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THE SMITH CENTER | for Private Enterprise Studies |
by
Charles W. Baird, Ph. D.
Emeritus Professor of Economics and Former Director of the Smith Center
Board of Directors of Mont Pelerin Society, California State University, East Bay
Most of the twentieth century was a disaster for classical liberalism. By 1945 the cumulative result of World War I, the Great Depression and World War II was that very few people still believed in the efficacy of limited government, the rule of law and open, competitive markets. Most people, even in the West, and especially academics including economists had come to think that in order to assure public peace, prosperity and harmony, government must actively intervene in private affairs, especially private economic affairs. As a credo, collectivism had subdued liberalism. Curiously, in America the word "liberalism" had come to mean its opposite - the view that government should intervene in private affairs. It seemed likely that true liberalism would soon become an odd relic of a benighted past.
In 1944 F. A. Hayek published The Road to Serfdom, wherein he argued that even well-intentioned intervention in private affairs even by democratically elected governments set in motion a process that led to more and more intervention, to increasing centralization of power, and to an inexorable loss of individual liberty. Although Hitler was about to be defeated, interventionism, Hayek argued, could gradually lead to future tyrannies that would in many respects be just as bad. Serfdom was already the fate of the people of the Soviet Union, and after 1945 it oppressed most of Eastern Europe.
Hayek thought that the only way that this descent to serfdom could be halted and reversed was if the principles of classical liberalism were kept alive, nurtured, developed, widely disseminated and, eventually, widely adopted. People of the classical liberal remnant were widely dispersed and often isolated. Hayek thought it would be useful to form an organization to make it possible for individual liberals regularly to come together for mutual encouragement and assistance, to keep liberalism alive and to fight the battle of ideas with interventionists. To discuss this possibility, Hayek convened a meeting of thirty-nine classical liberals from Western Europe and the United States which took place April 1 -10, 1947 at Mount Pelerin, Switzerland. The participants came from ten different countries and included academics from the disciplines of economics (the majority), law, history, political science, philosophy, and chemistry as well as three journalists. Among those joining Hayek at the meeting were Milton Friedman, George Stigler, Aaron Director, Ludwig von Mises, Leonard Read, Karl Popper, and Wilhelm Ropke. They agreed to form an organization, which they named the Mont Pelerin Society, dedicated to reviving, sustaining and spreading classical liberalism. It was registered as a non-profit, tax-exempt corporation in Illinois on November 6, 1947. Hayek became its first president, a post which he held until 1960. Hayek and most of the founding members wanted the Society, as an organization, to eschew direct political action and advocacy. In Hayek's words, the purpose of the Society:
"is not to spread a given doctrine, but to work out in continuous effort, a philosophy of freedom which can claim to provide an alternative to the political views now widely held.Our goal must be the solution not of the practical task of gaining mass support for a given programme, but to enlist the support of the best minds in formulating a programme which has a chance of gaining general support" (Hartwell, 32).
The Mont Pelerin Society (MPS) was conceived as, and remains, a voluntary community of individuals who share a dedication to the principles of a free society. Its activities, as an organization, consist in developing the principles of liberty and helping its individual members be more effective advocates of those principles. Its officers and other members of its Board of Directors are all unpaid volunteers. There is no central headquarters and there is no paid permanent staff. There are no official MPS publications except for a small quarterly newsletter designed to keep members informed of future meetings and changes of membership. There are no official MPS positions on politics or public policy. The external face of the Mont Pelerin Society is what its members, as individuals, write, say and do.
While all MPS members share a dedication to the concept of a free society, its members differ on many of the details. For example, they all believe in limited government, but they disagree on what those limits should be. Some members are anarcho-capitalists who, confident in the power of the market to generate voluntary solutions to all problems, believe in zero government. Others believe that government should be limited to the protective functions of the classical night watchman state (national defense, police and a judiciary). Still others add some "productive" functions (such as the provision of roads, and the financing of some educational services) to the list of acceptable government activities. Perhaps the most contentious issues among MPS members concern money and banking, monetary policy and foreign exchange. Some argue in favor of a return to a strict gold standard. Some think that gold is simply a commodity like any other commodity and that a country can have sound money without gold playing any monetary role. Some oppose fractional reserve banking and others support it. All MPS members endorse free trade, but some favor fixed exchange rates while others advocate flexible exchange rates. These, and other, points of disagreement are sometimes explored at MPS meetings.
A MPS general meeting is held every second year, and regional meetings ( of which there may be several) are usually held in the off years. In both cases local committees of volunteer members present proposals for meeting venues and themes and agree to raise the necessary funds. The officers and other members of the Board of Directors, who are elected at general meetings, select the winning proposals. Both types of meetings involve the preparation, presentation and critical discussion of formal academic papers. All meetings are dedicated to achieving a better understanding of the dangers of proffered interventionist solutions to perceived public problems and to developing non-interventionist alternatives.
MPS membership has grown to approximately five-hundred people from North America, Western Europe, Eastern Europe, South America, Hong Kong, Taiwan, Japan, India , Australia, New Zealand, South Africa, and Turkey. Membership includes academics in the disciplines of economics (still a majority), history, philosophy, political science, the law and sociology. Other members are business people, associates of private research institutions, lawyers, judges, journalists, clergy and even (very few) politicians.
The Society is now well known and widely respected even by those who differ with its goals. Its individual members are even better known and respected for their own accomplishments. Eight of its members have won the Nobel Prize in Economic Science: F. A. Hayek (1974, now deceased), Milton Friedman (1976), George Stigler (1982, now deceased), James Buchanan (1986), Maurice Allais (1988), Ronald Coase (1991), Gary Becker (1992), and Vernon Smith (2002).
Membership in the Society is by invitation. A prospective new member must have attended two MPS meetings as a guest and then be nominated and seconded by two members who must submit letters of recommendation to the Membership Committee. That committee makes its recommendations to the officers and other members of the Board of Directors. The Board, by majority vote at each general meeting, decides who will receive invitations to become new members. There is no formal ceiling on total membership, but the Board tries to assure that membership doesn't get so large that the intimate nature of the Society is lost.
With the collapse of the Soviet empire, which Hayek lived to see, it is certainly true that classical liberalism did not die in the disastrous twentieth century. To the contrary, it is alive and well especially in formerly subjugated countries such as the Czech Republic. Much of the credit for this must go to F. A. Hayek and many other MPS members past and present. Present and future members of the Society will keep the flame burning and spreading until interventionism is an odd relic of a benighted past.
References and Suggestions for Additional Reading
Hartwell, R. M. A History of the Mont Pelerin Society, Indianapolis: Liberty Fund, 1995.
Hayek, F. A. The Road to Serfdom, Chicago: University of Chicago Press, 1944.
Hayek, F. A. "Why I am Not a Conservative," postscript to The Constitution of Liberty, Chicago: University of Chicago Press, 1960, pp. 397-411.
www.montpelerin.org