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The Geneva connection, a liberal world order, and the Austrian economists

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Abstract

Quinn Slobodian’s Globalists: The End of Empire and the Birth of Neoliberalism (2018), attempts to draw a picture of the interwar and postwar periods of the 20th century that sees neoliberalism as a political and economic idea meant to preserve the power of private “capital” over democratic “labor” for the exploitation of the latter by the former. In doing so, he sees a group of economists associated with the Graduate Institute of International Studies in Geneva, Switzerland as central players in designing a new order for capitalist oppression. This article challenges both the facts and the interpretation offered by Dr. Slobodian, by analyzing the purpose behind and the scholars associated with the Graduate Institute in, especially, the 1930s, with particular attention to his criticisms of the Austrian economists, Ludwig von Mises and F.A. Hayek. It is shown that his story is far more fiction than fact.

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Notes

  1. A similar sentiment was expressed by the internationally respected Italian philosopher, Benedetto Croce:

    “We remember the old Europe with its riches, its flourishing trade, its abundance of goods, its ease of life, its bold sense of security; we see today the new Europe – impoverished, discouraged, crisscrossed with high tariff walls, each nation occupied with its own affairs, too distraught to pay heed to the things of the spirit and tormented by the fear of worse to come. .. Impatience with free institutions, has led to open dictatorships, and, where dictatorships doe not exist, to the desire for them. Liberty, which before the war was a faith, or at least a routine acceptance, has now departed from the hearts of men even if it survives in certain institutions.” (Croce 1932, pp. 1–2)

  2. For an overview of Wilhelm Röpke’s life and contributions, see, (Ebeling 1999; 2018).

  3. In the mid-1920s, Mises had assisted a number of the young “Austrian” economists who had been in his Vienna circle to obtain Rockefeller Foundation traveling grants to spend an extended time in the United States studying economic theory, policy, and institutions in America. Among those that he helped in this way included Gottfried Haberler and Oskar Morgenstern. Mises was also actively involved into trying to find academic refuge for those facing dismissal, discrimination, or far worse from the Nazis, first in Germany and then other parts of Europe. Fritz Machlup, who had been Mises’s assistant at the University of Vienna and who did his dissertation under Mises’s supervision, remarked in later years that the Rockefeller Foundation traveling grant that Mises had arranged for him in 1933–1934 enabled him to find an academic position at the University of Buffalo and, thus, remain in the United States; he considered that in this way Mises probably saved his life, since Machlup was Jewish. In March 1933, less than two months after Hitler came to power in Germany, Mises met in Paris, France with one of the Rockefeller Foundation representatives in Europe, Tracy B. Kittredge. In the memorandum (1933) that Kittredge prepared for the headquarters in New York, he said, “Professor M. [Mises] referred to the effects which recent developments would probably have on the development of economic science in Germany and Austria. He was inclined to take a very pessimistic view, and in his opinion we had probably seen the end, for at least a generation, of any intelligent economic research in the German-speaking countries. He felt that the dictatorial regime in Germany and the extension of nationalist tendencies in Austria will destroy any intellectual freedom in the field of economic studies, or will make it impossible for any properly qualified economists to obtain academic positions . . . Prof. M. was of the opinion that many of the Jewish professors in Germany would be forced to abandon their positions . . . Prof. M. further pointed out that income tax laws in Germany and Austria make it possible to carry out legal confiscation of Jewish property.” Lionel Robbins (1971, pp. 143–144), recounted that in the spring of 1933, he was in Vienna at a café with William Beverage, when “von Mises arrived with an evening paper carrying the shocking news of the first academic dismissals by the Nazis – [Moritz J.] Bonn, [Karl] Mannheim, [Ernst] Kantorowicz and others. Was it not possible he asked, to make some provision in Britain for the relief of such victims, of which the names mentioned were only the beginning of what, he assured us was obviously to be an extensive persecution.” Robbins goes on to explain that the brain-storming that Beverage, Mises and he shared in that Vienna café became the basis for what became the Society for the Protection of Science and Learning “to which hundreds of émigrés even now living in the English-speaking world owe the preservation of their careers and, in some cases, probably their lives.” After his own arrival in the United States in the summer of 1940, Mises approached Tracy Kittredge at the Rockefeller Foundation in New York City in October of 1940 about “the possibility of bringing a number of European economists to the United States” whose circumstances were highly precarious following the fall of France in June 1940 and the resulting German occupation. Among those for whom Mises made this case were Paul Mantoux, Jacques Rueff, and Francois Perroux. (Kittredge 1940)

  4. For a detailed discussion of Mises’s contributions and time in Austria in the interwar period, including his work as a senior economic policy analyst for the Vienna Chamber of Commerce, Crafts and Industry in the context of Austrian events in the 1920s and 1930s, see (Ebeling 2010, pp. 88–202).

  5. For a summary and overview of William Rappard’s life and his various contributions in the period between the two World Wars and after, see, (Ebeling 2000).

  6. Just a few months after Hitler came to power in Germany in January 1933, Rappard lamented (Rappard 1933, pp. 17–19): “For generations and, in some cases, for centuries, all nations within the orbit of our Western civilization have, through wars and revolutions, been striving to secure for all their members greater physical and moral security, greater political equality, greater individual freedom . . . [But now] the individual, the family, the local or regional community, everything and everybody is being sacrificed for the State. The State itself, once held to be the protector and the servant of the people, is in several countries in our Western civilization being turned into a weapon of oppressing its own citizens and threatening its neighbors, according to the capricious will of one or a few self-appointed individuals. These individuals, whether they style themselves chiefs, leaders, or dictators, are all what free men of all times, and all climes, have combated as tyrants. They are today acclaimed as heroes by hundreds of thousands of European youths, welcomed as saviors by millions of European bourgeois, and accepted as inevitable by tens of millions of European senile cowards of all ages.”

  7. In Slobadian’s worldview there are two irreconcilable ideologies confronting and fighting each other: “democracy” and “neoliberalism.” Democracy is treated as a hallowed word, a word representing “the masses” of society insisting upon and ready to establish a “better world” through the will power of a voting majority. Unchecked and unrigged, the democratic process will, no doubt, bring about a “progressive” or socialist future. If the electoral process does not produce it, it must be because “the system” is perverted and manipulated. Either “the rich” have used their wealth to bribe people and politicians to preserve the present system of injustice; or fascist-like demagogues have confused too many of the people with hateful references to national greatness or racist sentiments; or the existing electoral procedures prevent the will of the majority from determining who wins high political office because of archaic constitutional rules.

    Democracy’s nemesis is neoliberalism. Into this term is poured everything that thinkers such as Dr. Slobadian in general consider to be wrong with existing society. Neoliberalism is the political ideology of unrestrained capitalism guided by nothing but the self-interested profit motive; it is the camouflage behind which are the “rich” and the corporate “powerful” trying to maintain and extend their exploitation of workers, women, racial and gender minorities, and the physical planet; it is the false consciousness of thinking that “free markets” mean freedom when, in fact, it means control over the many by the few; it represents the use of government to assure the power of “capital” over “labor.”

  8. Space does not permit a detailed discussion of Dr. Slobadian’s questionable criticisms of other (classical) liberal scholars who had been associated with the Geneva Graduate Institute during the 1930s, in particular, Wilhelm Röpke, and in addition, Michael A. Heilperin and Moritz J. Bonn. Heilperin taught at the Graduate Institute from 1937 into the 1960s, with a brief period during which he lived in the United States; he specialized in monetary economics and international trade. Bonn was a highly regarded German economist who had to leave Germany in 1933 with Hitler’s coming to power, and was a frequent guest speaker at the Graduate Institute in the 1930s, having found a permanent position during that decade at the London School of Economics; he was considered an expert on imperialism, colonialism, nationalism, and more generally the theory of economic policy. Both Heilperin and Bonn come under criticism by Slobadian, and incorrectly in my view.

  9. For an exposition of the ideas of the Austrian economists, and Mises and Hayek in particular and their close intellectual relationship with each other, see, (Ebeling 2014, 2016).

  10. On the events of 1927 in Austria, to which Professor Slobadian refers and Mises’s views concerning them, see, (Ebeling 2010, pp. 97–98, 133).

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Ebeling, R.M. The Geneva connection, a liberal world order, and the Austrian economists. Rev Austrian Econ 33, 535–554 (2020). https://doi.org/10.1007/s11138-019-00450-3

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