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The Great Persuasion: Reinventing Free Markets since the Depression

Author	Angus Burgin
Language	English
Subject	Neoliberalism
Publisher	Harvard University Press
Publication date	2015
Media type	Print
Pages	303
ISBN	978-0-674-07049-3
Website	Official website

The Great Persuasion: Reinventing Free Markets since the Depression is a book by historian Angus Burgin outlining the intellectual history of the neoliberalism, focusing in particular on the Mont Pelerin Society and the intellectuals associated with it.

Summary

Burgin outlines the development of neoliberalism, starting with its progenitors in Frank Knight, Henry Simons, and Jacob Viner; moving to the earliest effort to establish a "neoliberal" movement in the Colloque Walter Lippmann; continuing with the movement's first real successes in the Mont Pelerin Society and its relationship with conservative figures; and ending with neoliberalism's ascendancy due to the efforts of intellectuals like Milton Friedman and Friedrich Hayek. He places particular focus on the Mont Pelerin Society—a group that "sought to articulate a worldview that would both defend free markets and establish ethical paradigms for a stable and productive social order—and how the individuals mentioned above relate to it.

Market Advocacy in a Time of Crisis

Friedrich Hayek

Burgin considers University of Chicago economists Frank Knight, Henry Simons, and Jacob Viner the progenitors of the influential Chicago School of economics.(citation needed) The early pro-market intellectuals avoided public engagement, finding it inappropriate for economists to risk their reputation of academic objectivity to influence politics.

Entrepreneurial Ideas

"The publication of Walter Lippmann's Inquiry in the Principles of the Good Society in 1937 sent seismic waves through the Depression era's nascent network of academic supporters of free markets...Lippmann, in publishing The Good Society, heralded the possible emergence of a new moment for those who had committed themselves to a revitalized liberalism."

"To an extraordinary degree, The Good Society established the framework for the arguments adopted by market advocates in the subsequent decade, and in particular for the political project that Hayek began to conceive in the wake of its publication". In the late 1930s, pro-free market economists began to shed their self-imposed restrictions on influence in the public sphere. Inspired by journalist and political commentator Walter Lippmann, who in 1937 published the influential pro-market book Inquiry in the Principles of the Good Society, economists like Friedrich Hayek began to move beyond technical discussion and into the realms of politics and political philosophy.

"Lippmann argued that the power structure of the modern state should center not on a managerial bureaucracy, but rather on a carefully delimited and constantly evolving network of established laws".

Planning against Planning

Trygve J. B. Hoff, editor of Farmand, (left) and Austrian economist Ludwig von Mises (middle) at the Mont Pelerin Society in 1947

In chapter three, Burgin outlines the sudden rise in popularity of Friedrich Hayek after the publication of his book The Road to Serfdom, his role in creating the Mont Pelerin Society, and the internal debates among scholars in the early years of the Society.

Burgin notes that there were significant differences of opinion within the society. In particular, they disagreed on ... and the relationship between democracy and capitalism. ... Within the capitalism-democracy debate, there was a significant consensus that economic freedom was necessary for political freedom and that democracy and other freedoms had "developed concurrently with and largely because of the emergence of the market economy". However, they all recognized the democracy could pose a threat to the market and private ownership, as well as freedoms like freedom of expression, if popular majorities voted against them. This led to disagreements on the extent to which democracy should dictate society, with some like Frank Buchanan, Wilhelm Röpke, and Friedrich Hayek arguing for a more limited role to defend the market, which they believed the most important arbiter of freedom.

New Conservatisms

Burgin begins by detailing the growth of the society over the decade after its inception. With only 39 members in 1947, by 1961 it had expanded to 258. Its character had also changed, becoming increasingly dominated by economists and, in its early years, Europeans. Because of its increasingly unruly size (which was not conducive to intensive in-person discussions), the sidelining of non-economists, and the sense that the society's original goal of bringing together isolated academics in an environment hostile to their views no longer applied in a world more conducive to them, Hayek steadily became more frustrated with it. He even proposed it cease operation after its tenth anniversary.

However, a schism in 1960 would result in the rapid transition of power from Europe to America, bringing with it a shift in power from its original leaders to a younger, more ideologically rigid generation of scholars associated with the University of Chicago. The split was initiated by the society's secretary, Albert Hunold. Hunold had invested significant time and resources into the Society and had become disillusioned by the nonchalance of its less forceful members, leading to occasional outbursts and even refusals to obey Hayek's orders demanding he not expand the purview of the organization beyond its restrained focus on philosophical discussion. Hunold's tempestuous behavior resulted in him being stripped of some of his administrative powers, causing Hunold to become even more dissatisfied. After further outbursts, in 1960 Hayek finally demanded that Hunold be removed as secretary, lest he step down himself. This split the society into two groups, those who supported Hunold and those who supported Hayek. Alliances were divided largely along national lines, with Americans like Milton Friedman, George Stigler, and Fritz Machlup forcefully supporting Hayek (who had moved to the United States in 1950) and Europeans like Franz Böhm, Louis Baudin, and Wilhelm Röpke supporting Hunold. While a compromise to promote Röpke to the presidency and demote Hunold to the vice presidency temporarily assuaged the hostilities, they soon broke out again, with Friedman leading the charge against Hunold. Hayek, Friedman, and their American allies embarked on a campaign to remove Röpke, who defended Hunold, as president. This culminated in a letter by Stigler demanding the resignation of Röpke, or else he would submit his own letter of resignation. Röpke, Hunold, and a number of other Europeans resigned soon after, leaving power firmly in the hands of the Americans. It was a deeply bitter dispute, and Röpke and Hunold even embarked on a failed pursuit to create an alternate organization—the Forum Atlanticum—by instigating mass resignations from the Society.

This had a significant effect on the character of the society. Shifting away from its looser ideological coalition, the society became increasingly pro-market, developing according to member Bertrand de Jouvenel a more Manichean outlook in which "the State can do no good and private enterprise can do no wrong". Whereas the society had come to life in a time when laissez-faire had been mostly discredited, the society became increasingly aligned with those economists—particularly those of the Chicago School—who revitalized it. The shift also had the effect of elevating Milton Friedman, who would play an immense role both in the society's later activities and in public and economic discourse.

The Invention of Milton Friedman

"For the first generation of leaders of the Mont Pelerin Society, [the] period [they lived in was defined by] the Great Depression, and the problems they grappled with were the grim conundrums of Depression economics. The scope of governmental activities was rapidly and massively increasing, and their goal was correspondingly modest: to convince their colleagues that there was some limited space within which...the government should not intervene. Milton Friedman, in contrast, came of age during the early stages of the Cold War, and the task of his generation would be to determine the economic approach taken by the United States...it...would be defined by a refusal to interfere with the market's invisible decrees."

Milton Friedman

Reception

The book received the Merle Curti Award from the Organization of American Historians and the Joseph Spengler Prize from the History of Economics Society. It has received mostly positive reviews.

The book has been praised for its treatment of the historical evolution of neoliberalism. Duncan Kelly, writing in the Times Literary Supplement, described the book as "[A] fluid, intellectually supple book. It tells the story of how Friedman and the Friedmanics captured the language of neoliberalism, showing how otherwise frankly utopian mantras about smart markets versus dumb governments were in fact the culmination of a whole series of earlier intramural arguments about the moral and conceptual underpinnings of capitalist societies that began in the aftermath of the First World War". Economist and former president of the Mont Pelerin Society Kenneth Minogue, writing in The Wall Street Journal, praised the book as an "intelligent account of how the postwar vogue for state regulation came to be challenged by a revived recognition of the things that markets alone can do". Nobel-prize winning economist Robert Solow, writing in The New Republic, says that "one of the great merits of Burgin's book is to show how the character and content of the free-market ideology changed when the flag passed from Hayek and Company to Friedman and Company". Kim Phillips-Fein, writing in The Nation, states that it the books is "an excellent example of what can be gained when intellectual history doesn't focus exclusively on individuals". Timothy Shank, writing in Dissent, extols the book for breaking the "binaries" separating the descriptions of free market capitalism on the left and right by instead "attend[ing] more closely" to the mix of opinions within the movement, and commends Burgin for his ability to use "a wide-angle lens to highlight what matters in specific texts while deploying close readings to revise the big picture". Daniel McCarthy, writing in The American Spectator, calls the book "a riveting cultural-political history of the free-market revival that began even as depression and world war threatened to quench the last embers of laissez-faire".

The quality of Burgin's research has also been praised. James McAuley, writing in the magazine Prospect, calls the book a "comprehensive intellectual history". Publishers Weekly calls the book a "masterful intellectual history" as well as a "thoughtful and well-researched study". Kim Phillips-Fein, writing in The Nation, calls the book "capacious and quietly ambitious".

The book has received both praise and criticism for its coverage of the Mont Pelerin Society. Kim Phillips-Fein, writing in The Nation, praises Burgin's history of the Mont Pelerin Society, calling it "immensely rich, careful, and thoughtful" and admiring it in particular for capturing "the range of opinion within a group of people who are too often seen as having marched in lockstep". However, Nobel-prize winning economist Robert Solow, writing in The New Republic, criticizes Burgin's heavy focus on the Mont Pelerin Society for overstating its importance to the economics profession and to larger political discourse.

Further reading

• For further analysis of the intellectual development of neoliberalism: Stedman Jones, Daniel (2012). Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics. Princeton University Press. ISBN 978-0691151571.
• For a survey of early neoliberal thought by a range of academics: Mirowski, Philip; Plehwe, Dieter, eds. (2009). The Road from Mont Pèlerin: The Making of the Neoliberal Thought Collective. Harvard University Press. ISBN 978-0-674-03318-4.
• For a short summary of neoliberalism: Steger, Manfred B.; Roy, Ravi K. Neoliberalism: A Very Short Introduction. Oxford University Press. ISBN 9780199560516.
• For a positive analysis of neoliberalism: Yergin, Daniel; Stanislaw, Joseph (1998). The Commanding Heights: The Battle for the World Economy. Free Press. ISBN 978-0684835693.
• For a neo-Marxist critique and a description of the geographic spreading of neoliberalism: Harvey, David (2007). A Brief History of Neoliberalism. Oxford University Press. ISBN 978-0199283279.