out the plan which their rulers have designed to meet the needs to be satisfied.

To protect their ‘knowledge’ producer sovereignty, in 2014 Boko Haram seized 276 Nigerian pupils from the Government Girls Secondary School; the 2018 release of some was accompanied by a warning: ‘Don’t ever put your daughters in school again.’⁴³ Liberalism in the Classical Tradition—illegally signed ‘von Mises’ (1985 [1927], 115)—provided the foundations of the ‘spontaneous’ order: ‘There is, in fact, only one solution: the state, the government, the laws must not in any way concern themselves with schooling or education. Public funds must not be used for such purposes. The rearing and instruction of youth must be left entirely to parents and to private associations and institutions. It is better that a number of boys grow up without formal education than that they enjoy the benefit of schooling only to run the risk, once they have grown up, of being killed or maimed. A healthy illiterate is always better than a literate cripple.’

Internationally, the neo-feudal ‘spontaneous’ order culminated in the ‘Great’ War between the dynasties; it was replaced, first, by the League of Nations and then by the United Nations—which was committed not to the maintenance of intergenerational entitlement programs for ‘von’ Hayek and ‘von’ Mises but to the promotion of achieved status:

• Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control (Article 25).

• Everyone has the right to education. Education shall be free, at least in the elementary and fundamental stages. Elementary education shall be compulsory. Technical and professional education shall be made generally available and higher education shall be equally accessible to all on the basis of merit (Article 26.1).

• Education shall be directed to the full development of the human personality and to the strengthening of respect for human rights and fundamental freedoms (Article 26.2).

In 1975 and 1976, the United Nations Commission on Human Rights concluded that many Chileans had been imprisoned, tortured, disappeared, forced into exile, and executed under Pinochet’s dictatorship. Hayek (1976, 103–104) complained about the ‘new trend’ which found its ‘definite’ embodiment only in the Universal Declaration of Human Rights which is ‘admittedly an attempt to fuse the rights of the Western liberal tradition with the altogether different conception deriving from the Marxist Russian Revolution.’ Democratic President Franklin Delano Roosevelt—the ‘greatest of modern demagogues’—was responsible (Hayek 1979, 202–203, n. 42).

Simultaneously, Hayek (1978)—in defending the ‘civilization’ of Police State apartheid from the American ‘fashion’ of ‘human rights’—blamed a later Democratic Party President:

You see, my problem with all this is the whole role of what I commonly call the intellectuals, which I have long ago defined as the secondhand dealers in ideas. For some reason or other, they are probably more subject to waves of fashion in ideas and more influential in the American sense than they are elsewhere. Certain main concerns can spread here with an incredible speed. Take the conception of human rights. I’m not sure whether it’s an invention of the present [Carter] administration or whether it’s of an older date, but I suppose if you told an eighteen year old that human rights is a new discovery he wouldn’t believe it. He would have thought the United States for 200 years has been committed to human rights, which of course would be absurd. The United States discovered human rights two years ago or five years ago. Suddenly it’s the main object and leads to a degree of interference with the policy of other countries which, even if I sympathized with the general aim, I don’t think it’s in the least justified. People in South Africa have to deal with their own problems, and the idea that you can use external pressure to change people, who after all have built up a civilization of a kind, seems to me morally a very doubtful belief. But it’s a dominating belief in the United States now.⁴⁴

The Prime Minister (1966–1978) and then President (1978–1979) of apartheid South Africa was Balthazar Johannes Vorster (1915–1983), who had been interned during the Second World War as a Nazi (Leeson 2015b, Chapter 3).

Hayek (1978) complained that Austria is a ‘country governed by the [labour] trade unions. At the present moment, nobody doubts that the president of the trade union association is the most powerful man in the country. I think it works because he happens to be personally an extremely reasonable man. But what will happen if they get a radical in that position I shudder to think.’ In 1986, Hayek complained that the ‘fuss’ made by the ‘foreign press’ about the Austrian Presidential candidate, Kurt Waldheim, was ‘foolish’ (Cubitt 2006, 217). Waldheim’s possible awareness of—if not involvement in—Nazi war crimes war made Austria an international pariah.

In 1986—inspired by Hayek—the British undertook the ‘Big Bang’ deregulation of the financial system. The ‘free’ market then delivered the first run on a British bank for 150 years: Northern Rock sought and received liquidity support from the Bank of England (14 September 2007) before being nationalized (22 February 2008). The Global Financial Crisis threatened to became another Great Depression.

The ‘Thing Taking Over’: ’Fascism’ and the Austrian School ‘United Front’ with ‘Neo-Nazis’

In ‘The Future of Liberty Lets Not Give Into Evil,’ Llewellyn Rockwell Jr. (1997, 92) stated that ‘at the Mises Institute, we seek to create a seamless web between academia and popular culture, so as to influence the future in every possible way.’ The Mises Institute Senior Fellow, Walter Block (2000, 40), described the Austrian School ‘united front’ with Neo-Nazis:

I once ran into some Neo-Nazis at a libertarian conference. Don’t ask, they must have sneaked in under our supposedly united front umbrella. I was in a grandiose mood, thinking that I could convert anyone to libertarianism, and said to them, ‘Look, we libertarians will give you a better deal than the liberals. We’ll let you goosestep. You can exhibit the swastika on your own property. We’ll let you march any way you wish on your own property. We’ll let you sing Nazi songs. Any Jews that you get on a voluntary basis to go to a concentration camp, fine.’

Nazi ‘ends’ included world domination and the liquidation of the Jews. But according to Block, the ‘problem with Nazism is not its ends, from the libertarian point of view, rather it is with their means. Namely, they engaged in coercion. But, the ends are as just as any others; namely, they do not involve invasions. If you like saluting and swastikas, and racist theories, that too is part and parcel of liberty.’

Also according to Block, ‘Freedom includes the right to salute the Nazi flag, and to embrace doctrines that are personally obnoxious to me. Under the libertarian code, you should not be put in jail for doing that no matter how horrendous this may appear to some. I happen to be Jewish, and my grandmother is probably spinning in her grave as I write this because we lost many relatives in the Nazi concentration camps.’

Shackle’s (1981) hagiographic chapter appeared in Pioneers of Modern Economics in Britain. Hayek (1992a [1963], 29–30) described his LSE colleagues, Cannan and Theodore Gregory, as Mises’ ‘kindred spirits.’ Before Hayek (1978) arrived in 1931, the LSE ‘was half-Austrian already. [laughter]’⁴⁵ What was the missing half?

According to Mises (1993 [1964], 36), Cannan (1861–1935) was ‘the last [emphasis added] in the long line of eminent British economists.’ The crucial distinction between Edwin Cannan: Liberal Doyen (Ebenstein 1997) and Mises: The Last Knight of Liberalism (Hülsmann 2007, 677, n. 149) is that only one was a card-carrying Fascist (and member of the official Fascist social club) and only one promoted Fascist violence to achieve Austrian School ends. According to Mises (1985 [1927], 47–48)—a business sector lobbyist: ‘The militaristic and nationalistic enemies of the Third International felt themselves cheated by liberalism’ because of the exclusion of ‘murder and assassination’ from the list of measures to be ‘resorted to in political struggles.’

According to Mises (1985 [1927], 49, 51), ‘It cannot be denied that Fascism and similar movements aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history.’ A generation later, Hayek’s (1973, 3) Law, Legislation and Liberty asserted: ‘It can hardly be denied that, since this type of democracy has come to be accepted, we have been moving away from that ideal of individual liberty of which it had been regarded as the surest safeguard, and are now drifting towards a system which nobody wanted. Signs are not wanting, however, that unlimited democracy is riding for a fall and that it will go down, not with a bang, but with a whimper.’

According to Hayek (1973, 3), it is ‘already becoming clear that many of the expectations that have been raised can be met only by taking the powers out of the hands of democratic assemblies and entrusting them to the established coalitions of organized interests and their hired experts.’ A few weeks before the announcement of his Nobel Prize, Hayek told Seigen Tanaka (1974):

It may be said that effective and rational economic policies can be implemented only by a superior leader of the philosopher-statesman type under powerful autocracy. And I do not mean a communist-dictatorship but rather a powerful regime following democratic principles.

Hayek was obviously determined that Operation Condor dictators—who administered crony-based coalitions of organized interests with ‘experts’ hired from the business elite (Chapter 10, below)—would not feel ‘cheated’ just because they led blood-thirsty Juntas that fitted Mises’ (1985 [1927]) definition of ‘Fascism.’ Moreover, in protecting ‘property,’ ‘Fascists’ protected the intellectual foundations (and the defining qualification) of liberty-promoters: ‘experience of the working of the economic system which the administration of property gives’ (Hayek 1997 [1949], 224).

The Mises Institute website has reproduced Alan Bullock and Maurice Shock’s (1957 [1885], 207) The Liberal Tradition from Fox to Keynes which contains Joseph Chamberlain’s complaint about those who sought to put ‘aside’ the ‘great problem of our civilisation’—income and wealth inequality—by ‘reference to the eternal laws of supply and demand, to the necessity of freedom of contract, and to the sanctity of every private right of property’: ‘phrases’ which were the ‘convenient cant of selfish wealth.’ Hayek administered ‘his’ property—stolen from tax-exempt educational charities (Leeson 2017); in Liberalism in the Classical Tradition and elsewhere, Mises (1985 [1927], xvii, 165, 186) stole Frank A. Fetter’s intellectual property—the concept of consumer sovereignty (Leeson 2015b, Chapter 7); and Pinochet ‘supplemented his modest salary—never more than about $40,000 a year as president—with foreign bank accounts holding millions of dollars’ (O’Brien and Rohter 2014).

In the 1932 German elections, who else but Hitler could Hayek and Mises have supported (Leeson 2018b)? In 1934, Harold Soref—Hayek’s fellow Reform Club member and fellow ‘Deacon’ McCormick promoter and later Conservative Monday Club M.P. (Ormskirk 1970–1974)—was a standard bearer at the British Union of Fascists Olympia rally. Five years previously—and the year after Cannan’s (1928) deflation-promoting An Economist’s Protest—Hayek (1995 [1929], 68)—while praising Cannan’s ‘fanatical conceptual clarity’ and his ‘kinship’ with Mises’ ‘crusade’—noted that he and the British-Austrians had failed to realise the necessary next step: ‘Cannan by no means develops economic liberalism to its ultimate [emphases added] consequences with the same ruthless consistency as Mises.’ According to Caldwell (1995, 70, n. 67), this was an apparent reference to Liberalism in the Classical Tradition, in which Mises (1985 [1927], 19, 51) stated:

The program of [Austrian] liberalism, therefore, if condensed into a single word, would have to read: property [Mises’ emphasis] … All the other demands of liberalism result from this fundamental demand … The victory of Fascism in a number of countries is only an episode in the long series of struggles over the problem of property.

The ‘Fascists’ that Mises praised included ‘Germans and Italians,’ ‘Ludendorff and Hitler.’ Mises aspired to provide intellectual leadership:

The great danger threatening domestic policy from the side of Fascism lies in its complete faith in the decisive power of violence. In order to assure success, one must be imbued with the will to victory and always proceed violently. This is its highest principle … The suppression of all opposition by sheer violence is a most unsuitable way to win adherents to one’s cause. Resort to naked force—that is, without justification in terms of intellectual arguments accepted by public opinion—merely gains new friends for those whom one is thereby trying to combat. In a battle between force and an idea, the latter always prevails [emphases added].⁴⁶

Hayek (1978)

just learned he [Mises] was usually right in his conclusions, but I was not completely satisfied with his argument. That, I think, followed me right through my life. I was always influenced by Mises’s answers, but not fully satisfied by his arguments. It became very largely an attempt to improve the argument, which I realized led to correct conclusions. But the question of why it hadn’t persuaded most other people became important to me; so I became anxious to put it in a more effective form.⁴⁷

In the ‘victorious’ countries, the inhabitants of those countries defeated in the ‘Great’ War and the Third Reich-initiated Second World War have been vilified through crude national stereotypes. Referring to British tabloids (some owned by Rupert Murdoch), Thomas Matussek, the German Ambassador to London, expressed exasperation:

Somehow every time our two countries meet on the soccer pitch it’s as if you’re still fighting the war and all the old ‘We Blitz you Fritz’ headlines come up again.⁴⁸

When Almen Alchian asked

Professor Hayek, can I use the name ‘Fritz’? Where did that develop?

Hayek (1978) expressed sensitivity—for himself: ‘My mother called me like that, and I dislike it particularly. [laughter] Of course, my friends in London picked it up, but it so happens that there are few Christian names which I like less than my own. [laughter] … To me it reminds me too much of the Fritz, the Prussian emperor.’⁴⁹

In September 1972, the Monday Club held a ‘Halt Immigration Now!’ public meeting which called for repatriation of non-white immigrants. In 1979, Hayek was invited to be ‘Guest of Honour’ at the Monday Club Annual General Meeting at the Carlton Club (Farrant and McPhail 2017). Hayek (17 October 1979) replied that he would not wish to miss an opportunity of addressing the Monday Club and suggested the title ‘The Muddle of the Middle.’ Hayek (11 March 1980) then sent an advance copy of his talk to Mrs. Thatcher, adding—as if to illustrate his lack of ‘disdain’—the dates at which he could be contacted at the Reform Club (23–28 March 1980).⁵⁰ The Times (26 March 1980) published an extract from his Monday Club lecture the previous evening, which was almost identical to the letter from Hayek (5 March 1980) they had just published:

No inflation has yet been terminated without a ‘stabilization crisis.’⁵¹

The title of the Monday Club President (‘Marquess of Salisbury’) had been created by George III in 1789, the same year that Hayek’s paternal family ‘von’ had been created by Kaiser Josef II. Hayek’s (29 February 1980) only concern was whether to wear a dinner jacket, and whether the Secretary of the Monday Club would like a ‘cup of tea’ at the Reform Club, prior to dinner.⁵² In terms of ascribed status, National Front members were not Hayek’s cup of tea; but in terms of attitudes to non-whites, Hayek (1978), Enoch Powell, and the National Front were kissing cousins:

I don’t have many strong dislikes. I admit that as a teacher–I have no racial prejudices in general–but there were certain types, and conspicuous among them the Near Eastern populations, which I still dislike because they are fundamentally dishonest. And I must say dishonesty is a thing I intensely dislike. It was a type which, in my childhood in Austria, was described as Levantine, typical of the people of the eastern Mediterranean. But I encountered it later, and I have a profound dislike for the typical Indian students at the London School of Economics, which I admit are all one type–Bengali moneylender sons. They are to me a detestable type, I admit, but not with any racial feeling. I have found a little of the same amongst the Egyptians–basically a lack of honesty in them.⁵³

When asked if a newly elected Conservative government would have a ‘tough, new immigration policy,’ Thatcher (30 January 1978) replied:

I have described what it is. How you describe what I say is a matter for you … we do not talk about it [non-white immigration] perhaps as much as we should. In my view, that is one thing that is driving some people to the National Front. They do not agree with the objectives of the National Front, but they say that at least they are talking about some of the problems. Now, we are a big political party. If we do not want people to go to extremes, and I do not, we ourselves must talk about this problem and we must show that we are prepared to deal with it. We are a British nation with British characteristics. Every country can take some small minorities and in many ways they add to the richness and variety of this country. The moment the minority threatens to become a big one, people get frightened.

When asked ‘So, some of the support that the National Front has been attracting in recent by-elections you would hope to bring back behind the Tory party?’ Thatcher replied: ‘Oh, very much back.’⁵⁴

In July 1979, Home Secretary William Whitelaw told Thatcher that ‘according to letters he had received, opinion favoured the accepting of more of the Vietnamese refugees.’ Thatcher responded: ‘all those who wrote letters in this sense should be invited to accept one into their homes.’ But she had ‘less objection to refugees such as Rhodesians, Poles and Hungarians, since they could more easily be assimilated into British society’ (cited by Swaine 2009).

Post-1965, ‘Fascists’ promoted coordinated destabilization (the ‘Strategy of Tension’; Chapters 7–9, below); and the stabilization crisis that Hayek and Mises promoted in post-1929 Germany (unemployment-inducing deflation) facilitated Hitler’s rise to power (White 2008, Chapters 3 and 4, below). In 2001, the Conservative Party leader, Ian Duncan Smith, severed the Monday Club’s links to the Party until it ceased to ‘promulgate or discuss policies relating to race’ (Watt 2001); he also indicated that no Conservative M.P. should contribute to Right Now!, a quarterly magazine (of which the 7th Lord Sudeley was a Patron), after an article in it referred to Nelson Mandela as a terrorist. In ‘Monday Club still on Reich Track,’ The Times (2 June 2006), in a report of the Monday Club’s Annual General Meeting, quoted the Old Etonian Lord Sudeley, as stating: ‘True though the fact may be that some races are superior to other … Hitler did well to get everyone back to work’ (Rifkind 2006). The Times also reported that Jacob Rees-Mogg, Conservative M.P. for North East Somerset, addressed the Annual Dinner of the Traditional Britain Group, which called for the mother of hate-crime-murdered teenager, Stephen Lawrence, and other non-whites to ‘return to their natural homelands.’ Rees-Mogg later regretted the association: ‘I clearly didn’t do enough work to look into what they [the TBG] believed in’—did Hayek ever distance himself from his card-carrying Nazi family, the Monday Club or Pinochet?⁵⁵

‘Von’ Hayek (9 September 1939) informed the BBC that he had discovered a ‘blemish’ in their propaganda broadcast into Germany—someone with ‘a very unpleasant voice’: ‘I am personally convinced that it actually was a Viennese Jew speaking.’ ‘Von’ Hayek (15 October 1939) proposed the establishment of a Propaganda Commission: it was ‘important, in view of the prejudices existing not only in Germany, not to have a person of Jewish race or descent on the commission’ (Leeson 2015b, Chapter 2). Denied the opportunity of becoming a wartime propaganda operative, Hayek (2007a [1941]) published, first, The Pure Theory of Capital (which Lawrence White edited for Caldwell’s The Collected Writings of F.A. Hayek) and then The Road to Serfdom (2007b [1944]).

Just As I Am: The Autobiography of Billy Graham (1999, Chapter 9) report that in 1949, a two-word directive from publisher William Randolph Hearst made him an instant celebrity: ‘PUFF GRAHAM.’ Richard Nixon’s aide H. R. Haldeman (1994) first reported that Graham told Nixon that the nation’s problem lies with ‘satanic Jews’ and the ‘total Jewish domination of the media.’ In May 1994, Graham responded: ‘Those are not my words … I have never talked publicly or privately about the Jewish people, including conversations with President Nixon, except in the most positive terms’ (cited by Firestone 2002).

But The Nixon Tapes, 1971–1972 captured Graham anti-Semitism: ‘They’re the ones putting out the pornographic stuff … the Jewish stranglehold has got to be broken or the country’s going down the drain.’ Nixon appeared shocked: ‘Do you believe that?’ to which Graham replied: ‘Yes sir.’ Nixon exclaimed: ‘Boy! I can never say it though, but I believe-’ Graham cut him short: ‘But if you’re elected a second time, you might be able to do something’ (cited by Brinkley and Nichter 2014, 360).

Abraham Rosenthal, the executive editor at The New York Times—who had ‘passions, chief among them human rights’—argued ‘strenuously for publication’ of the Pentagon Papers: a ‘7,000-page secret government history of the Vietnam War, showed that every administration since World War II had enlarged America’s involvement while hiding the true dimensions of the conflict’ (McFadden 2006). Graham told Nixon: ‘I go and I keep friends’ with Jews like Rosenthal and ‘people of that sort, you know. And all—I mean, not all the Jews, but a lot of the Jews are great friends of mine, they swarm around me and are friendly to me because they know that I’m friendly with Israel. But they don’t know how I really feel about what they are doing to this country. And I have no power, no way to handle them, but I would stand up if under proper circumstances’ (cited by Firestone 2002).

When Charlotte Cubitt (2006, 51, 146) asked Hayek ‘whether he felt comfortable about Jewish people he replied that he did not like them very much, any more than he liked black people.’ But in Duke University’s History of Political Economy, the Jewish-born Ronald Hamowy (2002, 255) stated:

For those of us who knew Hayek, the charge that he was anti-Semitic can only seem perverse. Not only was he not anti-Semitic but in most regards he was in fact pro-Semitic.

Hamowy was Caldwell’s choice to edit the tax-exempt Definitive Edition of The Constitution of Liberty in which Hayek’s (2011 [1960]) motive for writing the book—to market to ‘Fascist’ dictators such as Salazar—was rectified through deletion (Farrant et al. 2012; Robin 2015). And Caldwell may have made one million dollars in a single month as a result of the ‘puffing’ of the tax-exempt Definitive Edition of Hayek’s Road to Serfdom (2007b [1944]) by Murdoch’s Mormon conspiracy theorist, Glenn Beck (Leeson 2015a).

‘Consistent Doctrine’

When Thomas Hazlitt asked whether he was ‘pleased’ with the ‘progress’ of the MPS, Hayek (1992b [1977]) replied:

Oh yes. I mean its main purpose has been wholly achieved. I became very much aware that each of us was discovering the functioning of real freedom only in a very small field and accepting the conventional doctrines almost everywhere else. So I brought people together from different interests. Any time one of us said, ‘Oh yes—but in the field of cartels you need government regulation,’ someone else would say, ‘Oh no! I’ve studied that.’ That was how we developed a consistent doctrine and some international circles of communication.

Referring to ‘the Hayek-Robbins line,’ Brinley Thomas (1991, 390) recalled that at the interwar LSE, the ‘ruling powers were passionate believers in freedom, and this included freedom to adjust the constraints within which freedom was exercised by nonfavourites. The main type of adjustment was the postponement of tenure. In my own case I did not receive tenure until, on the advice of Sir Alexander Carr-Saunders [LSE Director, 1937–1957], I moved from monetary theory to migration and economic growth.’

Maurice Dobb reflected that the LSE economics department was ‘firmly regimented under the Robbins-Hayek banner’ where academics were ‘mouthing old platitudes about the blessings of a price mechanism and the beneficence of capitalist speculators’ (Shenk 2013, 130–131). According to Nadim Shehadi (1991, 385–387), Hayek and Lionel Robbins ‘tried to restrict the divulgence’ of non-Austrian ideas: ‘the LSE at the time was described as a court where the favourites were the ones who adhered to Neo-classical principles and the non-favourites were those who had affinities to Keynesian ideas. The former got promotion, the latter were weeded out gradually.’

Paul Einzig (1937, 204) reported that at the LSE, Robbins and his collaborators ‘set up a cult of the Austrian economist, Professor Ludwig von Mises, with his fanatic belief in cutting down prices, and especially wages, as a remedy for all evil [in the Great Depression].’ In his Memoirs, Hugh Dalton (1953, 115) concluded that Robbins, his LSE colleague, became an ‘addict of the Mises-Hayek anti-Socialist theme’: ‘variety’ tended to disappear, and the LSE began to teach a ‘more uniform brand of right wing economics.’ In 1932, Dalton wrote to a friend that the ‘Robbins-Hayek tendency (and they have several echoes on the staff) is very retrograde’ (cited by Pimlott 1985, 215). After a visit to Nazi Germany in spring 1933, Dalton noted that ‘Geistige Gleichschaltung [intellectual coordination] is the Nazi ideal in education. There is something of this to in the economics department of the school of economics’ (cited by Durbin 1985, 103).

According to an academic fraud, the Koch-funded ‘free’ market was revived through financial fraud:

The chap who organized the conference, who shall remain nameless, owed the owner of the hotel some money, so the conference killed two birds with one stone … I’m pleased to be working at the Mises Institute right now … assuredly if we do not all hang together, we will hang separately. (Shenoy 2003)

David Koch told Brian Doherty (2007): ‘If we’re going to give a lot of money, we’ll make darn sure they spend it in a way that goes along with our intent. And it they make a wrong turn and start doing things we don’t agree with we withdraw funding. We do exert that kind of control.’ Tax-exempt tobacco and carbon lobby funds trickled down to Hayek’s (1978) compliant cadre of ‘secondhand dealers in opinion’ who ‘determine what people think in the long run. If you can persuade them, you ultimately reach the masses of the people.’⁵⁶ Beneficiaries include Shenoy (for her non-existent ‘Order of Liberty’ biography) and ‘Dr.’ Leube (to work on the apparently non-existent Böhm-Bawerk diaries).

The alleged benefits of trickle-down tax cuts failed to trickle-down to the wider community. The Wall Street Journal’s Mary Anastasia O’Grady chaired a 2016 MPS session on how ‘free’ market principles ‘might be applied in practice to current challenges to the free society, from ISIS to the War on Drugs.’⁵⁷ She returned with a new trickle-less ‘consistent doctrine’: ‘But what you do when you do this [proposed 2017] tax cut and deploy capital in the market as you create wealth, you don’t know how that wealth is going to be allocated in the market after that. You have to allow the market to do that. The messaging from Republicans has to be [emphases added] this is about making the country wealthier.’⁵⁸

A century after a ‘republic of peasants and workers’ stripped ‘von’ Hayek (1978) and ‘von’ Mises of their intergenerational entitlements, their re-feudalization agenda appears to have entered a new phase.⁵⁹

‘Secondhand Dealers in Opinion’

According to the author of Selling Hitler, Murdoch ‘ruled his Empire in a manner not dissimilar to that which Hitler employed to run the Third Reich’ (Harris 1986, 258–263, 302, 307, 320, 322). And according to Harold Evans (2007), he was removed by Murdoch as editor of The Times because ‘nothing less than unquestioning backing of Mrs. Thatcher would satisfy Rupert.’

Murdoch purchased The Wall Street Journal in 2007—but if ownership is a necessary condition of control, it is not sufficient. Does Murdoch-funding come with Koch-like strings? The relationship between the WSJ editor, Paul Gigot, and op-ed page editor, Mark Lasswell, broke down during the 2016 Presidential election when ‘Gigot blocked Lasswell from publishing op-eds critical of Trump’s business practices and which raised questions about his alleged ties to Mafia figures … There has been a shift, also, at the highest levels of the organization, as the paper’s owner Rupert Murdoch went from Trump skeptic to ally over the course of the election’ (Gray 2017).

In The Wall Street Journal, Charles Koch (2011) stated: ‘Crony capitalism is much easier than competing in an open market. But it erodes our overall standard of living and stifles entrepreneurs by rewarding the politically favored rather than those who provide what consumers want.’ After five years of studying undergraduate economics, Shenoy (1943–2006) was given a lower second class degree in economic history—below the conventional cut-off point for entry to graduate school. She presented a paper on Austrian capital theory at the 1975 Hartford revivalist meeting to which her commentator, Leland B. Yeager, commented:

‘This paper is not worth any comment.’ He just stood up, said it, and sat down. Stunned silence.

At the closing dinner, Shenoy

approached Hayek and asked if she could be his official biographer I heard Hayek reply to Sudha, ‘yes, you may be my official biographer, but on one condition, and one condition only: namely, you must first become fluent in German.’ Sudha accepted, but never even learned to count from eins to zehn. (Blundell 2014, 98–99)

Richard Fink had a

rabble-rousing background that bordered on juvenile delinquency. ‘The first 18 years of my life, I would say that if there were trouble anywhere within a 5-square-mile radius of where I was, somehow I would be in the middle of it within a few minutes.’

As a teenage manual worker, Fink injured his back and ‘enrolled in an economics course without even knowing what economics was’; and at Rutgers University, he ‘quickly grew captivated by a libertarian-minded professor named Walter Grinder and his lectures on moral philosophy’ (cited by Wilson and Wenzl 2012). Grinder (2010 [1974])—who attended the 1975 Hartford conference (Armentano 2010, 9)—described Shenoy as the

brilliant young economist who is rapidly becoming ‘Vienna’s own Mrs. Robinson.’⁶⁰

What criteria do ‘free’ market promoters use when writing job recommendations? The ‘politically favoured’ Shenoy obtained lifetime tenure not through ‘open market’ competition but through special interest pleading by Hayek and the National Tertiary Education Union (of which she was a voluntary member). She peppered Hayek with obsequious conference speeches and letters, such as:

spiritually and intellectually Vienna will always be our home: and we will always return to the charge against the forces of macro-darkness now threatening to overwhelm the world, carrying aloft the intellectual flag of Austria-Hungary … we still love you: and we feel that by continued association with us, we may yet show you the light and truth of anarcho-Hayekianism … And so, ladies and gentlemen, I give you two toasts to victory in the future, and to the best legacy of Vienna to the world, Professor Hayek [emphases in original] (23 July 1975).⁶¹

Having fled from the ‘Fascists’ who had ‘saved European civilisation,’ Mises (2009 [1940], 55)—in his mendacious Memoirs (which he denied having written)—provided his life-long motto:

Tu ne cede malis sed contra audentior ito (‘Do not give into evil, but proceed ever more boldly against it’).

And in ‘Interventionism,’ Mises (2006 [1958], 39) described his quarry: intervention is the quest to ‘interfere with market phenomena … when the government interferes with the market, it is more and more driven towards socialism [Mises’ emphasis].’ From his three bedroomed rent-controlled Manhattan apartment, Mises used rent control to illustrate evil: ‘If the government controls rents, one result is that people who would otherwise have moved from bigger apartments to smaller ones when their family conditions changed, will no longer do so … One of the main reasons why many cities in the United States are in such great financial difficulty is that they have rent control and a resulting shortage of housing.’

In a Critique of Interventionism, Mises (2011 [1929], 13)—a paid aristocratic lobbyist for employer trade unions—complained:

He who timidly dares to doubt the justification of the restrictions on capitalists and entrepreneurs is scorned as a hireling of injurious special interests or, at best, is treated with silent contempt. Even in a discussion of the methods of interventionism, he who does not want to jeopardize his reputation and, above all, his career must be very careful. One can easily fall under the suspicion of serving ‘capital.’ Anyone using economic arguments cannot escape this suspicion.

It wasn’t just ‘Fascist’ ‘merit’ that would ‘live on eternally in history’ Mises (1985 [1927], 49, 51); so too would ‘free’ market opposition to intervention. In his Introduction to a Critique of Interventionism, Grove City College’s Hans Sennholz (2011, ix) emphasized:

We may grow in knowledge of truth, but its great principles are forever the same. The economic principles that Ludwig von Mises expounded in these six essays during the 1920s have endured the test of time, being as valid today as they were in the past. Surely, the names and places have changed, but the inescapable interdependence of market phenomena is the same today, during the 1970s, as it was during the 1920s, and as valid for present-day Americans as it was for the Germans of the Weimar Republic.

Having denigrated the ‘evil seed’ of Christianity (Leeson 2018d), Mises (2009 [1940], 55) described the ‘great danger … Evil consists precisely in the fact that the masses are not intellectually enabled to choose the means leading to their desired objectives. That ready judgments can be foisted onto the people through the power of suggestion demonstrates that the people are not capable of making independent decisions.’ At Grove City College, Sennholz, a ‘Misean for Life’ Luftwaffe bomber pilot, taught students of ‘economic science’ that ‘A logically competent defense of a free society requires divinely revealed information; all other defenses fail’ (John Robbins 1992).

Rothbard (2007, 145) reported that Leonard Read—who had a ‘mystical streak’—would treat newcomers to his Foundation for Economic Education (FEE) with a one-hour monologue that began: ‘scientists tell me that if you could blow up an atom to the size of this room, and then step inside it, you would hear beautiful music.’ It is ‘widely whispered in the libertarian community’ that Read (1898–1983) ‘joined his friends,’ William Mullendore (1892–1983, President, Southern California Edison Company), James Ingebretson (1906–1999, Spiritual Mobilization), and Thaddeus Ashby (1924–2007, Assistant Editor of Faith and Freedom) in ‘acid explorations’ (Doherty 2007, 279–280; Rothbard 2007, Chapter 11; North 1971; McVicar 2017). According to Rothbard (1990b, 3), Luhnow (President of the Volker Fund) was a devotee of Rousas John Rushdoony. Luhnow (1895–1978) told staffers that in 1962 he had received ‘direct and specific communication from God’ and expected that Baldy Harper would also receive Divine communication (Doherty 2007).

For over a quarter-of-a-century (1946–1973), Mises was funded by Read’s FEE as their ‘spiritus rector’—literally: ‘Führer’ or ‘ruler’ (Hülsmann 2007, 884). Noting that it is ‘ideas and ideals that make us free,’ Read shared the ‘testimony of a dear friend, Norman Ream’ (1983), who, in ‘The Law That Makes Us Free,’ declared:

There is, indeed, a law which governs human freedom and that law is the moral and spiritual law ordained by God.

Mises (2006 [1958], 52–53) sarcastically noted that ‘For centuries there was the doctrine—maintained and accepted by everyone—that a king, an anointed king, was the messenger of God; he had more wisdom than his subjects, and he had supernatural powers. This doctrine of the superiority of a paternal government, of the supernatural and superhuman powers of the hereditary kings gradually disappeared—or at least we thought so. But it came back again.’ Mises was referring—not to Sennholz and Read but—to a ‘book, published in our century, not in the Dark Ages,’ by Werner Sombart, a German Historical School ‘professor of economics,’ which

simply says: ‘The Führer, our Führer’—he means, of course, Hitler—‘gets his orders directly from God, the Führer of the Universe.’ I spoke of this hierarchy of the Führer earlier, and in this hierarchy, I mentioned Hitler as the ‘Supreme Führer’ … But there is, according to Werner Sombart, a still higher Führer, God, the Führer of the universe. And God, he wrote, gives His orders directly to Hitler. Of course, Professor Sombart said very modestly: ‘We do not know how God communicates with the Führer. But the fact cannot be denied.’

Mises had an antidote to the hierarchy associated with those with divinely revealed ‘knowledge’:

Is there a remedy against such happenings? I would say, yes, there is a remedy. And this remedy is the power of the citizens; they have to prevent the establishment of such an autocratic regime that arrogates to itself a higher wisdom than that of the average citizen. This is the fundamental difference between freedom and serfdom.

Peter Boettke’s (2010, 60) only attempt to obtain academic credentials outside the ‘free’ market obliged him to repeat his freshman year by relocating to Grove City College: ‘except for the intervention of the [basketball] coaching staff, I never would have been admitted.’ According to The Wall Street Journal, after other academic failures, a ‘friend’ intervened and arranged for Boettke to receive lifetime income from the taxpayers of Virginia. Roughly ‘75%’ of his GMU ‘students have gone on to teach economics at the college or graduate level’ (Evans 2010).

According to Boettke (2001, 198): ‘Markets are like weeds. They are impossible to stamp out.’ Using the analogy of an official licence issued by the Roman Catholic Church, Leonard Liggio (27 May 1985) promised Buchanan that the ‘imprimatur of George Mason University’ will churn-out ‘crop after crop’ of invasive weeds, or hirelings (cited by Maclean 2017, 188).⁶² According to Jane Mayer (2010, 2016), Liggio (who was employed by the Koch-funded, IHS, 1974–1998) wrote ‘National Socialist Political Strategy: Social Change in a Modern Industrial Society with an Authoritarian Tradition’ which described the Nazis’ successful creation of a youth movement as key to their capture of the state. Like the Nazis, libertarians, Liggio suggested, should organize university students to create ‘group identity.’ Do the taxpayers of Virginia wish their funds to be used by GMU to hire educators or cult recruiters?

Of the Koch-funded Austrian revival, John Blundell (2014, 102) reported: ‘We were all converts already. It was more a forming of a clan.’ Caldwell told The Wall Street Journal that Boettke ‘has done more for Austrian economics, I’d say, than any individual in the last decade’ (cited by Evans 2010). According to one of Boettke’s GMU Ph.D. graduates,

Pete often says ‘love Mises to pieces,’ by which he means never lose sight of why you entered the discipline in the first place. (Anthony Evans 2010, 79)

On his ‘Coordination Problem’ website, the Presuppositionalist Boettke (2014)—the President of Hayek’s MPS—obliges his GMU students to listen to his meandering soliloquies and to watch an ‘underpants’ video accompanied by a discussion about varieties of ‘masturbation.’ Historians of thought are as described as ‘gullible’—they play ‘ideological checkers’ while he plays ‘scholarly chess … Yes, I know that sounds elitist, but scholarship requires certain abilities and temperament.’⁶³

With respect to scholarship, Boettke tells his GMU students: ‘converse in that language, but he always stresses the need to keep the raw enthusiasm’ (Anthony Evans 2010, 79). Documents on the University of California San Francisco website led ‘Corporate Corruption of Science’ to conclude that Boettke (1960–) is on the tobacco industry’s ‘cash-for-comments’ economists network: ‘each op-ed now earned the economists $3,000. Presentations made to conferences earned them $5,000.’⁶⁴

One of Hayek’s sources was the transparent fraud, ‘Deacon’ McCormick, who derived some of his ‘knowledge’ from Monty Python’s Flying Circus (Leeson 2018c, Chapter 7). Caldwell and Leonidas Montes (2014a, 28, 42; 2014b, 2015, 285, 296) derive their conclusions from Lucia Santa Cruz, who they describe as a ‘reputed’ and ‘well-regarded Chilean historian who had studied at Oxford while her father was the Chilean Ambassador to the U.K. and who was a frequent and influential contributor to public debate.’ But was Lucia Santa Cruz a disinterested scholar? According to the Daily Telegraph, when Prince Charles of England ‘was forced to sit down and thumb his way through the pages of Burke’s Peerage to find a suitable candidate’ for marriage, Lucia Santa Cruz introduced ‘him to the ways of love’:

Pressure from above, and from public opinion, dictated that as heir to the throne he should secure a favourable marriage, meaning at that time either a foreign princess or the daughter of a senior British aristocrat. (Wilson 2013)

And according to Inter Press Services,

In an effort to justify the military coup and the use of torture, Pinochet’s advisers got an article by right-wing historian Lucia Santa Cruz, a friend of England’s Prince Charles, published in ‘The Sunday Telegraph’ in Britain. In her article, Santa Cruz maintained that her husband, Juan Luis Ossa, had been ‘tortured during the Allende government (1970–73).’ Santa Cruz’ claims drew a heated reaction in Chile. The assistant director of investigations under the Allende administration, Carlos Toro, in whose presence Ossa was interrogated after being arrested for carrying arms, said her husband was never tortured. ‘It is infamy to try to seek comparisons with the human rights violations committed during the dictatorship,’ said Toro. ‘Torture was never committed under the government of Allende.’⁶⁵

Invoking the authority of Lucia Santa Cruz, Caldwell and Montes (2014a, 28, 2014b, 2015, 285) begin their logic with a false premise: ‘A good place to begin is to point out that Hayek and his work was virtually unknown in Chile in the 1970s.’ From this falsehood, a priori ‘free’ market conclusions ‘logically’ follow (Leeson 2018b). So it is with Austrian time.

Mises ran a private seminar in Vienna, 1920–1934 (French 2013) and at New York University (NYU), 1945–1969. In his first report of the ‘new’ Austrian Economics Seminar (AES), Don Lavoie (1978a, 2, 8) noted:

While its method is distinguished primarily by complexity and purposiveness, the content [Lavoie’s emphasis] of Austrian economics is primarily distinguished both by its radical subjectivism,’ as [Ludwig] Lachmann puts it, and by its emphasis on the importance of time.

To Karen Vaughn’s (2000, 43, n. 10) ‘mind, the most fruitful product of the Austrian debates in the first decade of the revival’ was Gerald O’Driscoll and Mario Rizzo’s (1985) The Economics of Time and Ignorance which teased out ‘the implications of real time and partial ignorance for otherwise rational beings operating in a world of scarcity.’ Academic jobs and Ph.Ds are scarce: but in an Institute of Economic Affairs press release on privatisation, their employee (1970–1977), ‘Dr Sudha Shenoy,’ was listed as the authority to be contacted.⁶⁶ In 2001, near the end of her academic career, Shenoy was given an Austrian-examined Ph.D. And in 2000, Ebeling (1950–) was given a Ph.D. by Middlesex Polytechnic/University—seventeen years after he appeared to earn a living as an NYU ‘Post Doctoral Fellow’ (Leeson 2018d).

In the 1990, Ebeling was, by his own account, a major player in the post-communist ‘free’ market reconstruction that facilitated the rise of Vladimir Putin’s ‘Russia of the Oligarchs’ (Haiduk 2015). In ‘Project Andrea,’ Pinochet’s agents manufactured a supply of nerve gas and—bottled in a Chanel No. 5 perfume atomizer—transported it to the United States on a Chilean airliner, for possible use in the 1976 Washington assassination of Orlando Letelier, a former Chilean Ambassador (Shribman 1981). In 2018, the British Foreign Secretary concluded that it was ‘overwhelmingly likely’ that it was Putin’s ‘decision, to steer the use of nerve gas in the British streets, European streets, for the first time since the Second World War.’⁶⁷

According to his Heartland Institute policy ‘expert’ website, Ebeling is the

BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel. He conducts courses such as ‘Leadership, Entrepreneurship, and Capitalist Ethics’ as well as ‘The Morality and Economics of Capitalist Society.’⁶⁸

To ‘build a world where states are weak and society is strong,’ William J. Boyes (2015a) provided a ‘free’ market solution: ‘Get Rid of Public Schools.’ In his ‘Murray N. Rothbard Memorial Lecture,’ Boyes (2015b, 127, 130) reported that ‘Murray said he rebelled against the state when he was 6’:

I conducted a survey where I measured student attitudes towards free market ideas at various stages of their training. The result was: The more economics schooling they had, the less they liked the free market and the more they wanted government to solve issues … Much of what is being taught in mainstream economics departments around the country these days is nonsense. Mises dismissed academic economists as a collection of charlatans—‘The fact that the majority of our contemporaries, the masses of semi-barbarians led by self-styled intellectuals, entirely ignore everything that economics has brought forward, is the main political problem of our age.’

Documents on the University of California San Francisco website led ‘Corporate Corruption of Science’ to conclude that Boyes (1947–) is on the tobacco industry’s ‘cash-for-comments’ economists network.⁶⁹

Shackle (1981, 234) described Hayek as ‘the soul of scholarly generosity.’ In 1950, within weeks of arriving at the University of Chicago, Hayek pursued intellectual coordination by targeting academics for liquidation—Lawrence Klein (the recipient of the 1980 Nobel Prize for Economic Sciences) was one of those whose careers were adversely impacted (Leeson 2017). And in ‘What is to be Done’ Rothbard (2010 [1961]) promoted the Sovietization of American universities:

We are, in this sense, revolutionaries—for we are offering the public a radical change in their doctrinal views and we are offering it from a firm and consistent base of principle that we are trying to spread among the public … How do we go about it? I think that here we can learn a great deal from Lenin and the Leninists—not too much, of course, because the Leninist goals are the opposite of ours—but particularly the idea that the Leninist party is the main, or indeed only, moral principle [emphasis added] … we must, first and foremost, nourish and increase the hard core; we must, then, try to diffuse and advance principles and action as far as possible in the direction of [Rothbard’s emphasis], hardcore doctrines. To abandon the hard core is liquidationist; to abandon all hardcore leverage upon others is to remain sterile and ineffective. We must combine the two elements; we must, in short, nourish and develop a hard core, which will then permeate and exert leverage upon others.

In his September 1984 MPS closing address, Hayek stated that the Society should be concerned with ‘changing opinion … Its intellectuals who have really created socialism … who have spread socialism out of the best intentions.’ Hayek emphasized the

moral inheritance which is an explanation of the dominance of the western world, a moral inheritance which consists essentially in the belief in property, honesty and the family, all things which we could not and never have been able adequately to justify intellectually. We have to recognize that we owe our civilization to beliefs which I have sometimes have offended some people by calling ‘superstitions’ and which I now prefer to call ‘symbolic truths’ … We must return to a world in which not only reason, but reason and morals, as equal partners, must govern our lives, where the truth of morals is simply one moral tradition, that of the Christian west, which has created morals in modern civilization. (cited by Leeson 2013, 197)

According to Mises (2006 [1958], 71)

The only method by which a ‘full employment’ situation can be brought about is by the maintenance of an unhampered labor market. This is valid for every kind of labor and for every kind of commodity.

Through unhampered fraudulent recommendations, Hayek (1978) constructed a full employment Welfare State—or lifetime incomes policy—for his academically unqualified disciples: ‘That I cannot reach the public I am fully aware. I need these intermediaries.’⁷⁰ At the 1978 ‘new’ AES, Rothbard ‘emphasized that the Austrians’ greatest needs are institutional: we require a journal, a Society of Austrian Economists, and a favorable graduate department’ (cited by Lavoie 1978b, 6–7).

Rothbard (1973, 1990a), the Academic Vice President of the Ludwig von Mises Institute, declared that Mises was ‘unbelievably sweet’; he had a ‘mind of genius blended harmoniously with a personality of great sweetness and benevolence. Not once has any of us heard a harsh or bitter word escape from Mises’ lips’; he was ‘Un-failingly gentle and courteous.’ With respect to Mises’ reputation for ‘abrasiveness,’ Rothbard (1990a) claimed that ‘never saw it.’ Simultaneously, Rothbard (1990b) recalled that after a comment about monopoly theory, Mises called him a ‘Schmollerite. Although nobody else in the seminar realized it, that was the ultimate insult for an Austrian.’⁷¹ Rothbard was simply lying to his students; who, presumably, had to repeat his lies and his ideology to pass his courses: at the University of Las Vegas, Nevada, ‘Austrians are at the top of their classes’ (Rothbard 1990b, 5).

In the ‘free’ market, how do students get to the ‘top of their classes?’ Initially, Mises gave ‘every student an A. When told he could not do that, he alternatively gave students As and Bs depending on their alphabetical placement. When told he could not do that [emphasis in original], he settled on a policy of giving and A to any student who wrote a paper for the course, regardless of its quality and a B to everyone else’ (Rothbard 1988 [1973], 106, n. 56). This allowed Wall Street brokers to obtain Ivy League academic qualifications as they slept throughout Mises’ NYU class (Doherty 2007, 212).

When Mises (1881–1973) died, the ‘dedicated scholar,’ Israel Kirzner (1930–), had a ‘position at New York University, but no colleagues to constitute a school’ (Vaughn 2000, 41). The IHS ‘plan’ was to ‘try to build a group of faculty and cadre of graduate students around the Economics Department at NYU … Funds were raised for graduate student scholarships from not just Charles Koch but also others. The obvious candidates would be the Scaife, Olin, and Earhart Foundations’ (Blundell 2014, 103–104).

Lavoie (1978a, 2, 8) noted that after Mises’ regular NYU seminars in Austrian economics ended in 1969, it looked like the ‘last dying gasp of the Austrian school.’ Lachmann believed that when Hayek died he would become the ‘last living expositor of this once widely held point of view.’ But the 1970s ‘resurgence’ of Austrian economics had ‘exceeded the expectations of even the most optimistic among us … The seeds have been planted for the flowering of a new approach to economics in our time.’

According to Ebeling (1978, 12), the ‘Austrian resurgence has in many ways been a spontaneous reaction to the unsatisfactory state of orthodox economics’—adding that the ‘revival has greatly benefited’ from IHS ‘support.’ And according to the Association of Private Enterprise Education’s Free Library,

Austrian scholarship is a spontaneous order, and younger academics are constantly pushing the boundaries of what can be accomplished. They are demonstrating that it is possible for Austrian School economists to take a seat at the top table of the professional debate without compromising their message: it just takes the right attitude and a lot of work. We have provided evidence of the remarkable progress that has been made since the first revival and that will continue to be made. The academic wing of the Austrian School is flourishing, and the future of good economics is Austrian.

The authors, Anthony Evans and Vlad Tarko (2014), report that NYU, GMU and Auburn University ‘offered the original Ph.D. programs where students could take Austrian courses and write a specialized thesis under the supervision of an Austrian professor’—but now: ‘the options open to potential Austrians have increased and continue to grow.’ Aside from GMU, there are Austrian economists on the faculty of ‘about seven Ph.D.-granting institutions’ in the US:

NYU (Israel Kirzner, Mario Rizzo, David Harper), the University of Missouri (Peter Klein), West Virginia University (Josh Hall, Jeff Lee, Roger Congleton, Andy Young), the University of Illinois (Isaac DiIanni), Mississippi State University (Claudia Williamson), the University of California, Santa Barbara (Ryan Oprea), and Texas Tech University (Adam Martin, Ben Powell, and Edward Stringham). Master’s programs with Austrian faculty include those at San Jose State University (Colleen Haight, Matt Holian) and Western Carolina University (Ed Lopez, Steve Miller). Austrians have been visiting professors at prestigious schools such as London School of Economics (Peter Boettke, Bruce Caldwell, Roger Garrison), Chicago (Peter Leeson), NYU (Adam Martin, Claudia Williamson) and Duke (David Skarbek).

Evans and Tarko added: ‘It is important to also consider Austrians teaching in business schools, such as Nicolai Foss (Copenhagen Business School) and Anthony Evans (ESCP Europe).’ Documents on the University of California San Francisco website led ‘Corporate Corruption of Science’ to conclude that NYU’s Rizzo (1948-) and ex-GMU and current West Virginia University’s BB&T Professor of Economics, Congleton (1951–),⁷² are on the tobacco industry’s ‘cash-for-comments’ economists network.⁷³

Addressing a prominent member of the Mont Pelerin ‘other half,’ Friedman told Block (2006, 61, 65, 74, 77, 79): your ‘tone is that of a theologian examining scripture’ and not that of a ‘reasonable man’: ‘you are a fanatic who finds it absolutely impossible to understand the thinking of anybody other than himself. It is time to close our discussion.’ What educational merit does the taxpayer derive when public universities employ zealots—of the Left, Right, Theocratic, or any other variety? Fink (1951–) exclaimed: ‘I can’t figure out how they look at the data and not see the overwhelming benefits of the free market. I just don’t understand it’ (cited by Continetti 2011). As a GMU student,’ Boettke learnt to be ‘like Malcolm X, Austrian and proud. In your face with the Austrian economics … as a kid I wasn’t intellectual, but as a basketball player I was competitive. Sennholz and Fink made these appeals that fed into my psyche: We’ll form this team and go out and beat ‘em’ (cited by Doherty 2007, 430). Boettke (2010, 62) ‘was completely enamored of Rich Fink, who, like myself, was from New Jersey. He possessed a tireless energy and a dynamic personality.’ By ‘drinking beer, playing pool and talking about economics and libertarianism,’ Boettke ‘became convinced that I could do Austrian economics for a living.’

Douglas Simpson’s (2011, Chapter 5, 290) Looking for America: Rediscovering the Meaning of Freedom contains a chapter on ‘The Road to Serfdom’ plus a standard ‘free’ market cliché: ‘once bureaucracy solves a problem, it will usually either deny the problem, or create another, in order to remain attached to the tax nipple.’ For most of his career, Fink has been a Koch Industry bureaucrat. In 1978—looking like he was ‘trying out for the Bee Gees,’ dressed in ‘checkered shirt and a bright blue tie’ and a for-Koch-purchased ‘snazzy suit’—Fink flew to Kansas to receive $150,000 from ‘moneybags’:

Years later, Fink asked Koch why. ‘If a guy came up to me with a black polyester suit, white piping, dressed like that with a beard and hair down to his shoulders, I don’t think I would probably meet with him, let alone give him the equivalent of about $500,000 in inflation-adjusted dollars.’ ‘Why,’ he asked, ‘did you do that?’ ‘I like polyester,’ Koch deadpanned. ‘It’s petroleum-based.’ (Wilson and Wenzl 2012)

Is the ‘free’ market anything other than petroleum—and tobacco-based? In ‘Hayek’s Epistemic Liberalism,’ the IHS ‘Charles Koch Distinguished Alumnus’ explained:

Economic actors in the private sector as well as the public sector face a knowledge problem [emphasis in original], and the institutional framework [emphasis added] in each respective arena of social interaction provides answers to what we can learn, how we will learn, and who will learn. (Boettke 2017)

Salerno (2002, 105) points out that ‘Since human beings are not disembodied minds who instantly and costlessly absorb new knowledge, every scientific movement, if it is to flourish and advance, requires an institutional framework.’ This was evidenced by the Volker Fund making it ‘possible for Mises, Hayek, Rothbard, and dozens of others to develop and advance libertarian views and in the midst of an ideological climate implacably hostile to their ideas’ (Raimondo 2000, 151).⁷⁴ The Volker Fund underwrote Mises’s NYU seminar, provided Hayek’s salary at the Committee on Social Thought at the University of Chicago (Vaughn 1994, 66), and gave Rothbard grants to write Man, Economy, and State (Salerno 2002, 112).

With his middle-class income from the taxpayers of Virginia, Boettke (2015)—the ‘University Professor of Economics and Philosophy at George Mason University; the BB&T Professor for the Study of Capitalism, Vice President for Research, and Director of the F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at GMU’—lives in a ‘different world than the 99%’ and ‘I’d like to make more money.’

‘International Circles of Communication’

In interwar Europe, democracies were overthrown by ‘Fascists’ (as defined by Mises) in Italy (1922–1943), Portugal (1926–1974), Germany (1933–1945), Austria (1934–1945), and Spain (1936/1939–1975).⁷⁵ In post-war Latin America, the military seized power in what became known as Operation Condor countries: Paraguay (1954), Brazil (1964), Bolivia (1971), Uruguay (1973), Chile (1973), and Argentina (1976).

Military coups also ended democracy in Iran (1953), Guatemala (1954), Indonesia (1965) and Greece (1967). In Indonesia, General Suharto seized power and in the ‘cleansing’ process that followed, more than 500,000 Indonesian ‘impurities’ were liquidated. According to Mark Aarons (2008, 81), a CIA report described the massacre as ‘one of the worst mass murders of the 20th century, along with the Soviet purges of the 1930s, the Nazi mass murders during the Second World War, and the Maoist bloodbath of the early 1950s.’ In 1967, Hayek praised ‘el-Haj Mohammed’ Suharto and his Generals who were ‘mostly not what we would regard as military men. They are in many instances men coming from other professions who in the fight for independence have risen in rank and remained in the army to ward off communism’ (cited by Farrant and McPhail 2014).⁷⁶

Hayek’s MPS held regional meetings in Guatemala in 1973 and 1990, plus a full conference in 2006.⁷⁷ Referring to Guatemala, Jonathan Power (1981, 88, 113) reported that ‘anyone who speaks out or complains, much less organizes a formal opposition group, is the target for assassination.’ In 1977, a Nicaraguan Roman Catholic Bishop accused Anastasio Somoza’s National Guard of ‘humiliation and inhuman treatment ranging from torture to rape to summary executions.’ In May 1976, Amnesty International sent a mission to Nicaragua—and within five years, ‘half the people it interviewed have been found dead.’

In 1977, Hayek planned to visit three Operation Condor countries (Chile, Argentine, and Brazil) plus Nicaragua (which was then ‘owned’ by the Somoza dynasty, 1936–1979); but he ultimately visited only Chile, Argentina, and Brazil, plus post-‘Fascist’ Portugal and Spain (Caldwell and Montes 2014a, 20, n. 64, n. 66, 2014b, 2015, 278, n. 64, n. 66). In ‘Dirty War’ Argentina, about 30,000 ‘impurities’ were made to disappear; while in Pinochet’s Chile, 3197 were murdered, 20,000 were officially exiled and their passports marked with an ‘L,’ and about 180,000 fled into exile—about 2% of the population (Wright and Oñate 2005, 57; Montes 2015, 7).

Hayek (3 August 1978) indignantly wrote in the (London) Times that he had ‘not been able to find a single person even in much maligned Chile who did not agree that personal freedom was much greater under Pinochet than it had been under Allende.’⁷⁸ And in Chile, Hayek (1981) stated that

democracy needs ‘a good cleaning’ by strong government.

Simultaneously, Shackle (1981, 261)—the University of Liverpool’s Brunner Professor of Economic Science—described Hayek as ‘one of the outstanding sculptors of this age’s thought … To be free is breath itself. But would life be a keen invigorating air if it did not release the poet’s splendor of words and the painter’s tide of color, and encourage the mathematician’s web of gossamer entailment and even the business man’s enterprise and ambition? Hayek as economists has perhaps been eclipsed by Hayek the apostle of freedom. On any reckoning he must be accorded by friend and foe his unquestioned place among the giants.’

Hayek and Hitler sought to create irreversible versions of the past. Hitler’s method was to ‘cleanse the nation of its enemies’ (cited by Heiden 1944, 312); and the ‘Model Constitution’ that Hayek (2013 [1979], 483) sent to Pinochet ‘would of course make all socialist measures for redistribution impossible’—and could, therefore, only be imposed when socialists were unable to effectively object. Hayek (1981) supported the kleptocrat Pinochet (1973–1990), the coordinator of the Argentine ‘Dirty War’ (1976–1981), General Jorge Rafael Videla, and other ‘transitional’ dictators:

When a government is broken, and there are no recognized rules, it is necessary to create rules to say what can be done and what cannot be done. In such circumstances it is practically inevitable for someone to have almost absolute powers. Absolute powers that they should [emphasis added] precisely use to avoid and limit any absolute power in the future. It may seem a contradiction that precisely I say this, as I plead for limiting government’s powers in people’s lives and maintain that many of our problems are born, just out of the excess of government. But, however, when I refer to this dictatorial power, I am only talking for a transitional period. As a means for establishing a stable democracy and liberty, free of impurities. Only in this way I can justify, advise it.

The slogan ‘government is broken, and there are no recognized rules’ underpinned the post-1965 Neo-Fascist ‘Strategy of Tension’ that justified democracy-ending military coups (Chapters 7–11, below).

Volume Overview

Origins

In The Road to Serfdom, Hayek (2007b [1944], v) protested:

When a professional student of social affairs writes a political book, his first duty is plainly to say so. This is a political book … But, whatever the name, the essential point remains that all I shall have to say is derived from certain ultimate values. I hope I have adequately discharged in the book itself a second and no less important duty: to make it clear beyond doubt what these ultimate values are on which the whole argument depends. There is, however, one thing I would like to add to this. Though this is a political book, I am as certain as anybody can be that the beliefs set out in it are not determined by my personal interests.

In for-posthumous-general-consumption oral history interviews, Hayek explained what these ‘ultimate values’ were: fraud. The Road to Serfdom, he explained, had been written for personal interests: to allow the ‘old aristocracy’ to resume their ascribed status and to drive the ‘new aristocracy’—labour trade unionists and elected politicians—back down the road back to serfdom (Leeson 2015a, Chapter 3).

In The Constitution of Liberty, Hayek (2011 [1960], 71, 186) stated that ‘Coercion is evil precisely because it thus eliminates an individual as a thinking and valuing person and makes him a bare tool in the achievement of the ends of another.’ And simultaneously: ‘To do the bidding of others is for the employed the condition of achieving his purpose’—which smacks of feudal ownership rather than the neoclassical optimisation that forms the basis of conflict-of-interest analysis of the separation of ownership from control.⁷⁹ To defend the ‘spontaneous’ order, the tax-exempt bagmen of the tobacco industry and the fossil fuel lobby instructed those who ‘do their bidding’ not to submit (and in one case, to withdraw) commissioned chapters for Hayek a Collaborative Biography. In consequence, the present author was obliged to write a brief history of the origins of the Austrian School of Economics and the role played in those origins by the parallel German Historical School of Economics (Leeson 2015c, Chapters 2 and 3).

In Chapter 2, Birsen Filip (a recent Ph.D. graduate) provides an informative interpretation of the German Historical School of Economics and the foundations and development of the Austrian School of Economics. Carl Menger—who appears to have been motivated to found an Austrian School of Economics by resentment at his treatment by Austrian-excluding German Historical School promoters—claimed that they were responsible for delaying the development and progress of economic theory in Germany. However, Frederick C. Beiser (2011, 524) concluded that it was Menger and his Austrian School followers—not the German historians—who were responsible for delaying ‘the development of science’: ‘they wanted to return to the age of scholasticism, where abstractions and a priori constructions ruled, rather than the hard work of the empirical research.’

According to Mises (2003 [1969], 17), ‘Menger, Böhm-Bawerk, and Wieser looked with the utmost pessimism upon the political future of the Austrian Empire.’ Menger launched the Methodenstreit to ‘counter the destructive intellectual currents with which Prussian universities were poisoning the world.’ Mises projected his own suicidal tendencies onto ‘all sharp-sighted Austrians.’ And the tax-exempt Collected Works of F. A. Hayek (1992a [1934], 90) report that Menger was working on ‘wider and wider’ material but had to withdraw from academia because he was defeated by old age.

The archives tell a different story: according to Hayek, Menger, in his early sixties, fathered an illegitimate son, Karl Menger (1902–1985).⁸⁰ According to Eugen Maria Schulak and Herbert Unterkofle (2011, 32), the mother was a journalist, Hermine Andermann (1869–1924), who was 29 years his junior; according to J. Herbert Fürth, Karl’s mother was Menger’s Jewish housekeeper. Menger got his son legitimized by Imperial decree—but Karl never forgave his father for not marrying his mother.⁸¹

According to Schulak and Unterkofler (2011, 32), fathering an illegitimate child violated Viennese social conventions: in 1903, Carl was forced into early retirement and withdrawal from public life. Members of the Austrian School maintained the ‘esprit de corps’ posture that he had taken voluntary retirement for the sake of further studies: a

‘true Viennese secret’—which everyone in Vienna knew but did not talk about in public.

Mises (1985 [1927]) aspired to be the intellectual Führer of a Nazi-Classical Liberal Pact—but ‘went through the roof’ when he saw who Hayek planned to invite to the Mont Pelerin Society—he was ‘primarily concerned about the participation of Röpke, who is an outspoken interventionist. I think the same holds true for Brandt, Gideonse, and Eastman. All three of them are contributors to the purely socialist—even though decidedly anti-Soviet—New Leader’ (cited by Hülsmann 2007, 865–866).

After both were safely dead, Buchanan (1992, 130) reported that at Mont Pelerin Society meetings there was ‘too much deference accorded to Hayek, and especially to Ludwig von Mises who seemed to demand sycophancy.’ In 1966, Harry Gideonse resigned as President of Brooklyn College because of

the demand by the Board of Higher Education for ‘fealty.’ ‘Fealty is a medieval concept, and it describes the position of a medieval lord in his relation to his feudal serfs,’ Dr. Gideonse said. ‘Members of the Board of Higher Education are not medieval lords—and I am not inclined to become a serf.’ (Waggoner 1985)

Max Eastman has assisted with the publication of Hayek’s (1944) The Road to Serfdom; Karl Brandt was a Stanford University agricultural economist, and in 1934, Wilhelm Röpke had recruited Mises to the Geneva-based Graduate Institute of International Studies to become a visiting professor of international economic relations (his only genuine academic employment). In 1931, Röpke had been appointed to the ‘Brauns Kommission,’ a board of experts appointed by Heinrich Bruning’s government to put forward proposals that might reduce the dramatic rise in unemployment that was driving the electorate into the arms of the anti-democratic extremes. The Commission’s Report containing guidelines for an expansionary policy based on public works. In ‘Before Hitler: The Expansionary Program of the Brauns Commission,’ Antonio Magluio examines Hayek’s interaction with the Brauns Commission (Chapter 3).

In Chapter 4, David Glassner examines Hayek’s early writings on business cycle theory and the Great Depression in which he argued that business cycle downturns including the steep downturn of 1929–1931 were caused by unsustainable elongations of the capital structure of the economy resulting from bank-financed investment in excess of voluntary saving. Because monetary expansion was the cause of the crisis, Hayek argued that monetary expansion was an inappropriate remedy to cure the deflation and high unemployment caused by the crisis. He, therefore, recommended allowing the Depression to take its course until the distortions that led to the downturn could be corrected by market forces.

Glassner points out that this view of the Depression was at odds with Hayek’s own neutral money criterion which implied that prices should fall during expansions and rise during contractions so that nominal spending would remain more or less constant over the cycle. Although Hayek strongly favored allowing prices to fall in the expansion, he did not follow the logic of his own theory in favoring generally increasing prices during the contraction.

Glassner’s chapter explores the reasons for Hayek’s reluctance to follow the logic of his own theory in his early policy recommendations. The key factors responsible for his early policy recommendations seem to be his attachment to the gold standard and the seeming necessity for countries to accept deflation to maintain convertibility and his hope or expectation that deflation would overwhelm the price rigidities that he believed were obstructing the price mechanism from speeding a recovery. By 1935, Hayek’s attachment to the gold standard was starting to weaken, and in later years, he openly acknowledged that he had been mistaken not to favour policy measures, including monetary expansion, designed to stabilize total spending.

In 1944, in addition to publishing The Road to Serfdom, Hayek visited Gibraltar for the British Colonial Office to address post-war reconstruction issues. Othmar Spann—the ‘Philosopher of Fascism’ (Polanyi 1934, 1935) and the dominant influence over Hayek at the University of Vienna (Leeson 2017)—promoted the idea that the individual finds meaning by surrendering to the deified and mysterious State; while to promoters of the divine right of the ‘free’ market like Hayek (1974), the individual found meaning by surrendering to the ‘known only to God’ price mechanism (which mustn’t be interfered with by subsidising education or taxing carbon and tobacco).⁸² As Chris Grocott (Chapter 5) explains, Hayek’s proposals would have resulted in Gibraltarians (some anti-Fascist refugees) being forced to live under General Francisco Franco’s autarkic dictatorship in Spain.

Part 2: Revival

In the 1970s, Austrian economics experienced a resurgence in the English-speaking world, especially in America—the Austrian Economics Newsletter played an important role of communicating, diffusing, and developing Austrian ideas. The first ten AEN issues reveal how the Austrian revival took place; and what its infrastructure and personalities were. They also illustrate the ideas and problems that came to characterize the resurgence in Austrian economics: dynamics, process, expectation, time, entrepreneurship, (Knightian) uncertainty, knowledge, discovery, learning, equilibration and disequilibration, spontaneous order, subjectivism, Austrian methodology and praxeology, criticism of general equilibrium, price system as a conveyor of information, monetary policy, etc. In Chapter 6, Hiroyuki Okon examines the Austrian revival which—without Hayek’s 1974 Nobel Prize plus funding from the IHS—may never have occurred.

The ‘international circles’ of the International Right includes ‘free’ market economists, public stoning theocrats, political operatives and coup-masters—Hayek was their acknowledged intellectual leader (Leeson 2018e). When Chitester asked the ‘intellectual who is working theoretically and the one who essentially sells himself to the political process,’ Hayek (1978) replied:

Well, of course, there is a limit. You see, I’m very interested in politics; in fact, in a way I take part. I now am very much engaged in strengthening Mrs. Thatcher’s back in her fight against the unions. But I would refuse to take any sort of political position or political responsibility. I write articles; I’ve even achieved recently the dignity of an article on the lead page of the London Times on that particular subject. I’m represented in England as the inspirer of Mrs. Thatcher, whom I’ve only met twice in my life on social occasions. I enjoy this, but on the principle that I will not ask, under any circumstances, what is politically possible now. I concentrate on what I think is right and should be done if you can convince the public. If you can’t, well it’s so much the worse, but that’s not my affair.⁸³

According to the MPS Statement of Aims: ‘It aligns itself with no particular party.’⁸⁴ Yet of the 76 economic advisers on Reagan’s 1980 campaign staff, 22 were Mont Pelerin Society members (Peterson 1996). Hayek (7 June 1980) suggested to the Hoover Institution Director, Glenn Campbell, that during his next trip he would like Reagan to be cross-examined before the press by the Hoover Institution economists including himself: this would have allow Reagan to ‘show’ his confidence and to demonstrate that he was taken seriously by economists. Hayek sought a specific role in winning the 1980 election: he wanted to tell the media his ‘joke’ that since Reagan was twelve years his junior, he was clearly ‘good’ for an unconstitutional third term.⁸⁵

Cubitt (2006, 47–48) reported that Hayek was

active on the political scene in Germany too, despite having claimed that he never interfered in the affairs of any other country than his own. He told me he wanted to help Franz Josef Strauss, the then President of Bavaria, to become Chancellor of Germany by discrediting the Liberal Party …. Another politician he wished to further was Otto von Habsburg.

After the defeat of Hitler, the International Right regrouped, both internationally and within Europe. On the European level, two eminent Catholics—Habsburg, claimant to the Imperial throne of Austro-Hungary and Opus Dei’s candidate to rule over a united Catholic Europe, and future Franco minister and senior Opus Dei member, Alfredo Sánchez Bella—founded CEDI (Centre Européen de Documentation et d’Information—European Documentation and Information Centre), a Madrid-based think tank which aimed to unite European conservative and Catholic political organisations and break the diplomatic isolation of Franco’s Spain. In 1952–1953, the Cercle Pinay was founded as a clandestine forum of European leaders who aimed to oppose the threat of communism and promote the vision of a Catholic and conservative Europe. In the 1960s, the Neo-Fascist ‘Strategy of Tension’ emerged. In Britain, various individuals associated with the Conservative Monday Club were associate with sustained efforts to undermine Harold Wilson’s Labour Government (1974–1976), to discredit Liberal leader Jeremy Thorpe (1967–1976) and to have Conservative leader Edward Heath (1965–1975) replaced by someone of a ‘more resolute approach.’ In Chapter 7, David Teacher examines the role of (what was presented as) ‘neutral academic data’ on behalf of the ‘International Right.’

By the mid-1970s, the Cercle Pinay had succeeded in creating an international contact network of groups working on anti-communist and counter-subversion propaganda. But despite such wide-ranging contacts, the various components of the Cercle network, brought together to defend the conservative cause, felt their vision of the world to be threatened as never before. Between 1974 and 1976, a paranoid feeling of apocalypse, of imminent Armageddon spread through the private clubs, the lobby rooms and the secret services throughout Europe: the Left was on the rise! In Germany, despite a barrage of smears and attack ads, Willy Brandt had triumphed in the 1972 elections; after his resignation in 1974, the new Chancellor Helmut Schmidt led the SPD towards a strong showing in the 1976 elections. In Britain, humiliated by the unions, the Conservative government fell, and Labour won the two 1974 elections. In France and in Belgium, the Left seemed well-placed to break the electoral monopoly of the conservatives. In the Iberian Peninsula, the longstanding geopolitical stability was soon overturned: in Portugal, Marcelo Caetano’s dictatorship crumbled before the left-wing soldiers of the Armed Forces Movement; in Spain, the Generalissimo died, and democratic elections were called. In Chapter 8, Teacher documents the efforts of the ‘International Right’ to defend apartheid and the Shah of Iran and to assist the election efforts of Strauss and Reagan.

Operation Condor was a Latin American organization—the relationship between Pinochet and the Italian Neo-Fascists also provides a fascinating and unique picture of Fascism’s transnational and inter-temporal features. The influence of Fascism on Chilean nationalist movements and the link between Pinochet and Junio Valerio Borghese, who represented a myth for different Fascist generations, is illustrative. A further factor fostering the survival of the network was the logistic support provided by friendly regimes to the network’s members. Former Nazi and Fascist militants wanted for war crimes as well as Italian Neo-Fascists seeking to avoid judicial prosecution in Italy were all welcomed by sympathetic regimes in Spain, Chile, and Argentina. The opportunity of finding a safe refuge in those countries also promoted regular exchanges between inter-war and post-war Fascists.

In Chapter 9, Galadriel Ravelli and Anna Cento Bull examine the dynamic and resilient transnational trajectories of Fascist militants and ideas. The collaboration between Pinochet and Italian Neo-Fascists was mutually beneficial—in 1975, they cooperated in the attempted murder of Bernardo Leighton in Rome. In 1976, thanks to the transnational links between Latin American Juntas, Fernandez Larios and Pinochet’s agent Michael Townley obtained fake Paraguayan passports which they used to enter the US and assassinate Orlando Letelier.

Hayek is perceived as having contributed to the development of liberal thought, particularly his work on individual freedom, economic freedom, ‘spontaneous’ order, and limited state action. He also defended dictatorial regimes, provided that they were committed to achieving the conditions of a ‘free’ market economy at the expense of unlimited democracy. In Chapter 10, Birsen Filip examines Hayek’s rationale for supporting certain types of dictatorial regimes, based largely on the views expressed in an interview published in the Argentinean weekly magazine, SOMOS while on a one-week visit to Argentina in 1977. At that time, ‘Dirty War’ Argentina was ruled by the administration of army commander General Videla. Hayek defined ‘the condition of freedom’ as ‘a state in which each can use his knowledge for his purposes’ so as to achieve individual goals free from intervention or coercion on the part of an external authority. Hayek (1973, 56) defined the ‘condition of freedom’ as a ‘state in which each can use his knowledge for his purposes’ so as to achieve individual goals free from intervention or coercion on the part of an external authority. By defending the practice of relying on dictatorial regimes to achieve the conditions of a ‘free’ market economy, Hayek contradicted his own concept of freedom, which he defined as ‘absence of coercion.’

In spite of his reputation as a defender of freedom, Hayek did not value human rights, claiming it to be a relatively recent concept derived from combining the ‘old civil rights’ with rights derived from Marxism. His conception of freedom is a minimal form of freedom, which serves as a very useful tool in promoting the superiority of the ‘free’ market economy. His concept of freedom includes economic freedom in the ‘free’ market (with negative freedom as components) while, at the same time, excluding positive freedom and ignoring ethical and moral values. It should, therefore, come as no surprise that Hayek accepted the invitation to visit Chile during Pinochet’s dictatorship—or that he claimed ‘personal freedom was much greater under Pinochet than it had been under Allende.’

In their efforts to preserve Hayek’s reputation by providing justifications for his decision, Caldwell and Montes resort to providing incomplete information and concealing certain facts, while misrepresenting others. Furthermore, the discrepancies between the English and Spanish language versions of ‘Friedrich Hayek and His Visits to Chile’ (in terms of the information included and omitted) appear to have been strategic decisions based on the audiences being targeted—which suggests a deliberate and concerted effort to mislead their readers. They failed to fully enlighten their English- and Spanish-speaking readers about this ‘controversial episode’ in Hayek’s life. In Chapter 11, Filip argues that demonstrates that they were overzealous in their defence of Hayek: they present him almost as a naïve and saintly figure—in the face of persuasive evidence to the contrary.