Reinventing Liberalism: The Politics, Philosophy and Economics of Early Neoliberalism (1920-1947)

"The reason this book is important is because it is a meditation upon the issue of how classical liberalism was deeply unstable and also got its comeuppance in the period that saw the rise of the Nazis and the aftermath of World War Two. There are many people who consider themselves to be followers of Hayek who also claim to be classical liberals in the tradition of Adam Smith . That combination turns out to be misleading and wrong because classical liberalism was in deep trouble. It’s really important to understand the reasons for that if we’re going to understand why Hayek became significant. Innset is great on all that. He’s wonderful at parsing the inherent contradictions of the neoliberal response to the crisis of liberalism by focusing his book on the first meeting of the Mont Pelerin Society. You might imagine that, as a history of neoliberalism, this narrow focus is a bit boring, that it’s an unfortunate way to go about exploring intellectual history. But actually, it turns out to be a great entry point, because all of the issues that are involved in the formation of neoliberalism emerge with great clarity when you look at what went on at that meeting in 1947. That’s what Innset accomplishes. Among the issues he touches upon is the fact that the Mont Pelerin Society started out as Hayek’s baby. This political landmark wouldn’t have happened without Hayek’s subtlety in bringing these people together who actually didn’t agree on very much, and then getting them to consider working on a united project. A second thing Innset highlights are the close ties some of the founding members had to fascism, although Hayek always denied he had any such sympathies. Innset also highlights the instability of Hayek’s position where, on the one hand, he’s attacking economic planning, because economic planning is just going to lead to everything that’s awful, like the Nazis and the Soviet Union. On the other hand, he argues that laissez faire, classical liberalism has failed. He states this latter thesis over and over and over again, so it’s important to take it seriously. The question becomes whether Hayek’s proposal is some kind of ‘third way’ story and, if so, what kind of third way. What Innset brings out in his discussion is that no one in 1947 had any idea what this third way was. It’s not even clear, I think, to Hayek. It’s a very fascinating way to unpack the beginning of this project. There’s no manifesto of seven points to bring about the dawn of a new world—it’s not like that at all. Innset points out that this instability is not sufficiently stressed in much of the Hayek literature, but it’s brought right up front in his book. Hayek became famous for preaching the slippery slope to totalitarianism in his Road to Serfdom , which is just one side of this political problem and doesn’t really have a clear focus and analysis. Innset captures what this project started out as, which is an expression of despair, but really not very much of a plan at all. How to plan for the downfall of planning? But it’s amazing the extent to which he can organize people around it and get them to talk to each other. How can Hayek pull off this balancing act, which on its face doesn’t really seem to be very plausible? If I have a criticism of this particular book, it’s that Innset plays down the importance of epistemology in all of this—the theory of how we come to know things. A lot of the Mont Pelerin Society’s initial efforts to feel their way towards what they’re eventually going to promote is about understanding what the market is and what it does. It’s there in this book, but there’s not enough discussion of it. Yes, MPS became an annual event. It was not trivial to get a lot of these people together and get them to rehash things year after year. Also, even though it’s got a heavy economics component, Hayek had a light touch and was constantly bringing in people outside of economics to add to the mix. Economics became inward-looking in its postwar manifestation, with high walls and a strong sense of ‘us’ and ‘them’. Hayek also has his own sense of ‘us’ and ‘them’. His ‘them’ is the people who try to make excuses for socialism, but it’s much harder to know who the ‘us’ is, or credit their ideas as politically feasible. What eventually comes out of these meetings is a conviction that democratic politics is dangerous, and that the neoliberals must take over the government to produce the sort of market-friendly society that will permanently relinquish socialism to the trash heap of history."