‘The marginal revolutionaries’ review: Team Liberty
At the dawn of the 20th century, Vienna was the nerve center of a vast Austro-Hungarian Empire that controlled most of central Europe. The city was a haven of baroque splendor and liberal conscience, a multicultural citadel of wine, women and song. Ironically, it was also the incubator of revolutionary movements that would make this the bloodiest century in human history and bring profound political, social and economic changes to vast swathes of the West.
It was in the cafes of Vienna that the Russian Bolsheviks Nikolai Bukharin, Leon Trotsky, Vladimir Lenin and Joseph Stalin plotted the Marxist revolution that would result in huge numbers of deaths in their homeland. Another coffee regular, Adolf Hitler, is said to inflict on millions of Europeans a deadly Germanic variant, National Socialism.
The marginal revolutionaries
By Janek Wasserman
Yale, 354 pages, $ 35
Luckily, another coffee talk covered ideas that were totally contrary to socialism. Their authors laid the intellectual foundations for policies tolerant of economic freedom and market capitalism. These ideas would become the core of the so-called Austrian School of Political Economy. For a time, an expanding Soviet empire spread Marxism around the world, but by the end of the 20th century the ideas of the Austrian school would dominate global economic policies.
With âThe Marginal Revolutionaries,â Janek Wasserman, professor of history at the University of Alabama and author of a book on Vienna between the wars, wrote a masterful history of this war of ideas. He cites the economist Carl Menger as the founder of the Austrian school at the end of the 19th century. Menger challenged the then orthodox “theory of the value of labor” which Karl Marx had turned into a war cry “the workers of the world unite”. In its place, Menger introduced the concept of “marginal utility,” which, in overly simplistic terms, means that the only precise way to measure the true value of goods, and thus to achieve an efficient allocation of resources. , is to go through an arrangement that allows the buyer to indicate what he is willing to pay to meet his needs or wants, in short, what the market will support. The fixing of prices by state decrees is causing trouble. Menger’s ideas, over time, were developed into a broad theory of economics and society, so the Austrian school came to mean a defense of individual liberty and an indictment against it. statism and central planning.
The early Austrians, such as Menger, Friedrich von Wieser, and Eugen von BÃ¶hm-Bawerk, held important positions at the University of Vienna or in the Austro-Hungarian government. But World War I was a “total disaster” for those around them, writes the author. The empire is collapsing. Horrific wartime losses traumatized the Austrian population. The Bolsheviks had returned home, but their ideology remained. The once liberal city has become a âred and blackâ Vienna of rival Marxists and National Socialists.
Menger’s younger followers emigrated to America and drew supporters to combat the statist tendencies of the New Deal and John Maynard Keynes. Many “Austrians” had built their reputations by the late 1920s, writes Wasserman. “They developed an innovative understanding of business cycles and monetary theory, which gained a wide audience in the postwar and Great Depression periods.” Ludwig von Mises denounced government attempts to smooth out economic cycles, arguing that interventionism is destructionism and that markets, in times of downturn, if left alone, would make the necessary adjustments. On the monetary front, Friedrich Hayek argued, as Mr. Wasserman put it, that âchanging the quantity of money was a blunt instrument which would only exacerbate existing economic imbalancesâ.
The Austrians set about disseminating their ideas widely. They “have cultivated relationships with financial and political elites in chambers of commerce, national banks and conservative political parties,” Mr. Wasserman tells us. And they “found transnational support from the League of Nations and the Rockefeller Foundation.” After World War II, supporters of Austrian philosophy shaped politics through institutions such as the Mont Pelerin Society and the Rand Corp. beggar mercantilism and protectionism.
Austrian theorists have played a major role in think tanks like the American Enterprise Institute, the Cato Institute, the Heritage Foundation, and the Hoover Institution. Some have achieved individual success. Joseph Schumpeter, an Austro-Hungarian-born charismatic thinker who taught economics at Harvard, wrote that economies grow through the âcreative destructionâ of obsolete companies. Milton Friedman of Chicago’s televised free market lectures – best known in academia for his advocacy for steady-state money creation and floating exchange rates – were a hit with the public. Austrian-born Gottfried Haberler at Harvard pushed economic globalization to great effect. Von Mises, one of the first Austrians, taught at NYU, wrote extensively, mentored young economists, and, through his free market concepts, became the patron saint of modern libertarians.
Perhaps the greatest Austrian was Hayek, who provided a motto: âNo one can be a great economist who is only an economist. As a result, he wrote one of the most influential political philosophy books of the post-WWII era, “The Road to Serfdom”. The University of Chicago Press published it in 1944. Mr. Wasserman writes: âLess than a year after its appearance, Hayek was a celebrity and Road a feeling. Reader’s Digest printed a condensed version, exposing it to millions of readers.
The book came at a crucial stage in World War II, when Nazi Germany was an enemy and the Soviet Union was an ally. Mr. Wasserman writes that âHayek offered an account of the rise of Nazism which identified socialism as its producer and liberalism as the bulwark against totalitarianism. It was a defense of “liberal and capitalist society”, of private property and of the laissez-faire economy.
Hayek’s point of view, eloquently expressed in “The Constitution of Liberty” and “Fatal Vanity,” among many other books, has proven to be of lasting importance. At the heart of his philosophy was a defense of “spontaneous order”, the idea that individuals acting independently will achieve arrangements more beneficial to society and to themselves than any central authority, acting with knowledge. incomplete, can never do it.
By the turn of the century, the Austrian school had prevailed. The Russian socialist empire disintegrated in 1991, to be replaced by a form of “wild eastern” capitalism. Deng Xiaoping folded Maoist socialism in 1979 in favor of Western capitalist investment. Ironically, a prominent socialist writer, Robert Heilbroner, wrote the epitaph: âThe struggle between socialism and capitalism is over; capitalism won.
But it may have been premature. The egalitarian demands of socialism remain attractive. They reappeared in the Green New Deal, which proposes government takeovers of key sectors of the economy in the name of “environmentalism.” He at least gets lip-service from most of the Democratic Party’s presidential nomination contestants, despite his nonsense. Indeed, a quasi-socialist creed seems to govern many of the ideas that are now germinating within the Democratic Party: radical distribution of wealth, increasingly important rights, government-run health care, income guarantees. Mr Wasserman has chosen an excellent time to rediscover the teachings of the Austrian school’s âfringe revolutionariesâ and the safer world that their advocacy for economic freedom has given us.
-Sir. Melloan, former associate editor of the Journal’s editorial page, has written a book on fake science, which will be published by Lyons Press.
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