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The Road from Mont Pelerin: The Making of the Neoliberal Thought Collective

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"The Road from Mont Pèlerin" is the first work since the in-house history of the society by Hartwell to trace the origins, meaning, and development of the Mont Pèlerin Society and its role in the making of the neoliberal thought collective, as the editors call it. This collection is therefore first and foremost a work of modern history of ideas. While many people have written critical histories of the meaning and origins of neoliberalism, this work is perhaps the most academic and most strongly researched of them all, and goes beyond the more popular level of discussion of the effects of neoliberal policy in practice and the ways of political power, instead focusing more on the way in which 'neoliberalism' has become a strong and identifiable political philosophy. As the authors of this collection emphasize, it is first and foremost that: not an economic theory, nor simply an old laissez-faire doctrine in a new jacket, but an entire political philosophy and world outlook that is all the more powerful for the obscurity of its real content. Whereas other authors have at times simply sufficed to identify neoliberalism with particular politicians (Thatcher, Reagan, Blair) or with 'free market' policies, as co-editor Mirowski explains in his excellent postface, the philosophy of neoliberalism as it originated as an integral whole at Mont Pèlerin is quite distinct in several ways.

It is characterized by Mirowski in a number of important differentia specifica, useful to consider: Neoliberalism, contrary to the classical liberalism, believes that its vision of society is not the product of a natural development as long as the government is kept out of the way, but that it must be consciously constructed as a free society; this free society is based on the notion that the free market is the best and only competent processor of knowledge, which is partial and embodied in individuals; therefore, despite propaganda for political purposes, the actual neoliberal goal for the state is not to disempower it, but to empower it to create a free market state rather than its current functions; neoliberalism therefore operates within and through state power; the ultimate goal of the free market is to be a mechanism to advance freedom; the freedom of market actors must therefore be as absolute as possible, with this freedom defined solely as a negative freedom to be free of interference in acting within this market, making freedom the freedom to use one's personal, partial knowledge; and therefore, finally, in the last instance the free market as an exchange of individual knowledge, not democracy or well-being, is the ultimate moral goal. These points are in clear contradistinction to classical liberalism from Smith to Mill onwards, with its rather traditionalist view of the paternal state, its concern about inequality, its distrust of joint-stock companies and monopoly power, and its belief in social contract order and the 'natural' results of limited government. But, as Mirowski, Plehwe and the other contributors make clear, this neoliberal programme is inherently full of contradictions in its intellectual thought. Its greatest thinker, Hayek, made his entire career on promoting the notion that all knowledge of society is partial, that the course of society cannot be foreseen and the effects of individual action are always subject to unintended consequences, that only through the market system information can be processed efficiently, and that any attempt to change society according to a preconceived plan must therefore fail. But of course for neoliberalism's ideas to be true, it requires Hayek c.s. to be able to do just all these things: plan a free society, oversee the causes and consequences of individual action in current and the desired society, intellectually comprehend the whole, and then set about politically implementing their ideas. In this way, neoliberalism as an intellectual program is effectively refuted by the success of neoliberalism as a practical program, which is why its talk of freedom is always such hypocrisy and its effects have always been the opposite of its claims, even to the point where the neoliberal hegemony of the last 30 years has not anywhere in the developed world actually reduced the size of the state.

The contributions to this volume trace not only the origins of Mont Pèlerin as such, but also delve deeper into specific issues often not explored fully in more introductory works. Yves Steiner analyzes the neoliberal ideas about the trade unions, Ralf Ptak very usefully outlines how neoliberalism and German 'ordoliberalism' reach similar political conclusions through a somewhat different route, Dieter Plehwe briefly goes into neoliberal talk of Third World development (a subject really worth a book on its own), and Timothy Mitchell traces the way in which Hernando de Soto's neoliberal property rights project in Peru was presented as a victory for neoliberal thought, and its real background. Some of these contributions are decidedly too long and detailed, however, and some boredom is inevitable. There is also very little on the influence of neoliberal ideas today, particular on current day politics, and the role of the MPS, which is somewhat surprising. Nonetheless, for understanding the intellectual meaning and background of neoliberalism, rather than its immediate political mode of appearance, one could do no better than this volume.

The authors of this book provide some interesting factoids about Mont Pelerin and various tangentially related matters, but the drive of the book is not historical--it's unambiguously partisan from beginning to end. It closes with pages and pages of printed comments from the wikipedia page on "neoliberalism," followed by inserted political opinions and characterizations from the authors on par with the wikipedia comments both in terms of argument and reference. The central thesis, that Mont Pelerin-types wanted to construct a free market economy and thus fell into self-contradiction with their anti-rationalism, is remarkably poorly evidenced and reasoned and their alternative proposal (nation-state democracy) is given no sophisticated defense at all. To anyone who does not share the authors' political preconceptions, this book will be of little interest.

This book contains a mass of intricate historical detail that the authors have compiled on the activities of the "neoliberal thought collective" and precursors such as a group associated with Walter Lippmann in France. It is important to note from the go get that the authors have come to bury the Mont Pelerin Society, not to praise it. The degree of partisan bias exceeds the decent minimum that we are allowed, being human, and so it lacks credibility for all the interest of some of the stories.

Dieter Plehwe wrote the introduction. Keith Tribe - the movement in Britain from 1930 to 1980. Ralf Ptak - the ordoliberal foundations of the social market economy. Rob Van Horn and Philip Mirowski - the rise of the Chicago School of Economics. Yves Steiner - confronting the trade unions. Rob van Horn - on the Chicago attack on the law and economics of trust-busting. Dieter Plehwe on the origins of the neoliberal economic development discourse. Kim Phillips-Fein on the role of business conservatives. Karin Fischer on the influence of the neolibs in Chile before, during and after Pinochet. Jennifer Bair on the new international order. Timothy Mitchell on urban property rights in Peru. Postface, Mirowski defining neoliberalism.

Mirowski starts with a critique of "Wayward Wikipedia" and the "double truth" which is distorted by editorial influence beind the scenes. The Mont Pelerin Society is supposed to be dedicated to freedom and spontaneous order, but "neoliberals are simulteneously elitists: they do not in fact practice what they preach" p 425. When they organise things, "the cosmos collapses to a taxis"..."something like the double truth doctrine holds for neoliberal theories of democracy...it also holds for the notion of a `constructivist' approach to social reality".

Some of his "eleven tenets of neoliberalism" are very strange. 1. "The starting point of neoliberalism is the admission, contrary to classical liberal doctrine, that their version of the good society will triumph only if the becomes reconciled to the fact that the conditions for its existence must be constructed and will not come about `naturally' in the absence of concerted political effort and organization".

This is supposed to hint at contradiction but laissez faire liberalism did not preclude state action in the form of "construction', meaning piecemal experiments and instiutional reforms to control the use of force and fraud, to adminster police systems, courts and the laws of the land. It is like the no brainer that Hayek was opposed to planning, so he had to explain that planning is something that people do all the time, the objection is to holisistic or collectivist planning by the state.

Another pervasive confusion is the idea that the market is a big agent or person, he has not got hold of the idea that a market is something that happens when people buy, swap and sell things. So when someone says that the market will decide the value of my house or car, it just means that the price will be set (subject to negotiation) by the people who turn up and make offers.

7. Neoliberals begin with a presumption that capital has a natural right to flow freely across national boundaries (The free flow of labour enjoys no similar right)." Absent the welfare state and there would cease to be a serious issue about the movement of people.

8. "Neoliberals see pronounced inequality of economic resources and political rights not as an unfortunate byproduct of capitalism, but as a necessary functional characteristic of their ideal market system". So before capitalism there was no pronounced inequality of economic resources and political rights?
The "European miracle" (Radnitzky) was narrowing inequalities but at the same time the phenomenon of inequality suddenly became a huge issue and, as Hutt pointed out, the system that was emancipating the masses, by a perverse turn of reasoning, was blamed for the suffering of the poor.

9. "Corporations can do no wrong or at least they are not to be blamed it they do". Where did that come from?

Mirowski has not got hold of the fact that there is no answer to the problem of sovereignty (Who shall rule?) and settles for the "majority rule" theory of democracy so everyone can (in theory) participate in the political process. Of course the tyranny of the majority (or of the interest groups who end up representing the "majority") is no better than any other tyranny and the most appropriate response, articulated by liberals from Hume to Popper, is to aim for institutional and traditional controls, checks and balances on the rulers.

Consequently he can only see limited government as a device to disenfranchise the masses. He manages to trace a line from Adolf Hitler's crown jurist Carl Schmidt to Hayek (p 443-4). He suggests that Hayek owed more to Schmidt than he realised and so "For Hayek and the neoliberals, the Fuhrer was replaced by the figure of the entreprenneur, the embodiment of the will to power for the community, who must be permitted to act without being brought to rational account."

What about some of the other chapers? Because the chapters are mostly historical narratives, reporting who said what to whom, when and where, objections to neoliberalism mostly emerge in the form of side comments and innuendo, and by leaving out a lot of background information that might put the neolibs in a more sympathetic light. Keith Tribe wrote, regarding Peter Bauer "Like Jewkes, the forcefulness of his critique of state and economy is inversely proportional to its substantive merits." (p 86) And "Neoliberal economism increasingly domianted the public domain, a discourse on markets and liberty whose lack of intellectual credibility was no obstacle to its propagation and execution." (p 90)

In the chapter on trade unions there is a lot on the differences of opinion within the movement, between the Continental approach to get the unions "inside the tent" compared with those who saw a need to confront and control the "strike threat system". The author lists a paper by Hutt at the MPS but did not cite any of his major works on the fallacies of collective bargaining, the special pleading of the Webbs and other historians of the labour movement, and the way the unions subverted the rule of law and indeed the democratic process, and the damage inflicted on the unempoyed and the community at large.

Simarly the chapter on the "Third World" and development issues makes much of the differences of opinion in the movement, and the complications introduced by the process of decolonisation against the backdrop of the Cold War and the objective of keeping the new nations aligned to the West if possible. Peter Bauer emerged as the most important contributor to the dialogue, and to the rejection of the general statist/socialist consensus on the need for state planning, foreign aid for industrial development etc.