John Blundell is President of the Institute for Humane Studies, George Mason University, Fairfax, Virginia. He spoke at The Heritage Foundation on November 14, 1989, in the Resource Bank series of lectures featuring leaders of conservative public policy organ izations. ISSN 0272-1155. 01990 by The Heritage Foundation.1 B. Wootton, Freedom Under Planning and H. Finer, 77ze Road to Reaction.
Among the many who were influenced by The Road to SeijWom, I single out four people: Harold Luhnow, Leonard Read, and F.A. Harper in the U.S., and Antony Fisher in the U.K.
Let us start with Harold Luhnow. In the 1920s and 1930s, Luhnow worked for his uncle William Volker in Volker's Kansas City-based wholesale firm. 2In 1932, Volker had estab- lished the William Volker Fu nd and in 1944 Lulmow succeeded him as the Fund's presi- dent. Luhnow had-already been exposed to classical liberal thought through Loren Miller. Miller incidentally wii intimately acquainted with su6 inio6ftafit bd\u223\'a7ftT6\u223\'a7 9 intellectuals as Jasper Crane of DuPont, B.E. Hutchinson of Chrysler, Henry Weaver of GE, Pierre Goodrich, the Indianapolis businessman and creator in 1960 of Liberty Fund, and Richard Earhart, founder of the Earhart Foundation. Key Question. On reading The Road to Seiydom, Luhnow became a thorough-going classi- cal liberal and, as head of the William Volker Fund, was able to contribute financially to the cause of liberalism. In 1945, he met Hayek and was instrumental in bringing him to the University of Chicago soon thereafter. To Luhnow , as well as Read, Harper, and Fisher, the key question was: What should we do? What strategy should we adopt to change the course -of society? Hayek's answer can be found in a number of his articles of the time, in particular: "His- torians and the Future of Europe" (1944); "Opening Address to a Conference at Mont Pelerin" (1947); "The Intellectuals and Socialism" (1949); "The Transmission of the Ideals of Economic Freedom" (1951); "The Dilemma of Sgecialization" (1956). All are reprinted in his Studies in Philosophy, Politics, and Economics.The key strategic insights from these writings can be summarized as follows: 1) Socialism came into ascendancy partly because of the failure of liberalism to be a seemingly relevant, living, inspiring set of ideas. Li beralism needed reviving and toward this end, Hayek viewed his creation of the Mont Pelerin Society, an international community of classical liberal scholars and other intellectuals, as a critical first step. 2) History plays a major role in the developme n t of people's political philosophy. For Hayek, "nere is scarcely a political ideal or concept which does not involve opinions about a whole series of past events, and there are few historical memories which do not serve as a symbol of some political aim."
2 For more information on Volker, see Herbert Cornuelle's biography, Mr. Anonymous, Caxton Printers, Caldwell, Idaho, 1951. 3 University of Chicago Press, 1967. 4 Capitalism andthe Historians, RKP, London, 19542
Hayek agreed with an insight others had offered - that more people get their economic opinions through the study of history than through the study of economics. Hayek's key example in this regard is the German historical school, which promoted the role of the state and was hostile to spontaneou s order. To Hayek, it was very much responsible for creating the atmosphere in which Hitler could take power.
3) Practical-people who concern -themselves solely with current day-to-day problems tend to lose sight of, and therefore influence on, the long ru n. This is because of their lack of idealism. In a paradoxical way the principled, steadfast ideologue has far greater long-term influence than the practical man concerned with the minutiae of today's problems. 4) Never become associated with special inte r ests and beware of "free enterprise" policies that are neither free nor enterprising - or as Arthur Seldon of London's Institute of Economic Affairs (IEA) says, "Beware of 22 giving politicians dangerous toys. 5) Do not go into politics where you will bec o me imprisoned in a slow process whose outcome was already determined decades ago. Instead, look for leverage in the world of ideas as a scholar, intellectual, or intellectual entrepreneur. 6) Over the long run, it is a battle of ideas, and it is the intel l ectual - the journalist, novelist, filmmaker, and so on, who translates and transmits the ideas of the scholars to the broader public - who is critically important. He is the filter who decides what we hear, when we hear it, and how we hear it. 7) Histori c ally - and here I believe Hayek might change his tune a little if he were writing today - a high percentage of the most able market-oriented people have tended not to become intellectuals or scholars but rather businessmen, doctors, engineers, and so on. On the other side of the debate, a high percentage of the most able socialists - disgruntled with the course of history -became intellectuals and scholars. 8) Finally, and here I quote the whole of the last paragraph of "The Intellectuals and Socialism":
T he main lesson which the true liberal must learn from the success of the socialists is that it was their courage to be Utopian which gained them the support of the intellectuals and therefore an influence on public opinion which is daily making possible w h at only recently seemed utterly remote. Remember that Hayek was writing in 1949. He goes on: Those who have concerned themselves exclusively with what seemed practicable in the existing state of opinion have constantly found that even this has rapidly bec ome politically impossible as the result of changes in a public opinion which they have done nothing to guide. Unless we can make the philosophic foundations of a free society once3
more a living intellectual issue, and its implementation a task which challenges the ingenuity and imagination of our liveliest minds, the prospects of freedom are indeed dark. But if we can regain that belief in the power of ideas which was the mark of l i beralism at its best, the battle is not lost. The intellectual revival of liberalism is already under 95 way in many parts of the world. Will it be in time. To summarize Hayek's message: Keep liberal thought vibrant and relevant; recognize the importance o f history; be principled and steadfast;-avoid special interests; eschew politics and instead search for leverage; recognize the critical role of the intellectual; and be Utopian and believe in the power of ideas. This was the advice Hayek gave Luhnow, Rea d , Harper, Fisher, and others. How did they translate that advice into action? .The Volker Fund, with Loren Miller and the strategic insights of Herb Cornuelle -who was later to become Vice President of Dole, President of United Brands, President of Dil- l i ngham, and to serve on the Board of Directors of the Institute for Humane Studies (IHS) -pursued a number of strategies: First, it supported key world-class scholars who at that time could not obtain positions in American universities. The list includes H a yek, Ludwig von Mises, and Aaron Director - what a comment on the intellectual climate of the time! Second, it helped the then small minority of classical liberal scholars to meet, discuss, and exchange ideas. Friedman's Capitalism and Freedom, Leoni's Fr e edom and the Law, and Hayek's Constitution of Liberty all evolved from such meetings. One can also clearly trace the origins of both Law and Economics and the Public Choice school to early Volker programs. In the same vein, Volker put up the funds that en a bled the North Americans to have such a strong presence at the first Mont Pelerin Society meeting in 1947. Third, it employed the strategy that IHS was later to adopt from 1961 on, namely to iden- tify talented young people interested in the ideal of a fr e e society; qualify (i.e., get to know and evaluate) that talent; and finally support, nurture, and develop that talent. Fourth, it published the Humane Studies Series of books at a time when classical liberal scholars were spurned by publishers. These boo k s were distributed to almost all North American college and university libraries by the National Book Foundation. Finally, Volker encouraged the formation of complementary institutions, among them: The Intercollegiate Society of Individualists (ISI), late r renamed Intercollegiate Studies Institute; The Foundation for Economic Education (FEE); The Earhart and Relm Foundations, and finally IHS, theVolker Fund's strategic successor on its expiration.5 University of Chicago Law Review, Vol. 16, No. 3, Spring 1949.
4Leonard Read established the Foundation for Economic Education (FEE) in March 1946. Read had been a classical liberal since knowing William Mullendore, Herbert Hoover's executive secretary, in California. His early associates included Brown of GM, Goodrich of BF Goodrich, Henry Hazlitt, and the Relm and Earhart Foundations as well as Paul Poirot, William Curtis, and Ivan Bierley. Read carved out an "educational" route. He had two goals, namely, to recover the classi- cal liberal intellectual -t r adition and to disseminate that tradition to the layman. He was remarkably successful. He played a special role in the lives of many people over many years. Indeed, it is safe to say that had it not been for Read and FEE in the '40s, '50s, and '60s, those who followed and expanded the efforts on behalf of the free society in the '70s and '80s would have faced a much tougher battle. Cornell Fearful. F. A. "Baldy" Harper was a professor of economics at Cornell University when he, too, like Luhnow and Read, r e ad 77?e Road to Serfdom. He promptly began using it in his classroom teaching at Cornell. I vividly remember talking with his widow, Peg Har- per, in the summer of 1983, about the reaction to Baldy's use of 77ze Road to Seddom. She -described how one nigh t a trustee of Cornell, who was a friend of Baldy's, came to visit them at their home and asked that Baldy discontinue using 77ze Road to Serfdom in the classroom. In the view of the trustees, its message was more than contentious and, after all, Cornell, l ike so many private universities, received and looked forward to receiving a great deal of government funding. From that moment on, Baldy no longer considered himself in any way tied to Cornell. He very quickly went to join Leonard Read on the staff of FE E and by the mid-fifties had moved to California to join the senior staff of the William Volker Fund. In 196 1, with the Volker Fund due to expire, he made his third move, namely to set up his own shop, to found the Institute for Humane Studies. In this en d eavor, he was joined by people formerly associated with Volker such as Leonard P. Liggio, George Resch, Kenneth S. Templeton, Jr., and Dr. Neil McLeod; and among his earliest business supporters were R. C. Hoiles, J. Howard Pew, Howard Buffet, William L L a w, and Pierre Goodrich. Initially, the Institute for Humane Studies continued many of Volker's programs and was involved in conferences, publishing, and talent-scouting. IHS inherited Volker's staff, ap- proach, and the strategy of Loren Miller and Herb C o rnuelle. As the '70s ended, other groups emerged to run conferences, and university presses and trade publishers began to take a serious interest in the work of classical liberal scholars. This left IHS free to concentrate on its unique mission of talent s cout, and in recent years it has homed in exclusively on identifying, developing, and supporting the very best and brightest young people it can find who are (a) market-oriented and (b) intent on a leveraged scholarly, or intellectual, career path. Our fo u rth intellectual entrepreneur is Antony Fisher who came across the condensed version of 7he Road to Serfdom in Reader's Digest. A former World WarTwo fighter pilot turned farmer, he sought out Hayek at the London School of Economics. "What can I do? Shoul d I enter politics?" he asked.
5"No," replied Hayek. "Society's course will be changed only by a change in ideas. First you must reach the intellectuals, the teachers and writers, with reasoned argument. It will be their influence on society which will prevail, and the politicians will follow." For close to ten years, Fisher pondered Hayek's advice. In the late '40s he traveled to the United States and visited FEE. While he finally selected a different approach, he learned from Baldy Harper of a new agr i cultural breakthrough, the factory farming of chickens, and, armed with an introduction from Baldy, he traveled to the outskirts of Cornell and "met my first chicken farmer." Within a decade, Fisher was Britain's Frank Perdue.6 His widow, Dorian, later co m - mented to me, "He did more to put a chicken in every man's pot than any king or politician ever did." and in 1955 he incorporated the Institute of Economic Affairs in London to make the case for a free economy to the intellectuals.7 He hired Ralph Harri s and Arthur Seldon - Britains "last two economists who believed in free markets," someone joked - and the IEA began to publish a stream of independent studies, written by academics mainly, but couched in layman's language and accessible to all .interested people. Their strategy was to avoid politics, concentrate on the climate of opinion, and educate opinion leaders on market alternatives. For twenty years Harris and Seldon persevered, producing scores of well-researched monographs on everything from housi n g to agriculture, welfare to exchange controls. By the mid-1970s, it was clear that the consensus was turning away from state planning and toward market solutions, and it was also clear that the IEA was responsible. Thatcher Thanks. Indeed, on becoming Pr i me Minister in the summer of 1979, Mrs. Thatcher wrote to Fisher, "You created the atmosphere which made our victory possible." And some years later, in a speech on the occasion of the IEA's 30th anniversary, Mrs. Thatcher added, "May I say how thankful w e are to those who joined your great endeavor. They were the few, but they were right, and they saved Britain." Starting in the mid-'70s the IEA model began to be copied around the world, and Fisher found himself in great demand as a consultant to such fle d gling groups. By the late '70s his mailbag was so large that he incorporated the Atlas Economic Research Foundation to be a focal point for intellectual entrepreneurs wishing to establish independent, public policy in- stitutes. Today, Atlas lists some 50 + institutes in some 30 + countries that it has helped to establish, develop, and mature. It is against this background that the explosion of interest in market ideas in the '70s and '80s must be judged and understood.
6 As a result of his efforts, the price of chicken plummeted. 7 For a detailed, but short, history of the work of London's IEA, see my "How to Move a Nation," Reason, February 1987, pp. 31-35.6
Without the cast of characters I have described and many others - John M. Olin, Randy Richardso n, Dick Larry, Jeremiah Milbank, Dick Ware, Charles and David Koch, and so on - and without their farsighted commitment, we would not be here today and we would not be witnessing a world-wide move toward freedom and free markets. Idea Vacuum. The temptati o n now is to think the battle of ideas is won and all we need to do is to implement the rolling back of the state. The Fabian Society in the U.K. made an analogous mistake in 1945. Following Labour's huge victory at the polls that year, its mem- bers rushe d into government and ieft a vacuum in the'baftleifieild _ofTdFis_._71i1's permitted the IEA to grow in influence unchallenged by a socialist counterpart until the Institute for Public Policy Research was established in 1988. In a very real sense, the batt l e of ideas will never be won. However far we travel along the road to a free society there will always be a temptation to backslide and thus there will al- ways be a job for market liberals to do at all levels, from the practical to the scholarly. In part i cular, we must ensure that liberal thought continues to be relevant and inspiring. Liberal scholars must continually take up challenging, cutting-edge work and strive to be at the forefront of their disciplines. To draw on Hayek again, we must retain "tha t belief in the power of ideas which [is] the mark of liberalism at its best."In no particular order, let me outline some strategic thoughts for the '90s. Of course, I am assuming that all currently successful initiatives or programs continue. 1) Practic al people who pursue careers in business and the professions and who retain an interest in ideas are rare. However, they do exist, and some are on the side of market liberalism. In achieving change there is clearly an important role for the "business inte l lec- tual." At IHS we have started with Liberty Fund of Indianapolis a program of identifying, and nurturing a network of such people - i.e., younger business and professional people who are destined for top-flight careers and who share a concern for libe r ty. It is from their ranks that I see the future Loren Millers, Herb Cornuelles, and Randy Richardsons emerg- ing. 2) For several decades now it has been fashionable to fund economics. Despite the waste of some several hundred million dollars, possibly on e billion dollars, on endowing chairs of free enterprise, we have been winning in economics for some time. We have also done well in law, philosophy, and political science, although much remains to be done. History, moral philosophy, and literature are a d i fferent matter, and while Hayek stresses history I would stress all three as areas that our friends in the foundation world should be demanding we tackle. 3) To the extent that it is possible, we must identify the issues of the next century and in- vest n o w in generating the people capable of tackling them. Take the excellent people at the Political Economy Research Center (PERC) in Bozeman, Montana. They have done pioneer work in promoting the understanding of the role of markets and property rights in so und environmental stewardship. Imagine for a moment that PERC's funding had been many times higher. Imagine that a whole succession of generations of graduate students, numbering say 100 Ph.Ds, had come
7out of its programs to teach, write for the leadi ng newspapers, publish books, and so on. Clearly, the current debate on the environment would be different. 4) We must never overlook or underestimate the critical role of the filter of the intellec- tuals, the people who translate and transmit ideas to t h e general public. Pre-eminent among such people are journalists, but one also thinks of the clergy, novelists, cartoonists, filmmakers, editors, and publishers. Finding,- developing, -and nurturing young-people who value liberty and seek such careers is t h e object of another new IHS program, directed by Marty Zupan. However, we must not overlook the potential for our scholars in this area. Once tenured and well on in their disciplines, our scholars should be encouraged to come out of the ivory tower and jo i n in public discourse. They should not do this early in their careers - it will damage their chances of promotion. But at the right time they should be encouraged to fol- low in the footsteps of Milton Friedman, Robert Nisbet, and Michael Novak. 5) We mus t be alert to the danger of allowing the "free enterprise" tag to be given to policies that while somewhat market-oriented are certainly not free enterprise. A classic here is the growth of contracting out, that is of governments' issuing exclusive contrac t s to firms to do a job previously undertaken by directly employed labor. I have cataloged else- where the problems inherent in such a situation. 8 Today, I simply want to note that contracting out is not free enterprise. Yet when con- tracting out runs in t o problems, free enterprise gets a bad name. 6) Finally, I want to reiterate Arthur Seldon's point about giving dangerous toys to politicians. Here let me contrast four recent policy developments: denationalization, contracting out, enterprise zones in th e U.K., and airline deregulation in the U.S. U.K. denationalization and U.S. airline deregulation have both been successful. Enterprise zones and contracting out in the U.K. are, respectively, a total failure and problematic. The two successes were both ba s ed on well researched, well thought-out papers, articles, and dissertations. For years, if not decades, scholars and other intellectuals had debated and discussed every aspect of both reforms. As early as 1973 in the U.K., I can remember ar- ticles on and discussion of how we should denationalize through a program gf widespread stock ownership and many of the other techniques of the mid- and late '80s. These and various other articles paved the way for the reforms of recent years in the U.K. Similar debate s took place here in the U.S. on airline deregulation. The result of such rigorous examination was a pair of sound strategies.
8 "Privatisation Is Not Enough,"Economic Affairs, April 1983 and "Privatisation -by Political Processor Consumer Preference?,"Econornic Affairs, October-November, 1986.
9 See, for example, Goodbye to Nationalisation, edited by Dr. Sir Rhodes Boyson, Churchill Press, 1973 and Russell Lewis's chapter, "Denationalisation" in 198.5.- An Escapeftvm Orwell's 1984, edited by Dr. Sir Rhodes Boyson, Churchill Press, 1975.8
Let's contrast this with enterprise zones and contracting out in the UX Both ideas sud- denly appeared on the policy agenda in the late '70s and both were being implemented within a couple of years. In neither case was there more than derisory discussion of poten- tial problems. The result: a pair of flawed strategies.The story I have told of men such as Hayek,-Lulmow, Read, Harper,. and Fisher is a story of heroes. 11eir courage and persistence are inspiring.- So too are the patience, foresight, and strategic sense of the many other individuals I mentioned. They built a solid base. As long as we are not duped into believing either that the bat tle is won, or that we can now employ shortcuts, the future for a society of free and responsible individuals is indeed bright.