Today was the final meeting of my classes in Geezer College (aka Senior University). In "6 Great Economists," we finished with Milton Friedman. As I listened to the presentation of Friedman's Libertarianism, I was struck by the fact that Friedman and Leo Strauss (among others) were contemporaries at the University of Chicago. I wondered if they ever collaborated and set out to find the nexus that connected these two. As is often the case with an online search, the target is missed, but a lot of other stuff shows up. In this case, I read a neat synopsis of economic thought that (for me) summed up my class in economic history and theory. Today, we witness the attempt to undo the mixed economy of the twentieth century — formed during the New Deal and WWII and built during the Cold War — by Dub and his cohorts. Even Alan Greenspan has gone over to the other side. In 1983, Greenspan and Congressman Barber Conable (R-NY) led a reform commission that proposed a series of modest tax increases and benefit cuts to restore the Social Security System to actuarial balance. Where has the Greenspan of 1983 gone? In fact, what happened to the Greenspan who was the acolyte to Ayn Rand? If this is (fair & balanced) opportunism, so be it.
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What Pendulums Do
by David Warsh
It's been nearly thirty years since its stirrings reached my little corner of America and swept me up and carried me along -- me and half my generation and most of the next. Nor, of course, was it just the United States whose political landscape was subsequently transformed by its swing.
From Chile to Spain to China to the United Kingdom, in South Asia and South America, and eventually Eastern Europe and the Soviet Union itself occurred a change of emphasis, of tastes, of what was taken for granted about the possibilities of life, that in relatively short order effected a considerable political transformation around the world.
What was it? Not neo-conservatism, though neo-conservatism was certainly a part of it. Nor was it the Reagan Revolution nor Thatcherism nor the Solidarity movement, though these certainly were points of emphasis in its spread. For some years the term that seemed to describe it adequately was "the Turn to the Right."
But the more my friends and I reflected on our own experience, the more the Left/Right distinction lost its capacity to illuminate what had happened to us. We still felt ourselves to be "of the Left" -- we were egalitarian, socially liberal, seriously concerned about the environment.
Yet we were nearly as enthusiastic about the new reforms -- stable money, deregulation, corporate restructuring, tax simplification, auctions, emissions-trading and the rest -- as were any of our friends on the Right. So the shorthand we came to employ among ourselves was to speak of "the Market Revolution." It is hard to convey now how surprising it was to those of us who became involved.
For example, in 1975 I wrote a cover story for Forbes magazine whose title was, "How Much Should the Government Take?" The cover art featured four little pies, marked China, Russia, the United Kingdom and the United States. I had to struggle every inch of the way to get that story into print.
I can still hear the pained exasperation in the voice of the editor, Jim Michaels, saying, "Look, Dave, ever since the New Deal, it's considered, well, impolite to complain about taxes." Dear dead days! You should hear him now. But me, now I think taxes are too low.
I remember, also, the splashes of the stones that rippled the ponds of economic journalism in those days -- the appearance of Robert Nozick's book, Anarchy State and Utopia; of Paul Johnson's Modern Times; of Walter Eltis' influential series in the London Times, "Britain's Economic Problem: Too Few Producers" (and the equally influential but far less widely-noted tract, "Do Trade Unions Cause Inflation?")
There were those fascinating dueling television series -- Milton Friedman ("Free to Choose") versus John Kenneth Galbraith ("The Age of Uncertainty.") And for many years, the four periodical handmaidens of the Zeitgeist were the liveliest reading around -- The Public Interest, Commentary, Encounter and the editorial page of the Wall Street Journal.
By the time Reagan was elected, the people I worked with had been won over by "supply-siders," and I in turn had become much more interested in what was going on inside technical economics. Economic journalism, which had been so lively in the 1970s, then took a turn for the worse. But then and now, it seems to me that one of the most illuminating pieces of work to appear in all those bewildering years was George Nash's 1976 book The Conservative Intellectual Tradition in America Since 1945.
Nash had been a graduate student in history at Harvard University in the late 1960s when he hit upon his topic. Where had the conservative intellectual moment in America come from? What were its component parts? In 1945, he wrote, "no articulate, coordinated, self-consciously conservative intellectual force existed in the United States. There were, at most, scattered voices of protest, profoundly pessimistic about the future" -- not much more than pockets of Roosevelt-haters here and there.
Yet thirty years later, there were not one but three conservative camps, loosely related, and all smarting from the 1964 defeat of Republican candidate Barry Goldwater.
They included "classical liberals" or libertarians, exemplified by Ludwig von Mises, Friederich Hayek, Ayn Rand and Milton Friedman, worried by the threat to private enterprise posed by an expanding state.
There were "new conservatives" or "traditionalists" as well, exemplified by Richard Weaver, Peter Viereck, Leo Strauss and Russell Kirk, revolted by totalitarianism and mass society and anxious to return to traditional religious and moral absolutes.
A third distinct group were the evangelistic anti-communists, exemplied by James Burnham, Whittaker Chambers, Willmoore Kendall and others, one-time believers who had become profoundly disillusioned by communism and were convinced that it posed a fantastically dangerous threat to the industrial democracies of the West.
With clarity and respect for all sides in the argument, Nash traced the evolution over the course of thirty years of these three quite disparate strands, through high points and low -- the first meeting of the Mont Pelerin Society, for example, the founding of the National Review, the rise and fall of the John Birch Society -- and showed how, by 1964, they had become coherent enough to support a political candidate in a presidential; election.
Goldwater suffered a crushing political defeat that year. But even so, there was a sense among conservatives that the liberal consensus that had been forged by the New Deal was becoming overripe. And in 1968, the conservatives helped move Richard Nixon to the White House. He turned out to be the last liberal president.
The really interesting thing about Nash's book, however, was how uncertain the author was about the dimensions of the transformation that about to take place. True enough, in a final chapter ("Can the Vital Center Hold?"), Nash brought the neo-conservatives onto his stage -- men such as Edward Banfield, Nathan Glazer, Daniel Patrick Moynihan and Irving Kristol. He reported the emergence of what political analyst Kevin Phillips described as "populist conservatism." He was hopeful that a "fusion" of the libertarian and traditionalist schools might take place.
But he was strangely reluctant to pronounce that conservatism was on the eve of a great victory. Instead, he quoted T.S. Eliot. If true conservatism was not a lost cause, it was never a gained cause, either.
Nash's book had the virtue of helping to explain how a point of view that had been ridiculed only twenty years before had come to be widely accepted in Washington. But to my mind, it was less than half the story. It had plenty about Russell Kirk but nothing about Ronald Coase. Leo Strauss but not John Nash. Frank Meyer but not James Buchanan.
Indeed, despite the fact that it began with an account of the publication in 1944 Hayek's passionate defense of markets, The Road to Serfdom, Nash's book left out for the most part the subsequent rise of market liberalism -- and so completely missed the underpinnings of what would happen next. It wasn't conservatism that conquered the world in the last quarter of the 20th century -- it was capitalism.
I think of this because I have begun reading Jerry Z. Muller's The Mind and the Market: Capitalism and Modern European Thought. This is a remarkable book, fifteen years in the making. (Muller is a professor of history at the Catholic University of America in Washington D.C.) It seems to me to have the same clarifying effect today as did Nash's book in its time. And like Nash's book, it works at least partly by omission. It gives the same strong impression that something important has been left out.
In a dozen strong chapters, Muller tackles, not so much the philosophers of capitalism but their critics. A chapter on Voltaire details the rise of the intellectual as a force in the molding of public opinion. Another on Adam Smith lays out the founder's case for laissez faire in its considerable subtlety. (Muller wrote a particularly good book on Smith some years ago -- Adam Smith in His Time and Ours: Designing the Decent Society.)
There follow thoughtful portraits of leading critics of the market over the past three centuries, each firmly located in the political, economic, social and intellectually context of his times. Thus Justus Moser, a contemporary of Smith who for many years was the central figure in the tiny German state of Osnabruck, not far from the Dutch border, is seen as one of the earliest and most penetrating critics of "globalization." Edmund Burke, an intellectual leader of the generation that followed Smith in England, becomes a fierce critic of single-minded dependence on markets among all the other institutions of commercial societies.
Hegel is described as a champion of what today we call "capability," a philosopher preoccupied with the ways in which institutions shape human character. Karl Marx, scion of a family of distinguished German rabbis, is obsessed with creating an economic system which requires no money -- nor money-lending. The poet Matthew Arnold considers ways of confining the commercial mentality to its own realm, thereby permitting the worlds of politics and culture to retain their independence.
In the years after the unification of Germany and the rise of science as a more or less autonomous profession, the great German scholars Max Weber, Georg Simmel and Werner Sombart debate the interplay between religious conviction, human consciousness and economic organization. A quarter century later, George Lukacs and Hans Freyer reject Weber's cautious embrace of market liberalism -- Lukacs in favor of fervent communisn, Freyer for National Socialism.
And 25 years after that, Joseph Schumpeter makes a tight connection between capitalism, technical change and the inevitable resentment of the displaced that he expects soon will bring it to a halt. Similar criticisms are heard from Keynes and Marcuse And the narrative concludes with a chapter on Hayek -- exhibiting, in his ominvalent mistrust of government, "the crystal-clear vision of a one-eyed man."
At the end of the book, Muller writes of the various "vital tensions" that animate the present-day scene of intellectual politics. "One might say that in the capitalist era, the older tension between this world and the next has been replaced (or, for some, overlaid) with a new set of inner-worldly tensions. The tension between choices and purpose, between cultivating individuality while preserving the sense of attachment that gives life meaning, between independence and solidarity, between collective particularity and cosmopolitan interests, between productivity and equality -- these are the characteristic tensions of the capitalist epoch, tensions with which we will continue to live."
So what is it that has been omitted? In his final chapter, Muller raises the question of the status of non-market institutions -- the family, the church, the university, the state, the Volk. Naturally, economic self-interest penetrates and sometimes pervades each sphere. The decision to have children has an economic dimension. So does the decision to go to join the army, to go to school, to give to charity, to make a new finding and communicate it to others, to pay taxes, to grant benefits.
Will these non-market institutions some day cease to exist altogether? Or linger on only in the most attenuated form? Will there be markets for everything and motives for nothing aside from the aggrandizement of the Self?
Somehow, I doubt it. Economists and other social thinkers only recently have turned their attention to these counterinstitutions, wherein preferences are determined and tastes are made. They are probably far more important than we think. I suspect that markets will turn out to be only half the story. For changes within these little understood non-market institutions can produce very powerful shifts in short periods of time between the opposing poles that Muller sees as characteristic of the modern age.
Robert Nozick called it "the zig-zag.of politics." Henry Adams described a 36-year cycle of governmental expansion and contraction. Arthur Schlesinger Sr. called his similar schema the "tides" of American politics. Albert Hirschman writes of "shifting involvements" between the public and private speres. Or as the newspaper columnist Nancy Nall put it just last week, "It's only a matter of time before the pendulum does what pendulums do."
David Warsh covered economics for The Boston Globe and Forbes Magazine for 25 years and, earlier, reported for Pacific Stars and Stripes and Newsweek Magazine. He is a graduate of Harvard College (1966/72) in Social Studies and a two-time winner of financial journalism's Loeb Award. He was the J.P. Morgan Prize Fellow in Spring 2004 at the American Academy in Berlin.
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