Neoliberalism 2: From Paris to Pèlerin

by Mike Goodman

Errata

Before continuing on this journey it is appropriate to correct two errors in the introductory text last week.

The first is that the word Neoliberalism was adopted during the “Colloque Walter Lippmann” (the Walter Lippmann Colloquium) which took place in 1938, predating the Mont Pèlerin meeting it was accredited to last week by almost 9 years.

The other is that the Colloquium was actually organised by French philosopher Louis Rougier. It was named after Walter Lippmann, the American journalist and author, who did attend.

Colloque Walter Lippmann

The conference, named after Lippmann because of his book “the Good Society”[1], was held in Paris in August 1938 to discuss the ideas Lippmann had proposed in the book. The essence of the idea was a new liberalism, which was to reflect the original ideals of liberalism, which had been previously – in their view – hijacked and altered towards centrism. What better name to adopt for the new old movement than neoliberalism. It didn’t need a capital “n” after all.

The book was widely well received and it is believed to be this factor which enabled Rougier to attract support for the conference. Its aim was to coordinate action against planned economies, for which we can probably read totalitarian. Several of Europe’s nations at the time, viz. Germany, Italy, Hungary, Spain, Greece, were governed by fascists and there was, of course, the Soviet Union of Russia and its surrounding nations.

What led up to the conference is not well documented. However it seems some people were already using the term neoliberal. The general understanding as discussed at the conference was that it meant that the only role of government in a free society was to impose competition where competition did not exist.

What actually happened and who said what is documented by François Denord in an article for Le Mouvement Social 2001/2 (No 195)[2]. For those wishing to take a more rigorous academic look at the account, Denord’s article is well annotated and cites ample references.

Our purpose is to take more of an overview of the doctrine of neoliberalism in order simply to understand sufficiently to examine whether it is a suitable political doctrine for our more modern times, along with whether its effects over the past 40 or so years as the prevailing doctrine of Western governments has been beneficial or harmful.

The attendees of the 1938 Colloque were invited from a range of academic and industrial backgrounds. The records tell us 26 actually attended, but there were only 25 in this list. They were:
José Castillejo (Spain);
Marcel van Zeeland (Belgium);
John Bell Condliffe, Friedrich Hayek, Michael Polanyi (Great Britain);
Michael Heilperin (Poland);
Ludwig von Mises, Alexander Rustow, Wilhelm Röpke, Doctor Schutz (Austrian School);
B. Hooper, Walter Lippmann (United States),
The French contingent included:
Louis Baudin, Bernard Lavergne, professors at law;
Louis Marlio, Auguste Detœuf, Ernest Mercier, industrialists;
Marcel Bourgeois, listed as a figure linked to the Éditions de Médicis;
Jacques Rueff, a senior economic official;
Roger Auboin, director general of the Bank for International Settlements;
Raymond Aron, Étienne Mantoux, Robert Marjolin, André Piatier, all listed as “the youth of the congress”.
Louis Rougier, philosopher, the conference organiser.

It was the success of this conference which encouraged Friedrich Hayek. Of course, the war intervened so there was little organisational activity. However it did give him the confidence to go ahead and organise another conference in the small, pictorial Swiss resort of Mont Pèlerin once that had all settled down. The conference took place in April 1947.

In the interim Hayek’s seminal work “The Road to Serfdom”[3] was published in 1944, after three years of composition from 1940 to 1943. Hayek’s protege Milton Friedman was much taken by the book and it guided his work as Friedman himself rose to prominence.

But Hayek did not impress all of his contemporaries in the field of economics. Keynes accused him of muddled thinking and they disagreed a great deal in an exchange of letters. Much later, J K Galbraith was to criticise his work and Paul Krugman was to say that his work was much more about politics than economics[4].

In reviewing “The Road To Serfdom” George Orwell wrote this part-paragraph:

“But he does not see, or will not admit, that a return to ‘free’ competition means for the great mass of people a tyranny probably worse, because more irresponsible, than that of the State. The trouble with competitions is that somebody wins them. Professor Hayek denies that free capitalism necessarily leads to monopoly, but in practice that is where it has led, and since the vast majority of people would far rather have State regimentation than slumps and unemployment, the drift towards collectivism is bound to continue if popular opinion has any say in the matter.”[5]

Was this a prescient view? In the next episode we examine especially the inaugural meeting of the Mont Pèlerin society, who was there, what came out of it. The Paris colloquium was an important historical event, but it was at Mont Pèlerin that important decisions (which would change the entire modus operandi of Western capitalism) were made.

[1] “The Good Society”, Walter Lippmann, first published 1937 by George, Allen & Unwin. The 1944 edition is now available to read online

[2] Available at François Denord, Le Mouvement Social 2001/2 (No 195)

[3] Friedrich von Hayek, “The Road To Serfdom” 1944, (Routledge Press, UK), 1944 (University of Chicago Press, US)

[4] There is a good Wikipedia page on Hayek, with all relevant references.

[5] Review by Orwell: The Road to Serfdom by F.A. Hayek / The Mirror of the Past by K. Zilliacus Observer, 9 April 1944, as reproduced at Maud’s Tavern Blog

Author: Mike Goodman

Mike's main intersts are in economic policy, politics and current affairs. He has a degree in economics. He is retired now but still makes himself available occasionally for interesting speaking or training engagements. Leisure interests include rugby (the union code), cricket, music (especially modern to contemporary jazz), food, wine, good company or a good book.

Leave a Reply

Your email address will not be published. Required fields are marked *