In the late fall of 1924, John Maynard Keynes strode into the Examination Schools in Oxford and announced that the po liti cal economy of the civilized world was approaching, as his lecture title boldly proclaimed, the end of laissezfaire. … Now he was turning his attention to the development of a coherent theory of po liti cal economy to supplant the fading doctrines of the preceding century. … “We do not dance even yet to a new tune,” he told the attendees. “But change is in the air.”

The very idea of laissezfaire, Keynes believed, was a perversion of the views expressed by its purported advocates. “The phrase laissezfaire is not to be found in the works of Adam Smith, of Ricardo, or of Malthus,” he reminded his audience. “Even the idea is not present in a dogmatic form in any of these authors.” Rather, it represented “what the popularisers and the vulgarisers said.” Those who sought to relay economic ideas to the untutored masses deliberately reduced them to abstract tenets that appealed to those with a limited capacity to understand. Having absorbed those shrunken lessons, the public had come to “regard the simplifi ed hypothesis as health, and the further complications as disease.”

Despite the lingering popularity of the idea of laissezfaire and the widely shared assumption that it was the prevailing view of most economists, for more than fi fty years the world’s leading practitioners of the profession had applied it only as, in the words of John Elliott Cairnes, a “handy rule of practice” with “no scientifi c basis what ever.” … In other words, laissezfaire was dead, and only the public had yet to know.

The letters of the University of Chicago economist Frank Knight are a testament to the depths to which laissezfaire had fallen. “We cannot go back to laissez faire in economics even in this country,” he wrote to a colleague in the summer of 1933. “Now it seems to me inevitable that we must go over to a controlled system,” he wrote later that year, adding that his only question was “whether any sort of liberty, especially freedom of consumption and intellectual freedom, can be maintained to a signifi - cant extent.” The 1930s were an era when even many of the economics profession’s most strident advocates of marketplace freedoms accepted that they would need to be curtailed to a substantial degree.

Their narrative relies, ironically, on precisely the relationship between ideas and po liti cal change that Keynes cited as a rationale for his confi dence that laissezfaire was on the wane. The shift in pop u lar approaches to the market occurred on many levels, and many actors and institutions played constitutive roles, but it could not have occurred without the committed efforts of a transnational community of ideas. Much as Keynes worked, with manifest success, to develop and disseminate an understanding of advantageous ways in which the public sector could intervene, a network of phi los o phers, economists, journalists, and private foundations across the Atlantic world coalesced with the common goal of reversing the growth of government and rebuilding public support for freemarket ideas. As distant colleagues they had weathered depression and war; in future years they would experience perceptions of public irrelevance, impediments to academic advancement, countless po liti cal defeats, and, eventually, an extraordinarily rapid institutional and ideological ascent.

Few would contest that the conservative movement was infl ected by social and racial anxieties, supported by many who were unlikely to benefi t from its economic proposals, and characterized by the simultaneous advocacy of contradictory views. These interpretive models, however, shroud important aspects of the movement behind an analytic veil. A social philosophy is rarely comprehended by reducing its arguments to social or material interests, or by distilling its tenets into rigidly formalized schemes. The homo economicus is useful only as a formal abstraction, and few of us would withstand an interpretive procedure that ceased with the judgment that there were points of apparent confl ict among aspects of our stated worldview. Our experience of the social environment is relentlessly complex, and our po liti cal perspectives are formed through a dynamic and everchanging interaction among abstract idealism, purposive strategy, emotive inclination, and intuitive response. They are provisional responses to an alwaysincomprehensible world. Understanding why individuals believe what they do and evaluating the comparative validity of their beliefs require a mode of analysis that acknowledges the entangled nature of the problems it attempts to address.

This book provides both a contribution to this developing literature and an implicit revision. It takes the detailed analysis of conservative ideas out of the realm of intellectual biography, where it has largely remained, and situates the major fi gures in dialogue with one another. By focusing on networks and pro cesses of intellectual exchange, it devotes substantial attention to institutional context without inferring that the environment exerts hegemonic force over the generation and propagation of ideas. And it abandons the close observance of national boundaries that has continued to defi ne the pa ram e ters of research into the origins of the conservative movement. The result is a narrative that examines how its central fi gures developed, explained, and justifi ed their beliefs; how they alternately infl uenced and opposed one another's opinions; how they navigated the perilous relationship between politics and philosophy; and how, over time, their assumptions and arguments discreetly but decisively transformed. It approaches ideas neither as abstractions that unfold in a realm wholly distinct from politics nor as mere tools that are invoked to engender a desired change.

As Keynes concluded "The End of Laissez- Faire," he reminded his audience that discussions of abstract economic theory often serve as proxies for debates over the kind of world in which we want to live. The problems of economics cannot easily be severed from the problems of philosophy. The "fi ercest contests and the most deeply felt divisions of opinion," he predicted, "are likely to be waged in the coming years not round technical questions, where the arguments on either side are mainly economic, but round those which, for want of better words, may be called psychological or, perhaps, moral." Debates over economic policy occur on two levels: they encompass considerations of both how to achieve specifi ed ends with maximum effi ciency and what the ends themselves should be. Advocates of a par tic u lar approach to po liti cal economy rarely achieve much traction in the po liti cal arena without devoting close attention and rhetorical emphasis to the latter. Endeavors to transform economic policy almost invariably demand the capacity to reframe the meaning that members of a community derive from, and ascribe to, their world.

In the midst of the Great Depression, market advocates were acutely aware that the social philosophy of the free market inspired little support within either academic institutions or pop u lar politics. They sought to overcome their isolation by establishing networks of sympathizers who could work in conjunction to reexamine the philosophical foundations of their ideas and reconstruct the public pre sen ta tion of their arguments. … Many of these new or gan i za tion al forms emerged out of the membership of the Mont Pèlerin Society, a group founded by Friedrich Hayek in 1947 to provide an international gathering place for leading phi los o phers, economists, journalists, politicians, and philanthropists who supported the market mechanism.

An exploration of the rhetoric of the society's members in its early years reveals a movement far less doctrinaire than the conventional narrative would indicate. What emerges is a growing awareness of a set of complex tensions confronted by market advocates in the postwar era. Early members of the society desired to establish philosophical foundations for marketplace freedoms but expressed deep skepticism toward the intolerance and irrationality of unsubstantiated po liti cal absolutes. They sought to reach out to the religious believers and the eco nom ical ly disadvantaged individuals whom they believed nineteenthcentury market advocates had mistakenly eschewed but demonstrated hostility toward theological dogmatism and the redistributive state. They glorifi ed the achievements of capitalism but at times expressed dismay at its cultural and moral effects. They valorized liberty but maintained the vital need for collective moral traditions. They defended capitalism as a theory of individual choice but expressed deep suspicion of the implications of po liti cal democracy. Their similarities accentuated, rather than elided, the points of difference that drove them apart.

The fi nancial crisis and subsequent po liti cal instability left them broadly convinced of the need for a social philosophy that transcended the abstract dictates of laissezfaire: they agreed that if capitalism was going to be saved from the pressures that were continuously eroding its foundations, its core assumptions would need to be rebuilt. But they disagreed sharply and continuously when the conversation turned to identifying those aspects of the capitalist order that were sacred and those that could be revised, or those morals that might be coded as absolute and the mechanisms of enforcement that would make them so. … That these problems were posed by cosmopolitan intellectuals from around the Atlantic world, engaging together in earnest inquiry into the philosophical foundations of their social order, complicates the common assumption that the conservative project was parochial in its origins and strategic in its intent. It was the product of a collapsed rather than a rigidifi ed worldview.

“Terms like ‘liberalism’ or ‘democracy,’ ‘capitalism’ or ‘socialism,’ today no longer stand for coherent systems of ideas,” Hayek observed shortly after the conclusion of World War II. He saw them instead as “aggregations of quite heterogeneous principles and facts” that had become linked to certain words by means of a “historical accident.” … And the word “liberal”— otherwise a favorite— had been irrevocably altered by its increasing association with a progressive worldview. … We cannot rely on static renditions of the philosophies of the present if we wish to understand the dynamics of an earlier time.

“The hope that Economics will ever become something which the layman can comprehend without training,” he asserted in 1930, “is doomed for ever to frustration.”

Economists who supported the freeenterprise system perceived themselves to be the fi nal defenders of a social philosophy that was in the midst of passing away.

Hayek was in the early stages of a career in which he would often feel that his views ran against the tenor of the times, but at no other period was the contrast as stark as in the early 1930s. As governments adopted increasingly radical approaches to an extraordinary economic crisis, academic opponents of government intervention felt ever more marginalized. Around the Atlantic world they clustered in academic environments that prided themselves on fostering opinions that challenged the mainstream, including Hayek’s own London School of Economics, the University of Chicago, and the Institute for International Studies in Geneva.

In the Anglo- American world since the onset of the Industrial Revolution, the marginalization of market advocates during the early and middle years of the 1930s remains a singular event. This can be attributed in part to the loss of trust in markets that tends to accompany the onset of severe fi nancial crisis. But while events seem to shape the horizons of a discursive world, their hold on the ideological life of a community is not complete. However dismayed economists may feel at the level of public debate, their ideas, arguments, and assumptions all help frame its content and structure. This infl uence is most palpable in periods of uncertainty, when settled assumptions can suddenly become objects of debate within a broadened public sphere.

Although the market advocates at the LSE and the University of Chicago shared a skepticism about the accelerating government interventions of the time, their opinions were rarely united and often opposed. In London, Lionel Robbins and Friedrich Hayek initially espoused an extraordinarily constrained vision of the government's ability to redress the economic crisis. Blaming the downturn primarily on a business cycle that had become overstimulated by government interference, they argued that further interventions would only repeat the same disastrous pattern.

In Chicago, Frank Knight, Jacob Viner, and Henry Simons developed a more moderate response to the events of the time. All three were quick to denounce the excesses of laissezfaire, and they varyingly embraced the prospect of public works projects, progressive taxation, social insurance, and vigorous antitrust policies. This brought them much closer to the profession's mainstream than their colleagues in London, but made it diffi cult for others to associate them with any ascertainable doctrine or plan. Considered in conjunction, the economists in London and Chicago reveal a world of market advocacy that was very much in disarray. Some corners held fi rm to reactionary extremes that few were willing to follow; others much more readily made concessions but proved incapable of articulating a coherent oppositional worldview.

During the early 1930s the London School of Economics became widely known as a center for economists who believed that the government could not contribute to the resolution of the ongoing crisis. Even as leading conservative economists across the Atlantic world advocated for public works and other emergency mea sures, Lionel Robbins and his colleagues dwelled on the dangers of intervention and the absence of quick solutions.

The LSE's emergence as an institutional home for a reactionary economics struck many observers as a peculiar development. The university had been founded by members of the Fabian Society less than forty years before, under the theory that a thorough education in economics and politi cal science would serve to further the spread of socialism. Its structure manifested a set of commitments that made the Fabians unusual among their socialist peers. As George Bernard Shaw wrote in a retrospective on the group, they were unabashedly elitist, perceiving themselves as “a minority of cultural snobs and genuinely scientifi c Socialist tacticians” who had “no time to spend on the conversion and elementary Socialist education of illiterates and po liti cal novices.” They were committed to a policy of intellectual openness, believing that their ideas would achieve “Permeation” if they were shared with unwelcoming audiences rather than just the converted. And they eschewed the language of revolution, preferring to pursue social change through, in the words of Sidney Webb, “the inevitability of gradualness.” Thus the LSE focused on advanced training in the social sciences rather than elementary education for workers and the masses; it welcomed a faculty and student body that represented a broad range of views rather than demanding adherence to a par tic u lar ideological perspective; and it sought to cultivate a capacity for critical reasoning rather than radical action.

By the early 1930s the Fabians could look back on their commitments to elitism, openness, and gradualism with some appreciation for their successes. In his introduction to a 1931 reissue of Fabian Essays, Shaw noted the “air of amazing advance in our po liti cal circumstances.” A Fabian Socialist served as prime minister, two of the society's original essayists were in the House of Lords, and Parliament itself “swarm[ed] with Fabians.” Further, the LSE was fl ourishing. In the two de cades after 1919, its fulltime teaching staff more than qua dru pled, and the percentage of students considered “occasional” had halved. Its rapidly expanding infrastructure earned the school the epithet “the empire on which the concrete never set.”

The Fabians' commitment to ideological openness led the institution they founded to harbor advocates of precisely the economic theories that it had been established to overcome.

As his colleagues at the LSE observed, Robbins was not a particularly innovative thinker; his great skill lay in his capacity to aggregate and synthesize the scholarly achievements of others. In a discipline that remained distinctly insular, however, he achieved signifi cant originality by elaborating on the insights of foreign sources that his colleagues found largely obscure.

Schmoller argued that economists should devote the majority of their attention to the accumulation of vast sets of data, from which they would eventually use induction to arrive at their analysis. Menger did not deny the benefi ts of historical information or inductive reasoning, but he believed that economic theory emerged primarily through deductions from fi rst principles. And while Schmoller used his accumulated data to advocate for reform, Menger’s respect for the organic logic of the market led him to express suspicions of plans to bring about rapid or dramatic social change.

Although Mises acknowledged that workarounds might be developed to identify appropriate prices for consumer goods, he argued in an infl uential 1920 article that state own ership would render the construction, or even the simulation, of a competitive market for production goods impossible. In the absence of such a market, there was no way to determine how to allocate resources effi ciently. “There is only groping in the dark,” he wrote. “Socialism is the abolition of rational economy.”

Austrian capital theory, as expounded by Eugen von Böhm- Bawerk, helped convince him that government meddling in interest rates had farreaching ancillary effects on the business cycle that could do grievous harm to the economy. And Mises’s critique of socialism and corresponding defense of the effi ciency of the market helped lead him to the conclusion that attempts to interfere with the price mechanism were almost always misguided.

It did not take long for Robbins to disabuse Keynes of that notion. Citing an international literature that was largely unfamiliar to the other members of the committee, Robbins argued that many of the group’s central assumptions were ill founded. He encouraged them to solicit the opinions of younger scholars from other countries, suggesting as one possibility the Austrian economist Friedrich Hayek, who had recently written an article criticizing public works proposals in the United States.

As a star pupil of the distinguished economist Friedrich von Wieser and one of the most active members of a regular Privatseminar on economic theory and socialscientifi c methodology that Ludwig von Mises held for young Viennese intellectuals beginning in 1924, Hayek had developed an impressive range of connections throughout the Austrian academic world. He also was unusually discursive in Anglo- American po liti cal economy, in part because of connections formed during an extended research visit to New York City in 1923– 1924 and at international conferences in subsequent years. Nevertheless, at the time he was still a young and littlepublished economist caught within an Austrian academic system that was notorious for making the journey to a professorship lengthy and penurious. Outside his native country Hayek's scholarship remained largely obscure.

Shortly before engaging in these public disputes with Keynes, Robbins had arranged for Hayek to present a series of lectures at the LSE in January 1931.44 The fortuitous timing led some to conclude that Robbins was drawing on Austria for intellectual reinforcements. "While the controversy about public works was developing," the Cambridge economist Joan Robinson recalled, "Professor Robbins sent to Vienna for a member of the Austrian school to provide a counterattraction to Keynes."

During four gatherings Hayek presented to packed crowds the incipient work that would be published shortly thereafter as Prices and Production. Many in the audience struggled to understand Hayek's argument, fi nding his accent heavy, his pre sen ta tion largely "nonfollowable," and his ideas confusingly "tangled." His fi rst lecture, however, demonstrated a knowledge of the history of British monetary theory that would have been extraordinary in a native scholar, let alone one who had been educated within a different national tradition. Further, he drew extensively on ideas from Austrian capital theory that were novel to many members of the audience; although they were diffi cult for scholars unfamiliar with its antecedents to understand, they appeared to hold the potential to address urgent problems in the study of business cycles. Like Keynes, Hayek relied on the Swedish economist Knut Wicksell's distinction between the natural rate of interest and the market rate of interest, and analyzed the infl uence of the lending activities of banks on the relationship between them.

Robbins immediately recognized Hayek as a powerful ally in his arguments against public expenditures, credit expansion, and tariffs. He made his enthusiasm very clear when the LSE’s director, William Beveridge, suggested that Hayek might be an appropriate choice for the longvacant Tooke Chair of Economic Science that Jacob Viner had just declined. Hayek, who had engaged in idle daydreams about the possibility of a professorship in London, was fl atly astonished at his good fortune in receiving the offer. As the longtime hub of the fi nancial world and an increasingly dynamic center for economic thought, it seemed an ideal situation. “I mean, if you are at thirtytwo a professor at the London School of Economics,” he later told an interviewer, “you don’t have any further ambitions.”

Hayek’s arrival helped establish the LSE as a center for economists who dissented from the views associated with Keynes and Cambridge. Within six months of his visiting lectures, he published the fi rst of two lengthy critiques of Keynes’s Treatise on Money in the LSE’s journal, Economica. He excoriated Keynes for the total absence of capital theory from his analysis. Keynes conceded the criticism but then turned to an attack on Hayek, ridiculing his assumption that there was an “automatic mechanism in the economic system” to equalize the rates of savings and investment. Hayek, in turn, replied by observing that Keynes failed to provide a coherent explanation of the causes that led the rates of savings and investment to diverge. Keynes acknowledged that his analysis required further revisions, but he indicated in private correspondence with Hayek that there was “a better way to spend one’s time than in controversy.” His colleague Piero Sraffa then continued the assault, arguing in a devastating journal article that Hayek’s theory relied on a strangely simplifi ed conception of money and that his assumption that there was a single natural rate of interest was absurd. Over time the tone of these disputes became increasingly vitriolic. Keynes described Prices and Production as “one of the most frightful muddles I have ever read,” and Sraffa added that Hayek built up “a terrifi c steamhammer in order to crack a nut— and then he does not crack it.” By the end of 1932 Hayek was widely recognized as the leading theoretical opponent of Keynes’s ideas, but neither had emerged with his arguments unscathed.

The list of visitors to the LSE in the 1930s included leading fi gures from a broad range of national backgrounds, such as Erik Lindahl, Bertil Ohlin, and Ragnar Frisch from Scandinavia, Constantino Bresciani- Turroni from Italy, Frank Knight and Jacob Viner from the University of Chicago, William Rappard from Switzerland, and Hayek’s Austrian acquaintances Gottfried Haberler, Fritz Machlup, and Joseph Schumpeter.

Despite the importance of Hayek's arrival, it remained clear to all that Robbins was the department's dominant personality. … Denying the common narrative that attributed the recent collapse largely to failures of the market mechanism, Robbins instead cited interventionary policies as the primary culprit. “The cartelisation of industry, the growth of the strength of trade unions, the multiplication of State controls, have created an economic structure which, what ever its ethical or aesthetic superiority, is certainly much less capable of rapid adaptation to change than was the older more competitive system,” he wrote. “This puts it very mildly.” He worried, on the one hand, about the “impediments to enterprise” created by these interventions and, on the other hand, about the possibility of an unsustainable infl ationary boom created by the attempts to address the Depression with a massive program of public works. His policy recommendations included restoring the international gold standard, dramatically reducing restrictions on international trade, preventing trade unions from blocking those who were willing to accept a lower wage, and relaying a clear message that failing businesses would not be saved from bankruptcy.

Although The General Theory had little immediate impact on public policy, it swept through the profession with, in the terms of the MIT economist Paul Samuelson, "the unexpected virulence of a disease fi rst attacking and decimating an isolated tribe of South Sea islanders."

The General Theory was intended as an assault on the entire edifi ce of orthodox economic theory, but Keynes was not above sending, as Alvin Hansen observed in a prominent review, “many a dart at the neo- Viennese and London school.” He drew par tic u lar attention to the contrast between its optimistic and constructive approach and the much bleaker and more defeatist perspective in the work associated with the LSE. “The right remedy for the trade cycle is not to be found in abolishing booms and thus keeping us permanently in a semislump,” Keynes observed, “but in abolishing slumps and thus keeping us permanently in a quasiboom.” Keynes’s mocking treatment of Hayek’s ideas quickly became common even within seminars at the LSE. After converting to Keynesianism while on a fellowship in the United States during the 1934– 1935 academic year, Hayek’s younger colleague Nicholas Kaldor began making sarcastic interjections in seminars that became increasingly notorious within the school. In the midst of this atmosphere, Hayek made the devastating decision not to submit a review of The General Theory. … Regardless of the reasons, his decision seemed to many an admission of defeat.

Hayek faced the prohibitive challenge of advocating for quiescence in the face of an economic catastrophe that Keynes claimed he could solve. His colleague John Hicks later observed, “It is in its application to defl ationary slumps that the Hayek theory is at its worst; and it is a terrible fact that it was in just such conditions— in 1931– 2—that it was fi rst propounded.” Hicks recalled that in the absence of a forceful reply to Keynes, Hayek’s theories gradually “slipped through our fi ngers” as economists turned their focus toward what they perceived to be more urgent problems. Students at the LSE were hesitant to accept a theory that seemed to offer no clear route out of the crisis.

Milton Friedman, who was a graduate student at Columbia and the University of Chicago at the time, recounted that he and his generation were not convinced by the proposition that “you just have to let the bottom drop out of the world.” He concluded that by encouraging a “donothing policy both in Britain and the United States,” Hayek and Robbins “did harm.” … By the end of the de cade only two or three Hayekians were left at the LSE. … Hayek himself, noting the profession’s turn toward macroeconomics and econometrics after the publication of The General Theory, acknowledged that he became perceived as “oldfashioned, with no sympathy for modern ideas.”

By the late 1930s the approach to economics that Hayek and Robbins had incubated at the LSE was no longer prevalent even within their own department. Robbins was beginning to abandon his previous positions, while Hayek increasingly directed his attention to problems unrelated to his prior work on monetary theory. Hayek had foreshadowed the diffi - culties that precipitated this decline in his inaugural remarks at the LSE, which acknowledged that market advocates tended to dwell too much on criticisms of proposals for reform and to focus too little on elaborations of their own positive vision. … Market advocates, he determined, would need to do a better job of expounding the virtues of markets along with the vices of intervention, and of clarifying those points where moderation of the market mechanism would be necessary and benefi cial. … Although Hayek's writings on the immediate prospects for the economy were unfailingly grim, he retained an extraordinary confi dence in the capacity of his ideas to alter the longterm course of events.

Although Hayek's writings on the immediate prospects for the economy were unfailingly grim, he retained an extraordinary confi dence in the capacity of his ideas to alter the longterm course of events. Here, at least, he found it salutary for any sources of discouragement to be ignored.

During the 1930s the leading economists at the LSE saw their counterparts at the University of Chicago as their closest intellectual and ideological allies outside Vienna. … The strongest of these connections was between Lionel Robbins and Jacob Viner, who recounted their fi rst meeting in 1927 in terms more often used for romance than for discussions of theory. … Friedrich Hayek had fi rst met Frank Knight before moving to London, and wrote in 1936 that despite their occasional differences he could fi nd “no other author with whom I feel myself so much in agreement.” Robbins, too, expressed par tic u lar admiration for Knight’s work, assigning his treatise Risk, Uncertainty and Profi t as an introductory textbook in economic theory and assisting with the publication of his collection of essays, The Ethics of Competition. In 1937 Robbins told Viner that he was convinced that the economics faculty in Chicago was “easily the most important group in the world.”

Chicago economists had developed a reputation as leading opponents of the economic policies associated with the New Deal. Several of them were highly critical of institutionalism, a methodology that relied on precisely the modes of inductive reasoning that Robbins had denounced. After Keynes published his General Theory, some of the sharpest criticism of his ideas emanated from their department.

Chicago also developed a reputation for inculcating a conservative approach to po liti cal economy among its graduate students, who included Milton Friedman, George Stigler, and Aaron Director. Friedman later recalled that the “core” of his and his wife Rose’s conservatism was attributable to the “common infl uence” of their time in the department. Its intellectual atmosphere, he indicated, led students to admire the “strength of the price system” and to feel “rather negative towards socialism, socialist economics.” Chicago seemed to be the last redoubt of economic sentiments that the rest of the profession was fast leaving behind.

Further, they worried that the extremity of the views associated with the LSE was rhetorically ill advised, distilling market advocacy into an unforgiving absolutism that was more likely to persuade readers of their opponents' views than their own.

Despite their notoriously diffuse pre sen ta tion, these lectures were credited with transforming incoming socialists into nascent libertarians in an act of po liti cal alchemy often cited as the origin of the Chicago School.

Attempts to harden Knight's oppositional remarks into a unitary social philosophy, however, run the risk of imparting a selective order to the deliberate messiness of Knight's worldview. His writings have never neatly aligned with his imputed role as a dedicated advocate of free enterprise. Instead, he perceived himself to be primarily a critic, more comfortable exposing the obfuscations of other theorists' systems than constructing his own. He lived, as he acknowledged in Risk, Uncertainty and Profi t, in “a world full of contradiction and paradox,” and his primary instinct as a scholar was to expose these qualities where he perceived them to be elided. His one philosophical absolute was a refusal to indulge in the uncritical adoption of absolutes. “There is always a principle, plausible and even sound within limits, to justify any possible course of action and, of course, the opposite one,” he explained in his 1950 presidential address before the American Economic Association. Like cookery, he continued, economic theory “calls for enough and not too much, far enough and not too far, in any direction.” Throughout his career he refused to extol the virtues of markets without drawing attention to their limitations, or to observe those limitations without enumerating the costs inherent in any attempt to overcome them.

Knight worried, in par tic u lar, about the moral life of marketcentered societies. It was neither common nor desirable, he observed, for individuals to decide how to act on the basis of rational calculations of their own fi nancial interests. Even those at the highest levels of business enterprise pursued profi t more out of a love of competition than a desire for monetary gain. He wrote in Risk, Uncertainty and Profi t that they “consume in order to produce rather than produce in order to consume, in so far as they do either. The real motive is the desire to excel, to win at a game, the biggest and most fascinating game yet invented, not excepting even statecraft and war.” Indeed, actions pursued purely for interests that economists would defi ne as “rational” were widely considered abhorrent. The “rational, economic, criticism of values gives results repugnant to all common sense,” he observed in his 1922 essay “Ethics and the Economic Interpretation,” and the “economic man is the selfi sh, ruthless object of moral condemnation.” Market societies encourage such undesirable behaviors while discouraging the production of values not refl ected by the price mechanism. … Knight believed that a capitalist society could sustain itself only to the extent that it consisted of individuals whose behavior departed from the norms it incentivized.

Neither “freedom nor truth can be treated as an absolute,” he wrote. “They confl ict with beauty and morality and other values, and with one another, necessitating ‘marginal’ comparison and compromise, and correct proportioning.” He concluded that a social system that prioritized the market above all else would become imbalanced and prone to collapse. This should not be taken to mean, however, that he believed that any other system could solve the per sis tent tensions between a society’s moral and material welfare. … “Trying to look as deep as possible into fundamentals, I feel that both the radicals and conservatives are right,” he wrote. “On the one hand, the old system had got to where its workings could not be tolerated, and there is absolutely no use in thinking of going back to it. On the other hand, it just doesn’t seem real to me that any convention of the best minds could do much in the way of designing a new system to order.” … Knight saw his world as consisting of desperately bad alternatives, which allowed him to advocate the market system despite a distaste for its effects and a growing conviction that it was pi loting itself toward collapse. “I’m very curious as to what alternative to the profi tsystem you can think of that wouldn’t be worse,” he wrote to a colleague two de cades later. “I’ve been trying to think of one for a halfcentury or so, without success.” He demonstrated the radical’s capacity to lament the inadequacies of the present world and to yearn for a better one, but he lacked the ability to believe that the necessary options existed or that the desired changes might come to be.

Viner fi rst developed his professional reputation through infl uential and densely erudite treatises on international trade and the history of economic thought. He then rose to public prominence in a role in the Trea sury Department that forced him to spend much of the 1930s shuffl ing between Chicago and Washington. … The department’s reputation for theoretical rigor derived largely from his infl uence.

When he directly addressed matters of public policy, however, he strongly emphasized his departures from anything resembling laissezfaire. His rhetoric was particularly strident in regard to limitations on the powers amassed by large corporations. "Nothing in the history of American business," he reminded his audience in a 1931 speech, "justifi es undue confi dence on the part of the American public that it can trust big business to take care of the community without supervision, regulation or eternal vigilance."

Although he took pains to acknowledge that size had some benefi ts, he identifi ed “the important economic issue of our day” as the fact that “the mere size of business units tends almost inevitably to result in attempts to escape the impact of competition which have important— and in my opinion highly undesirable— consequences for the operation of the economic system.” He also strongly believed that democracy should take pre ce dence over the dictates of economic theory. If the public wanted direct controls, he expressed the opinion that economists should set about developing effi cient implementations rather than expressing frustration at perceived theoretical defi ciencies. Satisfying such demands promoted confi dence and stability in the economic system, which, Viner believed, held priority over governmental adherence in all cases to abstract economic theory.

Viner shared an instinctual support for free markets with Robbins, but he was much more willing to abandon his conservative inclinations to accommodate situational complexities and the po liti cal tenor of the time. “While I am more of a defeatist than you,” he confi ded to his close friend in 1940, “and am more disposed to be content when the lesser of evils is chosen instead of the true good, I am wholly and admiringly with you in your aims.” Robbins recognized and respected Viner’s reluctance to align himself with any abstract doctrine. “Jack was not a believer in any orthodox creed,” Robbins wrote in a retrospective on Viner’s career. “But he believed passionately in the liberal values: equality before the law, the maximum freedom for the individual compatible with similar privileges for his fellows, sympathy and help for the unfortunate.” Viner’s ideological fl exibility gained him a reputation for equanimity and respect for multiple points of view.

His fragile health left him an indifferent classroom teacher, defi ned largely by an outward appearance of indolence and a lack of interest in his less capable students’ ideas. Nevertheless, his strong engagement in matters of contemporary po liti cal debate, his unconventional points of view, and his greater proximity to the graduate students in both age and position garnered for him substantial infl uence. As a bachelor through much of his time at Chicago, he would gather with students in Hanley’s tavern on a weekly basis, where he came to play a central role in the doctoral experiences of many students who never took a course with him during their time at the university.

Through targeted acts of regulation and redistribution, he believed, the government could curb the cartelization and corresponding destabilization of the modern economic environment without excessively interfering with competitive business endeavors. His "positive program" suggested, for instance, that the government implement a "steeply progressive" income tax, which he believed would combat the concentration of economic power without obstructing the free play of marketplace competition. "Confi ning my remarks to matters of taxation, I may sound to you like a fullfl edged New Dealer, or something worse," he acknowledged in a speech before an audience of Republicans in 1938. "My criticism of the Roo se velt administration, in this special fi eld, is that it has been unduly backward and diffi dent about reform." And like Viner, he assailed the increasing centrality of giant corporations within the modern economic system, proposing a series of dramatic steps to discourage consolidation and return the basic structure of American business to a smaller scale. Simons's "positive program" presumed that the "great enemy of democracy is monopoly, in all its forms," and proposed counteracting this through a "complete 'new deal' with respect to the private corporation," which involved eliminating horizontal and restricting vertical integrations, as well as nationalizing "both the railroads and the utilities, and all other industries in which it is impossible to maintain effectively competitive conditions." He further proposed "direct limitations upon size, for the purpose of preventing unnecessary concentrations of power," asserting in justifi cation that "we have created Frankensteins. The best single remedy lies in drastic narrowing of corporate powers, with the purpose of facilitating use of the corporate form for the or ga ni za tion of enterprise and production, while preventing its use for sheer aggregation of businesses and concentration of power." Cumulatively, these ideas amounted to a complete reinvention of the corporate form that Simons hoped would counteract a trend toward consolidation and reshape the American economy around competitive small producers.

Simons was both more po liti cally engaged and a more strident public defender of capitalist forms of social or ga ni za tion than either Viner or Knight. As market advocacy began to gain traction after World War II, some of its leading fi gures therefore turned to his work in the hope of fi nding support for their ideas. They were appalled at what they discov- ered.

Such responses provide a reminder that the stridency of the later Chicago School was a product of change rather than constancy. Although the early Chicago economists viewed themselves as defenders of capitalism in a social environment that had rapidly turned hostile, they were convinced that it was a system that required moderation, regulation, and restraint. They were drawn to it more by skepticism of the available alternatives than by any confi dence in the desirability of the market ideal.

One further difference distinguished the faculty at Chicago from their colleagues in London: they did not conceive of themselves as a purposive group. Although some of their students would go on to ascribe a retrospective coherence to their time at Chicago, Knight, Viner, and Simons demonstrated only limited affi nity for one another and little sense that they considered themselves members of an ideological community. Years later Knight recalled the greatly differing interests of the Chicago economists in those years, declaring fl atly that there was no “Midway monolith.” Viner emphasized that he was never a conscious participant in any “school,” and that if one existed, his membership would have been tenuous. … Chicago economists in the interwar years were fashioned into a group through the loose refl ections of certain students, colleagues, and successors, but one can accept the term only by denying the contrary impressions of its ostensible members.

To Viner, the role of the academic was to provide dispassionate and, to the extent possible, objective analysis divorced from po liti cal ideology or rhetorical devices. He believed that Simons's work contravened these professional ideals, and he never altered this impression or perceived him as a peer or ally.

To assert that the early Chicago economists did not perceive themselves to be part of a coherent school, did not espouse a consistent ideological program, and did not even identify one another as peers engaged in a common endeavor is not to argue that they failed to have a decisive impact on their students and the economics profession during its most transformative years. Students' recollections of their educations at Chicago often take the form of a conversion narrative, even if the missionaries were reluctant and perhaps even unwitting in their roles. Time and again students remember entering Chicago as passionate socialists and departing as ardent advocates of the capitalist order. James Buchanan's experience is exemplary. After arriving at Chicago with a strong socialist orientation, he enrolled in Frank Knight's course on price theory. Knight was "not an ideologue, and he made no attempt to convert anybody," Buchanan recalls, but nevertheless, "within six weeks after enrollment in Frank Knight's course in price theory, I had been converted into a zealous advocate of the market order."

Robbins did not intend for his dictum to mean, as some at the time insinuated, that economists should refrain from any form of public engagement or philosophical argumentation. His major publications in the 1930s, including The Great Depression and Economic Planning and the International Order, were written to appeal to a general audience, and during the de cade he may have been the most po liti cally engaged of all the market advocates in Chicago and London. Rather, he was making the more limited claim that economists could not draw on their scientifi c work to arrive at any normative conclusions. If economists determined that free trade would lead more effi ciently to the wellbeing of the poor than protectionism, it would be appropriate for them to indicate as much, but they should not connect that analysis to any broader assertions about the ends that society should share.

Economists, he determined, were "entirely neutral between ends." Their role was to determine how to pursue predetermined goals with the greatest possible effi ciency. … Robbins's advice, to the extent that it was followed, served as a rhetorical straitjacket. Po liti cal debate, particularly in times of duress, relies heavily on the invocation of norms. Economists who adopt a selfdenying ordinance in regard to discussions of philosophical ends limit their public speech on economic matters to the discursive realm of technocratic expertise. As progressive reformers had discovered a generation earlier, the hold of scientifi c effi ciency on the pop u lar imagination is not strong.

His quarrel was with the nature of language itself: he was not willing to accept the intentional elisions that are entailed in the pro cess of expressing thought and experience in discernible signs. He regretted the linguistic mandate of reducing a complex world to much simpler sentences. … In his prose Knight responded to this problem by adopting a relentlessly paradoxical style that drew attention to its own elisions in order to gesture toward truths that resisted linguistic reduction. Needless to say, this approach remained uncommon within the economics profession.

Knight found himself, as he wrote in private correspondence in 1933, “bitterly disappointed and disgusted” with his colleagues within the discipline, seeing them as thinly disguised polemicists who leveraged their academic status to infl uence public debate on issues that remained controversial within the profession. The “headlong plunge of my colleagues in the social science professions here and elsewhere into po liti cal activity,” he asserted in a letter the following year, “seems to me the suicide of science.” It at once debased public debate and eroded the public's alreadylimited trust in the authority of experts.

Despite their personal and professional differences, Knight and Viner both sought to distance themselves from partisan debate and therefore held aloof from organizations they perceived to have an ideological agenda. They adopted this disinterested stance in deliberate opposition to the approach of their interventionist colleagues, whom they consistently criticized for their frequent engagements in politics and their willingness to validate matters of opinion with the mantle of science.

His disputes with Keynes in economic journals attracted broad attention within the profession, and he did not shy away from contributing to the ongoing socialist calculation debates. In both cases, however, he focused on analytic questions and avoided explicit invocations of broader philosophical claims. … His writing was still thematically abstruse, stylistically Germanic, and preoccupied with problems in capital theory that even many economists found diffi cult to comprehend.

In the early 1930s Hayek, too, was reluctant to connect economic analysis to any social or po liti cal ideology. He aligned himself with Robbins's methodological views, agreeing with his colleague's argument that economists should avoid claims to normative expertise. His inaugural lecture explicitly praised Robbins for having “so effectively impressed upon us, that science by itself can never prove what ought to be done.” He also agreed with Robbins's contention that the philosophical limitations of economics should not prevent its practitioners from participating in po liti cal debates. Because the economist's tools were needed to determine “the best policy” for achieving ends that were widely shared, Hayek concluded that it would be appropriate for economists to criticize proposals for social improvement if they “were not conducive to the desired end” or “policies of a radically different nature would bring about the desired result.”

Of all the leading market advocates in the economics profession during the 1930s, however, he was the least rigid in his interpretation of academic disinterestedness. He readily accepted invitations to give public lectures on matters of relevance to politics. His essays had a consistent po liti cal orientation and a strong rhetorical dimension, and his only major book, the posthumously published Economic Policy for a Free Society, consisted of a loosely related collection of po liti cal tracts. Although he was anxious to avoid association with any ideological dogma, he openly positioned himself as a policy thinker concerned primarily with ideas that were relevant to contemporary po liti cal problems.

In pursuing his po liti cal goals, Simons strategically framed the presen ta tion of his ideas in order to maximize their rhetorical effect. By proposing a graduated income tax, for instance, Simons believed that he gained reformist credibility without needing to sacrifi ce matters of foundational principle. “We old fashioned liberals have, at best, a hard time avoiding pop u lar classifi cation as reactionaries,” he wrote to Frank Knox at the Chicago Daily News in 1939. “Taxation, notably as to exempt securities and capital gains, is one of the few areas where we can talk in what is recognized to be ‘progressive’ language— without compromising at all on our freemarket position.” He demonstrated a similar degree of tactical selfconsciousness in his discussions of corporate power. “The present size of our great corporations, what ever the real economic effects, does place the economist liberal at an awful disadvantage in any discussion or debate,” he wrote to Trygve Hoff in 1939.199 In attacking the size of modern corporations, Simons hoped to undermine a persuasive component of progressive economic critiques. Further, he was willing to think of himself as part of a selfconscious co ali tion that shared certain defi ned po liti cal goals. “We liberals must stick together,” he wrote in one letter, “and not dissipate our small infl uence by arguing too vigorously the partic u lar points on which we may disagree.”

In the de cade after the publication of the book, this developing movement culture manifested itself in a variety of institutional forms. The fi rst international gathering to discuss “neoliberal” ideas was held in Paris in August 1938, in celebration of the publication of a French translation of Lippmann’s book. In subsequent years the Centre International d’Études pour la Rénovation du Libéralisme was founded in Paris; the Free Market Study was established in association with the Economics Department at the University of Chicago; Wilhelm Röpke worked from Geneva, ultimately without success, to raise money to support an international journal of liberal ideas; and Friedrich Hayek prepared the groundwork for the fi rst meeting of what became the Mont Pèlerin Society in Switzerland in 1947. … Many of these attempts were to varying degrees uncertain, lurching, and transient, and until the establishment of the Mont Pèlerin Society none of the institutions managed to fulfi ll their original mandates or to become established on a permanent basis.

This is a narrative about a network of small groups, which were isolated in specifi c universities and commensurately marginalized from national debate, developing the capacity to act as a broad and diverse community by conceiving of their project in supranational terms. Contemporary scholarship often treats community and global society in antipodal terms, but in the case of ideologies in abeyance the very possibility of community can depend on structures developed on a global scale.

The eventual successes of the neoliberal movement have made it challenging for contemporary readers to recognize the sense of uncertainty that impelled its early years. Between the two world wars it remained very much in abeyance, as a limited cohort of advocates struggled both to defi ne their ideas and to prepare them for an eventual resurgence.

In the years that preceded the publication of The Good Society, Walter Lippmann did not seem a likely advocate for freemarket ideas. He had become known early in his career, through both his books and his longtime association with the New Republic, as an advocate of scientifi c management and interventionary economic policies. Having helped arrange the serialization of The Economic Consequences of the Peace in the New Republic more than a de cade earlier, Lippmann maintained a close friendship with John Maynard Keynes that he later recalled as “one of the happiest of my life.” And after a period of initial skepticism, he had openly embraced Franklin Roo se velt’s economic program, telling him in the period between the election and the inauguration that he “may have no alternative but to assume dictatorial powers” and vigorously advocating the policies of the early New Deal. Lippmann’s only link to economic conservatism was through a recent institutional affi liation: in the fall of 1931 his career as executive editor of the New York World concluded with the newspaper’s demise, and he accepted a new position as a columnist at the staunchly Republican New York Herald Tribune.

Once Lippmann delivered the Godkin Lectures at Harvard in May 1934, however, it became apparent that his perspective on both the New Deal and economic planning was beginning to change. Like his earlier work, these lectures manifested an unremitting skepticism about the practicability of laissezfaire, which he analogized to “a man condemned who is reprieved repeatedly because he works miracles.” Lippmann argued that capitalism was sustained by the rising standard of living it enabled, but that improvements in living conditions had increased the price of social order from the full dinner pail to the twocar garage in a matter of de cades. Such an order, he concluded, “is inherently unstable.” But his perspective was infl ected by a new goal: he hoped to identify, in light of this instability, a foundation on which to preserve the viability of a capitalist economy. His attention now centered on the task of generating a “defense of liberty” that was grounded, unlike its nineteenthcentury pre de ces sors, in “positive convictions and affi rmative principles.” This would require identifying a “form of control” that was “compatible with the variability, the complexity, and the dynamic character of the capitalist order.” For this vision Lippmann adopted the uneasy label “free collectivism,” which he described as the doctrine of a state that maintained responsibility for “the operation of the economic order as a whole” while preserving “within very wide limits the liberty of private transactions.”

By the time Lippmann published The Good Society, which was partially serialized in the Atlantic Monthly before its fi nal publication in the fall of 1937, he had traveled further along the path that the Godkin Lectures had set. The transformation was partially inspired, he acknowledged in the opening pages of the book, by his readings in Austrian economics, and in par tic u lar by a volume edited by Hayek and published in 1935, Collectivist Economic Planning. “In a crude way I had discerned the inherent diffi culty of the planned economy,” Lippmann wrote to Hayek as the fi nal proofs of the book were being submitted to the publisher, “but without the help I have received from you and from Professor von Mises, I could never have developed the argument.” On the American side Lippmann had been “greatly helped” by his readings of Henry Simons's essays and pamphlets, and the two of them had initiated an active correspondence.

The most savage of these assessments came in a private letter from the historian Charles Beard to Maury Maverick, a Demo cratic congressman from Texas who had been asked to review The Good Society for Little, Brown. Since joining the Herald Tribune, Beard wrote, Lippmann had “been going Right as fast as his supple legs will take him.” But he rejected “the idea that Lippmann has sold out to the rich. Some men do not sell out. They go over gradually through association. They are buttered by fl attery. They sink softly into soft carpets and cushions. Having no steel in their systems, having never slept on the hard ground, they hanker after those things that tend to effeminacy, and plutocracy provides just those things.” Lippmann's writing, Beard asserted, exhibited the “odor of a sickly humanism as thick as the smell of magnolia blossoms which apologists of the good old days in the South spread over the sweat of slave gangs.”

The book, John Dewey wrote in Common Sense, gives "encouragement and practical support to reactionaries," in part by identifying "every form of socialism and collectivism with state or governmental socialism." Lewis Mumford complained of Lippmann's "strange collectivist heresy hunt," in which he posited the only social options as a free economy and a militarized collectivism. And Charles Merriam expressed his consternation about "an attempt to state a theory and formulate a practice of neoliberalism" that demonstrated "illiberalism and intolerance toward those who differ from the new credo." Lippmann's refusal to accept the legitimacy of gradations of planning lent a potent sense of urgency to his rhetoric, which in turn troubled those who did not share his manifest belief in the contemporary dangers of nuance.

“Who were the callous Liberals of the late nineteenth century?” W. H. Hutt asked in the South African Journal of Economics, speculating that Lippmann was here showing a failure to overcome dubious “ideas which he absorbed as a young man and cultivated as editor of The New Republic.” Herbert Spencer, Hutt further complained, had become “an Aunt Sally,” and those who read the muchdisparaged members of the Manchester School would fi nd them to be paragons of disinterested idealism.

Lippmann railed against “Adam Smith fundamentalism,” which he identifi ed as a product of the distortionary excesses of the fi rst half of the nineteenth century and “a philosophy of neglect and refusal to proceed with social adaptation.” As Henry Steele Commager observed a de cade later, the book elaborates a perspective that is “closer to Huxley than to Spencer, to Ward than to Sumner,” and “its most deadly attack was leveled not against government but against that perversion of classical economics which masqueraded as liberalism.”

In an incredulous overview in the Yale Review, Ralph Barton Perry observed that “Mr. Lippmann could not very well have attacked the New Deal directly because, item by item, he accepts the greater part of it.”

If all forms of planning were tantamount to totalitarianism, and nineteenthcentury laissezfaire was a bankrupt ideology, how could one identify an appropriate scope of intervention for the state? The distinction between collectivists and intelligent interventionists was vague at best: in critiquing the former, Lippmann appeared skeptical of virtually all forms of economic intervention; and in extolling the latter, he appeared to advocate dramatic redistributions of income and vigorous government action that paralleled many of the policies enacted in the course of the early New Deal.

Both Frank Knight and Henry Simons extolled the book as a major event and a brilliant contribution to contemporary debates about the appropriate scope of governmental interference in the economy, but expressed concerns that it was— paradoxically—excessively optimistic in its interpretation of the prospects for reform and insuffi ciently critical in its accep tance of certain laissezfaire principles.

Keynes was "irresponsible and untrustworthy" to members of the liberal movement, he warned, and the General Theory had potential as an "economic bible of a fascist movement."

It should be noted, however, that neither Knight nor Simons listed Hayek among those who advocated “extreme” policies in support of laissezfaire. At the time The Good Society was written, Hayek was beginning to turn away from his earlier focus on capital theory and toward the development of a broader social philosophy. To an extraordinary degree, The Good Society established the framework for the arguments adopted by market advocates in the subsequent de cade, and in par tic u lar for the po liti cal project that Hayek began to conceive in the wake of its publication. “No human mind has ever understood the whole scheme of a society,” Lippmann stated in The Good Society, in a critique of socialscientifi c rationalism that would become central to Hayek’s thought in the ensuing de cades. “At best a mind can understand its own version of the scheme, something much thinner, which bears to reality some such relation as a silhouette to a man.” He attributed this basic insight to eighteenthcentury intellectuals, most notably Adam Smith, whose thought he sought to protect from the parodies that had emerged in the intervening years. Presaging Hayek’s essays of the early 1940s, he disparaged Spencer and Mill, and contrasted the failures of nineteenthcentury laissezfaire with what he perceived to be the richer and more nuanced conception of liberty that emerged in the Scottish Enlightenment. And, foreshadowing Hayek’s central argument in The Constitution of Liberty, 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.

His enthusiasm was shared, with only limited qualifi cations, across the transatlantic network of classical liberals with whom Hayek maintained active communication during his time at the London School of Economics. To have a journalist of Lippmann's stature parroting and, still more remarkably, helping form their views was an extraordinary event. As Charles Beard noted in his epistolary skewering that autumn, it "is a rare fi nd for them to catch a Lippmann and they are tickled to death, like a child with new boots."

Hayek's response to the proofs of The Good Society expressed, in contrast to the positive but somewhat more reserved reviews from Knight and Simons, an unqualifi ed endorsement of Lippmann's arguments. Hayek wrote to Lippmann that he expected from his readings of the serialized portions of the book that he would "be in complete agreement with the critical parts," but it was "a pleasant surprise that I found myself in almost equally complete agreement, even to points of detail, with the constitution section." He went so far as to express par tic u lar enthusiasm for Lippmann's positive proposals, noting that he had "always regarded it as the fatal error of classical Liberalism that it interpreted the rule that the state should only provide a semipermanent framework most conducive to the effi cient working of private institutions as meaning that the existing legal framework must be regarded as unalterable." In one of the rarest of scholarly experiences, Hayek had found a book that perfectly conformed with his evolving views.

In the months preceding the publication of Lippmann's book, the German economist Wilhelm Röpke wrote separate letters to Lionel Robbins, Karl Brandt, and Friedrich Hayek all lauding the apparent "convergence" of their respective views. Röpke was eager to fi nd allies: he had risen rapidly to a chair at the University of Marburg at the age of thirty, but his forthright criticism of the Nazis had cost him his job soon after the implementation of their Law to Restore the Professional Civil Ser vice. After a short stay in Turkey, he had recently joined the faculty of William Rappard's nascent Institute for International Studies in Geneva. Although Röpke had been more open than his colleagues at the LSE to public investment as a means of combating the Great Depression, he substantially agreed with their diagnoses of the causes of the crisis and shared their anxiety about the global drift toward authoritarianism.

In this atmosphere the publication of a book that could capture some portion of the pop u lar imagination was a potentially transformative event. Upon the publication of The Good Society, Röpke wrote directly to Lippmann to herald its appearance as a moment of transition. “I state with unmitigated enthusiasm that you have given masterful expression to ideas which are in the minds of that all too small circle of thinking Liberals and that you have added new and weighty ideas.” Lippmann, in publishing The Good Society, heralded the possible emergence of a new moment for those who had committed themselves to a revitalized liberalism: a time when what seemed to have been a desperate errand into the wilderness began to yield precursory results.

The perception that a unique opportunity was at hand inspired the pivotal question of how best to take advantage of it. Hayek, Röpke, and their peers faced the fundamental challenge of attempting to transform a felt consonance of opinion among a small network of individuals— in some cases separated, as Röpke noted in his letter to Stanford economist Karl Brandt, by “a continent and an ocean”— into a coherent movement. This was further complicated by per sis tent ambiguities about what the goals of such a community would be. As the reviews of Lippmann’s The Good Society had revealed, dual criticisms of laissezfaire and creeping collectivism had yet to yield a clear repre sen ta tion of what fi scal and social policies one could advocate. And as a community consisting primarily of academics, they remained committed to ideological change but deeply uncertain about how to transform their isolated theoretical ideas into effective po liti cal praxis.

Hayek’s primary idea, as he articulated it to Lippmann, was to create an “international or ga ni za tion of liberal economists” that would center on “collaboration in some sort of international journal entirely devoted to the problems arising out of the rational construction of a ‘Good Society.’ ” Röpke, on the other hand, wanted “a thorough discussion of the main issues involved (the Agenda of Liberalism, its failures in the past, the larger so cio log i cal problems etc.).” He elaborated on his idea in a letter to Lippmann in the early fall: “I believe the next step should be to organise, in one form or another, a discussion among the few people in the world whose thoughts in these matters have reached the necessary degree of maturity.” He liked Hayek’s idea of “a special periodical or series of pamphlets,” but he worried “that an enterprise of this sort would lack the indispensable unity and direction without the personal touch and the thoroughgoing discussion which only a small conference could provide.”

As the po liti cal crisis of the early 1930s accelerated, however, Rougier's attentions began to drift away from neopositivist critiques of theology and toward what he perceived to be contemporary "mystiques," or doctrines that "one would not know how to demonstrate by reason or to ground in experience, but that one accepts blindly for irrational motives." He viewed this endeavor as very much connected to his previous philosophical project: an attempt to identify logical fallacies that had permeated the pop u lar imagination, and in doing so to rescue and demarcate the proper spheres of scientifi c inquiry.

Rougier began to put forward a more explicit agenda in his article “Retour au libéralisme” in the Revue de Paris at the beginning of 1938 and a book, Les mystiques économiques, that followed months later. These two texts lament the apparent devolution of po liti cal debate to a choice between fascism and communism, both of which he perceived to renounce the advantages of a liberal system: namely, the division of labor, the circulation of capital, the cosmopolitanism of culture, the dignity of the individual conceived as an end, the security provided by a stable judicial system, the free choice of consumers, and the freedom of thought. … He shared Lippmann’s belief that new economic solutions would require overcoming a static adoption of laissezfaire, which he labeled “la mystique libérale.”

In the ensuing weeks Rougier successfully persuaded Lippmann not to avoid future mutual endeavors, and in mid- July he sent a circular notice to potential participants in a conference centering on a discussion of Lippmann's The Good Society that he had scheduled for late August. The proposed "Conférence Walter Lippmann" (later formally christened the "Colloque Walter Lippmann") would be designed "to discuss the principal theses of this work relative to the decline of liberalism and to the conditions of a return to a renovated liberal order distinct from Manchester laissez faire." … Before Lippmann returned to America, and with a sense that the window of opportunity for effective action was rapidly closing, Rougier hoped to have established a formal program for future work on the creation of a new and constructive liberalism.

The continual focus on matters of wording at the “Colloque Lippmann,” which might seem at fi rst consideration trivial, attested to the importance of developing a single rubric to encompass the various members of an ideological group. The relationship between movements and terminology is reciprocal: just as movements create terms to describe the projects they have undertaken, terms provide a conceptual umbrella around which their disparate members can unite. Later generations would develop additional allegiances around the terms “classical liberalism,” “libertarianism,” and “conservatism” and engage in ongoing battles about how best to defi ne the set of beliefs they shared. The failure of the participants in the “Colloque Lippmann” at this moment to name themselves generated a problem that would plague the movement in later years, as in the absence of a shared reference its members increasingly identifi ed themselves with divergent labels and focused intensively on the differences their respective choices entailed.

The participants in the conference were committed to the rehabilitation of the market mechanism and to the advocacy of a social structure that preserved— with some necessary caveats and limitations— a general framework for free discussion and exchange. But they largely agreed that the previous philosophical vehicle for this system of beliefs, which they alternately described as “liberalism” or “laissezfaire,” had proved itself unsustainable as an abstract framework for the ordering of social interaction. They were therefore committed to the idea of a “revised,” “progressive,” “constructive,” “new” liberalism without having yet identifi ed precisely what the revisions entailed. Much as Lippmann, in The Good Society, struggled to outline a “positive” program that did not seem to advocate the policies that his critique of socialism condemned, the participants in the “Colloque Lippmann” had diffi culties identifying constructive “revisions” that did not violate the philosophy they were attempting to save.

Mises, Fritz Machlup wrote privately to Hayek in November 1940, was a "problem child." "You know how diffi cult it is to make him listen to an opponent's argument and discuss it in a friendly spirit," he added in another letter months later. "Now you can imagine that discussions in these times require more patience and less dogmatism— and that people do not stand for Mises' lack of the former and excess of the latter. This is why I have little hope for him."

If Rüstow believed that liberalism required a dramatic revision of its very philosophical foundations, the members of this group appeared suspicious of the notion that it required any substantial revision at all. This uncritical adherence to liberalism was not broadly accepted within the "Colloque Lippmann," however, and its advocates remained a vocal and dissatisfi ed minority.

In the years after the "Colloque Lippmann" this group found itself increasingly marginalized from the movement's ongoing debates. Mises's refusals to compromise his "pure" version of liberalism left him engaged in ever fewer dialogues, and made it impossible for him to fi nd an academic position commensurate with his professional prestige after he fl ed Switzerland for the United States at the end of the de cade.

Discussions at the "Colloque Lippmann" remained vague and broad because of both the relative brevity of the individual contributions and a general sense of uncertainty about whether the conversation should focus on a reexamination of foundational principles or a discussion of practical policies. … The primary task of the meeting, however, was to establish an agenda for the future of the movement itself, and about that the participants remained in broad agreement.

Such shared lines of inquiry, Rougier thought, would be strengthened by contributions from liberals committed to varying degrees of intervention, but would need to exclude nonliberals in order to “avoid falling into incoherence.”

Rougier proposed pursuing this agenda through a new institution named, at the suggestion of Marcel Bourgeois, the Centre International d'Études pour la Rénovation du Libéralisme. … The goal of the center, Rougier revealed in a subsequent document, was to identify a role for the state that manifested “not the indifference of a spectator, but the neutrality of an arbitrator” who would protect “the rules of the game.” Its vision would be “progressive” rather than “conservative,” in the sense that it would promote a social vision based on “perpetual adaptation.” Rougier's “Manifesto” for the center, which was lifted verbatim from a pre sen ta tion Walter Lippmann delivered at the “Colloque,” carved out a substantial role for state intervention, specifi cally identifying fi ve areas where tax revenues should be distributed: national defense, social insurance, social ser vices, education, and scientifi c research. … It was vital, Rougier added, that it be selffi nanced, relying on “subscriptions, grants, or donations” that were “impartial, unconditional, not imposing any moral or intellectual constraint.”

Their intellectual priorities had shifted, commensurately, from propagation to preservation, and the simple act of maintaining contact with the outside world became a daily struggle. Hayek, in par tic u lar, lamented his diffi culties in preserving extranational relationships and sources of information. “Correspondence with America takes a very long time and is unreliable, foreign books are of course about impossible to get and one begins to be really poor,” he told Röpke in April 1941.

The sense of panic and dismay that isolation inspired was only enhanced by the per sis tent conviction that the ideological program they had discussed at the “Colloque Lippmann” remained unpop u lar and obscure. The “trend everywhere,” Röpke observed in 1939, “is decidedly in the direction of Collectivism and Totalitarianism,” such that even En gland was “highly pathological” and the United States perhaps even worse. Émigrés in the United States, like Machlup and Mises, reported that the “Veblen- Hansen ideology dominates public opinion in this country” and subsumed the entire generation of economists under the age of forty.

The book that Wilhelm Röpke published in the midst of the war, The Social Crisis of Our Time, was permeated with this sense of crisis. “There is unanimous agreement,” he wrote, that the current age was distinguished by its “unequalled moral and intellectual de cadence,” “spiritual chaos,” and “boundless relativism.” Röpke, however, preserved some of the optimism that had accompanied the fi rst gathering of revisionary liberals four years before. A “vanguard— perhaps small as yet and by no means very certain of itself” was formulating a “new spiritual development . . . quietly and far from the noise of the great stage of the world where the last act of the old drama is still being played out.” His book was intended as both a diagnosis of the ills affl icting contemporary civilization and a programmatic statement of possible solutions to be implemented in the coming years. Its brisk pace of sales— over 6,000 copies were purchased within German Switzerland alone in the fi rst few weeks after publication, necessitating an immediate second edition— spoke to the war time appetite for didactic assessments of the contemporary social crisis.

One of the fi rst people Röpke contacted when he began developing his plans for a new journal was Walter Lippmann. After learning of Röpke’s proposal, Lippmann elected not to become involved. Hayek also developed “rather the impression that [Lippmann] deliberately avoided meeting me when I was in the States last Spring,” adding that “he has certainly kept very aloof from our other friends in America with whom he used to agree.” Together, he and Röpke concluded that Lippmann was “unpredictable,” subject to “ever more doubts,” and moving in the “wrong direction.” Despite Lippmann’s central role in the movement’s foundational period, he would never again engage directly and purposively with the members of their intellectual community. He extricated himself from the neoliberal movement at the very moment when it began to establish the durable structures that would lay the groundwork for its pop u lar success. This deliberate disengagement has led most histories of neoliberalism to ignore Lippmann, like Rougier.

The major fi gures in this story— Lippmann, Rougier, Röpke, and Hayek— sought with per sis tence and creativity to develop the structures that they believed would be most effective at sustaining an ideology that had fallen into abeyance. The success of their endeavors relied on an entrepreneurial capacity to conceive of new modes of or ga ni za tion and to bear the practical diffi culties and reputational risk of their implementation. The willingness of these individuals to devote their energies to the task is a testament to the importance they attributed to the mere existence of a forum for debate. Considering the goals they were attempting to achieve, they devoted remarkably little discussion or consideration to the complex relationship between ideas and politics. Their practices, however, attest to a belief that ideological change was not best precipitated by solitary individuals; the success or failure of their project would depend, they implicitly acknowledged, on a deliberate act of collaboration.

The late 1940s proved to be a unique moment of optimism within a movement that had previously tended to adopt an apocalyptic tone. The trials and restrictions of the preceding de cade had fostered a sense that renewed contacts carried infi nite possibilities, and the prospect of establishing durable institutions inspired a sense of momentum that had remained elusive in the past. The central fi gures appeared to believe that fi nally, after years of broken contacts and projects conceived but left undone, it would be possible to commence the philosophical task they had established for themselves shortly before the onset of war. With all distractions and disruptions concluded, the real work of reconstructing liberalism could begin.

Upon his arrival in the United States, Hayek was stunned to discover that his celebrity had increased dramatically during his time at sea. The catalyst was an abridgment by the Reader's Digest.

A commercial lecture agency had lined up an array of public lectures across eleven states, beginning with a radio address to an overfl ow crowd of more than 3,000 the day after his arrival in New York. Hayek maintained the cultivated reserve and unabashed elitism of a Viennese aristocrat, and did not take well to this new position. An interviewer at the time dwelled on his “purely academic” demeanor, and an observer at his fi rst press conference recounted that he had “small, sensitive hands which he seemed at a loss to know what to do with when he was not lighting his lowslung briar pipe.” De cades later Hayek recalled his shock at the dictating machines and microphones that greeted him at his fi rst public event. Hayek’s uneasy relationship with his pop ular persona had begun.

From the beginning, he found the textual life of The Road to Serfdom diffi cult to control. As he repeatedly observed, his message did not always align with its depiction in the hands of its advocates. In par tic u lar, he grew frustrated at a tendency among his more reactionary readers to disregard all his caveats and qualifi cations in order to represent the text as a call for a return to laissezfaire. It is not diffi cult to understand the source of this interpretation: much of The Road to Serfdom’s rhetorical force derived from its critique of central planning, and at various points Hayek did appear to advocate for the radical attenuation of the state. … Drawing on his background as an Austrian émigré, he argued that fascism was a “necessary outcome” of socialist trends that were now emerging in even the liberal bastions of the Anglo- American world, and he depicted any social philosophy that disrupted “freedom in economic affairs” as a step toward the arrival of a totalitarian state. Further, he appeared to reject the possibi lity of a middle way, arguing that both “competition and central direction become poor and ineffi cient tools if they are incomplete.” Such absolutist language led a substantial subset of his readers to derive the message that the government should abstain from intervention altogether.

Both were drawn to the text in part for ideological reasons: Eastman was a recent convert from socialism and one of Stalinist Rus sia's most prominent critics, while Wallace was a staunch anticommunist who had recently guided his magazine, as the sympathetic editor of the Saturday Review of Literature observed, on "a conspicuous list to the extreme Right." In their reworking of The Road to Serfdom Hayek's style was simplifi ed and dramatized, his observations were reordered and reconnected, and new sentences were written to impart an appearance of seamlessness to disconnected snippets. As a result, many of Hayek's qualifi cations were lost. As one critic observed, the text itself had become an enactment of readers' tendencies to take sentences out of context in order to support their own point of view.

Over a million orders for the reprint version were placed, many by corporations and their advocacy groups, dwarfi ng the 40,000 copies of the original version that had been sold. Employees of companies including General Motors and New Jersey Power and Light received copies courtesy of their managers. Look published a cartoon version, which was reprinted shortly thereafter in the General Electric Company's magazine. The National Association of Manufacturers, eager to expand its public relations activities as the war approached a close, mailed free copies to all of its 14,000 members.

Meanwhile, moderate business organizations like the Committee for Economic Development chose to keep their distance because Hayek had developed a reputation as— in the words of one observer—"a madetoorder hand grenade for conservatives to hurl at planners."

Hayek had become a symbolic fi gure, appropriated to serve as a public relations tool and source of intellectual legitimation for critics of the New Deal state and as an emblem of reactionary excess to its more numerous defenders. As the frequent invocations of Hayek in the contemporary media attest, these roles have continued to defi ne his public image ever since.

In the de cades that followed, Hayek expressed dismay at the prevalence of this interpretation. He repudiated it in his book Law, Legislation and Liberty, inveighed against it in his introduction to the 1976 edition of The Road to Serfdom, and privately wrote Paul Samuelson in 1980 to excoriate him for propounding it in his widely read textbook Foundations of Economic Analysis. This “myth,” he told Samuelson, had “prevented people from taking my argument seriously.” As Hayek repeatedly reminded his interpreters, his book both renounced any claims to inevitability and assailed the “wooden insistence” with which previous generations of liberals had clung to laissezfaire. Like Walter Lippmann’s Inquiry into the Principles of the Good Society before the war, The Road to Serfdom was premised on a belief that one could engage in a vigorous critique of planning without rejecting government intervention altogether.

Upon its initial publication, most of the book’s reviewers acknowledged that Hayek’s argument countenanced a substantial role for the government. A. C. Pigou observed in the Economic Journal that Hayek thought that the state should do a “great deal,” John Davenport pointed out in Fortune that his argument was compatible with a “fi scal policy aimed to eliminate the worst features of boom and slump,” the American Mercury noted his advocacy of a “guarantee of minimum standards of living,” and the Po liti cal Science Quarterly drew attention to his statements in favor of a “comprehensive social security or ga ni za tion.” If “a list were made of all the forms of purposive direction which are blessed in the course of the book,” the Economist observed, “it would be seen that Professor Hayek does not want to go back, but quite a long way forward.” Even Keynes recognized the book’s openness to public investment, writing Hayek in private correspondence that he found himself “in agreement with virtually the whole of it; and not only in agreement with it, but in a deeply moved agreement.” Hayek himself used radio addresses and pop u lar interviews to draw attention to the positive aspects of his program, urging that “security against severe privations” was an essential part of any government that sought to sustain itself. Like Frank Knight, he worried that a society that failed to fulfi ll these basic needs would inspire uncontrollable levels of pop u lar discontent. “I would rather have a little planning now to prevent much worse planning, and possibly authoritarian controls, later,” he told one interviewer.

The problem Hayek’s more careful readers faced was how to reconcile all the positive programs he apparently condoned with his stark warnings about the dangers of planning and the unacceptability of a middle way. Hayek did little to resolve such questions in The Road to Serfdom beyond stating enigmatically that he advocated “planning for competition” rather than “planning against competition.” Keynes privately warned Hayek that his denunciations of laissezfaire did not align with his insinuations that any planning would lead down a “slippery path” to the socialist state. Others publicly savaged him for this vagueness on what seemed to them the central question of the book: one critic found him “strangely” silent on the specifi c mea sures to which he objected, another could not fi nd “the manner of distinguishing between good planning and bad planning,” and a third observed that one would “hunt in vain” for any “concrete” vision. One reviewer concluded that this muddle was a “great weakness of the book.” It also left Hayek’s argument highly susceptible to interpretive sleights of hand, as readers emphasized his strong language in portions of the book without acknowledging the caveats couched in others. The Road to Serfdom demonstrated a propensity, Harper’s noted, for being “accepted in fragments and misused for childishly partisan purposes.”

Hayek recognized that his ideas would develop a broad and durable base of support only if they were supported by intellectuals from a range of disciplines and national backgrounds. Most urgently, he sought to reconvene his growing network of allies and supporters on a more permanent basis.

In developing his vision, Hayek drew directly on the plan to develop an international liberal journal that Wilhelm Röpke had conceived and then abandoned as the war drew to a close. Like Röpke's proposed publication, this new society would aim to escape a narrow economism and would focus its attention more broadly on "the observance of universally valid moral standards in politics" and "the common background of ideas and values which a civilization needs to survive." … Its membership would be broad based, consisting of individuals who agreed on certain basic principles but disagreed about many presentday po liti cal issues, because Hayek found par tic u lar value in those who could speak in a language persuasive to the Left.

The organisation which seems to be needed is something halfway between a scholarly association and a po liti cal society," he said. "It would differ from a purely scientifi c group in that its members would be held together by a basic agreement on the aims for which they are seeking the means. And it would differ from any po liti cal organisation in that it would not be concerned with short run policies, or even with the peculiar problems of par tic u lar countries, but with the general principles of a liberal order." He described it as "a kind of International Academy of Po liti cal Philosophy," or more specifi cally as "a closed society, whose members would be bound together by common convictions and try both to develop this common philosophy and to spread its understanding."

Ludwig von Mises, who had become a lonely advocate within their intellectual community for an uncompromising laissezfaire. The “weak point” of such a society, Mises argued, was that it relied “upon the cooperation of many men who are known for their endorsement of interventionism.” In doing so, he argued, the group would lend credence to the idea that advocates of freedom should place limits on the market mechanism. Mises wanted his colleagues’ veneration of the market to be absolute and was frustrated by their accommodationist instincts. Over the subsequent de cade he would alienate many of his friends and colleagues with vitriolic attacks on their departures from ideological purity.

Examining how Hayek approached the problem of funding provides some insights into the status of fi nancial support for conservative po litical ideas in the late 1940s. Today we live in a world with a vast array of rightwing ideological funding organizations, but in the immediate postwar period advocacy organizations with an explicit po liti cal agenda were unusual, and those with a freemarket orientation were rarer still. The existing policy institutes, such as the Brookings Institution, were largely Progressiveera enterprises designed to provide “objective” advice on making government more rational and effi cient. Although these organizations were by no means unfriendly to business— Brookings, in par tic u lar, was known for its critical response to the New Deal— Hayek believed that they were much more forthcoming to moderate and leftleaning intellectuals than to market advocates like himself. “While I see daily how for the international contacts of the leftish groups, and particularly the Communists, almost unlimited means seem to be available and in consequence the closest coordination of their systematic efforts possible,” he complained to a potential funder, Jasper Crane of DuPont, in 1949, “I have so far failed to obtain any funds to speak of for similar endeavours on the liberal side.”

Hayek had only limited willingness to engage in the more tedious aspects of administration, and his reservoirs of energy were not limitless; his family recalled his inability to wear a selfwinding watch because of its failure to function as he sat motionless for hours in his study.

Hunold proved to be an invaluable source of both administrative and fundraising support. He was able to draw on contacts cultivated throughout a disparate career as a schoolmaster, a university assistant, a radio commentator, a secretary of the stock exchange, a bank director, and a publicity executive in the watch industry to fi nd a set of Swiss institutions that were willing to sponsor regional meetings. Despite his lack of substantial personal wealth, he worked doggedly to convince colleagues and connections to provide periodic support to visiting academics. Further, his high degree of interest in Hayek's project led him to take on basic or gan i za tion al tasks that his academic colleague was not competent to fulfi ll.

At the time Hayek told Röpke in no uncertain terms that "the person who holds the purse strings will exercise a certain infl uence," and that he should not allow related concerns to lead him to abandon an essential source of support.

Although support for this meeting was not inexpensive, it represented a very small subset of the fund’s bottom line. During the late 1940s and 1950s the fund was dispensing over $1 million per year, and its administrators used these resources to provide support to market advocates in a variety of ways. They underwrote the salaries of Mises at New York University and Hayek at the University of Chicago, providing institutional bases in America for the most prominent international opponents of governmental intervention. They supported a series of institutions that were designed to foster communication among academics and students who opposed economic planning, including the Free Market Study at the University of Chicago, a rotating series of summer conferences and academies, and Hayek’s proposed society. Through a committee of four affi liated readers— Murray Rothbard, Frank Meyer, Rose Wilder Lane, and George de Huszar— they also sought out individuals who published arguments that corresponded with their stated ideals. After performing careful analyses of prior publications, they would send unsolicited fi - nancial support as a source of encouragement for further writing and research. Building on Hayek’s insights about the relationship between ideas and po liti cal change, the fund’s administrators designed it to provide an institutional glue that would allow disparate sympathizers to coalesce in support of an unconventional worldview.

Many of Hayek’s colleagues expressed concerns about the sources of funding for his proposed endeavor, and he was quick to reassure them that “no strings of any kind have been attached.” In return for the fi - nancial support, however, Luhnow did expect to have some say over who would be invited to make the transatlantic journey. When he saw the list of prospective invitees, he was quick to express his dis plea sure over names that he thought were insuffi ciently forceful in their defense of the market mechanism. “Frankly,” he wrote to Hayek in January 1947, “some of the reactions that I have had on one or two of your suggestions are such that I know the Directors of the Volker Charities Fund would not be interested in paying their travelling expenses anywhere.” Hayek quietly excised the most offensive names from a subsequent version of the list. The Volker Fund had successfully leveraged its fi nancial support to narrow the ideological horizons of the society Hayek was hoping to found.

Hayek, meanwhile, proved skilled at the dual task of reassuring colleagues of the unimpeachability of the funding sources while making limited adjustments to preserve the necessary support. He had demonstrated himself to be an institution builder with a crucial combination of qualities: an entrepreneurial ability to conceive and execute complex and potentially controversial plans, an academic background and reputation that reassured his colleagues about the nature of the enterprise, and a capacity to accommodate the needs of funding organizations without appearing wholly subject to their demands.

Hayek was very explicit in his correspondence with funders about the long time horizon over which its infl uence should be evaluated. “I . . . freely admit,” Hayek wrote, “that I neither expect immediate results nor believe that any efforts which aim at immediate results are likely to change the general trend of opinion.” Instead, he drew on his background at the London School of Economics to adopt a deliberately Fabian approach to the advancement of social change. The relationship between the society and its members would, Hayek hoped, be much like the relationship between a wellconstructed legal order and its constituents: it would merely provide a framework that enabled the individuals involved to pursue their projects aided by the greatest possible degree of mutually benefi cial interaction. “ ‘Organisation’ in the intellectual sphere must consist mainly in providing channels and facilities of communication,” he wrote, “of bringing together the people whose common outlook and interests make fruitful collaboration possible, not in ‘organising’ the work to be done which must grow freely out of the contacts and exchange of opinions.” The genius of such a structure would consist in the very limitations it set on itself. Hayek believed that the most effective way to inspire social change would be to avoid any explicit attempt to pursue it.

On a Tuesday morning in the early spring of 1947, Hayek convened a group of thirtynine colleagues in a hotel near Vevey, Switzerland, at the base of Mont Pèlerin. … In an era when transatlantic fl ights remained too expensive for many to afford, they had crossed the Atlantic in ocean liners and had discovered upon their arrival a Eu rope still ravaged by the war. The winter of 1947 had brought famine, freezing weather, impassable roads, shortages of coal, and growing concerns about spiritual malaise and economic stagnation. In the midst of this devastation, Switzerland’s war time neutrality had turned it into an oasis of relative prosperity. The resort where they would spend the next ten days provided a respite from a surrounding continent that was on the verge of painful and stillindeterminate reconstruction.

The relative isolation of conservative intellectuals in the wake of the Great Depression had created an extraordinarily fl uid ideological environment, in which market advocates were eager to recognize the limits to laissezfaire and social traditionalists were quick to acknowledge the benefi ts of the market mechanism. Hayek was not trying to adjudicate between static ideologies, but rather to develop one anew.

Perhaps their most important task was to develop a formal account of what the goal of this new or ga ni za tion would be. In doing so, they would have the opportunity to frame the pa ram e ters of the “new” liberalism Hayek had summoned them to construct, and to identify the points of commonality that held their sometimes divergent perspectives together. Their fi rst draft of such a statement was written by a committee of fi ve members, who sought to employ language that one of them described as “broad enough to be meaningful, and not detailed enough to split us up.” They produced a list of foundational convictions that assailed the socialist menace, lauded the virtues of the competitive market, and drew connections between economic freedoms and the “intellectual freedom” that totalitarians sought to erode. … Even in this vague initial form, their statement inspired controversy among the participants, who erupted in debate about whether it excessively or insuffi ciently emphasized the importance of private property, whether its reliance on the concept of a “moral code” should be expanded or removed, and whether it embraced the forwardlooking language of progressivism strongly enough. Some members questioned whether their diffi culties were a sign that the society’s members did not share many commonalities after all. If the group could not agree “on a fairly general scheme of ideas,” George Stigler remarked, “then it seems that there would be very little purpose or reason, in forming a society.”

In an attempt to resolve these tensions, Hayek enlisted Lionel Robbins to dictate a new draft of the statement after breakfast the following morning. Robbins’s version, which was quickly accepted by the group, defi ned the society’s mission primarily through the trends its members opposed, including the recent worldwide turn toward a “decline of belief in private property and the competitive market” and a denial of both “absolute moral standards” and “the desirability of the rule of law.” United in their sense of opposition, the members now faced a pressing need to unravel the “essential moral and economic origins” of the “present crisis.” … But Robbins’s statement cast aside the language of “convictions” in favor of an emphasis on problems that still needed to be solved. Their meetings would be charged with the task of generating “a reassertion of valid ideals” that could stand as fi rm bulwarks for the capitalist order against the socialist encroachments of recent years. About what those ideals might be, strong disagreements had already emerged. The members of the Mont Pèlerin Society were unifi ed in the social philosophy they opposed and the questions they sought to address, but the structure of their alternative vision remained unclear.

As a result of this lack of clarity, they spent much of their time dwelling on the ideological opponents that had brought them together. In part because of reservations about antagonizing a war time ally, Hayek had framed his critique of totalitarianism in The Road to Serfdom around Nazi Germany. By the time the society gathered for its fi rst meeting, however, his colleagues did not hesitate to identify the Soviet Union as their primary source of concern.

In the pop u lar war time tract Capitalism, Socialism and Democracy, Joseph Schumpeter had famously complained about a tendency for capitalist economies to generate intellectuals who were hostile to the social system that produced them. In previous eras, Schumpeter wrote, intellectuals served at the plea sure of a ruling class that was quick to punish them for heretical ideas. Capitalism provided them with the printing press, the radio, an increasingly leisured and literate public, and a system of cultural and legal restraints that protected expressions of dissent. As a result, he concluded, "unlike any other type of society, capitalism inevitably and by virtue of the very logic of its civilization creates, educates and subsidizes a vested interest in social unrest."

The French economist Maurice Allais chose not to sign its statement of aims on the ground that its “dogmatic stance” on private property left it “much closer to the laissezfairism of the nineteenth century than to a genuine revival of liberalism.” … Most of his colleagues in the society, however, saw themselves as defenders of theoretical complexity against Communists and planners who advocated misleadingly simple solutions for the social ills of the time. … This superfi cial mode of analysis, he argued, helped provoke the misguided assumption that revolutions could solve the central problems of human history. “Revolutions are sometimes inevitable, but they are almost always a misfortune,” he told the members. “They destroy irreplaceable goods.” … The early members of the society represented their market advocacy as emerging from a skepticism about, rather than a rigid adherence to, theoretical ideals.

In The Road to Serfdom Hayek’s vigorous condemnations of laissezfaire had served to remind his readers that his argument was not a simple restatement of ideas that had long been out of fashion. He now wanted to move toward a more specifi c, visionary repre sen ta tion of his worldview. “What we lack is a liberal Utopia,” he wrote in the late 1940s, “a program which seems neither a mere defence of things as they are nor a diluted kind of socialism, but a truly liberal radicalism.”

Knight, who had himself straddled the boundaries between a liberal sensibility and an explicitly "radical" worldview, urged the society's founding members to align their market advocacy with support for religious toleration and the mantle of humanitarianism. Perhaps the most vociferous advocate of the adoption of the language of progressivism, however, was Milton Friedman. He assailed the tendency of liberals to represent their ideas as a "defence of the status quo" and urged his colleagues to rely instead on rhetoric that was "dynamic and progressive." It was essential, he said, to relay the fact that their or ga ni za tion was "concerned in the progress of man's welfare." In the wake of the Great Depression, no demo cratic polity would be compelled by the cold language of nineteenthcentury market advocates. The remorseless social Darwinism associated with theorists like Herbert Spencer and William Graham Sumner had little place in a pop u lar conversation in which so many perceived themselves as helpless victims, or potential victims, of an unhindered market. It would be necessary to soften the price mechanism's sometimes rough edges and to shift its rhetorical logic of market advocacy away from an adversarial ethic and toward an emphasis on the benefi ts it could bestow on all.

The central mandate the society's members set for themselves was to provide, in the words of their statement of aims, a "reassertion of valid ideals." Any attempts to present a compelling alternative to the Communist worldview, to foster a contrary intellectual tradition, or to appropriate the language of progressivism would require a renewed inquiry into the philosophical foundations of capitalism. If not an unrepentant individualism, what social ideal would best justify and represent the social theory they sought to defend? How could they represent their market advocacy as part of a holistic worldview that their compatriots might conceivably share? Answering these questions would require them to reinvent, or at the very least to reground, the morals of capitalism. It was their task to provide a convincing account of the ethical foundations of a marketcentered world. The early members of the Mont Pèlerin Society struggled, however, to arrive at anything resembling consensus in their responses to the problems raised by the project they had assigned to themselves. Although they found some unity in their respect for the price mechanism, they gradually discovered that this shared orientation derived from deeply incongruous worldviews.

In the late 1940s Hayek was in the midst of his own attempt to describe the philosophical foundations of the market society, a project that would consume much of his remaining career. A de cade earlier he had begun publishing work that provided an epistemological justifi cation of his economic views. He increasingly represented himself as a theorist of ignorance, arguing that each individual had only a tiny fraction of the available information about the world within which he or she operated. Given these severe constraints on the individual’s capacity for comprehension, the challenge of the modern social order was to maximize the cumulative knowledge of its many constituents. Hayek was deeply suspicious of any response to these problems that relied on what he described as rationalism, "the product of an exaggerated belief in the powers of individual reason and of a consequent contempt for anything which has not been consciously designed by it or is not fully intelligible to it." Instead, he advocated for a humbler sensibility that emphasized the irrationality and fallibility of humankind, an approach that he specifi cally associated with "En glish individualism." Adherents of this antirationalist philosophy would respect the market as a mode of ordering social interactions that was capable of assimilating the unique knowledge of its constituents without subjecting them to any unitary plan. Although they would not hesitate to limit the exercise of coercive power, they would be suspicious of attempts to rationalize an economy or society, because such enterprises tended to overemphasize the knowledge of a few individuals and thereby to constrain the contributions of the many.

One close ally was Michael Polanyi, a Hungarian chemist who had been appointed to a chair in physical chemistry at Manchester University in 1933. Shortly after arriving in En gland, Polanyi began writing articles that criticized Rus sian restrictions on theoretical science. These attracted the attention of the emerging transatlantic network of critics of socialism, and he accepted invitations to attend the "Colloque Lippmann" in 1938 and the fi rst meeting of the Mont Pèlerin Society nearly a de cade later. In developing his theory of knowledge, Polanyi came to extol what he referred to as "spontaneous order": the extraordinarily "delicate and complex" patterns of alignment that aggregations can assume when they reach a point of equilibrium between internal and external forces. Spontaneous order was not always preferable to the imposition of an assigned plan, but Polanyi argued that it was often capable, especially in tasks involving large numbers, of producing a much more comprehensive and effi cient outcome than the alternatives. His discussions of spontaneous order ranged from small particles to communities of scientists, but he indicated that the "most massive" example was that of an economic marketplace. Hayek adopted the term and joined Polanyi in expressing the dangers involved in imposing order on both intellectual and economic communities.

Polanyi’s emphasis on tacit knowing led him to advocate for the decentralization of both civic and intellectual culture, but also to urge respect for established institutions and convictions that enabled such pro cesses to unfold, even if they could not be justifi ed using reason alone.

During the 1950s Polanyi turned his attention to another failure of rationalism, developing a social philosophy that accounted for modes of knowing that could not be relayed to others through language alone. Many forms of knowledge, Polanyi argued, cannot be distilled into any simple prescription. Consider, for example, the existence of skills that can be transmitted only by example from master from apprentice. He observed that many such crafts were altogether lost after remaining dormant for a single generation, citing the repeated failures of even the most sophisticated techniques of modern production “to reproduce a single violin of the kind the halfliterate Stradivarius turned out as a matter of routine more than 200 years ago.” Knowledge of the kind that Stradivarius manifested in his work was unspecifi able. Polanyi called this “tacit knowing” and indicated that it could not be subjected to the systematic forms of criticism that were applied to articulate forms. He believed that much of human life could be described in these terms, a fact that accounted “for the possession by humanity of an im mense mental domain, not only of knowledge but of manners, of laws and of the many different arts which man knows how to use, comply with, enjoy or live by, without specifi ably knowing their contents.”

Both Oakeshott and Polanyi were led, via their focus on knowledge that escaped the confi nes of the rational, to manifest a simultaneous respect for social traditions and the economic marketplace. Polanyi's critique of rationalism inspired him to valorize both the tacit knowledge embodied in networks of social tradition and the spontaneous orders that emerged out of largescale market interactions. Oakeshott's skepticism about abstract problem solving drove him to commend “traditional” forms of knowledge and to assail government interventions that were “consciously planned and deliberately executed.” The modern sensibility, they feared, was excessively sanguine about its capacity to construct entirely new social orders based on rational schemes. In contrast, they saw a hidden and often unarticulated wisdom in traditional beliefs and practices and an organic logic in the apparently chaotic exchanges that were characteristic of market societies.

Mises was quite willing, however, to acknowledge that the public sustained a distressingly limited market for the arts. “There is, in the structure of a capitalist society, little room left for the activities of the solitary phi los o pher, the detached poet and the lofty artist,” he observed. “The majority of the buying public has no use for their products. It is these facts with which we have to deal in studying the cultural effects of capitalism.” Mises believed that debates over the economic effi ciency of the capitalist system had been successfully concluded, but he acknowledged that critiques on the grounds of its cultural effects were very much alive.

Röpke's concerns about the cultural implications of capitalism did not end with its infl uence on religion. He also drew attention to the collapse of local economies, and in par tic u lar to the decline of traditional modes of agriculture, as signs of the dehumanizing infl uence of unregulated competition on interpersonal relationships. At the 1947 meeting he extolled "the social life of the family farm" and observed that it required economic "units smaller than would otherwise be rational for normal business standards." Röpke's respect for ways of life that stood outside the pure logic of competition and his evident contempt for the "proletarian nomads" engendered by capitalist industrialization revealed deep reservations about the social effects of capitalist systems of labor.

Like Hayek, they sought a consonance between markets and social traditions; unlike him, they believed that this could be achieved only through concerted efforts to protect the cultural forms that markets otherwise eroded.

A plan to resist all planning may be better than its opposite," he wrote of The Road to Serfdom, "but it belongs to the same style of politics." … He told Hayek that he would be willing to accept membership in the Mont Pèlerin Society, but he never attended a meeting.

Buchanan was frankly skeptical of the capacity of majorities to develop policies that would redress their own moral, cultural, or economic failings. "A shift of activity from the market sector cannot in itself change the nature of man," he and Tullock concluded. "The man who spends his time at the tele vi sion set or in his automobile in private life," they added drily, "is not the man who is likely to vote for more taxes to fi nance libraries, concerts, and schools."

In the immediate postwar years the members of the Mont Pèlerin Society faced a pop u lar environment that was deeply hostile to their economic views. In the face of this opposition, they were quick to draw connections between economic freedoms and po liti cal liberalism, but also to distinguish po liti cal liberalism from the advocacy of government by majority rule. The members' attempts to work through the problematic relationship between capitalism and democracy resulted in some of their richest and most complicated works, but also revealed a willingness to abandon pop u lar sovereignty altogether when the views of the public did not align with their own. As John MacCallum Scott, the secretary general of the Liberal International, invoked Edmund Burke to observe at their gathering in 1956, "Liberty, too, must be limited in order to be possessed." In practice, this sometimes meant disenfranchising local populations in order to defend the market economy from their control.

The Mont Pèlerin Society was established by a set of individuals who shared a conviction that capitalism had entered a potentially decisive moment of crisis. For all their differences, they agreed that the market system deserved to be defended from the forces that threatened its continued existence. Their debates over how best to achieve this goal continued to be shaped by the predicament that had brought them together, and they marginalized those who argued that the market system should remain free of regulations as impractical extremists. Among nearly all of the society's founding members, the term "libertarian" was either rejected or ignored. Even those who were most skeptical of government intervention recognized that the prospects of public support for a social philosophy that resembled laissezfaire remained, at best, dim.

If the market economy was to be preserved, it would need to be presented as part of a potentially compelling worldview. Hayek established the Mont Pèlerin Society because he believed that this act of ideology formation could occur only over time, among groups of sympathetic intellectuals who shared a po liti cal goal but were shielded from the rhetorical pressures of contemporary policy debates.

Once Hayek managed to create such a venue, the debates failed to unfold as he had hoped. He discovered that he had assembled colleagues who were largely united in what they opposed but shared little agreement in their attempts to construct an alternative vision. Some of the participants regarded capitalism and tradition as twin elements of an antirationalist critique of planning, while others perceived them as at best an antagonistic pair. A number of them warned that the logic of the market would need to be restrained in order to avoid wreaking havoc on ethics, religion, agriculture, or the arts, but others believed that a desire to avoid such restrictions was precisely the goal that had brought them together. All of them struggled to explain how the free market could be implemented and protected in the midst of a hostile public without the adoption of some form of authoritarian control (a prospect that, in certain cases, several of them seemed to embrace).

During the early years of the Mont Pèlerin Society, the very existence of a conservative intellectual world was a source of skepticism. Scholars in the 1950s, observing the atmosphere of consensus that pervaded American politics, were quick to deride the intellectual credibility of their conservative contemporaries. Lionel Trilling referred in The Liberal Imagination to the "plain fact that nowadays there are no conservative or reactionary ideas in general circulation." To the extent that there was an orientation toward conservatism, it was attributable to "impulses," or "irritable mental gestures which seek to resemble ideas." Richard Hofstadter appropriated Theodor Adorno's term "pseudoconservative" to describe the most vocal dissenters from the postwar liberal consensus, citing "clinical evidence" of their "profound if largely unconscious hatred of our society and its ways."

Hayek’s determination that the society should dissolve was the product of a peculiar combination of triumphalism and despair. It was motivated in part by his belief that an encouraging po liti cal environment and an increasing mutual awareness among freemarket economists diminished the need for regular meetings. In this sense, the society’s raison d’être was the victim of its unexpected and premature success. Any satisfaction derived from these victories was tempered, however, by his frustration at the continued failure of the society’s internal debates to fulfi ll his original aspirations.

In part, this was a product of a deliberate strategy: in order to limit the impact of any single funding orga ni za tion, the society's leadership labored to ensure that meetings were fi nanced by a range of supporters located near the rotating sites of the annual meetings. "We always refused to take money solely from one source," Albert Hunold, the society's primary fundraiser in its fi rst de cade, later recalled. "We insisted on a wide geo graph i cal dispersion of the different funds received," and the society never took "any money from po liti cal parties or their affi liates." The 1954 Venice meeting, for example, was fi - nanced by the Banca d'Italia, industrial organizations based in Rome and Milan, and a Venetian foundation; the 1957 St. Moritz meeting was fi nanced by twentythree fi rms throughout Switzerland; and the 1960 Kassel meeting was fi nanced by six enterprises from fi ve German cities.

The Volker Fund was now hosting a "growing conference program" of its own, and Luhnow was frank about his expectation that these events would fulfi ll the role once played by the Mont Pèlerin Society. The Volker Fund never again provided assistance to the society, and by the mid- 1960s it had altogether dissolved.

Through direct contributions to carefully chosen intellectuals and institutions, they sought to facilitate the expression of unorthodox ideas in the national conversation, and thereby to provoke longterm ideological change. In contrast to other contemporary sources of funding, they did not expect any immediate tangible return for their investments. Instead, they attempted to support viewpoints that fell outside the po liti cal and academic mainstream, and they approached “the unique and unorthodox” as “an advantage, rather than a handicap.” In adopting this strategy, they demonstrated an extraordinary faith in the capacity of abstract ideas to generate substantive po liti cal change. These commitments remained central to the conservative movement in subsequent de cades and developed a palpable infl uence with the emergence of a new collection of lavishly funded think tanks in the 1970s and 1980s.

The members needed to decide, Jewkes observed at a council meeting in 1959, “what sort of society the Mont Pèlerin Society shall become”: whether it would develop into a populist enterprise or remain restricted, as seemed increasingly unlikely, to a “limited elite.”

At the conclusion of the 1962 meeting, an article in National Review mulled over the dangers faced by the society as it added new members to its rolls. “The intimate atmosphere of a select group of intellectual peers, good friends and philosophic companions may give way to the businesslike atmosphere of a professional convention,” it observed. “Although the Society represents a rather broad spectrum of opinion within the libertarian fold, the present philosophic unity of the group could be affected and its intellectual strength watered down. These are the risks inherent in expansion, yet the world is moving on and this seems to be the course the Society will take.”

Hunold also possessed a notoriously abrupt and irascible personality, and his rhetoric lacked the soft edges that characterized the communicative styles of his academic colleagues. His close friend Wilhelm Röpke acknowledged that their “serious brawl” after the war over the establishment of the journal Occident demonstrated that “occasionally, his temperament may carry him away.” After only one meeting … Hunold was already complaining that the society was insuffi ciently “aggressive” and proclaiming that it was “useless to discuss anything” with one member, Maurice Allais, who reminded him of “socialists and communists.” Irritability is a characteristic that only rarely diminishes with the passage of time, and Hunold grew more vocal with his complaints as the society matured. In 1959 he publicly referred to the society's recent debates as a “playground for softpedalling [sic] neutralism and impotent scientism which would divert our Society from its real aims and drive it into moral bankruptcy,” and he privately complained that the “neutralists” among its members needed to be taken “by the horns.” His disenchantment with the society's direction was aggravated by an impression that his ideas and suggestions were not receiving the attention they deserved. He channeled the resulting frustration into periodic eruptions about issues of relatively trivial signifi cance, alienating the society's other members and leading them to grow increasingly concerned about his capacity to fulfi ll his secretarial duties.

Hayek had rigorously adhered to a view that it should avoid any public engagement in order to protect its identity as a philosophical enterprise. He believed that any turn toward propaganda or the proactive dissemination of its members' views would challenge its identity as a venue for serious inquiry and foundational debates. The emergence of a society publication was therefore a very serious matter, and Hayek attempted to delay the publication of the Quarterly's fi rst issue because of explicit concerns about its scope. He wrote that his “personal view is still that the Society as such should not express opinions,” adding that he was deeply hesitant to “attempt anything more ambitious” than a newsletter designed “to inform members about publications by other members of the Society, about changes in membership and to communicate to all members papers presented at the meeting.” Hunold expressed disappointment and termed Hayek's policy “a nuisance.” “If we go on like this,” he proclaimed, “we shall soon be hanged by the communists.”

A vicious circle emerged: Hunold's contentious behavior led him to be stripped of administrative powers, and his diminished authority in turn provoked further resentment and rage. The problem was conspicuous at the society's 1959 meeting in Oxford. Antony Fisher of the Institute of Economic Affairs (IEA) hosted the event, and Hunold was appalled to learn that the IEA was in charge of all the arrangements that he had typically managed in previous years. He attached great signifi cance to a letter from the IEA insinuating that there was no need for him to bring his customary two assistants to the meeting, and he concluded that IEA affi liates were plotting to replace him as the society's secretary. After the meeting he wrote an irate letter to the directors of the society in which he complained that the IEA had stolen his prerogatives “like a thief at night,” leveraged the Mont Pèlerin Society to produce “propaganda” for itself, and engaged in a “conspiracy” to replace him with the IEA affi liate and nonmember Ralph Harris.

Hayek, who had initially responded to Hunold's hostile behavior with mild exasperation, was now utterly dismayed. "I must confess," he wrote to Röpke in the winter of 1960, "that I am beginning to doubt if he is still entirely sane." He was more eager than ever to step down as the society's president but had become convinced that he would fi rst need to fi nd a replacement for Hunold in order to leave the society on stable ground. … Hunold had provided the society with "extraordinarily valuable ser vices," Hayek wrote to the membership, but his "general conduct during the last year . . . convinced me that a change in the Eu ro pe an Secretaryship has become even more important than a change in the Presidency." … In an astonishing demonstration of the dispute's escalation, he refused to sustain his affi liation with the society until Hunold was no longer its secretary.

Röpke, like Friedman, asserted that he would resign if the dispute was not resolved in a manner he found appropriate. If the removal of Hunold as secretary "would really be carried out," he announced, "I would leave the Mont Pèlerin Society in protest against a grave injustice and in loyalty to a man who has a claim to it."

In prior years Hayek had served as the arbitrator between divergent groups within the society; as both economist and po liti cal phi los o pher, freemarket advocate and social traditionalist, oldworld Eu ro pe an and émigré American, he could speak the languages of members who at times perceived one another as alien. But now he was a party to the dispute, and therefore was unable to bring it to a mutually satisfactory close.

Ludwig Erhard, then the vicechancellor of the Federal Republic of Germany, arbitrated an agreement wherein Hayek would be replaced as the society's president by Wilhelm Röpke, and Hunold would resign his position as its secretary in order to become a vice president. The conclusion was announced at the Kassel meeting, where Hayek spoke graciously about the past contributions of Hunold. “I will once more very briefl y say that I have no doubt that the Society would never have come into existence and would not have been as successful had it not been for Dr. Hunold's efforts,” he told the assembled members.

Friedman and Hunold immediately engaged in a sharply worded dispute over the competing versions. Röpke persuaded the parties to arrive at a mutually agreeable version, but the lines of continued resentment had been fi rmly established. Friedman and his associates believed that Hunold was attempting to manipulate the proceedings of the society by surreptitious means, and Hunold and Röpke believed that Friedman's accusations had plainly violated the spirit of the compromise at Kassel.

During the 1961 meeting in Turin, it became evident that the tensions within the society were unsustainable. Hunold and his American detractors engaged in an aggressive dispute about the location of the next meeting that several times inspired Röpke, when an unfavorable vote appeared imminent, to halt the proceedings with the claim that the tenor of the discussion was dangerous for his weak heart. Friedman intensifi ed the acrimony later in the meeting with a claim that Hunold had reordered the list of vice presidents to position himself, under the terms of an obscure bylaw, to become president in the event of Röpke's resignation. It was, Friedman later wrote, “an attempted coup d'etat” that was intended to bestow the presidency on Hunold by underhanded means. The debate was resolved in Friedman's favor, and Hunold exploded with rage; one unsympathetic member later recounted that Hunold had described the members of the society's board as “rascals,” referred to Trygve Hoff as a “useful idiot,” declared Bruno Leoni to be “insincere as all the Italians,” and told Friedman and Machlup to “go home ugly Americans.” Friedman displayed similar vitriol in the days that followed. Hunold, he wrote, “engineered this monstrous attempted fraud” with the intention of becoming “the chief benefi ciary of it,” demonstrating a “Machiavellianism” that Friedman had made the “fatal mistake” of underestimating. Two months later Hunold's principal adversaries, including Friedman, Stigler, Machlup, and Hayek, signed a letter indicating that the preservation of the society depended on Hunold's resignation.

Hayek knew that the Mont Pèlerin Society had been made possible only through his close collaboration with Röpke. In the current dispute Röpke was allowing himself "to be used as Hunold's tool," Hayek wrote to John Van Sickle after the Turin meeting, and the two of them had become nothing better than "takeover artists." He decided that further collaboration was no longer possible. Röpke had, he believed, "succeeded in destroying in the course of fi fteen month [sic] what others have built up in the course of as many years."

Stigler adopted an earnest and collegial tone, expressing "embarassment [sic] and distaste" for the society's quarrels concerning "personal manners, which a society of scholars and gentlemen should not even have to consider." He then presented an incongruous ultimatum: "if Roepke does not resign by February 1, 1962, I shall submit my resignation from the Society."

Röpke shared his concerns, writing in 1955 that the society was subject to "always noticeable" tensions between advocates of "paleoliberalism" and "neoliberalism." He applied the former label to those who sought to reinstitute laissezfaire economic policies reminiscent of the nineteenth century, and the latter to advocates of less rigid and more holistic solutions to contemporary social problems.

McGeorge Bundy, wrote a withering review in the Atlantic Monthly that noted the irony of a Catholic calling for a return to religious traditionalism at Yale. Buckley's support for laissezfaire was, Bundy added, far more extreme than that of the academics he and his allies cited for support. Positions that Buckley labeled “radicalism” could be found “in the work of such men as Hayek,” and “if Mr. Buckley read Lippmann and Knight, he would be horrifi ed.”

Buckley had risen to national prominence four years earlier with the publication of God and Man at Yale, which excoriated his alma mater for perceived attempts to persuade its students to become “atheistic socialists.” “I myself believe that the duel between Christianity and atheism is the most important in the world,” Buckley wrote in his foreword to the fi rst edition. “I further believe that the struggle between individualism and collectivism is the same struggle reproduced on another level.” He married an uncompromising antistatism in the economic sphere with a militant anticommunism and a heightened deference to established religious institutions and ways of life. … As Knight had grimly observed, it is diffi cult to distill challenging ideas into popularly accessible form without doing some violence to their intent. Buckley's success as a polemicist was a product, in part, of his capacity to elide complexities that would detract from his rhetorical force.

Buckley cast his lot with the “radical conservatives” who had not yet come to terms with the New Deal, and who were willing to stand with him “athwart history, yelling Stop, at a time when no one is inclined to do so, or to have much patience with those who so urge it.”

Like many of his contemporaries in the early Mont Pèlerin Society, Buckley believed that support for free markets would be po liti cally viable only if it were represented as part of a holistic and spiritually grounded worldview. He also shared with the society's early members an extraordinary faith in the power of ideas to effect po liti cal change over time. “Our po liti cal economy and our highenergy industry run on large, general principles, on ideas— not by daytoday guess work, expedients and improvisations,” he contended in the mission statement. The ideas expressed in the National Review soon attracted public attention and notoriety that far exceeded its sparse initial circulation of 7,500: the editor of Harper's labeled the magazine's readers “extremist” and “the precise opposite of conservatives,” and the literary journalist Dwight Macdonald referred to it as a haven for “the lumpen bourgeoisie, the halfeducated, halfsuccessful provincials.” Over time the National Review attracted allies as ardent as its enemies; after a de cade of existence on the edge of fi nancial insolvency, it had accumulated 100,000 subscribers and attained a prominent role in establishing the terms of American po liti cal debate.

Röpke saw the National Review's simultaneous embrace of free markets and social traditionalism as an enactment of the revised liberalism that the found ers of the Mont Pèlerin Society had originally sought to create. … Although he found McCarthy repugnant, Röpke argued that he had been caricatured as a dev il by the “communists and cryptocommunists” in order “to distract us from the true danger,” and that the National Review was right to focus on the latter.

Kirk arrived at “six canons of conservative thought”: belief in “a transcendent order”; affection for “proliferating variety”; defense of the maintenance of “orders and classes”; a conviction “that freedom and property are closely linked”; a preference for custom, convention, and prescription over “abstract designs”; and support for a “prudent” as opposed to a “hasty” approach to social change. At the suggestion of Whittaker Chambers, Time devoted the entire review section of its 6 July issue to the book, concluding that Kirk’s philosophy would prove to be of “interest that is not mainly antiquarian” to readers confronting the “shadow of lost illusions” in the wake of two world wars. The crisis of modernity had created space for a philosophy that was founded on its rejection.

In an article, “Liberaler Konservatismus in Amerika,” published in the Neue Zürcher Zeitung in 1955, he argued that Kirk was the major fi gure in an American movement toward “liberal conservatism,” a conservatism that looked for inspiration to fi gures like Tocqueville, Acton, and Jacob Burckhardt rather than to the reactionary tradition that Eu ro pe ans often associated with the term. Hayek had cited these same fi gures as inspirations for the formation of the Mont Pèlerin Society at the outset of its founding meeting. Eight years after that meeting, however, none of the Americans Röpke associated with this emerging movement— including Nisbet, Viereck, and Clinton Rossiter— were involved in the society’s activities.

When The Conservative Mind was fi rst published, he expressed admiration for the book and qualifi ed enthusiasm for its author. While he thought that the book was “a little uneven,” “much too long,” and excessively inclined to claim “for conservatism what really were the main contributions of classical liberalism,” he told Herbert Cornuelle of the Volker Fund that it was “really excellent in some parts and throughout erudite and readable.”

Röpke emphasized that he hoped to create the Forum Atlanticum "without rivalry" and maintained that it could exist in harmony with the Mont Pèlerin Society. Given the lingering resentments created by the Hunold affair and the direct solicitations that the establishment of such an or ga ni za tion required, however, his profession of a noncompetitive stance was disingenuous. Rüstow's attempt to incite a mass resignation from the Mont Pèlerin Society was broadly perceived as an implicit and unseemly declaration of war. Hunold deliberately held on to his membership in the society long after Röpke's resignation in order to publish further polemics in the Mont Pèlerin Society Quarterly, which he hoped would inspire further resignations before he folded the publication into its successor or ga ni za tion. The Forum Atlanticum struggled to overcome the impression that it was created primarily in an act of belligerence against the Mont Pèlerin Society, and only secondarily in order to pursue its own in de pen dent goals.

The Mont Pèlerin Society Röpke left behind at his death was in many ways unlike the one he had helped establish in the years after World War II. A society originally defi ned by its elite academic character had become, in the words of one of its members, "a businessmen's sort of trade association meeting." In 1947 only fi ve of its members were active academics born in North America, which gave rise to Hayek's initial concerns that the society was too exclusively oriented toward continental Eu rope; by the time of Röpke's death one member observed "within the Society an underlying suspicion, mistrust and even fear, of Anglo- Saxon, or more properly, Anglo- American domination."

Perhaps most important, the meetings of the society were no longer refl ective of a broad atmosphere of consensus within the conservative academic world. Economists who supported free markets were not so eager as in former years— at both the "Colloque Lippmann" in 1938 and the founding of the Mont Pèlerin Society nearly a de cade later— to validate certain modes of government intervention and to emphasize the need for philosophical justifi cations for free markets that extended beyond the material abundance they ostensibly produced. As a result, they no longer appeared to be drawing on a common tradition, or at times even engaging in direct dialogue, with colleagues and peers who remained suspicious toward the application of an unyielding economism.

As laissezfaire reemerged as a live possibility, so too did the antagonism between freemarket "liberals" and traditionalist "conservatives" that had riven Western societies amid the age of revolution and the early emergence of industry. The Mont Pèlerin Society of the early 1960s, like the American po liti cal environment in subsequent de cades, cast these divergent groups as uneasy allies. Their interaction was volatile and eventually unsustainable. The foundational tension of postwar American conservatism had begun to emerge.

After growing up in Newark, New Jersey, and briefl y attending Prince ton, Meyer had become a prominent Communist or ga niz er as a student at Oxford. His peripatetic career as a party member took him, ironically, through some of the few remaining centers of freemarket economics in the 1930s: he was expelled from the London School of Economics in 1934 after recruiting over 500 of its 3,000 students, and later worked— with less success— to enlist graduate students at the University of Chicago. … But Meyer began to have doubts about the party while recovering from a foot operation that left him immobilized for eigh teen months in the midst of World War II. The experience of reading Hayek's Road to Serfdom, he later recalled, "played a decisive part in helping me free myself from Marxist ideology." By 1955 he had followed the welltrodden midcentury path from Communist activism to conservative dissent, and had assumed his lifelong role of columnist and bookreview editor at the nascent National Review.

Meyer perceived, and rejected, the New Conservatism as a social philosophy in which the individual inquirer was always subordinated to the established logic of the group. At the same time, he was very clear that his criticisms of Kirk did not align him with the growing body of economists who emphasized free markets as a panacea for the problems faced by American society. Of all the disciplines that study human society, he situated economics as the "closest to an exact science" and "the farthest removed from philosophical competence, from the capacity to establish value."

Shortly before the founding of the National Review Meyer explained his differences with Russell Kirk, arguing in The Freeman that the New Conservatism advocated by Kirk, Peter Viereck, Walter Lippmann, and Clinton Rossiter opposed the concentration of power without identifying "by what standards overconcentration is to be judged." Meyer believed that in the absence of fi rm guidelines, the New Conservatives had become too skeptical of individualism and too accommodationist in regard to the New Deal. … His goal was to formulate a social environment that preserved the capacity of the individual to choose between "virtue" and "vice" while socializing individuals to take what he perceived to be the virtuous path. … Invoking a language familiar to readers of Röpke, he referred to his social vision as a "third way" between the "authority of truth" and the "freedom of men." His contemporaries, however, referred to the project as "fusionism": an attempt to develop a social philosophy that could inspire the allegiance of both laissezfaire economists and conservatives who emphasized the primacy of "virtue" or historically grounded "truths."

Jouvenel felt close allegiance to the early Mont Pèlerin Society's mission of defending individual liberties, but could not abide the channeling of that mission through the vehicle of laissezfaire. It was ironic, then, that his letter was addressed to the man who, with the publication of Capitalism and Freedom two years later, would become the society's leading exponent of the very philosophy that he professed to abhor. During the ensuing de cade Milton Friedman would develop a rhetorical mode and pop u lar profi le that supplanted, and exceeded, the Hayekian pre cedent. The ascent of Friedman would solidify the transformation of the society that Jouvenel had observed. But while Jouvenel's letter portrayed that transformation through a narrative of decline that began at the base of Mont Pèlerin, the life of Milton Friedman resists the declensional mode. His arrival as a major fi gure in the public sphere does align with the diminution of a certain sensibility associated with the society's initial meetings, but it resonates still more audibly as a point of origin for a pro cess of extraordinary social and po liti cal change. The nostalgia of founding members of the Mont Pèlerin Society like Jouvenel, Röpke, and Hunold provides, in its manifest regret for changes that increasingly appeared irreversible, an early intimation that the age of Milton Friedman had begun.

Hayek was notable, Friedman informed the room, because of “the extent to which he has succeeded in straddling two kinds of worlds”; the act of “spreading ideas among the public at large” was “very seldom combined with thorough, deep, and profound scholarly work that can infl uence the course of science.” The scholarly world was not friendly to those who used positions of academic authority to expound minority views to the public, and Hayek's exemplary per for mance as both academic and advocate had forced him to endure diffi culties that were too rarely acknowledged. Such an observation might easily have been a prelude to expressions of frustration, but Friedman was adept at fi nding inspiration where others saw grounds for despair. Discouragement from colleagues was “a very good thing,” he concluded, “because it means that those of us who hold our views have to be better to get recognized than people who hold the other views. And in the long run, what matters is the quality of people who propose the ideas and not their number and not their position.”

By the end of the de cade he was wrestling with personal depression and diminished productivity that further distanced him from the intellectual communities he had helped create. Friedman, on the other hand, was on the verge of a rapid personal and professional ascent. In the half de cade after his remarks at the Quadrangle Club dinner, his reputation as an economist would be solidifi ed with the publication of A Monetary History of the United States, 1867– 1960 (cowritten with Anna Schwartz) and election to the presidency of the American Economic Association, and his pop u lar profi le would dramatically expand with the publication of a bestselling book and a prominent advisory role in the Goldwater campaign. He had grown into a leadership position within the Mont Pèlerin Society as well.

While previous members of the Mont Pèlerin Society had labored to develop philosophical models that would prove palatable to their more moderate contemporaries, Friedman did not hesitate to emphasize those points where his perspective diverged from established views. “I believe that people are unduly deterred by the prospect of publicly taking an unpop u lar position,” he asserted in a retrospective at the end of his career. “As someone who has repeatedly done so over a very long period, I believe that doing so seldom involves high costs.” Friedman built his professional and public career on the advocacy of positions that ran contrary to received opinion, and he endured the resulting controversies to fi nd himself regaled with private wealth, academic honors, and lasting po liti cal recognition.

Even John Kenneth Galbraith would eventually admit that in “the history of economics the age of John Maynard Keynes gave way to the age of Milton Friedman.” To write the history of Milton Friedman is to attempt to situate a point of origin for a dramatic pro cess of social and ideological change.

At various stages in his professional development, Friedman made pivotal decisions that would not have been possible without the availability of the network of peers assembled by the Mont Pèlerin Society or the existence of the earlystage funding institutions that sustained it. The intellectual environment provided by these institutions provoked a cascading effect, creating opportunities that snowballed until they fundamentally altered the nature and structure of Friedman’s public career. The infl uence of organizations like the Mont Pèlerin Society and the Volker Fund can largely be reduced to their effects on the ideas and activities of their constituents. In the case of Milton Friedman those effects were substantial, with social ramifi cations that exceeded the ambitions that even their found ers espoused.

Friedman was less explicit about Frank Knight's infl uence, which he admitted was "certainly not on par tic u lar points" but rather "on general outlook or general philosophy, general feeling of the limitations of economics and of what economic theory could do."

Jacob Viner's introductory course on price theory, in par tic u lar, came as "a revelation" that opened his eyes to a world he "had not realized existed." Viner had the capacity to represent economic theory as a source of "beauty" and "power" and to assemble a series of apparently discrete insights into "a coherent and logical whole."

Friedman appropriated John Neville Keynes’s designation “positive economics” to describe this approach, and announced that it was “in principle in de pen dent of any par tic u lar ethical position or normative judgments” and could be “an ‘objective’ science, in precisely the same sense as any of the physical sciences.” In Western societies, he asserted, “differences about economic policy among disinterested citizens derive predominantly from different predictions about the economic consequences of taking action— differences that in principle can be eliminated by the progress of positive economics— rather than from fundamental differences in basic values, differences about which men can ultimately only fi ght.” Despite the severity of its implicit criticism of prevalent modes of economic analysis, “The Methodology of Positive Economics” was a fundamentally optimistic text. In Friedman’s view economists could overcome the par tic u lar challenges of the social sciences to achieve an “objective” perspective and in doing so could build a reasoned consensus in the population at large.

Drawing on Popper, he argued that the only relevant test of the validity of a hypothesis was a comparison of its predictions and experience, adding that “evidence can never ‘prove’ a hypothesis; it can only fail to disprove it.” Hypotheses that had “survived many opportunities for contradiction” were accorded “great confi dence”; those that were contradicted more often than alternative hypotheses were discarded. Crucially, the validity of a hypothesis was to be determined solely by its predictive capacity, and not by the conformity of its assumptions with our understanding of reality.

First, Friedman’s emphasis on the necessary descriptive simplifi cation entailed in the act of generating hypotheses reinvigorated the embattled theory of perfect competition. Economists had long struggled against the descriptive inaccuracies of the homo economicus; as Frank Knight had often observed, its atomistic and coldly calculating vision of human activity utterly failed to explain many selfevident aspects of intersocial behavior. To Friedman, the individual falsities were beside the point, because the only criterion to use in evaluating the theory that individuals “singlemindedly” seek to maximize their “money income” was its relative capacity to predict successfully when confronted with aggregated data. Friedman’s distinction between a theory’s descriptive and predictive capacities helped justify economists’ use of an abstract theory that appeared, when applied to individual cases, to be manifestly untrue. The defense of simplifi ed hypotheses in “The Methodology of Positive Economics” was, implicitly if not overtly, a defense of the model of perfect competition.

Since the late nineteenthcentury Methodenstreit between the Austrian economist Carl Menger and the German economist Gustav von Schmoller, opponents of state intervention had been associated in the public mind with a belief that economic theory could be deduced from a priori principles.

Friedman believed that the practitioners of praxeology were incapable of engaging in productive and open interchange with their colleagues. He told an interviewer that in admitting "no role whatsoever for empirical evidence," its practitioners developed "an attitude of human intolerance." He repeatedly stressed that his goal was to maintain "humility": to practice a mode of economic reasoning that avoided any claims to absolute truth or certainty, and that provided an objective basis for settling differences of opinion.

Friedman later expressed “no apologies,” citing the fact that at the time they “were concentrating on the war.” The withholding tax entered his pantheon of government programs that were useful when implemented but problematic once entrenched.

His emergence as a public intellectual was a product of his interactions in the years after the war with the Foundation for Economic Education, the Mont Pèlerin Society, and the William Volker Charities Fund. Together, these institutions brought Friedman into contact with likeminded intellectuals who led him to reconceive his professional ideas in po liti cal terms, and commissioned him to write pop u lar articles and lectures that eventually changed the trajectory of his career.

His graduate dissertation, Income from In de pen dent Professional Practice (coauthored with Simon Kuznets for the NBER), demonstrated a proclivity to advocate the extension of markets to areas where restrictions were well entrenched and widely assumed to be benefi cial. In the densely statistical format common to the NBER, Friedman and Kuznets argued that the high wages of medical doctors relative to dentists was attributable largely to the restrictions on entry to the profession entailed in the licensing requirements enforced by the American Medical Association.

The resulting pamphlet, entitled “Roofs or Ceilings?,” argued that the pressing shortage of housing in the immediate postwar period was attributable to distortions in the market structure caused by rent controls. Friedman and Stigler exhibited their argument through a striking analogy, comparing the housing market in San Francisco after the massive destruction of the 1906 earthquake with its housing market in 1946. The housing situation quickly normalized in the period after the earthquake, they wrote, because of the ability to ration the available units through higher rents and the strong incentives those higher rents created to build more units as quickly as possible. In 1946, despite the absence of a comparable catastrophe, the housing situation was dire, a product, they concluded, of the disincentives fostered by rent control.

Even as Friedman's “Roofs or Ceilings?” revealed his proclivity for, and inclination toward, engagement in public debate, it also introduced him to the challenges of working with ideologically motivated institutions. In the month before the publication of the pamphlet, Friedman and Stigler engaged in a fi erce dispute with FEE administrators that nearly led them to withdraw it from publication and decline the attendant compensation. The issue centered on a paragraph professing the authors' support for economic equality: … The fact that, under free market conditions, better quarters go to those who have larger incomes or more wealth is, if anything, simply a reason for taking longterm mea sures to reduce the in e qual ity of income and wealth. For those, like us, who would like even more equality than there is at present, not alone for housing but for all products, it is surely better to attack directly existing inequalities in income and wealth at their source than to ration each of the hundreds of commodities and ser vices that compose our standard of living. It is the height of folly to permit individuals to receive unequal money incomes and then to take elaborate and costly mea sures to prevent them from using their incomes.

In contrast to the contentions in the authors' version of the article that in e qual ity was undesirable but not a reason for continuing rent controls, Stigler observed that the foundation's version implied that in e qual ity was a blessing. He concluded that the moderating phrases in the essay were “indispensable in giving the tone of objectivity we seek” and helped them “to convince the openminded, not those who already favor our position.”

Friedman was eager to emphasize that he shared many goals with his colleagues on the left. "I believe it essential to make it clear wherein we are criticizing means and wherein ends," he wired to Leonard Read, adding that the failure "of liberals to emphasize their objectives seems to me one of [the] reasons they are so often labelled reactionaries." Whereas many of the foundations and polemicists on the right devoted their propaganda to the converted, Friedman strenuously sought to engage those with whom he disagreed. He adopted a tone of reasonable moderation while forwarding policies that would otherwise have appeared uncompromising and extremist. The young Friedman, however, was willing to make more substantial concessions to progressives than would subsequently be the case. The implication that in e qual ity was "bad," and that mea sures should be taken to reduce it, would fall away from Friedman's pop u lar writings later in his career.

Friedman's po liti cal thought was, at this point, in close conformity with that expressed by the leading members of the society during the initial meeting at Mont Pèlerin. The basic assumptions refl ected in the essay— including the need to overcome the dogmas of nineteenthcentury liberalism, the hazards of monopoly, the benefi ts of corporate regulations, and the desirability of governmentsponsored relief for the poor— were parroted from Hayek's and Röpke's descriptions of their mutual goals. Friedman had aligned himself with an ideological program, but he had not yet elaborated the characteristics that would mark his po liti cal philosophy as a distinctive departure from that of his pre de ces sors in Chicago and forebears at Mont Pèlerin.

Together, Friedman, Director, and Stigler formed a nexus that connected the graduate program in economics and the professional schools. Over time the interpersonal relationships that drew these programs together were reinforced by a distinctive institutional culture. In the early 1950s Friedman and several of his colleagues used funding from both the Ford Foundation and a Chilean fellowship program to pioneer the development of a novel system of workshops. In an attempt to model socialscientifi c research after scientifi c labs, professors and advanced graduate students began meeting regularly to discuss their emerging work in a shared fi eld of interest. Presenters distributed mimeographed papers before the meetings, and the discussions that ensued became notorious for dispensing with the culture of politeness that characterized much of the American academic world. The most distinguished of these workshops, which included Friedman's on money and banking, Stigler's on industrial or ga ni za tion, and the Law School's on law and economics, helped drill students in their professors' distinctive modes of analysis. The culture of these research communities accounted for much of the shared identity and methodological infl uence of the postwar Chicago School.

Although Director and Stigler did much to shape the research program of their colleagues and students, they largely avoided public engagement. Director rarely published, and Stigler remained unconvinced of the merits of public advocacy, arguing that popularity and infl uence were usually "rivals, not partners." Friedman became the public rhetorician of the jaundiced view of government intervention that increasingly characterized Chicago economics. Here, too, the Volker Fund played an integral role. Its program offi cers carefully monitored the participants in the events they sponsored and sought to engage them in its other related activities whenever synergies were apparent.

These organizations did not create Friedman’s ideology; he was uncowed by public controversy and fi ercely protective of his in de pen dence as a scholar, and in many cases his positions represented a departure from his pre de ces sors’ ideas and his funders’ expectations. Instead, they created an environment in which he was inspired to perceive his career in a po liti cal context and encouraged to share his perspective in a language that a general population could understand.

To adopt terms that Milton Friedman would appreciate, institutions like the Volker Fund and the Mont Pèlerin Society are the venture capitalists of the intellectual world, allocating a broad dispersion of small investments with an extended time horizon and an understanding that one spectacular success can compensate for the toll of many minor failures. Friedman was the benefi ciary of a network of organizations established by individuals who were uniquely reconciled to the assumption that the nature of their impact would not be revealed until long after their ability to appreciate it had passed.

In an implicit recognition of the changing framework of his social philosophy, Milton Friedman had stopped referring to himself as a "neoliberal" by the late 1950s. But he, too, suffered from the terminological challenge that had been discussed ad nauseam among freemarket sympathizers since they fi rst assembled at the "Colloque Lippmann" in Paris in 1938. During his career in the public arena, Friedman never settled on a consistent term to defi ne his point of view.

The word "libertarian" might have seemed a natural choice, but as early as 1957 he had determined to avoid it whenever possible. His problem with the term was purely "semantic": "It seems to me to lend itself greatly to confusion with the word 'libertine' and gives the impression of an anarchistic kind of a view." Friedman sympathized with anarchism and admitted that he "would like to be a zerogovernment libertarian," but he believed that a society with no government whatsoever was not "a feasible social structure." He was also highly conscious of a need to distance himself from anarchism in order to maintain credibility in public debates, and was constantly forced to defend himself against respectable opponents— like Senator Joseph Clark of Pennsylvania— who dismissed him as a "neoanarchist" who would be "a fi ne candidate for president of the John Birch Society."

Friedman’s approach to the problem of terminology distinguished him from his pre de ces sors in the Mont Pèlerin Society in signifi cant ways. His concerns about the term “liberalism” were wholly semantic and not at all substantive. An earlier generation at Chicago and in the Mont Pèlerin Society had expressed explicit dissatisfactions with the “Manchester liberalism” of their ostensible pre de ces sors and a desire to replace it with a novel worldview. In contrast, Friedman explained that he thought he “was going back to some fundamentals rather than creating anything new”; to him, the word “liberalism” was inadequate only because of the loss of the meaning it had once held. His unequivocal repre sen ta tion of himself as a “radical” and his professed abhorrence of the term “conservative” revealed a sensibility that was unafraid of rapid and transformative social change. Hayek, Röpke, and Knight had emphasized the importance of continuity, and had centered their criticisms of the New Deal on the unpre ce dented pace and scope of the social transformations it entailed. … Friedman, in contrast, advocated for the immediate implementation of his policy suggestions regardless of the diffi culties entailed in a pro cess of transition. He deliberately cultivated and carefully protected the persona of a contrarian gadfl y in the venues of public debate. When he received an inquiry about joining Eisenhower’s Council of Economic Advisers, he worried that in such a position it would seem “right and natural to compromise” and turned it down. “I think society needs a few kooks, a few extremists,” he explained. … To keep the fi sh that they carried on long journeys lively and fresh, sea captains used to introduce an eel into the barrel,” his frequent sparring partner Paul Samuelson said. “In the economic profession, Milton Friedman is that eel.”

Friedman simply argued that those ostensible failures were mythical creations of his ideological opponents. … He then held that vision of a vibrant frontier capitalism against a depiction of a contemporary America overwrought by misguided bureaucracies.

In Capitalism and Freedom he suggested a voucher system: “Parents who choose to send their children to private schools would be paid a sum equal to the estimated cost of educating a child in a public school, provided that at least this sum was spent on education in an approved school.” Such an approach “would permit competition to develop. The development and improvement of all schools would thus be stimulated.” This proposal inaugurated de cades of intensive public policy debates, and remained one of Friedman’s primary interests; in 1996 he and his wife Rose jointly established the Friedman Foundation for Educational Choice to continue advocating for voucher proposals in the public sphere.

Friedman’s scientifi c reputation and radical selfpresentation alone would have made him a formidable fi gure in the conservative intellectual world, but he multiplied his infl uence by combining these attributes with an extraordinarily inventive approach to public policy. The unorthodoxy of his perspective enabled him to apply a single set of analytic tools to generate a profusion of novel ideas, and he presented his readers with an abundance of explicit proposals that were clearly derived from and representative of a singular worldview. Over time and in combination, these qualities enabled him to shift the pa ram e ters of public debate.

By the early 1940s Frank Knight, Jacob Viner, and Henry Simons in the United States, Wilhelm Röpke in Geneva, and Friedrich Hayek and Lionel Robbins in London all recognized a broad scope for the government to intervene, with benefi cial effects, in the workings of the economy and the distribution of goods. All of them manifested reservations about the effects of unhindered competition and increasing skepticism toward the social and po liti cal viability of laissezfaire.

The universality of Friedman's belief in the effi cacy of free markets exceeded even that of the nineteenthcentury theorists whose legacy Hayek had spent the postwar years working to overcome. His was not a Spencerian or Sumnerian world in which free markets dealt crushing blows to some in order to contribute to the greater advancement of humanity. Rather, it was one in which incontrovertible benefi ts redounded, in a display of spectacular bounty, to people of all kinds and in all situations. He represented markets as an unremitting good.

The rise of Milton Friedman represents both the realization of Hayek's dream of inspiring broad popu lar support for the benefi ts free markets have to offer, and the fi nal failure of his ambition to create a new social philosophy that would moderate the excesses of prior modes of market advocacy. The irony of the Mont Pèlerin Society is that it achieved its goal of generating social change at the expense of the new philosophy that its members had assumed any such change would require. Friedman served as both the society's greatest engine of infl uence and its most forceful exponent of an uncompromising adherence to the market mechanism. To Hayek and the other found ers of the Mont Pèlerin Society, Friedman's ascent within its orbit refl ected the collapse of its attempt to integrate a restrained defense of free markets into a traditionalist worldview.

Although Friedman remembered the dramatics of his Haverford presen ta tion as a uniquely impressive "coup," its underlying narrative was repeated throughout his public career. As an economist, he was uniquely— perhaps unprecedentedly— skilled as a rhetorician. He had mastered the diffi cult art of persuading diverse audiences to take seriously an unconventional point of view. "No other American economist of the fi rst rank can match Friedman's forensic skills and persuasive powers," the Washington Post wrote in 1963. Those intrepid enough to serve as his public sparring partners often found themselves "torn to shreds," as the New York Times said of a former chairman of the Council of Economic Advisers, Walter Heller, in 1970. His per for mances before Congress left some of its members spellbound; one said, using terms rarely applied to an economist, that Friedman could "thrill me as nobody has since Teddy Roo se velt." Paul Samuelson backhandedly remarked that Friedman's personal powers of persuasion were so formidable that his ideas, if he suddenly passed away, would disappear with him.

During the 1960s Friedman became a forceful advocate for laissezfaire on the public stage, developing an argumentative framework that would provide the foundation for much of the Republican Party's policy platform in the de cades that followed. He transfi xed audiences, both in frequent public lectures and in increasingly ubiquitous appearances on the printed page, with his formidable rhetorical capabilities and the relentless consistency of his message. While his pre de ces sors in the Mont Pèlerin Society had approached their public roles with explicit reservations, Friedman embraced his with relish. Within months of the publication of Capitalism and Freedom he had commenced a rapid transition from academic economist to public policy advocate, and he enthusiastically devoted his full attention and energy to the cultivation of his emerging role.

Friedman's pre de ces sors in the Mont Pèlerin Society had largely aligned themselves with a rhetoric of deliberate moderation, attempting to pull their mainstream colleagues closer to their positions by ceding ground wherever possible. His approach was different: he was a controversialist who attempted to generate agreement by restructuring the very terms of the debate.

In developing this argument, Friedman drew on Frank Knight’s aphorism that “business is business,” which Knight had defi ned as meaning that “business is one thing, and ‘charity’ another.” Knight, however, had accompanied that statement with a series of characteristic caveats: it assumed mutual free consent, which precluded the modes of persuasion often adopted in advertising; public engagement and oversight would be necessary to avoid externalities; and the pursuit of profi ts “must be sometimes seasoned with mercy.”

The extent of Friedman’s departure from Knight’s position was evident in his comments in a 1972 interview in the Business and Society Review. “If a chemist feels it is immoral to make napalm, he can solve his problem by getting a job where he doesn’t have to,” he told the interviewer. “He will pay a price. But the ultimate effect will be that if many, many people feel that way, the cost of hiring people to make napalm will be high, napalm will be expensive, and less of it will be used. This is another way in which the free market does provide a much more sensitive and subtle voting mechanism than does the po liti cal system.” Friedman’s comments here strongly implied that any social harms brought about by a transaction could be redressed through the effect of the qualms of unique individuals on the marketplace price. He did not concede the existence of a collectiveaction problem even in matters involving a weapon of extraordinary force.

The choice between resorting to government and relying on the market was, in Friedman’s terms, one between “bureaucratic democracy” and “participatory democracy.” The act of participation required choices that, he believed, were lost to the individual who consigned fi nal authority to a politician rather than the market. Friedman’s preference for adjudication through market prices rather than po liti cal structures was based, in part, on arguments developed by two colleagues in the Mont Pèlerin Society who also received graduate educations at the University of Chicago. Relying on recent scholarship from James Buchanan and George Stigler, Friedman concluded that politicians are led, through the pursuit of their own interests, to advocate policies that are injurious to the public good.

In The Calculus of Consent Buchanan and his colleague Gordon Tullock had employed an assumption of methodological individualism and the tools of basic game theory to arrive at the conclusion that “majority voting will tend to cause overinvestment in the public sector relative to the private sector.” In his work on regulatory agencies, Stigler had determined that industries in demo cratic societies tended to capture the entities created to regulate them. Both analyses depicted politicians as actors who pursued their rational selfinterest, and both found that the inherent logic of the po liti cal pro cess led them to implement policies that were against the best interests of the broader public.

Friedman frequently referred to this insight as the “invisible hand in politics,” which he defi ned on the bicentennial of The Wealth of Nations as “the precise reverse of the invisible hand in the market”: politicians seeking to promote the public interest are “led by an invisible hand to promote an end which was no part of their intention.” As a result, they sacrifi ce “the public interest to the special interest, the interest of the consumers to that of producers, of the masses who never go to college to that of those who attend college, of the poor workingclass saddled with employment taxes to the middle class who get disproportionate benefi ts from social security, and so down the line."

In a rejoinder to the common assumption that market advocates were allies of big business and the wealthy, Friedman was careful to emphasize the injurious effects of the po liti cal pro cess on consumers, the uneducated, and the poor. The implicit conclusion was that more or less everyone— even those commonly criticized by the Right for benefi ting at the expense of others— was harmed when the government intervened.

"The most important single cause for hope, beyond any doubt, is the incredible ineffi ciency of government," he told students at the University of Pittsburgh. "People are always complaining about government waste. I don't complain about government waste; I welcome it. . . . Effi ciency is a vice if it is devoted to doing the wrong thing. If the government were spending the forty per cent of our income that it now spends effi ciently, we would long since have lost our freedom." Friedman implied that the individual harms caused by government ineffi ciencies were, in both their obstruction of politicians' goals and their erosion of public confi dence in government action, perversely benefi cial. He believed that individuals who sought the nation's best interest should in many cases root for its government to fail.

Despite advocating for ideas that had long been associated with those in positions of privilege, Friedman was able to present himself as a genuine and emphatic populist. His appearance helped him assume the role; standing about fi ve feet tall, he projected the unaffected aura, as the patrician New York Times observed, of a "pushy Jewish kid from New Jersey." His abhorrence of all modes of exclusivity extended even into the realm of private conversation, in which he frequently cited the personal mantra: "What I say to one person, I say to everyone." This claim, which is validated in the papers maintained in Friedman's archives, made him a uniquely controversial public fi gure and a singularly unsurprising private correspondent. He attempted to treat all people equally regardless of their rank or position, and his personal fi les are fi lled with multi-page responses to the peculiar questions of obscure individuals. He also expressed a willingness to consult with any po liti cal fi gure who actively sought his input. "I am willing to advise anyone who asks me," he told the San Francisco Examiner and Chronicle in 1976. "I have no partisan scruples about giving advice." This maxim provided Friedman with a compelling, if to many unsatisfying, justifi cation of his relations with the Chilean government during his visit in 1975. More important, it provided an appearance of legitimacy to his assertions that his economic philosophy was constructed with the wellbeing of average individuals— and even the destitute— as a paramount goal. Despite their considerable efforts, it was diffi cult for members of the American Left to brand Friedman as a deliberate enemy of the working class. One could argue that Friedman was wrong, but his public persona made it very hard to represent him as maliciously so.

Friedman's constant emphasis on choice was a refl ection of his approach; he sought to represent freemarket economists as possessors of respect for the manifest preferences of average consumers, and supporters of government intervention as paternalists imposing their beliefs on those less enlightened than themselves. He told Playboy that “what the critics really complain about” is “that under capitalism, consumers get what they want rather than what the critics think they should have.” Intellectuals were sympathetic to collectivism, he asserted, because it presented a social model in which they would have more power than they would under free enterprise.

Friedman studiously represented his freemarket philosophy as a manifestation of respect for the perspectives and preferences of average individuals, and worked to convince his sympathizers to adopt a similar approach. In a 1960 meeting of the Mont Pèlerin Society, he excoriated his colleagues for demonstrating a “lack of respect for the masses of the people” in frequent statements that “depreciate[d]” them and assumed that they were “ignorant.” He continued: “I think, if we look at the fact, we will come to the conclusion that the situation is almost the reverse. If by and large we ask why has freedom been preserved in our society, it is largely because the masses of the people has [sic] stubbornly stuck to basic values. . . . If the masses of the people would change and were as easily moved as the intellectual classes, I do not think, we would be living in a free society.

His deprecation of a language of “classes” drew on an insight that advocates of free markets should represent themselves as guardians of government neutrality, in contrast to a perceived leftwing tendency to divide societies into oppositional groups. He hoped to turn his po liti cal allies into defenders of equality and the ordinary individual, and interventionists into practitioners of social differentiation and paternalist elites. Characteristically, Friedman solved a rhetorical problem by restructuring the terms of the debate.

Recognizing that advocates of free markets had long been considered apologists for the depredations of big business, Friedman particularly emphasized his differences with corporate executives. He expressed continued frustration with a “failure to distinguish between being pro– free enterprise and probusiness,” arguing that the misunderstanding has “led persons opposed to par tic u lar existing businesses to oppose free enterprise.” Businessmen, Friedman argued, were constantly in search of special privileges. They worked relentlessly, and in demo cratic societies often with success, to obtain competitive advantage from the government. The result, he believed, was a cavalcade of specialinterest legislation that ultimately redounded to everyone’s harm. “Over and over again you have the big businessman who talks very effectively about the great virtues of free enterprise and, at the same time, he is off on a plane to Washington to push for special legislation or some special mea sures for his own benefi t,” he recounted. “I don’t blame him from the point of view of his business, but I do blame him because very often he is shortsighted and ultimately does himself more harm than good.” In an invocation of the dual villains of pop u lism, Friedman repeatedly argued that “the two groups that threaten the free market most are businessmen and intellectuals.” The one exception he carved out was for “small businessmen,” whose interests, he argued, consistently aligned with his own economic vision.

At the London School of Economics in the 1930s, when Hayek and Robbins were together on the faculty and Austrian businesscycle theory was prevalent, "the dominant view was that the depression was an inevitable result of the prior boom" and that "the only sound policy was to let the depression run its course, bring down money costs, and eliminate weak and unsound fi rms." Such fatalist rhetoric, Friedman believed, was unsalable in a world searching for dynamic solutions. In contrast, the news of Keynes's interpretation of the Depression "must have come like a fl ash of light on a dark night. It offered a far less hopeless diagnosis of the disease. More important, it offered a more immediate, less painful, and more effective cure in the form of bud get defi cits. It is easy to see how a young, vigorous, and generous mind would have been attracted to it." Ironically, it was Friedman's observation of the ascent of Keynesianism that demonstrated to him the importance of providing the public with policy proposals that offered practical solutions to the felt problems of the day.

"Liberalism is in a curious position, and on the downgrade," he told them in a preliminary discussion of the society's statement of aims. "It is at times used as a defence of the status quo, instead of being dynamic and progressive. We want to make sure that our manifesto is concerned in the progress of man's welfare. We have to distinguish between the negative and the positive approach. Broad statements on which we can very easily agree are negative in nature. We ought to agree on the necessity for a positive approach."

Friedman could channel the opposing languages of the critic and the visionary, the realist and the utopian. He appealed simultaneously to dissatisfaction with the status quo and the desire for a deus ex machina, and he ensured that his gloom about his ideological opponents' policies was always tempered by a visceral excitement at the alternatives he proposed.

Another rhetorical maneuver in Friedman's repertoire entailed the simultaneous invocation of abstract ideals and immediately achievable goals. He endorsed a conception of government that was vanishingly small, and occasionally articulated a social ideal that closely resembled that of a radical libertarian fringe. Despite these affi nities, he informed members of the International Society for Individual Liberty in 1990 that utopian visions should be only one component of their contributions to the public debate. "It is of course desirable to have a vision of the ideal, of Utopia," he said. "Far be it from me to denigrate that. But we can't stop there. If we do, we become a cult or a religion, and not a living, vital force." Instead, it was necessary to come up with solutions that would help inaugurate an extended pro cess of transition: "You cannot simply describe the utopian solution, and leave it to somebody else how we get from here to there. . . . It is irresponsible, immoral I would say, simply to say, 'Oh well, somehow or other we'll overnight drop the whole thing.' You have to have some mechanism of going from here to there." Friedman was attempting to overcome the perceived failures of his generational pre de ces sors. Some early members of the Mont Pèlerin Society had been so focused on presenting ideas that were palatable to their contemporaries that he believed their critique of existing practices had lost its critical edge. He worried that without frequent reference to foundational ideals, debates would regress to a reactive mean. Others, however, had clung so tightly to their ideals that they found themselves unable to engage in dialogue with people in positions of po liti cal power or even, in some cases, their peers. (Friedman noted Ludwig von Mises and Ayn Rand as prominent examples of this shortcoming.) He perceived the challenge faced by advocates of free markets as one of maintaining reference to a utopian ideal while presenting partial solutions that were po liti cally feasible in the present day. In adopting this approach, Friedman gave himself the capacity to address libertarian audiences as one of their own while at the same time participating as more than a fringe player in broader venues of public debate.

Friedman was vocal about these longterm goals when he engaged in discussion with ideological sympathizers, but he only rarely mentioned them when addressing a general audience. He was a radical idealist who constructed his public policy proposals with a deep and perceptive attention to strategy. Few public fi gures in modern history have matched a utopian social philosophy with such close attention to the maintenance of practical goals.

"We are talking at cross purposes because of what I regard as the important necessity of keeping clearly separate the longrun ideal goal and tactical steps that may be appropriate in moving toward it," he told Patrick Buchanan. "I have long supported and pushed the voucher plan for schooling as well as the negative income tax in welfare. In both cases I do so not because these are necessarily part of my ideal utopian society but because they seem to me the most effective steps, given where we are, in moving toward where we want to go." The voucher system was a trojan horse that would enable the gradual extinction of governmentrun schools: "By permitting parents to supplement the voucher, it is possible to conceive of the system developing into one where the government contribution becomes less and less." Similarly, the negative income tax would allow for the gradual diminution of welfare benefi ts until they disappeared altogether. "Exactly the same logic underlies my belief in a negative income tax," he told Buchanan. "I see no other way in which we can go from our present situation toward the ultimate situation you and I would like." Friedman was vocal about these longterm goals when he engaged in discussion with ideological sympathizers, but he only rarely mentioned them when addressing a general audience.

During the years surrounding World War II, the leading market advocates in the United States had generally remained distant from public discussion and wary of pop u lar audiences. In their occasional public appearances Hayek and Mises were received as exotic specimens from the Viennese intellectual world. Wilhelm Röpke was too sensitive to engage in dispute with fellow intellectuals— much less general audiences— without descending into an introverted gloom. The only thing Frank Knight abhorred more than an audience of his fellow academics was one of nonacademics, and he correspondingly refused to share his ideas outside a university environment.

The early Mont Pèlerin Society was so dubious about public interaction that it risked attaining, as Hayek regretfully acknowledged, the reputation of a "secret society." The public reserve of freemarket advocates provided implicit support for the notion that it was a philosophy cultivated by and for elites, in contradiction to the compassion of their redistributionist foes. In contrast, Friedman's extraordinary skills as a rhetorician were augmented by his unfl agging energy and constant willingness to expound his public policy suggestions to anyone who was willing to listen. After the publication of Capitalism and Freedom he used every available media venue to try to pop u lar ize his ideas, including university lectures, po liti cal stump speeches, newspaper editorials, magazine columns, audiotaped discussions, massmarket paperbacks, and even a Public Broadcasting System documentary. Between the early 1960s and the end of the Reagan presidency, he was an omnipresent generator of ideas in the American public sphere.

The group attracted signifi cant public attention because of a perceived disregard for orthodoxy in its members’ approach to economic policy. “Professor Friedman, a monetary expert, may be more extreme on many issues than Senator Goldwater himself,” an article in the New York Times reported. Newspapers interpreted the absence of a number of prominent members of Eisenhower’s Council of Economic Advisers— including Paul McCracken, Henry Wallach, and the chairman, Arthur F. Burns— as a sign that the Goldwater team’s radicalism had generated little academic support. Friedman was represented as the leader of a dissident band of policy intellectuals who were generating proposals that fell far outside the economic mainstream.

Friedman did not want to abandon his academic work to participate actively in the daytoday campaign, and Goldwater liked to maintain some distance between himself and his advisers. Nevertheless, Friedman’s prominent affi liation led him to become a widely known public fi gure for the fi rst time in his career. He arrived at Columbia as a visiting professor at the height of the campaign in the fall of 1964, and found that he was just about the only "respectable intellectual in New York who was willing to defend Goldwater." He then entered into a "blur of one meeting or interview or talk after another, leaving barely enough time for me to meet my professorial obligations." Economists were describing Goldwater’s positions as "pure Friedman," and the media were increasingly referencing him as an ideological architect of the campaign. It was a dubious entrance into the public sphere. "In academic circles, admitting to Goldwater leanings has come close to wearing the scarlet letter," the Wall Street Journal reported. "Even many parts of the more- Republican business and professional community have tended to look down their noses at Goldwater fans."

Regardless of the campaign’s ignominious end, Friedman expressed no regrets about his participation. "Despite the subsequent election results," he wrote in his autobiography, "the defeat of the hitherto dominant Rocke fel ler Republicans was a crucial step in the gradual shift of public opinion away from liberalism as popularly understood and toward freemarket conservatism."

Goldwater had argued in The Conscience of a Conservative in 1960 that although he was "in agreement with the objectives of the Supreme Court as stated in the Brown decision," he was not prepared "to impose that judgment of mine on the people of Mississippi or South Carolina." Asserting that the Constitution did not permit any federal interference in the fi eld of education, he had concluded that the issue was "their business, not mine." Goldwater built on that argument when he prominently announced his opposition to the civil rights bill of 1964. At the time Friedman expressed a belief that Goldwater’s perspective was "excellent" and a true manifestation of the concept of "equal treatment of all, regardless of race."

Friedman’s perspective on civil rights was complex. His correspondence from the early 1950s demonstrated a genuine concern with civil rights and a preference for politicians who emphasized the issue. By the time he wrote Capitalism and Freedom, however, he had developed a strong opposition to civil rights legislation. He categorized the problem of segregated schools as one more example of why governmentadministered education was an unwise idea, arguing that much of the social confl ict over desegregation was caused by the absence of institutional alternatives. In Friedman’s view, a world with competing private institutions would be likely to integrate much faster than one with a governmentrun monopoly. His views on schooling aligned with his argument that market costs would provide the most effective impetus to resolve the social problems that racism imposed. “The man who objects to buying from or working alongside a Negro, for example, thereby limits his range of choice,” he explained. “He will generally have to pay a higher price for what he buys or receive a lower return for his work. Or, put the other way, those of us who regard color of skin or religion as irrelevant can buy some things more cheaply as a result.” He believed that the market, over time and aided by continued public discussion, would eventually lead people to act as the advocates of civil rights legislation wished.

His views were indicative of the degree to which he trusted markets to solve even the most apparently intractable and morally abhorrent social problems. His unqualifi ed confi dence in the ameliorative capacities of the market was not shared by Hayek, who, despite some reservations about the coercive aspects of the fairemployment clause and the public accommodation clause, expressed sympathy for what he otherwise regarded as a “highly desirable” civil rights bill.

Friedman’s path to the Nobel was not as seamless as some expected it to be, and he was forced to wait until its eighth conferral in 1976 before receiving the award. The protracted delay was widely perceived to be a product, in part, of the selection committee’s disapproval of his po liti cal advocacy of free markets. It is a plausible explanation; the Nobel Prize in Economic Sciences has always served in part as a barometer of the conventional wisdom of the economics profession. Its establishment immeasurably increased the prestige of the discipline’s leading practitioners and commensurately heightened the diffi culty of supplanting their established views. But if Friedman’s initial wait revealed lingering opposition to Chicago economics and laissezfaire approaches to po liti cal economy, the subsequent generation of recipients manifested an astonishing reversal: between 1974 and 1991, seven of the awardees were members of the Mont Pèlerin Society. The creators of the Nobel Prize in Economic Sciences may at fi rst have wielded it as an expression of implicit disapprobation of Friedman’s po liti cal views, but in the longer term it proved to be an invaluable lever of support.

Friedman and his colleague Arnold Harberger traveled to Chile for six days in March 1975, during which they delivered a series of public lectures evaluating its economic and po liti cal policies and on one occasion met personally with its military dictator, Augusto Pinochet. Pinochet had entrusted economic policy to a group of radical economists, many of whom had attended the University of Chicago between 1956 and 1964 under the auspices of a program sponsored by the Agency for International Development. At the time of Friedman’s visit they were in the midst of implementing a rapid series of freemarket reforms, including deregulation, privatization, elimination of price controls, cuts in government spending, and an expansion of free trade. Critics have argued that the implementation of the economic policies that Friedman advocated required the use of the junta’s repressive mea sures, and have strongly implied the existence of sinister motives on the part of Friedman and his colleagues. They have raised enduring questions about the human costs of the “shock treatment” Friedman recommended and the wisdom of providing personal advice to terroristic regimes. But Friedman was also severely critical of the Chilean government’s repressive mea sures before, during, and after his visit, and refused receipt of two honorary degrees in order to avoid an implicit endorsement he did not want to bestow.

The rhetorical strategy that Friedman advocated then— with its emphasis on human freedom, its disparagement of government intervention, and its relentlessly optimistic valence— had become, via Reagan, the message of the party itself. It was an extraordinary demonstration of the capacity of radical opinion to become, over time and in concert with circumstance, accepted as the norm.

By the time Friedman ascended to the society's presidency, its academic membership had become overwhelmingly oriented toward technical economics, and its public policy perspective was unambiguously libertarian. Noneconomists and social traditionalists were wary of participating in a group defi ned by positions and methodologies that diverged from their own. The nature of the problem became apparent to Friedman when he asked Irving Kristol to join the society for its twentyfi fthanniversary meeting in 1972. Kristol's po liti cal history did not accord with that of most members of the Mont Pèlerin Society. He had been a member of the Young People's Socialist League when he attended City College in the late 1930s, and more recently he had advocated aspects of Lyndon Johnson's Great Society and had provided support to Hubert Humphrey's presidential ambitions.

Interest in 1965, Kristol had gradually dispensed with his technocratic sympathies, becoming known as both a harsh critic of the New Left and an exponent of the benefi ts of the market mechanism.

In refusing Friedman's request, Kristol indicated that the Mont Pèlerin Society suffered from an excessive emphasis on economics, which led its members to adopt “libertarian,” as opposed to “traditionalist,” ideals.

But Kristol coupled his concerns about the excesses of contemporary social policy with a warning, as he wrote in a collection of essays that year, that capitalism was living off the “accumulated moral capital” of social philosophies that it had since supplanted. He worried that the relentless materialism of market advocates rendered them incapable of combating the forces behind the nation's cultural decline.

The “identifying marks of the New Left,” Kristol asserted, "are its refusal to think econom ical ly and its contempt for bourgeois society precisely because this is a society that does think eco nom ical ly."

The problem, he believed, was that they were still fi ghting a battle that they had already effectively won. “To think eco nom ical ly has come to mean thinking along lines established by the socalled 'Chicago School,' ” he told the meeting participants. “So I think one can say that this ideological battle is over, and the dispute over the relative economic merits of central planning vis-à- vis the market has been settled.”

Indeed, Kristol saw the emerging critique of capitalism not as progressive, as it claimed to be, but rather as “utterly regressive,” adopting the logic of the Old Right that "never did accept the liberalbourgeois revolutions of the 18th and 19th centuries." The members of the Mont Pèlerin Society were using the presuppositions of modernity to argue against a critique that rejected modernity itself.

Milton Friedman never disparaged Hayek, whose insights and infl uence he consistently extolled, and drew no attention to his own differences from the other participants in the founding meeting at Mont Pèlerin. Nevertheless, he had, since inheriting Hayek's role as the preeminent scholar in the society and the leading advocate of free markets in the public sphere, quietly precipitated a dramatic transformation in the membership's worldview. Methodologically, he redirected the members' focus away from abstract theory and toward empirical modes of analysis, in a transition that entailed the abandonment of the very inquiries into questions of value that Hayek had established the society to address. Eco nom ical ly, he cast aside a cautious and conservative policy of moderation and rehabilitated the advocacy of an unmediated laissezfaire. Strategically, he tore down the barriers his pre de ces sors had constructed between economists and public policy debates, and he both encouraged and enacted aggressive new rhetorical modes. John Davenport and Irving Kristol were not critics of the society in its inherent or historical form. Rather, they were expressing dissatisfaction with what— under Friedman's formidable infl uence— it had become.

As a global fi nancial crisis approached its apex in the fall of 2008, commentators on both sides of the po liti cal aisle declared that a long era in American po liti cal history was drawing to a close. According to their narrative, the rise of deregulation in the 1970s and the subsequent election of Ronald Reagan had ushered in nearly thirty years during which the primacy of free markets was largely assumed. Advocates of government intervention had adopted a defensive rhetoric and approached economic legislation in a spirit of accession and compromise, while the invocation of freemarket doctrines among those in positions of po liti cal power had become ever more strident and selfassured. Now— in the wake of income stagnation, rising in e qual ity, an unpre ce dentedly unpopu lar president, conspicuous market imperfections, and an economic collapse widely attributed to failures of regulation— a tectonic shift had begun.

Imputations of a generational shift in the American po liti cal environment were not solely the province of the Left. David Brooks wrote in the New York Times that "we're in for a Keynesian re nais sance," predicting the onset of a "Gingrich revolution in reverse and on ste roids." Peggy Noonan, a former speechwriter for Ronald Reagan, observed in the Wall Street Journal that "something new is happening in America" and foresaw "the imminent arrival of a new liberal moment." Her newspaper's editorial page grimly anticipated "the restoration of the activist government that fell out of public favor in the 1970s" and "a period of unchecked leftwing ascendancy." Economists long known for their orientation toward laissezfaire economic policies called for vigorous stimulus policies to counteract the downturn. In an iconic moment, Alan Greenspan delivered a prepared statement before the House Committee on Government Oversight and Reform acknowledging that "those of us who have looked to the selfinterest of lending institutions to protect shareholders' equity, myself especially, are in a state of shocked disbelief." Under intense questioning from Henry Waxman, Greenspan admitted that he had "made a mistake in presuming that the selfinterest of organizations, specifi cally banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the fi rms." Asked whether his ideology had led him to make erroneous decisions, Greenspan said: "What I'm saying to you is, yes, I've found a fl aw. I don't know how signifi cant or permanent it is. But I have been very distressed by that fact." The fl aw had destabilized "the model that I perceived is the critical functioning structure that defi nes how the world works, so to speak." Waxman continued: "In other words, you found that your view of the world, your ideology was not right, it was not working." "Absolutely, precisely," Greenspan replied. Even the public icons of the free market seemed to be renouncing their established convictions before the nation's eyes.

When Hayek was preparing to found the Mont Pèlerin Society, he turned to Keynes's repre sen ta tion of the relationship between ideas and historical change. Keynes had famously commented at the end of The General Theory that "practical men, who believe themselves to be quite exempt from any intellectual infl uences, are usually the slaves of some defunct economist." As Hayek observed, that was an assertion that Keynes was uniquely qualifi ed to posit. But he went on to quote Keynes's subsequent, less often cited words: "I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval; for in the fi eld of economic and po liti cal philosophy there are not many who are infl uenced by new theories after they are twentyfi ve or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil." In this regard Hayek and Keynes agreed. People doubt that "human ideas and beliefs are the main mover of history," Hayek asserted, because "we all fi nd it so diffi cult to imagine that our belief [sic] might be different from what they in fact are." He attributed a certain merit to this perception of intractability: the "interval between the time when ideas are given currency and the time when they govern action" can, he acknowledged, be long. "It is usually a generation," he said, "or even more, and that is one reason why on the one hand our present thinking seems so powerless to infl uence events, and why on the other so much well meant effort at po liti cal education and propaganda is mispent [sic], because it is almost invariably aimed at a short run effect." Hayek's goal was to imitate the socialists, who had long emphasized the primacy of ideas and maintained "the courage to be 'utopian.' " The Mont Pèlerin Society was, above all else, an expression of faith in the power of philosophical abstractions to instigate longterm po liti cal change. Hayek had no explicit theory of transmission and little interest in cultivating or supporting modes of propagation; his sole concern was to create a space that would foster the generative capacity of ideas.

Milton Friedman disagreed in many ways with Hayek and still more so with Keynes, but he, too, shared their belief in the longterm po liti cal impact of economic ideas. An article in Time in 1969 compared Friedman to "a Paris designer whose haute couture is bought by a select few, but who nonetheless infl uences almost all pop u lar fashions." A year later, he explained to the magazine the pro cess through which his ideas entered the po liti cal mainstream: … Act I: The views of crackpots like myself are avoided. Act II: The defenders of the orthodox faith become uncomfortable because the ideas seem to have an element of truth. … Act III: People say, "We all know that this is an impractical and theoretically extreme view— but of course we have to look at more moderate ways to move in this direction." … Act IV: [They] convert my ideas into untenable caricatures so that they can move over and occupy the ground where I formerly stood.

In 1988 he and his wife Rose explained their threepart historical typology of Anglo- American po liti cal economy: fi rst, “The Rise of Laissez- Faire (the Adam Smith Tide),” running from the second half of the eighteenth century to the 1880s; second, “The Rise of the Welfare State (the Fabian Tide),” running from the 1880s to the postwar period; and fi nally, “The Resurgence of Free Markets (the Hayek Tide),” which was “approaching middle age” in public opinion and “still in its infancy” in its effects on public policy. All these “tides” provoked ideological countercurrents at precisely the moment their infl uence on public policy matured. “Promise tends to be utopian,” the Friedmans wrote. “Per for mance never is and therefore disappoints.”

It required the po liti cal ascension of those who had "picked up their convictions, and, what is of more consequence, their prepossessions, in early manhood, which is the one period of life when men are easily impressed with new ideas." As a result, the governmental practices of one period were often attributable to the ideologies of their generational pre de ces sors, and countervailing opinions would be gaining infl uence within the intellectual classes even as politicians put the new conventional wisdom into practice.

In his second lecture Dicey argued that po liti cal change tends to begin not with a conviction growing up "spontaneously among the multitude," but rather through the concerted efforts of "some single thinker or school of thinkers." He then described how the pro cess would typically unfold: "A new and, let us assume, a true idea presents itself to some one man of originality or genius; the discoverer of the new conception, or some follower who has embraced it with enthusiasm, preaches it to his friends or disciples, they in their turn become impressed with its importance and its truth, and gradually a whole school accept the new creed." Eventually "the preachers of truth make an impression, either directly upon the general public or upon some person of eminence, say a leading statesman, who stands in a position to impress ordinary people and thus to win the support of the nation." He saw ideas as spreading from one individual to a group of sympathizers, to those in positions of infl uence, and fi nally to a broad mass of public constituents. This was not a rapid pro cess but rather "gradual, or slow, and continuous," often taking twenty or thirty years to unfold.

Friedman took from this a strong conviction that marginalized individuals had the capacity to effect po liti cal change, and an understanding that public assumptions about po liti cal economy were malleable only over very long periods. "All important movements in the history of mankind have come from tiny minorities," he said at a commencement ceremony in 1969. "They are made by a few creative individuals who see ahead of the masses and who lay the path for the future." He never showed signs of being disheartened at those stages of his career when his ideas were rejected by most of his colleagues in the academy and his politics were widely derided as far outside the mainstream.

Instead, he resolutely sought to affect the views of the young, whom he saw as the only demographic group open minded enough to develop new perspectives based on their encounters with his or his colleagues' ideas. The "people now running the country refl ect the intellectual atmosphere of some two de cades ago when they were in college," he told an audience of executives in 1977. "Most men's basic ideas are formed in their teens. Very few people change their fundamental values and ideas in later life." As a result, "the old theories still dominate what happens in the po liti cal world." His goal was to present his minority perspective in a manner that would compel members of the younger generation to adopt it as their own. He believed that this pro cess of generational transfer, rather than any more immediate forms of advocacy, would prove the most effective means of engendering po liti cal change.

Friedman acknowledged that in matters of economic policy "the patient is incompetent to choose the physician," but he saw "no alternative in a free society." In an environment structured around uninformed opinions, he assumed "the writings that demand least in the way of hard thought and that appeal most to emotion and prejudice are likely to command the widest readership." Friedman shared Hayek’s understanding of the importance of ideas and the long horizons of ideological change, but they parted ways on the question of rhetoric. Friedman’s public utterances, unlike those of his pre de ces sor, are marked by their neartotal instantiation of Dicey’s warning against qualifi cations in the pre sen ta tion of an economic philosophy. While Hayek remained aloof from politics and confi dent in the infl uence of his ideas unaided by his public persona, Friedman embraced the reductive language of the American public sphere as one more lever in the provocation of ideological change. He recognized the absence of limitations in his advocacy of laissezfaire as a primary source of its polemical strength.

For all their differences, Hayek and Friedman are both exemplars of a Diceyan insight: the importance of a belief in the generative capacity of ideas. Both of them built their public lives on an abiding faith that intellectual arguments could transform po liti cal practice.

But Hayek and Friedman, along with their colleagues in the Mont Pèlerin Society, incontrovertibly played a role in the formation of that network of presuppositions that Dicey referred to as the “spirit of an age.” Their narrative, however exceptional, provides an implicit rebuke to the fatalism engendered by encounters with the real. Ideological changes require individuals who can continue to believe, against good evidence, that actions will at some point catch up with their ideas.

Even as the members of the Mont Pèlerin Society experienced greater public and professional infl uence in its later years, many of its found ers remained distinctly ambivalent about its trajectory. Some stopped attending meetings, sending notes to Hayek in which they indicated that the tenor of its arguments no longer refl ected their perspectives; others continued to participate while expressing private dismay at the direction its membership had taken. Their frustrations were not related to the society's impact: its membership continued to expand rapidly, its leading fi gures advised politicians who were well positioned to enact their ideas, and the institutional apparatus in support of freemarket principles was growing ever more intricate and extensive. Rather, the early members worried that the ideas the society now represented were quite different from those that had dominated the initial meetings at Mont Pèlerin. Friedman's persuasive capacity had proved to be far more potent than their own, but they expressed concern that it was leveraged in the ser vice of a very different social philosophy. Members who had come of age reminding socialists of unwelcome complexities could not wholly embrace the simpler logic that now shaped the public understanding of their worldview.

Milton Friedman's social philosophy invoked an optimistic language, ideological coherence, disciplinary prestige, and policy imagination that suited the needs of this new age. Combating repre sen ta tions of the market as a volatile engine that required both veneration and constraint, he reimagined it as an infi nite resource that yielded social benefi ts in proportion to the extent it was set free. Although Friedman often failed to convert the public to his specifi c views, over time his rhetorical audacity succeeded in restructuring the terms of pop u lar debate.

124. Friedman's conception of an unencumbered and individualistic frontier lifestyle drew on a narrative of western history that was common among historians in the early twentieth century. An exemplary text is Frederic Paxson, History of the American Frontier, 1763– 1893 (Boston: Houghton Miffl in, 1924). Long before Friedman delivered his speech, this narrative had been subjected to devastating criticisms; see, for, example, Benjamin Wright, "American Democracy and the Frontier," Yale Review 20 (1931): 349– 365.