Reinventing Liberalism: The Politics, Philosophy And Economics Of Early Neoliberalism (1920-1947)

201 Pages·2020·4.592 MB·English

by  Ola Innset

Springer Studies in the History of Economic Thought
Ola Innset
Reinventing
Liberalism
The Politics, Philosophy and Economics
of Early Neoliberalism (1920-1947)
Springer Studies in the History of Economic
Thought
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Muriel Dal Pont Legrand, CNRS - GREDEG, Université Côté d’Azur, Sophia
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Ola Innset
Reinventing Liberalism
The Politics, Philosophy and Economics
of Early Neoliberalism (1920-1947)
123
OlaInnset
National Library of Norway
Oslo, Norway
ISSN 2662-6098 ISSN 2662-6101 (electronic)
SpringerStudies in the History of EconomicThought
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Preface
This book is based on my Ph.D. thesis “Reinventing Liberalism—Early
Neoliberalism in Context (1920–1947)”, defended at the European University
Institute in Florence in September 2017. I am very grateful to the editors of the
SpringerseriesontheHistoryofEconomicThoughtforofferingmetheopportunity
to publish the thesis as a book.
OverthesixyearsthatIhavenowworkedonthetopicofearlyneoliberalism,I
havebenefittedenormouslyfromthehelpandadviceofcountlessscholars.Oneof
my favourite things about academia ishow you can just e-mail almost any scholar
anywhere in the world and receive thoughtful responses and offers to meet up in
person.Fortheiradvice,commentsandtipsalongtheway,Iwouldespeciallylike
tothankPhilipMirowski,SimonReid-Henry,EdwardNik-Khah,TiagoMata,Ann
Thomson, Robert Lepenies, Simon Jackson, Naoko Shimazu, Hans-Michael
Trautwein and Jennifer Burns, none of whom are in any way responsible for the
contents of this book.
I have benefitted greatly from a number of research seminars, workshops and
conferencesheldattheEuropeanUniversityInstituteduringmytimetherefrom2013
to2017,bothattheDepartmentofHistoryandCivilization,butalsointheDepartment
of Law. I would especially like to thank the participants of the interdisciplinary
workinggrouponneoliberalism,andtheworkshop“WhyNeoliberalism?”,whichI
co-organizedin2015and2016withJuliaRoneandLiamMcHugh-Russell.
I would also like to thank the History Department at Stanford University for
having me as a guest researcher in 2014 and the corresponding department at the
UniversityofOsloforallowingmethesameprivilegein2016and2017.Mywork
would have been impossible without very helpful archivists at the Hoover
Institution, Yale University Library, Het Liberaal Archief in Gent, Friedrich
Naumann Stiftung in Gummersbach, King’s College Archives at Cambridge, the
LSEArchives,theRubensteinLibraryatDukeUniversityandRiksarkivetinOslo.
I would like to thank my second reader Youssef Cassis, and especially my
supervisor Lucy Riall, who expressed enthusiasm for my project at a time when it
was badly needed, and who has used her experience as a historian in guiding me
towards completion of the Ph.D. programme. Huge thanks are owed also to my
v
vi Preface
external advisor João Rodrigues, who has shared his expertise in a most generous
way and advised me through several re-writes of the thesis. Marie-Laure
Salles-Djelic was the last member of the examining board and provided excellent
advice and criticisms for which I am most thankful.
Funding for this project was provided by the Norwegian Research Council,
project nr. 231807. Various archival trips and conference participations were
financed by Torleif Dahls legat for historisk forskning, Borgermester Christies
legat, the Department of History and Civilization at the European University
Institute, the Institute for New Economic Thinking, the History of Economics
Society and the European Society for the History of Economic Thought.
Lastly,IwouldliketothankDorothyHahn,withoutwhoseeffortsbothin1947
and in 2015–2016, this thesis would not exist. She was the secretary of the Mont
Pelerin Conference in 1947 and agreed to let me interview her in her home in
Cambridge twice during the work on the thesis. I am very grateful to her.
I dedicate this book to my whole family, near and far, and especially to my
wonderful wife, Elizabeth Morris Innset, and our daughter Astrid.
Moss, Norway Ola Innset
October 2019
Contents
1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Neoliberalism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
The Mont Pelerin Society . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Reinventing Liberalism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Social Liberalism Versus Laissez-Faire . . . . . . . . . . . . . . . . . . . . . . . . 10
The Dual Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Secondary Litterature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Part I The Dual Argument (1920–1947)
2 The Socialist Calculation Debates . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Red Vienna . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Mises’ Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
The Emergence of Hayek . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
From Socialism to Business Cycles . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Collectivist Economic Planning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
The Challenge of Market Socialism. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
The Knowledge Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Differing Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
A New Vision of Markets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Primary Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Secondary Literature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3 The Lippmann Colloquium. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
The Rise of Fascism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
The Popularity of Economic Planning . . . . . . . . . . . . . . . . . . . . . . . . . 41
The Totalitarian Enemy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
The Good Society. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
The Importance of Hayek . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
vii
viii Contents
The Colloquium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
The Price Mechanism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Ordoliberalism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
The Myth of Laissez-Faire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Primary Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Secondary Literature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
4 The Economic Consequences of the War . . . . . . . . . . . . . . . . . . . . . 59
Hayek in the Blitz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
The Road to Serfdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
The Contested Definition of Economic Planning. . . . . . . . . . . . . . . . . . 64
Other Versions of the Dual Argument . . . . . . . . . . . . . . . . . . . . . . . . . 66
Against “Scientism” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
War and Planning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Neoliberals in Wartime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Individualism True and False . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
The Acton-Tocqueville Army . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Primary Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Secondary Literature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Part II The First Meeting (1947)
5 An Army of Fighters for Freedom . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Previous Scholarship. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Introducing Neoliberalism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
The Attendees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
List of Attendees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Liberalism, Economics and Science. . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Primary Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Secondary Literature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
6 Using the State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Hayek’s Welcome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Hayek Peeling Oranges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
“Free” Enterprise or Competitive Order . . . . . . . . . . . . . . . . . . . . . . . . 118
Support from Freiburg and Chicago. . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Primary Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Secondary Literature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
7 A New Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Post-war. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
The Beginning of the Cold War . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
The Post-war Right. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
The Future of Germany. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Contents ix
Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
The Problems and Chances of European Federation . . . . . . . . . . . . . . . 144
Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Exploring Roots . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Primary Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
Secondary Literature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
8 The Second Week . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Economic Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
Agricultural Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Statement of Aims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
Speaking Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
A Neoliberal Cadre. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
Primary Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179
Secondary Literature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
9 Conclusions: What Is Neoliberalism? . . . . . . . . . . . . . . . . . . . . . . . . 181
The Importance of Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184
Think Tanks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
Primary Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
Secondary Literature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
Index .... .... .... .... .... ..... .... .... .... .... .... ..... .... 193