ARCHIVAL INSIGHTS INTO THE

EVOLUTION OF ECONOMICS

HAYEK: A
COLLABORATIVE
BIOGRAPHY
Part VIII:
The Constitution of Liberty:
‘Shooting in Cold Blood’, Hayek’s Plan
for the Future of Democracy

Robert Leeson
Archival Insights into the Evolution
of Economics

Series Editor
Robert Leeson
Stanford University
Stanford, CA, USA
This series provides unique archival insights into the evolution of eco-
nomics. Each volume examines the defining controversies of one or
more of the major schools.

More information about this series at

http://www.palgrave.com/gp/series/14777
 Robert Leeson

Hayek: A
Collaborative
Biography
Part VIII: The Constitution of Liberty:
‘Shooting in Cold Blood’, Hayek’s Plan
for the Future of Democracy
Robert Leeson
Department of Economics
Stanford University
Stanford, CA, USA

Archival Insights into the Evolution of Economics

ISBN 978-3-319-78068-9 ISBN 978-3-319-78069-6 (eBook)
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 Contents

Part I Crony Capitalists and Their ‘Free’ Market School

of Economics

1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument

Which Is Not Sympathetic to Me, I Pass Over’ 3

2 ‘The Two Great Scarcities in the Libertarian Movement:

Money and Talent’ 79

3 The Deception Plans of the ‘Aristocratic Revolution’:

‘Von’ Hayek I, II and III 115

4 The Deluding and the Deluded 159

5 Summoned to Service by TOFF Funds

and Aristocratic Bells 199

6 ‘Free’-Market ‘Knowledge’: Seven Suggested

Research Topics 269

v
vi   Contents

Part II Hitler and the Austrian School ‘United Front’

with ‘Neo Nazis’

7 Power, Terror and Rights: An Overview Chronology 309

8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’

‘Oligarchic’ ‘Liberty’ and Russia of the Oligarchs 353

9 Cold War ‘Peace’ 415

10 ‘Shooting in Cold Blood’ 453

11 What ‘Things’ Did Hitler ‘Get Done’? 497

12 The Unravelling and the Glue 549

Bibliography 609

Index 667
 Part I
Crony Capitalists and Their ‘Free’ Market
School of Economics
 1
‘Free’ Market ‘Knowledge’:
‘That Part of the Argument
Which Is Not Sympathetic to Me,
I Pass Over’

1 Archival Insights into the Evolution

of Economics
This volume of the AIEE series examines the relationship between the
Austrian School of Economics and the overthrow (or planned over-
throw) of democracy in a variety of countries, including inter-war
Germany and Austria and Cold War Chile, the USA and Britain. The
AIEE series seeks to provide a systematic archival examination of the
process by which economics is constructed and disseminated. All the
major schools will be subject to critical scrutiny; a concluding volume
will attempt to synthesise the insights into a unifying general theory of
knowledge construction and influence.
Before encountering the argumentum ad hominem of the Tobacco,
Obesity and Fossil Fuel (TOFF) Professoriate, the AIEE editor
largely accepted the validity of Ludwig ‘von’ Mises’ (1998, 90) cliché:
‘Scientists are bound to deal with every doctrine as if its supporters were
inspired by nothing else than the thirst for knowledge.’ Two AIEE vol-
umes were initially planned for the entire Austrian section. However, it
soon became apparent that due to the amount of stolen and covered-up
© The Author(s) 2019 3
R. Leeson, Hayek: A Collaborative Biography,
Archival Insights into the Evolution of Economics,
https://doi.org/10.1007/978-3-319-78069-6_1
4    
R. Leeson

evidence almost two score volumes would be required to examine

Friedrich ‘von’ Hayek alone.
Economic ‘theory’ is a misnomer: the subject has been constructed
through competition between school-based theories. Theory (and illus-
trative evidence) is the bridge between the school (or individual econo-
mist) and their preferred (if often unacknowledged or fully recognised)
societal outcomes. The ‘presuppositions of Harvey Road’ informed John
Maynard Keynes’ theorising (Harrod 1951), and the presuppositions
of his proto-Nazi family and milieu played a similar role for Hayek.
And as Lawrence White (2008) unintentionally discovered, for Hayek
and Mises, economic ‘theory’ is an elaborate and ornate facade behind
which to pursue deflation—and thus ‘extensive unemployment’—so as
to reconstruct the ‘spontaneous’ order (see also Magliulo 2018; Glasner
2018). And Presuppositionalist public stoning theocrats also sense an
opportunity to impose their ‘free’ market.
The two fraternities that emerged from the French Revolution—com-
mitted, respectively, to the slogans of ‘liberty’ and ‘equality’—have tended
to see the world as an irreconcilable conflict concerning the share of
national income that ‘should’ accrue to the owners of the two primary
factors of production: labour (human capital) and (non-human) capital.
Two trade unions (and their associated political representatives) emerged
from the Third Estate: for employers and for labour. Adam Smith (1827
[1776], 137) famously cautioned that ‘People of the same trade seldom
meet together, even for merriment and diversion, but the conversation
ends in a conspiracy against the public, or in some contrivance to raise
prices.’ Mises (2006 [1958], 97) complained: ‘You have, in the legis-
latures, representatives of wheat, of meat, of silver, and of oil, but first
of all, of the various unions.’ Mises (1881–1973), the co-leader of the
third-generation Austrian School, was a paid lobbyist for employer trade
unions1; and the co-leaders of the fourth generation, Hayek (1899–1992)
and Murray Rothbard (1926–1995), were also funded from the same
source.2 Behind the abstractions of ‘mal-investment,’ their mission was to

1He was sacked in 1938, after the Anschluss that he had promoted, and for a few wartime years
may have not had much, if any, funding from the business lobby.
2In Hayek’s case: with the exception of his time at the LSE, 1931–1949.
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
5

undermine the power of the other (labour) trade union. In contrast, the
British branch of the neoclassical school promotes the tax-funded acquisi-
tion of education (human capital) as a harmonising invisible hand.
Both major branches of the neoclassical school (British and Austrian)
promote interference with the price mechanism. In the British
Pigouvian-externality tradition, taxes and subsidies are recommended to
promote full-cost pricing; and in the post-Keynesian tradition, incomes
policies or price and wage controls (underpinned by cost-push or wage-
price spiral analysis) are often proposed to assist the pursuit of the
empty concept of ‘full’ employment.
In The General Theory of Employment, Interest and Money, Keynes
(1936, Chapter 2)—disturbed by the threat to civilisation posed by the
return to the gold standard and the resulting general strike—advocated
(naively, perhaps) a once-and-for-all rise in the price level to reduce
both real wages and unemployment:

it is fortunate that the workers, though unconsciously, are instinctively

more reasonable economists than the classical school, inasmuch as they
resist reductions of money-wages, which are seldom or never of an all-
round character, even though the existing real equivalent of these wages
exceeds the marginal disutility of the existing employment; whereas they
do not resist reductions of real wages, which are associated with increases
in aggregate employment and leave relative money-wages unchanged,
unless the reduction proceeds so far as to threaten a reduction of the real
wage below the marginal disutility of the existing volume of employment.
Every trade union will put up some resistance to a cut in money-wages,
however small. But since no trade union would dream of striking on
every occasion of a rise in the cost of living, they do not raise the obstacle
to any increase in aggregate employment which is attributed to them by
the classical school.

The Great Inflation of the 1970s—initiated by the second-year (1948–)

Mont Pelerin Society (MPS) member and Richard Nixon’s Chair of
the Federal Reserve, Arthur Burns—turned Keynes’ ‘dream’ into a
nightmare.
To end inflation, Mises reportedly stated: ‘Hear that noise’ of the print-
ing presses? ‘Turn it off!’ (Chapter 8, below). Using a price-wage-depression
6    
R. Leeson

spiral, Austrians seek to ‘turn off’ labour trade union power through a
‘contrivance’ to reduce prices: demand-pull deflation which (temporarily)
increases the real wage creates double-digit unemployment (the equilibrat-
ing vehicle) through which nominal wages and labour trade union power
are reduced. They also provide intellectual respectability to the TOFF lobby
in their efforts to keep prices reduced (by avoiding externality full-cost
pricing).
The AIEE series had been designed to address six questions:

i. How is knowledge constructed and by whom?

ii. What quality control mechanisms are applied by producers?
iii. How is knowledge marketed?
iv. Who consumes it and why?
v. What quality control mechanisms are applied by consumers?
vi. What are the consequences (intended and unintended) of the con-
structed knowledge?

The Hayek Archives (some stolen, some available, some suppressed)

suggest at least seven further questions:

vii.  Why does a community tolerate—rather than reporting—

academic, financial and immigration fraud?
viii. What are the consequences of fraud for public policy?
ix. Do scholars have a responsibility to report the fraudulent use of
public funds to the authorities?
x. Why did a History of Economics Society (HES) President offer
the AIEE editor hundreds of thousands of tax-exempt dollars not
to publish the long-suppressed evidence about Hayek and to work,
instead, on a hagiographic project?
xi. What role did Hayek and Mises play in facilitating Hitler’s rise to
power?
xii. Why do epigone-generation Austrians continue to promote the
deflation that assisted Hitler’s rise to power?
xiii. What role have Austrian economists and philosophers played in
ending democracy in Chile and elsewhere?
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
7

2 ‘I Have Very Strong Positive Feelings

on the Need of an “Un-Understood”
Moral Tradition’3
Achieved status is acquired within a societal structure that bears the
heavy residual influence of previously achieved—that is, subsequently
ascribed—status.4 In England, selective entrance grammar schools were
the primary vehicle for upward social mobility. The majority of voters,
however, had been non-selective entrance ‘secondary modern’ educated
(trades, semiskilled and unskilled), and only a small minority were pri-
vately educated in ‘public’ (fee-paying) schools. With condescension,
goes deference: before the 1979 general election, Margaret Thatcher,
who was sneered at by the private (that is, ‘public’) school focused
Private Eye as a ‘grocer’s daughter,’ took ‘upper-class’ elocution lessons to
out-trump the lower-middle-class-born, non-university educated James
Callaghan.
Hayek (1994, 92) observed that people got ‘enchanted by merely
listening’ to Keynes’ ‘words’: his Old Etonian ‘voice was so bewitch-
ing.’ The editor of the (London) Times, William Rees-Mogg, recalled
Thatcher ‘listening to Friedrich von Hayek like a schoolgirl, her face
glowing with attention’ (cited by Campbell 2007, 372). Ralph Harris
(2000)—the son of a tramways inspector, ‘one of four children born to
working-class parents on a council estate’ who rose, via a ‘free’ market
think tank (the Institute of Economic Affairs, IEA), to become Baron
Harris of High Cross (Roth 2006)—introduced her to Hayek: ‘she
called by, and sat down at the desk, and the unkind quip I make is that
there was a period of unaccustomed silence from Margaret Thatcher
as she sat there, intense, attending to the master’s words, not her usual
dominating conversation.’

3Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral
History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
4Sometimes, these residuals become harmless tribal identities. The two rival branches of the

House of Plantagenet—the Houses of Lancaster (red rose) and York (white rose)—fought for the
throne of England (1455–1487), and half a millennium later, cricket teams from those counties
fight with a special intensely in ‘Roses’ matches.
8    
R. Leeson

Pre-Austrian Classical Liberals like John Bright described the aristoc-

racy as a moribund social class, while Whigs and Tories saw a noble back-
ground and land ownership as ‘essential requirements for political power.’
In the public policy domain, experts confronted landowning aristocratic
amateurs for influence (Bradley 1980, 52, 66). A century later, Hayek
(1949, 420–421), in reaffirmed the pre-democratic view, appropriated
the label of expertise for the aristocratic amateurs: there was a crucial
distinction between ‘the real scholar or expert and the practical man of
affairs’ and non-propertied intellectuals, who were ‘a fairly new phenom-
enon of history,’ and who’s low ascribed status deprived them of what
Hayek regarded as a central qualification, ‘experience of the working of
the economic system which the administration of property gives.’5
Teleological assumptions (i.e. guaranteed to lead to preordained conclu-
sions) about the basic unit of ‘scientific’ analysis bolstered both Marxists—
homogenous and objective class interest—and Austrians—the sovereign
consumer as a super-rational agent who has no need for a nudge to adjust
short-run impulsive (and producer-manipulated) behaviour to reported
long-run desired outcomes. Four years after the demise of Habsburg sover-
eignty, Mises promoted ‘consumer sovereignty’ as an alternative to democ-
racy (Leeson 2015a, Chapter 7). In 1918, 85% of those ruled by the
Habsburgs were illiterate (Taylor 1964, 41, 35, 166). In a journal commit-
ted to ‘gold economics finance world events stock markets,’ Hayek (1980)
explained that the gullible (allegedly sovereign) consumer had been manip-
ulated—not by producers and advertising—but by education: the ‘great
masses’ had been fed opium or false consciousness through the ‘media and
the schools … this intellectual conceit which believes that if you only used
your intelligence properly you could design everything much more effec-
tively than it is. It’s really a sort of intellectual arrogance which believes that
man, after all, which had, as they imagined, built his civilisation, certainly
should be capable of greatly improving civilisation.’

5‘Though nobody will regret that education has ceased to be a privilege of the propertied classes,

the fact that the propertied classes are no longer the best educated and the fact that the large
number of people who owe their position solely to the their general education do not possess that
experience of the working of the economic system which the administration of property gives, are
important for understanding the role of the intellectual.’
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
9

Bright found in America ‘a free church, a free school, free land, a free
vote, and a free career for the child of the humblest born in the land’
(cited by Bradley 1980, 61). And Paul Johnson (1997, 149) reported
that the ‘new egalitarian spirit’ in post-colonial America ‘consciously
placed education right at the front of national priorities.’ The post-
1870 British system of publically funded elementary education was
influenced by the American model: compared to the Habsburg Empire,
Britain and America have been relatively successful in promoting
human-capital-fuelled social mobility. Milton Friedman, whose Austro-
Hungarian parents arrived in the USA in 1894 and 1895, respectively,
was the beneficiary of the ‘high value that my parents, like the Jewish
community in general, placed on education’ (Friedman and Friedman
1998, 21); Rothbard’s (1994a) parents also migrated out of the area that
later became Austro-German Lebensraum: ‘My father emigrated to the
United States from a Polish shtetl in 1910, impoverished and knowing
not a word of English.’
The American taxpayer initially paid for Murray Rothbard’s (1994a)
education until he ‘shifted’ in early grades from the ‘debasing and egal-
itarian public school system to a private school,’ Birch Wathen (on
Manhattan’s Upper East Side) that he ‘enjoyed a great deal.’ Rothbard
(1994b, 12)—who was financially dependent on the tax-exempt
Austrian Welfare State—was horrified that taxes were being used to edu-
cate migrants: ‘Within the framework of the welfare state, immigrants
have access to all the entitlements granted to citizens: not only welfare
benefits of every description, but also the right to an education at public
expense.’
Robert Anderson (1999) observed (as a ‘free’ market proponent)
the consequences of ‘free’ market rule: George Roche III (a former
Foundation for Economic Education, FEE, employee) was a ‘user who
saw the deep pockets of conservatives and looted them for his personal
aggrandizement.’ With respect to academic freedom, Roche’s Hillsdale
College was the quintessential Misean institution:

One of the first indications that there was a different man behind the
facade was George’s intolerance toward criticism. Some people can han-
dle negative comments better than others, but George could not accept
10    
R. Leeson

any. Like most narcissists, George had an insatiable appetite for praise
but a zero tolerance for the slightest disapproval or even a differing judg-
ment … You learned quickly the futility of ‘arguing with George’ or even
disagreeing with him. One hundred percent approval and agreement
were required.

Hayek had lunch at the Reform Club with Donald McCormick (aka
Richard Deacon), the author of the patently false assertion that the
inventor of externality taxes (A. C. Pigou) was a Soviet agent, and
noticed that he ‘may sometime [sic] be making things up’—but pro-
moted the fraud anyway (Leeson 2013, Chapter 9; 2015b). The
Heartland Institute’s Richard Ebeling (1994a), Hillsdale’s ‘Ludwig von
Mises Professor of Economics,’ then illustrated what passes for ‘knowl-
edge’ in the ‘free’ market by repeating Hayek’s (1994, 137) ‘official his-
tory’: Pigou was a gunrunner for Stalin.
Simultaneously, Ebeling (1994b) asserted that in the

hands of the state, compulsory public education becomes a tool for polit-
ical control and manipulation -- a prime instrument for the thought
police of the society. And precisely because every child passes through
the same indoctrination process -- learning the same ‘official history,’ the
same ‘civic virtues,’ the same lessons of obedience and loyalty to the state
-- it becomes extremely difficult for the independent soul to free himself
from the straightjacket of the ideology and values the political authori-
ties wish to imprint upon the population under its jurisdiction. For the
communists, it was the class struggle and obedience to the Party and
Comrade Stalin; for the fascists, it was worship of the nation -- state and
obedience to the Duce; for the Nazis, it was race purity and obedience to
the Fuhrer. The content has varied, but the form has remained the same.

Mises (1985 [1927])—a FEE employee and its ‘spiritus rector ’—literally:
‘Führer,’ ‘ruler’ (Hülsmann 2007, 884, 851, n26)—aspired to be the
intellectual Führer of a Nazi-Classical Liberal Pact (Chapter 2, below).
Like the Boko Haram (translation: ‘Western education is forbidden’)
Holy Terror group, in his defining statement of Liberalism in the Classical
Tradition, Mises (1985 [1927], 115) provided the foundations of a
‘spontaneous’ order: ‘It is better that a number of boys grow up without
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
11

formal education than that they enjoy the benefit of schooling only to
run the risk, once they have grown up, of being killed or maimed. A
healthy illiterate is always better than a literate cripple.’ The Argentinian
‘free’ market dictator promoter, Benegas Lynch (1971), cited approvingly
from Mises (1985 [1927], 68): private property ‘allows other forces to
arise side by side with and in opposition to political power … In this
sense, it has even been called the fundamental prerequisite for the devel-
opment of the individual.’
In the seventeenth century, liberalism—the idea that the state exists
to serve the individual—sought to overcome the Divine Right of Kings,
and in the twentieth century, it was threatened by ayatollahs, the Divine
Right of the State (Hitler and Stalin) and the Divine Right of the ‘Free’
Market (Mises, Hayek, Rand and Rothbard) (Leeson 2017a). John
Locke’s (1690, Chapter 5) Second Treatise of Civil Government extolled
(what could be interpreted as) the Divine Right of ‘the industrious and
rational (and labour was to be his title to it) not to the fancy or cov-
etousness of the quarrelsome and contentious.’ In The Constitution of
Liberty, Hayek (2011 [1960], 187, 194–195) extolled the financially
independent leisure class: the ‘freedom’ of the employed ‘depends on the
existence of a group of persons whose position is different from theirs.’
Hayek lamented that the ‘almost complete disappearance’ of this class—
and the ‘absence of it in most parts’ of the USA—has ‘produced a situ-
ation in which the propertied class, now almost exclusively a business
group, lacks intellectual leadership and even a coherent and defensible
philosophy of life.’ A ‘wealthy class that is in part a leisured class will
be interspersed with more than the average proportion of scholars and
statesman, literary figures and artists,’ and it was through their inter-
course in their ‘own’ circle with such ‘men who shared their style of life,’
that in the ‘wealthy man of affairs’ had previously been ‘able to take part
in the movement of ideas and in the discussions that shaped opinion
[emphasis added].’
Friedrich ‘von’ Wieser (1851–1926) was Hayek’s (1978) ‘teacher. He
was a most impressive teacher, a very distinguished man whom I came
to admire very much, I think it’s the only instance where, as very young
men do, I fell for a particular teacher. He was the great admired fig-
ure, sort of a grandfather figure of the two generations between us’ who
12    
R. Leeson

‘floated high above the students as a sort of God’ and was for a ‘long
time my ideal in the field, from whom I got my main general intro-
duction to economics.’6 The evidence, however, reveals that Othmar
Spann—‘the Philosopher of Fascism’ (Polanyi 1934, 1935)—was
the dominant influence over Hayek’s student days (Leeson 2017b).
However, in The Law of Power, Wieser (1983 [1926], 38, 45) did state
that ‘traces of true leadership may be perceived only when the des-
pot rallies the masses in order to have them fight and work for himself
[emphasis added]. When despotic leadership thus turns into lordly lead-
ership [Wieser’s emphasis], the function of leading the way is performed
more efficaciously; compliance with the commands imposed by the lord
on his subject is already genuine following … Every truly active follow-
ing by the masses must be borne by spiritual and moral forces—how
else could a sense for law and ethics, true culture, and a strong sense of
liberty [emphasis added] endure with the populace.’
Hayek (1978)—who was contemptuous of Americans—described his
objective: ‘My aim is to make politically possible what in the present
state of opinion is not politically possible.’7 His vehicle was ‘secondhand
dealers in ideas … I have long been convinced that unless we convince
this class which makes public opinion, there’s no hope.’8 Hayek was not
a scholar but a propagandist: ‘I devote all my efforts--My concern is to
operate on public opinion, in the hope that public opinion will suffi-
ciently change to make such a development possible. But if I may say
so--I hope you are not offended--I don’t believe the ultimate decision is
with America. You are too unstable in your opinion.’9
According to ‘von’ Hayek (2011 [1960], 187, 194–195), the
‘European observer’ could not ‘help being struck by the apparent help-
lessness of what in America is still sometimes regarded as its ruling

6Friedrich Hayek, interviewed by Earlene Craver date unspecified 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

7Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

8Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

9Friedrich Hayek, interviewed by Thomas Hazlett 12 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
13

class.’ This helplessness was ‘largely’ due to the ‘fact’ that its ‘traditions
have prevented the growth of a leisured group within it, of a group
that uses the independence which wealth gives for purposes other than
those vulgarly called economic.’ Hayek bemoaned that this lack of a
‘cultural elite within the propertied class’ had also become evident in
Europe, where the combined effects of ‘inflation and taxation’ have
largely ‘destroyed’ the old ‘leisured group’ and prevented the rise of
replacement.
The neo-feudal century (1815–1914) culminated in the catastrophic
‘Great War’—a display of incompetence which undermined deference to
the European ruling class. Wieser (1983 [1926], 226) reflected on the
consequences: ‘When the dynastic keystone dropped out of the monar-
chical edifice, things were not over and done with. The moral effect
spread out across the entire society witnessing this unheard-of event.
Shaken was the structure not only of the political but also of the entire
social edifice, which fundamentally was held together not by the external
resources of power but by forces of the soul. By far the most important
disintegrating effect occurred in Russia.’ Referring to this ‘great break,’
Hayek (1978) also reflected about the demise of aristocratic rule and the
rise of democracy—power sharing with those with low ascribed status:
‘I grew up in a war, and I think that is a great break in my recollected
history. The world which ended either in 1914 or, more correctly, two or
three years later when the war had a real impact was a wholly different
world from the world which has existed since. The tradition died very
largely; it died particularly in my native town Vienna, which was one of
the great cultural and political centers of Europe but became the capital
of a republic of peasants and workers afterwards.’10
Hayek (1978) had ‘very strong positive feelings on the need of an
“un-understood” moral tradition.’11 He ‘felt at home among the English
because of a similar temperament … I think most Austrians I know
who have lived in England are acclimatized extraordinarily easily. There

10Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

11Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

14    
R. Leeson

must be some similarity of traditions, because I don’t easily adapt to

other countries.’ In 1923–1924, he had found America ‘extremely stim-
ulating and even knew I could have started on in an assistantship or
something for an economic career, I didn’t want to. I still was too much
a European and didn’t the least feel that I belonged to this society. But
at the moment I arrived in England, I belonged to it.’12
Mises (1985 [1927]) enlisted political ‘Fascism’ to protect (Austrian)
Classical Liberalism (‘property’), and Hayek (1978)—who sought to
create ‘a system of really limited democracy’13—promoted superstitious
reverence towards ascribed status for the same purpose: ‘You know, I’m
frankly trying to destroy the superstitious belief in our particular concep-
tion of democracy which we have now, which is certainly ultimately ide-
ologically determined, but which has created without our knowing it an
omnipotent government with really completely unlimited powers, and to
recover the old tradition, which was only defeated by the modern super-
stitious democracy, that government needs limitations.’14 To achieve this,
he needed dictators (in Chile, Augusto Pinochet; in Portugal, António de
Oliveira Salazar; in Argentina, Jorge Rafael Videla, etc.) plus (as he told
James Buchanan) ‘secondhand dealers in opinion’ who ‘determine what
people think in the long run. If you can persuade them, you ultimately
reach the masses of the people.’15 Or as Mises (1944, 133–134; 1974
[1952], 170–171) put it: ‘The masses, precisely because they are dull and
mentally inert, have never created new ideologies. This has always been
the prerogative of the elite’—‘inferior’ consumers who could be per-
suaded by ‘superior’ producers that they were sovereign:

The ‘proletarian’ is the much-talked-about customer who is always right.

(Mises’ emphasis)

12Friedrich Hayek, interviewed by Earlene Craver date unspecified 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

13Friedrich Hayek, interviewed by Jack High date unspecified 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

14Friedrich Hayek, interviewed by Robert Bork 4 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

15Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
15

While North Americans were ‘too unstable’ in their opinion, the

Operation Condor military dictatorships of South America were more
to Hayek’s liking: the kleptocratic Pinochet was an ‘honourable general,’
and his government officials were ‘educated, reasonable, and insightful
men’ (cited by Caldwell and Montes 2014a, 38, n121; 2014b; 2015a,
282). In his Argentinian Centro de Estudios sobre la Libertad (Centre for
the Study of Liberty) lecture series, Mises (2006 [1958], 89) asserted
that ‘Capitalists have the tendency to move towards those countries in
which there is plenty of labor available and in which labor is reasonable.
And by the fact that they bring capital into these countries, they bring
about a trend toward higher wage rates. This has worked in the past,
and it will work in the future, in the same way.’
With respect to ‘the past’: labour was plentiful in pre-Hitler
Germany—the deflation that Hayek and Mises promoted produced
unemployment. Hitler abolished all non-Nazi political parties and
all labour unions—union leaders were taken into ‘protective cus-
tody’ and workers were obliged to join the National Socialist Union.
Hitler received a 0.03% levy on wages and salaries of employees of
the German Trade Association (Davidson 1966, 192–193, 230, 204;
Shirer 1960, 252–253; Bullock 1991, 133). Deflation had been ‘one of
the strongest agents working towards the Republic’s downfall’ (Stolper
1967, 116–119), and with respect to ‘the future,’ Pinochet, the strong-
est agent working towards the Chilean Republic’s downfall, sought to
abolish all political parties and trade unions (Barros 2004, 188). Hayek
was pleased that his dictatorship had avoided ‘[labour] trade union priv-
ileges of any kind’ (cited by Farrant et al. 2012, 522).
According to Bruce Caldwell (his ‘officially appointed family’ biog-
rapher) and Leonidas Montes (2014a, 21; 2014b, 279; 2015a, 279),
when Hayek arrived in Chile in 1977 for his first official visit, Pinochet
(1915–2006) would ‘barely’ have known who he was. But Pinochet
(1982, 13; 1991, 125, 176, 22–25) was proud of his status as ‘Professor
of Geopolitics’ at the Military Academy (War College) and claimed
to be a scholar: in ‘my readings I noted with concerns how Marxism
contributes to alter the moral principles that should uphold the soci-
ety, until such principles are destroyed, in order to replace them with
the shibboleths of communism.’ For twenty years, he went ‘deeper
16    
R. Leeson

and deeper into that ideology.’ Most if not all of the standard Austrian
School texts were accessible to Pinochet: for example, Mises (2006
[1958], 34) informed his admirers: ‘if you are interested in the funda-
mental problem of the impossibility of calculation and planning under
socialism, read my book Human Action, which is available in an excel-
lent Spanish translation.’
In April 1961, the CIA botched an invasion of Cuba (at the Bay of
Pigs). A decade later, Lynch (1971) denigrated the ‘new’ policy initiated
in Chile where ‘communists’ had come to power—which ‘shows that
even the more educated people have learnt very little. We must admit
that in Chile the politicians who took over have only read the wrong side
of the library, say the Marxist authors.’ They are ‘even incapable of learn-
ing by facts. It is incredible that they learnt nothing from the disastrous
experience of Cuba.’ The Chilean example is an ‘experience that should
be carefully studied’ because it would ‘show the way deterioration and
abolition of private property ends all kind of individual freedom.’
What would have happened to the ‘American experiment’ had
George Washington not delivered his Newburgh Address to disgruntled
military officers but had, instead, succumbed to Austrian-style notions
of ‘liberty’? Seeking to avoid the appearance of being ‘charged … with
concealed ambition,’ Washington (21 July 1799) declined the offer of a
third term as president: ‘Prudence on my part must arrest any attempt
of the well meant, but mistaken views of my friends, to introduce me
again into the Chair of Government.’16 In contrast, after a 1988 pleb-
iscite in which Chileans voted against Pinochet’s plan to remain pres-
ident for eight more years, he declared that he would not tolerate any
attempt to prosecute his era’s human rights violators:

The day they touch one of my men, the rule of law ends. (cited by Kandel
2006)

Rothbard (1993) was, in effect, a tax-exempt spotter for Al-Qaeda

(Chapter 2, below); Pinochet seized power (coincidentally) on 9–11, 1973;
and Videla seized power in Argentina on 29 March 1976 (Filip 2018).

16https://www.gilderlehrman.org/sites/default/files/inline-pdfs/T-05787.pdf.
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
17

In ‘Dirty War’ Argentina, elite business classes use their connections to

have the military Junta kidnap, torture and ‘disappear’ some of the key
figures within the labour movement who represented potential threats to
their interests. In fact, it was common practice for the well-connected elite
business classes to provide

lists of ‘subversives’ in their work force to the military regime, and that
the regime used these lists to target firm level union representatives and
workers for disappearances. (Klor et al. 2017, 9)

Wieser (1983 [1926], 257, 363) described ‘The Modern Plutocracy’:

‘The Law of Small Numbers found in the economy a field of application
of equally great effect as it once had in the victory of arms. While the
multitude of the weak was pressed down, out of the bourgeois middle
class there arose to dizzying heights the elite of the capitalists, joining
the rulers of earlier times and exceeding them still in wealth and finally
even in social influence. The great economic rulers had won under the
slogan of liberty [emphasis added], which opened for them the road to
unchecked activity. They demanded ever more impetuously the green
light for themselves, but the uninhibited unfolding of their energies
meant coercion for all the weak who stepped into their way. Could the
liberals still talk about freedom?’
In the slogan-ridden I Chose Liberty, Alejandro Chafuen (2010,
83–85) reported that he ‘first fell in love with liberty; I then fell in love
with God. Soon thereafter, I learned that they were the same thing,
the true Liberty. Following liberty has been a challenging and reward-
ing journey. I hope it never ends.’ At the age of 17, his ‘search’ for
‘champions’ of Mises et al. ‘led’ him to the Centro de Estudios Sobre la
Libertad. In 1976, Lynch asked if ‘I would be willing to translate for
Dr. Sennholz at several private speaking events. I was happy to volun-
teer my services.’
30,000 labour trade unionist, socialists, writers ‘disappeared’ (after
being tortured) in Argentina’s ‘Dirty War.’ This state-sponsored ter-
rorism was accompanied by private sector initiatives: for exam-
ple, the Alianza Anticomunista Argentina death squads. Chafuen
(2010, 84–85) explained: ‘With support from the military and
18    
R. Leeson

friendly segments of the civil society, Argentines were able to pre-

vent a Communist takeover of the country. The military, not with-
out fault or sin, provided some space to liberals who, from a different
angle, shared their same determination to stop left-wing terror.’ With
respect to his fellow adolescent Randians, Chafuen reported: ‘I was able
to recommend that all of them be given the same scholarship that I
received, thanks to Hans Sennholz via Benegas Lynch, to study at Grove
City College in Pennsylvania … I, as well as other young Argentines,
returned from Grove City to teach at the best Argentine universities.’
Hayek (1978) had planned to call (what became known as) the MPS
‘the Acton-Tocqueville Society, after the two most representative fig-
ures.’ But the University of Chicago’s

Frank Knight put up the greatest indignation: ‘You can’t call a liberal
movement after two Catholics!’ [laughter] And he completely defeated it;
he made it impossible. As a single person, he absolutely obstructed the
idea of using these two names, because they were Roman Catholics.17

On the dust jacket of his The Tyranny of Clichés: How Liberals Cheat in
the War of Ideas, Jonah Goldberg (2012)—the senior editor of National
Review (founded by William Buckley Jr.) and holder of the impres-
sively titled ‘Asness Chair in Applied Liberty at the American Enterprise
Institute’18—is falsely described as having ‘twice been nominated for a
Pulitzer Prize.’19 But Goldberg (2012, Chapter 6) correctly cited from
Acton: ‘Power tends to corrupt, and absolute power corrupts absolutely’
(see, e.g., Hill 2000, 300). In his ‘Property and Freedom’ celebration of
Mises, Lynch (1971) misquoted the proposed founder of the Society of
which he was a member:

Long ago Lord Acton very correctly said: ‘Power corrupts and absolute
power corrupts absolutely.’

17Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

18https://www.nationalreview.com/author/jonah-goldberg/.

19http://investigations.nbcnews.com/_news/2012/05/09/11608553-conservative-author-jo-

nah-goldberg-drops-claim-of-two-pulitzer-nominations.
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
19

According to Goldberg (2012, Chapter 6), the use of Acton’s phrase was
‘often a sign of the speaker’s own corruption’—adding: ‘Acton risked
excommunication for his long battle the doctrine of [papal] infallibil-
ity.’ The MPS is largely coordinated around the doctrine of ‘free’ mar-
ket infallibility and the infallibility of ‘von’ Hayek and ‘von’ Mises: there
was ‘too much deference accorded to Hayek, and especially to Ludwig
von Mises who seemed to demand sycophancy’ (Buchanan 1992, 130).
In The Constitution of Liberty, Hayek (2011 [1960], 186) stated that ‘To
do the bidding of others is for the employed the condition of achiev-
ing his purpose.’ In the journal of the American Economic Association
(AEA), Lincoln Gordon (1949, 976–978) complained about the conse-
quences: ‘There has emerged in recent years a new fashion of egregious
rudeness among self-styled libertarians … the Hayek-Mises-Jewkes-
Graham manner.’20
In Russia in the 1990s, botched (i.e. ‘free’ market) privatisation
ended the prospect of a ‘peace dividend.’ In July 2018, twelve Russian
members of the GRU (a Russian federation intelligence agency within
the main intelligence directorate of the Russian military) who were act-
ing in ‘their official capacities’ were indicted as part of special counsel
Robert Mueller’s investigation of Russian interference in the 2016 elec-
tion.21 The Director of National Intelligence, Dan Coats, warned that
there was an incipient cyberattack threats against the USA: ‘The warn-
ing signs are there. The system is blinking. It is why I believe we are at a
critical point.’22
Should elections be ‘free and fair’? Or should the ‘free’ market rule
and illegitimate influences be tolerated? Should tax-funded academics
aspire to evaluate evidence as objectively as possible? Or should they
suppress evidence so as to ‘do the bidding’ of their TOFF paymasters?

20Of the proposed founding members, Henry Simons committed suicide before the meeting;
Frank Graham committed suicide afterwards (at least according to Hayek); and Hayek and Mises
suffered from suicidal depression. Of the 36 founding members, Watts and Read were regarded
by Stigler and Friedman as dishonest ‘bastards’ (see above) and seven appear to have been invited
for solely fund-raising purposes (Leeson 2017a).
21https://www.cnn.com/2018/07/13/politics/russia-investigation-indictments/index.html.

22https://www.cnn.com/2018/07/14/politics/director-of-national-intelligence-dan-coats-cyberat-

tacks-russia/index.html.
20    
R. Leeson

According to his Mises Institute website, Chafuen has been ‘president

and CEO of Atlas Economic Research Foundation since 1991’ and so
is, presumably, primarily a fund-raiser23; and Peter Boettke’s George
Mason University (GMU) contract—apparently unbeknownst to the
GMU President, Ángel Cabrera—specifies that he must participate in
a ‘minimum of three Mercatus fundraising or public relations events.’24
In using his producer sovereignty to market the concept (stolen
from Frank A. Fetter) of consumer sovereignty, Mises (2012 [1936],
Chapter 28) appeared to be describing the power that the consumers of
‘free’ market ‘knowledge’ (Koch Industries) later exerted over ‘free’ mar-
ket ‘scholars’—who

are forced to follow the instructions that the consumers give them on
the market. If they are unable to fulfill the desires of the market in the
best and least expensive way, they experience losses; finally, if they do not
change their conduct in time, they are removed from their favored posi-
tion into other roles where they no longer have control over some of the
means of production, and therefore can no longer do harm.

How competent is Israel Kirzner (2 October 1984) to make academic

(as opposed to ideological) judgements? He assured ‘Dr Leube’ that
he was ‘brilliant.’25 And shortly before Caldwell joined the New York
University (NYU) ‘Austrian Economics Program,’ an internally circu-
lated document on ‘The Fall of Austria’ appears to describe the ‘free’
market influence upon tenure decisions at NYU. Although Gerald
O’Driscoll was an ‘Austrian economics superstar,’ Kirzner (the ‘sen-
ior’ Austrian at NYU) told George Pearson that it was ‘imperative’ to
put off a faculty vote on tenure for O’Driscoll by giving him a ‘part-
time’ grant that would keep him off the NYU payroll and hence ‘post-
pone’ the decision on his tenure until next year. Pearson promised the
grant—but reneged after ‘clear[ing]’ it with Charles Koch. According to

23https://mises.org/profile/alejandro-chafuen.

24http://apps.washingtonpost.com/g/documents/local/donor-agreement-between-the-mercatus-

center-and-george-mason-university-to-fund-a-faculty-position/2930/.
25MPS Archives Box 47.2.
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
21

the document, as a result of having to face a non-rigged market pro-

cess, O’Driscoll was deemed unworthy of tenure (December 1980).
Simultaneously, Richard Fink relocated his ‘Centre for the Study of
Market Processes’ (CSMP; later the Mercatus Center), from Rutgers to
GMU (Doherty 2007).
This had ‘effectively wrecked’ the NYU Austrian economics program
‘painstakingly’ built up since the mid-1970s. With faculty jobs at NYU
now clearly ‘deadends’ for ‘Austrians’ rather than routes to professor-
ships with tenure, other young ‘rising’ lights in Austrian economics –
like Jack High, Roger Garrison, and Larry White – will ‘surely avoid
the place.’ Mario Rizzo, another ‘highly’ talented young Austrian, who
now has an untenured post at NYU, is ‘sure’ to leave as soon as he can
find a ‘safe berth’ elsewhere. Pearson had switched allegiances away from
NYU to GMU—a school with a much lower academic ‘reputation’
than NYU’s and in a department with a much ‘shakier’ commitment to
teaching in the Austrian ‘tradition.’26
Almost four decades later, Rizzo is still at NYU running ‘The
Foundations of the Market Economy,’ whose ‘Scholars’ include

• Nick Cowen, a ‘Mercatus Center Adam Smith Fellow’27;

• Joseph Salerno, the Academic Vice-President of the Ludwig von
Mises Institute;
• Malte Dold, ‘Adam Smith fellow at George Mason University’s
Mercatus Center’;
• the Grove City College graduate Sanford Ikeda, who has pub-
lished in the Rothbard-founded, Boettke-edited Review of Austrian
Economics and the TOFF-funded The Independent Review; and
• Shruti Rajagopalan who ‘earned her Ph.D. in economics’ from GMU;
• Paola Suarez, ‘a Ph.D. Candidate in the Department of Economics’
at GMU, where she ‘also received her BS in Economics’ and ‘her MA
in Economics’ and is a ‘Mercatus Dissertation Fellow at the Mercatus
Center’ at GMU;

26Evers Archives. Box 13. Cato.

27https://asp.mercatus.org/nick-cowen.
22    
R. Leeson

plus two ‘Hayek MA Fellows’:

• Eunice Famodimu, a ‘Mercatus Center Frédéric Bastiat Research

Fellow’ and
• Shane Otten who ‘completed the Koch Fellow Program’ while ‘work-
ing for the Manhattan Institute as an Economic Policy Intern.’28

In Radicals for Capitalism: A Freewheeling History of the Modern

American Libertarian Movement, the editor of the libertarian Reason
magazine described the ‘bizarre gravitational shifting as Planet Koch
adjusted everyone’s orbits inclining them towards Wichita and then
San Francisco, which, with Ed Crane as Charles’s new libertarian activ-
ism majordomo, became the centre of Kochian libertarianism by the
late 1970s’ (Doherty 2007, 409). For proposing that Jerusalem was
not the centre of the universe and suggesting that other planets could
sustain life, Giordano Bruno (1548–1600) was tried for heresy by the
Roman Inquisition and burnt at the stake. As a ‘free thinker,’ Bruno’s
‘truth’ was derived from logic, reason and empirical evidence—not
authority, tradition, dogma or revelation; while as a Presuppositionalist,
Boettke (2005) believes that ‘divinely revealed’ economics is the ‘out-
working of the lordship of God in the area of human thought. It merely
applies the doctrine of scriptural infallibility to the realm of knowing’
(Frame 1987, 45). Rothbard was expelled from Koch Industry’s ‘Garden
of Wichita’ and left with just his salary from Brooklyn Polytechnic
Institute, and fearful of being reduced to the ‘fig-leaf ’ of his GMU
salary, Boettke’s (2010a) contribution to I Chose Liberty is titled: ‘On
Becoming an Austrian and Staying One.’
Boettke’s GMU contract with Charles Koch’s representatives also
specifies that the ‘objective’ of his ‘Professorship’ is—not to advance
critical and dispassionate thought but—‘to advance the understand-
ing, acceptance and practice of those free market processes and prin-
ciples which promote individual freedom, opportunity and prosperity
including the rule of law, constitutional government, private property

28https://wp.nyu.edu/marketfoundations/about-us/who-we-are/.
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
23

and the laws, regulations, organizations, institutions and social norms

upon which they rely.’ To illustrate his lavishly remunerated Serfdom,
Boettke’s handlers closely monitor him: ‘In addition to an annual report
by the Professor to the Selection Committee and Advisory Board, the
President of Mercatus will report to these same bodies on how the
Professor has contributed to the mission of Mercatus.’ He must pro-
duce ‘a research product (e.g., an article published in a refereed journal,
a working paper of suitable quality, a useful database, a public interest
comment), decided jointly with the President and General Director
of Mercatus.’ This research is not related to GMU’s mission but must
be ‘closely related to the Center’s mission of producing highly credible
research about the underlying sources of prosperity and poverty.’29
The 1998 Master Settlement Agreement (between the Attorneys
General of 46 states, five US territories, the District of Columbia and
the five largest cigarette manufacturers in America) closed the Tobacco
Institute and made its documents available for public inspection.30
These documents (on the University of California, San Francisco web-
site) led ‘Corporate Corruption of Science’ to conclude that numer-
ous ‘free’ market economists—including Boettke and ‘Professor Mario
Rizzo New York University’—were part of the ‘cash-for-comments’
network of the tobacco industry and that GMU ‘economists’ were
the heart and lungs of that operation: ‘each op-ed now earned the
economists $3,000. Presentations made to conferences earned them
$5,000.’31
With respect to the other TOFF components, the cities of San
Francisco and Oakland sued BP, Chevron, ConocoPhillips, Exxon
Mobil and Royal Dutch Shell, for compensation to remedy future
environmental damage caused by fossil fuels. The editorial pages of the
Murdoch-owned and supervised Wall Street Journal appear to provide

29http://apps.washingtonpost.com/g/documents/local/donor-agreement-between-the-mercatus-

center-and-george-mason-university-to-fund-a-faculty-position/2930/.
30 http://www.publichealthlawcenter.org/topics/tobacco-control/tobacco-control-litigation/

master-settlement-agreement.
31It’s not clear whether or not any of Boettke’s op-ed pieces (if written) were published. http://

sciencecorruption.com/ATN166/01477.html. While Rizzo ‘didn’t appear to do anything.’ http://

sciencecorruption.com/ATN182/01008.html.
24    
R. Leeson

a platform for (often inadequately identified) TOFF lobbyist (Leeson

2017a), and in ‘A Climate Shakedown Flops A federal judge tosses the
left coast’s suit against fossil fuels,’ the WSJ Editorial Board (29 June
2018) rejoiced that the ‘first wave of lawsuits to make oil companies
atone for their alleged climate sins was beaten back this week by fed-
eral Judge William Alsup. One hope is that this victory for judicial san-
ity will stop the tide of litigation from spreading across the country.’32
However, if the 1998 Tobacco settlement is followed by a similar agree-
ment with fossil fuels: Would the Mercatus Centre be shuttered? And all
‘confidential’ documents opened for public scrutiny?
In 2017, Scott Pruitt accepted Donald Trump’s nomination for
him to become the fourteenth Administrator of the Environmental
Protection Agency (EPA) ‘followed a season of prayer’:

I spent a couple years just earnestly praying, asking the question that I
don’t think we ask enough, ‘God, what do you want to do with me?’

Pruitt, a Southern Baptist, said God ‘really spoke to my heart’ while he

was reading the latter part of the first chapter of Isaiah, where God tells
Israel, ‘I will restore your leaders as in the days of old, your judges as at
the beginning.’

There was just a desire that welled up in me to say, ‘I want to be like those
leaders that we had at our founding, at the inception of our country.’

Pruitt ‘opposes regulations restricting the mining of non-­ renewable

energy resources because the Bible tells him so’ (Allen 2018). Moreover,
‘There aren’t sufficient scientific facts to establish the theory of
evolution.’33
In ‘Government Work Done, Tax Policy Writers Decamp to
Lobbying Jobs,’ The New York Times described the process by which
Shahira Knight went from studying ‘economics’ at the University of

32https://www.wsj.com/articles/a-climate-shakedown-flops-1530315398.

33https://www.politico.com/story/2018/03/02/scott-pruitt-epa-evolution-theory-abortion-gay-

marriage-433284.
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
25

Virginia and GMU to become head of the ‘Public Affairs Efforts for
a New Banking Trade Association’ via Trump’s National Economic
Council (Rappoport 2018).34 Pruitt and his Deputy, Andrew Wheeler
(a GMU graduate), appear to define the ‘free’ market ‘swamp’: Pruitt’s
campaign to become Oklahoma Attorney General was fossil fuel
funded, and Wheeler was formerly a lobbyist for coal magnate, Robert
Murray. Both Pruitt and Wheeler are climate change denialists.35 But
when Pruitt was obliged to resign after innumerable scandals involving
expenses, the WSJ (5 July 2018) editorialised

Chalk one up for the swamp. The permanent progressive state finally ran
Scott Pruitt out of the Environmental Protection Agency … EPA is the
Holy Sepulchre of progressive politics, and Mr. Pruitt posed an existential
threat to command and control regulation that is the hallmark of the left’s
environmental agenda. The shame is that Mr. Trump is losing his bravest
deregulator. Mr. Pruitt started to roll back the Obama Administration’s
Clean Power Plan that attempted to re-engineer the economy with little
effect on climate change. He clamped down on the ‘sue and settle’ racket
that allows environmental groups to impose policy through consent
degrees. He moved to redefine the Waters of the United States rule that
let EPA regulate ponds and potholes. Mr. Pruitt also sought to require
more honest cost-benefit analysis, and he updated advisory science boards
that have been stacked with members who receive EPA grants.

The following week, the WSJ published George Melloan’s (2018) ‘Pruitt
Leaves a Proud Legacy at the EPA,’ which asserted that Bjorn Lomborg
was a ‘Danish scholar’ who had ‘predicted the cost of implementing the
Paris Climate Accord would hit $2 trillion by 2013.’ But Melloan fails
to report that outside the ‘free’ market, Lomborg is not widely regarded
as a ‘scholar.’ The Union of Concerned Scientists, for example, commis-
sioned a report which concluded that Lomborg’s (2001) The Skeptical
Environmentalist is

34 https://www.theclearinghouse.org/advocacy/articles/2018/06/20180605_organizational_

announcement.
35Pruitt
claims not to be a ‘denialist.’
26    
R. Leeson

seriously flawed and fails to meet basic standards of credible scientific

analysis. The authors note how Lomborg consistently misuses, misrepre-
sents or misinterprets data to greatly underestimate rates of species extinc-
tion, ignore evidence that billions of people lack access to clean water
and sanitation, and minimize the extent and impacts of global warming
due to the burning of fossil fuels and other human-caused emissions of
heat-trapping gases. Time and again, these experts find that Lomborg’s
assertions and analyses are marred by flawed logic, inappropriate use of
statistics and hidden value judgments. He uncritically and selectively cites
literature -- often not peer-reviewed -- that supports his assertions, while
ignoring or misinterpreting scientific evidence that does not.36

3 Austrian ‘Bastards’
The Nazis described themselves as a humane government with the
‘strictest laws in the world against cruelty to animals’ (Time 1967 [4
December 1933], 107). The Orwellian-named Institute for Humane
Studies claims to be the ‘leading institute in higher education ded-
icated to championing Classical Liberal ideas and the scholars who
advance them.’37 At the 1974 tax-exempt IHS Austrian revivalist
conference, devotees competed with each other over what Friedman
described as ‘rotten bastard’ proposals: the speed with which they would
force wounded veterans, the young, the old, the poor and the sick to
rely on private charity.38 One of these revivalists, Block (2006, 74),
described Hayek as ‘a person with more than a little bit of moral cow-
ardice’ because he didn’t seek to completely dismantle the non-Austrian
Welfare State.
In 2015, childhood poverty costs the USA $1.05 trillion (5.4% of
GDP). Impoverished children grow up possessing fewer skills (and
are thus less able to contribute to the economic productivity) and are

36https://www.ucsusa.org/global-warming/solutions/fight-misinformation/ucs-examines-the-skep-

tical.html#.W0fo2cInapp. Accessed 12 July 2018.

37https://theihs.org/.

38Conversation with David Henderson (7 July 2011), who attended the 1974 revivalist confer-

ence and heard Friedman make the remark.

 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
27

also more likely to experience ‘frequent health care problems and to

engage in crime. These costs are borne by the children themselves, but
ultimately by the wider society as well.’ For each dollar spent reduc-
ing childhood poverty, the USA would save at least $7 (McLaughlin
and Rank 2018). In ‘The Lifecycle Benefits of an Influential Early
Childhood Program,’ the Chicagoan Nobel Laureate, James Heckman,
reports that ‘high-quality birth-to-five programs for disadvantaged chil-
dren can deliver a 13% per year return on investment.’39
In 1972, Shenoy provided an ‘Informal Address on F.A. Hayek’ to
the First Annual Libertarian Scholars Conference.40 On Hayek’s 75th
birthday, Shenoy (8 May 1974) explained why she was ‘qualified’ to
become the recipient of a lifetime’s income from the taxpayer:

As one Whig to another may I also say Long Live Whiggery? It isn’t given
to all of us to do for The Cause what you have done, many of us – all of
us – must feel very much that we are simply filling in one or two small
chinks in that noble edifice of thoughts which you have reconstructed;
but I can say that for one such person, it is a task to which her work-
ing life will be dedicated [Shenoy’s emphases]. (cited by Leeson 2015a,
Chapter 1)

‘The Cause’ was favoured by academic frauds like Shenoy who, in addi-
tion to her tenured lectureship at the University of Newcastle, Australia,
held Visiting Professorships at GMU’s CSMP (1983), the University
of Ohio, Athens (1984), and California State University Hayward/
East Bay (CSUH/EB) (1989). According to Inside Higher Ed, Fink,
as President of the Charles Koch Charitable Foundation, later signed
a donor deal with Utah State University which specified that the
Foundation must approve funded faculty hires and that a ‘common
perspective’ regarding the ‘free’ market must prevail (Berrett 2011).
Boettke (2010a, 63) ‘was completely enamored of Rich Fink, who, like
myself, was from New Jersey.’ Outside the ‘free’ market, academic posi-
tions are allocated through competition; but according to the WSJ, after

39https://heckmanequation.org/assets/2017/01/F_Heckman_CBAOnePager_120516.pdf.

40Evers Archives. Box 4. Libertarian Movement.

28    
R. Leeson

multiple academic failures, a ‘friend’ arranged for Boettke to receive life-

time income from the taxpayers of Virginia (Evans 2010). Was Boettke’s
(2010b) ‘friend’ Charles Koch (Chapter 3, below)?
Mises (1922) condemned the First Estate—the ‘evil seed’ of
Christianity—for having failed to provide the foundations for the
neo-feudal power of the Second Estate (Leeson 2017a). The words that
Mises (1922, 411; 1932, 389) believed were sabotaging his liberty were:
‘Selig seid Ihr Bettler, denn Euer ist das Reich Gottes’—‘Blessed be you
beggars, for yours is the kingdom of God.’ Charlotte Cubitt (2006, 10,
122, 264) ‘once asked Hayek whether he did not mind having to beg
for money so often’ from ‘educational’ charities to pay for her services,
he ‘just laughed, said he did not mind in the least, that all his profes-
sional decisions had been based on financial considerations.’ When
Walter Morris, a donor from Little Rock, Arkansas, complained about
being ‘deceived [,] Hayek laughed, and told me that he had wanted to
have nothing to do with this but did not mind being told about it as an
anecdote.’ Caldwell (2007, x) reported that ‘Walter Morris was instru-
mental in the creation of The Collected Works project.’
Are Boettke’s ‘PhD Fellows’ exposed to evidence or ‘free’ market
propaganda? Mercatus PhD Fellows take courses in

market process economics, public choice, and institutional analysis and

work on projects that use these lenses to understand global prosperity and
social change. Successful PhD Fellows have secured tenure-track positions
at colleges and universities throughout the United States and in Europe.41

Boettke (2010b) claims to operate ‘in the interest of full disclosure.’42

But the case for the ‘free’ market can only be made by suppressing and/
or distorting evidence. Boettke (2018a) described his mission: ‘Let us
get on with our task of being students of civilization, social critics of
policy regimes, and teachers to our fellow citizens. We need to empower
the people with knowledge. That is, I contend, the public purpose of

41https://asp.mercatus.org/content/phd-fellowship.

42‘We also are at a state university [GMU] so we receive tax payer support as well in the interest

of full disclosure.’
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
29

economics.’ Boettke (2011, 26) obliges his GMU graduate students

to read Caldwell’s (2004) ‘celebrated’ biography which ‘contextualizes
(as the title suggests) the development of Hayek’s ideas from his stu-
dent days to his final writings in terms of the intellectual debates he
was involved with and the goals he set for his research program in the
social sciences. Hayek had a vision, Caldwell identifies it, and then we
learn of the trials and tribulations that Hayek faced in seeing that vision
through.’
As a BB&T Professor of Economics, permission is required before
Boettke (2016) can speak to a journalist: John Allison IV, Cato’s CEO,
told a reporter from the New Yorker:

‘I’ll give you permission to talk to three of my BB&T professors: Geoff-

Sayre McCord, myself, and Brad Thompson at Clemson.’ Now, depend-
ing on how you present yourself is gonna influence.

Boettke then boasted how he had ‘completely neutered’ the journalist

by telling him that GMU students had to read Ayn Rand because

I’m talking about contending perspectives, is there a problem with that?

… You would have to be, kind of, deaf, dumb and silly, or whatever, to
not understand that … the bottom line is that it’s not like I held back
telling the guy that I’m a Libertarian, that I teach Ayn Rand, that I use
economics … But the fact is that I put it in the context of an open and
free debate among our students, which I did, and all of a sudden he can’t
tell this story. His story isn’t about that, his story is somehow we were
being manipulated to, you know, brainwash the students. That’s not what
we’re doing, right? We’re trying to have open discussion. That’s what
our colleagues are in fear of, afraid of. You know? That we’re cutting off
debate. But if we’re the ones who are the leaders in promoting debate on
campus, I don’t think we get into trouble.

But in his Mercatus Centre ‘Living Bibliography of Works on Hayek,’

Boettke (2018b) pretends to offer a list of ‘all [emphasis added] works
in the social sciences and humanities that discussed Hayek’s contribu-
tions.’ But ‘all’ appears to be a translation into the Austrian of ‘all’ that
serves the Hayek-Fink-Koch ‘knowledge’ production line—the nearly
30    
R. Leeson

200 chapters in the twenty-volume Hayek: A Collaborative Biography

have been silently deleted from Boettke’s list.43 Boettke is getting
one-up on ‘God’: GMU students must, it seems, be prohibited from
discovering that there is fruit on the ‘Tree of Knowledge.’
Caldwell (2017) complains that Philip Mirowski and Edward Nik-
Khah (2017) ‘ignore or dismiss inconvenient facts.’ But Caldwell’s
nuanced hagiography is derived by ignoring and/or dismissing all the
inconvenient facts about Hayek. Kelley Brownell, Dean of Duke
University’s Sanford School of Public Policy, praised Marion Nestle’s
(2015) Soda Politics Taking on Big Soda (And Winning): ‘No book in his-
tory has so completely laid bare the soda scourge that touches every cor-
ner of the world. Marion Nestle shows how this happened, its impact
on human health and well-being, who the players are, and, most impor-
tantly, what might be done. This is the right book at the right time.’44
Caldwell’s (2004, xi, 344, n16) Hayek’s Challenge was funded by the
John W. Pope Foundation and the Liberty Fund (who hosted a con-
ference to discuss a preliminary draft of the volume). According to its
2013–2014 Annual Report, Duke University’s CHOPE was ‘founded
in 2008 with a significant grant from the John W. Pope Foundation’
(Caldwell 2014); and in fiscal year 2014–2015, CHOPE received
$175,000 from the Pope Foundation.45
According to its mission statement, ‘The Pope Foundation supports
organizations that work to advance free enterprise — the same system
that allowed Variety Wholesalers to flourish — for future generations of
Americans. To achieve those ends, the Pope Foundation supports a net-
work of organizations in North Carolina that advocate for free markets,
limited government, individual responsibility, and government trans-
parency.’ With regard to ‘Education support,’ the ‘Pope Foundation
believes that Americans have a duty to teach the next generation about
the blessings of liberty.’46

43https://ppe.mercatus.org/essays/living-bibliography-works-hayek.

44https://www.foodpolitics.com/2015/09/soda-politics-the-blurbs/.

45https://jwpf.org/grants/.

46http://jwpf.org/grants/focus-areas/education/.
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
31

Heritage is a grantee of the Donor Trust; and the Pope Foundation

is the sixth largest contributor to what Robert Brulle (2014, 687,
Figure 1, 681) described as the ‘Climate Change Counter Movement’
(CCCM). Referring to private sector transparency, Bruelle reported
that ‘there is evidence of a trend toward concealing the sources of
CCCM funding through the use of donor directed philanthropies.’ In
December 2013, Whitney Ball, the President of the Donors Trust and
Donors Capital Fund, ‘said the organisation had no say in deciding
which projects would receive funding. However, Ball told the Guardian
last February that Donors offered funders the assurance their money
would never go to Greenpeace’ (Goldenberg 2013). Instead, they are
committed to ‘Building a Legacy of Liberty.’47 Lawson Bader, Ball’s
successor as President of both DonorsTrust and Donors Capital Fund,
was formerly President of the Competitive Enterprise Institute and
Vice-President at the Mercatus Center.48 In recent years, DonorsTrust
has received more than $3.2 million from the ‘Knowledge and Progress
Fund,’ which is chaired by Charles Koch (Bennett 2012).
Before joining the Martin Center (formerly the John W. Pope Center
for Higher Education Policy), Jane S. Shaw (an APEE President) spent
22 years with the Property and Environment Research Centre (PERC),
where she was a Senior Fellow. Documents on the University of
California, San Francisco website led ‘Corporate Corruption of Science’
to conclude that her husband, Richard Stroup, was a Tobacco Institute
‘cash-for-comment’ economist.49
Nestle (2015) devotes two chapters to ‘“Hardball” Tactics: Defending
Turf, Attacking Critics.’ Somewhat hysterically, Caldwell (Society for
the History of Economics, SHOE 31 May 2014) complained to the
history of economics community that had elected him their President
that the editor of Archival Insights into the Evolution of Economics series
‘has worked in the archives regularly, indeed constantly every summer.’
And in a ‘Hayek Program Podcast’ at Charles Koch’s Mercatus, Caldwell

47http://www.donorstrust.org/.

48http://www.donorstrust.org/news-notes/donorstrusts-new-ceo/.

49http://www.sciencecorruption.com/ATN183/00918.html.
32    
R. Leeson

(27 June 2017) sneered at the archival evidence about Hayek—but after
mentioning the name of the AIEE editor immediately rectified himself:
‘forget that name.’50 Caldwell’s 2018 curriculum vita explains: ‘With
the recently awarded Koch grant,’ Duke University CHOPE ‘funding
totals approximately $11 million.’
Thrice, Caldwell (2004, 317, n34; 2005, 56; 2008, 701–702)
uncritically repeated Shenoy’s easily detected fraud. In 1978 (a third-of-
a-century before obtaining a Caldwell-examined PhD), Shenoy sought
a CLS Fellowship on the grounds that she was a ‘doctoral candidate.’51
Shenoy (1972), who published the IEA’s Tiger by the Tail The Keynesian
Legacy of Inflation, become a ‘think-tank Dr’; as early as 1977, she was
referred to as ‘Dr Shenoy’ in FEE circles52; and in an IEA press release
on privatisation, their employee (1970–1977), ‘Dr Sudha Shenoy,’ was
listed as the authority to be contacted.53 But the IEA and FEE—unlike
the ‘Market Process Centre’—are not attached to universities. Having
lasted less than a year as a graduate student at the University of Virginia,
she may have sought to obtain a university doctorate through GMU.
Doctorates are conventionally awarded for an assigned thesis (with or
without intensive coursework on the ‘technical aspects’ of economics).
Boettke (2010a, 61) ‘started graduate school’ at GMU and ‘worked at
the Center for the Study of Market Processes. Richard Fink arranged
a fellowship for me and I was assigned [emphasis added] to work with
Don Lavoie on the Center’s publication, Market Process.’ In ‘graduate
school,’ Boettke (2016) was ‘managing editor’ of the ‘CSMP newslet-
ter.’ Is producing a newsletter for the Koch brothers an appropriate
post-graduate training for an impartial economist?
Hayek’s determination to pursue his own private benefit at the
expense of ‘The Cause’ created social costs for his disciples. It appears
that the oral history interviews (or conversations) that Kurt Leube
taped—with or without Hayek’s knowledge—reveal that his aristocratic

50 https://ppe.mercatus.org/podcasts/06282017/history-mainline-economics-research-top-

ic-bruce-caldwell.
51Evers Archives. Box 6. CLS.

52Hayek Archives. Box 20.1.

53MPS Archives. Box 2.7.

 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
33

‘liberty’ was an ocean away from the (largely) achieved status hierarchy
that had propelled Friedman from the son of poor Jewish migrants to
the pinnacle of American society.
Migrants came (and come) to America to escape the ascribed status
blocks to upward social mobility: many of their children are ‘bred’ to
leap rather than ‘tear down this Austrian wall.’ According to his Nobel
biography, George Stigler (1982a) was the ‘only child of Joseph and
Elizabeth Stigler, who had separately migrated to the United States at
the end of the 19th century, my father from Bavaria and my mother
from what was then Austria-Hungary (and her mother was in fact
Hungarian).’ And Friedman (1976) was the ‘fourth and last child and
first son of Sarah Ethel (Landau) and Jeno Saul Friedman. My parents
were born in Carpatho-Ruthenia (then a province of Austria-Hungary;
later, part of inter-war Czechoslovakia, and, currently, of the Soviet
Union).’
Rothbard (1994b, 12) was horrified that migrants might become
integrated into America by participating in democracy: ‘The Clinton
Administration recently announced a new drive to integrate immigrants
by encouraging them to become voting citizens. This announcement
came just as the Democratic Party was gearing up for another elec-
tion-year cycle. Now you don’t have to be a conspiracy theorist to realise
what is going on here. Most of these new voters, primarily from Third
World countries, will be herded into the Democratic Party.’
Hitler complained that ‘immigration to America has been brought
into a form constructively dangerous for us, in so far as the human
material which we deliver to America is not picked out by poverty alone
… From a multitude of men, they seek the most highly valued indi-
viduals’ (cited by Heiden 1944, 322). As Economic Consultant to the
Austrian General Staff, Mises (2012 [1918], 227) also denigrated emi-
gration: ‘Aside from its general political and economic harmful effects,
emigration also involves military disadvantages as well.’ In the decade
before the ‘Great’ War between the dynasties, the ‘monarchy’—not
Austria—‘permanently lost at least 250,000 conscripts in this way.’
The third and final stage of the Hayek-Fink-Koch ‘knowledge’ pro-
duction line involves ‘Citizen activist or implementation groups’ to
translate the agenda into ‘proposals that citizens can understand and
34    
R. Leeson

act upon. These groups are also able to build diverse coalitions of indi-
vidual citizens and special interest [emphasis added] groups needed to
press for the implementation of policy change’ (cited by Leeson 2017a,
Chapter 7). Mises (2006 [1958], 97) projected a high moral tone:
‘Only one thing is not represented in the legisla-ture: the nation as a
whole. There are only a few who take the side of the nation as a whole.
And all problems, even those of foreign policy, are seen from the point
of view of the special pressure group interests.’ Based on taped inter-
views with Hayek, Leube (2003) described the Mises-Hayek special
pressure group interest that persuaded them (and Hitler) to promote
Austro-German Lebensraum (Chapter 7, below). Their ‘intellectual
milieu’ had been ‘formed by individuals who had become accustomed
to playing a leading role in a large cosmopolitan multi-national state.
For this entire group the most important fact about the newly founded
Republic of German-Austria was that it simply did not offer a field of
action commensurate to their aspirations, and they were to respond
accordingly.’ Having lost their ‘vast empire,’

von Hayek, Ludwig von Mises and large numbers of fellow intellectuals
became convinced advocates of the ‘Anschluss’ to Germany … Their soci-
ety had disappeared and the new Austria was simply unable to offer the
type of opportunities for leadership which Hayek and his social class had
come to expect.

The neoclassical emphasis on private sector optimisation has been sup-

plemented by ‘Academic Choice’ analysis (see, e.g., Kuhn 1962; Lakatos
1978). Much ‘outside’ analysis (undertaken by non-economists) lacks
penetrating insight; and ‘inside’ perspectives can become warped by
community loyalties (the incentives of the School, the Department,
the University, and professional bodies). The group uniquely well posi-
tioned to analyse the dynamics of the economics profession are his-
torians of economic thought—which has been partially colonised,
ideologically and financially, by the Austrian School of Economics.
Friedman and Stigler had profound understandings of the knowledge
construction and dissemination process that this AIEE series addresses:
and, like Keynes, they were polemically aware political economists who
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
35

constructed their ‘knowledge’ so as to engage—and defeat—their oppo-

nents (Leeson 2000, 2003; Leeson and Schliffman 2015). Their ‘victo-
ries’ involved an understanding of exploitable weaknesses (unwarranted
faith in Keynesian regression races, etc.).54
In 1984, Leube received the ‘F. Leroy Hill award Institute for
Humane Studies, George Mason University.’55 Shortly after the MPS
celebration of the 40th anniversary of the publication of The Road to
Serfdom, Leube (1984), en route to legal immigration status and a CSU
Professorship of Economics, informed The Stanford Daily that ‘Hayek’s
thesis seems to maintain its validity.’ Although (according to Hayek) he
had failed to pass his undergraduate degree in economics, Leube pon-
tificated: ‘The central problem of economics is how the spontaneous
interaction of a number of people, each possessing only certain bits of
knowledge, creates circumstances that could be brought about only by
somebody who possessed the combined knowledge of all these individ-
uals. Our whole modern order and well-being rest on the possibility of
adapting to processes that we do not know.’ Orwell’s Nineteen Eighty-
Four was a work of ‘fiction,’ whereas The Road to Serfdom was what the
author described as ‘a genuine search for truth.’ But in taped oral his-
tory interviews, Hayek apparently informed Leube that he wished it to
be known—posthumously—that The Road to Serfdom had been written
to justify the ‘liberty’ of the ‘old’ European aristocracy and to provide
the road-back-to-serfdom for the ‘new’ aristocracy of labour (Leeson
2015a, Chapter 3).
Before World War II, businesses successfully lobbied for tax-based
protection from import competition (which intensified the Great
Depression and facilitated political climate change—the Third Reich);
while after 1945, they more frequently lobbied for protection against
full-cost pricing. Like Pigouvian taxes, tariff reductions creatively

54Deirdre McCloskey (2004, 32) denigrates these skills: ‘I grew up to understand how the
Chicago School argued, and I can do it myself, but they were lying about how they arrived at
their conclusions. I could see that they were obviously lying, but I was just annoyed and shocked
that they continued to lie about how they got to the questions that they got to. And then it grad-
ually occurred to me that if this is true, then maybe the whole profession is lying, and that belief
has gotten stronger as I have gotten older.’
55http://prabook.com/web/person-view.html?profileId=587996.
36    
R. Leeson

destroy those who cannot compete in a no-subsidy environment. In

1994, Hayek asserted that externality taxes had been invented by a
Soviet agent (Leeson 2015b); and in the same year, when the Clinton
administration seeks to stop the use of the atmosphere as an ‘open
sewer’ by levying an externality tax on the heat content of fuels (the
BTU tax), the Koch employee, Fink, confessed to The Wichita Eagle:
‘Our belief is that the tax, over time, may have destroyed our business’
(cited by Dickinson 2014).
In 1928, the Republican Herbert Hoover—who described prohibi-
tion as a ‘Nobel Experiment’—defeated the ‘wet’ Democrat Al Smith
to be elected US President on a protectionist platform; and in 1930,
Republican Senator Reed Smoot and Republican Representative Willis
Hawley raised tariffs to record levels on over 20,000 imported goods.
According to Hoover (1952, 30), during the Great Depression, his
(Austrian or ‘Austerian’) Treasury Secretary, Andrew Mellon, implicitly
advised him to follow a version of the policies that Chancellor Heinrich
Brüning was following in pre-Hitler Germany: ‘liquidate labor, liqui-
date stocks, liquidate farmers, liquidate real estate… it will purge the
rottenness out of the system. High costs of living and high living will
come down. People will work harder, live a more moral life. Values will
be adjusted, and enterprising people will pick up from less competent
people.’
In 1929, Leonard Read, of the Burlingame Chamber of Commerce,
took a select group from Palo Alto, California, to Washington to cele-
brate Hoover’s victory: a ‘luxury Pullman with 16 cars, quality service
and gourmet meals, nurse and doctor aboard, and a daily mimeographed
bulletin, which Leonard edited. Once in the nation’s capital there would
be special rates in first-class hotels, tickets for the parade, reservations for
the Inaugural Ball … and who knows what else?’ (Opitz 1998).
In 1947, three years after the publication of The Road to Serfdom
(1944), the ‘Volker Fund of St Louis’ facilitated an ‘expenses paid’ trip
to the London Dorchester Hotel, the Paris Grand Hotel, and from there
to a ‘private railroad car’—the April Fool’s Day convening atop Pilgrim
Mountain (Mont Pèlerin): it was Friedman’s and Stigler’s ‘first trip
abroad … Here I was, a young naïve provincial American, meeting peo-
ple from all over the world …This marked the beginning of my active
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
37

involvement in the political process’ (Friedman and Friedman 1998,

159–161). John Davenport (1981) described the ascent: ‘From the sta-
tion platform at Vevey, Switzerland, a little funicular railroad pointed
up the mountain-side. As I swung aboard and as the cables tightened, I
was vaguely conscious that something new and exciting lay at the top.’
The first MPS meeting was ‘indeed a unique gathering and a turning
point in the life of most participants.’
In 2014, Rupert Murdoch was ‘won over’ by something new and
exciting: Elizabeth Holmes’ charisma and vision’ plus the ‘financial
projections she gave him.’ He then invested $125 million in Theranos,
Holmes’ start-up ‘unicorn’ which promised to ‘revolutionize the medi-
cal industry with a machine that would make blood testing significantly
faster and easier.’ Theranos ‘sold shares in a fundraising round that val-
ued the company at more than $9 billion, putting Holmes’s worth at
an estimated $4.7 billion. There was just one problem: The technol-
ogy didn’t work.’ When the WSJ investigative reporter, John Carreyrou
(2018), began uncovering the fraud, Holmes put pressure on Murdoch
to kill the story.
Hayek told Stephen Mariotti (2012): ‘You cannot measure changes
in capital using statistics. A statistical test of trade cycles is not possi-
ble -- you will mislead the field by advocating that.’ Friedman’s (1953)
‘as-if ’ Essays in Positive Economics stressed that theories had to be con-
fronted by evidence. In 1985, Hayek told disciples Mark Skousen and
Gary North that ‘I want nothing less than the whole Friedman group
would leave the Mont Pelerin Society.’ Friedman, he insisted, was as
much an enemy to ‘liberty’ as Keynes: ‘one thing I regret is not having
returned to a criticism of Keynes’ [1930] Treatise. But it’s as much true
as not having criticized Milton’s Positive Economics, which in a way is
quite as dangerous.’56
Friedman and Stigler had a low opinion of the integrity of their MPS
‘other half ’—those who promote Eastern Reich (Austrian) economics.
From his three bedroom, rent-controlled Manhattan apartment, Mises
(2006 [1958], 50–51) complained that rent control led to socialism:

56http://contemporarythinkers.org/friedrich-hayek/multimedia/interview-hayek-gary-north-

part-2/.
38    
R. Leeson

one result of rent control is those who would otherwise have moved
from bigger apartments to smaller ones when their family conditions
‘changed, will no longer do so.’ One of the ‘main’ reasons why many
cities in the USA are in such great financial difficulty is that they ‘have
rent control and a resulting shortage of housing.’ The government
then spend ‘billions’ to build new houses. But the housing shortage
had developed for the ‘same reasons that brought milk shortages when
there was milk price control. That means: when the government inter-
feres with the market, it is more and more driven towards socialism [Mises’
emphasis].’
Read invited Friedman and Stigler to write about rent control—and
then insisted that they delete a paragraph:

The fact that, under free-market conditions, better quarters go to those

who have large incomes or more wealth is, if anything, simply a reason
for taking long-term measures to reduce the inequality of income and
wealth. For those, like us, who would like even more equality than there
is a present, not alone for housing but for all products, it is surely bet-
ter to attack directly existing inequalities in income and wealth at their
source than to ration each of the hundreds of commodities and services
that compose our standard of living. It is the height of folly to permit
individual to receive unequal money income and then to take elaborate
and costly measures to prevent them from using their income.

Friedman and Stigler ‘refused’ to delete it, stating that instead of doing
so they would ‘withdraw permission to publish and forego the modest
fee’ that FEE had offered. And they were ‘certainly justified’ in being
‘outraged’ by what subsequently happened (Friedman and Friedman
1998, 150–151). Orval Watts informed Stigler that FEE had invested
‘several thousand dollars’ in their essay—which they would prefer to see
wasted rather than publish what they disapproved of. Both Friedman
and Stigler insisted that it was ‘essential’ that they see the galleys before
publication (Hammond and Hammond 2006, 20, 22, 35).
Although the paragraph was not deleted, ‘without asking our permis-
sion an anonymous ‘Editor’s Note’ (no editor was mentioned by name
in the pamphlet) was appended to the paragraph’ which stated that
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
39

The authors failed to state whether the ‘long-term measures’ which they
would adopt go beyond elimination of special privilege, such as monop-
oly now protected by government. In any case, however, the significance
of that argument at this point deserves special notice. It means that, even
from the standpoint of those who put equality before justice and liberty,
rent controls are the height of folly.

Friedman and Stigler ‘regarded this note, which in effect accused us

of putting equality above justice and liberty as inexcusable and for
some years we refused to have anything to do with the foundation
or with Leonard Read’ (Friedman and Friedman 1998, 150–151).
Stigler referred to Read and Watts as ‘those bastards’ (Hammond and
Hammond 2006, 33); and Hayek had an equally low opinion of their
‘propaganda’ institution.57
For inviting the Mayor of New York City (1994–2001), Rudy
Giuliani—regarded by some FEE members as a ‘Fascist’ and a ‘thug’
who ‘represents everything inimical to what FEE stands for’—to speak
at a banquet, Skousen (2003) was dismissed as FEE President: ‘I was
amazed how closed-minded my libertarian friends were to Giuliani’s
positive contributions. I wish that libertarians could be more tolerant
and open-minded, more willing to have a dialogue with those whose
views differ from their own.’ Guiliani also made positive contributions
to the use of Austrian-style knowledge in society by supporting the
2016 Republican Party Presidential candidate who insisted that ‘The
concept of global warming was created by and for the Chinese in order
to make US manufacturing non-competitive’ (Griffin 2016). Skousen
(2009, 338–389) insists that Pigou’s positive contributions to eco-
nomics (externality taxes) had been funded by Russian ‘gold’ and were
designed to destroy the ‘free’ market.
But for what Hayek called his ‘worst inferior mediocrities’
(Chapter 5, below), ‘propaganda’ is, apparently, sufficient for their
purposes. According to the FEE website, ‘FEE played an impor-
tant role in the early development of Boettke’s economic thinking.’

57http://www.margaretthatcher.org/document/114609. Hayek Archives. Box 27.6.

40    
R. Leeson

Boettke reported that ‘At the suggestion of my professor Hans Sennholz,

I made the trip from Grove City College to FEE more than three decades
ago. That weekend proved to be a pivotal moment for me as a student
and later as a teacher in the classroom. FEE is the home base for free
market economics throughout the world. It is a privilege for me to be
associated with FEE and its core educational [emphasis added] mission.’58
Those members of Rose Friedman’s family who had not emigrated ‘all
died in the Holocaust. We have never learned where or how.’ In 1950,
while Milton worked on the Schuman Plan, Rose experienced trauma:
it was very difficult for her to let their two children ‘run freely as they
were accustomed to do at home because always there was the nagging
fear that they might suddenly disappear. Of course I knew that they
would no Nazis in the park that somehow there was always in my sub-
consciousness those terrible stories about what happened to Jewish chil-
dren during the Nazi era. That trip to Germany haunted me for many
years’ (Friedman and Friedman 1998, 3, 180). When in June 1974,
Rothbard, Block, Shenoy, Fink, North, Rizzo, Ebeling (1974) et al.
initiated the Koch-funded IHS Austrian revival, one of the conference
highlights was baiting the Friedmans in person with the accusation that
their son detected ‘latent fascist tendencies’ in his father. Shenoy (2003)
recalled that ‘Murray Rothbard made the whole affair fun.’
In 1980—with David Koch as their Vice-Presidential candidate—
the Libertarian Party described any attempt to interfere with Koch
Industries special interest as ‘ENERGY FASCISM’:

The United States has enough coal to last for 500 years, ample natural gas
supplies, and a 30-year supply of crude oil sitting in wells already drilled
… The libertarian solution is to end all price controls and allow free peo-
ple in a free market to meet our energy needs.59

In April 1989, Chris Tame the Director of the tobacco-funded Freedom

Organisation for the Right to Enjoy Smoking Tobacco (FOREST)
wrote a strategy document—self-consciously based on the IEA

58https://fee.org/resources/dr-peter-j-boettke-joins-fee-board-of-trustees/.

59Evers Archives. Box 1. LP California 1980.

 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
41

‘model’—in which he plotted to overcome scientific defeat about the

link between smoking and adverse health outcomes by promoting an
alleged link between public health and fascism:

The only way that the right to smoke can be preserved is to link it up
with the freedom of lifestyle position, and with the broader libertarian
critique of ‘health fascism’ and the paternalism and authoritarianism
of the medical establishment. Our ‘special interest’ can only be viably
defended as part and parcel of broader coalition. We have to shift the
focus of the debate from the enemy’s strong ground – health - to our
strong ground - freedom of choice and individual liberty.

All that was required was to assert that anti-smoking was in reality a
coalition driven by ‘anti-capitalists’ (‘capitalism haters’) who would ‘lose
their cool’ when confronted by their true identity. The public would
observe anti-smoking ‘nutters,’ ‘fanatics’ and ‘extremists’ and conclude:
‘a plague on both your houses.’ ‘FOREST has no good name to lose in
this respect.’60 He succeeded: the FOREST website states that ‘We may
have lost the battle but the war against intolerance and excessive govern-
ment intervention in our daily lives is there to be won and Forest has no
intention of giving up … Most of our money is donated by UK-based
tobacco companies.’61
Tame founded the Libertarian Alliance which subsequently renamed
itself after a member of the official Fascist social club: ‘Mises UK.’
According to Rothbard’s Libertarian Vanguard (August 1983), Tame
was ‘working with British fascists in a supposed attempt to combat the
left … Alan Winder (south London organiser for the fascist British
Movement), Charles Hanson (now of the National Socialist Initiative,
formerly of the National Socialist Movement) and Mary Page (one-
time member of the National Front).’62 David Ramsey Steele (14
December 1982) reported to Walter Grinder that Tame had often been
heard to say that he would make sure that ‘unilateralism’ and other

60https://www.industrydocumentslibrary.ucsf.edu/tobacco/docs/#id=zndh0059.

61http://www.forestonline.org/about-forest/frequently-asked-questions/. Accessed 7 July 2018.

62Evers Archives. Box 13. Libertarian Vanguard 26.
42    
R. Leeson

‘pro-Communist’ currents would never get a toe-hold in the British lib-

ertarian movement. Tame’s wife had worked for the intelligence services
and they mixed socially with intelligence operatives. Tame—who owned
‘The Alternative Bookshop’—had, Steele reported, a ‘zeal’ to cooperate
with British intelligence and would supply to the police the names and
addresses of anyone who ordered The Anarchist Cookbook. And Della
Scott (26 December 1982) reported to Eric Garris on the ‘loyalty oaths’
that were required of Libertarian Party candidates in Montana.63
The Mises Institute Senior Fellow Block (2000, 40) describes the
Austrian School ‘united front’ with ‘Neo-Nazis.’ Somewhat sycophan-
tically, Block (2 February 2002) also tried to persuade Milton Friedman
to contribute to a compilation subsequently entitled I Choose Liberty
Autobiographies of Contemporary Libertarians published in 2010 by
the Ludwig von Mises Institute because you are ‘at bottom a warrior.’
Block remain convinced that the ‘teaching’—synonymous with what
he described as the ‘missionary’ value—of Friedman’s personal narra-
tive could be ‘decisive’ in leading more young ‘scholars’ to ‘our side.’
Friedman (2 February 2004) declined—telling Block:

I do not really know how I got my ‘passion for liberty’ and anything I
wrote on the subject would be hot air.64

As Hayek (2007 [1944], 99) noted, ‘From the saintly and single-minded
idealist to the fanatic is often but a step.’ Friedman told Block (2006,
65, 61, 77, 74, 79) that his ‘tone is that of a theologian examining scrip-
ture’ and not that of a ‘reasonable man’: ‘you are a fanatic who finds it
absolutely impossible to understand the thinking of anybody other than
himself. It is time to close our discussion.’ Block replied:

Yes, I happen to be an anarchist libertarian (along with your son; do you

think of his views as ‘fanatical’ on this score?) … I wonder in this connec-
tion how you would evaluate the perspective of your son David? After all,
he and I share an ‘extremist’ vision of free-market anarchism, while you

63Evers Archives. Box 12. 1982 LPRC correspondence.

64Friedman Archives. Box 134.6.
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
43

favor government, albeit a limited one. Just out of curiosity, would you
place David and I in the same category as far as extremism or fanaticism
is concerned?

All knowledge is a construction: historians are trained to compare con-

structions with the evidence—but Austrians don’t wish to have their
‘knowledge’ examined. Using his dissembling word, ‘curious,’ Hayek
reflected: ‘It’s very curious. I am hardly capable of restating the ideas
of another person because I read and embody what I like to my own
thought. I cannot read a book and give an account of its arguments. I
can perhaps say what I have learnt from it. But that part of the argument
which is not sympathetic to me, I pass over’ (cited by Ebenstein 2003, 30).
Much of it appears to either

• fundraising;
• that which must be nuanced or alluded to only in footnotes; or
• that which must be passed over (suppressed).

In Friedman, the Misean and Hayekian branches of the MPS converged

on a common monetary and epistemological enemy. Yet (like his fellow
MPS members, Robbins and Haberler) Friedman pulled his punches
when it came to publicly associating Hayek’s deflationary policy promo-
tion with the Holocaust (Chapter 9, below).

4 Volume Overview
Abstractions can be both illuminating and misleading. For econo-
mists, (logical) time lies between the short and the long run; while
for (non-teleological) historians, time is narrative illuminated by con-
text. There are two ‘thoughters’ in the history of thought: the second
interprets the first. Context is the Myrdal (1969) transparency of the
first provided by the second—but few economists are trained historians.
Rothbard told the CLS Board that ‘we are severely limited by the two
great scarcities in the libertarian movement: money and talent.’ TOFF
industries solved the money problem, but the talent problem remains.
44    
R. Leeson

The ‘free’ market is promoted via neo-feudal patronage—the ‘spoils

system.’ Chapter 2 examines the process by which Hayek pro-
moted what Kevin Phillips (1969; 1974), the co-author of Nixon’s
1968 ‘southern strategy,’ described as ‘mediacracy’—whereby the mass
media have effective control over the voting public and thus politi-
cal outcomes. Logic and self-interested introspection (and/or decep-
tion-driven delusion) reveals that ‘von’ Hayek (I) was disinterested,
devoted to liberty and projected the ‘definite impression of austere
and magisterial eminence, both intellectually and morally.’ The evi-
dence, however, suggests that there were two more Hayeks: Hayek (II),
a crude, aristocratic, Jew-hating racist; plus Hayek (III): a ‘Three-Fifths
Compromise’ White Terror promoter. Whether or not he was a diag-
nosed schizophrenic, Hayek was funded by the TOFF lobby—as are
his epigones. The Road to Serfdom was published on 10 March 1944;
the liberation of Europe began three months later. Both were success-
ful because of a standard military tactic: deception plans. Hayek and
Mises promoted the deflation that undermined democracy and allowed
Hitler to seize power. The Allies expected that the Austro-Germans
were expecting them to land in Pas-de-Calais and so pandered to that
psychological predisposition. Hayek knew that many British neoclassi-
cal economists were concerned that the Great Depression led to both
protectionist pressures and extensive economic planning and so pan-
dered to those psychological predispositions, whilst blaming the Third
Reich not on his own proto-Nazi family but on socialists (Chapter 3).
A deluder without the deluded is of limited historical interest. Revolu­
tionaries usually enlist ‘useful idiots’—and what Boettke (2014) calls
the ‘gullible’ members of the HES appear to be the vehicle through
which ‘free’ market theocrats seek academic respectability. Hayek told
Buchanan—the ‘GMU Nobel Laureate’—that propaganda (‘catch-
words’) was required. Mises needed ‘Fascists’ to protect oligarchic ‘lib-
erty,’ while Hayek needed Utopian ‘intellectuals’ (‘secondhand dealers
in opinion’) who ‘have to play a very important role and are very effec-
tive.’ Fink—the GMU co-author of the Hayek-Koch-Fink ‘knowledge’
production line—exclaimed: ‘I can’t figure out how they look at the
data and not see the overwhelming benefits of the free market. I just
don’t understand it’ (cited by Continetti 2011). According to I Chose
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
45

Liberty (Block 2010), most ‘free’ market ‘scholars’ entered their cult
as adolescents via Ayn Rand and/or science fiction. But is cult mem-
bership conducive to the dispassionate evaluation of evidence? Alan
Greenspan—who was mesmerized by his all-night encounters with Ayn
Rand, his amphetamine-driven cult leader—was left with faith-driven
regrets: ‘Those of us who have looked to the self-interest of lending
institutions to protect shareholders’ equity, myself included, are in a
state of shocked disbelief.’ ‘Do you feel that your ideology pushed you
to make decisions that you wish you had not made?’ Greenspan replied:
‘Yes, I’ve found a flaw. I don’t know how significant or permanent it
is. But I’ve been very distressed by that fact’ (Ward 2008). Friedman’s
willingness to acknowledge error is evidence that he should be located
at the scientific end of the ‘knowledge’-to-faith spectrum. Austrian
‘gold’ comes from the TOFF lobby, the Apartheid regime, Pinochet,
the Shah of Iran, the Gaddafi family, the United Fruit Company, etc.
Are Austrian ‘scholars’ motivated by anything other than the ‘finan-
cial considerations’ associated with ‘Staying’ Austrian (Chapter 4)?
Chapters 4 and 5 propose eight research topics. First, a systematic study
of the social origins and psychological predispositions of those who have
recruited to the Austrian School (Chapter 4). Second, a calculation of
both the numerator and the denominator of the Austrian tax depend-
ency ratio (X/Y), where X is the millions (or billions?) of dollars that
Austrians have appropriated, and Y is their ‘research’ output. Third, a
metrics-based examination of what type of producer-sovereignty stu-
dents of Austrian economics have been exposed to; what Austrian
donors believe they are funding; plus a systematic study of Mises’ influ-
ence over the anti-democratic spectrum—including those who funded
Hitler. Fourth, a Mises-inspired examination of ‘life history by the
psycho-analytical method’ (or any other method) of those who assert
that ‘Waking and dreaming man’s wishes turn upon sex’ (Mises 1951
[1932], 87, 104, n1). And fifth, the role that ‘financial considerations’
play in the Austrian School promotion of the TOFF lobby (Chapter 5).
‘Free’ market promoters destroy the illusion that their suc-
cess is the product of ‘diabolical competence’ (Teles 2008,
276)—when they think that only the ideologically correct are lis-
tening, they openly express contempt for those they have colonised.
46    
R. Leeson

The IHS- and Mercatus-funded George Crowley is a member of the

Manuel H. Johnson Centre for Political Economy at Troy University,
Alabama, which in 2010 alone received about $1.2 million in gifts
from both the Charles Koch Foundation and BB&T.65 At a 2016
APEE meeting on being an ‘intellectual entrepreneur,’ Crowley was
secretly recorded stating that ‘Our task really was, in a lot of ways, to
kind of fundamentally change what Troy was doing. We were basically
a straight teaching school, [giving students] a kind of general business
degree, that they then went out and did business generally with, and
not actually getting them engaged with the actual ideas. We actually at
a later point were able to kind of take over the finance major, as well’
(cited by Flaherty 2016). Citing Fink, Boettke tells his GMU students:
‘Our goal is not just to get a seat on the bus. Our goal is to take over
the bus. Our goal is not just to sit in the back of the classroom and
make a small point. Our goal is to be running the classroom’ (cited by
Stringham 2010, 7, n10).
In Witness, the former Soviet spy Whittaker Chambers (2014 [1952],
XXXII) described ‘the first quotas of the great drift from Columbia,
Harvard, and elsewhere … A small intellectual army passed over to
the Communist Party with scarcely any effort on its part.’ Describing
Auburn University (which houses the Mises Institute) as second class,
Crowley hinted at the reason that Koch had chosen Troy: ‘we’re very
obviously the third-class university in the state.’ Troy had ‘an adminis-
tration that has kind of let us get away with a lot, as far as hiring people
very rapidly and ramming through some of the curricular kind of stuff.’
The Johnson Centre had ‘done stuff that had kind of made a splash, at
least at the state level.’ For example, Daniel Smith, associate professor
of economics and associate director of the Johnson Center, ‘has kind
of taken it upon himself to try to bring down the state pension system
… at least in getting the conversation going there’ (cited by Flaherty
2016).

65http://www.grc3.com/uploads/CrowleyCV.pdf. Johnson held the GMU-Koch Chair in

International Economics, 1977–1994, and served on the GMU Board of Visitors, 1999–2003.
https://www.mercatus.org/manuel-johnson.
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
47

At the end of his life, Harry Johnson (1923–1977) began to investi-

gate the extra-mural influences on economics departments—how their
geographical proximity to other disciples influenced their knowledge
dynamics. What are the consequences of allowing TOFF-funded think-
tanks to be located on university grounds? Shouldn’t those universities
who appear to award ideologically correct degrees based on the abil-
ity to uncritically extol the benefits of a ‘free’ market in TOFF prod-
ucts inform prospective students about potential conflicts of interest:
whether or not, that is, their ‘Professors’ are paid lobbyists?
Chapter 7 provides a ‘time as context’ overview chronology of three
major societal conflicts: between absolutism and oligarchy (feudalism),
between oligarchy and the ‘people’ (neo-feudalism), and between finan-
cial, industrial and service sector barons and democracy (new-feudal-
ism). Two concepts of civilisation continue to compete for dominance:
ascribed status versus the achieved status associated with universal vot-
ing rights for adults and universal compulsory and subsidised education
for their children. Chapter 8 examines the neo-feudal ‘spontaneous’
order—from Metternicht’s Concert of Europe to Mises’ oligarchic ‘lib-
erty’ and beyond.
Hayek was, like Mises, apparently ‘consciously devoted to the vision
and splendour of the Habsburg Empire’ (Leube 2003, 12). Mises
(1963, 282; 1966, 282) lobbied for the Warfare State and taxes; and in
1983, Hayek told the CIA-financed Cold War magazine Encounter that
he favoured an arms race. Chapter 9 examines the context of Hayek’s
1983 advocacy: the Nobel Peace Prize awarded to Alva Myrdal and the
public animosity expressed towards his parents by her son, Jan Myrdal.
‘Innocent until proven guilty?’ Mises (2012 [1940], 152)—who pro-
moted ‘Ludendorf and Hitler’ and other ‘Fascists’—insisted that ‘only
if they can prove that they did nothing to promote National Socialism’
could public servants keep their pensions. Hayek’s ‘Plan for the Future
of Germany’ began with a description of what became Pinochet’s ‘Plan
for the Future of Chile’: ‘Neither legal scruples nor a false humanitari-
anism should prevent the meeting out of full justice … shooting in cold
blood.’ Meanwhile, tax-funded Austrians have formed a ‘united front’
with ‘Neo Nazis’ (Block 2000, 40). Chapter 10 examines this Austrian
contempt for political liberalism.
48    
R. Leeson

Elections are a beauty (or least-ugly) contest. In 1929, Read of the

Burlingame Chamber of Commerce (who was later a major fund-raiser
for ‘liberty’) celebrated the inauguration of president committed to pro-
hibition and tariff protection (Hoover) and the ongoing tenure of the
deflation-promoting Treasury Secretary, Andrew Mellon (1921–1932).
Through Richard Mellon Scaife and his offspring, the Mellon family
fortune funds the Austrian School of Economics: Boettke (1997, 11, n)
is grateful for ‘financial assistance’ from the ‘Sarah Scaife Foundation in
support of the Austrian Economics Program at NYU.’ To gain power,
Hitler, who promoted ABCT, sought funding from leading industrialists
and their Chambers of Commerce and Industry plus support from intel-
lectuals. Chapter 11 examines the last democratic elections in Weimar
Germany in the context of the stated positions of both Hayek and Mises.
In The Road to Serfdom, Hayek (2007 [1944], 59) attributed blame
for the Nazis not to the proto-Nazi culture which his family and oth-
ers had cultivated during Hitler’s ‘Vienna days,’ nor to the industrialists
who funded the Nazis, but to ‘THE SOCIALISTS OF ALL PARTIES’:
‘There are few signs yet that we have intellectual courage to admit to
ourselves that we may have been wrong. Few are ready to recognise the
rise of Fascism and Nazism was not a reaction against the socialist trends
of the preceding period, but are necessary outcome of those tendencies.’
In 1945–1946, this almost unravelled through critiques from the
British Labour Party, his LSE colleague, Herman Finer, and his soon-
to-be University of Chicago colleague, Maynard Krueger. In 1933,
Hayek’s 1931 job interview assertion about having predicted the Great
Depression had been exposed as fraud at the University of Chicago
(Leeson 2018): circa 1945, Friedman explained to Hayek why he was
unacceptable to the Chicago Department of Economics.
All of Rose Friedman’s family who hadn’t emigrated perished in the
Austrian-fuelled Holocaust (Friedman and Friedman 1998, 3): Milton
came close to attributing blame. But after the 1947 establishment of the
MPS, Hayek was no longer an individual with a discredited business
cycle theory but became co-leader of a wider ‘liberty’ movement.
The denazification prosecution of Hayek’s brother, Heinrich, could
have led to questions about the von Hayek Nazis. Eugene Davidson
may have stumbled upon incriminating evidence; Paul Samuelson had
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
49

much of the information about Hayek’s Nazi background; and Haberler

went almost as far as Robbins and John Hicks in renouncing his
Austrian School identity.
Richard Mellon Scaife funded the 1990s ‘Arkansas Project’—digging up
dirt about the Clintons. Llewelyn Rockwell Jr. (1993) Austrian-knew that
during the Clinton Administration ‘We’ll see prohibitions on logging, fed-
eral permits for new factories, and bans on production to fight non-existent
global warming and ozone depletion … And churches will be taxed, while
gifts to them and all other charities will be taxable … An armed civil rights
police will be created … We will have fully socialized medicine and there-
fore rationed care. And we’ll have hymns to euthanasia, and why terminal
patients should do the government a favor and kill themselves.’
In ‘Clinton vs. God,’ Rockwell (1998) Austrian-knew that ‘in the
sacraments, we find the reality of God’s presence on earth. It is the
Almighty that Clinton has now directly challenged, in a symbolic
culmination of the war of the century between God and the state.’
Rockwell (2005) was also delighted to see the ‘current US president and
three previous presidents kneeling at the rail in front of the Pope’s cof-
fin.’ Mises denigrated the ‘evil seed’ of Christianity (Leeson 2017a)—
but Rockwell had found his involvement with an Institute named after
this card-carrying Austro-Fascist to be educational:

This much I’ve learned in my years as the head of the Mises Institute. It
is not enough to have a good education. It is not even enough to hold
the right ideas. What one needs to be a hero and to achieve the status of
greatness is moral courage. To really make a difference in this world, one
must be willing to stand up for what one believes, and be implacable in
the face of political and social pressure. This is a trait far rarer than bril-
liance and wit. John Paul II had it. So did Ludwig von Mises.

In ‘To Restore the Church, Smash the State,’ Rockwell (1998) insisted
that ‘Religiously active Christians have only one permanent enemy in
politics: the irredeemably corrupt modern state.’ The Rothbard Rockwell
Report referred to Bill Clinton as the Democrats’ ‘pants-dropping stand-
ard-bearer’ (Rockwell 1997) and ‘pants-dropping hero’ (Levin 1998, 14).
In an essay on the ‘Origins of the Welfare State in America,’ Rothbard
50    
R. Leeson

described what passes for knowledge among Austrian economists: ‘One

of Jane Addams’s close colleagues, and probable lesbian lover, at Hull
House was the tough, truculent Julia Clifford Lathrop … Sophinisba
Breckenridge … was not a Yankee, but she was pretty clearly a lesbian …
She continued to teach social science and social work at the University of
Chicago for the rest of her career, becoming the mentor and probable long
time lesbian companion of Edith Abbott [emphases added].’66
What’s good for the goose is good for the gander: the criminal sex-
ual activities of the ‘celibate’ First Estate were covered-up for decades;
and one of the creators of the Austrian Welfare State—a leading mem-
ber of the Second Estate, Hayek—abandoned his wife and children to
have unrestricted access to his cousin, who’s conversation and cooking
he could barely tolerate. His third authorised biographer—William
Warren Bartley III, a ‘gay liberationist’ who reportedly died of AIDS-
related cancer—spoke openly about his ‘Last Tango in Vienna’ conclu-
sion: Hayek was a ‘closet homosexual’ whose sexual activities with his
second wife (but, presumably, not his first) resembled his own.
Robert Vansittart (1958, 279) reported in The Mist Procession that in
post-1918 Germany, the ‘Universities bristled with the past. Sodomy,
fostered by the pre-war army, was not only tolerated but flaunted on a
scale hitherto unprecedented.’ Why are the transcripts of Bartley’s inter-
views with Hayek being suppressed by ‘free’ market fund-raisers? Why
are Hayek’s other for-posthumous-general-consumption also being sup-
pressed (Leeson 2015a, Chapter 2)?
The evidence discussed in Chapter 12 suggests that another leading
member of the Second Estate—Mises—was a sexual predator: one of
his victims may have been his stepdaughter. August Kubizek observed
Hitler’s ‘sudden unrestrained attacks of rage, the wild outbursts, the
capacity for hatred’ (Fest 1970, 9; Bullock 1962, 35): Friedman,
Robbins, Haberler, Machlup, Margit Mises and others observed similar
character traits in Mises.67

66https://mises.org/library/origins-welfare-state-america.

67Friedman recalled Mises stomping out of the inaugural MPS meeting and shouting ‘You’re all a

bunch of socialists’ (Friedman and Friedman 1998, 161). Haberler (22 November 1994 to Karl
Socher) recalled Mises describing them as a bunch of ‘Communists.’ Haberler Archives. Box 32.
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
51

5 Four Clarifications
1. According to British neoclassical analysis, outcomes are the product
of optimising agents confronting constraints. It is, therefore, not com-
pelling to ‘blame’ the Global Financial Crisis on ‘Wall Street greed’ or
climate change on Austrian ‘gold’—to change outcomes, incentives
must change. Although many Austrians (and—in at least GMU—their
PhD students) appear to display characteristics usually associated with
extreme forms of autism, such an assumption (correct or otherwise)
is not required for the analysis contained in these chapters: Austrian
‘scholars’ are assumed to be neoclassical optimisers who maximise their
income from whatever source is available. Malevolent mental illness
appears to be pervasive throughout their school: the individuals dis-
cussed below are deserving of sympathy and assistance. These chapters
are offered ‘with Malice toward none, with charity for all.’
According to one Austrian, ‘justice is what benefits my people,
injustice what harms my people’ (Hitler cited by Heiden 1944, 314).
Austrians and their fellow travellers appear horrified by the thought that
non-Austrians should be employed in ‘their’ departments. Charles K.
Rowley and Daniel Houser (2012, 17, 20) complained that the ‘Marxist-
Leninist bureaucrats who had captured the Ford Foundation’ would not
fund Buchanan’s Thomas Jefferson Center at Virginia Tech until the eco-
nomics department became as ‘balanced politically as those at Harvard
and Yale’: ‘Well, that was certainly not about to happen under the intel-
lectual leadership of James Buchanan and Warren Nutter.’ They were
proud to allege (falsely, it seems) that Nutter had penned Goldwater’s
famous 1964 acceptance speech phrase: ‘I would remind you that
extremism in the defense of liberty is no vice. And let me remind you
also that moderation in the pursuit of justice is no virtue.’
A report was commissioned to address the far-right-of-the-Repub-
lican-Party bias which concluded that faculty additions within the
department should consist ‘exclusively’ of those ‘of different modern
outlook’ (‘no further recruitment from the Chicago School’). Rowley
and Houser (2012, 20) described the consequences: a ‘Salem-style hunt
for “free-market witches” was rampant.’ In 1978, the newly recruited
departmental chair Daniel Orr sought to ‘re-orientate the Virginia Tech
52    
R. Leeson

economics program towards mainstream neoclassical economics.’ This

was intolerable to Buchanan (2015 [15 February 1979], 260), who told
his devotees that ‘we must continue to be able to secure sufficient inde-
pendent and external financial support to ward off threats from the aca-
demic enemies within our institutions.’
Buchanan et al. began looking for more a homogenous place to pro-
mote their agenda. Some joined the Reagan Administration; while oth-
ers joined GMU.
If universities want to avoid the appearance of economics depart-
ments having been bought by Austrian ‘gold’ they should issue regu-
lations that prevent ‘Austrians hiring Austrians’ and prohibit their
academics from being so-funded (several universities already prohibit
tobacco-funded ‘research’). To avoid the suspicion that ideologically
correct degrees are being issued, universities should insist that external
examiners vet grades—a standard practice in British universities where
Austrian colonisation (with very few exceptions) has failed.
2. According to Stigler (1955, 301), ‘Unless a science is thor-
oughly shaken up from time to time, its practitioners tend to become
a spiritless and stultifying lot. They drift into a rigid orthodoxy and
fail to maintain even the kind of progress of which they are capable.
Significantly original work, with its consequent controversies, feuds,
victories and defeats, appear necessary to maintain the esprit of a sci-
ence.’ Austrians should interpret these chapters as an attempt to
shake-up what they regard as their science.
In his Nobel lecture, Friedman (1977, 473) famously quoted from
Pierre S. DuPont: ‘Gentlemen, it is a disagreeable custom to which one is
to easily led by the harshness the discussions, to assume evil intentions. It
is necessary to be gracious as to intentions; one should believe them good,
and apparently they are; but we do not have to be gracious at all to incon-
sistent logic or to absurd reasoning. Bad logicians have committed more
in voluntary crimes bad men have done intentionally.’ Since intentions
are usually unobservable, these chapters will focus on Austrian logic.
Hayek provided the first step in the Austrian logic chain by stating
that ‘though there was in his opinion no difference between Communist
and Fascist states he would prefer to live under Fascism if he were forced
to decide’ (Cubitt 2006, 48). Raico (2015) provided the second step:
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
53

If you’re a Jew I want you to say these next five sentences out loud,
because they are true, and hard to say if you were brought up on
Holocaust-centred Judaism.

1. Stalin was worse than Hitler and killed at least twice as many people.
2. Mao was MUCH worse than Hitler and killed nearly eight times as
many people.
3. The communist holocaust was worse than Hitler’s Holocaust.
4. Communism is worse than Nazism.
5. Hiter’s [sic ] Holocaust was not unique.

Rothbard provided the third: he ‘physically applauded Khrushchev’

because he had ‘killed fewer people than General Eisenhower’ (Buckley
1995). And Hayek provided the conclusion—telling Cubitt (2006, 17)
about a ‘famous scientist [Mises?] without, however, revealing his name,
who despite being opposed to Hitler had gone to one of his rallies just
to see what it was like, only to find himself applauding and clapping his
hands, about which afterwards had been very ashamed [sic ].’
In Austrian logic, there could not have been a 1939–1941 Nazi-
Soviet Pact because in 1945 Soviet troops ransacked the apartments
of Nazi officials; and in 1927, Mises could not have aspired to be the
intellectual Führer of a Nazi-Classical Liberal Pact because in 1938
the Nazis ransacked his apartment. Some Miseans openly embrace the
neo-Nazi white supremacist fringe; others, such as the Jewish-born
Block (2000, 40) tolerate them; while most Hayekians would hold
their noses in such company (with the exception of those who knew
Hayek II and III, all appear to display cognitive dissonance). Like
Spanish Inquisitors, Austrians may believe themselves to be doing ‘the
Lord’s work.’ Some openly promote White Terror—but while they
were Austrian ‘boots on the ground’ assisting Pinochet’s coup, no evi-
dence has so far emerged linking them to death squads. These chapters,
which are concerned with ‘thinking’ (not doing) ‘the unthinkable,’ are
predicated on Friedman’s observation: Austrians are fanatics who find
it absolutely impossible to understand the thinking of anybody other
than themselves.
3. The familiar problems associated with making either Type 1 errors—
incorrect rejection of evidence (or hypothesis)—or Type II errors—failure
54    
R. Leeson

to reject—are compounded when ideology (or fund-raising) drives dis-

course. For this reason, almost all Austrian ‘knowledge’ is, perhaps, best
treated as propaganda: ‘Donor Shopping infomercials.’
‘Footnote Austrians’ appear to think that their ‘fine print’ will not
be read by their target audience and their conclusions will not be com-
pared to the evidence. However, with respect to their links to the Nazis
and other ‘Fascists,’ there appear to be two categories of Austrian: the
deluding (Hayek and Mises) and the deluded. Although politically,
Austrian are on the far-right spectrum, most do not self-identify as
‘Fascists.’ In these chapters, they will be treated as deluded consumers
of two sovereign producers of knowledge. The think-tanks that employ
them and the donors who fund them may also fall into this deluded
category.
Miseans have stripped meaning from the word ‘Fascist’ by indis-
criminately attaching it to anyone they disapprove of. Terror has
frequently underpinned power: an overtly ideological White Terror
arose in response to the Red Terror of the French Revolution—and
Fascism is the subset that arose in response to the 1917 Bolshevik
revolution. In the third Austrian generation, Mises self-identified as
a ‘Fascist’ (by his card-carrying and official Fascist social club mem-
ber status). In the fourth generation, Hayek and Rothbard were
White Terror promoters but not, apparently, Fascist party members.
Epigone-generation Austrians embrace a ‘united front’ with ‘Neo
Nazis’ (Block 2000, 40); and some are associated with white suprem-
acist groups. But no systematic examination of party membership is
undertaken below: in these chapters, ‘Fascism’ is a description not a
gratuitous insult.
Likewise, Marxists have expropriated (and therefore partially discred-
ited) class analysis (by muddling it up with permanent status and objec-
tive interest). Those who promote a society dominated by achieved status
distinguish between class of origin and class of destination. These chap-
ters will utilise appropriate self- and other-identified class categories.
The ‘free’ market fraud, ‘Deacon’ McCormick, appeared to want to be
exposed, if only posthumous (Leeson 2015c). Hayek headed his introduc-
tion to The Road to Serfdom with a quote from Lord Acton (after whom he
had initially hoped to name the MPS): ‘Few discoveries are more irritating
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
55

than those which expose the pedigree of ideas.’68 In ‘The Totalitarians in

our Midst,’ Hayek (2007 [1944], 195–196) appeared to describe Mises:
‘there is scarcely a leaf out of Hitler’s book which somebody or other in
this country has not recommended us to take and use for our own pur-
poses. This applies particularly to many people who are undoubtedly
Hitler’s mortal enemies because of one special feature in his system. We
should never forget that the anti-Semitism of Hitler has driven from his
country [Austria], or turned into his enemies, many people who in every
respect are confirmed totalitarians of the German type.’
With respect to ‘the Jew’ in ‘Germany and Austria,’ Hayek (2007
[1944], 161) asserted: ‘The fact German anti-Semitism and anti-capi-
talism spring from the same root is of great importance for the under-
standing of what has happened there, but this is rarely grasped by
foreign observers.’ Almost all pre-epigone-generation-Austrians were
either Jewish-born, anti-Semitic, or, like Mises, possibly both. The
Jewish-born Fürth (26 February 1992) reported to Haberler (his broth-
er-in-law) that Wieser was anti-Semitic.69 According to Eugen Maria
Schulak and Herbert Unterköfler (2011, 42), Wieser was labelled
a ‘Fascist’ because his magnum opus Gesetz der Macht (The Law of
Power 1983 [1926]) contains ‘anti-Semitic statements and an abstract
Führerkult … as well as sources indicating the contrary.’ Wieser’s
diary entries reveal that he was ‘not free from anti-Semitic sentiment’
(Klausinger 2013, 6, n16). Schumpeter also made anti-Semitic remarks
and diary notes, and shortly after the Nazis took power told Haberler
(20 March 1933) that recent events may mean a ‘catastrophe’ but they
also may mean ‘salvation.’70 He was ‘unsure whether Hitler would be
good or bad for Germany’ (cited by Swedberg 2003, x–xii).

68‘Ihad already had the idea we might turn this into a permanent society, and I proposed that it
would be called the Acton-Tocqueville Society, after the two most representative figures. Frank
Knight put up the greatest indignation: ‘You can’t call a liberal movement after two Catholics!’
[laughter] And he completely defeated it; he made it impossible. As a single person, he absolutely
obstructed the idea of using these two names, because they were Roman Catholics’ (Hayek 1978).
Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History Research,
University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
69Fürth Archives. Hoover Institution Box 6.

70Haberler Archives. Box 72.7.

56    
R. Leeson

The anti-Semitic Spann, who recruited Hayek to the Austrian School

of Economics, aspired to be the Nazi’s premier theoretician (Leeson
2017b, Chapter 2); he was the ‘Philosopher of Fascism’ (Polanyi 1934,
1935). As Hayek (1978) ‘finally achieved’ his ‘license to lecture as a
so-called Privatdozent’ at the University of Vienna, Spann was espous-
ing Nazi polices in public meetings on behalf of the Kampfbund fur
Deutsche Kultur in the University’s main auditorium (Turner 1985,
58–59). Immediately after Anschluss, Mises’ Viennese apartment was
ransacked by those he had aspired to lead (Hülsmann 2007, xi, 728,
677, n149); and the Reich’s Security Service issued an order to kill
Spann and his son (Klausinger 2013, 16, n59). After a visit to post-
Anschluss Vienna, Hayek (17 April 1939) reported to the Jewish-born
Machlup that Mises’ co-leader of the third-generation Austrian School,
Hans ‘Mayer is a ferocious Nazi. Possibly, the reason for his excitement
is that Spann and his son Raphael have been arrested by the Gestapo ’
(cited by Klausinger 2015).
In ‘The Socialist Roots of Nazism,’ Hayek (2007 [1944], 191–192)
asserted that Moeller van der Bruck’s ‘Third Reich’ was intended to
‘give the Germans a socialism adapted to their nature and undefiled
by Western liberal ideas. And so it did.’ The ‘Fight against liberalism
in all its forms’—the liberalism that had ‘defeated Germany’—was the
‘common idea which united Socialists and conservatives in one com-
mon front.’ Initially, it was ‘mainly in the German Youth Movement,
almost entirely socialist in inspiration and outlook, where these ideas
were most readily accepted and the fusion of socialism and nationalism
completed.’
Leo Rosten asked Hayek about Mises’ (1944, 94–96) description
of one component of the German Youth Movement, the Wandervögel,
most of whom had ‘one aim only: to get a job as soon as possible with
the government. Those who were not killed in the wars and revolutions
are today pedantic and timid bureaucrats in the innumerable offices of
the German Zwangswirtschaft. They are obedient and faithful slaves of
Hitler.’ Hayek (1978) replied: ‘Oh, I saw it happen; it was still quite
active immediately after the war. I think it reached the highest point in
the early twenties, immediately after the war. In fact, I saw it happen
when my youngest brother [Erich] was full time drawn into that circle;
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
57

but they were still not barbarians yet. It was rather a return to nature.
Their main enjoyment was going out for walks into nature and living a
primitive life. But it was not yet an outright revolt against civilization,
as it later became.’71
The proto-Nazi von Hayeks had three sons. The middle one,
Heinrich, a card-carrying Nazi, spent the Third Reich injecting chem-
icals into freshly executed victims (Hildebrand 2013, 2016). In The
Road to Serfdom, Hayek (2007 [1944], 189, n27) referred to Spann as
‘one of the intellectual leaders of the generation which has produced
Nazism.’ Rosten asked: ‘Tell me, did you begin, in your intellectual life
as an adult, did you begin as a Fabian? were you a socialist? were you
an Adam Smith man?’ Hayek (1978) replied: ‘You could describe it
as Fabian.’ The first two books of economics that Hayek encountered,
‘which I read while I was fighting in Italy, were so bad that I’m sur-
prised they didn’t put me permanently off economics; but when I got
back to Vienna somebody put me on to Karl Menger and that caught
me definitely.’72 That ‘someone’ was Spann, who led the first Führerkult
that Hayek (1978) joined: ‘he, being a young and enthusiastic man, for
a very short time had a constant influence on all these young people.
Well, he was resorting to taking us to a midsummer celebration up in
the woods, where we jumped over fires and—It’s so funny [laughter],
but it didn’t last long, because we soon discovered that he really didn’t
have anything to tell us about economics.’73
Using ‘curious,’ one of his dissembling words, Hayek (1978) elabo-
rated: ‘It’s very curious; the man who drew my attention to Menger’s
book was Othmar Spann … He was semicrazy and changed vio-
lently from different political persuasions--from socialism to extreme
nationalism to Catholicism, always a step ahead of current fashions.’74

71Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
72Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

73Friedrich Hayek, interviewed by Earlene Craver date unspecified 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

74Friedrich Hayek, interviewed by Armen Alchian 11 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

58    
R. Leeson

The evidence suggests that Hayek was more than ‘semicrazy.’75

Generally, those who suffer from mental illness now tend to be treated
more sympathetically than previously (when the ‘sub-human’ label
had frequently been attached). In the ‘Aryan’-obsessed Nazi regime
that Hayek’s Austrian family supported, the mentally ill were among
the first victims of the ‘purification’ Holocaust: Aloisia, one of Hitler’s
cousins on his father’s (Schicklgruber) side, ‘told doctors she was
haunted by ghosts and the presence of a skull.’ In 1940, she was mur-
dered ‘in a room pumped full of carbon monoxide’ in the Vienna insti-
tution where she had ‘spent most of her time chained to an iron bed’
(Connolly 2005).
To facilitate a divorce, Hayek (1899–1992), who was the same gen-
eration as Aloisia (1891–1940), may have attempted to have his first
wife, Hella, certified as insane: a pseudo-scientific graphological (hand-
writing) analysis by Dr. Erika Smekal-Hubert concluded that Hella
was ‘deeply inhibited, was slightly psychopathic, quarrelsome, and was
likely to have sudden emotional outbursts. She was a wayward, autistic
person, who should live alone and was neither a good wife nor a good
mother. The one for Hayek was couched in the most agreeable, even
enthusiastic terms’ (Cubitt 2006, 141).
Hayek’s mental illness manifested itself in obsessive self-interest and
extreme mood swings. Cubitt did not specify which type of psychiatrist
her employer was supervised by; but Hayek (1978) explained: ‘it seems
that it was through psychiatry that I somehow got to the problems of
political order.’76
‘There’s more to seeing than meets the eyeball.’ Hayek (1997
[1949], 231), who recruited and inspired disciples through ‘visions’
of ‘Utopian’ ‘liberty,’ was a see’er of visions: four decades after see-
ing Pigou climb mountains, he saw himself, simultaneously, being
75Hayek (1978) ‘heard a lot’ about Ludwig Wittgenstein ‘because his oldest sister was a close

friend of my mother’s. They were second cousins, and she came frequently to our house. There
were little rumors constant about this crazy young man, but she strongly defended Wittgenstein,
and that’s how I heard about him.’ Friedrich Hayek, interviewed by James Buchanan 28 October
1978 (Centre for Oral History Research, University of California, Los Angeles, http://oralhistory.
library.ucla.edu/).
76Friedrich Hayek, interviewed by Earlene Craver date unspecified 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
59

recruited as a Soviet agent (Leeson 2015c); and seeing a ‘negro’ Nobel

laureate (almost certainly Sir Arthur Lewis) dance made him see the
‘the animal beneath the facade of apparent civilization’ (Cubitt 2006,
23). In 1991, Hayek told his second wife to put him—not in a nursing
home—but into

a lunatic asylum, yet their doctor said he was in perfect physical shape.
His hallucinatory experiences exhausted him … Sometimes he would
see things in vivid shapes, green meadows, writing on the wall, and even
perceived sounds. No matter how strongly Mrs. Hayek would deny the
reality of these apparitions he would insist that he had seen and heard
them. On one such occasion he was so distressed because she would
not believe him that he clutched my hand and said that the presence
of persons and their singing had lasted for nine hours. (Cubitt 2006,
355–356)

In Zurich in 1919–1920, Hayek (1994, 64) worked in the laboratory

of the brain anatomist, Constantin von Monakow, ‘tracing fibre bun-
dles through the different parts of the human brain.’ von Monakow
and S. Kitabayashi (1919) had just published ‘Schizophrenie und
Plexus chorioidei’ in Schweizer Archiv für Neurologie und Psychiatrie
(Swiss Archives of Neurology and Psychiatry—a journal von Monakow
had founded in 1917).
Hayek’s mental illness manifested itself in obsessive self-interest and
extreme mood swings: he was being ‘looked after by a psychiatrist and a
neurologist’ (Cubitt 2006, 168). Hayek (1978) explained that ‘it would
sound so frightfully egotistic in speaking about myself--why I feel I
think in a different manner. But then, of course, I found a good many
instances of this in real life.’77
After his second prolonged bout of suicidal depression (1969–1974),
Hayek always carried a razor blade with which to slash his wrist; he
wanted to know ‘where “the poison”, that is arsenic, could be obtained.’
During his third bout (1985–), the second Mrs. Hayek instructed

77FriedrichHayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
60    
R. Leeson

Cubitt (2006, 168, 188, 168, 89, 111, 174, 188, 284, 328, 317) not
to let her husband near the parapet of their balcony. When asked ‘What
did Hayek think about subject x?’ his fellow Austrian-LSE economist
(1933–1948), Lachmann (1906–1990), would routinely reply: ‘Which
Hayek?’ (cited by Caldwell 2006, 112). Cubitt noted that Hayek
became ‘upset’ after reading an article on schizophrenia, and ‘won-
dered whether he thought it was referring to himself or Mrs. Hayek.’
The 1974 Nobel Prize exacerbated this personality split: Walter Grinder
detected ‘almost two different people’ (Ebenstein 2003, 264).
After the premature death of his first wife, Hayek lost about a dec-
ade to mental illness (1960–1961, 1969–1974, 1985–). Hayek (11 June
1961) recorded his year of ‘misery’ for posterity: his depression was, he
wrote, sparked by having to give up smoking on 11 May 1960, exactly
two months before the death of his first wife. Not smoking, he wrote,
proved hard for another ‘two’ months. Then general discomfort gave
way to other more ‘definite’ symptoms, which appeared to be unrelated
to the cessation of smoking: tiredness, sudden attacks of exhaustion, loss
of appetite, poor sleep, weight loss, plus ‘depressions.’78
Hayek’s (11 June 1961) condition deteriorated during March and
April 1961; while he was at the University of Virginia, his depression
took ‘suicidal’ forms.79 Hayek (5 June 1961; 22 July 1961) informed
the William Volker Charities Fund that he had been suffering from
‘acute’ depression and ‘extreme’ dejection and panic about his future,
which had resulted in a year of ‘enforced’ rest.80 Friedman (22 July
1969) suggested to Ralph Harris that the Caracas MPS meeting should
‘do something about Hayek’—such as a dinner in his honour.81 From
the IEA, Harris (16 September 1970) offered to supply Hayek with the
name of a doctor who had treated him for depression82; Popper (3 May
1974) told him that there was ‘no need’ to be depressed.83

78Hayek Archives. Box 119.2.

79Hayek Archives. Box 119.2.
80Hayek Archives. Box 58.19.

81Hayek Archives. Box 154.1.

82Hayek Archives. Box 19.19.

83Hayek Archives. Box 44.1.

 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
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In ‘Reflections on Hayek,’ Davenport (no date) recalled encounter-

ing the pre-Nobel Hayek in a ‘profound mood of depression.’84 Hayek
(17 April 1967) informed the Administrator of Manuscripts at Syracuse
University that he would probably leave instructions that his entire col-
lection of correspondence and manuscripts be ‘destroyed.’85 Haberler (3
December 1970) told John Van Sickle that Hayek created a somewhat
‘depressed’ impression—never before had he seen him in such a state of
mind.86 Hayek (28 January 1971) declined to recommend anyone to
Leland Yeager to fill one or two academic openings for Hayekians at the
University of Virginia because there were hardly any trained economists
with ‘any’ interest in the problems he had been working on for the last two
decades.87 Robbins (1971, 154) very pointedly distanced himself from the
Austrian business cycle model; as, the following year, did the co-recipient
of the 1972 Nobel Prize in Economic Sciences (Hicks 1972).
In ‘The Pit of State Control,’ ‘von’ Hayek told the St Andrew’s Citizen:
‘[Labour] Trade union mentality has come to govern the whole coun-
try. Basic elements of liberty are being engulfed by collectivism’ (cited
by Taylor 1976). Three years earlier, ‘von’ Hayek—gripped by suicidal
depression—polled last as Chancellor of the University of St Andrews,
behind the Old Etonian, Baron Ballantrae, the last British-born
Governor-General of New Zealand, and Sir Thomas Malcolm Knox, a
Hegel scholar.88
The idea that ‘liberty’ had been dreamt-up by such a ‘mindset’
could pose problems for Hayekian fund-raisers. In 1984, just before
Hayek’s third suicidal depression, Murdoch’s Sun published a feature
article on the morning of the 1984 Chesterfield by-election in which
Tony Benn, a candidate, was described as ‘insane’ (Higgins 1984, 208;
Hollingsworth 1986, 71–72; Porter 1984, 134; Pilger 1999, 449, 640,
n11; Trowler 1988, 90). In 1971, as Hayek was in the middle of his sec-
ond depression, the White House ‘Plumbers’ broke into a psychiatrist’s

84Davenport Archives. Box 3.24.

85Hayek Archives. Box 52.20.
86Fürth had also received a ‘pitiful’ letter from Hayek. Haberler Archives. Box 39.

87Hayek Archives. Box 55.22.

88Ballantrae, 3261 votes, Knox, 1924 votes, ‘von’ Hayek, 990 votes. Hayek Archives Box 55.13.
62    
R. Leeson

office to obtain the ‘incriminating’ medical records of the leaker

of the Pentagon Papers, Daniel Ellsberg (Schlesinger 2004 [1973],
261). Shortly afterwards, Thomas Eagleton was dropped as George
McGovern’s 1972 Vice-Presidential running-mate because it was discov-
ered that he been hospitalised three times for depression (Clymer 2007).
The behaviour of the press over the ‘Eagleton Episode’ resembled a
‘mob scene out of Shakespeare’ (Ross 1989, 227). Death-in-office has
resulted in eight ‘accidental’ presidents89; and in 1974, Vice-President
Gerald Ford succeeded the disgraced Nixon. All nine vice-presidents
were a ‘heartbeat away’ from the presidency—while Hayek’s person-
ality and social philosophy exerted a seminal influence in the USA
(under Reagan’s Presidency), in the UK (during Thatcher’s Prime
Ministership), in Germany (under Helmut Kohl’s Chancellorship)
and in Chile (during Pinochet’s dictatorship). In ‘Friedrich Hayek
and His Visits to Chile,’ Caldwell (the fifth official biographer and
third general editor of The Collected Writings of F. A. Hayek ) and
Montes (2014a, Section 3; 2014b, Section 3; 2015a, Section 3)
reflected about ‘Hayek’s Mindset in the 1970s’ without mentioning
his three prolonged episodes of mental illness. Caldwell and Montes
(2015b, 89) display open contempt for their Spanish readers: ‘It has
even been suggested that he suffered a depression (Kresge and Wenar
1994, 130–131).’90
Hayek emphasised to Cubitt (2006, 68–69) that as his second
authorised biographer, she was ‘quite a dangerous woman.’ However,
posthumously ‘he would want the truth to be told about him’; and he
presumably relayed the same message to Bartley, his third appointed
biographer and the first general editor of The Collected Writings of F. A.
Hayek. In Hayek on Hayek, Bartley and his editorial successor, Stephen
Kresge (together with Leif Wenar) reproduced Hayek’s (1994 [1972],

89The tenth, John Tyler (William Harrison’s Vice President), thirteenth, Millard Fillmore

(Zacary Taylor’s), seventeenth, Andrew Johnson (Abraham Lincoln’s), twenty-first, Chester A.

Arthur (James Garfield’s), twenty-sixth, Theodore Roosevelt (William McKinley’s), thirtieth,
Calvin Coolidge (Warren Harding’s), thirty-third, Harry S. Truman (F. D. Roosevelt’s), and
thirty-sixth, Lyndon B. Johnson (John F. Kennedy’s).
90‘Incluso se ha sugerido que sufrió una depresión (Kresge y Wenar 1994, 130–131).’
 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
63

130–131) words: mid-way through his second ‘miserable state,’ he was

in a ‘severe depression.’
Hayek’s second ‘severe depression’ lasted from 1969 to 1974. On
19 May 2014, Caldwell and other members of the SHOE list were
informed that the AIEE series would address ‘The consequences for
public policy of von Hayek’s psychiatric illness (apparently schizophre-
nia).’ But in a working paper and essay in the ‘refereed’ Rothbard-
established Review of Austrian Economics published four and five months
later, Caldwell and Montes (2014a, 15; 2014b; 2015a, 273) nuanced
what—to them—is ‘uncomfortable’ evidence by mashing-it-up with
wife, work, cities, plus a ‘perhaps’: ‘In 1969 Hayek and his wife moved
from the University of Freiburg in West Germany to the University of
Salzburg in Austria. It was an inauspicious move. For a variety of rea-
sons he was unhappy, perhaps even depressed in Salzburg, and in any
event he did not get much work done.’91
But from the other side of the ideological divide:

The details of how Chile’s Marxist Experiment came to be published show

that the CIA does not merely subsidize right-wing hacks to do their
own work; rather, it directs the production of propaganda at every stage.
Correspondence between David & Charles, Ltd., the publisher, and
Forum World Features and the Institute for the Study of Conflict shows
that the CIA first selected the title and then went searching for an author.
It rejected the first candidate (Michael Field of the Daily Telegraph), then
settled on Moss, paid him in advance to write the book, and supervised the
content and progress of his manuscript over several years. (Landis 1979, 9)

A priori it seems unlikely that Robert Moss’ (1973) Chile’s Marxist

Experiment would have required supervision from the CIA. But ‘intel-
ligence’ community ‘knowledge’ is inherently unreliable: an historian
has to choose what to include and what to exclude. Since the purpose
of these AIEE volumes is to collectively construct a compelling general
theory of knowledge construction and dissemination, it is important

91Ina footnote they add: ‘For more on this, see [Hayek on Hayek] 1994, pp. 130–31’ (Caldwell
and Montes 2014a, 15, n46; 2014b; 2015a, 273, n46).
64    
R. Leeson

to have a feedback mechanism: if material is subsequently proven to be

unreliable, corrections will be made in future volumes.92
These chapters are concerned with Austrian ‘secondhand dealers
in opinion’ not the institutions which employ them. Research must
precede conclusions—and since no institutional research has been
undertaken, no conclusions are presented. If individual Austrians feel
that they have been unfairly treated, they are invited to contribute to
future AIEE volumes to respond to the ‘opinion’ expressed in these
chapters. In particular, those who have been identified on the University
of California, San Francisco website as tobacco lobbyists should explain
how this has influenced their advocacy (if at all).
4. According to Mises (1962, 2008 [1956], 79), the ‘fact that the major-
ity of our contemporaries, the masses of semi-barbarians led by self-styled
intellectuals, entirely ignore everything that economics has brought for-
ward, is the main political problem of our age.’ Moreover, what

characterizes capitalism is not the bad taste of the crowds, but the fact
that these crowds, made prosperous by capitalism, became ‘consumers’ of
literature—of course, of trashy literature. The book market is flooded by a
downpour of trivial fiction for the semibarbarians. But this does not pre-
vent great authors from creating imperishable works.

Hitler (1939 [1925], 72) stated that ‘Democracy as practised in

Western Europe today is the forerunner of Marxism. In fact, the latter
would be inconceivable without the former. Democracy is the breed-
ing ground in which the bacilli of the Marxist world pest can grow and
spread.’ Hayek’s (1978) ‘present ambition’ was ‘largely concerned with
socialism, but of course socialism and unlimited democracy come very
much to the same thing. And I believe--at least I have the illusion--that
you can put things in a way [emphasis added] in which the intellectuals
will be ashamed to believe in what their fathers believed.’93

92Austrians were invited to contribute a chapter to this AIEE series: ‘Does what appears to be

fraud have an innocent explanation? Was Hayek a fraud or not? We need a chapter providing an
alternative perspective’ (SHOE 19 December 2015). No response was received.
93Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 1 ‘Free’ Market ‘Knowledge’: ‘That Part of the Argument …    
65

Herman Finer (1945) detected in his LSE colleague a ‘thoroughly

Hitlerian contempt for the democratic man.’ Like other cult leaders,
‘von’ Hayek spoke ex cathedra—telling a Paris press conference that ‘The
principles of democracy continue to be just, but it is necessary to try
them in a different way … Democracy is not an end in itself ’ (cited by
Han 1982, 91). According to Hitler, ‘the Jewish doctrine of Marxism
repudiates the aristocratic principle of nature’ (cited by Bullock 1962,
40). As Hayek (2007 [1944]) was writing The Road to Serfdom, the
Austrian School philosopher, ‘Ritter von’ Kuehnelt-Leddihn (alias F. S.
Campbell 1978 [1943]), published The Menace of the Herd. Austrian
School economists and philosophers openly embraced ‘natural aris-
tocracy’ (Rockwell 1994, 19), monarchy, or anything but democracy
(Hoppe 2001), and a ‘small, self-perpetuating oligarchy of the ablest
and most interested’ (Rothbard 1994c, 10).
Why are ex-Austrians (Robbins, Hicks, Haberler etc.) so deter-
mined to distance themselves from the ABCT that Hitler embraced
and which facilitated his rise to power (Chapter 9, below)? Why do
lapsed Austrians like George Selgin describe what they escaped from
as a ‘moronic cult’ with ‘clownish convictions’ (Salerno 2012)? Or
rather: how did they fall victim in the first place? The evidence uncov-
ered and presented in these volumes on the threat to democracy posed
by Austrian economists has surprised and shocked the AIEE editor:
hence, perhaps, a tone that is, at times, somewhat strident. The Austrian
School of Economics have used argumentative ad hominem (and other
‘unscrupulous methods’) to discourage analysis of their ‘knowledge’: is
anything other than a strident tone appropriate? But this also illustrates
a pitfall: dealing with ‘scholars’ who have corrupted scientific discourse
is as challenging to one’s sense of academic fair-play as it is distasteful.94
Many Austrians have either produced or consumed (and then repro-
duced) fraud—the reader must decide which of the Austrians discussed
below are gullible and which are guileful.

94One Austrian fundraiser, when his corrupt offer of hundreds of thousands of dollars to abandon
the Hayek component of the AIEE series was rejected, tried another tactic: his obsession with
Hayek, he somewhat pathetically implied, derived from the similarity between his own marriage
and Hayek’s first.
66    
R. Leeson

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Myrdal, G. (1969). Objectivity in Social Research. New York: Pantheon.
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 2
‘The Two Great Scarcities
in the Libertarian Movement:
Money and Talent’

1 ‘The Rewards of Predatory Publications

at a Small Business School’
Rothbard (24 September 1980) told the Board members of the Centre
for Libertarian Studies (CLS) that ‘we are severely limited by the two
great scarcities in the libertarian movement: money and talent.’1 Koch
Industries solved the money problem; but the talent problem remains:
Dan Klein described his ‘delusions of grandeur’ that his GMU students
display (Chapter 4, below). Where do these delusion come from? At a
Koch-funded Association of Private Enterprise Education (APEE) ses-
sion on ‘Being a Liberty-Advancing Academic,’ Boettke (2016) was
secretly recorded outlining what could be interpreted as a blackmail
strategy by which University Presidents would be obliged to display the
‘sycophancy’ to Misesians that MPS members displayed to Mises:

Like, I’ll give you one last thing that was the coolest thing that was
Jim Buchanan, who was my and Roy’s teacher, and you know what

1Evers Archives. Box 5. CLS (3).

© The Author(s) 2019 79

R. Leeson, Hayek: A Collaborative Biography,
Archival Insights into the Evolution of Economics,
https://doi.org/10.1007/978-3-319-78069-6_2
80    
R. Leeson

Jim Buchanan had going for him? When the President wanted to have a
meeting with Jim Buchanan, he went to Jim Buchanan’s office. Jim didn’t
go to George Johnson’s office.

GMU President Cabrera stated that ‘George Johnson’s work here – and
the spirit in which he performed it – will forever serve as inspiration
for those of us who follow in his footsteps.’2 After obtaining a PhD
in 1948, Buchanan (1919–2013) taught at Florida State University
(1951–1956), the University of Virginia (UVA, 1956–1968), the
University of California, Los Angeles (1968–1969) and Virginia Tech
(1969–1983) before moving to GMU and Cato. But according to
Boettke’s (2016) ‘free’-market Truth, all University Presidents followed
(or preceded) Johnson’s footsteps:

And that was true at every single university that Jim Buchanan taught
at, starting back when he was at UVA. Presidents came to sit and talk to
him. Alright? That’s the kind of … the best of all possible worlds. That’s
the world you want to be in.

If Boettke’s statement was true, then Cabrera would surely remember

going ‘to Jim Buchanan’s office.’ Instead, Cabrera referred the inquiry
to Robert Vay (email 13 July 2018), an Archivist in the GMU Libraries’
Special Collections Research Center, who was unable to locate any
material that could absolve Boettke of the charge that he had fabricated
‘knowledge.’
In ‘The Rewards of Predatory Publications at a Small Business
School,’ Derek Pyne (2017, 137) highlights the social costs associated
with publishing in privately optimal journals ‘that claim to be refereed’:

readers may wrongly believe such publications are legitimate scientific

journals. For example, 9/11 conspiracy theorists routinely cite an arti-
cle in a predatory journal as evidence in support of their views. Other
such journals contain articles that support pseudo-science. One even
contains a study of ancient Martian management practices. When

2https://www2.gmu.edu/news/427091.
 2 ‘The Two Great Scarcities in the Libertarian …    
81

academics publish in these journals, their university affiliations contribute

to the credibility of the journals. Because decision makers and the pub-
lic may lack the expertise to distinguish between nonsense and legitimate
research, they may be led to suspect expert opinion in general. In addi-
tion, when academics are rewarded for publishing in predatory journals,
the research incentives of their universities are distorted.3

Mises (1985 [1927], 44, 48) did not dissent from ‘Fascist’ ‘unscrupu-
lous methods’: ‘any crime, any lie, and any calumny.’ Fascism (like the
Third International) considers itself in ‘no way bound by the terms of
any compact that it may conclude.’ William Beveridge, the Director
(President) of London School of Economics (LSE), provided Hayek
with a professorship on the back of a fraudulent assertion about hav-
ing predicted the Great Depression (Leeson 2018); and Hayek (1994,
84) subsequently concluded LSE departmental meeting with ‘Beveridge
delundus est ’ (‘Thus I believe that we must destroy Beveridge’). What
kind of compact do Hayekians have with the universities that employ
them?
Boettke (2015, 2016)—who told the TOFF-funded Independent
Institute that ‘I live in a different world than the 99%’ and ‘I’d like to
make more money’—described the process by which a ‘free’-market
economist could live in the ‘world you want to be in.’

• Boettke (2016) denigrated academic economics as ‘blah, blah, blah,

blah, blah, and all that stuff.’
• Boettke’s (2016) mission is to get his GMU PhD students ‘placed in
jobs.’
• Boettke (2015, 2016) is a ‘tenured academic at a large state univer-
sity so my job security is very strong … I don’t expect to ever retire
and I have such a position of job security.’ ‘You can basically get ten-
ure, not publishing in the same journal twice, in a bunch of journals
that the editors are actually very predisposed towards classical liberal-
ism.’ Boettke named three of these ideologically-correct journals: ‘the

3The journals that Pyne analysed published articles in return for fees.
82    
R. Leeson

Journal of Private Enterprise, Independent Review… Cato Journal’4;

but declined to add his own ‘peer reviewed’ Review of Austrian
Economics which published – un-refereed - Caldwell and Montes’
(2014b, 2015) academically-unpublishable ‘Friedrich Hayek and His
Visits to Chile.’
• Boettke appears to have ‘placed’ his graduates in low-status Business
Schools in which non-‘free’ market economists have difficulty getting
published.
• Boettke (2016) then outlined what appears to be a strategy which
would enable a ‘free’ market economist to blackmail his univer-
sity: ‘And the only way you do that is through two things: lots of
funding, [laughs], if you have access to that, especially in this day
and age, and lots of publications that will destroy the school if you
leave from accreditation. And that’s the key issue, is the academic
exit option because if I leave in the midst of an AACSB [Association
to Advance Collegiate Schools of Business] accreditation, then the
school’s publications go down, they get hit, they don’t have accred-
itation, which means what? No third -party payer will pay, under-
stand? That’s the tuition- driver. That’s why accreditation matters
because the company won’t pay for you to get a non–accredited
MBA. And so in our world, where we are, we get… the third party
payer is government. Right? It’s all people trying to move up the
GS levels, or whatever. So again, we lost accreditation and then
that would matter for the government funding the thing. So this
is the economics of the university. Not saying, by the way, from a
Libertarian point of view that it’s the best thing in the world, but,
you have to recognize and take advantage of it in building programs.
And I think that’s, you’re a hundred percent right on that. Great
opportunity.’5

4‘Then what happens, you stretch it out and you go to, sort of, Public Choice. You know, Public

Choice is actually a very high- impact journal, in the field. But it’s actually very sympathetic to
our position. You know, right? But there’s also the European Journal of Political Economy and
blah blah blah blah blah, and all that stuff.’
5https://soundcloud.com/a-philadelphia-experiment/qa-being-a-liberty-advancing-academic-

apee-2016.
 2 ‘The Two Great Scarcities in the Libertarian …    
83

Boettke (2016) suggested that GMU—after Harvard and MIT—was

the best place to study economics:

‘Should I go to Michigan or should I go to GMU?’ Well, why don’t you

look at graduate student placement? What you’re gonna find out in all
these schools is that there’s a star system. Meaning one student can leap-
frog the academic appointments, but everyone else gets normal jobs.
Let’s look at the history track record at GMU, right? So, where’s one of
our graduate students teaching? Well, he’s a joint professor in the Law
School and Economics Department at the University of Pennsylvania.
If you go down the list of the number of GMU graduates that have
landed in Ph.D-granting institutions, which is considered the gold stand-
ard, you’re gonna end up finding that kind of standards that you’d have
from Michigan. Or anyplace else. What we don’t have is the same kind of
appointments that you would have at MIT or Harvard. That’s my bottom
line.6

Boettke’s talk was ‘moderated’ by ‘Debi Ghate, Charles Koch Institute/

Foundation’ who concluded the session with ‘go team.’ Boettke’s APEE
apparent conspiracy was outlined at Bally’s Casino, Las Vegas and he
was lucky that no disinterested journalist was present—just the WSJ
editorial page writer, Mary Anastasia O’Grady, who chaired another
APEE session.
Boettke (2005, 14–15, 17–18) celebrates his ‘Lord and Savoir
[sic]… one must commit to a personal relationship with God and
to strive to live a Christ-centered life.’ Yet his ‘risen’ Truth about the
‘cross’ and the ‘empty tomb’ appears to be more an empty boast and
a double cross. Boettke (2016) began his APEE presentation with the
‘free’-market Truth about himself: ‘I spend most of my career teach-
ing PhD students and trying to get them placed in jobs. I started the
first part of my career at New York University, where I taught through-
out the 1990’s. And then I moved back to George Mason University
in 1998 and I’ve been there ever since. But I’ve been a visiting profes-
sor, over the years, at Stanford, at London School of Economics, and

6https://soundcloud.com/a-philadelphia-experiment/peter-boettke-george-mason-university-be-

ing-a-liberty-advancing-academic-apee-2016-in-las-vegas.
84    
R. Leeson

the Academy of Sciences in Moscow, as well as Charles University in

Prague.’ Did Kirzner successfully obtain funds for Boettke to absent
himself from NYU to delay his tenure review (in a way that he had been
unable to for O’Driscoll; Chapter 1, above)? The evidence reveals that
Boettke may have taught at NYU for three or four years—before being
denied tenure—but he has never been a visiting professor at Stanford
(Leeson 2018).
Does he make equally false claims to get his PhD graduates ‘placed’?
The WSJ reported that ‘Roughly 75%’ of Boettke PhD students have
‘gone on’ to find employment teaching ‘economics at the college or grad-
uate level’ (K. Evans 2010). Will Boettke allow his job recommendations
to be evaluated? The ‘man on the Clapham Omnibus’ could conclude
that the ‘man’ (and they nearly are all white men—see Chapter 5,
below) on ‘the Hayek-Fink-Koch’ ‘knowledge’ production line was
‘doing the bidding’ of his funders—Koch Industries (Leeson 2018).
When Boettke tells employers that Mercatus-GMU PhD gradu-
ates are highly ‘qualified’ to become Professors of Economics what—
in the ‘free’ market—does ‘qualified’ mean? According to his contract,
Boettke’s handlers ‘Make periodic assessments of the Professor’s perfor-
mance and/or activities’ and if they make a ‘determination (based on
the individual’s performance or otherwise) that the professor filling
the Professorship is no longer qualified [emphasis added] to do so, and
upon this determination will submit in writing to Mercatus a recom-
mendation that the professor be removed from the Professorship.’7
In Cadre The Internal Bulletin of the Libertarian Radical Caucus,
Rothbard (1980) promoted conspiratorial ‘cadre-building’ (as opposed
to ‘educationism’) as the ‘only’ strategy that ‘can possibly succeed.’

At all times, the cadre holds high the banner of pure principle, and then
applies that principal to the crucial issues of the day. But this course
requires a lifelong commitment to what Mao aptly called a ‘protracted
struggle’; it is no movement for those who rush in and burn out in a few
months.

7http://apps.washingtonpost.com/g/documents/local/donor-agreement-between-the-mercatus-

center-and-george-mason-university-to-fund-a-faculty-position/2930/.
 2 ‘The Two Great Scarcities in the Libertarian …    
85

In the ‘free’ market, the prospect of lifetime academic tenure (largely

sheltered from market forces) appears to be the cadre-building vehicle.
What Paul Samuelson (2004, 312) hated ‘most in life is staying wrong
[Samuelson’ emphasis].’ Hayek (1978) complained to Thomas Hazlett
(later a GMU Professor of Law and Economics) that Americans ‘are too
unstable in your opinion.’8 Craufurd Goodwin (1988) is the author of a
perceptive account of ‘The Heterogeneity of the Economists’ Discourse:
Philosopher, Priest, and Hired Gun’; and Hayek (1978) perceptively
noted how the ‘Hired Gun’ might operate: Beveridge ‘was the type of
a barrister who would prepare, given a brief, and would speak splen-
didly to it, and five minutes later would forget what it was all about.’9
In between two lavish Koch-funded boosts (2007 and 2011) to his sal-
ary, Boettke’s (2010a)—presumably to remind his handlers how ‘qual-
ified’ he was—contributed a chapter to I Chose Liberty ‘On Becoming
an Austrian and Staying One.’ The following year, Boettke (in a conver-
sation with the AIEE editor) explained that he knew that Mises was a
sexual predator—even raising to his ear an imaginary telephone, Mises’
preferred method of abuse (see Chapter 12, below). But

Pete often says ‘love Mises to pieces,’ by which he means never lose sight
of why you entered the discipline in the first place. (A. Evans 2010, 79)

In 2015, the details of Mises’ card-carrying Austro-Fascist status and

the details of his telephone terrorism became public knowledge (Leeson
2015a); and in ‘F. A. Hayek, Free-Market Think Tanks, And Intellectual
Entrepreneurs,’ Chafuen (2015) cited Boettke: ‘I think Mises is a more
galvanizing ideological figure, whereas Hayek inspires scholars and aca-
demics. I think Mises can also inspire academics, witness Kirzner but
also all his students from Vienna including Hayek. But this requires
more work. We don’t immediately see the Mises of Theory of Money
and Credit, or Epistemological Problems, or even Socialism, Liberalism,

8Friedrich Hayek, interviewed by Thomas Hazlett 12 November 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
9Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

86    
R. Leeson

Interventionism, Bureaucracy, and Omnipotent Government. We don’t

read how he gave rise to Lionel Robbins, Fritz Machlup, Gottfried
Haberler, or Oskar Morgenstern, but instead we read him as an icon
who opposed any deviation from laissez-faire. So he becomes a galvaniz-
ing figure.’ Chafuen added: ‘I concur with [Boettke’s] views.’
The Probasco mission is ‘To study the American free enterprise sys-
tem and the conditions under which it operates most efficiently’ and
to liaise with ‘Economics America, Students in Free Enterprise, The
Association of Private Enterprise Education, etc. on aspects of economic
education in our geographic service area.’10 According to the GMU
‘scholar’ and ‘Probasco Chair of Free Enterprise University of Tennessee
at Chattanooga,’ Thomas J. DiLorenzo (1991, 9–10), ‘Mises’s predic-
tion that middle-of-the-road policy leads to socialism has been borne
out in many instances and is in the process of being proven in many
others. A current example is the political campaign for socialized health
care in America.’ Another was

environmental protection … There can be no market economy without

private property, and without a market economy there can be no free-
dom and prosperity … Mises’s 1958 ‘Liberty and Property’ and his 1950
‘Middle-of-the-Road Policy Leads to Socialism’ are timeless.

The form of fund-raising is timeless; but the content is opportunity-

specific. Time is central to Austrian economists: according to Chafeun
(2015) ‘Mises also accepted transitory middle-of-the-road solutions,
among others, retaliatory tariffs and gradual rather than radical liber-
alization (in his plan for Mexico). These were usually offered when
he acted as a consultant [emphasis added] more than a theoretician.’
Documents on the University of California, San Francisco website led
Source Watch and ‘Corporate Corruption of Science’ to conclude that
DiLorenzo was part of the ‘cash-for-comments’ network of the tobacco
industry.11

10https://www.naee.net/position_utennchattanooga.pdf.
11DiLorenzo is described as a ‘minor figure.’ https://www.sourcewatch.org/index.php/Thomas_J._

DiLorenzo.
 2 ‘The Two Great Scarcities in the Libertarian …    
87

Mises (1985 [1927], 153) declared: ‘If modern civilization were una-
ble to defend itself against the attacks of hirelings, then it could not,
in any case, remain in existence much longer.’ Mises (2006 [1958], 97)
also stated that if you

talk to people in the United States who really know the business of
Congress they will tell you: ‘This man, this member of Congress repre-
sents the interests of the silver groups.’ Or they will tell you another man
represents the wheat growers.

When the long-suppressed evidence about Mises and Hayek was pre-
sented to the SHOE list, Boettke (SHOE 20 May 2014) became hyster-
ical: ‘Can we please get back to business.’ What business is Boettke—the
President of Hayek’s MPS—in? In Economic Policy, Thought for Today
and Tomorrow, Mises (2006 [1958], 89) asserted that it is a

very well-known fact that as soon as, for instance, the United Fruit
Company moved into Guatemala, the result was a general tendency
toward higher wage rates, beginning with the wages which United Fruit
Company paid, which then made it necessary for other employers to pay
higher wages also. Therefore, there is no reason at all to be pessimistic in
regard to the future of ‘undeveloped’ countries.

The previous year, the neo-feudal United Fruit Company had donated
$1000 to the MPS12; and the MPS secretary, Albert Hunold (10
November 1958) then invited Kenneth Redmond, the President of
United Fruit Company, to attend MPS meetings.13 Hunold (November
1958) told Machlup that he was travelling around Guatemala and
Panama as a ‘guest’ of United Fruit.14
With respect to the Obesity component of TOFF: more than
one-third of adults in the USA are clinically obese. Obesity-related

12MPS Archives. Box 50.13.

13Redmond (27 March 1959) to Hunold. MPS Archives. Box 40.8.
14MPS Archives. Box 58.1.
88    
R. Leeson

conditions include heart disease, stroke, type 2 diabetes and certain

types of cancer, some of the leading causes of preventable death. The
medical cost of obesity in the USA was $147 billion per annum (in
2008 US dollars); the medical costs for obese people are $1429 higher
than those of normal weight.15
In Rockwell’s Private Practice, Jeremy Shearmur (1983) (of the
Institute for Humane Studies, IHS) explained why ‘free’-market med-
icine would produce better outcomes than ‘free health care’ (a ‘social-
ized system’): those with ‘liver disease from alcoholism, gum disease
from poor dental practice, bone fractures from drunk driving, damaged
lungs from smoking’ would face the threat of paying higher insurance
premiums and thus have a ‘pecuniary incentive to change their self-
destructive habits.’ Shearmur related this to his own inability to ‘weigh
the long-run costs against short-run pleasures’—‘I must weigh about
300 pounds.’ ‘Free’-market medicine enlists the price mechanism and
‘would actually give me the immediate financial incentive that I now
lack to lose some weight.’
In August 1975, Rothbard proposed that the Libertarian Party add
to their 1980 Platform: ‘We further oppose efforts to control broadcast
content by banning advertising for cigarettes or sugar-coated breakfast
food.’ Four decades later, after a local soda tax was passed, consumption
of soda and other sugary drinks dropped by more than a fifth in low-
income Berkeley neighbourhoods. The beverage industry then spent
more than $30 million in 2016 fighting similar taxes in San Francisco
and Oakland. After their lobbing failed, they persuaded the State of
California and to pass a law preventing any local governments from tax-
ing their products. The American Beverage Association California PAC
raised $6 million from Coke and Pepsi, $1 million from Dr Pepper
Snapple and $100,000 from Red Bull:

‘People across the country are taxed enough, and they can’t afford new
taxes on what they eat and drink,’ said William Dermody, the vice pres-
ident for media and public affairs at the American Beverage Association,
an industry trade group.

15https://www.cdc.gov/obesity/data/adult.html.
 2 ‘The Two Great Scarcities in the Libertarian …    
89

Duke’s Kelly Brownell responded:

The irony is that the soda companies screamed very loudly about gov-
ernment overreach when soda taxes began to get passed. But now they
are looking for the ultimate government overreach when it works in their
favor. (cited by O’Connor and Sanger-Katz 2018)

‘Free’-market economists promote the price mechanism only when it

suits their argument (or brief )—the preordained conclusions of their
‘research’ are functional and fully funded. In 1967, John Hickson, Vice-
President of the International Sugar Research Foundation (ISRF; later,
the Sugar Association), ‘secretly paid two influential Harvard scien-
tists to publish a major review paper’ that ‘minimized the link between
sugar and heart health and shifted blame to saturated fat.’ In 1968, the
ISRF started ‘Project 259’ and paid W. F. R. Pover (a researcher at the
University of Birmingham, England) the equivalent of $187,000 in
2018 dollars to conduct a laboratory study on animals to test whether
‘germ-free’ rats and guinea pigs that lacked gut bacteria would respond
differently to sugar and starches than normal animals. The initial results,
described in a 1969 internal ISRF report as being ‘of particular interest,’
revealed that rats fed with sucrose (the main component of cane sugar)
had produced high levels of an enzyme which was associated with hard-
ened arteries and bladder cancer: ‘This is one of the first demonstrations
of a biological difference between sucrose and starch fed rats.’ After the
initial phase of the research appeared to ‘confirm that sugar’s adverse
effects on cholesterol and triglycerides were a result of it being metab-
olized and fermented by gut bacteria,’ the ISRF ended Project 259 and
eliminated its funding. In an internal report in 1970, Hickson updated
fellow sugar executives on studies that could ‘elicit useful and significant
information’ for his industry and described the value of Project 259 as
‘nil’ (Kearns et al. 2017).
According to Mises (2006 [1958]), ‘One situation, especially inter-
esting in the United States, concerns sugar. Perhaps only one out of
500 Americans is interested in a higher price for sugar. Probably 499
out of 500 want a lower price for sugar. Nevertheless, the policy of the
United States is committed, by tariffs and other special measures, to a
90    
R. Leeson

higher price for sugar.’ Most economists oppose tariffs; but outside the
‘free’ market, most economists also favour using the price mechanism
to achieve socially beneficial outcomes (through externality taxes) and
to assist (nudge) individuals to achieve their reported long-term goals
(escaping from obesity).
In Austria, Mises (1909–1934) was a full-time paid lobbyist for
employer trade unions, and in the USA played a similar role (1945–
1973). Dan Sanchez (2018), the FEE ‘Director of Content’; and the
‘editor of FEE.org,’ provided a translation into the Austrian:

fortunately for us, Mises was not only a genius but also a paragon of
moral courage. In this harrowing crisis, as in all his subsequent trials,
Mises bolstered that courage with a scrap of Latin poetry he had learned
as a schoolboy. ‘How one carries on in the face of unavoidable catastrophe
is a matter of temperament. In high school, as was custom, I had chosen
a verse by Virgil to be my motto: Tu ne cede malis sed contra audentior ito.
Do not give in to evil, but proceed ever more boldly against it. I recalled
these words during the darkest hours of the war. Again and again I had
met with situations from which rational deliberation found no means of
escape; but then the unexpected intervened, and with it came salvation.
I would not lose courage even now. I wanted to do everything an econo-
mist could do. I would not tire in saying what I knew to be true.’

In ‘Mises Never Gave In to Evil,’ Sanchez (2018) provided the stand-

ard fund-raising mantra: ‘And he was forever faithful to that resolution.
Throughout his career, Mises was ever the picture of principled intran-
sigence.’ Referring to a card-carrying Austro-Fascist and member of the
official Fascist social club, Sanchez continued: ‘An intellectual Leonidas,
surrounded by hordes of socialists, fascists, and money cranks, he stood
his ground. Even as old allies—like those swept up in the Keynesian
Revolution—fell away, still he stood his ground. Still, he fought. And
he fought not only for the sake of future generations but for the sake of
his own.’
According to Chaffeun (2015), in his ‘main treatise, Human Action,
Mises defended military conscription, as at the time he was writing,
Western civilization was being challenged by the National Socialist
and Communist menace.’ The evidence reveals that Mises’ (1963, 282;
 2 ‘The Two Great Scarcities in the Libertarian …    
91

1966, 282) Human Action defence of conscription was written almost

two decades after the demise of the Third Reich—which had been
preceded by Mises’ (1985 [1927], 51) insistence that ‘It cannot be denied
[emphasis added] that Fascism and similar movements aiming at the
establishment of dictatorships are full of the best intentions and that
their intervention has, for the moment, saved European civilization.
The merit that Fascism has thereby won for itself will live on eternally in
history.’ The ‘Fascists’ defined and praised by Mises included ‘German
and Italian,’ ‘Ludendorff and Hitler.’ And in the tax-exempt Mises
Institute’s Human Action Scholar’s Edition (1998), Mises’ lobbying for
the Warfare State was silently rectified by deletion.
Boettke tells his GMU students: ‘For our whole lives we need to
be trying to win the scientific battle’ (cited by Stringham 2010, 6).
Hayek told Arthur Seldon that FEE was a ‘propaganda’ set up16; and
Boettke (2016) told a FEE audience that Mises is a ‘story of scien-
tific glory and personal courage in a very dark time in human history.’
Lynch (1971) repeated this fund-raising mantra: ‘It is a great honour
to be able to share this deserved homage to Professor Doctor Ludwig
von Mises’ who was ‘undoubtedly the most enlightened man of thought
of our times, consubstantiated with the basic principles which brought
about the greatness of western civilization. Constantly, in his teachings,
he has been loyal to scientific truth … The intelectual [sic ] integrity of
Professor Mises is the best example for students who love truth.’
Almost half-a-century after Mises (1985 [1927]) sought to become
the intellectual Führer of a Nazi-Classical Liberal Pact, Lynch (1971)
repeated his perennial concerns: ‘During these hard times, private
property, pursued and crippled, has become a kind of Cinderella.’ In
the USA, voluntary retirement contributions have left a toxic legacy of
budget deficits (to fund retirement income streams)—but Lynch com-
plained that ‘compulsory contributions for retirements, pensions, etc.’
violate liberty and property. The ‘preachings of Marxism’ was the villain:
‘Everywhere we hear people demanding changes. These changes are usu-
ally called social reforms. Among these, in many countries—especially

16http://www.margaretthatcher.org/document/114609 Hayek Archives. Box 27.6.

92    
R. Leeson

in the so-called under-developed countries—agrarian reform is a cur-

rent slogan. None of the politicians demanding agrarian reform has
taken the trouble to study the problem. They only wish to appeal to the
emotional aspect, offering to those who do not own land and wish to
become owners a piece of land that will be taken from a land owner. In
Latin American countries this is something that is happening in a very
extended way.’
According to Mises (1985 [1927], 51), ‘Fascist’ dictatorships had
‘saved European civilization.’ And according Lynch (1971)—who was
celebrating Mises’ 80th birthday: in the ‘unsteady times in which we are
living [emphasis added],’ Mises’ (2006 [1958]) ‘Freedom and Property’
is of ‘outstanding importance.’ Lynch suggested: ‘Let us cast a look
upon one of the basic constituents of civilization and ponder the causes
that move the modern barbarism which destroys civilization.’ Referring
to the ‘dramatic ideological struggle between liberty and collectivism,’
Lynch (1971) also asserted: ‘As all the wrong policies are based on
deterioration of private property, the most important task of our times
[emphasis added] is to properly defend this fundamental social institu-
tion.’ But Caldwell and Montes (2014a, 3, n8; 2014b, n8; 2015, n8)
defended Mises (1985 [1927]) glorification of ‘Fascism’ in Liberalism in
the Classical Tradition because he was merely ‘offering a comment on a
pressing issue of the day.’ Lynch (1971) revealed that the 1962 edition
of Mises (1985 [1927], 68) Liberalism in the Classical Tradition was his
bible.
Tax-funded Austrian ‘educators’ oppose the ‘non-concept of educa-
tion’ (Leeson 2018); and the Libertarian Party calls for ‘an immediate
end to compulsory busing’ and advocates the ‘complete separation of
education and State. Government schools lead to the indoctrination of
children and interfere with the free choice of individuals. Government
ownership, operation, regulation, and subsidy of schools and col-
leges should be ended.’17 At Grove City College, Sennholz, a ‘Misean
for Life’ Luftwaffe bomber pilot, taught Boettke and other students of
‘economic science’ that ‘A logically competent defense of a free society

17Evers Archives. Box 2. LP Platform.

 2 ‘The Two Great Scarcities in the Libertarian …    
93

requires divinely revealed information; all other defenses fail’ (John

Robbins 1992). Mises (2006 [1958], 52–53) sarcastically noted that
‘For centuries there was the doctrine—maintained and accepted by
everyone—that a king, an anointed king, was the messenger of God; he
had more wisdom than his subjects, and he had supernatural powers.
This doctrine of the superiority of a paternal government, of the super-
natural and superhuman powers of the hereditary kings gradually disap-
peared—or at least we thought so. But it came back again.’ Mises was
referring—not to Sennholz but—to a ‘book, published in our century,
not in the Dark Ages,’ by Werner Sombart, a ‘professor of economics,’
which

simply says: ‘The Führer, our Führer’—he means, of course, Hitler—‘gets

his orders directly from God, the Führer of the Universe.’ I spoke of this
hierarchy of the Führer earlier, and in this hierarchy, I mentioned Hitler
as the ‘Supreme Führer’… But there is, according to Werner Sombart, a
still higher Führer, God, the Führer of the universe. And God, he wrote,
gives His orders directly to Hitler. Of course, Professor Sombart said very
modestly: ‘We do not know how God communicates with the Führer.
But the fact cannot be denied.’

Mises had an antidote to the hierarchy associated with those with

divinely revealed ‘knowledge’:

Is there a remedy against such happenings? I would say, yes, there is a

remedy. And this remedy is the power of the citizens; they have to prevent
the establishment of such an autocratic regime that arrogates to itself a
higher wisdom than that of the average citizen. This is the fundamental
difference between freedom and serfdom.

Boettke—the GMU Presuppositionalist Professor of Economics who

sits atop the ‘free’-market food chain—became a second-hand dealer
in divine revelation. For three decades (1983–2013), Buchanan mar-
shalled cadres of opinionated ‘dealers’ at GMU: one of his first recruits
(in 1983) may have been the academic fraud, Sudha Shenoy—in I
Chose Liberty, Dora de Ampuero (2010, 95) recalls her participating
94    
R. Leeson

along with Ebeling, Rizzo and O’Driscoll in weekly GMU seminars.18

Buchanan taught at the University of Virginia where Shenoy (despite
being academically underqualified) was admitted—and unsuccessfully
undertook ‘Graduate courses in Economics, 1967–1968.’19 But she was
highly ‘qualified’ to ‘do the bidding’ of her paymasters.
Tax-funded libertarian ‘scholars’ chant ‘We want externalities’
(Blundell 2014, 100, n7) and walk the streets carrying banners proclaim-
ing that ‘TAXATION IS SLAVERY’ and ‘TAXES ARE REVOLTING
WHY AREN’T YOU.’20 How do intellectual pygmies become tenured
Professors of the ‘free’ market? Boettke (2016) told an APEE audience:

Basically, to run a center or to be a person on a campus that has impact,

you have to be viewed as, kind of, a version of a gorilla. Either from a tiny
gorilla to, like, the big eight hundred pound gorilla. And the more you’re
the eight hundred pound gorilla the more you’re able to, like, get your
way.

Rothbard—who died of a heart attack, aged 68—hated both nature and

public health and sought (in effect) to turn obesity into a communi-
cable disease. In the 1960s, he was a ‘little fat man’: when eating with
Rothbard began to adversely affect Walter Block’s (1995, 21, 22) own
weight, he was told: ‘every calorie says “yea” to life. What could I say?’
Boettke (2005) takes his children to a place where ‘they have a contest
that if you can eat and [sic] entire pie yourself you get a shirt and my
kids love to go for that reason. We did eat plenty of pizza in New Jersey
when there.’ Boettke (2010a, 64) models himself on Rothbard in other
ways: ‘When I first started teaching (and even today), I would listen to
tapes of Rothbard lectures and try to imitate his ability to combine the-
ory, history, and jokes to convey the principles of economics to those
who are innocent [emphasis added] of its teachings.’

18Or alternatively, Shenoy’s appointment might have been coincidental.

19Shenoy’s CV. University of Newcastle, Australia.
20Evers Archives. Box 12 LP Activities.
 2 ‘The Two Great Scarcities in the Libertarian …    
95

The Comprehensive Anti-Apartheid Act of 1986 led to democ-

racy and the end of whites-only rule. Rothbard proposed that the
1986 Libertarian Party Platform state: ‘We deplore any restrictions on
imports from or private investment in South Africa’ because it would
lower the ‘wages and cripples the employment of foreign producers –
regardless of race, color or creed.’21 Rothbard (1994a) also defended
Byron De La Beckwith Sr., the Klu Klux Klan assassin of voter regis-
tration activist, Medgar Evers, because he had been convicted of being
‘politically incorrect.’
In Deep South Dispatches: Memoir of a Civil Rights Journalist, John N.
Herbert (2018, 71) described the sentiments which informed his own
educational upbringing: ‘black people were innately inferior to whites
and were prosperous and happy when confined to a separate society.
This belief was rarely challenged by parents, schools, universities, or the
church.’ According to Byron De La Beckwith Jr., the Citizens’ Council
(which began in 1954 in response to the US Supreme Court ruling that
desegregated public schools) produced television shows that claimed
African Americans were ‘genetically inferior.’

It sought ‘to keep us segregated and to promote council schools and pri-
vate schools and to fight integration,’ the younger Beckwith said. ‘It was
to halt the mixing of the races.’

As a child, the younger Beckwith helped his father sell Citizens’ Council
memberships and copies of the speech, ‘Black Monday,’ which ‘com-
pared African Americans to chimpanzees.’22 Rothbard was the first
person Raico (2013) had met who defended ‘a fully voluntary soci-
ety—nudge, nudge.’ Why would Boettke (2010a, 64)—who works in
a department that employs at least two African Americans—imitate
someone who asserted that African Americans are genetically inferior
(Rothbard 1994b)?
Walter Grinder (2010 [1974]) described Shenoy as the

21Evers Archives. Box 15. LP National Platform.

22 https://www.clarionledger.com/story/news/2011/01/23/evers-assassin-said-still-at-large/

28936323/.
96    
R. Leeson

brilliant young economist who is rapidly becoming ‘Vienna’s own

Mrs. Robinson.’

In person and on video, Shenoy appeared to be imitating the upper-

class mannerisms of Joan Robinson. According to Jeffery Tucker (2008),
Shenoy—who was a student of neither Hayek nor Rothbard—was a

student of both Hayek and, most directly, of Murray Rothbard, a fact

which became clear once you began to talk with her at length. She has
picked up some of Rothbard’s mannerisms in the most charming way:
her laugh, the way she moved her hands when she spoke, and her general
scholarly demeanor, which combined vast knowledge and a love of detail
with a certain lightness and optimism.

Margit Mises (1984, 143) described Mises’ ‘court’ manners: he would

‘never sit down with me at mealtime, even on the hottest day, without
wearing his jacket … to his last days he never would take his jacket off
when he was with other people.’ The display of an ‘affected manner’—
art imitating art, florid literary styles or showy intellectual sophistication
and virtuosity—is typically referred to as ‘Mannerism’; and in Art and
Illusion, the Viennese art historian Ernst Hans Gombrich (1960) pro-
vided a seminal Study in the Psychology of Pictorial Representation.
As Hayek (1978) perceptively noted, ‘there are certainly many order-
ing principles operating in forming society, and each is of its own
kind.’23 He captivated his audience—the Washington Post reported that
he ‘is everything you want an 83-year-old Viennese conservative econ-
omists to be. Tall and rumpled. A pearl stickpin in his tie. A watch
chain across his vest, even though he wears a digital on his wrist. An
accent which melds German Z’s with British O’s.’ With ‘lovely aristo-
cratic ease,’ he became a ‘favorite of conservative economists from Irving
Kristol to William Buckley.’ While Hayek described the ‘spontaneous
formation of an order’ as ‘extremely complex structures’ and the mar-
ket as ‘an exo-somatic sense organ,’ the staff of the Heritage Foundation

23Friedrich Hayek, interviewed by Jack High date unspecified 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 2 ‘The Two Great Scarcities in the Libertarian …    
97

‘hover around him with a combination of delight and awe that makes
them seem like small boys around a football hero’ (Allen 1982).
For Hayek, his own status and income out-trumped ideology—
which is perfectly consistent with Austrian perceptions about Human
Action (Mises 1998 [1949]). While bemoaning Keynesianism, ‘con-
structivism’ and ‘the engineering attitude of mind,’24 he became the
American sales agent for the engineering-derived Keynesian Phillips
Machine and recruited Machlup as his sub-agent.25
According to Rockwell (2010), the co-founder of the Mises Institute,
Austrians—in their role of ‘speaking truth to power’—‘possess unique
insight. Only the Austrians have consistently warned that fiat money
creates the wrong incentives for the banking industry, that central-bank
manipulation of interest rates distorts the structure of production, that
the combination of paper money and central banking leads to economic
calamity.’ Rockwell used a standard fund-raising trick: ‘The stakes are
impossible to overstate. Fiat paper money is destroying civilization right
now. It has fueled the predator state. It has destabilized markets. It has
wrecked balance sheets and distorted financial markets. It has wrecked
the culture by leading the whole world to believe that prosperity can
come as if by magic, that stones can be turned into bread. It might yet
unleash a ravaging inflation that will be welcomed by dictators, despots,
and cruel tyrants. How important is sound money? The whole of civili-
zation depends on it. We must accept no compromise.’
Rockwell (2010) then resorted to demagogic ‘slogans of liberty’:
‘Down with government plans. Down with international commissions.
Down with attempts to manipulate and control that always end in rob-
bing us and making us poorer than we would otherwise be. We should
embrace no more and no less than what the old liberals of the 18th and
19th centuries championed. All we ask is laissez-faire.’
Keynes was the ‘maestro’ of the Bretton Woods Conference—while from
the ‘very beginning, Henry Hazlitt saw it all coming and warned against

24FriedrichHayek, interviewed by Robert Bork 4 November 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
25Machlup suggested that the Harvard Keynesian, Seymour Harris, might be interested in the

purchase. Hayek Archives. Box 36.17.

98    
R. Leeson

Bretton Woods.’ Rockwell (2010) described martyrdom: ‘Only Hazlitt’ was

on the ‘front lines’ in the USA ‘by himself, writing constantly and passion-
ately day by day to make a difference.’ When the Bretton Woods representa-
tives first gathered (1 July 1944), he ‘greeted them with a punch in the nose.’
According to Rockwell (2010), Hazlitt ‘questioned their compe-
tence, employing what would later be called the Hayekian knowledge
problem’ and made it ‘clear what was really at stake: the freedom of
the individual vs. the plans of government.’ Simultaneously, a second
front opened up in Cambridge (where Hayek spent the war): ‘Hayek
in London [sic ] actually submitted to the Bretton Woods delegates a
draft plan for a real gold standard for every nation. It was completely
ignored.’ But the British Ambassador in Washington reported (6 May
1945) to the Foreign Office that at a meeting of ‘influential New York
bankers,’ Hayek ‘argued passionately in favour of Bretton Woods on the
grounds that its defeat would encourage British bilateralism and eco-
nomic nationalism to a fatal degree’ (Nicholas 1981, 557).
Hayek (1978) told his first wife: ‘if I could plan my life I would like
to begin as a professor of economics in London, which was the center
of economics. I would do this for ten or fifteen years, and then return
to Austria as president of the national bank, and ultimately go back to
London as the Austrian ambassador.’ In the 1960s—at the height of the
Bretton Woods system—Hayek was ‘negotiating a possible presidency
of the Austrian National Bank [laughter].’26 Thus Hayek would have
been involved in setting interest rates—not at their ‘natural’ rate but—
at the rate that would keep a price (foreign exchange) fixed (Leeson
2003). Had Hayek become a central banker he would, presumably, not
have had to steal or double-dip from tax-exempt educational charities to
maintain his aristocratic lifestyle (Leeson 2015b, Chapter 1).
The British Ambassador in Washington also reported (31 March
1945) to the Foreign Office that

The Reader’s Digest, which is in effect the voice of Big Business, has
printed a digest of Professor Hayek’s notorious work, The Road to Serfdom

26Friedrich Hayek, interviewed by Earlene Craver date unspecified 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 2 ‘The Two Great Scarcities in the Libertarian …    
99

(any number of offprints of this at reduced price would be supplied by

the Book of the Month Club to purchasers). Wall Street looks on Hayek
as the richest goldmine yet discovered and are peddling his views every-
where. The Scripps-Howard papers have syndicated a digest of the digest,
and the imminent arrival of the Professor himself is eagerly anticipated by
the anti-Bretton Woods party, who expect him to act as the heavy artil-
lery with formidable academic ammunition, a commodity insufficiently
supplied by the somewhat thin writings of their university allies, faced
as these are by the almost consensus of all the respectable economists in
the country. Professor Hayek should not be surprised if he is invited to
address the Daughters of the American Revolution to provide them with
the latest weapons against such sinister social incendiaries as Lord Keynes
and the British Treasury. (Nicholas 1981, 534–535)

In 1980, Hayek scripted a press conference for candidate Reagan;

and in 1984, planned an ‘October Surprise’ by publishing an arti-
cle in the (London) Times fraudulently asserting that social costs had
been invented by a Soviet agent (Leeson 2013, Chapter 9; 2015b).
And according to Libertarian Vanguard (October 1983), Cato’s Annual
Report contained a quote from Hayek which ‘testifies to the good inten-
tions of the Reagan administration and identifies the Cato Institute as
technocratic advisers to the Reagan administration.’27
Hayek (7 May 1975) addressed the Libertarian Party; and the fol-
lowing day was ‘respondent’ to Rothbard’s address to the same party.28
In ‘Socialism and Science,’ Hayek (1979 [1976], 29) told the Canberra
branch of the Economic Society of Australia and New Zealand that ‘I
have never belonged to any political party.’ But in 1918–1921, Hayek
(1994, 53)—who promoted Austro-German Anschluss—had estab-
lished his own political party: the ‘German Democratic party.’ Caldwell
(2004, 141) changed the name (Hayek ‘and some friends once tried to
organize an Austrian Democratic Party’) before describing the attached
ideas: the party ‘would lie between the Catholics, on the one side, and
the socialists and Communists, on the other.’

27Evers Archives. Box 3. Vanguard 22.

28Evers Archives. Box 1. Libertarian Party Santa Clara County.
100    
R. Leeson

In 1945, the New York Times reported that after the leader of the
Labour Party, Clement Attlee, referred to his party political influence,
Hayek complained (that is, lied): ‘I am a teacher of economics, not a
politician. I have no connection whatsoever with the Conservative
Party.’29 Two-thirds of a century later, Caldwell (2010)—having
apparently already made for himself $1 million in royalties in a sin-
gle month from the Definitive Edition of the Road to Serfdom—misin-
formed readers of the Washington Post: ‘Hayek himself disdained having
his ideas attached to either party.’30 The evidence reveals that The Road
to Serfdom—with Hayek’s permission—played an important role in
Conservative Party propaganda (Shearmur 2006, 310). But between
March and May 1945, Hayek (1994, 103) was on a Road to Serfdom
promotional tour of the USA seeking funding for his post-divorce life as
a ‘free’ man: ‘practically all my contacts that led to later visits and finally
made my move to [the University of ] Chicago possible were made dur-
ing this trip.’
Hayek was still seeking a high-status academic position—hence, pre-
sumably, what the British Ambassador (11 June 1945) reported was
his ‘sincere refusal to be identified with the economic pressure groups
which acclaimed his book as a major weapon to fight against planning
of any nature.’ Hayek had been a ‘most embarrassing ally’ to the ‘eco-
nomic tories’ since his ‘passion for free trade makes him no less hos-
tile to tariffs and monopolies’ Had Hayek publically kowtowed to these
pressure groups this would, presumably, have scuttled his efforts to find
a position at the University of Chicago. Instead, it had led to a ‘suc-
cession of embarrassing incidents highly embarrassing to both sides’
(Nicholas 1981, 576).
‘Speaking truth to power’? Are disinterested scholars embarrassed
when their advocacy is inconsistent with those who fund them? Hayek
(1978)—who had ‘indubitably anti-New Deal views’ (Nicholas 1981,
576)—reflected on the process by which he became ‘completely’ dis-
credited as a professional economist:

29Citedby Claude Robinson (6 June 1945) to Hayek. Hayek Archives. Box 46.28.
30‘Eventhough Hayek himself disdained having his ideas attached to either party, he nonetheless
provided arguments about the dangers of the unbridled growth of government’ Caldwell (2010).
 2 ‘The Two Great Scarcities in the Libertarian …    
101

Socialism was a new infection; the great enthusiasm about the New
Deal was still at its height, and here there were two groups: people who
were enthusiastic about the book but never read it--they just heard there
was a book which supported capitalism--and the American intelligent-
sia, who had just been bitten by the collectivist bug and who felt that
this was a betrayal of the highest ideals which intellectuals ought to
defend. So I was exposed to incredible abuse, something I never experi-
enced in Britain at the time. It went so far as to completely discredit me
professionally.31

2 The Purpose and Discipline of History

Versus ‘History Area’ Fundraising
The writing of history is a journey of discovery in which evidence inter-
acts with the perspectives of the author in a manner which is disciplined
by the desire to persuade. Historian aspires to persuade fellow historians
and sometimes a wider audience—while ‘free’-market historians appear
to seek to persuade Koch Industries that they are worthy of further
funding.
Because of suspicions about his intellectual honesty, Rothbard had
been unable to leverage his Columbia PhD into anything other than
the fringes of academia. The CLS Board of Directors (17 April 1977)
schemed to overcome this personal market failure: there was a sugges-
tion that a chair of economics for Rothbard be ‘set up’ at a ‘prestigious’
university. Rothbard discussed the growing number of Kirzner followers
in the graduate school and the ‘fear’ that Austrians should never men-
tion ‘liberty’ and ‘libertarianism.’ It would be easier to ‘obtain’ a ‘pure’
Austrian ‘value-free’ professorship than a ‘libertarian tinged’ one and
easier still to in the field of History of Thought.32
According to Jane Mayer (2010, 2016), Leonard Liggio (who was
employed by the Koch-funded, IHS, 1974–1998) wrote ‘National

31FriedrichHayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
32Evers Archives. Box 6. CLS (1).
102    
R. Leeson

Socialist Political Strategy: Social Change in a Modern Industrial

Society with an Authoritarian Tradition’ which described the Nazis’ suc-
cessful creation of a youth movement as key to their capture of the state.
Like the Nazis, libertarians, Liggio suggested, should organise univer-
sity students to create ‘group identity.’ The minutes of the CLS Board
of Directors (17 April 1977) report that Liggio suggested that ‘we’ first
establish it as Austrian of Austrian History of Thought professorship
and ‘then expand.’ Columbia University might be a ‘good’ place as this
would keep Rothbard in the New York area and could eventually lead
to the Centre for Libertarian Studies having a privileged place on the
Columbia campus. A motion was passed authorising Walter Grinder
to prepare two proposals: 1) an Austrian Institute and 2) for ‘fund-
raising’ purposes, a professorship in the economics department of a
‘major’ university.33
Boettke (2014, 2010a)—who regards historians of economic thought
as ‘gullible’—reports that ‘Grinder and Leonard Liggio were very influ-
ential on me, both in terms of their suggestions of research projects one
could explore and the way one should interact with interested students
to build an academic community of libertarian scholars.’
This ‘free’-market strategy was further developed by another CLS
Director: as the field ‘we’ are in becomes more competitive, we are
going to have to use ‘more ingenuity’ to secure funding—by using
‘imagination’ and ‘marketing’ our ideas so that ‘they sell.’ The ‘history
area’ should be exploited because historians are ‘not only plentiful’ but
also ‘less costly’ than economists. The CLS should be ‘taking advantage’
of the fact that we have an academic board of advisors—which means
that ‘we’ should be ‘one step’ up on an organisation governed by busi-
nessmen when it comes to generating ‘research’ ideas.34
FEE became ‘home’ to the adolescent Boettke (2005):

Richard [Ebeling] is the master historian of the liberal tradition and of

the Austrian School of Economics … I wish them [Ebeling and his wife]
all the best in this endeavor to educate the young on the first-princples

33Evers Archives. Box 6. CLS (1).

34Evers Archives. Box 5. CLS (3).
 2 ‘The Two Great Scarcities in the Libertarian …    
103

[sic] of liberty and basic economics. When I was watching Richard speak
I got goose bumps remembering Leonard Read demonstrating with the
Lamp of Liberty how the flame of truth never burns out and how the
remnant through self-education and effective communication can make
sure that the flame grows. Everyone should send their students to FEE,
and better yet if you can get them to do so, get your children to make a
sojourn to FEE and be enlightened by the Ebelings.

Boettke (2010b) described the ideological homogeneity of incoming

GMU PhD students

‘Boettke boys’ all came to GMU as half-baked cookies and all I did was
help them bake a bit more. I didn’t haven’t [sic] to turn an oatmil [sic] rai-
sin cookine [sic] into a choclate [sic] chip one, they were already choclate
[sic] chip, they just needed to cook a bit more. But who made them cook-
ies were the great undergraduate teachers they had such as Richard Ebeling,
Sam Bostaph, Walter Block, Howie Baijter [sic], Emily Chamlee Wright,
David Prychitko, Tony Carilli, etc. We have a network of undergraduate
teachers now that excite young students about economics and they then
come to GMU, where I have the good fortune to work with them.

In the late 1970s, the CLS Director also sought to rescue children from
the ‘non-concept of “education”’: he had contacted ‘several prestigious
New York City private schools inquiring into the possibility of CLS
directing an economics workshop for college-bound seniors’ because the
‘pupils from these schools are from upper-class families (i.e. potential
donors) and a high percentage go on to Ivy League colleges.’ Moreover,
‘Funding’ would be ‘relatively easy to find. I have one New York City
foundation in mind already, and there are several others whose commu-
nity focus might make them good prospects.’
The headmistress of the all-girl private Brearley School, Evelyn J.
Halpert—described by the New York Times as having the ‘vaguely
British diction of a lifetime on the Upper East Side’ (Bumiller 1997)—
responded favourably. Presumably referring to ‘NYU Post-Doctoral
Fellows’ like Ebeling, the Director continued: ‘John Kunze tells me
that several of the NYU grads could use some extra money and such a
program would be perfect for them. Needless to say, the prestige that
104    
R. Leeson

would accrue to CLS by an association with these schools would be a

great asset, and I do think that we need to diversify a bit.’35
Diversification meant away from almost complete dependence on the
Koch brothers and the Scaife Foundation: all the $107,444 Donations
to the Centre for Libertarian Studies Through ‘2/77’ came from Charles
Koch, Cato Institute (formerly the Charles Koch Foundation), ‘Fred
Koch Foundation,’ ‘Koch Industries through FCK Foundation,’ and
‘Koch Industries Direct.’ Two months later, the CLS Board of Directors
(17 April 1977) agreed that the ‘aim for CLS should be to diversify
funding so as to stop complete dependence on Koch.’
Charles Koch and CLS Executive Director, David Padden, were both
on the Board of Directors of the Council for a Competitive Economy.36
In neoclassical terms, a ‘competitive’ economy is characterised by
price-taking behaviour—but the CLS complained that Koch and Cato
were taking something else. Koch, they complained, was a thief: ‘Koch
has now adopted a more activist stance. Many of the ideas we have sub-
mitted have been taken over by other groups and the Centre has received
no credit. The consensus was that each member of the board should
insist that the Centre get credit for all its activities.’ Somewhat patheti-
cally, the Board (item 1) suggested that Cato ‘contract with us’ to prepare
bibliographies for ‘free’-market ‘study kits.’ Item 11 then reported that
‘Study kits contract taken away from CLS and Cato will do it directly.’
The Introduction to Rothbard’s (2017) posthumously published The
Progressive Era reports that Rothbard ‘began writing’ the book ‘while affil-
iated with the Cato Institute’ and ‘appears to have worked on the man-
uscript from 1978 to 1981’ by which time he ‘was no longer working
on the remaining chapters’ (Newman 2017, 24, 27). Cato’s President
Edward Crane III (5 March 1981) complained to Rothbard—who was
known in ‘free’-market circles as ‘Robhard’ (Skousen 2000)—that Cato
had paid his salary and benefits for two years while he was supposedly
writing the book.37 Four years previously, the CLS Board of Directors (17
April 1977) asked Rothbard why he was writing the book through Cato,

35Evers Archives. Box 5. CLS (2).

36Evers Archives. Box 6. Council for a Competitive Economy.
37Evers Archives. Box 3. Cato.
 2 ‘The Two Great Scarcities in the Libertarian …    
105

and not through a Cato contract with CLS. Although there is no record
of Rothbard’s explanation, the minutes concluded: ‘We’ must claim this
as a sui generis situation and prevent ‘them’ from setting a precedent.
They felt obliged to surrender to producer sovereignty: It was suggested
that ‘we’ probably cannot use it as a lever for anything right now.
While preparing a bibliography on ‘Rise of Corporate State in
America,’ these ‘free’-market libertarians were outraged that Koch was
undermining their monopoly and exploiting their labour: by establish-
ing a ‘monopoly’ on ‘academic’ resources in the field of libertarianism,
‘we’ initially had ‘leverage’ for ‘funding.’ But in the two years since
inception, virtually every member of the board had undertaken activ-
ities outside CLS which ‘weakens our monopoly.’ Cato can undertake
any project they want as they have the ‘money provided [emphasis in
original]’ that ‘we’ supply the ‘labor.’38
Charles Koch was a micro-manager: the CLS Board of Directors (1
December 1976) were informed that he had ‘agreed to help find funds’
for their secretary.39 David Theroux of the Pacific Institute (4 November
1985) complained to Williamson Evers that David Koch—after speak-
ing with his brother—had reneged on promised funding.40 And a CLS
‘Activity Report’ noted that the Fred C. Koch Foundation had ‘approved’
funding for the Research Associate position for ‘W. Block’—and that
a tax-exempt ‘bouquet of flowers’ was sent to Liz and Charles Koch.41
David Koch told Brian Doherty (2007, 409): ‘If we’re going to give a lot
of money, we’ll make darn sure they spend it in a way that goes along
with our intent. And it they make a wrong turn and start doing things we
don’t agree with we withdraw funding. We do exert that kind of control.’
In 1971, Hickson left the sugar industry to work for the Cigar Research
Council (CRC). He had a PhD from Purdue University and had been
an Assistant Professor of Chemistry at Kansas Wesleyan University.42
Hickson (18 December 1972) wrote to Dr. Sydney Green at British
American Tobacco (BAT) about the use of knowledge in selling tobacco:

38Evers Archives. Box 6. CLS (1).

39Evers Archives. Box 4. CLS.
40Evers Archives. Box 16. Correspondence.

41Evers Archives. Box 6. CLS.

42https://www.industrydocumentslibrary.ucsf.edu/tobacco/docs/#id=zhdl0199.
106    
R. Leeson

CRC’s commodity is KNOWLEDGE. You will recognise that there

appears to be two ways to gain knowledge. One way is to collect it; the
other, is to create it. CRC’s programme has been designed to provide
appropriate endeavours in each of these spheres. (emphases in original)43

A confidential BAT document (8 September 1972) had earlier described

him as a

supreme scientific politician who has been successful in condemning

cyclamates, on behalf of the Sugar Research [Foundation], on some-
what shaky evidence which he has been able to conjure out of Wisconsin
Alumni Research Foundation. Hickson apparently has a close connection
with WARF on which he has been able to draw in the past in order to
obtain selected pieces of work.

Any Hickson-related ‘research’ would, therefore, need

very careful examination and checking to ensure that the evidence was
not ‘selected’ to suit the particular situation.44

Since leaving high school, Boettke may not have passed a single course
taught and examined by non-devotes of two transparent frauds, ‘von’
Mises and ‘von’ Hayek. This may explain why he appears to be unfa-
miliar with the standard rules of evidence and logic. As a non-smoker,
Boettke was presumably regarded as being worth his weight in gold to
the tobacco industry—but with respect to the use of ‘knowledge,’ they
appear to be more discerning than him.
For example: according to Boettke (2004) ‘attempts to dehomoge-
nize Mises and Hayek on the issue of private property and knowledge
are mistaken.’ But Hayek (1937) sought to dehomogenise himself from
Mises. Hayek (1978) told one of Boettke’s GMU colleagues, James
Buchanan, that Mises ‘had great influence on me, but I always differed,
first not consciously and now quite consciously. Mises was a rationalist
utilitarian, and I am not. He trusted the intelligent insight of people
43https://www.industrydocumentslibrary.ucsf.edu/tobacco/docs/#id=jjvg0210.

44https://www.industrydocumentslibrary.ucsf.edu/tobacco/docs/#id=gjjy0205.
 2 ‘The Two Great Scarcities in the Libertarian …    
107

pursuing their known goals, rather disregarding the traditional element,

the element of surrounding rules.’45 And Hayek (1978) told another of
Boettke’s GMU colleagues, Jack High, that ‘in most instances I found
he was simply right; but in some instances, particularly the philosophi-
cal background--I think I should put it that way--Mises remained to the
end a utilitarian rationalist. I came to the conclusion that both utilitari-
anism as a philosophy and the idea of it--that we were guided mostly by
rational calculations-- just would not be true.’46
When Axel Leijonhufvud asked ‘You have developed your own views
on methodology over the years. Did you have a conflict with Mises
on methodological matters?’ Hayek (1978) replied: ‘No, no conflict,
although I failed in my attempt to make him see my point; but he
took it more good-naturedly than in most other instances. [laughter] I
believe it was in that same article on economics and knowledge [1937]
where I make the point that while the analysis of individual planning
is in a way an a priori system of logic, the empirical element enters in
people learning about what the other people do. And you can’t claim,
as Mises does, that the whole theory of the market is an a priori sys-
tem, because of the empirical factor which comes in that one person
learns about what another person does. That was a gentle attempt to
persuade Mises to give up the a priori claim, but I failed in persuading
him. [laughter] … You see, I am neither a utilitarian nor a rationalist in
the sense in which Mises was. And his introspection is, of course, essen-
tially a rationalist introspection.’47
Hayek (1978) told Leo Rosten: ‘Mises remained to the end a strict
rationalist and utilitarian. He would put his argument in the form that
man had deliberately chosen intelligent institutions. I am convinced
that man has never been intelligent enough for that, but that these insti-
tutions have evolved by a process of selection, rather similar to biolog-
ical selection, and that it was not our reason which helped us to build

45Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
46Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

47Friedrich Hayek, interviewed by Axel Leijonhufvud date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

108    
R. Leeson

up a very effective system, but merely trial and error. So I never could
accept the, I would say, almost eighteenth-century rationalism in his
argument, nor his utilitarianism. Because in the original form, if you
say [David] Hume and [Adam] Smith were utilitarians, they argued that
the useful would be successful, not that people designed things because
they knew they were useful. It was only [Jeremy] Bentham who really
turned it into a rationalist argument, and Mises was in that sense a suc-
cessor of Bentham: he was a Benthamite utilitarian, and that utilitari-
anism I could never quite swallow. I’m now more or less coming to the
same conclusions by recognizing that spontaneous growth, which led
to the selection of the successful, leads to formations which look as if
they had been intelligently designed, but of course they never have been
intelligently designed nor been understood by the people who really
practice the things.’48
Dehomogenising himself from Mises led Hayek (1978) ‘to my latest
development, on the insight that we largely had learned certain prac-
tices which were efficient without really understanding why we did it;
so that it was wrong to interpret the economic system on the basis of
rational action. It was probably much truer that we had learned cer-
tain rules of conduct which were traditional in our society. As for why
we did, there was a problem of selective evolution rather than rational
construction.’49

References

Archival Insights into the Evolution

of Economics (and Related Projects)

Leeson, R. (2003). Ideology and the International Economy: The Decline and Fall
of Bretton Woods. Basingstoke, UK: Palgrave Macmillan.

48Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

49Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 2 ‘The Two Great Scarcities in the Libertarian …    
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Leeson, R. (Ed.). (2013). Hayek: A Collaborative Biography Part I Influences

from Mises to Bartley. Basingstoke, UK: Palgrave Macmillan.
Leeson, R. (Ed.). (2015a). Hayek: A Collaborative Biography Part II Austria,
America and the Rise of Hitler, 1899–1933. Basingstoke, UK: Palgrave
Macmillan.
Leeson, R. (Ed.). (2015b). Hayek: A Collaborative Biography Part III Fraud,
Fascism and Free Market Religion. Basingstoke, UK: Palgrave Macmillan.
Leeson, R. (2018). Hayek a Collaborative Biography Part XI: Orwellian
Rectifiers, Mises’ ‘Evil Seed’ of Christianity and the ‘Free’ Market Welfare State.
Basingstoke, UK: Palgrave Macmillan.

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Rothbard, M. N. (2017). The Progressive Era (P. Newman, Ed.). Auburn, AL:
Mises Institute.
Samuelson, P. A. (2004). Paul Samuelson. In D. C. Colander, R. P. F. Holt, &
J. B. Rosser (Eds.), The Changing Face of Economics. Ann Arbor: University
of Michigan Press.
Sanchez, D. (2018, May 10). Mises Never Gave In to Evil. Despite
Overwhelming Odds and Social Pressure, Mises Never Wavered in His
Convictions. Foundation for Economic Education. https://fee.org/articles/
mises-never-gave-in-to-evil-1/.
Shearmur, J. (1983). Fat for Free. Private Practice, 14(21).
Shearmur, J. (2006). Hayek, the Road to Serfdom, and the British
Conservatives. Journal of the History of Economic Thought, 28, 309–314.
Skousen, M. (2000, December). Dr. Jekyll and Mr Robhard. Inside Liberty,
14(12), 52–53. http://mises.org/journals/liberty/Liberty_Magazine_December_
2000.pdf.
Stringham, E. P. (2010). Toward a Libertarian Strategy for Academic Change:
The Movement Building of Peter Boettke. Journal of Private Enterprise,
26(1) (Fall), 1–12.
Tucker, J. (2008, June 4). Sudha Shenoy, 1943–2008. Mises Wire. https://
mises.org/wire/sudha-shenoy-1943-2008.
 3
The Deception Plans
of the ‘Aristocratic Revolution’:
‘Von’ Hayek I, II and III

Archival evidence survives because it can be deposited in a supervised

institution (and increasingly electronically preserved). In most instances,
Archivists determine the quantity of ‘fair use’ direct quotes—but in
Hayek’s case, an inherited title was created. Hayek promoted the ‘rule
of law’ except when it conflicted with his perceived self-interest. The
Austrian ‘free’-market monopolist of the Hayek Archives believes that
his inherited entitlements nullify the legal foundations of fair use:

FRIEDRICH VON HAYEK PAPERS USER AGREEMENT FORM

I AFFIRM THAT I HAVE READ THE FOLLOWING INFORMATION
AND AGREE TO THE TERMS SPECIFIED BELOW:
THE HOOVER INSTITUTION DOES NOT OWN THE
COPYRIGHT IN THE WRITINGS OF FRIEDRICH VON HAYEK.
APPLICATION FOR PERMISSION TO PUBLISH ANY SUCH
WRITINGS OR TO QUOTE ANY EXCERPT OF ANY LENGTH
FROM THEM SHOULD BE MADE TO THE GENERAL EDITOR
OF THE COLLECTED WORKS OF F. A. VON HAYEK.

© The Author(s) 2019 115

R. Leeson, Hayek: A Collaborative Biography,
Archival Insights into the Evolution of Economics,
https://doi.org/10.1007/978-3-319-78069-6_3
116    
R. Leeson

Evidence about an historical agent can be decomposed into spontaneous

and constructed components. The architecture of the mind is a construc-
tion (much of the construction is done involuntarily, through osmosis)
from which spontaneous and constructed evidence emerges. An agent
leaves a trail: documents (malleable or otherwise), oral history interviews,
the recollections of those who knew the agent, plus third-party accounts.
In reconstructing an agent’s life, an historian usually has access to three
categories of construction: the projected self-image (including published
works); private or semi-private self-reflections; plus the images (impres-
sionistic or otherwise) constructed by associates. These three sources,
when combined together, suggest that there were three Hayeks:

• Hayek I: disinterested, devoted to liberty, projecting ‘the definite

impression of austere and magisterial eminence, both intellectually
and morally’ (Kirzner 1995);
• Hayek II: a crude, aristocratic, Jew-hating racist; plus
• Hayek III: a ‘Three-Fifths Compromise’ White Terror promoter.

When preparation for the Hayek AIEE volumes began in summer 2009,
the post-Nobel Hayek ‘industry’ (1974–) had reached middle age; for
over two decades, the Hayek Archives had been subjected to thousands
of hours of ‘scholarly’ examination—much of it (it subsequently became
apparent) funded by the TOFF lobby. A large amount of ‘knowledge’
about Hayek I had already been published—nearly all of it top-down.
There appear to be two types of epigone: Austrian-born Austrians
(at least some of whom know about Hayek’s Nazi background) and
non-Austrian-born Austrians (who either don’t know or don’t want it
revealed). Pattern recognition suggests that their ‘knowledge’ is derived
from the following sequence:

• American children are taught to be proud that their ancestors had

fought for liberty against the red-coated White Terror of European
aristocrats;
• They also consume comic books about superheroes: ‘peacekeepers
and guardians’ of the galaxy; most, if not all, then graduate to Ayn
Rand fiction and The Road to Serfdom;
 3 The Deception Plans of the ‘Aristocratic Revolution’ …    
117

• Therefore, two waist-coated White Terror promoting European aris-

tocrats—one on the run from the ‘Fascists’ he thought had ‘saved
European civilisation’ and the other escaping from his first wife and
children—are the best defenders of (aristocratic) ‘liberty.’

A bottom-up archival approach reveals—as Hayek’s fifth author-

ised biographer, Caldwell (SHOE 5 June 2014), put it to the society
that elected him their President—that ‘Hayek [II and III] is a fraud,
anti-Semite, racist, elitist, liar, crazy, suicidal.’ This conflicts with
Caldwell’s top-down (fund-raising?) approach and is, therefore, dis-
missed: ‘no, I don’t think Hayek [I] was a fraud.’1
According to Mises (2006 [1958], 7) ‘again and again, the early his-
torians of capitalism have—one can hardly use a milder word—falsified
history.’ According to Boettke (2016), Mises ‘argued forcefully’ against
‘populism’—which made him a ‘target of interest’ for the Nazis. The
evidence reveals that ‘Fascists’ were a target of recruiting interest for
Mises.
Mises (2006 [1958], 94) noted that ‘Man is not a being that, on
the one hand, has an economic side and, on the other hand, a politi-
cal side, with no connection between the two.’ And as Boettke (2016)
correctly pointed out: ‘Mises’s economics informed his political the-
ory.’ In promoting political ‘Fascism’ to defend Austrian ‘liberty’ (i.e.
property), Mises (1985 [1927], 44, 48)—referring to ‘Ludendorff and
Hitler’—stated that the ‘fundamental idea’ of Fascism is the ‘proposal’
to use third international-style ‘unscrupulous methods.’ Using a eugen-
ics analogy, Mises described these ‘any crime, any lie, and any calumny’
methods: seeking to ‘exterminate its adversaries and their ideas in the
same way that the hygienist strives to exterminate a pestilential bacillus.’

1‘The list does not realize, perhaps, that I have been dealing with Robert Leeson’s rants about
Hayek for quite some time, as has any unfortunate historian who has met him in person. When I
would go to the Hayek archives a few years back I would run into him, and we had dinner a cou-
ple of times. Our dinner conversations bring to mind the experience of passing a bad car wreck
on the highway: one wants to look away, but one can’t. Leeson repeated all of the sorts of things
he has been saying on this list: Hayek is a fraud, anti-Semite, racist, elitist, liar, crazy, suicidal,
and on and on. I have stopped going to the archives chiefly because I did not want to run into
him yet again. If he wants a response to his assertion that Hayek is a fraud, I can give him it right
now: no, I don’t think Hayek was a fraud.’
118    
R. Leeson

Eleven years before the Nazis ransacked his apartment, Mises did
not dissent from such unscrupulousness: ‘Fascism’ (like the Third
International) considers itself in ‘no way bound by the terms of any
compact that it may conclude with opponents.’
Previously, the ‘militaristic and nationalistic enemies of the Third
International felt themselves cheated by liberalism.’ But since Mises
(1985 [1927], 47, 51) aspired to be the intellectual Führer of a Nazi-
Classical Liberal Compact, it was essential that these ‘Fascists’ not be
deterred from accepting his authority: Austrian economists must, there-
fore, encourage their Fascist comrades not to ‘exclude murder and assas-
sination from the list of measures to be resorted to in political struggles.’
According to Mises:

The program of liberalism, therefore, if condensed into a single word,

would have to read: property [Mises’ emphasis] … All the other demands
of liberalism result from this fundamental demand … The victory of
Fascism in a number of countries is only an episode in the long series of
struggles over the problem of property.

Having insisted that ‘Fascists’ had protected property, in 1940 The Last
Knight of Liberalism fled—leaving others to defeat the ‘Fascists’ that he
had anointed as having ‘saved European civilization.’ In America, he
was lucky not to have been deported and/or detained. Having reached
the safety of neutral Manhattan, Mises presumably perjured himself
by falsely declaring ‘No’ to immigration questions such as ‘Have you
committed, ordered, incited, assisted, or otherwise participated in extra-
judicial killings, political killings, or other acts of violence?’ Within
18 months, the USA was at war with those he had previously courted:
presidential proclamation 2526 (Alien Enemies - German) could have
led to Mises’ internment (Krammer 1997; Fox 2000).
In Chicago in July 1952, Senator Joseph McCarthy told the
Republican National Convention: ‘One Communist on the faculty of one
university is one Communist too many’ (cited by Herman 2000, 203);
while at the University of Chicago Hayek targeted left-wing academics
for liquidation (Leeson 2015b, Chapter 1). Had Mises been asked at New
York University (NYU), ‘are you now, or ever have you been, a member of
 3 The Deception Plans of the ‘Aristocratic Revolution’ …    
119

the Fascist party,’ how would he have responded? Some Miseans seek to
elevate biblical law over secular constitutions: How would Hayek (1978)
have responded if asked ‘are you plotting to overthrow the constitution
of the United States and replace it by a single sentence written by a dicta-
tor-promoting European aristocrat’ (Chapter 8, below)?
Mises applied for citizenship at the earliest possible date (August 1945)
and became an American citizen on 14 January 1946 (Hülsmann 2007,
832). Mises would have had to swear: ‘I hereby declare, on oath, that I
absolutely and entirely renounce and abjure all allegiance and fidelity to
any foreign prince, potentate, State, or sovereignty, and particularly to
Austria of who (which) I have heretofore been a subject (or citizen); that I
will support and defend the Constitution and laws of the United States of
America against all enemies, foreign and domestic … So help me God. In
acknowledgment whereof I have hereunto affixed my signature.’2
By affixing ‘von’ to his name, Mises was committing a criminal
offence under Austrian law. Equally contemptuous of the law in the
USA, he ‘generally’ referred to Otto the Hapsburg Pretender as ‘His
Majesty, Kaiser Otto’ and ‘Imperial Highness’—long after the prospect
of a restoration of the Austrian monarchy had disappeared (Hülmann
2007, 818).
Mises also had a promotional involvement with those who sought to
overthrow the Constitution of the USA and replace it with biblical law
(Berlet 2017; McVicar 2017).
According to Mises (1974 [1952], 170–171), the LSE economic
historian, T. S. Ashton, presented an MPS paper which suggested that
much contemporary history was mere ideology, consisting of ‘tortured’
facts and ‘concocted’ legends. In contrast, Mises (plagiarising Frank A.
Fetter’s concept of ‘consumer sovereignty’) provided ‘The Truth’:

In his capacity as consumer the common man is the sovereign whose buy-
ing or abstention from buying decides the fate of entrepreneurial activ-
ities. The ‘proletarian’ is the much-talked-about customer who is always
right. (Mises’ emphasis)

2https://www.uscis.gov/us-citizenship/naturalization-test/naturalization-oath-allegiance-united-

states-america.
120    
R. Leeson

On D-Day (6 June 1944), President Franklin Roosevelt addressed the

nation with a prayer about the ‘struggle to preserve our Republic, our
religion, and our civilization, and to set free a suffering humanity.’3
With his old world ‘storied pomp,’ Mises (23 January 1958) was the
Statue of Austrian Liberty: telling Ayn Rand that she had the ‘courage
to tell the masses what no politician told them: you are inferior and
all the improvements in your conditions which you simply take for
granted you owe to the effort of men who are better than you.’4 Hayek
sought to recruit the ‘worst inferior mediocrities’ to promote his ‘liberty’
(Chapter 5, below). He succeeded: at MPS meetings, the ‘demand’ for
‘sycophancy’ created its own supply (Buchanan 1992, 130).
In Human Action, Mises (1998, 90) stated that it is ‘vain to deny
that up to now certain races have contributed very little to the devel-
opment of civilisation and can, in this sense, be called inferior.’ The
tax-exempt Liberty Fund must have known they were funding a racist:
Hayek (5 March 1975) did not want non-whites to touch his money—
telling Neil McLeod that he wished to find an alternative to his ‘gone
negro’ Chicago bank.5 Seeing a ‘negro’ Nobel laureate (almost certainly
Sir Arthur Lewis) dance made Hayek see the ‘the animal beneath the
facade of apparent civilization’ (Cubitt 2006, 23). When Cubitt (2006,
146, 51) asked Hayek ‘whether he felt comfortable about Jewish peo-
ple he replied that he did not like them very much, any more than he
liked black people.’ And Hayek told his second wife that Shenoy, his
first appointed biographer, ‘could not be trusted since she was only an
Indian’ (Cubitt 2006, 344).
Hayek (1978) had a visceral dislike of and contempt for Jews and
non-whites:

I don’t have many strong dislikes. I admit that as a teacher--I have no

racial prejudices in general--but there were certain types, and conspic-
uous among them the Near Eastern populations, which I still dislike
because they are fundamentally dishonest. And I must say dishonesty

3http://www.historyplace.com/speeches/fdr-prayer.htm.

4https://mises.org/library/ludwig-von-misess-letter-rand-atlas-shrugged.

5Hayek Archives. Box 34.17.

 3 The Deception Plans of the ‘Aristocratic Revolution’ …    
121

is a thing I intensely dislike. It was a type which, in my childhood in

Austria, was described as Levantine, typical of the people of the eastern
Mediterranean. But I encountered it later, and I have a profound dis-
like for the typical Indian students at the London School of Economics,
which I admit are all one type--Bengali moneylender sons. They are to me
a detestable type, I admit, but not with any racial feeling. I have found
a little of the same amongst the Egyptians--basically a lack of honesty in
them.6

As George Roche III was preparing to run for the United States
Senate, Ronald Reagan (1977) delivered the Hillsdale College Ludwig
von Mises Lecture on ‘Whatever Happened to Free Enterprise?’ As
President, Reagan (1984, 198)—who had a special affinity with ‘the
American people’—wrote that ‘von Mises … rekindled the flames of
liberty in new generations of thinkers … we owe an incalculable debt to
this dean of the Austrian school of economics for expanding our knowl-
edge and inspiring a new vision of liberty in our age.’ He told Margit
Mises: ‘You don’t know how often I consult the books of your husband
before I make a speech’ (cited by Doherty 2007, 10).
According to Nancy Maclean (2017, Chapter 1), the fear of deseg-
regation (Brown versus Board of Education, 1954) initiated Buchanan’s
University of Virginia Thomas Jefferson Center for Studies in Political
Economy. After Emmett Till was lynched (28 August 1955), one of
those acquitted of his murder, J. W. Milam, told Look magazine why the
14-year-old Chicagoan boy had to die:

I like niggers -- in their place -- I know how to work ‘em. But I just
decided it was time a few people got put on notice. As long as I live and
can do anything about it, niggers are gonna stay in their place. Niggers
ain’t gonna vote where I live. If they did, they’d control the government.
They ain’t gonna go to school with my kids. And when a nigger gets close
to mentioning sex with a white woman, he’s tired o’ livin’. I’m likely
to kill him. Me and my folks fought for this country, and we got some
rights. ‘Chicago boy,’ I said, ‘I’m tired of ‘em sending your kind down

6FriedrichHayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral
History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
122    
R. Leeson

here to stir up trouble. Goddam you, I’m going to make an example of

you -- just so everybody can know how me and my folks stand.’ (Huie
1956; Whitfield 1988)7

On 1 December 1955, Rosa Parks resisted bus segregation by refused

to give up her seat to a white person. Describing himself as ‘always a
sucker for inspirational stories,’ Boettke (2009) describes how ‘in 1984
when I showed up for graduate school at GMU, my personality was one
that looked for inspirational talks and rallying cries for a mission to be
accomplished.’ Just before he left to work full time for Koch Industry’s
Citizens for a Sound Economy, Fink delivered what

became the ‘locker room speech’ for my professional life … at GMU

would no longer accept second class citizenship in the profession. We
didn’t just want a seat on the bus, we wanted to own the entire bus and
that we would never be content until that was achieved. To accomplish
this goal, Rich gave us specific guidelines to not just survive in graduate
school but excel and put ourselves in the best position possible to take
control of the professional ‘bus.’

Boettke was

hooked hearing Fink’s words. But then came the exceptional part. Fink told
us that to ensure that we could accomplish our goals CSMP was committed
to creating the learning environment and the financial support to give us
the best chance to succeed … CSMP provided summer funds for 1st year
students to not work, but to study for their exams. CSMP held a writing
workshop in the summer, including the hiring of a professional editor to
help us learn how to write academic papers. CSMP paid for students to
attend conferences to present papers or serve as a discussant. CSMP paid
for journal submissions. And CSMP helped with the academic job search at
the end of our schooling … Fink’s speech still inspires me every time I get
frustrated and it makes me want to get out there and compete harded to do
what I think is right to advance the cause of ‘good’ economics --- by which
I mean Austrian economics and the Virginia Political Economy tradition.

7http://famous-trials.com/legacyftrials/till/confession.html.
 3 The Deception Plans of the ‘Aristocratic Revolution’ …    
123

Boettke (2009) found his ‘mission’ in what he sometimes calls ‘educa-

tion’ but by which he appears to mean ideological correctness: ‘in intel-
lectual affairs, or, as some might say in less than charitable moments,
ideological affairs … Educationally, I cannot imagine a better experi-
ence than GMU 1984-88.’
In 1944 and again in 1957, General and then President Dwight
Eisenhower employed the 101st Airborne Division: first as a behind-
the-lines, first-strike force against the Austro-German Third Reich, and
then to enforce the 1954 Supreme Court’s school desegregation decision
in Little Rock, Arkansas. In I Chose Liberty, Rockwell (2010 [1999],
289, 291) explained which side Austrians were on: ‘The good folks
who resisted the civil-rights juggernaut were not necessarily ideological
driven. Mostly they resented horrible intrusions into their communi-
ties, the media smears, and the attacks on their fundamental freedoms
that civil rights represented.’ Before founding the Ludwig von Mises
Institute, Rockwell had worked for ‘Arlington House,’ named ‘after
Robert E. Lee’s ancestral home, stolen by Lincoln for a Union cemetery.
(I still hope to see it returned some day.)’
According to William Buckley Jr. (1995), when ‘Khrushchev
arrived in New York’ in 1959, with ‘much of America stunned by the
visit of the butcher of Budapest - the Soviet protégé of Stalin who was
threatening a world war over Berlin - Rothbard physically applauded
Khrushchev in his limousine as it passed by on the street. He gave as his
reason for this that, after all, Khrushchev had killed fewer people than
General Eisenhower, his host.’
In 1961, Eisenhower left the Oval Office concerned about the threat
posed to American liberty by the military industrial complex:

Throughout America’s adventure in free government, our basic purposes

have been to keep the peace; to foster progress in human achievement,
and to enhance liberty, dignity and integrity among people and among
nations …We face a hostile ideology – global in scope, atheistic in char-
acter, ruthless in purpose, and insidious in method. Unhappily the dan-
ger is poses promises to be of indefinite duration. To meet it successfully,
there is called for, not so much the emotional and transitory sacrifices of
crisis, but rather those which enable us to carry forward steadily, surely,
124    
R. Leeson

and without complaint the burdens of a prolonged and complex strug-

gle -- with liberty the stake … In the councils of government, we must
guard against the acquisition of unwarranted influence, whether sought
or unsought, by the military industrial complex. The potential for the dis-
astrous rise of misplaced power exists and will persist … We must never
let the weight of this combination endanger our liberties or democratic
processes. We should take nothing for granted. Only an alert and knowl-
edgeable citizenry can compel the proper meshing of the huge industrial
and military machinery of defense with our peaceful methods and goals,
so that security and liberty may prosper together.8

The following year, two Harvard academics revealed that B.F. Goodrich
Company ranked 67th in terms of the value received of World War
II military production contracts (Peck and Scherer 1962, 618–619).
Read had established FEE with co-founders David Goodrich (of B.F.
Goodrich Company, one of the world’s largest tire and rubber manu-
facturers), Frank Donaldson Brown (a financial executive and corporate
director with both DuPont and General Motors), Henry Hazlitt (New
York Times ), Claude Robinson (Opinion Research Corporation), plus
two academics, Fred R. Fairchild (Yale), and Leo Wolman (Columbia)
(Sennholz 1996; Hazlitt 1984). According to Mises (1974 [1952],
170–171), ‘Big business caters to the needs of the many; it depends
exclusively upon mass consumption.’ Mises (1963, 282; 1966, 282)
was a lobbyist for this military industrial complex: ‘He who in our age
opposes armaments and conscription is, perhaps unbeknown to himself,
an abettor of those aiming at the enslavement of all.’
After the second bombing of the World Trade Centre, Boettke
(2007) declared: ‘After 9/11, the Mises Institute was the only [Boettke’s
emphasis] libertarian organization that held steadfast to the anti-war
stance… Mises is, in my opinion, the greatest economist of the 20th
century, and Rothbard is the most inspiring (though I really like Hayek
too!).’ But Boettke fails to point out that Rothbard promoted terrorist
attacks on the USA.

8http://www.panarchy.org/eisenhower/farewelladdress.html.
 3 The Deception Plans of the ‘Aristocratic Revolution’ …    
125

The World Trade Center was first bombed on 26 February 1993, kill-
ing six and injuring hundreds; the ‘Blind Sheik,’ Omar Abdel-Rahman,
apparently an al-Qaeda affiliate, was sentenced to life imprisonment. Six
months after the attack, Rothbard (1993) declared: the ‘A-rabs’ under
investigation ‘haven’t done anything yet. I mean, all they’ve done so far is
not assassinate former President George Bush, and not blow up the UN
building or assassinate [United States Senator] Al D‘Amato.’ The Oath
of Allegiance declares ‘that I will support and defend the Constitution
and laws of the United States of America against all enemies, foreign and
domestic.’ Rothbard became in effect a tax-exempt spotter for al-Qaeda
by suggesting other buildings to bomb: ‘I must admit I kind of like that
bit about blowing up the UN building, preferably with [UN Secretary
General] Boutros Boutros-Ghali inside.’ One of Rothbard’s ‘A-rabs’ may
have been Abdul Rahman Yasin who was on the FBI’s list of 22 most-
wanted terrorist fugitives and who, according to US intelligence officials,
was on Saddam Hussein’s payroll—which helped sustain the Cheney-
Rumsfeld case for the 2003 invasion of Iraq (Dimand 2003).
Mises (1985 [1927], 43–44) acknowledged the antidemocratic ‘doc-
trine of force’ commonality between White Terrorists (‘descendants of the
old aristocracy and the supporters of hereditary monarchy’) and their Red
Terror counterpart: ‘One recognizes the best, those who alone are compe-
tent to govern and command, by virtue of their demonstrated ability to
impose their rule on the majority against its will.’ For public consump-
tion, Mises nuanced his promotion of ‘Ludendorff and Hitler’: ‘Many
arguments can be urged for and against these doctrines, depending on
one’s religious and philosophical convictions, about which any agreement
is scarcely to be expected. This is not the place to present and discuss the
arguments pro and con, for they are not conclusive. The only ­consideration
that can be decisive is one that bases itself on the fundamental argument
in favor of democracy.’ In ‘Democracy, the God’s That’s Failing,’ the Mises
Institute President provided a translation from the Austrian: ‘democracy
is a sham that should be opposed by all liberty-loving people. Voting and
elections confer no legitimacy whatsoever on any government, and to the
extent a democratic political process replaces outright war it should be seen
as only slightly less horrific’ (Deist 2017).
126    
R. Leeson

In ‘The Aristocratic Doctrine,’ Mises (1944, 132) described the phi-

losophy of the ‘advocates of an aristocratic revolution’: ‘You have the
choice, they say, between the tyranny of men from the scum and the
benevolent rule of wise kings and aristocracies.’ Therefore, the labourer

must be deprived of the franchise. All political power must be vested in

the upper classes. Then the populace will be rendered harmless. They will
be serfs, but as such happy, grateful, and subservient. What the masses
need is to be held under tight control. If they are left free they will fall an
easy prey to the dictatorial aspirations of scoundrels. Save them by estab-
lishing in time the oligarchic paternal rule of the best, of the elite, of the
aristocracy.

‘Free’-market knowledge operates on two levels—bogus-benevolent

propaganda and genuinely-expressed malice. Lieutenant ‘von’ Mises
outlined his own ‘Aristocratic Doctrine’ about the ‘scum’—telling Rand
that the ‘masses’ were ‘inferior’ and dependent ‘men who are better’
than them. And for the co-founders of the Mises Institute, democracy
must be replaced with a ‘natural aristocracy’ (Rockwell 1994a, 19):
a ‘small, self-perpetuating oligarchy of the ablest and most interested’
(Rothbard 1994c, 10).
Populism is to democracy what the Austrian School of Economics
is to education: both seek to replace rational discourse (constrained by
evidence and logic) with a sociopathic trance. The perennial populist
threat to democracy has been intensified by a backlash against globali-
sation. In 1992 and 1996, Ross Perot campaigned for the White House
on the platform: ‘you’ve wrecked the country with these kinds of deals’
(New York Times 1992). Does Say’s Law of Markets—supply creates its
own demand—apply to the supply of workers who feel that their jobs
have ‘been exported’? Or is tax-funded human capital creation (retrain-
ing) required to prevent the emergence of a pool of trade-induced struc-
tural unemployment? Hitler’s para-military forces recruited from the
demand side of the unemployment market (Haberler 1990).
Hayek (1975a) promoted ‘major social instability’ to reduce wages.
The ‘primary cause of the appearance of extensive unemployment’ is
disequilibrium prices and wages: ‘wages are only rigid downwards …
 3 The Deception Plans of the ‘Aristocratic Revolution’ …    
127

Remember, please: this is the crucial concept.’ A ‘secondary’ contrac-

tion or depression could make unemployment ‘general.’ Hayek, who
couldn’t specify how much ‘social unrest’ it would take in ‘restor-
ing the market,’ stressed: ‘The point I want to make is that this equi-
librium structure of prices is something we cannot know beforehand
because the only way to discover it is to give the market free play.’ With
respect to political entrepreneurs (like Hitler?), Hayek (1975b [1974])
acknowledged that the pursuit of unobservable equilibrium ‘will cer-
tainly be a time of constant political disruptions. My wish is that people
would have courage to face a period of substantial though not neces-
sarily very prolonged unemployment, with all provisions for the unem-
ployed, and restore the price mechanism.’
In the British neoclassical tradition, trade is perceived as creating
(diffused) winners and (concentrated) losers: while Austrian economics
is organised around the slogan ‘Free trade benefits everyone’ (Shenoy
2003). In 1992, Perot insisted: ‘We have got to stop sending jobs over-
seas. It’s pretty simple: If you’re paying $12, $13, $14 an hour for fac-
tory workers and you can move your factory South of the border, pay a
dollar an hour for labor … have no health care—that’s the most expen-
sive single element in making a car— have no environmental controls,
no pollution controls and no retirement, and you don’t care about any-
thing but making money, there will be a giant sucking sound going
south.’ In 1992, Perot asserted that when Mexico’s jobs ‘come up from
a dollar an hour to six dollars an hour, and ours go down to six dollars
an hour, and then it’s leveled again’ (New York Times 1992); in 2016,
the Mises Institute advised candidate Trump that ‘Ideally, all mini-
mum wage laws should be repealed since they cause job destruction.9
In 1992, Perot won 19,743,821 votes (18.9% of the popular vote);
Rockwell (1996) proclaimed ‘The Death of the Two-Party Cartel.’ In
‘Right-Wing Populism: A Strategy for the Paleo Movement,’ Rothbard
(1992)—an aspiring political entrepreneur—explained: ‘In a sense
the strategy we are now proclaiming is a strategy of Outreach to the
Rednecks.’

9https://mises.org/blog/7-things-trump-must-do.
128    
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According to Caldwell (2017), ‘Hayek and other neoliberals were

throughout their careers opponents of police states.’ The evidence
reveals that in addition to the ‘Defend Family Values’ strategy, Rothbard
(1992)—Hayek’s co-leader of the fourth-generation Austrian School—
proposed to establish a violence-based Austrian Police State with, in
effect, only notional controls on coercive power:

Take Back the Streets: Crush Criminals. And by this I mean, of course,
not ‘white collar criminals’ or ‘inside traders’ but violent street crimi-
nals-robbers, muggers, rapists, murderers. Cops must be unleashed, and
allowed to administer instant punishment, subject of course to liabil-
ity when they are in error. Take Back the Streets: Get Rid of the Bums.
Again: unleash the cops to clear the streets of bums and vagrants. Where
will they go? Who cares? Hopefully, they will disappear, that is, move
from the ranks of the petted and cosseted bum class to the ranks of the
productive members of society.

In ‘A New Strategy for Liberty,’ Rothbard (1994b) believed that he had

solved the ‘coordination problem’ between Austrian economists and
‘Redneck’ militia groups:

A second necessary task is informational: we can’t hope to provide any

guidance to this marvellous new movement until we, and the various
parts of the movement, find out what is going on. To help, we will feature
a monthly report on ‘The Masses in Motion.’ After the movement finds
itself and discovers its dimensions, there will be other tasks: to help the
movement find more coherence, and fulfil its magnificent potential for
overthrowing the malignant elites that rule over us.

Hitler was embittered by being denied admittance to the Akademie der

bildenden Künste Wien (Academy of Fine Arts in Vienna); apparently
because of suspicions about his lack of intellectual honesty, Rothbard
was unable to leverage his Columbia PhD into anything other than the
fringes of academia. According to Jeff Peterson II (2014) and Jeffrey
Tucker (2014), Rothbard’s motto was ‘hatred is my muse’: ‘the least’
Austrians could do is to ‘accelerate the Climate of Hate in America, and
hope for the best’ (Rothbard 1994a, 6). After rejection, Hitler sank into
 3 The Deception Plans of the ‘Aristocratic Revolution’ …    
129

hate-filled poverty before embracing ‘The Cause’—including Austrian

business cycle theory (Chapter 8, below). When Rothbard learnt that
he was to ‘head academic affairs’ at the newly formed Ludwig von Mises
Institute, ‘he brightened up like a kid on Christmas morning’ (Rockwell
2010 [1999], 294).
Compared to other ‘liberty’ promoters, Rothbard (1926–1995) was
a relative failure. Roy Cohn (1927–1986), for example, his Columbia
University contemporary, was an ‘assault specialist’ who became world-fa-
mous during the McCarthy era. Cohn, who served on the Advisory
Board of Western Goals Inc., was also one of Donald Trump’s fondly
remembered lawyers; while Rothbard, despite decades of participation
in the Libertarian Party, left (according to the ‘Rothbard Caucus’) ‘con-
tributions’ that are ‘already almost forgotten.’10 Rothbard was known in
Austrian circles as ‘Robhard’ (Skousen 2000)—loose change compared to
the fortune the tax-evading Cohn acquired. To derive his a priori conclu-
sions, Rothbard (2000 [1963], 90) insisted that ‘the cash surrender liabil-
ities of life insurance companies must also form part of the total supply
of money’—which appears to be data mining if not fraud. Again, small
fry compared to Cohn’s disbarment from practising law in New York
State after the Appellate Division of State Supreme Court concluded that
his conduct in four legal matters was ‘unethical’ and ‘unprofessional.’ In
one ‘particularly reprehensible’ case, Cohn had entered the

hospital room of Lewis S. Rosenstiel, the multimillionaire head of

Schenley Industries, and ‘misrepresented the nature, content and pur-
pose of the document that he offered Mr. Rosenstiel for execution.’ The
document, which the dying client shakily signed, was a codicil to his will
that would have made Mr. Cohn and certain others the executors of the
will. The court refused to probate the codicil. (Krebbs 1986; Krebbs and
Thomas 1982)

But Buckley (1995) understated Rothbard’s influence: ‘huffing and

puffing in the little cloister whose walls he labored so strenuously
to contract, leaving him, in the end, not as the father of a swelling

10http://www.lprc.org/.
130    
R. Leeson

movement that ‘rous[ed] the masses from their slumber,’ as he once

stated his ambition, but with about as many disciples as David Koresh
had in his little redoubt in Waco.’ In 1996, Rothbard found an addi-
tional recruit: Timothy McVeigh bombed the Alfred P. Murrah Federal
Building, Oklahoma City, killing 168 and injuring over 600. In the
Rothbard Rockwell Report, Justin Raimondo (1996) then complained
about the

storm of abuse hurled at the right, and a witch-hunt that is ongoing.

Clinton gave us a preview of his 1996 re-election campaign theme by
inveighing against the alleged threat of rightwing ‘extremism.’

In 2011, Anders Behring Breivik—inspired by Misians and 9-11-style

religiosity—killed eight people by detonating a car bomb in Oslo
before shooting dead 69 participants of a Workers’ Youth League sum-
mer camp (Tietze 2015). The other co-founder of the Mises Institute,
Rockwell (2011), responded to the Mises-Breivik association immedi-
ately: ‘There were footnotes in his 1500-page manifesto to many doz-
ens of books and articles — including a few published by the Mises
Institute. Looking at the balance of his citations, however, it’s clear that
his main influence had nothing [emphases added] to do with libertar-
ianism. His inspiration was a point of view reminiscent of American
neoconservatism.’
Rockwell (2011) asked: ‘does this violence discredit neoconserv-
atism, as when then-president Clinton tried to blame libertarians and
the “militia” movement for the Oklahoma bombing in 1995?’ Rockwell
answered: ‘If you think that the rich should be expropriated, there are
generally two ways to bring this about: you and your friends can steal
from the rich directly — maybe killing some fat cats in the process —
or you can lobby Congress to do it for you … government is the organ-
ized, consistent, relentless, large-scale center of violence on earth … it
exists entirely in a parasitical relationship to society.’ Rockwell knew
who to blame for Misean-inspired mass murder: ‘The state has never
been more pompous, arrogant, and ambitious than it is today. The
police state has visited the developed world in a manner none of us have
seen in our lifetimes. The local police reflect that ethos. They disregard
 3 The Deception Plans of the ‘Aristocratic Revolution’ …    
131

their heritage of wearing a civil mask and now bully people openly in a
way contrary to freedom.’
Rothbard was the first person Ralph Raico (2013) had met who
defended ‘a fully voluntary society—nudge, nudge.’ In the ‘Negro
Revolution,’ Rothbard (1963) noted that the ‘Gandhian concept of
non-violent action’ was a potent propaganda weapon: ‘the news or pic-
tures of unarmed and helpless Negroes beaten or clubbed by armed
whites.’ Later, in ‘The New Menace of Gandhism,’ Rothbard (1983)
expressed contempt for the faddish nature of the libertarian faith: the
1982 Gandhi film had ‘inspired’ the ‘old Hindu baloney’ of the ‘lit-
tle Hindu charlatan … The new craze of non-violence or Gandhism’
was a ‘menace’ and a ‘dead-end for the libertarian movement.’ After
the Breivik massacre, Rockwell (2011) declared that Miseans were the
Gandhians of the Right: ‘Libertarianism is the one political theory
extant that consistently preaches nonviolence in every way, condemning
all aggression against person and property, whether it is done by a pri-
vate party or under the cover of law.’
Rockwell (2011) explained that ‘The use of violence in any form
[emphasis added] is not only contradictory to libertarian theory; lib-
ertarianism stands alone as the only political outlook that makes non-
violence its core tenet.’ Rockwell (1991) also explained that the core
tenet of Austrian libertarianism is discretionary violence by the coercive
forces of the State: ‘As recently as the 1950s — when street crime was
not rampant in America — the police always operated on this principle:
No matter the vagaries of the court system, a mugger or rapist knew he
faced a trouncing — proportionate to the offense and the offender —
in the back of the paddy wagon, and maybe even a repeat performance
at the station house. As a result, criminals were terrified of the cops, and
our streets were safe.’
The fossil fuel industry funds the Austrian School of Economics, a
significant proportion of whom describe themselves as a Stone Age
tribe—‘paleos’—some of whom are committed to administering
Bronze Age justice—public stoning. Although the ‘old brutal feelings’
lingered on in mid-Victorian Britain, public hangings ended in 1868
(Gash 1979, 346); while in the ex-Confederate States, the ‘spontane-
ous’ order was propped up by public lynchings for another century.
132    
R. Leeson

Candidate Hitler promised that ‘Heads will roll in the sand!’ and in
power, Herman Göring revived the ‘medieval headsman’s axe. Last week
three heads rolled off bloody blocks in the courtyards of Berlin prisons’
(Time 1967 [4 September 1933], 104).
Having access to divinely revealed economics might be consid-
ered a job market asset—but some Presuppositionalist have risen
only a little way up the academic totem pole; while others (such as
Sennholz and Boettke) have prospered. Rockwell recruited North
(a Presuppositionalist public stoning theocrat) as the Mises Institute
‘Rothbard Medal’ holder. In ‘Flog Him,’ Rockwell (1994) appeared to
salivate over ‘six of the best … to be administered on his bare buttocks
with a half-inch wide, disinfectant-soaked rattan cane … a tough spank-
ing on your bare rear end enlists the emotion of shame, particularly
powerful among adolescents, in the cause of law and order … I’d bring
back the stocks and the rotten tomatoes too.’
Like all Austrians, Rothbard (1994c) claimed to be devoted to truth:
‘In the long run, truth cannot be suppressed.’ In his mendacious obituary
of Mises, Rothbard (2002 [1973]) referred to ‘this gentle and charm-ing
friend’ who was ‘Un-failingly gentle and courteous.’11 And FEE’s founder,
Read (2011 [1973]), described Mises as ‘a gentle man, modest, humble,
and kindly, and that I had never known him to push his thoughts onto
anyone. To the contrary, his life was devoted to a search for truth and
that he gladly shared his findings with any seeker of light, that Professor
Mises was a shining example of a refined and inspiring exemplar.’ Margit
Mises (1976, 143) appeared to object to these fund-raising distortions:
when ‘friends’ talked about Mises they spoke of him as being ‘gentle.’ But,
Mises was ‘not gentle’—he could be ‘unbelievably stubborn.’
The upper Habsburg Estates were primarily focused on maintain-
ing the ‘privileges of their aristocratic members … the nobles regarded
the Austrian people as an extension of their own peasantry, their only
function to keep the nobility in luxury’ (Taylor 1964, 14, 188–189).
According to historian Gerhard Ritter, some German princes supported
Hitler because ‘Court circles, in which the opinion of the people were

11http://mises.org/rothbard/misesobit.asp.
 3 The Deception Plans of the ‘Aristocratic Revolution’ …    
133

unknown, left them completely devoid of instinct’ (cited by Röhl 1970,

9). There was mutual incomprehension between aristocrats and ‘the peo-
ple.’ According to his wife, ‘von’ Mises operated behind a sophisticated
faced that ‘people’ could not detect in ‘daily life.’ He had been raised
during the Habsburg Empire: ‘good manners and self-discipline were not
only a prerequisite of the court, but a must for a member of every cul-
tured family.’ Mises had ‘excellent’ manners (Mises 1976, 143).
Hayek (1978) denigrated post-Habsburg democracy as a ‘repub-
lic of peasants and workers.’12 Under Chancellor Hitler, the flag of
the Weimar Republic was banned and ‘out of the ballot box another
Germany was being reborn. Its flag – black, white & red – the onetime
Imperial Hohenzollern colors, flew in every street, floated majestically
from Government buildings and was flaunted everywhere by shouting,
cheering throngs.’ Simultaneously, the Bourbon Pretender, ‘King Jean III’
of France, was ready ‘if it pleases God, when he wills it’ to resume ‘his’
crown (Time 1967 [6 March 1933], 95; [13 February 1933], 130).
The British Embassy in Washington (3 April 1943) sent a dispatch
to the Foreign Office describing Count Richard von Coudenhove-
Kalergi’s Pan-European Conference as ‘unimportant’ (Nicholas 1981,
172). In November 1941, Coudenhove-Kalergi, a close ally of Otto
the Habsburg Pretender, submitted a petition to the US government
pleading for privileged (separate) post-war treatment for the country
where Hitler was born and acquired anti-Semitism—which the Jewish-
born Mises (along with many other leading Austrian expatriates) signed
(Hülsmann 2007, 811). For military purposes, the Allies sought to
create a division within the Third Reich by agreeing to treat Austria as
‘Hitler’s first victim’—thus allowing some Austrians to boast: ‘We have
persuaded the world that Mozart was Austrian and Hitler was German.’
According to Rockwell (2005), ‘Instead of socialism, fascism, and war,’
Mises ‘advanced a case for freedom and peace.’ Mises—who promoted
‘Ludendorff and Hitler’ and other ‘Fascists’—had ‘a heart that would
never compromise with despotism but rather advance the truth of
human freedom until his last breath.’

12FriedrichHayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
134    
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Rockwell (2005) sought to draw the attention of his audience to

an event that ‘impacted directly not only the founding of the Mises
Institute but on the future of freedom itself.’ It concerned Mises’s
‘time of sanctuary’ when he lived as an ‘intellectual refugee in Geneva,
Switzerland, during the Second World War.’ Mises ‘found himself ’ in a
‘privately funded research center with other refugees from Austria and
Germany, driven out [emphasis added] for having fought against the
rising tide of socialism, both left and right.’ In The Essential von Mises,
Rothbard (1988, 35) provided a similar version of symbolic Truth:
between 1934 and 1940, Mises was ‘in exile in Geneva from fascist
Austria, amidst a world and a profession that had deserted all of his ide-
als, methods and principles.’ Rothbard (1981, 250–251) also asserted
that Mises ‘trenchantly attacked war and national chauvinism.’
The evidence, however, reveals that Mises (2009 [1978 (1940)], 120)
was intensely chauvinistic about Fascist Austria: ‘Only one nation had
attempted serious opposition to Hitler on the European continent—
the Austrian nation. It was only after five years of successful resistance
that little Austria surrendered, abandoned by all.’ In a footnote, Raico
(2012, 259, n9) implicitly accused Rockwell and Rothbard of lying:
‘On this fairly trivial point, Mises can perhaps be forgiven his Austrian
patriotism.’
On 1 March 1934, Mises became member 282632 of the Austro-
Fascist party (Vaterländische or Patriotic Front) and member 406183 of
Werk Neues Leben, the official Fascist social club (Hülsmann 2007, 677,
n149). Two months later, the Austrian Christian Social Chancellor,
Englebert Dollfuss, created a one-party corporatist state. Mises (2009
[1978 (1940)], 62) had long been associated with Dollfuss; according to
Hans-Herman Hoppe (2009 [1997]), before Dollfuss (1892–1934) was
‘murdered for his politics, Mises was one of his closest advisers.’ Hoppe
(‘Distinguished Fellow’ of the Mises Institute) was recruited by Rockwell
to co-edit Mises’ (1998) Human Action: The Scholar’s Edition.
Margit Mises (1976, 23–24) reported that after the Viennese bank,
Credit Anstalt, declared bankruptcy (11 May 1931), there was hardly a
quiet day in Vienna (which resembled a ‘fortress … no one dared to
go out’). On 3 October 1934, The Last Knight of Liberalism left for
Geneva—characteristically announcing to his fiancé that he was leaving
 3 The Deception Plans of the ‘Aristocratic Revolution’ …    
135

her and her two fatherless children behind in Fascist Austria: ‘When I
heard him say that, it seemed as if the sun had suddenly gone down. My
hands dropped, I could not speak. This was a blow that hit me harder
than any chilling wind. I never thought he could go away like this.’
Mises had not been driven out—he was taking his first and only full-
time academic appointment—a ‘great’ opportunity for him: he, there-
fore, had accepted the appointment without consulting her. Neither
was he a refugee—Mises returned to Vienna for Christmas and ‘came
very often, sometimes in the middle of the week, for only a day or two’
(Mises 1984, 32–33).
A ‘suffering’ individual is entitled to sympathetic attention. The men-
tal illness of an influential agent also requires investigation: What type
of illness was it? Did it affect world history? An ‘active’ letter deposited
in a filing cabinet can later be ‘passively’ deposited in an archive; in con-
trast, oral history evidence has to be actively recorded to survive. Had
Christine Hayek (1929–) not been asked to record her memories of her
mentally ill father—an Austrian ‘Emperor’ to his disciples—they would
have been lost (Leeson 2015a, Chapter 6).13 It subsequently transpired
that she may had been (or was about to be) instructed/encouraged not
to cooperate with non-authorised biographies.
In The Austrian Mind: An Intellectual and Social History, 1848–1938,
William Johnson (1972, 341, 344, 397, 398) reflected that both
Habsburg capitals, Vienna and Budapest, ‘seemed a city on the border-
land, poised between East and West, between feudalism and modernity.’
The multi-ethnic nature of the Empire may have stimulated a variety of
characteristics: ‘Duplicity flourished among institutions whose workings
blatantly contradicted their facades. The emperor, whose portrait hung
as a model of rectitude in every classroom, infringed common decency
by badgering family and subordinates. He affronted his son, neglected
his wife, harassed his successor’s consort, and duped loyal servants.’
However, ‘duplicity in public life promoted creativity in private. In
order to cushion abrasive contact between nationalities, Austrians culti-
vated a courtliness that mollified hostility.’

13Christine Hayek had previously provided Alan Ebenstein (2003) with some recollections.
136    
R. Leeson

G. L. S. Shackle (1981, 234) described Hayek as ‘aristocratic in tem-

per and origins.’ The epithet ‘courtly’ is also widely applied to Hayek
I: a ‘courtly and gentle person’ (Blundell 2004); ‘extremely distin-
guished-looking, with an air of courtly elegance about him’ (Hamowy
1999). The ‘Friedrich von Hayek Foundation (Moscow)’ was impressed
by this connection to the world of the Romanovs and Habsburgs: The
legacy of this ‘courtly Austrian aristocrat and one of the twentieth cen-
tury’s most influential intellectuals’ (Edwin Feulner) offers solutions to
Russia’s domestic and international problems.14 It is, perhaps, not sur-
prising that epigone-generation ‘scholars’ are little better than sycophan-
tic court historians.
Boettke (2015), the ‘Director of the F.A. Hayek Program for
Advanced Study in Philosophy, Politics, and Economics at the Mercatus
Center’ at GMU, told Grove City College students how to mollify hos-
tility: pretend to agree with Keynesians face-to-face, while simultane-
ously promoting conspiracy theories about them behind their backs.
Boettke presumably derived his version of Mises’ (1985 [1927], 48)
‘unscrupulous methods’ from Hayek (1978) who told Buchanan about
the tactic: ‘pretend to agree.’15
When Britain left the gold standard in 1931, Mises falsely predicted:
‘In one week England will be in hyperinflation’ (cited by Hülsmann
2007, 633, 636, 641, n68). And at the start of the first post-war boom,
Mises (1953, 17) devoted the preface to a new edition of The Theory of
Money and Credit to an equally false assertion: sound money had given
way ‘to progressively depreciating fiat money. All countries are today
vexed by inflation and threatened by the gloomy prospect of a complete
breakdown of their currencies.’
Armed with Second Estate Truth, ‘secondhand’ or third- and
fourth-hand ‘dealers in opinions’ appear equally befuddled by their
business cycle model. In 1984, at the beginning of the second quar-
ter-century post-war boom (the ‘Great Moderation,’ 1982–2007),

14http://www.hayek.ru/about_en.html.

15Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 3 The Deception Plans of the ‘Aristocratic Revolution’ …    
137

Caldwell (2010, 8, n7) taught his students that ‘either a recession (if
government borrowing to finance the deficit pushed up interest rates)
or inflation (if the fed monetized the debt) was coming.’ Hayek (1978)
told Jack High that predictive failure had ‘strengthen[ed]’ his faith in
Austrian business cycle theory: ‘although I see more clearly that there’s
a very general schema which has to be filled in in detail. The particular
form I gave it was connected with the mechanism of the gold standard,
which allowed a credit expansion up to a point and then made a certain
reversal possible. I always knew that in principle there was no definite
time limit for the period for which you could stimulate expansion by
rapidly accelerating inflation.’16
Hayek (1978) revealed the sloppiness of Austrian thought: ‘I just
took it for granted that there was a built-in stop in the form of the
gold standard, and in that I was a little mistaken in my diagnosis of the
postwar development.’17 He was referring to the first quarter-century
post-war boom which broke down in large part because of spending on
Mises’ Warfare State plus the MPS inflation stoked by Burns:

I knew the boom would break down, but I didn’t give it as long as
it actually lasted. That you could maintain an inflationary boom for
something like twenty years I did not anticipate. While on the one
hand, immediately after the war I never believed, as most of my
friends did, in an impending depression, because I anticipated an
inflationary boom. My expectation would be that the inflationary
boom would last five or six years, as the historical ones had done,
forgetting that then the termination was due to the gold standard. If
you had no gold standard--if you could continue inflating for much
longer--it was very difficult to predict how long it would last. Of
course, it has lasted very much longer than I expected. The end result
was the same.18

16Friedrich Hayek, interviewed by Jack High date unspecified 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
17Friedrich Hayek, interviewed by Jack High date unspecified 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

18Friedrich Hayek, interviewed by Jack High date unspecified 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

138    
R. Leeson

Hitler’s Mein Kampf was originally entitled ‘Four and a Half Years of
Struggle Against Lies, Stupidity and Cowardice’ (Heiden 1944, 282).
When asked ‘what is the reason for the respect that your ideas are cur-
rently garnering, when so recently they met with open hostility?’ Hayek
(1978) replied:

Well, I think the main point is the decline of the reputation of Keynes.
Thirty years ago there were two--I may sound curious myself saying this,
but I believe about 1946, when Keynes died, Keynes and I were the best-
known economists. Then two things happened: Keynes died and was
raised to sainthood; and I discredited myself by publishing The Road to
Serfdom. [laughter] And that changed the situation completely. For the
following thirty years, it was only Keynes who counted, and I was grad-
ually almost forgotten. Now the failure of the Keynesian system--infla-
tion, the return of unemployment, all that--first confirmed my predictions
[emphasis added] in strictly the economic sphere. At the same time, my
studies of politics provided, I believe, answers for many problems which
had begun to bother people very seriously. There is a good reason why I
am being rediscovered, so to speak.19

The devil had previously blocked Hayek’s (1975a) struggle: the ‘silver
voice of that genius in persuasion, Lord Keynes’ who was ‘exceedingly
difficult to resist in conversation or discussion. Even if you knew that
he was wrong, you sometimes found it extraordinarily hard to main-
tain your position while you talked to him – although once you turned
away, you realised that you had been misled.’ Hayek had a remedy:
‘Before we can return to reasonable stability and perhaps lasting pros-
perity, I am convinced that we must exorcise this Keynesian devil …’
The devil’s followers had ‘forfeited their right to be heard.’ Hayek then
described his ‘free’-market knowledge construction model: ‘You might
object that I have left out some facts, and that the result would have
been different if I had not neglected those other facts. Well, my answer
to this objection would be: quote the facts, please, and I shall be willing
to consider them.’

19Friedrich Hayek, interviewed by Thomas Hazlett 12 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 3 The Deception Plans of the ‘Aristocratic Revolution’ …    
139

When asked about ‘intellectual dishonesty,’ Hayek (1978) replied:

‘Well, of course, that’s the thing I particularly dislike, but it’s not so
easy to draw the line. Strictly speaking, of course, every moral prejudice
which enters into your intellectual argument is a dishonesty. But none
of us can wholly avoid it. Where to draw the line, where you blame a
person for letting nonintellectual arguments enter into his intellectual
conclusions, is a very difficult thing to decide. One has to pardon a
great deal in this field to the human and unavoidable.’20
Henry Ashby Turner (1985, 218, 288) contrasted the ‘conciliatory
fork of the Nazi tongue’ with its ‘radical fork.’ Hayek (1992 [1944],
208; 1978), who only spoke the truth for self-promotional purposes
and who became famous for his understanding about ‘Economics and
Knowledge’ (1937), ‘The Use of Knowledge in Society’ (1945), and
‘The Pretense of Knowledge’ (1974), asserted that the rules of ‘just con-
duct’ involved subscribing to ‘certain moral standards’ including the
‘sacredness of truth’: ‘honesty is really the best expression of what I call
the morals of a civilized society. Primitive man lacks a conception of
honesty; even medieval man would put honor higher than honesty, and
honor and honesty have turned out to be very different conceptions. I
became very much aware of the contrast and quite deliberately began to
be interested in the subject.’21
Both the Great Depression of the 1930s and the post-2008 Great
Recession were preceded by financial sector fraud—the second was asso-
ciated with circulating stock exchange ‘securities’ (‘toxic paper’). Hayek
(1978) provided an example about relative honesty: ‘the different moral
outlook of an officer and a broker in the stock exchange. In my tradi-
tional environment the officer was regarded as a better kind of person.
I have come to the conviction that the broker at a stock exchange is a
much more honest person than an average officer. In fact, the officer--
and I knew them in the Austro-Hungarian army--who made debts
which he could not pay was not shameful. It did not conflict with his

20Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral
History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
21Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

140    
R. Leeson

honor, but of course it was dishonest. I sometimes like to shock people

by saying that probably the most honest group of men are the members
of the stock exchange. They keep all their promises.’22
According to Hayek (1978), the ‘robber baron was a very honored
and honorable person, but he was certainly not an honest person in
the ordinary sense.’23 Hayek (II and III)—a ‘robber baron’—was con-
sistently dishonest. For example, in researching William F. Buckley Jr.:
Patron Saint of the Conservatives (1988), John Judis (15 May 1984)
asked Hayek why in 1955 he refused to let his name be listed on the
National Review masthead (Judis had only Buckley’s side of the corre-
spondence). Hayek (27 May 1984) replied that he did not ‘preserve’ the
correspondence of so long ago.24 But simultaneously, Hayek was nego-
tiating to send all his correspondence—including the letters that Judis
wished to see—to the Hoover Institution.25 Hayek thus simultaneously
lied and left the evidence that exposed his lies: as soon as the Hayek
Archives became ‘public’ (open to scholars), Judis could have uncovered
the lie and found the answer to his question.
The USA was founded by those who were apprehensive about inter-
generational privileges (inherited titles, etc.): this found expression
in The Title of Nobility Clause—Article 1, Section 9, Clause 8 of the
Constitution.26 Thomas Paine’s (2000 [1775]) ‘Reflections on Titles’
is part of The Founders’ Constitution (Kurland and Lerner 2000). Paine
approved of the title ‘The Honorable Continental Congress’; but when
reflecting on the

pompous titles bestowed on unworthy men, I feel an indignity that

instructs me to despise the absurdity … The lustre of the Star and the

22Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

23Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

24Hayek Archives. Box 29.47.

25Hayek Archives. Box 25.24.

26This states: ‘No title of nobility shall be granted by the United States: and no person holding

any office of profit or trust under them, shall, without the consent of the Congress, accept of any
present, emolument, office, or title, of any kind whatever, from any king, prince, or foreign state.’
 3 The Deception Plans of the ‘Aristocratic Revolution’ …    
141

title of My Lord, over-awe the superstitious vulgar, and forbid them to

inquire into the character of the possessor: Nay more, they are, as it were,
bewitched to admire in the great, the vices they would honestly condemn
in themselves. This sacrifice of common sense is the certain badge which
distinguishes slavery from freedom; for when men yield up the privilege
of thinking, the last shadow of liberty quits the horizon [emphases in
original].27

Paine’s ‘Reflections on Titles’ is available on the Ludwig von Mises

Institute website.28
MPS member Paul Johnson (1997, 240) described the ‘blessings’
of ‘Democratic America 1815–1850’: ‘No conscription. No political
police. No censorship. No legalised class distinctions.’ In the Rothbard-
edited Journal of Libertarian Studies, Rothbard (1981, 250) declared
that Mises was a ‘proclaimed pacifist’; Rockwell (2010 [1999], 291,
297–298), who describes himself as ‘ANTI-STATE•ANTI-WAR•PRO-
MARKET,’ ‘was so thrilled to meet’ Mises ‘at dinner in 1968’ and
‘thrilled’ to have censored-out Mises’ (1963, 282; 1966, 282) lobby-
ing for conscription and the Warfare State from the Ludwig von Mises
Institute’s Human Action: the Scholars Edition.
After 3 April 1919, by attaching ‘von’ or ‘Ritter von’ to their names,
Hayek, Mises and Erik Kuehnelt-Leddihn became common criminals.
The Habsburg-born, Austrian-educated Arthur Koestler (1950, 19)
described some of the affected: ‘Those who refused to admit that they
had become déclassé, who clung to the empty shell of gentility, joined
the Nazis and found comfort in blaming their fate on Versailles and
the Jews.’ According to ‘Ritter von’ Kuehnelt-Leddihn (1989), ‘The
average man always clings despairingly to clichés.’ Hayek (1978) told
Buchanan: ‘Why shouldn’t--as a proper heading--the need for restor-
ing the rule of law become an equally effective catchword, once people
become aware of the essential arbitrariness of the present government.’29

27http://press-pubs.uchicago.edu/founders/documents/a1_9_8s2.html.

28http://mises.org/books/paine2.pdf.

29FriedrichHayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
142    
R. Leeson

Hayek told the New York Times that he

preferred to be referred to simply as ‘Hayek’ but the history and reference

books have made the ‘von’ appendage a must. (Geddes 1979)

Hayek also lied to the Washington Post: saying he was the ‘son of a bota-
nist and the grandson of a zoologist, both of them von Hayeks, a hered-
itary title he has dropped [emphasis in original]’ (Allen 1982). After
almost two-thirds of a century as a ‘von’ criminal, Queen Elizabeth II
made Hayek her ‘Companion of Honour’—which was ‘the happiest
day’ of his life (cited by Ebenstein 2003, 305).
Canon law (the inviolable Seal of Confession) protected the First Estate
from the consequences of their criminality (child abuse): for a Catholic
priest to divulge confessional secrets would result in automatic excommu-
nication. And the ‘Seal’ of the ‘free’-market likewise protects bogus mem-
bers of the Second Estate. Two self-appointed members of the First Estate,
Skousen and North, rang the doorbell labelled ‘Professor Dr. Friedrich
A. von Hayek’ (Ebenstein 2003, 316) to be told by Hayek (1994, 95)
that ‘I was a law abiding citizen and completely stopped using the title
von.’ In Austria, his University of Salzburg notepaper was headed ‘PROF.
F. A. von HAYEK’30: and the archival and public evidence reveals that
Hayek—professionally and personally, in and out of Austria—repeatedly
attached ‘von’ to his name (Leeson 2015a, Chapter 1).
On 11 September 1973, Pinochet seized power in a military coup
in Chile. A few weeks before the announcement of his 1974 Nobel
Prize for Economic Sciences, Hayek informed Seigen Tanaka (1974):
‘It may be said that effective and rational economic policies can be
implemented only by a superior leader of the philosopher-statesman
type under powerful autocracy. And I do not mean a communist-dic-
tatorship but rather a powerful regime following democratic principles.’
Tanaka reported ‘Saying this, Prof. Hayek shifted his eyes to the snow
capped mountains at a distance.’31

30Hayek Archives. Box 12.19.

31Hayek Archives. Box 52.28.
 3 The Deception Plans of the ‘Aristocratic Revolution’ …    
143

Edith Vane-Tempest-Stewart, Marchioness of Londonderry, reported

that upon meeting ‘Herr Hitler’ in 1937 she was ‘at once aware of an
arresting personality, a statesman endowed with remarkably expressive
and far-seeing eyes.’ From the ‘Führer’s own lips’ she ‘learned of the
great desire which he had for friendship with the English … Surely this
offer of friendship merits acceptance in the spirit in which it has been
made’ (cited by Gilbert 1966, 102).
After his own 1937 pilgrimage, General Sir William (later 1st Baron)
Ironside (1962, 29) reflected about Hitler’s ‘weak, watery eyes … The
man struck me not at all. His voice was soft and his German of the
South. He made no more impression on me than would a somewhat
mild professor whom I rather suspected of having a drop too much
on occasions.’32 Ironside made a favourable impression on Hitler—
who on 11 August 1939 told Karl Burckhardt, the League of Nations
Commissioner for Danzig, that he wished to ‘annihilate Poland’ and to
meet with an ‘Englishman who could talk German.’ Although he had
presumably heard Ironside speaking to him in German only two years
before, he added: ‘They tell me that General Ironside talks it fluently,
the General who went to Warsaw’ (cited by Gilbert 1966, 148). In July
1940, Ironside was replaced as Commander-in-Chief of the British
Home Forces; his credibility may have been dented by his association
with Major-General John ‘Boney’ Fuller, a senior member of the British
Union of Fascists.
Hitler—a recruit to Mises’ business cycle policy recommendations—
recruited Charles Stewart Henry Vane-Tempest-Stewart, 7th Marquess
of Londonderry—the subject of Ian Kershaw’s (2004) Making Friends
with Hitler: Lord Londonderry and the British Road to War. And accord-
ing to Marquess of Londonderry: Aristocracy, Power and Politics in Britain
and Ireland, it was the ‘very phenomenon of declining influence that led
many aristocrats to strongly advocate appeasement. Lost in an interwar
world of mass democracy, declining power and wealth, the aristocracy

32InIronside: The Authorised Biography of Field Marshal Lord Ironside, Edmund Oslac Ironside,
2nd Baron Ironside (2018, Chapter 14) replaced ‘mild professor’ with ‘wild professor.’ The sec-
ond Baron was excluded from the House of Lords after the House of Lords Act 1999.
144    
R. Leeson

like other traditionalists looked upon Hitler’s regime as a bulwark

against communism.’ Such aristocrats hoped to use their ‘remaining
influence to foster an informal alliance between British traditionalists
and German fascism, institutionalised in the Anglo-German Fellowship’
(Fleming 2005, 178–179).
In withdrawing from the League of Nations, Hitler declared: ‘I,
together with all my followers, decline to conquer the people of a
strange nation – who would not love us anyway. German youth is
marching, not to demonstrate against France, but to evince that
political determination necessary for bringing down Communism’
(Time (1967 [23 October 1933], 142). Twelve years before the
Nazi-Soviet Pact, Mises (1985 [1927], 49, 44) sought to become
the intellectual Führer of a Nazi-Classical Liberal Pact: ‘As soon
as the first flush of anger had passed, their [Fascist] policy took a
more moderate course and will probably become even more so with
the passage of time.’ Mises was referring to ‘Germans and Italians,’
‘Ludendorff and Hitler,’ and ‘traditional restraints of justice and
morality.’
The Last Knight of Liberalism reported that von Mises could ‘hardly
believe’ what he read in the newspapers:

‘Belgium! Holland!’ he exclaimed in his notebook on May 10 … On June

14, Mises exclaimed again: ‘Paris!’ and three days later ‘Armistice!’ It was
an ordeal. May 1940 was, as he later recalled, ‘the most disastrous month
of Europe’s history.’

According to Guido Hülsmann (2007, 751), this miscalculation was the

‘only time’ Mises was ‘ever wrong in forecasting an important political
or economic event.’
Gian Galeazzo Ciano, 2nd Count of Cortellazzo and Buccari—
who owned a newspaper and extensive farmland in Tuscany—was
Undersecretary for Press and Propaganda (1934–1935) and Foreign
Minister (1935–1943) in the ‘Fascist’ government of his father-in-law,
Benito Mussolini. The first ‘von Hayek’ had ‘served one of the great
 3 The Deception Plans of the ‘Aristocratic Revolution’ …    
145

aristocratic landowners of Moravia’ (Hayek 1994, 37); ‘The whole tra-

ditional concept of aristocracy, of which I have a certain conception-- I
have moved, to some extent, in aristocratic circles, and I like their style
of life’ (Hayek 1978).33 Fascism appealed to such aristocrats because of
a perceived analogy—at the State level—with the benevolent paternal-
ism of a landed estate (Cannadine 2005).
When he relocated to pre-World War Vienna, Hitler absorbed
the anti-Semitism co-created by prominent proto-Nazi and later
card-carrying Nazi families like the von Hayeks (Leeson 2017). In
Mein Kampf, Hitler declared that Democracy ‘can only be pleasing
or profitable to mendacious crawlers who avoid the light of day, and
it must be hateful to any good, straightforward man who is ready to
take personal responsibility … None but a Jew can value an institu-
tion which is as dirty and false as he is himself … If the Jew, with
the help of his Marxian creed, conquers the nations of the world,
his crown will be the funeral wreath of the human race.’ In Vienna,
he began to ‘believe that I must act in the sense of the Almighty
Creator: By fighting the Jews I am doing the Lord’s work’ (cited by
Gilbert 1966, 95–96).
The Jewish-born Rothbard (2002 [1973]) reported that Mises
‘brought to the rest of us the living embodiment of the culture and the
charm of pre-World War I Vienna.’ And Hayek (1978) reported

In theory I am a Roman Catholic. When I fill out the form I say ‘Roman
Catholic,’ merely because this is the tradition in which I have grown up.
I don’t believe a word of it. [laughter] … I practically never talk about it.
I hate offending people on things which are very dear to them and which
doesn’t do any harm.34

33Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral
History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
34Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

146    
R. Leeson

The Road to Serfdom was published on 10 March 1944; the liberation

of Europe began three months later. Both were successful because of a
standard military tactic: deception plans. Hayek and Mises promoted
the deflation that undermined democracy and allowed Hitler to seize
power. The Allies expected that the Austro-Germans were expecting them
to land in Pas-de-Calais and so pandered to that psychological predis-
position. Hayek knew that many British neoclassical economists were
concerned that the Great Depression led to both protectionist pressures
and extensive economic planning and so pandered to those psychologi-
cal predispositions while blaming the Third Reich not on his own pro-
to-Nazi family but on socialists.
When Austrian-promoted deflation intensified the Great Depression,
policymakers turned to protection (the 1930 Smoot-Hawley tariff and
its imitators) as a solution. Hayek (1983, 55) ‘saw and experienced the
serious unemployment of 50 years ago. Then it meant great poverty; at
the moment I don’t see any great poverty [emphasis added]. Of course,
when I look at the shift of opinions, I find cause for concern. .. because
of the intellectual tendency in the time of depression—down with the
market economy, up with interventionism and even (heaven help us)
protectionism—all that I find alarming.’
Under Pinochet’s White Terror, 3197 Chileans were murdered by
the Junta, 20,000 were officially exiled (their passport marked with
an ‘L’), and about 180,000 fled the country (Wright and Oñate
2005, 57; Montes 2015, 7). Tens of thousands were detained and
maltreated or tortured. Hayek was contemptuous of what he dis-
missed as Amnesty International’s ‘bunch of leftists’ who provided
evidence about the Junta’s human rights abuses (cited by Farrant and
McPhail 2017). In 1981, Hayek found what he wanted by strolling
around Pinochet’s military dictatorship to see whether ‘people’ were
‘cheerful and content.’ He told (Cubitt 2006, 19) that the ‘sight of
many sturdy and healthy children that had convinced him.’ He was
‘so certain of the value of his findings’ that he wrote to the British
Prime Minister to protest about a cartoon ‘lampooning Chile and
Poland.’
 3 The Deception Plans of the ‘Aristocratic Revolution’ …    
147

The ‘man on the Clapham omnibus’ is a legitimate legal fiction.

Hayek (2011 [1960], 285) enlisted the ‘feelings’ of the American
‘masses’ based on a single (fictitious?) conversation en route to a 1945
Road to Serfdom book promotion event: he would not ‘easily forget how
this feeling’ was expressed by a taxi driver in Philadelphia in whose cab
he heard the radio announcement of Roosevelt’s sudden death (12 April
1945). Hayek believed that this taxi driver spoke for the

great majority of the people when he concluded a deeply felt eulogy

of the President with the words: ‘But he ought not to have tampered
with the Supreme Court, he should never have done that [Hayek’s
emphasis]!

The ‘shock’ of Roosevelt’s 1937 ‘Court Packing Plan’ had evidently gone
‘very deep.’
In The Constitution of Liberty, Hayek (2011 [1960], 190–191, n9)
used another knowledge-based strategy: he wished he could command
the ‘eloquence’ with which he had heard the late ‘Lord’ Keynes ‘expa-
tiate’ on the ‘indispensable’ role that the man of ‘independent’ means
must play in ‘any decent’ society: it came to Hayek as ‘somewhat as a
surprise’ that this should have come from

the man who at an earlier date welcomed the ‘euthanasia of the rentier.’

Hayek detected hypocrisy: he would have been less surprised if he had

known how ‘acutely’ Keynes had sought an ‘independent fortune’ to
bolster the ‘position to which he aspired.’
Hayek (1983, 55)—a serial tax-evader who referred to progressive
taxation as ‘social justice’—regarded

‘social justice’ as a nonsensical term—basically it means nothing at all,

because it expresses desires that can never be fulfilled. Whenever you start
discussing such desires you realise that the people who defend them have
absolutely no clear idea of what the principles of social justice might be.
148    
R. Leeson

The only practicable principle is … a striving for equality. But if you

attribute ‘egalitarianism’ to the supporters of social justice they protest as
if they wanted to have nothing to do with it. It’s a fearfully dangerous
watchword, which unfortunately has lost less of its attraction in Germany
than it has elsewhere in the West.

Germany is the home of Ordo-Liberalism, associated with Ludwig

Erhard (Vanberg 2013; Goldschmidt and Hesse 2013; Filip 2018).
When an interviewer asked ‘But do we have the concept of the “social
market economy”?’ Hayek (1983, 55–56) resorted to (fictitious?) per-
sonal knowledge:

May I tell you the story of when I last spoke to Dr Ludwig Erhard?
We were alone for a moment, and he turned to me and said, ‘I hope
you don’t misunderstand me when I speak of a social market economy
(Sozialen Marktwirtschafi ). I mean by that that the market economy as
such is social, not that it needs to be made social.’ If you had to make the
market economy ‘social,’ the concept of social justice would immediately
come into play. With that you can justify every demand that cannot be
reconciled with having the market determine prices and incomes. There’s
no better way of destroying the market economy than with the concept of
‘social justice.’

Imaginary ‘voices’ corrupt ‘knowledge.’ At least two of Hayek’s fol-

lowers—‘Deacon’ McCormick and Shenoy—were informed by such
‘voices’: yet Austrians repeat their fraud in History of Political Economy
articles and University of Chicago biographies (Caldwell 2004,
317, n34; 2005, 56; 2008, 701–702; Ebeling 1994; Skousen 2009,
338–389; see Leeson 2013, 202; 2015c).35

35According to Raico, ‘Professor [sic] Shenoy was brilliant, remarkably learned in the social

sciences, especially economics and economic and legal history, always civil and considerate in dis-
cussions and debates, yet a feisty fighter for her libertarian ideas.’ http://store.mises.org/Towards-
a-Theoretical-Framework-for-British-and-International-Economic-History-P10386.aspx. https://
www.lewrockwell.com/lrc-blog/a-great-scholar-and-wonderful-person/.
 3 The Deception Plans of the ‘Aristocratic Revolution’ …    
149

References

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(and Related Projects)

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Consequences. In R. Leeson (Ed.), Hayek a Collaborative Biography Part IX:
The Divine Right of the ‘Free’ Market. Basingstoke, UK: Palgrave Macmillan.
Farrant, A., & McPhail, E. (2017). Hayek, Thatcher, and the Muddle of the
Middle. In R. Leeson (Ed.), Hayek: A Collaborative Biography Part IX the
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Filip, B. (2018). Hayek and Popper on Piecemeal Engineering and Ordo-
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Goldschmidt, N., & Hesse, J.-O. (2013). Eucken, Hayek, and the Road to
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 4
The Deluding and the Deluded

1 ‘Victory,’ Faith-to-Fraud, Faith-to-Fascism

and ‘Financial Considerations’
By 1927, the Nazis had become ‘determined to reach the workers’
(cited by Noakes and Pridham 1994, 53). Simultaneously, Mises (1985
[1927], 51) aspired to build a ‘let’s meet halfway’ bridge between
(Austrian) Classical Liberals and ‘Fascists’—they would provide the
death squads and he would provide the ideology: ‘The victory of
Fascism in a number of countries is only an episode in the long series
of struggles over the problem of property. The next episode will be the
victory of Communism. The ultimate outcome of the struggle, however,
will not be decided by arms, but by ideas.’ In what Caldwell (1995,
70, n67) suggests is a reference to Liberalism in the Classical Tradition,
Hayek (1995 [1929], 68), while praising Edwin Cannan’s ‘fanatical
conceptual clarity’ and his ‘kinship’ with Mises’ ‘crusade,’ noted that
British-Austrians had failed to realise the necessary consequences of the
whole system of Classical Liberal thought: ‘Cannan by no means devel-
ops economic liberalism to its ultimate consequences with the same

© The Author(s) 2019 159

R. Leeson, Hayek: A Collaborative Biography,
Archival Insights into the Evolution of Economics,
https://doi.org/10.1007/978-3-319-78069-6_4
160    
R. Leeson

ruthless consistency as Mises.’1 Cannan’s (1927) An Economist’s Protest

contains no praise of ‘Fascists,’ ‘Ludendorff and Hitler’; and neither (it
seems) was Cannan a member of the British Fascisti (founded 1923)
(Ebenstein 1997).
Caldwell’s epigone-generation co-leader insists that Mises and Hayek
had ‘intertwined research programs’: both were

advocates of the private property market order and attempts to dehomog-

enize Mises and Hayek on the issue of private property and knowledge
are mistaken. (Boettke 2004)

In cults, conclusions precede arguments: Hayek (1978) had ‘just learned’

that Mises was ‘usually right in his conclusions, but I was not completely
satisfied with his argument. That, I think, followed me right through my
life. I was always influenced by Mises’s answers, but not fully satisfied by
his arguments. It became very largely an attempt to improve the argu-
ment, which I realized led to correct conclusions. But the question of
why it hadn’t persuaded most other people became important to me; so I
became anxious to put it in a more effective form.’2
A common, ‘ideologically correct’ substance wrapped up in a ‘more
effective form.’ Mises (1985 [1927]) needed ‘Fascists’ to protect oligar-
chic ‘liberty’; while Hayek (1978) needed ‘intellectuals … secondhand
dealers in ideas,’ who ‘have to play a very important role and are very
effective. But, of course, in my particular span of life I had the misfor-
tune that the intellectuals were completely conquered by socialism. So
I had no intermediaries, or hardly any, because they were prejudiced
against my ideas by a dominating philosophy. That made it increasingly
my concern to persuade the intellectuals in the hopes that ultimately
they could be converted and transmit my ideas to the public at large.’3

1Hayek (1956) later slightly modified his phraseology: ‘You have shown a relentless consistency

and persistence in your thought, even when it led to unpopularity and isolation.’
2Friedrich Hayek, interviewed by Earlene Craver date unspecified 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

3Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 4 The Deluding and the Deluded    
161

The neoclassical model initially emphasised private sector optimi-

sation while implicitly assuming that the ‘presuppositions of Harvey
Road’ motivated academics, bureaucrats and politicians. ‘Academic
Choice’ extends the analysis to those who promote the various branches
of the neoclassical model; and Buchanan’s ‘Public Choice’ applies pri-
vate optimisation to the public sector (thus questioning assumptions
about the pursuit of ‘the public interest’).
The (Viennese-born) University of Michigan economist, Wolfgang
Stolper (21 February 1992), informed J. Herbert Fürth that Buchanan
fitted Schumpeter’s description of an ‘irresponsible’ intellectual: he
couldn’t see how anybody could regard the recipient of the 1986 Nobel
Prize in Economic Sciences as anything other than an ‘ideological fool’
who spoke of ‘free’ markets as if they were ‘magic formulas.’4 On 28
October, Hayek (1978) told Buchanan

what I always come back to is that the whole thing turns on the activi-
ties of those intellectuals whom I call the ‘secondhand dealers in opinion,’
who determine what people think in the long run. If you can persuade
them, you ultimately reach the masses of the people.5

Buchanan (MPS President, 1984–1986) replied: ‘And you don’t see

a necessity for something like a religion, or a return to religion, to
instill these moral principles?’ Four months later, Buchanan (2015 [15
February 1979], 260) described not the pursuit of disinterested aca-
demic analysis, but the crude colonising agenda of ‘free’-market religion:

We are now winning a few battles in the ongoing war of ideas, but we
cannot lapse into complacency. The islands of comparative strength
in modern American academia (Miami, VPI [Virginia Polytechnic
Institute and State University, or Virginia Tech], UCLA, Chicago,
Rochester, NYU, Washington)—these must be strengthened and new
islands (Auburn, Colorado) must be created. The diverse approaches of

4Haberler Archives. Box 39.

5FriedrichHayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
162    
R. Leeson

the intersecting ‘schools’ must be the bases for conciliation, not conflict.
We must marry the property-rights, law-and-economics, public-choice,
Austrian subjectivist approaches.6

According to O’Driscoll (2017), ‘UCLA was where Chicago and

Vienna (the Austrian School) intersected. UCLA’s professors and their
students were influenced by both traditions. That explains positions
taken by them over the years on many issues.’
Another of Hayek’s intermediaries, Boettke (2010c, 61), is the
Branch Banking and Trust (BB&T) ‘Professor for the Study of
Capitalism.’ His GMU student, Anthony Evan (2010, 79), recalled that

Pete often says ‘love Mises to pieces,’ by which he means never lose sight
of why you entered the discipline in the first place.

According to I Chose Liberty (Block 2010), most ‘entered’ as adolescents

via Ayn Rand and/or science fiction. Inspired by Rothbard, Austrian
economists ‘booed deeply’ when encountering government building
(e.g. the University of Nevada, Los Vegas, GMU and Citadel Military
College campuses); but if the building was ‘private we all cheered
heartily’ (Blundell 2014, 100). Boettke (2010a, 61) tells ‘all’ of his stu-
dents (his fourth-hand dealers) that they should ‘never lose their deep
commitment to libertarianism, but instead use it as a tool for research
productivity.’ In what may be a reference to Caldwell-style nuanced
hagiography, Boettke continued: the ‘profession of economics demands
that they present an argument at a certain level of sophistication, and I
try to convey to them that the harder they are on their own arguments
the stronger those arguments will become.’
What type of ‘research’ does Boettke (2010a, 61) encourage—‘more
effective form’ versions of the crude Austrian School frauds perpetrated
by Hayek, Mises, Shenoy, ‘Deacon’ McCormick et al.? They should ‘try
to be sophisticated if they want to succeed in this business. But I also

6After Rothbard relocated from Brooklyn Polytechnic Institute from the University of Nevada at

Las Vegas (UNLV) in 1986, Skousen (1991, 12, 287, 276) described ‘The Expanding Austrian
Universe’ in which Austrians had ‘taken hold’: GMU, Auburn, NYU and UNLV.
 4 The Deluding and the Deluded    
163

tell them constantly that they must never forget why they decided to
become an economist in the first place—they must retain that youthful
enthusiasm for the ideas of liberty’:

It is sophistication and enthusiasm that will win this race. It is my sincere

belief that we have a great group of young ‘runners’ now entering the race
and that future victory is not just likely, but inevitable.

Mises (1985 [1927], 51) left an eternal instruction: ‘The merit that
Fascism has thereby won for itself will live on eternally in history.’ In
Living Economics Yesterday Today and Tomorrow, Boettke (2012, 13)—
ignoring Yesterday Today and Tomorrow (eternity), merit and the ‘victory
of Fascism’—promoted the Austrian deflationary message: ‘Not only is
the private property market economy a self-regulating system guided
through relative price adjustment and profit and loss calculus, but the
market society forms the basis for a political order of free people.’
According to Herbert Hoover (1952, 30), Andrew Mellon advised
him (as Hitler was rising to power) to ‘liquidate stocks’ because ‘enter-
prising people will pick up from less competent people.’ Similar advice
was offered in post-communist countries. Two mafias had previously
coexisted: the vory v zakone and the Communist Party of the Soviet
Union; after 1991, one filled the vacuum created by ‘regime change’
(Leeson 1994; Galeotti 2018). The Soviet experiment was followed
by the ‘free’-market ‘remake’ experiment; and Ebeling, for example,
is proud of the role he played in the botched privatisation that facili­
tated the rise of ‘Supreme Leader’ Vladimir Putin and ‘Russia of the
Oligarchs’ (Haiduk 2015). As Mises (1985 [1927], 51) praised ‘Fascist’
gangsters as ‘full of the best intentions,’ so Miseans contributed to the
rise of the Russian gangster State.
In ‘Why the Social Engineers of the Sixties Failed to Make a “Great
Society”,’ Ebeling (2018) complained to a FEE audience about the
‘same fundamental flaw in the Great Society agenda as was to be found
in the executing of the Vietnam War: the confidence and belief on the
part of the implementers of these programs that they could redesign
the social order at home just like the foreign policy makers believed
they could remake entire societies abroad.’ As an adolescent in the late
164    
R. Leeson

1960s, Ebeling was recruited to the ‘free’ market through what appears
to be a cult recruitment operation (Leeson 2018); and to a later genera-
tion of adolescents, Ebeling is a Supreme Leader. When Boettke (2016)
was an undergraduate student and ‘deciding that I was going to pursue
a career’ as an Austrian economist, the IHS’s Walter Grinder sent him
Ebeling’s ‘study guide and bibliography for serious students of Austrian
economics’:

I followed Ebeling’s reading suggestions. Then while I was in graduate

school, Richard used to write a column for the CSMP newsletter that I was
the managing editor of entitled -- In the Journals and On the Shelves --
which provided further reading suggestions which I always followed.
Richard wasn’t my teacher in any technical sense of the word, but he was
my ‘teacher’ in a meaningful sense. He has been that teacher both in the
concrete and in the abstract for so many economists that have dedicated
their lives to advancing the awareness and the teachings of the Austrian
school of economics as teachers, scholars, public intellectuals and citizens.

Ebeling is a devotee of Rothbard (1994, 10) who sought to replace

democracy with a ‘small, self-perpetuating oligarchy of the ablest and
most interested.’ No one doubts the ability of the former KGB opera-
tive, ‘Tsar’ Putin; Ebeling, in contrast, is regarded (even in ‘free’-market
circles) as a ‘total fool’ (Leeson 2018). Hayek, Ebeling et al. believe that
Pigou undermined both the Tsar’s Empire and capitalism—through
externality taxes and by gunrunning for Stalin (Leeson 2015b).
Hayek (1978) explained to Buchanan that the (neo-feudal) ‘spontane-
ous order’ had to be reconstructed. When asked ‘how would you see this
coming about, though? Would you see us somehow getting in a posi-
tion where we call a new constitutional convention and then set up this
second body with separate powers? Or how would you see this happen-
ing?’ Hayek replied: ‘I think by several experiments in new amendments
in the right direction, which gradually prove to be beneficial, but not
enough, until people feel constrained to reconstruct the whole thing.’7

7Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 4 The Deluding and the Deluded    
165

Wieser (1983 [1926], 257, 363) described ‘The Modern Plutocracy’:

‘The Law of Small Numbers found in the economy a field of application
of equally great effect as it once had in the victory of arms. While the
multitude of the weak was pressed down, out of the bourgeois middle
class there arose to dizzying heights the elite of the capitalists, joining
the rulers of earlier times and exceeding them still in wealth and finally
even in social influence. The great economic rulers had won under the
slogan of liberty [emphasis added], which opened for them the road to
unchecked activity. They demanded ever more impetuously the green
light for themselves, but the uninhibited unfolding of their energies
meant coercion for all the weak who stepped into their way. Could the
liberals still talk about freedom?’
A deluder without the deluded is of limited historical interest. Hayek
(1978) told Buchanan that propaganda—‘catchwords’—were required: ‘I
see no other solution than my scheme of dividing proper legislation from
a governmental assembly, which is under the laws laid down by the first.
After all, such a newfangled conception gradually spreads and begins to be
understood. And, after all, in a sense, the conception of democracy was an
artifact which captured public opinion after it had been a speculation of
the philosophers. Why shouldn’t–as a proper heading–the need for restor-
ing the rule of law become an equally effective catchword, once people
become aware of the essential arbitrariness of the present government.’8
The Treaty of Versailles limited the size of the German army to
100,000; but Ernst Röhm provided a catchword explanation for the
existence of 250,000 Storm Troopers: ‘The brown uniform is com-
pletely unsuitable as a field uniform’ (cited by Time 1967 [18 December
1933], 108). In ‘Against the Jews,’ Time (1967 [3 April 1933], 99)
sarcastically observed that Herman Göring summoned foreign corre-
spondents to his apartment for an ‘angry, hour-long speech to the effect
that the reign of terror had not taken place – but that it would stop
at once.’ In response, US Secretary of State (1933–1944) Cordell Hull
announced: ‘Mistreatment of Jews may be considered virtually ter-
minated.’ Hull was then awarded the 1945 Nobel Peace Prize for his

8Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

166    
R. Leeson

‘fight against isolationism at home, his efforts to create a peace bloc of

states on the American continents, and his work for the United Nations
Organisation’: he was the ‘representative of all that is best in liberalism,
a liberalism with a strong social implication.’9
In 1942, Hull fell victim to the propaganda of the Austrian National
Committee by declaring that the US government had never recognised
Hitler’s annexation of Austria. Twelve state governors also declared 25
July 1942 to be ‘Austrian Day.’ This ‘dissociation of German villains and
Austrian victims’ remained the ‘one common position of the various
Austrian right-wing expatriate groups’ throughout the war, and ‘here
they achieved a clear success’ (Hülsmann 2007, 819).
The ‘free’ market is funded by TOFF lobbyists. According to Don
Boudreaux (1997), an Auburn PhD graduate and later the chair of the
GMU economics department chair (2001–2009), the

foulest feature of government’s long-running harassment of the tobacco

industry is the elitist presumption that tens of millions of Americans are
too dimwitted to be trusted with their own fates. This presumption fol-
lows from the belief that ‘Big Tobacco’ profits by selling goods to people
who really don’t want to buy what they buy.

According to Mises (1974 [1952], 170–171),

Big business caters to the needs of the many; it depends exclusively upon
mass consumption. In his capacity as consumer the common man is the
sovereign whose buying or abstention from buying decides the fate of
entrepreneurial activities. The ‘proletarian’ is the much-talked-about cus-
tomer who is always right. [Mises’ emphasis]

Hayek (1978) attributed his suicidal depressions to having to give up

tobacco: ‘I was stopped from smoking by the doctor some five years ago
and was miserable for a long time.’10 And Margit Mises (1984, 144)

9https://www.nobelprize.org/nobel_prizes/peace/laureates/1945/press.html.

10Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 4 The Deluding and the Deluded    
167

reported that her husband (as he promoted ‘consumer sovereignty’) was

being victimised by sovereign producers: Mises ‘loved smoking’ and it
was ‘not easy’ for him to follow medical advice and ‘give it up’: he ‘felt
almost ashamed that the longing for a cigarette could overpower him
and break his will.’ Presumably referring to the medical advice he had
received, Mises (2006 [1958], 21) complained that ‘Some authorities
in the United States are even opposed to smoking’—but smoking while
knowing about the adverse medical consequences showed ‘what free-
dom really means.’
Mises (2012 [1918], 227) also denigrated emigration: in the dec-
ade before the ‘Great’ War between the dynasties, the ‘monarchy’—not
Austria—‘permanently lost at least 250,000 conscripts in this way.’ For
public consumption, Mises (2006 [1958], 21, 24–25) also asserted:
‘The fact is that, under the capitalist system the ultimate bosses are the
consumers. The sovereign is not the state, it is the people.’ In feigning
an attachment to achieved status, Mises stated that ‘one must not forget’
that when ascribed status dominated in Europe and in their American
‘colonies,’ ‘people did not fell themselves to be connected in any special
way with the other classes of their own nation’; instead, they felt much
more ‘at one with the members of their own class’ in other countries:

A French aristocrat did not look upon lower class Frenchmen as his fellow
citizens; they were the ‘rabble’ which he did not like.

Hitler was initially taken to be an ‘inferior sort of Corporal’ (Gilbert

1966, 104). Lieutenant ‘von’ Mises’ (2006 [1958]) Argentinian lectures
(Economic Policy: Thoughts for Today and Tomorrow ) were posthumously
published with the assistance of George Koether whose editorial expe-
rience and his ‘understanding’ of her husband’s theories were a ‘great’
help (Margit ‘von’ Mises’ 2006, xv). Koether (2000, 5) reported that in
‘many ways,’ Mises was ‘still attached to the old world: he had a color
picture of the Emperor Franz Josef II [sic ] hanging on the wall’ in his
rent-controlled Manhattan apartment. Simultaneously, ‘von’ Mises (23
January 1953) sneered at the ‘scum’ and the ‘rabble’: telling Ayn Rand
(a heavy consumer of tobacco and amphetamines whose premature
death may have been related to smoking) that ‘You have the courage
168    
R. Leeson

to tell the masses what no politician told them: you are inferior and all
the improvements in your conditions which you simply take for granted
you owe to the efforts of men who are better than you.’ This was the
‘truth that had to be said in this age of the Welfare State.’11
If smokers report that they would like to quit tobacco (formerly,
slave-produced) but can’t, because they are addicted: would the price
mechanism (taxes) help them to be free of their unwanted addiction?
What was once the ‘free’ market in tobacco now kills more than 7
million people each year (more than 6 million of those deaths are the
result of direct tobacco use while around 890,000 are the result of non-­
smokers being exposed to second-hand smoke).12 And if the consensus
of the relevant scientific community is correct, the ‘free’ market for pol-
lution will create severe consequences for all of the earth’s inhabitants.
Hoover (1952) attributed his one-term status Presidential status
(1929–1933) in large part to the ‘Austrian’ policy advice offered by his
Treasury Secretary (1921–1932), Andrew Mellon. Believing the lies
of one advocate of Austrian Business Cycle Theory (ABCT) led Prime
Minister Neville Chamberlain (3 September 1939) to bemoan in the
House of Commons: ‘Everything that I have worked for, everything that
I have hoped for, everything that I have believed in during my public life
has crashed into ruins.’13 Yet according to ‘establishment’ opinion—the
(London) Times (1 October 1938) editorial entitled ‘A New Dawn’—
Chamberlain had returned from Munich as a ‘conqueror’ with noble
‘laurels’: with the Munich agreement, ‘the Führer reminds us’ of his ‘good
intentions.’ Yet on 22 September 1938, having agreed to Hitler’s demand
to transfer the Sudeten Germans to the Austro-German Third Reich,
Chamberlain was told by Hitler that ‘this is no longer of any use’: more
concessions—by 28 September—were required. When Chamberlain
complained that this was an ‘ultimatum,’ Hitler made a semantic distinc-
tion: the document on which the ultimatum was presented was ‘headed
by the word memorandum.’ In extending the deadline to 1 October,

11https://mises.org/library/ludwig-von-misess-letter-rand-atlas-shrugged.

12http://www.who.int/mediacentre/factsheets/fs339/en/.

13http://avalon.law.yale.edu/wwii/gb2.asp.
 4 The Deluding and the Deluded    
169

Hitler assured Chamberlain: ‘You are the only man to whom I have ever
made a concession’ (cited by Gilbert 1966, 115, 120).
Alan Greenspan (2008, 40–41)—who was mesmerised by his all-
night encounters with his amphetamine-driven cult leader (Ayn
Rand)—was left with faith-driven regrets: ‘Those of us who have looked
to the self-interest of lending institutions to protect shareholders’ equity,
myself included, are in a state of shocked disbelief.’ When asked by
Henry Waxman, the Chair of the House Committee on Oversight and
Government Reform, ‘Do you feel that your ideology pushed you to
make decisions that you wish you had not made?’ Greenspan replied:
‘Yes, I’ve found a flaw. I don’t know how significant or permanent it is.
But I’ve been very distressed by that fact’ (cited by Ward 2008).
George Shultz helped to destroy both the Bretton Woods system of
fixed exchange rates and the Berlin Wall; and Friedman (successfully)
advised him to resign as Nixon’s Treasury Secretary to avoid damag-
ing his hard-won reputation for integrity (Leeson 2003). Imaginary
‘vaporware’ must be distinguished from hardware and software—how
did Shultz become entrapped by Elizabeth Holmes’ fantasy about her
‘unicorn’ start-up: ‘we are working to facilitate the early detection and
prevention of disease, and empower people everywhere to live their
best possible lives.’14 In 2011, Shultz joined the Theranos Board of
Directors and recruited an ‘all-star board’—including William Perry
(former Secretary of Defense), Henry Kissinger (former Secretary of
State), Sam Nunn (former US Senator), Bill Frist (former US Senator
and heart-transplant surgeon), Admiral Gary Roughead (retired),
General James Mattis (retired), Richard Kovacevich (former Wells Fargo
Chairman and CEO) and Riley Bechtel (chairman of the board and for-
mer CEO at Bechtel Group) (Carreyrou 2018).
In Mises in America, William Peterson (2009, 8) cited Mises:

If the policies of nonintervention prevailed—free trade, freely fluctuating

wage rates, no form of social insurance, etc.—there would be no acute
unemployment. Private charity would suffice to prevent the absolute des-
titution of the very restricted hard core of unemployables.

14https://www.theranos.com/company.
170    
R. Leeson

Mises in post-communist Russia led to the collapse of male life expec-

tancy—67 compared to 79 for the Euro area (2016).15
Friedman (2002, xvii) issued a mea culpa:

We have learned about the importance of private property and the

rule of law as a basis for economic freedom. Just after the Berlin Wall
fell and the Soviet Union collapsed, I used to be asked a lot: ‘What
do these ex-communist states have to do in order to become market
economies?’ And I used to say: ‘You can describe that in three words:
privatize, privatize, privatize.’ But, I was wrong. That wasn’t enough.
The example of Russia shows that. Russia privatized but in a way that
created private monopolies-private centralized economic controls that
replaced government’s centralized controls. It turns out that the rule of
law is probably more basic than privatization. Privatization is meaning-
less if you don’t have the rule of law. What does it mean to privatize if
you do not have security of property, if you can’t use your property as
you want to?16

Friedman’s willingness to acknowledge error—here and elsewhere—is

evidence that he should be located at the scientific end of the ‘knowl-
edge’-to-faith spectrum. Austrian ‘gold’ comes from the TOFF lobby,
the Apartheid regime, Pinochet, the Shah of Iran, the Gaddafi family,
the United Fruit Company, etc.: are Austrian economists motivated by
anything other than the ‘financial considerations’ associated with ‘stay-
ing’ Austrian?
Ayn Rand (1905–1982) was born in neo-feudal Russia before
the last throw of the reforming dice: the Prime Ministership of Pyotr
Arkadyevich Stolypin (1906–1911). The breaching of the Berlin
Wall (9 November 1989) allowed devotees to bring her contempt for
‘the masses’ back ‘home’ during the brief post-communist interval in
which genuine democracy and human rights could have taken root.
In 1990, ‘victory’ led Buchanan to be quoted as stating that a market
economy ‘freer’ than the West could be established in post-communist

15https://data.worldbank.org/indicator/SP.DYN.LE00.MA.IN?locations=RU.

16http://www.cato.org/special/friedman/friedman/friedman4.html.
 4 The Deluding and the Deluded    
171

countries.17 In 1991, ‘victory’ led Ebeling (2016) to present a post-

communist ‘free’ market agenda to elected deputies: ‘privatization of all
state enterprises (banking, industry, agriculture and retail stores).’18
In 1918 in post-Romanov Russia, the transition from one-family to
one-party rule had been affected by a rhetorical trick: the chairman of
the elected deputies was told that the ‘guard is tired. I propose that you
close the meeting and let everybody go home’ (cited by Raskolnikov
(1982 [1934])). In less than a decade, the transition from one-party
rule to Oligarchy (1990s ‘Catastroika’) caused national income to fall by
more than 50% (almost twice the drop in output during America’s Great
Depression), investment by 80%, real wages by half and meat and dairy
herds by 75%: ‘The numbers living below the poverty line in the former
Soviet republics had risen from 14m in 1989 to 147m even before the
1998 financial crash. The market experiment has produced more orphans
than Russia’s 20m-plus wartime casualties, while epidemics of cholera and
typhus have re-emerged, millions of children suffer from malnutrition and
adult life expectancy has plunged’ (Milne 2001; see also Cohen 2001).
Ebeling was ‘qualified’ to deliver policy advice to elected deputies
because he had an (eight-year?) undergraduate degree from Sacramento
State College cum University (1968–1976), an (Austrian?) M.A. from
Rutgers University (1980), a Hillsdale College professorship (1988–
2003) named after a card-carrying Austro-Fascist—but, apparently, no
referred publications in non-Austrian-dominated journals. In 2014, he
became ‘BB&T Distinguished Professor of Ethics and Free Enterprise
Leadership’ at the Citadel Military College.19
Block (2018) propose that economist who don’t fawn before the ‘free’
market should be punished: ‘Must this consist of the death penalty or

17Haberler (11 April 1990) to Buchanan inquiring whether he had been quoted correctly.
Haberler Archives. Box 7.
18We ‘presented to the deputies our four-point program for the rapid freeing of prices and wages;

the privatization of all state enterprises (banking, industry, agriculture and retail stores); reforms
in the legal framework of Lithuania for the recognition, specification, and enforcement of private
property rights and contracts; and the opening of Lithuania to international trade and foreign
direct investment as soon as politically possible’ (Ebeling 2016).
19http://www.citadel.edu/root/images/Business_Administration/2016_Faculty_CVs/ebeling_

cv_2016.doc.pdf.
172    
R. Leeson

even a jail sentence? Maybe. But not necessarily so. There are also lesser
forms of approbation. For example, doctors are struck off for medical
malpractice, priests and ministers are unfrocked, and lawyers are dis-
barred for professional misconduct and professors are stripped of their
tenure and fired, if their offense is serious enough. Possibly, something
along these lines could apply in this case.’
According to Mises (2006 [1958], 71), the

only method by which a ‘full employment’ situation can be brought

about is by the maintenance of an unhampered labor market. This is valid
for every kind of labor and for every kind of commodity.

Through unhampered fraudulent recommendations, Hayek (1978)

constructed a full employment Welfare State—or lifetime incomes pol-
icy—for his academically unqualified disciples: ‘That I cannot reach the
public I am fully aware. I need these intermediaries.’20 In a ‘victory’ cel-
ebration of two decades of its existence, one of these beneficiaries, the
academic fraud Shenoy, assisted IEA co-founder, Seldon to construct
the ‘IEA Roll of Honour’ in which she referred to an incomes policy as
‘like the “stability” of a set of defective gauges perpetually pointing to
the set of readings’ (cited by Harris and Seldon 1997, 154).
‘Victory’ assisted Shenoy (2003)—Tiger by the Tail (1972)

came out at the right time. We were in the midst of stagflation, and it
was just before Hayek’s Nobel Prize. I was surprised by the reception, but
Arthur Seldon was not. For months after, we had ‘tigers’ running through
the financial press. Keynes’s unassailability died between the first and sec-
ond [1978] editions, and I realized while preparing the second edition
that I could now say anything I wanted.

According to Mises (2012 [1920], Chapter 16), ‘scientific development

does not take place in a simultaneous and uninterrupted ascent; periods of
great achievement are followed by periods of intellectual exhaustion; the

20Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 4 The Deluding and the Deluded    
173

masters are followed by the imitators, until men of genius again bring forth
a new flowering.’ Mises was contemptuous of his imitators from whom
he demanded sycophancy (see below). After decades of close observation,
Arnold Harberger (1999) detected not a school of economics but a religion:
‘There was a great difference in focus between Hayek (the Austrians) and
Chicago as a whole. I really respect and revere those guys. I am not one of
them, but I think I once said that if somebody wants to approach econom-
ics as a religion, the Austrian approach is about as good as you can get.’
In The Tyranny of Gun Control, Ebeling (1997) describes his religion:
‘Government is and always has been, the greatest criminal threat to the
peaceful members of society.’ And the co-founder of the Mises Institute
is the author of ‘To Restore the Church, Smash the State’ (Rockwell
1998). Alan Bullock (1962, 176) described the Nazi Party as ‘an organ-
ised conspiracy against the State … the program had to be kept unalter-
able and never allowed to become a subject for discussion.’
Heinrich Hoffmann (2011 [1955]) photographed Hitler imitating
opera singers and gesturing in the mirror before delivering his ‘lectures.’
After his second Nuremberg Rally, Hitler told a foreign observer: ‘Look
at these laughing eyes, this fanatical enthusiasm, and you will discover
how in these faces the same expression has formed, how a hundred
thousand men in a movement become a single type’ (cited by Heiden
1944, 316). Hayek (2007 [1944], 81) perceptively noted that in
‘Germany before 1933 and in Italy before 1922 communists and Nazis
or Fascists clashed more frequently with each other than with other
parties. They competed for the support of the same type of mind and
reserved for each other the hatred of the heretic.’
Laurence Moss (2005, 447) observed Rothbard, Israel Kirzner,
George Reisman, David Grant, and others participating in Mises’ NYU
seminar: the ‘atmosphere’ of the

Mises seminar did not produce an open and free discussion. It did not
send off armies of young scholars to the professional meetings to mesh
older habits of reasoning with new insights and tools for analysis. In many
ways it remained a protest seminar where Keynes and his students were
the ‘enemies’ in our midst and mathematical economics and econometrics
were pushing wrongheaded avenues of research, and crowding out what
Mises termed ‘modern economics.’ There was a hagiographic quality to the
174    
R. Leeson

seminar, at least during the years when I attended in the mid-1960s. I dis-
covered three categories of seminar participants. First, there were the occa-
sional graduate students who needed the credits in order to obtain their
degrees. They would ask specific questions about current monetary or fiscal
policies, suggesting an affinity for Keynesian nostrums, and would speed-
ily receive icy cold stares from the second category, diehards participating
in that seminar. The diehards were a motley collection of Mises’s friends,
protectors, and benefactors. They formed a physical protective belt around
Mises and stared down all who would dare to question or disbelieve.

The lengthy but forced ‘spontaneous’ laughter in response to Mises’

humourless and almost impenetrable Germanic diatribes (on, e.g.,
Ebeling’s 1962 tape of Mises’ address to the faithful) suggests that
this is a more an illness than a school of economics.21 A tax-exempt
illness—Hayek received a letter (18 June 1965) from a fund-raiser:
‘Occasionally, it is possible to bolster one’s faith in the triumph of that
which is right and to reaffirm one’s faith in truth, hard work, sacrifice,
perseverance, prayer and patience. On June 16th we received a letter
from the U.S. Treasury Department (Internal Revenue Service) granting
tax exempt status to the Institute!’22
A Libertarian Party activist telephoned Rothbard (13 October 1981),
secretly recorded the conversation (which may have been a crimi-
nal offence) and then confronted him with a transcript (1 November
1981): she was seeking ‘the gospel truth directly from the preacher’
and was motivated by a desire to demonstrate that he wasn’t ‘senile or
deceitful (as some individuals are willing to assert).’ There had been a
bidding war to host the 1983 Libertarian Party State Convention and
she asked Rothbard to speak if San Mateo County ‘secures that bid.’
Rothbard’s only concern was funding:

I would require travel and hotel expenses … you know full expenses …
I am willing to go to the think if I get expenses, so I don’t care where its
located … but I would require expenses.

21https://www.mises.org/library/economics-middle-road-policy.

22Hayek Archives. Box 26.21.

 4 The Deluding and the Deluded    
175

She attempted to persuade him that the ‘Contra Costa County, over
in East Bay, listed your name as a speaker – a contracted speaker
and a confirmed speaker for their convention.’ Rothbard assured her
(falsely, it seems) that ‘I haven’t agreed to anything of that sort.’23
Shortly afterwards, a ‘free’-market Bay Area ‘Senior Economist’
became convinced that his phone was being tapped and his waste
paper bin examined by the President of his TOFF-funded think
tank.
On 26 January 1932, Hitler told the Düsseldorf Industry Club that
the Nazis were organised around the

principles of Command and Obedience … an organisation which when

a political opponent says, ‘We regard your behaviour as a provocation,’
for the first time does not submissively retire from the scene but brutally
enforces its own will and hurls against the opponent the retort, We fight
today! We fight tomorrow! … we have formed the inexorable decision to
destroy Marxism in Germany down to it’s very last root. (cited by Fest
1973, 461; Bullock 1962, 77, 197–199)

Buchanan (1992, 130) observed that at MPS meetings there was ‘too
much deference accorded to Hayek, and especially to Ludwig von
Mises who seemed to demand sycophancy.’ ‘Lieutenant’ ‘von’ Hayek
(1978) explained to Buchanan about Austro-German ‘Command and
Obedience’:

I have always maintained that the great prosperity of Germany in the first
twenty-five years after the war was due to the reasonableness of the trade
unions. Their power was greater than they used, very largely because all
the trade union leaders in Germany had known what a major inflation
was, and you just had to raise your finger—‘If you ask for more, you will
have inflation’–and they would give in.24

23Rothbard told Mike Hall that he had ‘simply forgot’ that he had agreed to speak at the

Contra Costa-hosted convention. Evers Archives. Box 15. LP of California 1981.

24Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

176    
R. Leeson

Sir Edmund Ironside (1962, 29, 50), who noted Hitler’s Austrian
accent (‘His voice was soft and his German of the South’), described
the ‘dramatic’ scene at Berchtesgaden when the low-born Austrian
Chancellor of the Third Reich ‘summoned’ the high-born Austrian
Chancellor, Kurt Alois Josef Johann ‘Elder von’ Schuschnigg, and kept
him ‘waiting for an hour.’
In The House That Hitler Built, Steven Roberts (1937, 363) reported
that ‘there is hardly a boy in Germany who does not view the prepara-
tion for ultimate war as the most important aspect of his life.’ Eduard
Bloch, the Hitler family’s Jewish doctor, recalled: ‘Like any well-bred
boy of fourteen or fifteen,’ the deferential Adolf had ‘waited patiently in
the waiting room until it was his turn’ and then ‘would bow and thank
me courteously’ (cited by Hamann 2010, 20; see also Davidson 1977,
21).
Sir Neville Henderson (17 June 1939) reflected to Viscount
Halifax—Viceroy of India (1925–1931), Foreign Secretary (1938–
1940) and co-architect of Appeasement—that ‘the world’ had ‘made a
fatal mistake of underestimating Hitler. At first he was either a moun-
tebank or a kind of Charlie Chaplin, an Austrian house-painter or
inferior sort of Corporal’ (cited by Gilbert 1966, 104). Time (1967 [6
February 1933], 90, 93) reported that when Corporal Hitler first met
President von Hindenburg, the General did not invite the leader of
the largest party ‘in the fatherland’ to sit down—he merely asked if he
would support Lieutenant Colonel von Papen’s ‘Cabinet of Monocles.’
Five months later, von Hindenburg described the expected deference:
‘Let me tell you, Herr Hitler, if you don’t behave, I’ll rap your fingers.’
Time reported that the ‘best posted observers greeted the advent of
Chancellor Hitler’ with ‘equanimity’ because his Cabinet was ‘so full of
safeguards.’
What did Hayek (1978) mean by ‘under no circumstances’? He told
Buchanan: ‘Government should have no, under no circumstances–
except perhaps in an emergency–power of discriminatory coercion.’25

25Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 4 The Deluding and the Deluded    
177

Mises (1985 [1927], 51) recommended that ‘Fascists’ use (Austrian)

Classical Liberal ideas for recruiting purposes: it is ‘ideas that group
men into fighting factions, that press the weapons into their hands,’ and
that ‘determine against whom and for whom the weapons shall be used.’
It is ‘they alone, and not arms, that, in the last analysis, turn the scales.’
Using a phrase that defines Austrian ‘education,’ Mises (1985 [1927],
51) insisted: ‘It cannot be denied [emphasis added] that Fascism and
similar movements aiming at the establishment of dictatorships are full
of the best intentions and that their intervention has, for the moment,
saved European civilization. The merit that Fascism has thereby won
for itself will live on eternally in history.’ And in the reprinted Road to
Serfdom, while complaining that ‘both the influence of socialist ideas
and the naive trust in the good intentions of the holders of totalitarian
power have markedly increased since I wrote this book,’ Hayek (1976,
ix, 4) added: ‘It cannot be denied [emphasis added] that there is yet little
recognition of the positive ideals for which we are fighting.’
Caldwell and Montes (2014a, 3, n8; 2014b; 2015, n8) seek to
dispose of Mises’ praise of Fascism by referring to its historical back-
ground—it was only ‘an emergency makeshift’ and he was merely ‘offer-
ing a comment on a pressing issue of the day.’ The ‘Fascists’ praised
by Mises (1985 [1927], 49, 44, 51) included ‘Germans and Italians,’
including ‘Ludendorff and Hitler.’ According to Mises, ‘Fascism’ with-
out (Austrian) Classical Liberalism could not ‘promise continued suc-
cess. Fascism was an emergency makeshift.’ To view it as ‘something
more would be a fatal error.’ Also according to Mises (1998, 91), it is a

poor makeshift to dispose of a theory by referring to its historical back-

ground, to the ‘spirit’ of its time, to the material conditions of the coun-
try of its origin, and to any personal qualities of its authors. A theory
is subject to the tribunal of reason only. The yardstick to be applied is
always the yardstick of reason. A theory is either correct or incorrect. It
may happen that the present state of our knowledge does not allow a
decision with regard to its correctness or incorrectness. But a theory can
never be valid for a bourgeois or an American if it is invalid for a proletar-
ian or a Chinese.
178    
R. Leeson

Knowledge is a ‘bridge’ or a transparent observation platform (such

as the one jutting out over the Grand Canyon). The Misean apriori
‘bridge’ leads to a predetermined destination; while an inductive knowl-
edge ‘bridge’ begins from Faith and sets out towards an unknown des-
tination (and sometimes becomes an abandoned ‘bridge to nowhere’).
Because of the well-known pitfalls of the inductive approach—‘there’s
more to seeing than meets the eyeball’—Myrdal (1969) transparency is
also required.
The Faith from which the ‘bridge’ construction begins consists of a
variety of typically unexamined assumptions: ‘no, I don’t think Hayek
[1] was a fraud,’ 2 + 2 = [I], etc. All scholars share prejudices with a sub-
set of other scholars—while schools define themselves by those shared
prejudices. An individual can commit fraud—and a school can be
located on the Faith-to-Fraud (F2F) spectrum (where 2 can have at least
three different meanings). Analysis of the central tendency of a school’s
F2F distribution can be a ‘tolling’ bell curve.
Like Hayek, Mises (2009 [1978 (1940)], 40–41) projected a high
moral tone: though he had known ‘much, if not all, about the corrup-
tion of the interventionists and socialists’ with whom he had to deal, he
had ‘never’ made use of this information. He had been supplied with
‘ample’ material on the ‘corrupt practices of these socialist leaders’ and
was ‘well schooled in the moral decadence of the party’—but had ‘gra-
ciously declined offers to prove fraud and embezzlement on the part of
my opponents, admissible in courts of law.’
According to Burton Blumert (2008, 327), one CLS Executive
Directors was

lost in a tragic suicide, and his successor—the CLS board would sadly
learn—was a partially recovered member of Gambler’s Anonymous. Some
months later, Richard—let’s call him—disappeared, and two fellows with
hand-painted ties, representing a garbage disposal company from New
Jersey, came to CLS’s offices looking for him. (Today, they could audition
for ‘The Sopranos.’)

After Walter Grinder resigned as CLS Executive Director because of the

climate of ‘emotional conflict’ and ‘personal invective,’ David Padden
 4 The Deluding and the Deluded    
179

(28 December 1977) wrote to the CLS Board of Directors announcing

that J. Philip Sykes would replace him.26 In April 1978, Sykes appar-
ently committed suicide; and Richard Seiden was, apparently, his suc-
cessor. But Seiden didn’t disappear—instead he made threats against
the CLS which they turned over to their lawyer, Paul Liggio. The debts
meant that unless the Scaife Foundation bailed them out ‘dissolution
becomes a real option.’27
Ebeling’s Citadel Military College cv doesn’t mention that he
was employed by the CLS as it ‘Project Director’ and editor of its
Occasional Papers. The minutes of the CLS the Board of Directors
(26 January 1979) report that Ebeling was ‘terminated’ as editor of
the Occasional Papers; and that a motion was made and seconded
that the position of Project Director be ‘abolished.’ The vote—by
Randy Barnett, Block, Evers, Dale Grinder, Chuck Hamilton, Ronald
Hamowy, Liggio, O’Driscoll, Padden, Joe Paden, Rizzo and Rothbard
(with CLS Director, Bill Hammett, ‘present’) was ‘unanimous’ (26
October 1978). But the position of Project Director had not been abol-
ished: Rothbard and Liggio ‘urged’ David Theroux (21 May 1979) to
offer his services to Hammett as Ebeling’s successor.
But nobody told Ebeling (31 October 1978) that his position had been
abolished. Instead, he complained to Padden at the CLS he was treated as
an ‘errand boy’ and that he would resign on 15 November 1978.28
The Moonie’s Washington Times reported that

With the GOP in control of the White House and Congress, conserv-
atives are finally poised to mount a coordinated attack on federal envi-
ronmental regulations — but some of their strength is being sapped by a
nasty fight inside one of the movement’s key advocates.

David Schnare and Chris Horner’s ‘Free Market Environmental Law

Clinic’ had obtained climate scientists’ emails (‘Climategate’) which
embarrassed climate change scientists. But they’re

26Evers Archives. Box 6. CLS.

27JoePeden (18 December 1981) to CLS Board of Directors. Evers Archives. Box 6. CLS.
28Evers Archives. Box 6. CLS.
180    
R. Leeson

now feuding amid allegations of extortion, lying to the IRS, harassment

and other mismanagement that threatens to shutter the law clinic just
as it should be providing muscle for President Trump’s push to free the
economy of burdensome regulations. (Wolfgang 2018)29

In ‘He Sues to Discredit Climate Scientists. Now He’s Being Sued by

His Allies,’ The New York Times reported that although the Free Market
Environmental Law Clinic hasn’t disclosed its funding sources, ‘ties to
fossil fuel companies have emerged. In 2015, The Intercept reported
that a bankruptcy filing by Alpha Natural Resources, a major coal com-
pany, listed payments to Free Market and Mr. Horner’ who is also a
‘senior fellow at the Competitive Enterprise Institute, which receives
support from the fossil fuel industry.’ Lawson R. Bader, chief executive,
DonorsTrust, a conservative group that provides an avenue for anony-
mous donations, said in an interview that if a donation

‘has been made under false pretenses, that is a problem,’ Mr. Bader said.
‘We need that money back.’ (Schwartz 2018)

Gerald O’Driscoll Jr. (20 August 1981) complained to Padden that

the CLS had violated the New York State laws governing non-prophet
organisations by agreeing to hire Robert Formaini without the approval
of the Board and by negotiating ‘in secret’ with the President of the
University of Dallas at Texas to relocate the CLS to their campus.30
Complaining of Evers’ ‘unprofessional’ conduct, Rizzo (7 August 1979)
used NYU resources (official notepaper plus secretarial time) to insist to
O’Driscoll that in future he would require ‘compensation’ if he could
not deliver a conference paper.31
Scott Olmsted’s minutes of a ‘Gathering’ of Students for a
Libertarian Society meeting indicate how a libertarian society would
operate: Jeff Friedman ‘denied’ him the opportunity of reading a

29https://www.washingtontimes.com/news/2018/may/9/free-market-environmental-law-clinics-

effort-to-ro/.
30Evers Archives. Box 13. CLS.
31Evers Archives. Box 15. CLS (2).
 4 The Deluding and the Deluded    
181

Secretary’s report minutes. Evers denied that Friedman (as a paid

employee) could chair the meeting—to which Friedman replied that
since he had reserved the room, the position of chair was his property
and he would call the police to ‘remove’ anyone who did not recognise
his authority.32
Stephen Davis, Evers and Andre Marro (Fall 1984) drafted a letter
(which they didn’t send) to Jim Turney complaining that he had used
National Libertarian Party funds for illegitimate purposes: ‘Where is
the money?’33 Turney (1985–1988) then became National Libertarian
Party chair; and in 2017, addressed ‘The Ludwig von Mises Centre for
Property and Freedom’ on ‘Liberty in the Age of Trump.’ Alongside
Turney was ‘Dr. Sean Gabb’ (who succeeded Tame as Head of the
‘Tame Libertarian Alliance’ and then became Honorary Vice-President
of Mises UK) and ‘Professor John Kersey’ (‘Chairman of Mises UK
and a Vice-President of the Traditional Britain Group,’ ‘Chancellor of
Western Orthodox University’ and promoter of a ‘Traditional Catholic
community’).34
In his ‘Ludwig von Mises Centre’ essay ‘Can aristocracy and its feu-
dal roots offer a prospect and model for secessionist solutions to the
present crisis in Britain?’ Kersey (2014) DD, DLitt, EdD, PhD, FRSA,
FRGS, FSA Scot (who prefers to be known as ‘Edmond John Kersey de
Polanie-Patrikios,’ the adopted son and heir of Prince Kermit William
Poling de Polanie-Patrikios of West Virginia, a descendant of the
Byzantine Emperor Leo V Patrikios and of Rurik, ruler of Novgorod,
and the head of the monarchist movement in exile of Belarus and who
appears to have as many degrees as Leube) advanced a ‘neo-feudalist
view of the future’ and the ‘free’ market:

an appeal to aristocracy cannot rely entirely upon the present aristocratic

class, for this is composed in large part of those who are the beneficiar-
ies of the patronage of the current system, but should instead look to a
renewal of the aristocratic feudal impulse within the modern age and

32Evers Archives. Box 16. SLS.

33Evers Archives. Box 16. Correspondence. The letter was marked ‘never sent.’
34https://misesuk.org/2017/02/12/liberty-in-the-age-of-trump-a-symposium-with-jim-turney/.
182    
R. Leeson

in the light of propertarian theory, knowing that such principles would

likely bring about a society that was traditionally structured, stable and
sustainable, and which enjoyed once more that measure of individual lib-
erty that has often been held to be a key characteristic of Britain in the
past … A future society that seeks to establish traditionalist principles
must be based initially on a strict interpretation of propertarianism, as set
out by Murray Rothbard (‘Ethics of Liberty’) and Hans-Hermann Hoppe
(‘Economics and Ethics of Private Property’).

The Traditional Britain Group (TBG) ‘calls for the removal of the statue
of the Communist terrorist Mandela from our Westminster Parliament
Square.’ TBG’s President is ‘Lord Sudeley’ who ‘discusses the impor-
tance of heredity and its principles for the modern state.’35 Merlin
Charles Sainthill Hanbury-Tracy, 7th Baron Sudeley (born 1939) was
chair of the Conservative Monday Club and Vice-Chancellor of the
International Monarchist League. The Times quoted Sudeley as stating,
in a report of the Monday Club’s Annual General Meeting, that ‘Hitler
did well to get everyone back to work’ (Rifkind 2006). On the Monday
Club website, Count Dmitri Tolstoy-Miloslavsky is photographed with
the 2018 AGM after-dinner speaker36; and in 1980, Hayek was the
Club’s AGM after-dinner speaker (Farrant and McPhail 2017).
Shenoy (2003) ‘borrowed’—and refused to return, despite repeated
requests—Hayek family heirlooms for her non-existent ‘Order of Liberty’
biography that she ‘began so long ago’ (Leeson 2015a, Chapter 2). She also
stated that financial fraud characterised the Koch-funded 1974 revivalist
Austrian conference: ‘The chap who organized the conference, who shall
remain nameless, owed the owner of the hotel some money, so the confer-
ence killed two birds with one stone …I’m pleased to be working at the
Mises Institute right now … assuredly if we do not all hang together, we
will hang separately.’ Like rock climbers, School knowledge-constructors are
connected by rope, attached—not to the waist, but—to the neck. If a link
in the chain is fraudulent, most scholars would cut the rope. The Austrian
School is riddled with fraud—but no rope has been cut.

35https://traditionalbritain.org/.

36http://www.conservativeuk.com/.
 4 The Deluding and the Deluded    
183

Like Hayek, Mises promoted Anschluss. Mises (2006 [1958], 22)

complained that under the Third Reich, it became ‘illegal for people to
utter other views about art and painting than his, the Supreme Führer.’
When disciples with decades of devotion dissented by promoting the
use of the price mechanism (with respect to foreign exchange), Mises
instructed his wife to dismiss Machlup and treat him as an ‘intellectual
apostate’:

‘I don’t want you to talk to him,’ he said. ‘I don’t want you ever to talk to
him again.’ He was so excited that I became frightened, gave Machlup a
sign, and stayed behind with Lu. We went to our room, and I saw that Lu
was really unhappy about Machlup. ‘He was in my seminar in Vienna,’
Lu said, ‘he understands everything. He knows more than most of them
and he knows exactly what he is doing.’ (Mises 1984, 145–146)

Margit Mises (1976, 110) described the ‘first’ of Mises’ two major adult
traumas. After 27 years of ‘devoted service’ as a lobbyist (‘legal adviser
and financial expert’) for the Chamber of Commerce in Vienna, her
husband received a post-Anschluss letter (dated 29 July 1938) which
stated: ‘you are dismissed. The dismissal goes into effect with the day of
receipt of the letter. No appeal is allowed against this dismissal.’
These Chambers of Commerce fulfilled three main functions: they
provided the ‘political establishment’ with some control over any
‘emerging’ commercial power; the ‘commercial establishment’ was rep-
resented within the state apparatus; and ‘established commercial inter-
ests’ were protected from new competition. The Vienna Kammer gained
its ‘greatest’ direct impact on Austrian politics in 1884–1901, when it
‘most visibly’ acted as the ‘cartelizing agent’ of Austrian industry and
opposed free trade. The Kammer acquired so much regulatory power
that it was ‘increasingly’ perceived as an ‘arm’ of the Habsburg state
administration (Hülsmann 2007, 190).
Mises (2012 [1913], Chapter 8), a quasi-public servant, had a very
specific and personal reason for opposing inflation: public servants
with fixed incomes are ‘especially victimized’ by rising prices because
their income tends to lag behind ‘changes’ in the price of goods. Later,
Mises promoted deflation—which benefited public servants with fixed
184    
R. Leeson

incomes. But in 1913, he was concerned about inflation: public servants

‘must pay’ higher prices before their salary rise in compensation. When,
‘finally’ they receive a rise in salary, the increase ‘fails’ to compensate them
for the ‘loss’ they incurred in the intervening period. In Austria, the sala-
ries of senior public servants had not been increased for four decades.
An ‘ankle’ injury obliged Boettke (2010a, 58) to abandon his career
as a basketball professional in favour of a career as a tennis profes-
sional—which he abandoned because of Sennholz: ‘His lectures sang to
me from the first time I heard them, and unlike many of my classmates,
I loved the tune. So much so, in fact, that I decided to become an aca-
demic economist.’ Others loved the smell of burning martyr. Bettina
Greaves (1994) described one aspect of Mises’ martyrdom: ‘He was a
part-time, unsalaried lecturer at the University of Vienna, receiving as
pay only the fees of students.’ In 1913, he both began receiving these
fees (Hülsmann 2007, 209) and complained about the consequences of
inflation on those who received fees from students: the ‘same applies’
for certain incomes that ‘tradition and customs’ have set at a fixed level,
and where income changes are ‘exceedingly’ slow. Mises illustrated this
by reference to physicians’ fees, fees for certain services and ‘examina-
tion fees.’ In contrast, wage earnings had been ‘steadily rising’ for several
decades (Mises 2012 [1913], Chapter 8).
Inflation thus undermines the ‘spontaneous’ order. From his
three-bedroom, rent-controlled Manhattan apartment, Mises (2012
[1940], 152) prepared a post-war reconstruction manual for Otto the
Habsburg Pretender which preserved his own State pension: public
servants who retired before Anschluss (1 March 1938) would receive
their pensions, if and only if they could ‘prove’ that they did ‘noth-
ing’ to promote National Socialism. This did not apply to Mises (1985
[1927], 44, 48), who had promoted ‘Ludendorff and Hitler.’ An addi-
tional category of public servant would receive their pension—those
(like Mises) who had been ‘pensioned off’ or dismissed by the Nazis.
When Cubitt (2006, 10) asked Hayek if he minded having to ‘beg’
from ‘educational’ charities to pay for her services, he ‘just laughed, said
he did not mind in the least, that all his professional decisions had been
based on financial considerations.’ The Austrian epigone generation
appear to be roped (or glued) together by financial considerations.
 4 The Deluding and the Deluded    
185

2 ABCT
A school that is not riddled with fraud is entitled to have their theo-
ries examined respectfully—this does not apply to the Austrian School
of Economics. The upper Habsburg Estates primarily focused on
maintaining the ‘privileges of their aristocratic members … the nobles
regarded the Austrian people as an extension of their own peasantry,
their only function to keep the nobility in luxury’ (Taylor 1964, 14,
188–189). Based on ‘Conversations and interviews with Hayek’
(Salzburg 1971–1977) ‘Tapes in my possession,’ Leube (2003, 13)
reported that Hayek and Mises supported Austro-German Anschluss for
reasons of self-importance (Chapter 1, above). Germany struggled with
a ‘fragile democratic polity’ that faced ‘unrelenting hostility from many
citizens imbued with beliefs incompatible with democracy’ (Turner
1985, 355). In Austria, this hostility was represented by Hayek (1978),
who denigrated post-Habsburg democracy as a ‘republic of peasants and
workers.’37
Before becoming dictator, Pinochet (1991, 141) had several maids.
Hayek’s (1994, 39, 78) maternal grandparents ‘kept at least three serv-
ants’; in London ‘we were of course still running the house with the
help of a regular maid.’ In Vienna in 1917, Mises was ‘shocked’ to see
how the food supply had collapsed during his six-month absence. He
‘predicted’ that very soon there would be ‘no more food.’ His grand-
father’s cook stood in line for three hours to buy meat; and his mother
‘had’ to dismiss her cook because she could ‘barely afford’ to feed her
(Hülsmann 2007, 283).
As a youth, Hayek was known as ‘ugly Fritz.’38 During the Great
War, he shared an ‘Italian servant girl’ who (fearful of being dismissed?)
had ‘been quite willing to sit on his lap’; and with his second wife, he
had a ‘bedienerin ’ or ‘servant’ (Cubitt 2006, 76, 240, 46). This style
of life was challenged by ‘the servant problem.’ As the Economist (17

37FriedrichHayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral
History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
38Conversation with Leube, 12 August 2010.
186    
R. Leeson

December 2011) noted, ‘By the early 20th century, the rich were get-
ting the uncomfortable sense that the foundations of the social order
were shifting.’39
Between 1910 and 1923, the proportion of the Viennese workforce
employed as domestic servants fell from 9.3 to 6.3% (Kirk 1996, 14,
Table 0.2). Mises lived with his mother until he was 53: the ‘only’
explanation that Margit Mises (1984, 25) could find was that his moth-
er’s household was ‘running smoothly’—their two maids had been
with them for two decades and Mises could ‘come and go whenever it
pleased him’ and concentrate—undisturbed—on his work.
Before The Road to Serfdom (1944), Hayek’s major contribution to
world history (1929–1933) had been—from a democratic perspec-
tive—the dysfunctional promotion of the deflationary manipulation of
the price mechanism: falling general prices, rising real wages and thus
increased unemployment. As Hitler was gaining electoral momentum,
Hayek (1975, 5) regarded deflation-induced ‘allocative corrections’ and
the removal of ‘distorted relative prices’—that is, eliminating rigidities
in wages—as ‘desirable’: at the ‘beginning of the Great Depression … I
believed that a process of deflation of some short duration might break
the rigidity of wages which I thought was incompatible with a function-
ing [emphasis added] economy.’
Boettke explained to the WSJ (and presumably also to his GMU
students) the importance of sometimes ‘letting prices fall. There’s lit-
tle to fear [emphasis added] in deflation, he adds, when it accompanies
periods of strong productivity growth’ (Evans 2010). But as Haberler
(1990) stressed: ‘The high unemployment helped Hitler in another very
important way; it enabled him to start building up the para-military
forces of the Nazi party long before he took office, the SA, the dreaded
black shirted SS, which later came under the command of the Gestapo,
the secret police. A large part, probably about 75 percent of the SA,
came from the ranks of the unemployed.’ ‘Roughly 75%’ of Boettke
PhD students have ‘gone on’ to find employment teaching ‘economics
at the college or graduate level’ (Evans 2010).

39http://www.economist.com/node/21541717.
 4 The Deluding and the Deluded    
187

The labour market can be viewed in trade union density terms: from
highly unionised (e.g. manufacturing) to non-unionised (e.g. domes-
tic service). Deflation increases the real wage and thus directly assaults
trade union power: highly unionised workforces that resist nominal
wage reductions would face the prospect of unemployment. In contrast,
domestic servants live largely by barter: Hayek’s (1994, 78) ‘regular’
maids were ‘usually Austrian girls, one of who stayed with us for a long
time and became quite a member of the family.’ Their remuneration
would have consisted of food and lodging plus ‘pocket money’ which
could be adjusted downwards as prices fell, leaving the maids with an
unchanged purchasing power.
Boettke’s GMU students have had aggregation fallacy imposed on
them: productivity growth impacts on the economy at a microeconomic
level. Walmart, for example, can computerise all of its products—while
those who provide care for the aged cannot.40 Walmart can, therefore,
gain a competitive advantage over its immediate competitors by produc-
tivity-led cuts in individual prices—while a falling aggregate price level
will impact adversely on less productive companies and agencies and
sectors of the economy. Public servants also tend to be highly unionised.
Deflation and unemployment reduce tax revenues and increases budget
deficits: the Austrian policy response would be to cut labour costs.
According to Hayek (1948 [1947], 113–114), ‘freedom’ and ‘lib-
erty’ required that ‘the people’ acquiesce: ‘We can either have a free
Parliament or a free people. Personal freedom requires that all author-
ity is restrained by long-run principles which the opinion of the people
approves.’ If Austrian School opinion was resisted by ‘the people,’ this
would, according to Hayek (1960), lead to dictatorship: ‘In a nation
where there is not yet a tradition of compromise … almost any attempt
to put upon the government a great many tasks is bound to lead to dicta-
torial regimes.’ Referring to the policies associated with Gunnar Myrdal
and John Kenneth Galbraith, Hayek (1979, 93) insisted that what
‘makes most Western economies still viable is that the organisation of
interests is yet only partial and incomplete. If it were complete, we would

40Some aspects of aged care can be computerised: child-sized robots can, for example, deliver
reminders about pills and appointments.
188    
R. Leeson

have a deadlock between these organised interests, producing a wholly

rigid economic structure which no agreement between the established
interests and only the force of some dictatorial power could break.’
Hitler legitimized his rule through plebiscites; and twelve years before
the Nazi-Soviet Pact, Mises (1985 [1927]) aspired to be the intellectual
Führer of a Nazi-Classical Liberal Pact. Boettke’s (2010a, 62) mindset is
typical of those who embrace Austrian economics: ‘I had neatly divided
the world into those who were evil, those who were stupid and those
who agreed with me.’ Are there similarities between this totalitarian ten-
dency and those in interwar Germany and Austria who replaced democ-
racy with mob-rule?
Six years after encountering Mises’ hysterical malice at the first MPS
meeting, Friedman (1953, 5) suggested that ‘currently in the Western
world, and especially in the United States, differences about economic
policy among disinterested citizens derived predominantly from dif-
ferent predictions about the economic consequences of taking action -
differences that in principle can be eliminated by the progress of pos-
itive economics - rather than from fundamental differences in basic
values, differences about which men can ultimately only fight.’ Almost
four decades later, Friedman (2017 [1991]) wrote a critique – naming
Mises - entitled ‘Say “No” to Intolerance.’
Mises (1951 [1932], 87, 104, n1) instructed his disciples to form
themselves into a Right-Freudian cult (by using the ‘psycho-­analytical
method’) to examine the ‘sickness of a man whose sexual life is in
the greatest disorder’ which ‘is evident in every line of his writings.’
Miseans despise President Abraham Lincoln because he abolished slav-
ery and defeated the Confederacy (DiLorenzo 2002); and are pleased
to report that post-Apartheid Afrikaners were beginning to embrace a
new faith—Austrian economics—as a vehicle for secession from democ-
racy and non-white rule (Becker 2013; Boettke (2010b) appears to be
contemptuous of democracy: ‘I do not vote and I do not get involved
in politics, but if I did,’ the Austrian-promoter, ‘Ron Paul would be
the only politician in DC that I would find acceptable.’ Ron Paul’s
Austrian-written Newsletters are intensely racist (Leeson 2017); and
DiLorenzo (2004), who like many other Miseans favours secession
to get the ‘genie of centralization’ back in the bottle, told Southern
 4 The Deluding and the Deluded    
189

Partisan: ‘Seriously, the only way it could, would be secession. If a big

chunk of the United States actually seceded from the federal govern-
ment and pained it a bit and deprived it of a large amount of its reve-
nue. Otherwise, how else could it possibly happen?’
Rothbard (1992) sought to establish a violence-based Austrian Police
State with, in effect, only notional controls on coercive power: ‘Get Rid
of the Bums.’ During President Obama’s first term, Boettke (2010b),
in what may be a reference to a plebiscite and secession, insisted:
‘Bottom line: I’d like to vote all the bums out of DC and get the US out
of North America, so the idea of working within the existing political
structure is not something I am persuaded about.’41
According to Boettke (2015): ‘Bottom line, ABCT has more than a
promising future in economic analysis.’ But ABCT is to the business
cycle what Leni Riefenstahl’s ‘Triumph of the Will’ is to the Holocaust.
At GMU it is at least imperfectly known that ABCT is an elaborate
façade behind which Hayek and Mises promoted the deflation that
assisted Hitler’s rise to power (White 2008). Hayek (1984 [1975], 5)
contrasted the ‘disquieting but unalterable truth’ with ‘false monetary
and credit policy.’ The ABCT for which he was awarded the Nobel
Prize, and which originated with Eugen Böhm Ritter von Bawerk
(1851–1914), appears to consist of the following sequence:

i. The opportunities for productivity growth are greater outside the

service sector (‘the cost problem of the service sector’).
ii. If central banks lower interest rates below the unobservable ‘natural’
rate of interest, this will tend to increase (a) capital per worker, (b) the
marginal revenue product of labour, and thus (c) exports, (d) the equi-
librium wage, (e) income and (f) national savings—and thus lower the
‘natural’ rate of interest. All this is regarded by Austrians as ‘malinvest-
ment’ because it disturbs the ‘natural’ social order. Service sector work-
ers will increasing migrate to take advantage of the higher wages in the
nonservice sector: the Second Estate has a ‘servant problem.’

41Boettke (2010b) continued: ‘Instead, I am much more myopically academic and comfortable
in the world of the pointy-headed eggheads. That is the conversation I want to change. Haven’t
succeeded yet, but I keep trying.’
190    
R. Leeson

iii. Galbraith (1981, 49) recalled that at Harvard, Hayek’s fellow Austrian,
Joseph Schumpeter, informed his ‘impecunious graduate students’ that
‘a gentleman… could not live on less than $50,000 per annum’ (equiv-
alent to about $300,000 in 1981 dollars). With respect to the Great
Depression: Schumpeter promoted wage cuts for Harvard’s tea ladies,
but not for the faculty (Sandilands 1990, 24–26).
iv. When a financial sector bubble bursts, Austrians insist on defla-
tion—which will raise real wages, causing ‘extensive unemploy-
ment,’ ‘constant political disruptions,’ and migration back to the
service sector: ‘servant problem’ solved.

References

Archival Insights into the Evolution of Economics

(and Related Projects)

Farrant, A., & McPhail, E. (2017). Hayek, Thatcher, and the Muddle of the
Middle. In R. Leeson (Ed.), Hayek: A Collaborative Biography Part IX the
Divine Right of the Market. Basingstoke, UK: Palgrave Macmillan.
Friedman, M. (1953). Essays in Positive Economics. Chicago: University of
Chicago Press.
Friedman, M. F. (2017 [1991]). Say ‘No’ to Intolerance. In R. Leeson &
C. Palm (Eds.), Milton Friedman on Freedom. Stanford, CA: Hoover
Institution Press.
Haiduk, K. (2015). Hayek and Coase Travel East: Privatization and the
Experience of Post-Socialist Economic Transformation. In R. Leeson (Ed.),
Hayek: A Collaborative Biography Part VI Good Dictators, Sovereign Producers
and Hayek’s ‘Ruthless Consistency’. Basingstoke, UK: Palgrave Macmillan.
Leeson, R. (1994, February 3). Russia: Marx Turns to Marcos. Australian
Financial Review, 15.
Leeson, R. (2003). Ideology and the International Economy: The Decline and Fall
of Bretton Woods. Basingstoke, UK: Palgrave Macmillan.
Leeson, R. (Ed.). (2015a). Hayek: A Collaborative Biography Part II Austria,
America and the Rise of Hitler, 1899–1933. Basingstoke, UK: Palgrave
Macmillan.
 4 The Deluding and the Deluded    
191

Leeson, R. (Ed.). (2015b). Hayek: A Collaborative Biography Part IV England,

the Ordinal Revolution and the Road to Serfdom, 1931–1950. Basingstoke,
UK: Palgrave Macmillan.
Leeson, R. (Ed.). (2017). Hayek: A Collaborative Biography Part IX The Divine
Right of the ‘Free’ Market. Basingstoke, UK: Palgrave Macmillan.
Leeson, R. (2018). Hayek a Collaborative Biography Part XI: Orwellian
Rectifiers, Mises’ ‘Evil Seed’ of Christianity and the ‘Free’ Market Welfare State.
Basingstoke, UK: Palgrave Macmillan.

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 5
Summoned to Service
by TOFF Funds and Aristocratic Bells

‘Free’ market promoters openly express contempt for those they have
colonised—when they think that only the ideologically correct are lis-
tening. This chapter suggests that we need a systematic study of the
social origins and psychological predispositions of Austrian School
recruits.
Joachim Fest (1970, 8) described Hitler’s ‘Vienna days’: ‘This patho-
logical, evil smelling world of envy, spite and egotism, where everyone
was on edge for a chance to scramble upwards and only ruthlessness
guaranteed escape.’ This permeated his philosophy: ‘whatever goal man
has reached is due to his originality plus his brutality’ (Hitler, cited by
Bullock 1962, 36). According to Seymour Martin Lipsett (1960, 175,
149), ‘Extremist movements have much in common. They appeal to
the disgruntled and the psychologically homeless, the economically
insecure, the uneducated, unsophisticated, and authoritarian persons at
every level of society.’ The typical Nazi voter in 1932 was a ‘middle-class
self-employed Protestant who lived either on a farm or in a small com-
munity, and who had previously voted for a centrist regionalist politi-
cal party strongly oppose power and influence of big business and big
labour.’
© The Author(s) 2019 199
R. Leeson, Hayek: A Collaborative Biography,
Archival Insights into the Evolution of Economics,
https://doi.org/10.1007/978-3-319-78069-6_5
200    
R. Leeson

Milovan Đilas (1957) The New Class: An Analysis of the Communist

System provides a penetrating insight into the ‘red bourgeoisie’ or
nomenklatura—beneficiaries of an old-fashioned patron–client rela-
tionship. Behind the Austrian School Welfare State lies some primi-
tive class-based prejudices about ‘welfare cheats’ and non-whites of the
type that Hitler would have been exposed to in Vienna and which ‘the
man on the Clapham omnibus’ might overhear on his way to work.
There have been five authorised biographers—Shenoy, Cubitt, Bartley,
Leube and Caldwell; and three general editors of The Collected Writings
of F.A. Hayek: Bartley, Kresge and Caldwell; plus two pretenders, Leube
and Shenoy.1 In person and on video, the middle-class (but upper
caste) Shenoy (the daughter of an academic) appears to be imitating
Joan Robinson’s upper-class mannerisms; and Bartley III, the grand-
son of a self-made businessman and the son of a ne’er-do-well, sub-
urban Pennsylvanian, affected the mannerisms (and wore the clothes)
of an English country gentleman. He also had to resign his full-time
Professorship at the University of Pittsburgh after it was discovered
that he was simultaneously employed as a full-time CSU Professor
(Theroux 2015).
Bartley’s partner, Kresge, ‘shouted so loudly’ at Cubitt (2006, 343)
that his

voice occasionally slipped into falsetto … The people opposing him had
no idea what a dangerous thing they were doing, how his name was so
well-known that it appeared even on a famous building, and that he had
the means to destroy ‘them all.’

Kresge’s ‘friend’ and successor, Caldwell,2 asked to spend part of

two summers with the AIEE editor while he sought employment in
California.3 Hayek cultivated a ‘frightfully’ upper-class English accent

1Shenoy and Leube believed that they had secured these rights through the ‘Obergurgl

Document’ (Leeson 2013, Chapter 9).

2‘Stephen Kresge has been an advisor, mentor, sounding board, and friend throughout the very

long transition from 2nd to 3rd general editor, and beyond’ (Caldwell 2007, x–xi).
3He seemed terrified of one of his Duke University colleagues and appeared desperate to leave.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
201

(Leeson 2017, Chapter 2); and Caldwell requested training in ‘received’

pronunciation.4
After decades of devotion, Caldwell has reportedly abandoned his
attempt to learn Hayek’s first language and has, instead, employed a
German speaker (Hansjörg Klausinger) to co-write his Philosopher of
Liberty ‘definitive’ biography. Boettke (2010b) ‘spent the first 10-15
years of my career as a Russia watcher – studied the language (though
I never mastered it).’ And at a 1975 Austrian conference dinner, when
Shenoy asked Hayek if she could be his official biographer, he agreed
‘on one condition, and one condition only: namely, you must first
become fluent in German.’ For three decades, her non-existent ‘Order
of Liberty’ biography was listed as ‘forthcoming’ on her CV—but while
she could learn ‘Austrian’ she was unable to learn ‘to count from eins to
zehn ’ (Blundell 2014, 100).
Hayek (1994, 92) observed that people got ‘enchanted by merely
listening’ to Keynes’ ‘words’: his Old Etonian ‘voice was so bewitch-
ing.’ The middle-class Leube, ‘D.L.E.,’ claims to be the ‘holder of an
A.J.D. degree in law and economics from the University of Salzburg,
he is internationally recognized as one of the closest disciples of the late
F. A. von Hayek.’5 The son of a cement merchant, Leube claims that
‘The Sound of Music’ was filmed on his property; and Sennholz’s lec-
tures ‘sang to’ Boettke (2010a, 58): from ‘the first time I heard them
and unlike many of my classmates, I loved the tune.’
At age 23, the Englishman, Houston Stewart Chamberlain (1855–
1927), first embraced the religion of Wagnerism (associated with
Richard Wagner’s music)—and became an ardent Germanophile. In
1889, he moved to Austria where—as Hitler did two decades later—
he absorbed the racist and anti-Semitic ideas of Teutonic supremacy. In
1901, he explained to Kaiser Wilhelm II about the ‘holy place’ in which
Germans had been born: while he, in contrast, had to ‘follow a long and
difficult path before I espied the holy shrine from afar.’ ‘Things German’

4For example: he would repeat (as if he were a foreign language student): ‘Hampstead Garden
Suburb. Hampstead Garden Suburb. Hampstead Garden Suburb.’
5http://www.hoover.org/sites/default/files/uploads/documents/Leube.Kurt.pdf.
202    
R. Leeson

were the ‘central pivot on which the future of man’s spirits depend’;
‘Political freedom for the masses’ is a ‘spent force’; and the ‘future of the
German cause is bound up with the Hohenzollern dynasty.’ The month
before the Ludendorff and Hitler Beer Hall Putsch, Chamberlain (7
October 1923) told Hitler that ‘With one blow you have transformed
the state of my soul. That Germany, in her hour of her greatest need,
brings forth a Hitler – that is proof of her vitality … that the magnifi-
cent Ludendorff openly supports you and your movement: What won-
derful combination!’ (cited by Röhl 1970, 43–45, 53). Four years later,
Mises (1985 [1927], 44, 51) praised ‘Ludendorff and Hitler’ and other
‘Fascists’ for having ‘saved European civilisation.’
In 1933, Dr. Joseph Goebbels was appointed Minister of Propaganda
and Popular Enlightenment. With a congenital deformity (a shortened
right foot), Goebbels told President von Hindenburg that he should
‘think of the Press as a great keyboard on which the Government can play’
(Time 1967 [27 March 1933], 97). Sennholz (1922–2007) was a self-de-
scribed ‘Misesian for life’ Luftwaffe bomber pilot who had a bomber plane
and a piano engraved on his headstone6; his formative years had been
spent as a sovereign consumer of Goebbels’ propaganda.
The Hayeks were elevated into the Second Estate in 1789 by Kaiser
Francis II; and the Mises were elevated in 1881 by Kaiser Franz Josef I.
Koether (2000, 5) reported that in ‘many ways,’ Mises was ‘still attached
to the old world: he had a color picture of the Emperor Franz Josef II
[sic] hanging on the wall’ in his rent-controlled Manhattan apartment.
In ascribed status terms, Leube claims to be superior to both: he is
descended from a fourteenth-century Habsburg Count. Boettke comes
from New Jersey European-styled royalty: his grandfather was Frederick
G. Boettke Sr., his father Frederick G. Boettke Jr. and his elder brother
(presumably) Frederick G. Boettke III.
Boettke also claims to come from sporting royalty.7 With 138,000
athletic scholarships available for Division I and Division II sports,

6https://www.findagrave.com/memorial/55113757.

7Boettke Jr. was an ‘outstanding’ tennis player, a ‘star’ basketball player in high school, and
played for the US Army AirCorp team. He ‘started at guard’ for the varsity basketball team and
was ‘number 1’ singles on the varsity tennis team at his high school from his freshman year on,
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
203

American colleges and universities employ thousands of full-time

scouts to watch hundreds of thousands of high school hopefuls
(O’Shaunessey 2010). Very few become professionals. Boettke believes
that he was such a promising football player that his coach monitored
his post-training activities. His professional basketball coaching career
was cut short by an ‘ankle’ injury—which forced him to become a
tennis professional.8 Boettke claims that he was a professional-bound
sports scholar despite being a market failure (that is, unable to obtain a
sports scholarship).
Bartley was an outstanding student: in 1952, he was the
Valedictorian at Wilkinsburg High School, Pennsylvania, and the last
recipient of the Parshad Scholarship Award (an award sponsored by
the United Christian Youth Movement and administered through the
National Council of Churches of Christ). He continued to shine aca-
demically: A.B. (magna cum lauda ) in Philosophy (1956, Harvard
College) A.M. in Philosophy (1958, Harvard University) and PhD
(1961, LSE). He appeared to suffer a mental breakdown associated
with losing religious faith—and then became a professional philosopher
instead a theologian (Leeson 2013, Chapter 9).
Boettke (2010a, 59–60) attended Thiel College, an ‘independent
institution related to the Evangelical Lutheran Church in America,
and established in Western Pennsylvania in 1866.’9 His ‘depression’ led
him to embrace religious faith: ‘Reflections on Becoming an Austrian
Economist and Libertarian, and Staying One.’ The only books that he
read were ‘basketball stories.’

and held a ‘world’ record in fishing. Boettke III played basketball in high school and one year at
Bucknell University before a knee injury ended his career. His sister was an ‘outstanding gymn-
ist [sic ]’ at Trenton State College and a ‘very’ successful gymnastics coach in New Jersey. His
nephew was a ‘standout’ high school soccer and basketball player and played one year of col-
lege basketball (at Ramapo College, NJ) before switching to volleyball where he ‘actually led the
nation’ in blocks in his junior year and was nominated for ‘All-American honors’ in his senior
year. http://econfaculty.gmu.edu/pboettke/sports.html. Accessed 1 October 2016.
8Boettke worked as a tennis instructor at Allaire Racquet Club, New Jersey, until he entered

graduate school. Despite a career-ending ankle injury, Boettke continues to play in tennis ‘tour-
naments.’ http://econfaculty.gmu.edu/pboettke/sports.html. Accessed 1 October 2016.
9https://www.thiel.edu/.
204    
R. Leeson

In the USA, those unable to gain admission to university have

two major alternatives: minimal cost, universal entry, community
college or what are (perhaps unfairly) sometimes described as (fee-
based) ‘country club colleges’ (which are socially but not necessarily
educationally exclusive). Some are—or, at least, were—devoted to
preserving the ‘white heritage’ and preventing the temptations asso-
ciated with interracial marriage. After the failure of his Nazi-Classical
Liberal Pact, Mises formed a post-war alliance with theocrats and the
John Birch Society (Leeson 2018a). Mises (2012 [1920], Chapter 16;
1951 [1932], 85, 87, 90, 100–101) appeared to regard himself as a
‘genius’; as did Donald Trump who declared ‘Actually, throughout
my life, my two greatest assets have been mental stability and being,
like, really smart … I went from VERY successful businessman, to
top T.V. Star to President of the United States (on my first try). I
think that would qualify as not smart, but genius….and a very stable
genius at that!’10
According to the founder of ‘Liberty University,’ Jerry Falwell Sr.,
if Chief Justice Warren and his associates had ‘known God’s word
and had desired to do the Lord’s will,’ the 1954 Brown versus Board of
Education decision would ‘never had been made. The facilities should
be separate. When God has drawn a line of distinction, we should not
attempt to cross that line’ (cited by Cross 2014, 160). After the 2016
Republican Party Presidential candidate was caught on tape crossing
another line (boasting about sexual assault), Jerry Falwell Jr. insisted
that this was the man who evangelicals must help become leader of the
‘free’ world.11
According to the succinct Nobel press release, Ronald Coase was
awarded the 1991 Nobel Prize for Economic Sciences for two essays.
In ‘The Nature of the Firm,’ Coase (1937) used transaction costs to
explain why a ‘large proportion of total use of resources was deliber-
ately withheld from the price mechanism in order to be coordinated

10https://edition.cnn.com/2018/01/06/politics/donald-trump-white-house-fitness-very-stable-

genius/index.html.
11http://edition.cnn.com/videos/cnnmoney/2016/10/17/clinton-trump-election-campaign-mon-

ey-cnnmoney.cnnmoney/video/playlists/stories-worth-watching/.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
205

administratively within firms.’ And in ‘The Problem of Social Cost,’

Coase (1960) demonstrated that a ‘large amount of legislation’ to deal
with externalities ‘would serve no material purpose if transaction costs
are zero … All allocations could be effectuated through simple, uncom-
plicated agreements without administrative features, i.e. through fric-
tionless markets.’12 The ‘free’ market is funded by those who seek to use
the environment as an open sewer: What is ‘The Nature of the “Free”
Market Firm’ and why do they produce polluted ‘knowledge’ such as
the fraud that externalities were invented by a gunrunner for Stalin
(Leeson 2015)?
Mises (2009 [1978 (1940)], 7) contemptuously asserted that the uni-
versity ‘enterprise’ of economic political science held a ‘strong attraction
to halfwits.’ It is, however, usual to assume that a ‘free’ market Professor
of Economics has genuinely earned the educational qualifications that
underpins their title. It is also unusual (and possibly praiseworthy) for
a university Professor of Economics to have failed to gain university
admission or to have failed their undergraduate degree in economics.
But when pattern recognition (and thus pattern prediction) reveals a
school-based portal, does this suggest that the Austrian business model
aims to reduce the transaction costs associated with acquiring educa-
tional qualifications?
Apparently unable to gain admission to university, Boettke’s (2010a,
59–60) grades at Thiel College were ‘not exemplary’ and only through
‘free’ market ‘intervention’ was he allowed to transfer to Grove City
College to restart his college career. Ebeling was also apparently una-
ble to gain admission to university and enrolled in an almost fully tax-
funded college (possibly Sacramento State College, SSC). In 1967,
Ebeling (2016) was introduced to Ayn Rand; and in his ‘first econom-
ics class, the assigned textbook was the seventh edition of Keynesian
economist, Paul Samuelson’s [1967] Economics’ (the eighth edition
was published in 1970). In ‘1972, while still an undergraduate student,’
SSC became a university (CSU at Sacramento)13; Ebeling (2010, xvi)

12http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1991/press.html.

13http://sacramento.stateuniversity.com/.
206    
R. Leeson

was still a CSU ‘undergraduate’ in 1973. Undergraduate degrees are

usually completed in three years: Ebeling (born 1950) took a ‘B. A. in
Economics (1976).’14
As an ‘Adjunct Instructor in Economics (1979-1981) Rutgers
University,’ Ebeling claims to have received an ‘M. A. in Economics
(1980).’15 At Rutgers, there was an ‘Austrian program directed by Rich
Fink’ where, according to I Chose Liberty, Dan Klein (2010, 172) had
‘courses with Joseph Salerno and Richard Ebeling, and seminar dis-
cussions also with Rich Fink and Don Lavoie. I was part of the group
that relocated to George Mason.’ Block (born 1941) was an ‘Instructor’
(1968–1971) and Assistant Professor at Rutgers (1975–1979) while
simultaneously receiving a Charles Koch Fellowship (1974–1976).16
Ebeling became ‘Lecturer in Economics (1981–1983) National
University of Ireland at Cork, Ireland.’17 Ebeling (9 June 1981)
told Haberler that he had been recruited by the head of the depart-
ment (who had been one of Wilhelm Röpke’s students in Geneva)
to undertake a PhD on Mises—which he had already begun to
write.18 In 1983, he apparently began to make a living as an NYU
‘Post Doctoral Fellow’ (Leeson 2018b). In 2000, while Ebeling
was ‘Ludwig von Mises Professor of Economics’ at George Roche
III’s Hillsdale College, Michigan (1988–2003), in 2000, Britain’s
Middlesex Polytechnic cum University gave him (at age 50) a ‘Ph.D.
in Economics (2000).’19 Yet Ebeling appears to have no refereed pub-
lications (in non-Austrian-dominated journals)—the conventional
benchmark for a doctorate.

14http://www.citadel.edu/root/images/Business_Administration/2016_Faculty_CVs/ebeling_

cv_2016.doc.pdf.
15http://www.citadel.edu/root/images/Business_Administration/2016_Faculty_CVs/ebeling_

cv_2016.doc.pdf.
16http://www.walterblock.com/wp-content/uploads/cv/block_cv.pdf.

17http://www.citadel.edu/root/images/Business_Administration/2016_Faculty_CVs/ebeling_

cv_2016.doc.pdf.
18Haberler Archives. Box 10 Ebeling file.

19http://www.citadel.edu/root/images/Business_Administration/2016_Faculty_CVs/ebeling_

cv_2016.doc.pdf.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
207

Shenoy (2003) read The Constitution of Liberty (1960) ‘when it first

came out … Hayek and Mises were household names in the family.’
In 1966, after five years as an ‘Economics (major) … Special Subject:
Monetary Economics,’ she obtained a lower-second-class undergradu-
ate degree in economic history, which is below the conventional cut-off
point for entry to graduate school.20 Shenoy then unsuccessfully under-
took ‘Graduate courses in Economics, 1967-1968’ at the University of
Virginia21; who have confirmed that she attended the University from
Fall 1967 to Spring 1968.22 But as early as 1977, she was referred to as
‘Dr Shenoy’ in FEE23; and in an IEA press release on privatisation, their
employee (1970–1977), ‘Dr Sudha Shenoy,’ was listed as the authority
to be contacted.24
According to Shenoy (1969, 1987), ‘the market process’ is ‘adapted
to the realization of hitherto latent and unknown possibilities’; and
Mises ‘repeatedly emphasised’ that the ‘rationale of the market is the
continuous displacement’ of incumbents by ‘other entrepreneurs, bet-
ter-adapted to the new circumstances constantly appearing in the real-
ity of the market.’ Shenoy, who held a visiting position at the ‘Market
Process Centre’ (later, the Mercatus Centre), GMU (1983), enjoyed a
career at the taxpayer’s expense, courtesy—not of the academic market
process—but of special pleading by Hayek and the National Tertiary
Education Union (of which she was a member). In 2001, near the end
of her academic career, Shenoy (1943–2008) was given a Caldwell-
examined PhD.
Hayek (19 July 1971) informed Dennis Ainsworth that the
University of Salzburg was completely unsuitable for advanced work in
economics. Economics was still taught only as a subsidiary subject to

20‘In the second year of college, I took a course in economics … and I quite liked it.’ Shenoy
(2003) took a B.A. from Gujarat University in 1963 (‘Economics major),’ where her ‘father was
teaching,’ and which had copies of some ‘Mises books. I read them and was hooked … I eventu-
ally attended the LSE’ (1963–1966).
21Shenoy’s CV. University of Newcastle, Australia.

22Email to Leeson from the Office of University Communications (24 October 2016).

23Hayek Archives. Box 20.1.

24MPS Archives. Box 2.7.

208    
R. Leeson

law and therefore was on a completely ‘elementary’ level.25 Referring to

economics, Hayek (in a January 1977 letter to the editor of the news-
paper Die Presse ) bemoaned that the ‘University of Salzburg is not
authorized to bestow doctorates. Thus, there are no serious students
of economics here. I made a mistake in moving to Salzburg’ (cited by
Ebenstein 2003, 254). In his 30s, ‘Dr.’ Leube (born 1943) attempted
without success to acquire an undergraduate degree in economics from
the University of Salzburg.
Under a section entitled ‘The Moral Hazard of Being Honest,’ Leube
(2003 [2001], 15–16, 10) reflected about ‘considerations of reputation
and especially peer pressure’: there were times when it ‘becomes senseless
and even stupid to remain honest … situations are often faked to capi-
talise on any legal or semi-legal opportunity to exploit the collective sys-
tem.’ Hayek (1994, 95) insisted that ‘you are only prohibited from calling
yourself von in Austria … I was a law abiding citizen and completely
stopped using the title von.’ In Austria, his University of Salzburg note-
paper was headed ‘PROF. F. A. von HAYEK.’26 As early as 1977, Leube
added ‘Dr’ to his Vereinigung der Österreichischen Industrie (Federation of
Austrian Industries) notepaper27; and the President of the Vereinigung der
Österreichischen Industrie (4 December 1977) wrote to Haberler about
‘Dr.’ Leube.28 On notepaper headed ‘Dr. Kurt R. LEUBE’ [emphasis
in original], Leube (17 January 1979) wrote to Machlup; he also signed
himself ‘Dr’ in a letter to Machlup (13 June 1980) on Philosophia Verlag
International Karl Menger Library notepaper.29
W. Glenn Campbell (1924–2001) had been research director for
the US Chamber of Commerce and the American Enterprise Institute
for Public Policy Research prior to becoming Director of the Hoover
Institution and chairman of Reagan’s Intelligence Oversight Board
and the President’s Foreign Intelligence Advisory Board. Twenty-nine
other Hoover Fellows served in the Reagan administration. Reagan told

25Hayek Archives. Box 9.9.

26Hayek Archives. Box 12.19.
27Machlup Archives. Box 44.2.

28Haberler Archives. Box 22.

29Machlup Archives. Box 50.9.

 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
209

Hoover Institution Fellows that they had ‘built the knowledge base that
made the changes now taking place in Washington possible’—which led
to a backlash on the Stanford campus (Turner 1983; Anderson 1985;
Martin 2001; Trei 2001; Oliver 2001). By suggesting that he script a
Hoover press conference for candidate Reagan, Hayek (to Campbell 7
June 1980) appeared to have been unconcerned by any perceived threat
to the Institution’s tax-exempt status.30
The ‘Expanding Austrian Universe’ (Skousen 1991, 12, 287, 276) fol-
lowed Hayek into the Hoover Institution (see, e.g., Boettke 1997, 11,
n). In his 1982 application for a Hoover Fellowship, Leube claimed to
have a ‘Dr. jure. econ. 1971.’31 Dennis Bark (20 January 1983), Deputy
Director of the Hoover Institution, asked Haberler to evaluate ‘Dr’
Leube’s alleged reason for relocating to the USA: to complete a book on
‘The Struggle against the Roots of State Intervention Böhm-Bawerk, His
Life and Intellectual Influence.’32 Leube had asserted that he just discov-
ered the long-lost (and still never seen) Böhm-Bawerk diaries.
‘Dr Kurt Leube’ contributed to Ebeling and Lissa Roche’s (1999, ix,
51–67) The Age of Economists: From Adam Smith to Milton Friedman.
‘Dr Kurt R. Leube … an associate of Friedrich Hayek at the Institut
fur Nationalokonomie at the University of Salzburg’ published ‘Hayek’s
Perception of the “Rule of Law’” in The Intercollegiate Review (1976–
1977). ‘Dr Kurt Leube’ attended MPS meetings in 1980 and 1984.33
Thirteen distinguished academics—all with University affiliations—
attended the August/September 1982 Edelweiss conference on the Fatal
Conceit. Three, Stigler, Buchanan and Coase later won Nobel prizes; and
also present were Peter Bauer and Karl Brunner—plus ‘Dr Kurt Leube’
of ‘Vienna’ (the only attendee without an academic affiliation).34 In
1984/1985 ‘Dr. Kurt R. Leube Hoover Institution of Stanford University ’
was Visiting Scholar at the von Mises Institute35; ‘Dr Kurt Leube,

30Hayek Archives. Box 25.22.

31Haberler Archives. Box 32.
32Haberler Archives. Box 22.

33Hayek Archives. Box 22.8.

34Hayek Archives. Box 43.6.

35http://mises.org/journals/fm/fm185.pdf.
210    
R. Leeson

Stanford University, USA’ was a speaker at a Liberales Institut event (14

June 1991); and ‘Dr Kurt Leube’ is listed as editor of the International
Carl Menger Library.
In the first draft of the letter to the potential donor, Hayek
stated that Leube seemed to him to be almost suitable for a Mises
‘POSTDOCTORAL’ Research Grant [Hayek’s capitals]. The second
draft stated that the 38-year old Leube seems to be an almost perfect
case for a Mises ‘postgraduate’ Research Grant. Hayek added that at
the University of Salzburg economics is taught only as a subsidiary of
law, and although Leube completed the Law course, he ‘never’ took
a degree.36 But as funding sources failed to materialise, Hayek (15
February 1983) wrote to Leonard Liggio at the IHS requesting money
for his former Salzburg Assistant, ‘Dr’ Leube.37
In 1968, Governor Reagan appointed Campbell to a 16-year term on
the University of California’s Board of Regents (he chaired the board
in 1982–1983). In 1969, Campbell backed Reagan’s crackdown on
student protests (Oliver 2001). Hayek appeared to exert an influence
over Glenn Dumke, Chancellor (1962–1982) of the CSU system and
another of Reagan’s allies in the conflict against those who opposed con-
scription and the Vietnam War.38 In 1976, Professor ‘von’ Hayek (in a
letter following up a telephone call) was invited to appear on ‘one or
several of our [CSU] nineteen campuses.’39 At CSUH/EB, Leube—
courtesy of Hayek’s fraudulent recommendation—became a Lecturer
(1985–1986) and Associate Professor (1986–1990) before promotion to
tenure and a full Professorship (13 July 1990).40
In the 1998 CSUH/EB ‘Annual Supplement to Biography’ Leube’s
qualification is listed as ‘University of Vienna, Innsbruck and Salzburg
Law and Economics 1965-71 A.J.D. University of Salzburg (A) 1971.’
The 2001–2002 CSUH/EB Directory of Academic Personnel lists

36Hayek Archives. Box 15.5.

37Hayek Archives. Box 27.1.
38https://www.gilderlehrman.org/history-by-era/sixties/resources/ronald-reagan-unrest-college-

campuses-1967.
39Hayek Archives. Box 13.31.

40Leube’s CV. California State University East Bay/Hayward.

 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
211

‘LEUBE, KURT R. (1985), Professor of Economics: D.L.E., 1971,

University of Salzburg (Austria).’ According to a December 2004
CSUH/EB document ‘Proposal for Systems Review California State
University, Hayward,’ the Academic Director for the CSUH/EB Vienna
MBA was ‘Dr. Kurt Leube.’41 The CSUH newspaper Pioneer obtained a

redacted photocopy of the handwritten CSUH faculty application on file

for Leube, which lists his highest degree as a ‘DLE’ from the University of
Salzburg, Austria.

As Director of the joint CSUH/EB/IMADEC University Executive

MBA Programme in Vienna, contracts were allegedly printed with
‘PhD’ following Leube’s name. Leube informed Pioneer that he was
‘not sure what the credentials meant in the early 1970s when he earned
them.’ Leube added ‘I have never claimed a Ph.D. or similar in any way,
nor was there any deliberate act of deception or the slightest attempt to
mislead anyone …. I did, however, never pay attention to the fact that
people actually addressed me with this title once in a while … the rea-
sons for this vendetta … are not known to me’ (Coleman 2002). But in
April 1986, Leube’s CSUH/EB colleague, Bartley, had relayed the ‘dev-
astating’ news to Hayek and Cubitt (2006, 196) that ‘Leube did not
have the doctorate he claimed to own!’ Presumably referring to Leube’s
‘legal’ (green card) immigration status, Bartley added that ‘false preten-
sions were a criminal offense in the United States and that Leube would
be thrown out of the country if he were found out.’ A third of century
later, Leube is still ‘Professor Emeritus’ at CSUH/EB.42
On a promotional Constitution of Liberty tour of South Africa—
which appears to have been a prelude to a planned retirement in that
country (Leeson 2015, Chapter 3)—Hayek was reported as stating that
he was ‘under no illusion about the threat which a Black dominated
electorate could constitute in the future.’ Moreover, Hayek was ‘sym-
pathetic to those who seek (like our Progressives) to protect the White

41http://www20.csueastbay.edu/about/accreditation/files/pdf/sys_review.pdf.

42https://lwa1.csueastbay.edu/staffdir/index.cfm?Fuseaction=DisplayResults&name=Kurt+Leu-

be&MAXRECS=25.
212    
R. Leeson

minority through constitutional entrenchments (following an extension

of the franchise to non-Whites)’ (Hutt 1961).
Interference with the ‘policy of other countries’ was not ‘in the least
justified’ when Hayek disapproved of the specifics of the interference—
but did Hayek object to the American intervention that overthrew
Chile’s democratically elected government (1970–1973)? William Hutt
(1961) reported that he could

refer with some confidence to the bearing of Hayek’s philosophy on

the problems of this country because, in lectures at Cape Town and
Stellenbosch, he himself showed its relevance with the greatest clarity. He
does not believe that a country which is as racially complex as ours can be
ruled democratically unless the sphere of the state can somehow be effec-
tively limited.

In The Constitution of Liberty, Hayek (2011 [1960], 186) stated that ‘To
do the bidding of others is for the employed the condition of achiev-
ing his purpose.’ Hutt (1961)—noting that ‘our Africans, Asiatics and
Coloureds’ were ‘economically subservient’—also stated that

Hayek’s recommendations rely on free markets, which is colour blind (as

well as race blind, sex blind, and class blind). When one buys a commod-
ity, one does not ask, ‘What is the colour of the maker?’ One asks, ‘Is it
good value for money?’

But Hayek (5 March 1975) did not want non-whites to touch his
money—telling Neil McLeod at the Liberty Fund that he wished to
find an alternative to his ‘gone negro’ Chicago bank.43
Hayek (1978) defended the ‘civilisation’ of apartheid from the
American ‘fashion’ of ‘human rights’:

You see, my problem with all this is the whole role of what I commonly
call the intellectuals, which I have long ago defined as the secondhand
dealers in ideas. For some reason or other, they are probably more subject

43Hayek Archives Box 34.17.

 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
213

to waves of fashion in ideas and more influential in the American sense

than they are elsewhere. Certain main concerns can spread here with
an incredible speed. Take the conception of human rights. I’m not sure
whether it’s an invention of the present administration or whether it’s of
an older date, but I suppose if you told an eighteen year old that human
rights is a new discovery he wouldn’t believe it. He would have thought
the United States for 200 years has been committed to human rights,
which of course would be absurd. The United States discovered human
rights two years ago or five years ago. Suddenly it’s the main object and
leads to a degree of interference with the policy of other countries which,
even if I sympathized with the general aim, I don’t think it’s in the least
justified. People in South Africa have to deal with their own problems,
and the idea that you can use external pressure to change people, who
after all have built up a civilization of a kind, seems to me morally a very
doubtful belief. But it’s a dominating belief in the United States now.44

And in 2015, ‘Prof. Kurt Leube, an acclaimed Professor from Stanford

University in the USA,’ delivered the 2nd Herman Mashaba Lecture
on Entrepreneurship at the South African Central University of
Technology, where he ‘shared some ideas about the Austrian School of
Economics and its differences with other schools of economics which
uses logic of a prior thinking, where a person can think on their own
without relying on the outside world to find out about economic laws
of universal application.’45 In 2016, with the support of the revolution-
ary socialist Economic Freedom Fighters, Herman Mashaba became
Mayor of Johannesburg.
According to Ludwig von Mises Institute South Africa, Mashaba (the
Chairman of the Free Market Foundation) declared in 2012 that

The truth of the matter is that the global financial crisis has socialist
roots. More socialist policies will result in less growth, greater inequality,
increased poverty, even worse unemployment, and more scary, human
rights violations … A lack of capitalism and the dominance of socialist

44FriedrichHayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral
History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
45http://www.cut.ac.za/academic/2nd-annual-herman-mashaba-lecture-held/.
214    
R. Leeson

ideas in government and central banking have caused the global crisis.
The solution is more capitalism and less socialism … the kind of capi-
talism that is in operation in Hong Kong, Singapore, New Zealand and
Switzerland, which are the best examples of capitalism in operation.46

When asked by Daily Bell ‘Is South Africa quasi-communist at this

point?’ Chris Becker (2013), the founder of Ludwig von Mises Institute
South Africa, replied ‘Yes, you can say so, but then again, so are
most countries these days.’ Those who had benefited from apartheid
were discovering the ‘more effective form’ vehicle of Austrian School
economics:

We’re seeing a growing interest in free-market economics and think-

ers, and it is coming primarily from the Afrikaans community seeking
answers to secession and being self-sufficient. Inevitably, if you go down
this road you’re going to end up with the likes of Mises and Hoppe and
us free market commentators. And even if those of this bent are not par-
ticularly the academic types who read free-market literature, their actions
result in free-market outcomes. We’re seeing quite a bit of the latter in
South Africa.

According to the ‘free’ market environmentalist, Terry Anderson (1997),

‘In resource economics, we can now see that a negative externality is
really only an uncaptured benefit--in other words, an entrepreneur can
capture the benefits from what would otherwise have been a tragedy of
the commons.’ As a ‘scientifically-proven problem,’ global warming is
‘basically a myth. It is not a threat to the human species. I think that
the theories alone aren’t very sound, and the data to back them up is
worse.’ Rockwell (1993)—a career-long fundraiser and political oper-
ative with a Tufts University undergraduate degree in English—also
issued a definitive scientific judgement:

The earth isn’t getting warmer, and ozone, which is scattered throughout
the upper atmosphere, isn’t even a ‘layer,’ let alone in danger.

46http://mises.co.za/blog/2012/09/03/herman-mashaba-defends-the-free-society/.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
215

Rockwell (1993) Austrian-knew that during the Clinton Administration

(1993–2001), ‘We’ll see prohibitions on logging, federal permits for
new factories, and bans on production to fight non-existent global
warming and ozone depletion.’ But according to Berkeley Earth—
established by scientists who ‘found merit in some of the concerns’ of
climate change ‘skeptics’—‘the rise in average world land temperature
globe is approximately 1.5 degrees C in the past 250 years, and about
0.9 degrees in the past 50 years.’47
Emma Lazarus’ 1883 New Colossus—

“Keep, ancient lands, your storied pomp!” cries she

With silent lips. “Give me your tired, your poor,
Your huddled masses yearning to breathe free,”

—stands in quintessential opposition to Mises’ (1881–1973) contempt

for the ‘masses’: ‘you are inferior and all the improvements in your con-
ditions which you simply take for granted you owe to the effort of men
who are better than you.’48 But those who funded Mises have left their
mark.
According to the Lung Association’s ‘State of the Air 2016,’ despite
ongoing improvements, ‘more than half of all Americans—166 million
people—live in counties where they are exposed to unhealthful lev-
els’ of particle pollution and ozone.49 In the 1970s, research revealed
that lead exposure (even at low levels) could cause permanent learn-
ing and behavioural problems in children. Regulation-based efforts to
reduce lead exposure began in 1975–1976: lead paints were banned
and leaded gasoline began to be phased out. Gasoline taxes can also
reduce both carbon footprints and travel time (through infrastructure
spending).
The Economist (28 June 2018) reported that Chinese consumers,

47http://berkeleyearth.org/summary-of-findings/.

48https://mises.org/library/ludwig-von-misess-letter-rand-atlas-shrugged.

49http://www.lung.org/our-initiatives/healthy-air/sota/key-findings/.
216    
R. Leeson

particularly those living in busy megacities, shell out 4bn yuan ($600m)
on masks every year. Many are manufactured in Dadian, a town in
Shandong province in eastern China known as ‘mask village.’ Such find-
ings suggest that efforts by the government to cut air pollution could
yield significant savings. Since 2014, when Li Keqiang, China’s premier,
declared ‘war’ on air pollution, the country has closed polluting factories,
shuttered coal-fired power plants and taken millions of vehicles off the
roads. These measures have helped reduce concentrations of PM2.5 in
major Chinese cities by 32%. If the country’s PM2.5 levels are cut to 10
µg/m3, a level deemed safe by the World Health Organisation, the study’s
authors reckon that Chinese households could save tens of billions of dol-
lars in health-care expenses.50

Anderson (1997) offered a ‘free’ market alternative: ‘Me suing you to

collect for damages you inflict on my air space with your power plant
might take care of many of the problems we have with things like air
pollution without the government regulation we now have.’
According to Anderson (1997), ‘Austrian economists have made
all economists, not just natural resource economists, more aware
of the role that individuals play in collecting and acting on informa-
tion. Friedrich Hayek’s insight that there are special circumstances of
time and place that govern how we act has been invaluable.’ Anderson
and Leube were ‘co-directors’ of the 2016 Liechtenstein Academy
Freudenfels Castle conference on the ‘intentional deception of words’—
not bogus degrees but what they describe as the ‘dramatic slogan climate
change ’ which had become a substitute for the ‘effect of greenhouse gases
[emphases in original].’ The inspiration for the conference was an aca-
demic fraud:

In chapter 7 of The Fatal Conceit, ‘Our Poisoned Language,’ F. A. von

Hayek lists over 100 words before which we put social ranging from social
accounting to social property to social waste, and in each case obfuscate
their meaning [emphasis in original].51

50https://www.economist.com/graphic-detail/2018/06/28/how-smog-affects-spending-in-china.

51http://ecaef.org/tag/liechtenstein-academy/.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
217

According to Anderson (1997), the ‘Austrian economists’ emphasis on

entrepreneurship--seeing the unseen and acting on it--has been very val-
uable.’ To ‘Debunk Climate Change Propaganda and Provide Balanced
Perspective,’ two entrepreneurs with high-status titles, ‘Dr’ Leon Louw
and ‘Lord’ Monckton, created a ‘CFACT’ lobby at the 2011 Durban
United Nations Climate Change conference.52 When asked by The
Daily Bell whether his South African Free Market Foundation was
‘based on Austrian economics? Are you a supporter of Austrian eco-
nomics?’ Louw (2011)—who apparently doesn’t have a PhD but (like
Ebeling) is an ‘expert’ at the Heartland Institute53—replied:

Yes, yes, yes. We are all very much Austrian … I am an extreme Austrian
myself; my colleagues are Austrian, as are all people who work full-time
for the Foundation … We often get involved in orthodox battles for
think tanks such as the assault on liberty in the name of climate change
… We might, for example, defend people who run pyramid schemes or
people who deal drugs or prostitution or whatever.54

Louw, a Committee member of the ‘Association for Rational Inquiry

into Claims of the Paranormal,’ explained that he ‘became converted to
capitalism mainly by the literature of Ayn Rand’ and the Cold War sci-
ence fiction writer ‘Robert Heinlein.’ He claims to have been awarded
the Don Quixote Award, the Social Inventions Award, the Freedom
Torch Award and a UNISA Bachelor of Law55; plus a UNISA BA
(African Studies).56 According to Louw, anti-smoking by-laws are ‘a
kind of hysteria, a peculiar semi-religious fundamentalist Puritanism
… a vicious assault’ on choice: ‘The anti-tobacco fanatics … the nic-
otine Nazis will not stop until there is full prohibition.’57 In 2015,

52http://www.cfact.org/2011/11/16/946/.

53http://heartland.org/leon-louw.

54https://www.thedailybell.com/3266/Staff-Report-Leon-Louw-on-Sinking-South-Africa-and-

How-Free-Market-Thinking-Can-Help-Recover-Prosperity.
55http://www.whoswho.co.za/leon-louw-3162.

56http://www.myvirtualpaper.com/doc/brookepattrick/water_sewage_and_effluent_septem-

ber2011/2011090201/5.html#4.
57http://www.desmogblog.com/leon-louw.
218    
R. Leeson

‘Prof Kurt Leube,’ a ‘Professor of Economics (emeritus) and Research

Fellow (emeritus) at the Hoover Institution, Stanford University, USA’
and a ‘true Austrian,’ addressed the Free Market Foundation on the
‘Unintended Consequences of the European Welfare State.’58
Piero Sraffa (6 October 1975) wrote to Charles Blitch: ‘In economic
theory, the conclusions are sometimes less interesting than the route by
which they are reached’ (cited by Marcuzzo and Rosselli 2008, 215).
And according to Boettke (1997, 32–33), the ‘fundamental question
raised by Mises and Hayek’ is ‘how information gets onto the shelf in
the first place.’ When long-suppressed information about Mises and
Hayek was reported on the SHOE list, Boettke (SHOE 20 May 2014)
became hysterical and insisted that ‘graduated penalties’ be imposed.
Would a dissenting student at GMU or the Citadel Military College
(where ‘Lt. Col.’ Ebeling is ‘BB&T Distinguished Professor of Ethics
and Free Enterprise Leadership’) be obliged to repeat a year?
At Charles Koch’s Mercatus Centre, Caldwell (27 June 2017) claimed
to be motivated by a desire to ‘correct the historical record.’59 Caldwell
(SHOE 4 June 2014) complained to the community that had elected
him their president that he had been asked to

justify the role of Austrians in blocking Larry Klein’s promotion. Note

that the question assumes the truth of the claim that Austrians played
such a role. Roy Weintraub, who knows the Klein case well, has recently
sent to the list a message that summarizes the documentary evidence
concerning the Klein case, and concludes that there ‘is no Austrian/
Hayekian/Mt. Pelerin-ian connection whatsoever.’

When Cubitt (2006, 146, 51) asked Hayek ‘whether he felt comfort-
able about Jewish people he replied that he did not like them very
much, any more than he liked black people.’ Hayek repeatedly slurred
almost everyone—his opponents were ‘not intelligent’ and suffered

58http://irr.org.za/programmes/events/fmf-invitation-talk-onunitended-consequences-of-the-eu-

ropean-welfare-state.
59 https://ppe.mercatus.org/podcasts/06282017/history-mainline-economics-research-top-

ic-bruce-caldwell.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
219

from erectile dysfunction, etc. (Leeson 2017). Caldwell (2010a) insists

that non-Hayekians ‘could perhaps learn something from him: a lit-
tle Austrian politesse is a nice prophylactic against stridency.’ Caldwell
(SHOE 31 June 2014) then posted a message on Weintraub’s behalf:

Leeson’s outrages against sound scholarship need to be exposed … Leeson

is simply an irresponsible poseur and provocateur. Anything he writes
needs to be fact-checked. Yes, it really is that bad.

Weintraub (SHOE 4 June 2014) continued to misinform the society

that had elected him their president:

Between Leo Scharfman and Gardner Ackley, the two Michigan chairmen
at that time, the department, with one exception (accountant William
Paton, 1889-1991 -- papers at the Univ of Florida and certainly no
Austrian), behaved fairly and honorably. There was, in fact no successful
‘campaign’ against Klein.

Weintraub was illustrating what passes for ‘documentary evidence’ at

Duke University’s Koch-funded CHOPE. The archival evidence—
which Caldwell seeks to monopolise—reveals that the Austrian/
Hayekian Paton orchestrated the successful campaign against Klein—
and was rewarded with membership of Hayek’s MPS. With Caldwell
(SHOE 31 June 2014) as his messenger, Weinraub stated: ‘As any-
one with an ability to Google Klein would know, Klein’s papers are at
Duke.’ But anyone with an ability to Google Paton would know that he
was intimately involved with Mises’ FEE (Leeson 2017).
Koch Industries are, presumably, monitoring their Duke University
‘Hayek-Fink-Koch’ ‘knowledge’ production line as closely as they do
its GMU counterpart (Leeson 2018a). What was ‘the route’ by which
these transparently false conclusions about the Jewish-born Klein
were ‘reached’? Has the Jewish-born Weintraub—a CHOPE ‘Faculty
Member’—become a wholly owned subsidiary of Koch Industries?60

60http://hope.econ.duke.edu/Faculty.
220    
R. Leeson

Historical scholarship requires that narratives be evidence-based; and

speculation to be clearly identified as such. Every major assertion made
by Caldwell about his religious icon is either not supported by evidence
or flatly contracted by the evidence. For example, in the first part of his
‘definitive’ nuanced hagiography, Caldwell (2004, 133, n1) asserts that
Hayek had ‘courted [Helene] Bitterlich in Vienna in the early 1920s.’
Cubitt (2006, 50, 119, 211) reported that Hayek and his second wife
were ‘at peace’ with each other when they reminisced about the ‘shared
time of their early’ lives. They spent childhood summers together stay-
ing in the home of Eugenie Schwarzwald (1872–1940), who ran a pro-
gressive school which Helene attended. Hayek told Bartley ‘As to sex,
well, I left my first wife for my first girlfriend’ (cited by Blundell 2014,
100). Did Hayek have his first girlfriend in his early twenties? Was
Caldwell motivated by fund-raising?
In an Economic Affairs obituary, Hayek was cited as stating that his
early life was ‘probably ideal – three meals together every day, talking
about every subject under the sun, always free to roam, to think, even
to commit minor peccadilloes’ (cited by Ebenstein 2003, 14). Another
biographer, Bartley (who reportedly died of AIDS-related cancer), spoke
openly about his ‘Last Tango in Vienna’ conclusion—Hayek was a
‘closet homosexual’ whose sexual activities with his cousin and second
wife resembled his own.
Caldwell is a Duke University ‘Research Professor of Economics.’61
Would the Duke University economics department give a passing grade
to a first year student who believed that all curves in economics slope
upwards? All of Caldwell’s Hayek curves slope upwards—in the hagi-
ographic direction. If Caldwell’s errors were white noise (a sequence of
serially uncorrelated random variables), then he could be dismissed as
an incompetent but unbiased historian. But there is an omitted variable
in his model—virtually all the adverse evidence.
Some Germans regard their southern neighbours as storytellers and
fantasists: ‘Österreichers! Who will remember tomorrow [the lies told
today]!’ H. S. Chamberlain romantically told the Austrian Führer of the

61http://econ.duke.edu/people/bruce-j-caldwell.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
221

National Socialist German Workers’ Party that he was the ‘direct oppo-
site of a fanatic. The fanatic makes people into hotheads, you warm
people’s hearts … I would also describe you as the opposite of a pol-
itician – in the ordinary sense of the word – for the root of all poli-
tics is membership of a party, whereas in your case all parties disappear,
devoured by the heat of your love for the Fatherland’ (cited by Röhl
1970, 52–53). Caldwell (2010b)—who may have made for himself $1
million in a single month of Road to Serfdom Definitive Edition royal-
ties—wrote in the Washington Post: ‘Hayek himself disdained having his
ideas attached to either party.’62 Yet both the public and the archival
evidence (that Caldwell seeks to monopolise) reveal that Hayek was a
party political operative for both the Conservative and Republican par-
ties (Leeson 2017).
Caldwell chose the hagiographer, Hamowy, to edit The
Constitution of Liberty: The Definitive Edition—in which one of
Hayek’s motives for writing the book (to market it to dictators such
as Salazar and later Pinochet) was silently corrected through deletion.
And to edit The Collected Works of F. A. Hayek Hayek and the Austrian
Economists: Correspondence and Related Documents, Caldwell chose
Ebeling. Cui bono?
How can an atheist and (apparent) sexual predator be transformed
into a religious icon? From the vantage point of the evidence-free ‘free’
market parallel universe, Ebeling (SHOE 22 May 2014) informed his-
torians of thought that ‘anyone familiar with Mises’ writings knows that
he opposed war.’ After this was exposed as nonsense (SHOE 29 May
2014), Boettke (2016b) doubled down: ‘Mises was a cosmopolitan lib-
eral who argued forcefully against colonialism, protectionism, populism,
migration restrictions, and totalitarianism left, right and center.’ But the
evidence contained in an Ebeling-edited volume reveals that Mises pro-
moted Lebensraum (Chapter 10, below).
According to Rothbard (1981, 239), Mises issued a ‘radical philip-
pic against Western imperialism.’ Four years after the demise of the

62‘Eventhough Hayek himself disdained having his ideas attached to either party, he nonetheless
provided arguments about the dangers of the unbridled growth of government’ (Caldwell 2010b).
222    
R. Leeson

Habsburg Empire, Mises (1951 [1932], 234–235) found a replace-

ment: the wars waged by England during the ‘era of Liberalism to
extend her colonial empire and to open up territories which refused to
admit foreign trade, laid the foundations of the modern economy.’ In
‘judging’ the English policy for ‘opening up China,’ critics ‘constantly
put in the foreground the fact that it was the opium trade which gave
the direct, immediate occasion for the outbreak of war complications.’
But in reality, according to Mises, what was at ‘stake’ in the Anglo-
French wars against China (1839–1860) was the ‘general freedom of
trade and not only the freedom of the opium trade.’ It was ‘not cant
for English free traders to speak of England’s vocation to elevate back-
ward people to a state of civilisation’ because England has shown by
‘acts that she has regarded her possessions in India, in the Crown col-
onies, and in the Protectorates as a general mandatory of European
civilisation.’
In 1949, ‘One Hundred Years of Humiliation’ allowed a Red
Terrorist—Chairman Mao—to seize power and repudiate the private
ownership of commodities; and Mises’ (1963, 282; 1966, 282) lobby-
ing for the Warfare State facilitated a similar ‘victory’ for Pol Pot and the
Pathet Lao in post-carpet-bombed Cambodia and Laos.
According to Boettke (2016b), Mises

argued throughout his long career for the free flow of capital and labor
internationally, and for peacefully social cooperation grounded in the
Kantian aspirations that global citizens be ‘Strangers Nowhere in this
World.’

And according to Ebeling (SHOE 20 December 2015), Mises was

a strong proponent of free movement of people -- that is, ‘open

immigration.’

According to Boettke (2016a), Ebeling is one of the ‘most articulate

spokesman for the Austrian school of economics -- its history and its
teachings.’ Ebeling and Block (2010, 55) attended a ‘Human Action
seminar, where we read and discussed this book chapter by chapter.’
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
223

In Human Action, Mises (1998 [1949], 820–821) stated that there

could be no ‘question of appeasing the aggressors by removing migra-
tion barriers. As conditions are today, the Americas and Australia in
admitting Germans, Italians, and Japanese immigrants would merely
open their doors to vanguards of hostile armies.’ In the Rothbard-edited
Journal of Libertarian Studies, Rothbard (1981, 251) declared that Mises
was ‘someone so hostile to immigration restrictions, that he almost
endorsed war against such countries as the United States and Australia
to force them to open up their borders.’ But according to Mises (in a
volume edited by Ebeling), ‘Combating Emigration ’ was required to bol-
ster the Austro-German Second Reich (Chapter 9, below).
‘Strangers Nowhere in this World’? The ‘Fascist’ Warfare State man-
ifested itself in the ‘free flow’ of conscripted ‘labour internationally.’
In Liberalism in the Classical Tradition, Mises (1985 [1927], 449–450,
151–154; 1963, 282; 1966, 282)—a lobbyist for the Warfare State and
conscription—insisted that Fascism was the product of civilisation:

Fascists carry on their work among nations in which the intellectual

and moral heritage of some thousands of years of civilization cannot
be destroyed at one blow, and not among the barbarian peoples on both
sides of the Urals [emphasis added], whose relationship to civilization has
never been any other than that of marauding denizens of forest and desert
accustomed to engage, from time to time, in predatory raids on civilized
lands in the hunt for booty. Because of this difference, Fascism will never
succeed as completely as Russian Bolshevism in freeing itself from the
power of liberal ideas.

Deception provides evolutionary advantages—and most children go

through a phase of lying and fantasy. The reader must decide whether
Professors of Austrian economics ‘lie for a living’—and taxpayers must
decide whether they want such ‘scholars’ on their property.
In the Washington Post, Charles Koch (2016) stated that ‘Democrats
and Republicans have too often favored policies and regulations
that pick winners and losers. This helps perpetuate a cycle of control,
dependency, cronyism and poverty in the United States.’ Does Koch
Industry pick ‘winners’ through Affirmative Action?
224    
R. Leeson

Comparing the Centre for Public Integrity list of the Koch’s higher
education funding choices (Levinthal 2014) with the US New and
World Report ’s analysis of the quality of doctoral programme in eco-
nomics reveals an interesting ‘pattern prediction.’ Based on a survey of
academics at peer institutions, each department’s score reflects its aver-
age rating on a scale of 5 (outstanding) to 1 (marginal, or Rank Not
Published, RNP—which also includes ‘new’ post-2012 schools). Of the
Koch’s top twelve picks, only three scored higher than 2.3/5.63 Of the
other nine: one (Troy University, Alabama) wasn’t listed; three (Utah
State University, West Virginia University and Kansas State University)
were marginal or RNP; one (Clemson University, South Carolina) was
ranked 2.0/5, three (George Mason University, Virginia, Florida State
University, and Southern Methodist University, Texas) were ranked
2.2/5, and one (George Washington University) was ranked 2.3/5.64
According to Inside Higher Ed, Fink, as President of the Charles Koch
Charitable Foundation, signed a donor deal with Utah State University
which specified that the Foundation must approve funded faculty hires
and that a ‘common perspective’ regarding the ‘free’ market must prevail
(Berrett 2011).
In the USA, entry to graduate school is intensely competitive—
aspiring economists can work their way down the list: from 4.5/5
and above (Harvard, MIT, Princeton, Chicago, Stanford, Berkeley,
Northwestern and Yale) to below 1/5 (Auburn, Utah State, etc.).65
Boettke (2007; 2010a, 61; 2015) recalled that the Mises Institute
was ‘founded during my senior year of college, and a Ph.D. program
at Auburn seemed promising.’ He wanted to obtain a PhD in mon-
etary economics—but in 1983, he chose GMU, which ‘most peo-
ple hadn’t heard of,’ and where no one was working on monetary
economics.

63The University of Arizona (3.1/5), the University of North Carolina, Chapel Hill (3.2/5) and

Ohio State University (3.4/5).

64http://grad-schools.usnews.rankingsandreviews.com/best-graduate-schools/top-humanities-

schools/economics-rankings/page+6.
65http://grad-schools.usnews.rankingsandreviews.com/best-graduate-schools/top-humanities-

schools/economics-rankings/page+6.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
225

GMU was a ‘fledgling institution,’ having gained its independence

from University of Virginia in 1972; and by 1981 still had no doctoral
programme in economics (Rowley and Houser 2012, 21). In 1983, it
was a self-reported low-status, ‘undistinguished’ institution: before
Buchanan’s ‘serendipitous’ arrival, it was a ‘young and largely unknown
state university’ whose ‘faculty was not exactly at the forefront of aca-
demic research.’ The economics department was ‘bottom heavy in
newly minted PH.D.’s’ and ‘only a handful of faculty were actively pub-
lishing in academic journals.’ It had one distinct advantage—it was ide-
ologically correct: ‘those of us who did strive to be research economists
were all sympathetic to either the public choice agenda or to Jim’s sub-
jectivist side’ (Vaughn 2015, 103, 105).
Ideologues typically believe that they sacrifice personal income for
their ‘cause’; and scholars trade monetary income for ‘psychic’ utility
(the delight of discovery). All discovery is both ‘local’ (the opportunity
provided by exposure to embryonic ‘new’ knowledge) and ‘contingent’
(a reflection of an individual’s ‘old’ socially constructed knowledge). But
Boettke, Caldwell, Fink et al. have risen to ‘1%’ financial status by—as
Boettke (2010a) put it—‘Becoming an Austrian and Staying One.’
In the USA, those who have earned non-ideologically correct degrees
are burdened by $1.3 trillion debt; while as ‘soon as you start at GMU,
Pete [Boettke] puts resources in place to elevate you into the profession
and pass onto bigger and better things. He ensures that graduate stu-
dents have the resources they need to pursue their careers’ (A. Evans
2010, 80). Boettke (2015) explained to his students that if funders
didn’t get what they wanted, they would be ‘pissed off.’ Buchanan and
Richard E. Wagner (1977) asserted that ‘Keynesian economics has
turned the politicians loose; it has destroyed the effective constraint on
politicians’ ordinary appetites.’ Have ‘free’ market economists turned
the TOFF industries loose?
Austrians openly brag about the optimal extraction problem associ-
ated with fossil fuel-based capital: David Koch is, they believe, at his
most generous when attending the New York opera wearing bowtie
and tails. David Koch told Doherty (2007, 409): ‘If we’re going to give
a lot of money, we’ll make darn sure they spend it in a way that goes
along with our intent. And it they make a wrong turn and start doing
226    
R. Leeson

things we don’t agree with we withdraw funding. We do exert that kind

of control.’ But Austrians and their universities insist that he is wrong:
financial incentives do not affect behaviour—the price mechanism is
impotent.
Boettke (2010a, 61) initially perceived Hayek to be ‘a sell out.’ But
if TOFF funding does not—objectively—change behaviour, universi-
ties must by definition be indifferent about the source of their fund-
ing. Thus if a university receiving $Z million from a Foundation had
an ‘equal and opposite’ reduction in taxpayer support this would, in
aggregate, have no effect. David Koch would—subjectively—continue
to believe that he was exerting ‘control’ while the taxpayer would bene-
fit: a Pareto improvement.
According to Leube (2016), ‘Hayek thought that ideas studied in
universities are the first part of a complex (intellectual) capital struc-
ture, which are then disseminated through second-hand intellectuals
and then become common knowledge among politicians and voters.’
Austrians ‘know’ that ‘cheap’ capital ‘always and everywhere’ leads to
boom and then bust. Foundation capital is cheap (tax-exempt) and
the Austrian human capital that it funds appears to have been cheaply
acquired (ideologically correct): they must know that their epigone gen-
eration is a tax-funded bubble waiting to be burst.
According to Greenpeace’s ‘Polluterwatch,’ between 2005 and 2013,
GMU received over $77 million of the $109,778,257 that Charles
Koch donated to higher ‘education.’66 GMU’s President Angel Cabrera
(8 April 2015) told National Public Radio (NPR) that she was ‘noth-
ing but incredibly grateful’ to the Koch brothers. Referring to Buchanan
and Vernon Smith, Cabrera stated that GMU has produced ‘two
Nobel Prize winners in economics. For a university this young, this is
unheard of. In fact the first two Nobel Prize winners in Virginia--in
the ­history--were awarded to faculty members at George Mason, both
of them in economics.’67 But by 2013, GMU’s doctoral programme

66Institute for Humane Studies $23,387,030, Mercatus Centre $8,708,500, and GMU

Foundation $45,558,153. http://polluterwatch.org/charles-koch-university-funding-database.

67http://thekojonnamdishow.org/shows/2015-04-08/george-mason-univ-president-angel-cabrera.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
227

in economics was still only ranked joint 64th in the USA68; and the
department fails to register in the Times Higher Education’s 2016–2017
World University Rankings.69
Fink had a

rabble-rousing background that bordered on juvenile delinquency. ‘The

first 18 years of my life, I would say that if there were trouble anywhere
within a 5-square-mile radius of where I was, somehow I would be in the
middle of it within a few minutes.’

As a teenage manual worker, Fink injured his back and ‘enrolled in an

economics course without even knowing what economics was’; and at
Rutgers University ‘quickly grew captivated by a libertarian-minded
professor named Walter Grinder and his lectures on moral philosophy’
(cited by Wilson and Wenzl 2012).
Boettke described the attitude to dispassionate scholarship at GMU as
expressed by Fink’s orientation talk to newly enrolled PhD students: Fink

used an analogy with the civil rights movement: ‘Before we just wanted
to be let on the bus and not raise a ruckus. Now we’re gonna [sic ] be like
Malcolm X, Austrian and proud. In your face with Austrian economics.’

Fink would ‘get you hyped up about this stuff. We were coming from
a non-top-ranked school and had this [Austrian] label on our heads, so
we had to outcompete other people.’ For Boettke, this fraternity-like
initiation ritual worked:

When I was a kid I wasn’t intellectual, but as a basketball player I was

competitive. Sennholz and Fink made these appeals that fed into my psy-
che: ‘We’ll form this team and go out and beat ‘em!’ (cited by Doherty
2007, 430–431)

68http://grad-schools.usnews.rankingsandreviews.com/best-graduate-schools/top-humanities-

schools/economics-rankings/page+6.
69https://www.timeshighereducation.com/world-university-rankings/2017/subject-ranking/

business-and-economics#!/page/3/length/25/name/georgemasonuniversity/sort_by/rank_label/
sort_order/asc/cols/rank_only.
228    
R. Leeson

According to Boettke, Oscar Lange’s defence of socialism ‘hit Mises and

Hayek like a 4 × 2 to the head’ (cited by Doherty 2007, 77). Boettke
(2010a, 61) initially ‘hated’ Hayek: his copy of The Road to Serfdom still
has a ‘broken binding because of when I threw it across my dorm room
at Grove City after reading an argument by Hayek on why immuni-
zation by the government was an acceptable policy.’ And according to
Boettke (2010b), if the ‘Tea Party is a positive force to limit the power
of the government, then I think it is great. I think anger can be a won-
derful muse. But I hope the Tea Party will now hold the Republicans
feet to the fire so to speak with the same level of enthusiasm that they
expressed their anger at the Democratic party.’
The buggery-obsessed North (1986, xix, xxiii)—a public stoning
theocrat, Boettke’s fellow Presuppositionalist and MPS member, and
self-appointed ‘Tea Party Economist’—also described Austrian tactics:

Fighting to Win … At least we admit that we are street fighters. We pre-

fer to stab our opponents in the belly, publicly … Take no prisoners! If
our style is not considered polite in certain academic circles, then to
avoid being manhandled, it would be wise for these epistemological child
molesters to stay out of print, hidden from public view in their tenured
classroom security. If they go into print … they can expect ‘the treatment’
[North’s emphases].

Although Boettke (2010a, 59) appears to be incompetent with respect

to the ‘technical aspects’ of economics, he may be world-class when it
comes to ‘The Pretense of Knowledge.’ During World War II, his father,
he asserts, spent ‘the last 18 months of this episode in a German pris-
oner-of-war camp.’ But according to the military records, Boettke
Jr. enlisted on 1 April 1942, and his capture was ‘reported to the
International Committee of the Red Cross on November 2, 1944’—six
months before the end of the war. He was held in Stalag Luft 4, Prussia,
which was liberated three months later (5 February 1945); those who
survived the ‘Black March’ westwards were liberated on 2 May 1945.70

70http://wwii-pows.mooseroots.com/l/13569/Frederick-G-Boettke.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
229

Austrians support the medical trade union’s efforts to prevent the

‘socialized’ medicine that ‘swamp’ political operatives like Rockwell
receive from being more widely available. For example, in February
1974, President Nixon proposed a ‘Comprehensive Health Insurance
Plan’; as editor of Private Practice Magazine, Rockwell (1974) informed
the ‘Manion Forum’ that this ‘pernicious’ bill would provide ‘lower
quality medicine and more expensive medicine. I don’t think the
American people are interested in either one of those things.’ This is
a translation from the Austrian of ‘higher quality outcomes and less
expensive medicine.’ According to the World Bank, in 2013 the USA
spent 17.1% of Gross Domestic Product on ‘health expenditure’—far in
excess of Canada (10.9), Denmark (10.6), Finland (9.4), France (11.7),
Germany (11.3), Japan (10.3), Italy (9.1), the Netherlands (12.9), New
Zealand (9.7), Singapore (4.6), Spain (8.9), Sweden (9.7), Switzerland
(11.5) and the UK (9.1).71 In 2013, Americans spent $9146 per capita
per annum on health care; while the British spend US$3598 per capita
per annum; in 2016, the US figure was projected to rise to $10,000. By
2025, health care is projected to consume represent 20% of the total
economy (Pear 2016).
Many of those conventionally described as ‘lower-middle-class’ often
hover precariously above ‘hard hats and hard work’; and in the USA,
many are a just a misfortune away from homelessness. Boettke (2010a,
59) reconstructed his deceased father as a fictional Ayn Rand charac-
ter—self-martyred for ‘liberty.’ The ‘globalizing’ Trade Expansion Act
of 1962 and the Kennedy Round of the General Agreement on Tariffs
and Trade (concluded in 1967) created domestic ‘losers’—Boettke Jr.
had four years of high school and was employed in the vulnerable-to-
imports textile industry. According to Boettke (2010a, 59), his ‘business-
man’ father ‘refused to take advantage of any of the benefits available
to him afterward (GI Bill etc.)’ even when ‘financial hardship hit … he
was a staunch individualist.’ Thus rather than accept free veterans’ medi-
cal treatment, Boettke Jr. paid hundreds and then thousands of dollars a
month in rent (a surplus—that which is not required to induce supply)

71http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS/.
230    
R. Leeson

to the medical trade union and their insurance associates (Friedman and
Friedman 1998, 74–76; Leeson 2017).
Boettke (2012, 13, xx) insisted that ‘ridicule and satire’ are ‘effective
teaching tools …We all have a lot of work to do to get economics back
on track. Let’s go to work.’ Through Sennholz, Boettke heard again the
standard prejudices of a New Jersey sports bar—this time elevated into
an educational product that would facilitate his social mobility into the
higher reaches of the ‘free’ market Welfare State. Sennholz described
the non-Austrian ‘welfare state as this giant circle with all of our hands
in our neighbors’ pockets. This was 15 years ago and I can still remem-
ber it. How many people with one lecture 15 years ago can make you
still remember that lecture?’ (Boettke cited by Doherty 2007, 423–424).
But Boettke and his family were major beneficiaries of the non-Austrian
Welfare State: primary school, the Arthur L. Johnson High School and
the State-funded GMU. Perhaps a more likely explanation is that Boettke
Jr. was apprehensive about further education and feared that he would
have to repeat first year college (as his son was later obliged to do).
Viennese doss houses shaped Hitler’s philosophy:

Those among whom I passed my younger days belonged to the petty bour-
geoisie class … The ditch which separated that class, which is by no means
well-off, from the manual labouring class is often deeper than people
think. The reason for this division, which we may call enmity, lies in the
fear that dominates a social group which has only just risen above the level
of the manual labourer - a fear lest it may fall back into its old condition
or at least be classed with the labourers. (Hitler cited by Bullock 1962, 37)

Hitler ‘passionately refused to join a trade union, or in any way to accept

the status of a working man’ (Bullock 1962, 38). Kubizek (2006 [1953],
Chapter 3) recalled that Hitler ‘emphasised the position of his father, who
as a customs official ranked more or less with a captain in the army.’ In
contrast, in the USA there is a tendency to overemphasise the humble
origins of those who go from ‘no-plumbing poor to White House’; while
those who appear socially ‘stuck’ are denigrated, by some, as ‘trailer park
trash.’ ‘Below’ this so-called white trash had been the descendants of African
slaves; and just ‘above’ are those who are fearful of descending lower.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
231

Hitler observed that Mayor Karl Lueger’s (1844–1910) following

lay in the lower middle class of Vienna: those ‘whose existence was in
danger.’ He concluded that the ‘psyche of the broad masses is accessible
only to what is strong and uncompromising … The masses of the peo-
ple prefer the ruler to the supplicants and are filled with a stronger sense
of mental security by a teaching that brooks no rival than by a teach-
ing which offers them a liberal choice. They have very little idea how to
make such a choice’ (cited by Bullock 1962, 45, 44).
Hayek (1976, Preface) offered a salesman’s choice—truth or grave
dangers: ‘I have come to regard the writing of this book as a duty which
I must not evade.’ It is a ‘genuine effort to find the truth which I believe
has produced insights which will help even those who disagree with me
to avoid grave dangers.’ However, if a slave ‘is able to own and acquire
property, no other man or group of men can coerce him to do their
bidding.’ Yet Hayekians acquired property by doing his ‘bidding’—by
becoming his ‘secondhand dealers in opinion.’72
Hayek (2007 [1944], 91, 94) knew how ‘myth’ or second-hand opin-
ion was spread: ‘This argument is rarely developed any length – it is one
of the assertions taken over by one writer from another till, by mere
iteration, it has come to be accepted as an established fact. It is, never-
theless, devoid of foundation.’ The intellectual history of the ‘last sixty
or eighty years is indeed a perfect illustration of the truth that in social
evolution nothing is inevitable but thinking makes it so.’ Hayek (2011
[1960], 196, 8, 200; 2007 [1944], 144) distinguished between the
‘directing class’ and the non-directing class: ‘To do the bidding of others
is for the employed the condition of achieving his purpose … Coercion
implies, however, that I still choose but my mind is made someone else’s
tool, because the alternatives before me have been so manipulated that
the conduct that the coercer wants me to choose becomes for me the
least painful one.’
For Hayek (2007 [1944], 145, 154), status hierarchy had political
consequences: the ‘resentment of the lower-middle-class, from which
Fascism and National Socialism recruited so large a proportion of their

72FriedrichHayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
232    
R. Leeson

supporters, was intensified by the fact that their education and train-
ing had in many instances made them aspire to directing positions, and
that they regarded themselves as entitled to be members of the directing
class.’ There could, he insisted, ‘be little doubt that no single economic
factor has contributed more to help these movements than the envy of
the unsuccessful professional man … insecurity becomes the dreaded
state of the pariah in which those who in their youth have been refused
admission to the haven of a salaried position remained for life.’
Hayek (1978) described his tactics to Buchanan: ‘So, again, what I
always come back to is that the whole thing turns on the activities of
those intellectuals whom I call the “secondhand dealers in opinion,”
who determine what people think in the long run. If you can persuade
them, you ultimately reach the masses of the people.’73 Hitler had a dif-
ferent avenue: ‘the movement must avoid everything which may lessen
or weaken its power of influencing the masses … Because of the simple
fact that no great idea, no matter how sublime or exalted, can be real-
ised in practice without the effective power which resides in the popular
masses … To be a leader, means to be able to move masses’ (cited by
Bullock 1991, 69).
The lower-middle-class Rothbard (1992a, 12; 1992b, 8), having
failed to achieve a non-donor-dependent academic career, embraced
socially ‘stuck’ ‘Rednecks’: ‘we need a dynamic, charismatic leader who
has the ability to short-circuit the media elites, and to reach and rouse
the masses directly.’ Hayek, Hitler and Mises had a common cultural
heritage and it is, therefore, not surprising to find a commonality of
thought and message. How this proto-fascist and later card-carrying fas-
cist culture was transmitted across the Atlantic to ‘secondhand dealers
in opinion’ is worthy of further investigation. Hayek, Hitler and Mises
were obsessively self-interested: a common trait among Austrians, whose
motto appears to be: ‘we want to receive subsidies, but evade taxes.’
About 90% of those on the SHOE list appear to have genuinely
awarded (that is, non-ideologically correct) degrees; another 5% appear

73Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
233

to be Koch-funded Austrians; and about 5% are office-holders or

office-seekers some of whom are anxious not to offend those who dis-
tribute Austrian ‘gold.’ Boettke (2014) described the ‘gullible’ historians
of thought on the SHOE list as ‘not necessarily high opportunity cost
scholars’:

Yes, I know that sounds elitist, but scholarship requires certain abilities and
temperament, and is measured by very conventional standards of publica-
tion, citation measures, etc. and these are highly correlated with academic
position. In addition, as the sociologists Peter Berger used to emphasize,
you cannot expect those only capable of playing checkers to be able to play
chess. Leeson’s form of intellectual ‘history’ appeals to those playing ideo-
logical checkers, not those capable of engaging in scholarly chess.

The post-war expansion of higher education increased the demand for

qualified academics. To build an epigone Welfare State, Hayek pro-
vided fraudulent academic job recommendation; while Rothbard estab-
lished Austrian-edited and Austrian-refereed pseudo-academic journals
(Leeson 2018a). Austrian economics is a vehicle for the social advance-
ment of these academic market failures with their non-existent or ide-
ologically correct degrees and nomenklatura think tank titles. Hayek
(1997 [1949], 231) described the fourth generation as primarily ‘infe-
rior … mediocrities’; academically, the epigone generation is an order of
magnitude worse.
Perhaps ‘Austrian’ is the school of choice for those who embrace argu-
mentum ad hominem because they accept the status that Hayek (1978)
allocated to them: ‘scientists are pretty bad, but they’re not as bad as what
I call the intellectual, a certain dealer in ideas, you know. They are really
the worst part. But I think the man who has learned a little science, the
little general problems, lacks the humility the real scientist gradually
acquires. The typical intellectual believes everything must be explainable,
while the scientist knows that a great many things are not, in our present
state of knowledge. The good scientist is essentially a humble person.’74

74FriedrichHayek, interviewed by Robert Bork 4 November 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
234    
R. Leeson

In Free Market, Mises (2006 [1958], 6) declared: ‘Our civilization

will not be conquered by the spirit of Moscow.’ Napoleon described
achieved status: ‘every corporal carries a field marshal’s baton in
his knapsack’—while Lieutenant ‘von’ Mises and ‘Lieutenant’ ‘von’
Hayek carried the corrupt ‘spirit of Vienna’ with them wherever they
taught. According to Hayek (1978), the Austrian-Austrian School of
Economics was driven by nepotism: ‘You were very much dependent
on the sympathy, or otherwise, of the professor in charge. You had to
find what was called a Habilitations-Vater, a man who would sponsor
you. And if you didn’t happen to agree with the professor in charge, and
there were usually only two or three--in fact, even in a big subject like
economics, there were only two or three professors--unless one of them
liked you, well there was just no possibility.’75
Within weeks of arriving at the University of Chicago in 1950,
Hayek began targeting left-wing academics for liquidation. Quality pro-
vided no protection—Lawrence Klein, the recipient of the 1980 Nobel
Prize for Economic Sciences, was one of the victims (Leeson 2018a).
According to Nadim Shehadi (1991, 386), Hayek’s LSE (1931–1950)
‘was described as a court’: the neoclassical favourites got promotion and
the Keynesians nonfavourites, including Brindley Thomas and Abba
Lerner, were ‘gradually weeded out.’76 Thomas (1991, 390) concurred:
‘The ruling powers were passionate believers in freedom, and this
included the freedom to adjust the constraints within which freedom
was exercised by the nonfavourites. The main type of adjustment was
postponement of tenure.’
In his Memoirs, Hugh Dalton (1953, 116) noted that Robbins had
become an ‘addict of the Mises-Hayek anti-Socialist theme’; ‘variety’
tended to disappear, and the LSE began to teach a ‘more uniform brand
of right wing economics.’ In 1932, Dalton wrote to a friend that the
‘Robbins-Hayek tendency (and they have several echoes on the staff)
is very retrograde’ (cited by Pimlott 1985, 215). According to Shehadi
(1991, 385), at least from about 1934, suppression was evident at
the LSE: ‘The reaction of the ‘Old Guard’ of the department, that is,

75Friedrich Hayek, interviewed by Earlene Craver date unspecified 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

76Shehadi (1991, 386) added John Hicks to the list of the weeded-out.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
235

of Hayek and Robbins, was to try to restrict the divulgence of these

[anti-Austrian] ideas.’ Shehadi cited Dalton, who on a visit to Germany
in the spring of 1933 noted that ‘Geistige Gluchschaltung [intellectual
coordination] is the Nazi ideal in education. There is something of this
too in the economics department of the school of economics.’ GMU
students are obliged to read Boettke’s ‘Coordination Problem’ blog.
Do the taxpayers of Virginia pay Boettke to train disinterested
economists or TOFF hirelings? Does he provide fair-minded evalua-
tions of his PhD students? Will he allow his job recommendations to
be inspected? In I Chose Liberty, Boettke (2010a, 62) reported that by
‘drinking beer, playing pool and talking about economics and libertar-
ianism,’ ‘I became convinced that I could do Austrian economics for a
living … Grinder and Leonard Liggio were very influential on me, both
in terms of their suggestions of research projects one could explore and
the way one should interact with interested students to build an aca-
demic community of libertarian scholars.’
The Journal of Private Enterprise, Cato Journal, Public Choice and the
Independent Review were the four ideologically correct journals that
Boettke (2016a) recommended ‘free’ market economists should pub-
lish in so as to obtain lifetime protection from market forces (Chapter 1,
above). Four of Stringham’s ‘refereed’ publications were published (with-
out mention of a referee) in the Independent Review of the TOFF-funded
Independent Institute.77 According to Source Watch, the editor of the
Independent Review, Robert Higgs, ‘took over fronting’ the Tobacco
Institute’s ‘Cash for Comments Economists Network.’78 His succes-
sor as editor of the Independent Review, Wake Forest University’s Robert
Whaples, commissioned a Heartland Institute policy ‘expert’ to (incompe-
tently) review Part I of Hayek a Collaborative Biography for the SHOE list
(Ebeling 2013); and then refused to review the remaining sixteen volumes.
According to a 2017 Gallup poll, 36% of respondents had a ‘great
deal’ or ‘quite a lot’ of trust in public schools and 35% had ‘some’
trust.79 In Higher Education in America, former Harvard University

77http://internet2.trincoll.edu/FacProfiles/CVs/1332120.pdf.

78https://www.sourcewatch.org/index.php/Robert_Higgs.
79http://news.gallup.com/poll/1597/Confidence-Institutions.aspx.
236    
R. Leeson

President Derek Bok (2015, 356–357) concluded that ‘A democratic

society badly needs credible, unbiased information from highly knowl-
edgeable people in order to enlighten decision-makers and inform
public debate. Thus, the country has much to lose if the objectivity
of academic researchers can no longer be taken for granted.’ GMU
Professor Bethany Letiecq told the Washington Post that ‘It’s now abun-
dantly clear that the administration of Mason, in partnership with the
Mercatus Center and private donors, violated principles of academic
freedom, academic control and ceded faculty governance to private
donors’ (Larimer 2018).
The Fairfax County Times cited Letiecq: these Koch-GMU agree-
ments ‘have wreaked havoc on our reputation as an institution of higher
education, as a public institution of higher education. The university
now has a tremendous amount of work to do to redress these violations
and to rebuild our reputation as an institution that upholds academic
independence’ (Woolsey 2018a, b). In contrast, the Murdoch-owned
and supervised WSJ (11 May 2018) trivialised these concerns: ‘The
good people at George Mason should go on taking money from the
Kochs and anyone else it wants, and tell the UnKochs to harass some-
body who deserves it, like that progressive icon, Eric Schneiderman.’
New York Attorney General Schneiderman had filed suit against
Trump Entrepreneur Initiative—known as Trump University until
2010—for allegedly having mislead more than 5000 people who
paid between $1495 and $35,000 to learn Trump’s real estate invest-
ment techniques (Frefeld 2014).80 In 2014, the New York State
Supreme Court Justice found in favour of the complaint; but in 2018,
Schneiderman resigned after four women accused him of physical
assault (Mayer and Farrow 2018).81
While Trump was just one of many Republican Party hopefuls, the
WSJ (11 December 2015) editorialised about ‘Trump and the Goodfellas’:

80 https://www.reuters.com/article/us-trump-nyag-lawsuit/new-york-judge-finds-donald-

trump-liable-for-unlicensed-school-idUSKCN0I52MW20141016.
81https://www.newyorker.com/news/news-desk/four-women-accuse-new-yorks-attorney-general-

of-physical-abuse.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
237

Donald Trump says he’ll succeed as President because he has succeeded in

business, so it’s appropriate to scour his business record. One area in par-
ticular that deserves scrutiny is his business relationship with companies
controlled by the Mafia.

Adding: ‘The presidential candidate says he didn’t know he was doing

business with the mob.’
A new millennium editorial ‘About Us’ (1 January 2000) asserted that

The Wall Street Journal has a long tradition of vigorous and independ-
ent editorial commentary … They are united by the mantra ‘free markets
and free people,’ the principles, if you will, marked in the watershed year
of 1776 by Thomas Jefferson’s Declaration of Independence and Adam
Smith’s Wealth of Nations.82

Esquire reported that as ‘Trump’s chances of winning the nomination

grew,’ the WSJ ‘buried an editorial highlighting his underworld connec-
tions.’ In a short period of time, five staffers have (willingly or otherwise)
departed the WSJ editorial page because of the increasing conformity
with the ‘pro-Trump dictates’ of the rest of the Murdoch media empire:

And the reason, according to several defectors, was the Journal’s skidding
reversal once Rupert Murdoch realized Trump could win. Several sources
pointed to the editorials by one writer, James Freeman. ‘All-in for Ted
Cruz’ during the primaries, Freeman wrote a strong attack on Trump’s
Mob dealings, and had a second ready to go. But as Trump got closer to
clinching the nomination, Paul Gigot kept delaying publication, saying
‘it needed work.’ Once Trump became the likely Republican nominee,
Freeman executed a neat volte-face. ‘The facts suggest that Mrs. Clinton
is more likely to abuse liberties than Mr. Trump,’ he wrote. ‘America
managed to survive Mr. Clinton’s two terms, so it can stand the far less
vulgar Mr. Trump.’ (Tanenhaus 2017)

The WSJ (11 May 2018) dismissed the apparent deception of the
GMU-Koch contracts because of the stipulation that the ‘final say in

82https://www.wsj.com/articles/SB126841434975761027.
238    
R. Leeson

all faculty appointments lies in specified GMU procedures, involving

academic approval and final approval by the Board of Visitors. But if
GMU chose to hire academics like the prolific Donald Boudreaux
because he believes in advancing free-market ideas, so much the better.’
Boudreaux (1997–2001) succeeded the ‘Misean for Life’ Luftwaffe
bomber pilot Sennholz (1992–1997) as FEE President; and was suc-
ceeded by Skousen (2001–2002) and Ebeling (2003–2008)—both of
whom promoted Hayek’s transparent fraud that externality taxes had
been invented by a gunrunner for Stalin, Pigou (Leeson 2015).
According to Hayek, FEE was a ‘propaganda’ institution.83
Boudreaux (1997)—the co-creator of the hagiographic ‘Café Hayek’—
complained to a FEE audience that the ‘government’s long-running har-
assment of the tobacco industry’ was based on the ‘elitist presumption
that tens of millions of Americans are too dimwitted to be trusted with
their own fates.’ According to the World Health Organization, tobacco
now kills more than 7 million people each year (more than 6 million of
those deaths are the result of direct tobacco use while around 890,000
are the result of non-smokers being exposed to second-hand smoke).84
But according to Boudreaux (1997), smoking also

benefits smokers. Non-smokers’ failure to appreciate these benefits no

more proves that smoking is without benefits than does a bachelor’s fail-
ure to appreciate the benefits of marriage prove that marriage is without
benefits. Of course, anti-smoking zealots cravenly deny their puritanical
busy-bodiness. Instead, anti-smoking snobs issue all manner of ad hoc
excuses in attempts to manufacture popular support for their fanatical
crusade. In addition to the tired refrain that tobacco advertising hypno-
tizes vast numbers of otherwise sane folk, the anti-smoking lobby regu-
larly shrieks that ‘children must be protected!’ or that ‘secondhand smoke
kills, too!’ or that ‘smokers’ health-care expenses are a cost to us all!’

According to Boudreaux (2008), ‘As the cliché goes, money is the mother’s
milk of politics.’ The government’s settlement with the tobacco industry

83http://www.margaretthatcher.org/document/114609. Hayek Archives. Box 27.6.

84http://www.who.int/mediacentre/factsheets/fs339/en/.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
239

involved the release of documents that revealed that his GMU colleagues
were at the centre of the ‘cash for comments’ network of the Tobacco
Institute. Boudreaux (1997) had his ‘own proposed tobacco settlement. Let’s
recognize that smoking is voluntary. Let smokers enjoy their cigarettes, and
let tobacco companies be regulated only by the market by putting an end to
government’s odious molestation of smokers and tobacco companies.’
Boudreaux (2006) told his FEE audience to ignore the ‘hysterical
language used by the likes of Al Gore’ and concluded that ‘it’s a per-
fectly legitimate stance for truly reasonable people to conclude that
the best policy regarding global warming is to neglect it -- and let
capitalism continue to make us healthier and wealthier.’ Documents
on the University of California San Francisco website led ‘Corporate
Corruption of Science’ to conclude that Boudreaux was a ‘minor mem-
ber’ of the ‘Cash for Comments Network’ of the Tobacco Institute.85
Boudreaux co-authored an Independent Institute chapter on ‘Sin
Taxes’ (Boudreaux and Pritchard 1995). According to the blurb,
William Shughart II ‘has marshalled the work of 17 scholars to investi-
gate the economics, history, and politics of selective excise taxes, includ-
ing those taxes on tobacco, alcohol, gasoline, and guns, which, at least
in theory, are supposed to influence consumer choices in order to bring
about more rational decision making in the marketplace.’ Documents
on the University of California, San Francisco (provided by the tobacco
companies and forwarded by the National Association of Attorneys
General) led ‘Corporate Corruption of Science’ to conclude that seven
of these 17 ‘scholars’ are on the ‘Cash for Comments Network’ of the
Tobacco Institute86: Wagner (GMU),87 Randall Holcombe88 and Bruce
L. Benson (Florida State University),89 Dwight R. Lee (University

85https://www.sourcewatch.org/index.php/Donald_J._Boudreaux.

86https://www.sourcewatch.org/index.php/Donald_J._Boudreaux.

87‘A life-long lobbyist for the tobacco industry.’ http://sciencecorruption.com/ATN187/00438.

html.
88‘A Public Choice Society member who also joined the cash-for-comments economists network.’

http://sciencecorruption.com/ATN172/00210.html.
89‘A minor cash-for-comments economist from the University of Florida.’ http://sciencecorrup-

tion.com/ATN166/01341.html.
240    
R. Leeson

of Georgia),90 Gary M. Anderson (California State University,

Northridge),91 Richard Vedder (Ohio University)92 and Robert B.
Ekelund Jr. (Auburn University).93 An eighth, Mark Thornton, is
described as part of ‘Ekelund’s group of Auburn University economists’
who ‘became highly skilled at generating scientific propaganda. They all
worked diligently on a commission basis — sometimes with Ekelund
and sometimes alone.’94 A ninth, Gordon Tullock (GMU) is described
by Source Watch as having ‘set up’ the ‘Cash for Comments’ network.95
A tenth, Bruce H. Kobayashi, GMU Associate Professor of Law received
the ‘Citizens Committee for the Right to Keep and Bear Arms’ Gun
Rights Defender of the Month Award.’96 For an eleventh, DiLorenzo
(Loyola College in Maryland), see below.
J. R. Clark (one of Stringham’s co-authors) is the FEE co-author
(with Dwight Lee) of ‘Distrust and Verify’:

Perhaps the most positive legacy of the Clinton administration will be

that it further eroded the public’s trust in the federal government. Trust
has declined significantly since the Great Society programs of the Johnson
administration … Our view is that this decline in trust is a good thing
because it mirrors rather accurately the performance of a government that
has become less trustworthy. (Clark and Lee 1999)

90‘Among academic economists, probably only Robert Tollison did more to promote the interests

of the tobacco industry than Dwight Lee. From his first sniff of tobacco industry lucre he was a
dedicated and enthusiastic collaborator.’ http://sciencecorruption.com/ATN176/00615.html.
91‘Gary Anderson was a “core” member of the Tollison/Wagner economists network who had

been trained by the Tobacco Institute to make their “Social Cost” arguments. His name appears
in both the 1989 Five-man core group of Consulting Economists Team; and in the 1990 Six-man
core group.’ http://sciencecorruption.com/ATN165/00216.html.
92‘From the viewpoint of the tobacco industry Richard Vedder was one of the more productive

and useful of the cash-for-comments economists in their network.’ http://sciencecorruption.com/

ATN186/00003.html.
93‘Ekelund was one of the tobacco industry’s most valued economists through the main Tollison/

Savarese network, and the organiser of his own sub-network through Auburn University in
Alabama.’ http://sciencecorruption.com/ATN169/00359.html.
94http://sciencecorruption.com/ATN169/00359.html.

95https://www.sourcewatch.org/index.php/Gordon_Tullock.

96https://www.ccrkba.org/bruce-h-kobayashi/.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
241

According to his Independent Institute website, ‘Dwight R. Lee is

a Research Fellow at The Independent Institute and the William J.
O’Neil Endowed Chair Global Markets and Freedom and Scholar
in Residence at Southern Methodist University … He is former pres-
ident of the Association of Private Enterprise Education and presi-
dent of the Southern Economic Association.’97 And Clark ‘earned the
Ph.D. in Economics from Virginia Polytechnic Institute under the
Nobel Laureate James Buchanan. He holds the Probasco Distinguished
Chair at The University of Tennessee at Chattanooga … In 1996, he
was inducted into the Mont Pelerin Society and elected to its board of
directors in 2006. Currently, he serves as Secretary/Treasurer for both
the Southern Economic Association and The Association of Private
Enterprise Education and Treasurer of The Mont Pelerin Society.’98
Clark and Lee have trustworthy titles as ‘Professors.’ Documents on
the University of California, San Francisco website led Source Watch
to conclude that Lee was a ‘major figure in the Cash for Comments
Economists Network … primarily run by Robert Tollison out of the
libertarian think-tank, the Centre for Public Choice at George Mason
University’99; and for ‘decades,’ J. R. Clark was a ‘diligent lobbyist for
the tobacco industry.’100
Should those institutions where Kochs exert their ‘that kind of con-
trol’ be allowed to call themselves universities? The Koch family are
loyal to no one—not even each other. Fred Koch removed his oldest
son, Frederick, from his will, and Bill Koch described his two broth-
ers, Charles and David, as ‘crooks’ (Schulman 2014). And Jane Mayer
(2018) reported a further victory for Charles over David: ‘One Koch
Brother Forces the Other Out of the Family Business.’ One misspoken
word and Boettke could sink into middle-class dependency on the tax-
payers of Virginia.

97http://www.independent.org/aboutus/person_detail.asp?id=299.

98https://www.utc.edu/probasco-chair-free-enterprise/profiles/vnt255.php.

99https://www.sourcewatch.org/index.php/Dwight_R_Lee.

100https://www.sourcewatch.org/index.php/Jeff_Ray_Clark.
242    
R. Leeson

In ‘The Trashing of George Mason University The left gangs up on

the school for having conservative professor,’ the WSJ (11 May 2018)
editorialised:

George Mason has made a mark in economic debates through its

Mercatus Center … A 2009 gift agreement between George Mason and
the Mercatus Center outlined the terms for a Koch-funded chair, and
it states that “the objective of the Professorship is to advance the under-
standing, acceptance and practice of those free market processes and prin-
ciples which promote individual freedom, opportunity and prosperity,
including the rule of law, constitutional government, private property and
the laws, regulations, organizations, institutions, and social norms upon
which they rely.” We should hope so. Donors are committing no crime in
trying to judge if their philanthropy is fulfilling its purpose. The Kochs,
God bless them, believe in supporting academics who believe in the prin-
ciples of liberty and market economics. While they can’t and shouldn’t
dictate what any professor writes, professors who believe in free markets
will tend to support those principles.

TOFF lobbyists have almost a monopoly on the WSJ op-ed pages—

where their lobbying identity is rarely revealed (Leeson 2018a). In
‘Climate Change Has Run Its Course Its descent into social-justice iden-
tity politics is the last gasp of a cause that has lost its vitality,’ Steven F.
Hayward (2018) stated: ‘Climate change is over. No, I’m not saying the
climate will not change in the future, or that human influence on the
climate is negligible. I mean simply that climate change is no longer a
pre-eminent policy issue. All that remains is boilerplate rhetoric from the
political class, frivolous nuisance lawsuits, and bureaucratic mandates
on behalf of special-interest renewable-energy rent seekers.’ Hayward (7
July 2006) co-authored an American Enterprise Institute (AEI) offer of
$10,000 (plus travel expenses and additional payments) to an unknown
number of scientists and economists to provide a ‘policy critique’ of the
UN’s Intergovernmental Panel on Climate Change.101 According to the
Guardian, the ‘AEI has received more than $1.6m from ExxonMobil
and more than 20 of its staff have worked as consultants to the Bush

101https://www.desmogblog.com/sites/beta.desmogblog.com/files/AEI.pdf.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
243

administration. Lee Raymond, a former head of ExxonMobil, is the

vice-chairman of AEI’s board of trustees’ (Sample 2007).
‘Uneasy lies the head that wears a crown’ or TOFF regalia: judging
by Boettke’s GMU contract, TOFF-funded ‘Professors’ are monitored
by Koch-appointed handlers (‘Advisory Board’)—who have inquisitorial
power and sanction.102 In ‘Mason Magic Isn’t Rocket Science,’ Boettke
told the Washington Post that ‘He and a student are beginning research
that would use economic techniques to examine what he suspects are
myths … For the big winners, look to the George Mason fundraisers’
(Irwin 2006).103 In ‘Israel Kirzner for the Nobel Prize in Economics?’
GMU Professor Todd Zywicki told readers of the Washington Post that
‘Pete [Boettke] makes the case for Kirzner’s worthiness … he is one of
those great economists (like Hayek) who can explain economics without
equations and formulas. And speaking of Kirzner and Hayek, Kirzner
will be the keynote speaker as the Mercatus Center presents a program
celebrating the 40th anniversary of Hayek’s Nobel Prize … Here’s a
description of the extravaganza.’
In 2016–2017, Boettke was the 65th highest paid GMU employee:
earning $204,365 (313% of the GMU median).104 ‘For services ren-
dered,’ Koch Industries could have put Boettke on their payroll as a
registered lobbyist—but some universities have regulations about their
name being used for such activities. Instead, the taxpayers of Virginia
pay Boettke more than GMU think he is worth—and representa-
tives of Koch Industries reimburse the (independent) George Mason
Foundation by over $80,000 per annum.105
Boettke (2016a) spent ‘five hours’ briefing one journalist and is
known for being unable to stop talking—his wife commented to the
WSJ that he was ‘always on’ (K. Evans 2010). But when the Washington
Post asked questions about the ‘free’ market calculation debate (the

102http://apps.washingtonpost.com/g/documents/local/donor-agreement-between-the-mercatus-

center-and-george-mason-university-to-fund-a-faculty-position/2930/.
103Boettke was talking about basketball predictions.

104http://data.richmond.com/salaries/2016/state/george-mason-university/peter-boettke.

105http://apps.washingtonpost.com/g/documents/local/donor-agreement-between-the-mercatus-

center-and-george-mason-university-to-fund-a-faculty-position/2930/.
244    
R. Leeson

under-the-table Koch payments that supplement his GMU salary),

Boettke ‘referred questions’ to ‘Daniel Rothschild, executive director of
the Mercatus Center’ who dismissed the question with ‘the proof of the
pudding is in the eating’ (Larimer 2018). Shortly afterwards, Boettke
(2018) reported that ‘I am finishing up revisions on a paper dealing
with Buchanan and Academic Entrepreneurship with J. R. Clark.’106 As
the Washington Post reported: ‘Boettke’s work is in the tradition of for-
mer George Mason economist Robert D. Tollison’ (Irwin 2006).
According to Citadel Military College’s ‘Lt. Col. Richard M. Ebeling
PhD,’ externalities had been invented by a gunrunner for Stalin and
NPR journalists are Nazis: ‘National Socialist Radio’ (cited by Leeson
2018a). In 2015, GMU President Cabrera told NPR that ‘Mercatus
affects the reputation of the university in very positive ways. In fact, the
work that it does in exploring how markets can contribute to solving
some of the problems of our day I think is great. They produce great
quality work and work that is, in fact, that receives a great deal of atten-
tion in the media. There are a lot of people who know about George
Mason precisely because of the work that some of our colleagues in
Mercatus conduct. So I think overall the economics field in general has
been central to making George Mason what it is today … I think the
work of our economics group, both inside of--if you will--the academic
structure of our department of economics but also in our affiliated
centers like Mercatus have had a tremendous influence in what George
Mason is today, and I hope it will continue to be that.’107
David Koch told Doherty (2007) that their tax-exempt educational
charitable funding comes with strings—it must go ‘along with our
intent’ or ‘we withdraw funding’ (see above). But when asked ‘Can
the Koch foundation influence what Koch-funded professors teach?’
Cabrera replied:

They can not. First of all, I am nothing but incredibly grateful to their
generosity, especially of Charles Koch. David as well, but Charles has been
nothing but generous to our university. And I think--what I first do when

106http://www.coordinationproblem.org/2018/05/buchanan-camp-park-city-utah.html.

107http://thekojonnamdishow.org/shows/2015-04-08/george-mason-univ-president-angel-cabrera.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
245

anybody decides to part with their hard-earned dollars to support what we

do, my first reaction is to say ‘thank you.’ Hopefully, we will have many
more people follow their example and also contribute with their own
investments to the work that our faculty do. Not just in economics, but
in the sciences, in the social sciences, in the humanities, in the arts and
so forth. Now, at the same time, it is of course our responsibility--mine
and the rest of the faculty--to make sure that we never accept a gift from
anybody that somehow compromises our intellectual independence. No
donor, no matter how generous, can influence who gets who gets tenure,
who gets promoted, what is taught in the classroom, what any faculty
teaches and so forth. Those are absolutely off limits to any donor.108

Three years later, the Washington Post (‘George Mason president: Some
donations “fall short” of academic standards’) reported that Boettke’s
contract was under investigation (Larimer 2018).
Rothbard was a spotter for Al-Qaeda (suggesting New York buildings
to bomb); and according to one of his disciples, ‘Pete [Boettke] is a tal-
ent spotter’ (A. Evans 2010, 80). Jane Mayer (2018) reported that at the
Environmental Protection Agency (EPA)

and the Interior Department, for instance, two government agencies that
are vital to the profit levels of Koch Industries, top personnel have deep
ties to the Kochs. The career of the E.P.A. administrator, Scott Pruitt, in
Oklahoma politics was financially supported by the Kochs. Daniel Jorjani,
now the acting solicitor in the Interior Department, formerly worked
for Freedom Partners, the Kochs’ political-funding group, and at the
Charles Koch Institute and Charles Koch Foundation. Dozens of other
key Koch-affiliated personnel encircle Trump, including Marc Short, the
congressional liaison in the Trump White House; Secretary of State Mike
Pompeo, who received backing from the Kochs as a businessman and a
congressman from Wichita; Education Secretary Betsy DeVos, who was
a billionaire donor in the Kochs’ Seminar Network; and Vice-President
Mike Pence, whose financial ties to the Kochs run so deep, the former
Trump White House strategist Steve Bannon told me, that he worried that
if Pence were ever elected ‘he’d be a President that the Kochs would own.’

108https://www.dailykos.com/stories/2015/4/9/1376491/-George-Mason-University-President-to-

Charles-Koch-I-am-nothing-but-incredibly-grateful.
246    
R. Leeson

Fred Koch—a founding member of the John Birch Society (JBS)—

claimed that racial integration was a communist plot to use African
Americans to destabilise the country and would lead to a ‘mongreliza-
tion’ of the races. Charles Koch purchased a ‘lifetime membership’ of the
JBS until he resigned in 1968 (Leeson 2018a). In 2018, Charles Koch’s
Mercatus Centre had 10 ‘Dissertation Fellows,’ and 35 ‘PhD Fellows’ each
receiving ‘up to $200,000 (over five years) includes a monthly stipend, full
tuition support (nine credits per semester), and experience as a research
assistant working closely with Mercatus-affiliated Mason faculty [bold in
original].’109 Hayek told his second wife that Shenoy, his first appointed
biographer, ‘could not be trusted since she was only an Indian’ (Cubitt
2006, 344); and he didn’t want the ‘negro’ to touch his money.110 Of these
45 members of the GMU Hayek-Fink-Koch ‘knowledge’ production line,
42 are white, two have Chinese names and one has an Indian name.111
According to Carera, ‘gifts may be earmarked for programs, scholarships
or faculty support, but donors may not determine what is taught, what stu-
dent is funded, or what professor is hired. If these terms are not acceptable
to donors, the gifts are kindly declined.’ But the Mercatus ‘Schumpeter
Fellowship includes a stipend, meals and all required readings at program
events, and advice on research, jobs, and graduate school. Schumpeter
Fellows are eligible to apply for conference and research support.’ And
the ‘up to $1000 per semester’ funding is allocated on the basis of replies
to ‘Why you are interested in studying key ideas in political economy and
learning how to utilize these ideas in academic and policy research’ and ‘How
you hope the program will benefit your future endeavors.’112 Boettke—
the Director of the Mercatus ‘F. A. Hayek Program for Advanced Study in
Philosophy, Politics, and Economics’—‘often says’ to his GMU students

‘love Mises to pieces,’ by which he means never lose sight of why you
entered the discipline in the first place. (A. Evans 2010, 79)

109https://asp.mercatus.org/content/phd-fellowship.

110Hayek (5 March 1975) to Neil McLeod at the Liberty Fund. Hayek Archives. Box 34.17.
111https://asp.mercatus.org/students.

112https://asp.mercatus.org/content/schumpeter-fellowship.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
247

‘Donors may not determine what is taught, what student is funded’?

Boettke (2010c) reports that the current GMU economics department
consists of Austrians plus those who are ‘respectful’ towards Mises,
Hayek and Rothbard. What is the probability that an aspiring academic
could obtain employment in Red Terror North Korea without being
‘respectful’ to the country’s ‘Eternal President,’ Kim Il-sung? Would the
Koch-funded Mercatus Centre provide a ‘Schumpeter Fellowship’ to a
student who didn’t want to deify

• a card-carrying Austro-Fascist and member of the official Fascist

social club (Mises);
• someone who sought to overthrow the Constitution of the United
States and replace it by a single sentence written by a dictator-pro-
moting European aristocrat (Hayek)?
• someone who celebrated the bombing of the World Trade Centre and
who defended the Klu Klux Klan assassin of the African American
voter registration activist, Medgar Evers (Rothbard 1993, 1994); and
• those who seek to use the environment as an open sewer (polluters).

Boettke (2016a) stressed Tollison’s ‘importance to Austrian economics

and in particular the sort of environment for Austrian economists here
at GMU.’ He created

legitimate scientific space for Austrian economics at GMU and in the

profession more generally … As a scientist, Bob above all else cared about
productivity and the consistent and persistent application of the eco-
nomic way of thinking to all subjects. He was a natural economist in the
same way as Tullock, and he was a brilliant political economists in the
tradition of Buchanan. He created intellectual space at GMU and beyond
for folks to do ‘good work’ and to strive to publish interesting work.113

This appears to be a translation into the Austrian—‘space’ (‘legit-

imate scientific’ and ‘intellectual’) may best be retranslated as

113http://www.coordinationproblem.org/2016/10/robert-tollison-economist-political-econo-

mist-and-mentor-to-so-many-1942-2016.html.
248    
R. Leeson

channels for TOFF funding (some apparently disguised). And accord-

ing to Boudreaux (1997), ‘Scientific data undermine’ the ‘assertion’ that
‘Secondhand smoke kills! [Boudreaux’s emphasis].’
Fink (born 1951) exclaimed: ‘I can’t figure out how they look at the
data and not see the overwhelming benefits of the free market. I just
don’t understand it’ (cited by Continetti 2011). In 1990, Carol Hrycaj
reported to the Tobacco Institute on her progress with the anti-Pigou
‘Social Cost’ programme:

Consulting economists presented papers on the social cost issue dur-

ing the Western Economic Association’s annual meeting in San Diego,
California. Dwight Lee chaired the session entitled, ‘Smoking and Public
Policy.’ Papers were offered by Lee (‘Smoking and Public Policy’), Gary
Anderson (‘Politics, Redistribution and Smoking’) and Benjamin Zycher
(‘Insurance and Smoking: Market vs. Government’). A full report on the
conference is expected next month. We have agreed to support consult-
ing economists’ presentations during sessions of two other major aca-
demic conferences later this year: the Atlantic Economic Society and the
Southern Economic Association. Both will focus on aspects of ‘user fees’
and budgetary politics. Consulting economists Bob Tollison and Richard
Wagner began work on the manuscript for the revised edition of Smoking
and the State. We received a proposal from consulting economist Dwight
Lee to write an article on the social cost issue for placement in an eco-
nomic periodical, The Margin. The publication is required reading for
students of economics at universities around the country.114

In the USA, Pigouvian taxes and public health campaigns have reduced
adult smoking rates from 42 to 15%.115 In ‘The Government’s Crusade
against Tobacco: Can It Ultimately Succeed?’ Lee (1997) denied that
the price mechanism would work:

Based on past performance, medical warnings, high excise taxes on cig-

arettes, and anti-tobacco media campaigns will have no long-term effect

114https://www.industrydocumentslibrary.ucsf.edu/tobacco/docs/#id=knxw0101.

115https://www.cdc.gov/tobacco/campaign/tips/resources/data/cigarette-smoking-in-united-states.

html.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
249

on smoking … Of course, the organized groups benefiting from raising

taxes on cigarettes and exercising more political control over informa-
tion on tobacco products will continue to support taxation and control
no matter how erroneous their claims. These claims will continue to be
made and supported with arguments that are only superficially plausi-
ble. Will such arguments be sufficient to maintain the political crusade
against tobacco? The answer depends on the gullibility of the public and
the whims of political fashion.

According to Corporate Corruption of Science, Lee was ‘clearly an

enthusiastic servant of the tobacco industry for many years’ who had
been ‘trained by the Tobacco Institute’ to make their ‘Social Cost’
arguments.116 A ‘self-made millionaire’ (according to his former assis-
tant),117 he had previously been ‘Associate Professor & Research Fellow,’
at GMU’s Center for Study of Public Choice.
Hayek’s obsession with his own Aryan ancestry (Ahnenpaß—literally,
‘ancestor passport’) predates Hitler’s (Leeson 2015). According to one
of Boettke’s sympathisers, James Madison University’s J. Barkley Rosser
Jr. (2014), ‘It should be noted that he [Robert Leeson] is apparently
not related to Pete Leeson.’ One of Stringham’s ‘refereed’ publications
appeared in the Journal of Social, Political, and Economic Studies (Parizek
and Stringham 2005) which operates behind a paywall. Stringham
refuses to supply this essay—and so it seems reasonable to presume that
this too was unrefereed.118 The Journal of Social, Political, and Economic
Studies ‘regularly’ carries articles which attempt to ‘support the idea of
a superior white race’ (Stavenhagen 2013, 90). According to Andrew
Winston, the General Editor of the Journal of Social, Political, and
Economic Studies, Roger Pearson, founded the Northern League, a neo-
Nazi organisation whose stated purpose was to save the ‘Nordic race’
from ‘annihilation of our kind’ and to ‘fight for survival against forces
which would mongrelize our race and civilization.’ When he moved

116‘Among academic economists, probably only Robert Tollison did more to promote the inter-

ests of the tobacco industry than Dwight Lee. From his first sniff of tobacco industry lucre he was
a dedicated and enthusiastic collaborator.’ http://sciencecorruption.com/ATN176/00615.html.
117http://www.utm.edu/staff/jsandefe/pages/prof.html.

118Unanswered emails from Leeson (2, 5, and 13 June 2018) to Stringham.

250    
R. Leeson

to the USA in the 1960s, Pearson ‘worked closely with Willis Carto,
the founder of the ultra-right wing Liberty Lobby and the most impor-
tant purveyor of anti-Semitic and holocaust denial literature in the
country.’119
Winton (2010) is the author of ‘Science in the Service of the Far
Right: Henry E. Garrett, the IAAEE [International Association for the
Advancement of Ethnology and Eugenics] and the Liberty Lobby’—
and Pearson was clearly a Rothbard fellow-traveller. Stringham is the
co-author of ‘Radical Scholarship Taking on the Mainstream: Murray
Rothbard’s Contribution’ in the Review of Austrian Economics (Powell
and Stringham 2012); and like Mises and Hayek, Rothbard was a
White Terror promoter masquerading as a scholar.
Boettke told a Globe and Mail op-ed writer that it is

not the job of the referee to decide the winner of the game; nor the mar-
gin by which one team wins or loses. It is not the job of economists to
call the plays, either. Basketball players ‘self-regulate.’ Left alone, markets
do the same - given impartial referees (Reynolds 2010).120

Boettke also told the Washington Post: ‘I can change one rule in basket-
ball and Michael Jordan will no longer be the best basketball player of all
time. You could change the rules to require the game be played on stiletto
heels. Then Cindy Crawford would be the best player’ (Irwin 2006).
Is Boettke a globe-trotting ambassador for the TOFF lobby or a dis-
interested scholar who exposes his GMU students to a variety of per-
spectives so that they can acquire intellectual independence? When
writing academic job recommendations for his graduating GMU stu-
dents, does he provide disinterested evaluations (an impartial referee)
or is he entirely motivated by ‘victory’ for the ‘ideological aspects’ of
economics? Has he systemically abused the privileges bestowed on him
by the taxpayers of Virginia to protect Koch Industries from externality
taxes? According to Stringham (2010)

119https://web.archive.org/web/20150818165724/http://www.ferris.edu/isar/bios/cattell/HPPB/

visions.htm.
1 2 0 h t t p s : / / w w w. t h e g l o b e a n d m a i l . c o m / r e p o r t - o n - b u s i n e s s / r o b - c o m m e n t a r y /

good-economics-and-basketball-just-let-the-players-play/article4325799/.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
251

Advancement to a libertarian society almost definitely requires persuading

enough people to support it. Large-scale education is of utmost impor-
tance, and one of the most important platforms, perhaps the most impor-
tant platform, is through advancement of libertarian ideas in academia.
Imagine hundreds or thousands of professors writing and teaching about
the benefits and morality of a free society. Imagine thousands or millions
of students and people in the general public learning about the ben-
efits and morality of a free society. Peter Boettke exemplifies the move-
ment-building approach to libertarian academic change.

Stringham (2010) describes an ideological agenda: ‘The foundations

that this movement-builder has built will have long-lasting and poten-
tially world-changing consequences … When a student shows interest
in Austrian economics and liberty, Boettke will go out of his way to
work with that student to help them succeed.’ And what happens when
a GMU student doesn’t show an interest in ‘Austrian economics’ and the
‘slogan of liberty’?
According to Mises (1996, 869), ‘No university would admit that the
members of its faculty are inferior to anybody in their respective field.’
But which self-respecting university would knowingly employ a prod-
uct of the Hayek-Fink-Koch production line (Leeson 2018a)? In ‘10
Austrian Vices and How to Avoid Them,’ Daniel B. Klein complained
about the quality of his GMU students:

You are not a philosopher. Your reader can tell this … Many Austrians
have a tendency to think that economists they agree more with are ‘bet-
ter’ economists than those they disagree more with. This is not true …
Most economists will have no idea what you’re talking about if you tell
them you’re working on ‘capital theory’ … you are not going to do this.
Do not pretend otherwise. In fact, ‘grand theory’ or ‘treatises’ of all kinds
should be avoided until you’re a full professor or 65, which ever comes
first. Nearly all Austrians at one point have these delusions of grandeur,
but they are just that—delusions.121

121http://austrianeconomists.typepad.com/weblog/2007/03/austrian_vices_.html.
252    
R. Leeson

Block told Stringham (2010, 10, n22) that ‘nearly all of his students
who have studied under Boettke are now in (or on their way to) aca-
demic positions, versus almost none of his students who studied in
graduate school elsewhere.’ At the ideologically homogenous GMU
economics department, Boettke (2005) expressed contempt for those
applying for academic positions:

Close to 90% of the applications are ridiculously boring --- this is either
a function of the personality of those attracted to academics in the first
place or the incentives within the economics profession which tend to
reward work that conforms to a certain style of reasoning rather than sub-
stantive contribution to our understanding of the world. The 10% that
are not outright boring usually have other quirks which make you get
nervous about the idea of hiring them. The secret for anyone who wants
to really succeed in academics --- turn the quirk into a WOW and you
will separate from the competition quickly.

By his own self-evaluation, Boettke is a ‘WOW’—he claims (falsely,

it seems), to have ‘completed a Post-Doctoral Fellowship at Stanford
University’ and to have been awarded a Prize that appears not to exist
(Leeson 2018a). And after failing to thrive at Thiel Lutheran College,
Boettke may not have passed a single post-secondary course taught and
examined by those who were not devotees of two transparent frauds
(‘von’ Hayek and ‘von’ Mises). There are two alternatives:

• Klein is not accurately describing GMU students—they are of out-

standing academic quality; or
• Block’s students are of a uniform low-level quality. When pursuing
graduate studies outside the ‘free’ market they are deemed unworthy
of an academic career. But at GMU, the same quality students are
provided with ‘WOW’ recommendations so as to add to the Koch
‘academic network’ and thus allow Boettke to meet Koch’s bonus-
driven Key Performance Indicator.

Boettke (2015)—the ‘Charles Koch Distinguished Alumnus, The

Institute for Humane Studies,’ and the ‘vice president and director of
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
253

the F. A. Hayek Program for Advanced Study in Philosophy, Politics,

and Economics at the Mercatus Center as well as the BB&T [Branch
Banking and Trust Company] Professor for the Study of Capitalism’—
lives in a ‘different world than the 99%’ and ‘I’d like to make more
money.’122 From (in ascribed status terms), the New Jersey lower
middle class, Boettke (2012)—who sits atop the ‘free’ market food
chain—describes Mises and Hayek as an intergenerational entitlement
programme: ‘the silver spoon in my mouth.’
According to Hayek (2011 [1960], 186), ‘To do the bidding of oth-
ers is for the employed the condition of achieving his purpose.’ Boettke
(2005) reported that ‘When Marty Zupan contacted me with the
information that I had been chosen to receive the Charles Koch Award
for Outstanding Alumni I was absolutely thrilled and honoured … I
received the award in a state of elation and in all humility.’
In Down and Out in Paris and London, the old Etonian George
Orwell (1933, Chapter 14) detected that the keenly felt gradations of
class distinction towards the bottom of the social hierarchy: the waiter

is proud in a way of his skill, but his skill is chiefly in being servile. His
work gives him the mentality, not of a workman, but of a snob. He lives
perpetually in sight of rich people, stands at their tables, listens to their
conversation, sucks up to them with smiles and discreet little jokes. He
has the pleasure of spending money by proxy. Moreover, there is always
the chance that he may become rich himself, for, though most waiters
die poor, they have long runs of luck occasionally. At some cafes on the
Grand Boulevard there is so much money to be made that the waiters
actually pay the patron for their employment. The result is that between
constantly seeing money, and hoping to get it, the waiter comes to iden-
tify himself to some extent with his employers … waiters are seldom
Socialists, have no effective trade union, and will work twelve hours a
day—they work fifteen hours, seven days a week, in many cafes. They are
snobs, and they find the servile nature of their work rather congenial.

122http://www.peter-boettke.com/curriculum-vita/. Accessed 5 January 2018.

254    
R. Leeson

In America in 1945, Hayek (1978) went on a Road to Serfdom book

promotion tour: ‘I began with a tone of profound conviction, not
knowing how I would end the sentence, and it turned out that the
American public is an exceedingly grateful and easy public.’ It was a
‘very instructive experience … I didn’t know in the end what I had said,
but evidently it was a very successful lecture … I think I ought to have
added that what I did in America was a very corrupting experience. You
become an actor, and I didn’t know I had it in me. But given the oppor-
tunity to play with an audience, I began enjoying it. [laughter] … It’s
the sort of lecturing you can do with the American audience but not the
British audience.’123
Simultaneously, Hayek (1945) published ‘The Use of Knowledge in
Society’ in the American Economic Review. ‘Society’ can be taken two
ways, a double entendre. Fifteen years later, Hayek (2011 [1960], 195)
described the visible marks of Society (or ‘High Society’—the conspic-
uous display of housing, clothing, servants, dining, etc.): Americans
lacked this ‘cultural elite within the propertied class.’
‘Old money’ Europeans tend to be contemptuous of nouveau riche
Americans, their Mock Tudor McMansions, and their ‘stately neo-
Gothic buildings’: a ‘quaint community … There’s a comfortable feeling
being in Olde Town Grove City.’124 For current consumption purposes,
Hayek (1978) doubted ‘whether the Americans are book readers. You
see, if you go to a French provincial town, you’ll find the place full of
bookstores; then you come to a big American city and can’t find a single
bookstore. That suggests a very fundamental contrast.’
There is also a fundamental contrast between the evidence and
Hayek’s (1992 [1977]) assertions: the previous year, he had told Thomas
Hazlett that he had been ‘quite depressed two weeks ago when I spent
an afternoon at Brentano’s Bookshop in New York and was looking at
the kind of books most people read. That seems to be hopeless; once
you see that you lose all hope.’

123Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

124http://www.gcc.edu/about/visitingcampus/Pages/Visiting-Campus.aspx.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
255

The interwar American public transport system was gutted by

National City Line’s criminal conspiracy: henceforth, in Los Angeles,
for example, sovereign consumers would have to drive a car to get to the
beach (Leeson 2005). Hayek was contemptuous of Americans because
they were victims of the automobile industry who funded his MPS.
The Austrian-born architect Victor Gruen (1903–1980)—the author of
The heart of our cities: The urban crisis: diagnosis and cure (1964)—con-
structed a pedestrian-only mall in Kalamazoo to counteract the automo-
bile-oriented culture encouraged by suburbanisation. Many European
intellectuals are walkers, climbers and hikers—and Hayek (1978)
noted that it was ‘conspicuous that the Americans did no longer walk.
My wife used to say that they would soon lose the capacity to walk.’125
What did he say in private conversation with Leube (that he may not
have known were being taped)?
Hayek (1978) was raised on the author of ‘Dr. Faustus’ who sold his
soul to the devil for academic advancement: ‘Goethe is really proba-
bly the most important literary influence on my early thinking.’126 In
‘Television and the Public Interest,’ President John F. Kennedy’s Federal
Communications Commissioner, Newton Minow (9 May 1961),
described ‘a procession of game shows, formula comedies about totally
unbelievable families, blood and thunder, mayhem, violence, sadism,
murder, western bad men, western good men, private eyes, gangsters,
more violence, and cartoons. And endlessly, commercials -- many
screaming, cajoling, and offending … a vast wasteland.’127 Out of this
wasteland emerged ‘secondhand’ images of Hayek, Mises and ‘liberty.’
Boettke, the President of Hayek’s MPS (2016–2018), describes the diet
of the American-Austrian cultural elite:

Buffy the Vampire Slayer, Seinfeld, Sapranos [sic ], and NYPD Blue
(I believe I have seen every episode of these shows). As for movies, I

125Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

126Friedrich Hayek, interviewed by Axel Leijonhufvud date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

127http://www.americanrhetoric.com/speeches/newtonminow.htm.
256    
R. Leeson

am partial to Adam Sandler movies, in particular The Water Boy, but

also The Wedding Singer. Though I should note that I love the Lord
of the Rings movies, The Matrix, and The Godfather triology [sic ]; Star
Wars less so, but still a big favorite. Other movies I have particularly
liked over the year have been Taxi Driver, Raging Bull, and Bang the
Drum Slowly with Robert DeNiro, and The Right Stuff and Apollo 13
about the space program. I enjoy watching Tom Hanks movies as
well. Given my interest in basketball it should not be a surprise that I
loved Hoosiers, the story of Pistol Pete Maravich, The Pistol: Birth of a
Legend, and even Robbie Benson in One on One … I am an avid fan,
watching hundred [sic ] of games a year at the high school, college and
pro level.128

Fest (1970, 9, 7) describes both the ‘gutter pamphlets’ that motivated

Hitler in Vienna—the Ariosophy ‘doctrine of the struggle of the ace-
men or heroes against inferior races, the ape-men or satyrs’—and the
‘maniac eagerness’ with which he ‘allowed himself to be transported’ by
Richard Wagner’s music ‘into the unreal world which he finally erected
beside and above real life.’ In Block’s (2010) I Chose Liberty, many
Austrian-Americans—who profess great religiosity—report they were
recruited as adolescents through fantasy:

Prometheus, the Journal of the Libertarian Futurist Society… founded in

1982 to recognize and promote libertarian science fiction. The LFS is a
tax-exempt nonprofit group with an international membership of lib-
ertarians and freedom-loving science fiction fans who believe cultural
change is as vital as political change in achieving freedom. After all, imag-
ination is the first step in envisioning a free future -- and the peace, pros-
perity and progress that can take humankind to the stars … People come
to libertarianism through fiction.129

As MPS President, Friedman (October 1970) proposed that a special

board of directors meeting consider holding a ‘grand 25th anniver-
sary meeting’ in 1972 ‘and then disbanding … in a blaze of glory …

128http://econfaculty.gmu.edu/pboettke/sports.html. Accessed 1 October 2016.

129http://www.lfs.org/index.htm.
 5 Summoned to Service by TOFF Funds and Aristocratic Bells    
257

Organizations have a tendency to persist after they have outlived their

function. Unlike old soldiers, they generally do not even fade away.’130
As Boettke’s fellow Austrian epigones and Presuppositionalists streamed
into the MPS, Friedman (17 April 1990) withdrew—telling MPS
President Antonio Martino that ‘a disturbingly large fraction of mem-
bers are present at the meetings essentially as voyeurs and not as real
participants.’131
In ‘Red Light States: Who Buys Online Adult Entertainment?’
Benjamin Edelman (2009, Table 2, 217, 219) found that there is a posi-
tive relationship between pornography consumption and the proportion
of the population of a State that agrees with statements such as

Even today miracles are performed by the power of God.

I never doubt the existence of God.
Prayer is an important part of my daily life.
I have old-fashioned values about family and marriage.
AIDS might be God’s punishment for immoral sexual behavior.

The ‘free’ market fraud, ‘Deacon’ McCormick (1965, 162–163,

127, 130, 158, 159; 1956, Chapter x, 115–116, 144–145), who
was disgusted by ‘aged men with jaded and warped sexual appe-
tites,’ described watching a performing Arab girl—‘she couldn’t
be more than thirteen’—and discussed having sex with her. One
of his companions complained: ‘she is not too young. But naked
she would be a disappointment. Too much bone. And that would
ruin everything.’ As an illustration, a semi-naked photograph of ‘A
child dancer’ was provided. ‘Deacon’ McCormick then recounted
his befriending of a middle-aged Frenchman who had ‘rescued’ a
twelve-year-old servant girl from a brothel: ‘he made no attempt
at love-making although he was unable to sleep for thinking about
her.’ He then ‘married’ her two years later. ‘Deacon’ McCormick’s

130Hayek Archives. Boxes 73.40.

131Friedman Archives. Box 200.6.
258    
R. Leeson

(1962, 200, 192, 97, 148, 125, 164, 190, 191, 64n) Temple of Love
described one cult leader, John Hugh Smyth-Pigott, the ‘flamboyant
Messiah of Clapton,’ who was devoted to ‘conquests of young girls’:
one sixteen-year-old orphan, Zoe Paterson, was led away for sex with
the ‘Beloved One.’
The ‘liberty’ candidate in the 2016 US Presidential election gener-
ated headlines such as ‘Donald Trump boasted about meeting semi-na-
ked teenagers in beauty pageants’ (Ravesz 2016). Mises apparently had
a fetish about touching young girls (especially their hair) while think-
ing about their mothers (Chapter 12, below). What type of relation-
ship does Rockwell (2005) have with the cult leader after whom his
Institute is named? ‘I often think back to a photograph of Mises when
he was a young boy of perhaps 12, standing with his father … you
sense that there is something in Mises’s eyes, a certain determination
and intellectual fire, even at such a young age. His eyes seem know-
ing, as if he were already preparing himself for what he might face.’ It
would be useful to have a systematic study of the social origins and psy-
chological predispositions of those who have been summoned to ser-
vice by aristocratic bells.

References

Archival Insights into the Evolution

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 6
‘Free’-Market ‘Knowledge’:
Seven Suggested Research Topics

1 The ‘Free’ Market Tax Dependency

Ratio (X/Y)
Candidates running for public office usually claim they can cut taxes by
eliminating ‘waste, fraud and corruption.’ Austrian logic is that (often
through dishonesty) they have created a Welfare State for themselves
(funded either directly by the taxpayer or through tax-exempt ‘educa-
tional’ charities) and that their donors’ taxes can be cut by eliminating
the non-Austrian Welfare State.
In a footnote, Block (2009, 145, n19) stated: ‘In the interests of full
disclosure, I must note that I was previously employed by the University
of Central Arkansas, a public institution of higher learning.’ In addi-
tion to being employed at the tax-exempt Fraser Institute and holding
the ‘Charles Koch Fellowship’ at the tax-exempt Coalition to Save New
York, Block is funded by the tax-exempt Jesuit Loyola University New
Orleans and the tax-exempt Mises Institute. He is a major beneficiary of

© The Author(s) 2019 269

R. Leeson, Hayek: A Collaborative Biography,
Archival Insights into the Evolution of Economics,
https://doi.org/10.1007/978-3-319-78069-6_6
270    
R. Leeson

the Welfare State: James Madison High School, Brooklyn, NY (devoted

to ‘the development of nobility of character’1), Brooklyn College (BA),
Rutgers The State University of New Jersey (Instructor and Assistant
Professor), Stony Brook State University of New York (Instructor),
Bernard M. Baruch College of the City University of New York, the
first institution of free public higher education in the USA (Assistant
Professor) in addition to the University of Central Arkansas (Professor).2
Cubitt’s (2006) documentation of Hayek’s anti-Semitism can pre-
sumably also be found in her 1999 draft of Hayek an Affectionate
Memoir, which scholars have accessed (see, e.g., Hoover 2003, 277,
n48). One of Hayek’s befuddled PhD students, the Jewish-born
Hamowy (2002), who was known in Austrian circles as the ‘gay dwarf,’
was incapable of detecting his supervisor’s anti-Semitism.3 Another,
the gay-rights activist, Raico (2015), runs the ‘Jewish Libertarian
blog’ where he insists that: ‘Paul Samuelson and other Jewish apol-
ogists for the Soviet Union and Mao are not stupid. They are evil.’
In a footnote, Raico (2012, 260, n11) asserted: ‘Mises, of course,
always vehemently rejected Nazism in every respect.’ Yet Mises (1985
[1927], 44)—referring to ‘Ludendorff and Hitler’ and others—stated:
‘Many arguments can be urged for and against these doctrines, depend-
ing on one’s religious and philosophical convictions, about which any
agreement is scarcely to be expected. This is not the place to present and
discuss the arguments pro and con, for they are not conclusive’.4
According to Raico (2012, 140–141), Turner’s ‘superb scholarship’
had demolished a

1http://www.madisonhs.org/domain/66.

2http://www.walterblock.com/wp-content/uploads/cv/block_cv.pdf.

3Or more precisely, Hayek’s third appointed biographer, himself gay, referred to him as a ‘gay

dwarf ’ (Cubitt 2006, 265).

4Mises’ (1985 [1927], 44) next sentence—‘The only consideration that can be decisive is one

that bases itself on the fundamental argument in favor of democracy’—should be taken in the
context of Mises’ anti-democratic contempt for the lower orders, and Hayek’s (1978) state-
ment: ‘I believe in democracy as a system of peaceful change of government; but that’s all its
whole advantage is, no other. It just makes it possible to get rid of what government we dis-
like.’ Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
 6 ‘Free’-Market ‘Knowledge’: Seven Suggested Research Topics    
271

myth. He relied on a multitude of primary sources ignored by other writ-

ers. Turner’s own analysis is now accepted by practically all experts in the
field. Whether he will have any more success in seeing his version passed
on to the educated public than the economic historians of the indus-
trial revolution have had remains to be seen … Turner reflects on why
so many professional historians should have accepted the old fable of
Hitler and the German industrialists so uncritically. His reply is: bias …
Although deliberate distortion figures in some publications on the sub-
ject, the susceptibility of most historians to the myths dealt with in this
volume is attributable not to intellectual dishonesty but rather to the sort
of preconceptions that hobble attempts to come to grips with the past.

Mises (1985 [1927], 49, 44) praised ‘Fascists,’ ‘Germans and Italians,’
‘Ludendorff and Hitler.’ But in a footnote, Raico (2012, 258, n7),
Professor of European History at Buffalo State College, asserted that
(in addition to Mussolini) Mises ‘had in mind (48) the “militarists and
nationalists” of the first years following World War I, particularly the
Freikorps.’ Turner (1985, 10) implicitly explained why this defining
article of Austrian faith is a myth:

Until their disbandment in the summer of 1920, the Freikorps also served
as training schools for a generation of young, reactionary political hood-
lums who would later assassinate prominent Republican leaders, serve as
foot soldiers in the [Ludendorff and Hitler] Munich Beer Hall Putsch of
1923, and man the political armies that eventually turned the streets of
Germany into battlefields. The big businessmen who helped finance the
Freikorps thus incurred a share of responsibility - along with the Majority
Socialists who called these units into being - for swelling the ranks of the
violence prone young men who would bedevil the democratic processes
of the Republic throughout its brief existence.5

Referring to the political left and the left-influenced, Turner

(1985, 350) concluded: ‘With astonishing frequency … evidence and

5According to Clark (1964, 57), the Freikorps consisted of three elements: ‘soldiers, mainly young
soldiers, from the frontline who preferred to go on soldiering, youthful idealists of the aristocratic
and professional classes who had experience of local bolshevisants, and frank adventurers.’
272    
R. Leeson

purported evidence bearing on the subject of this book has been dealt
with by historians in a fashion marked by striking suspension of profes-
sional standards.’
Mises was distrustful. When his fiancé was involved in a ‘sensational’
trial about the ‘improper’ behaviour of her Stage Director, Mises vis-
ited the archives of the Neue Freie Presse and looked up all the records
about the case: he had to ‘assure himself ’ that she had ‘spoken the truth’
(Mises 1976, 8–9; Chapter 9, below). But ‘professional standards’ are
suspended when dealing with religious icons. In his Preface to the
English language version of Liberalism in the Classical Tradition, Mises’
(1985 [1962], xviii) asserted that he had ‘not changed anything in the
original text of the book and did not influence in any way [emphasis
added] the translation made by Dr. Ralph Raico and the editing done
by Mr. Arthur Goddard.’ In a footnote, Raico (2012, 258, n7), a Mises
Institute Senior Fellow, revealed—but did not explicitly report—that
Mises was lying:

When I undertook to translate Liberalismus into English in the late

1950s, Mises at one point suggested that I include a translator’s note
explaining the historical context of these and similar remarks on Italian
Fascism. My reply, in retrospect mistaken, was that such a note was super-
fluous, since the grounds for the views he expressed in 1927 were obvi-
ous. The English translation appeared, unfortunately, without any such
explanation. I had vastly underestimated the prevelance of historical clue-
lessness among Mises’s socialist critics.

In his Barron’s review of Raico’s (2012) book, Block (2012) asserted:

‘Raico elucidates the liberalism of the great Austrian economist Ludwig
von Mises, who fled Nazi-dominated Europe for New York City—an
accident of history that proved fortunate for the intellectual develop-
ment of Mises’ greatest American student, Murray Rothbard, and pres-
idential candidate Ron Paul, not to mention the author himself and,
among countless others, this reviewer.’
The atheist Block (2005b) was ‘very busy doing what I take to be
the Lord’s work’ when Hurricane Katrina hit. Block (2005a) then
decamped to the ‘monastic’ Ludwig von Mises Institute where he ‘could
 6 ‘Free’-Market ‘Knowledge’: Seven Suggested Research Topics    
273

spend many happy minutes gazing at the busts of Rothbard and Mises,
and thinking great thoughts,’ while working ‘nonstop from about
8:30am to about 10:30 p.m., seven days a week. Exhilarating.’ Block
(2013, 25) derives his Austrian ‘knowledge’ from ‘Wiki. (2012, 12 02).
Ludwig von Mises. Retrieved from Wikipedia: http://en.wikipedia.org/
wiki/Ludwig_von_Mises#Criticisms.’
Block (2012) claims to have ‘published over 400 articles in peer-
reviewed journals’—but under ‘Articles Published in Refereed Journals,’
there are only 288 items on walterblock.com.6 Boettke (2016a) cele-
brated that if your ‘peers’ are Austrians, the reviewing will almost cer-
tainly be done by fellow ideologues: about half of Block’s 288 items fall
into that category; about a quarter are highly opinionated contribu-
tions to law reviews; about 10% to ‘ethics’ journals; and 20 or so appear
in mainstream economics journals. When an article has been peer-
reviewed, it is conventional to thank the referee in a footnote: Do any
of Block’s ‘peer-reviewed journal articles’ thank referees?
Since Hayek’s 1974 Nobel Prize, the taxpayer has provided Austrian
epigones with $X million (billion?) to teach and produce research (Y).
University Austrians ‘teach’ nuanced propaganda (e.g. Hayek I), while
their median research output (conventionally defined, primarily, by
peer-reviewed publications in quality journals) is zero: X/0 = unde-
fined (‘ghosts of departed quantities’). The tiny minority who have
published in non-fringe journals have done so through ‘opinion’ pieces
(with innumerable rejoinders) or as cuckolds: nuanced ‘lives of the
Austrian saints’ masquerading as history of economic thought. Think-
tank Austrians neither teach nor undertake disinterested research: they
promote a weltanschauung in which their TOFF donors can evade full-
cost pricing. Fiscal rationality implies that all entitlement programmes
should be subject to social cost–benefit analysis: it would be useful to
have a calculation of both the numerator and the denominator of this
tax dependency ratio (X/Y).

6Accessed 10 March 2016.

274    
R. Leeson

2 Donor Objectives
The post-Nazi, pre-Nobel Austrian School of Economics would have
largely been relegated to ‘antiquity value’ had ‘business conservative’
donors not funnelled millions of tax-exempt dollars to (presumably,
unintentionally) support transparent frauds, the ‘united front’ with
‘neo-Nazis’ (Block 2000, 40), ‘Redneck’ militia groups, and white
supremacists (Rothbard 1994b). Rothbard (1963) described himself as
an ‘economic consultant’: Would he have been able to survive, finan-
cially, on the failed fringes of academia without TOFF funding?
Turner’s (1985) German Big Business and the Rise of Hitler describes
the equally muddled incentives with respect to the period when Mises
was promoting political fascism and (along with Hayek) the economic
policy—deflation—that facilitated the Nazi seizure of power. Turner
also explicitly disposed of the Marxist myth that big business was a
homogenous class block that provided the bulk of funding for the
Nazis: dues and entrance fees for their public rallies were also impor-
tant. Yet there were also numerous businesses and individuals from the
‘middle reaches of industry, commerce and finance’ that funded Hitler.
Those businessmen who supported the duplicitous Hitler often got
the ‘short end’ of the bargain. Fritz Thyssen, whose views were ‘shaped
by Catholic social thought,’ was an ‘implacable foe of the Republic’
(Turner 1985, 45, 51–52)—but when in 1934, he complained about
his lack of gratitude, Hitler replied: ‘I never made you any promises …
I’ve nothing to thank you for. What you did for my movement you did
for your own benefit, and wrote it off as an insurance premium’ (cited
by Turner 1985, 237, 339). Hayek’s (1988) Fatal Conceit the Errors of
Socialism was funded by Thyssen’s Foundation (Bartley 1988, xiii).
Chambers of Commerce and Industry and similar organisations lob-
bied for the quasi-official business sector ideology—die Wirtschaft (the
national economy)—and lobbied against Socialpolitik, the Welfare State
for the non-business sector. Government favours had made ‘big business
seem very much a pampered child of imperial Germany’—but the dem-
ocratic arithmetic became increasingly stacked against die Wirtschaft:
‘Three quarters of the voters were wage earners.’ While the officer corps
 6 ‘Free’-Market ‘Knowledge’: Seven Suggested Research Topics    
275

saw itself as the custodian of Germany’s ‘proud military heritage,’ big

business saw itself as ‘the rightful, if self-appointed, guardian of a vital
aspect of Germany’s national life.’ This ‘loyalty’ transcended—and
stood in opposition to—the Republic. In 1931, a group of prominent
businessmen urged Chancellor Brüning to ‘remove the chains from
business and free it to conduct its affairs according to the eternally valid
laws of economics, so it can unleash its might’ (Turner 1985, xix, 3,
Chapter 1, 158).
In ‘Money Versus Votes,’ Turner (1985, 18–31) described the response
of the business sector to democracy: ‘the delicate process of transforming
money into influence.’ In Austria, Germany and later the USA, Mises—
the promoter of one-dollar-one-vote ‘consumer sovereignty’—saw him-
self as the codifier and theoretician of Wirtschaftspolitik.
Time (1967 [3 April 1933], 98) reported that in Berlin, ‘tycoons of
the Reichs Federation of Industry signed a manifesto promising the gov-
ernment their fullest support.’ Those who funded the Nazis also funded
other political parties: ‘They would have preferred a single united bour-
geois party and looked with envy to the United States, where a simpler
party system seemed to make it easier for their American counterparts
to influence the shape of national policy’ (Turner 1985, 24). In the
USA, the ‘donor class’ fund the Austrian School of Economics plus both
major political parties. From 1 April 1909 until 1934, Mises was a full-
time Kammer lobbyist (and part-time between 1934 and 1938). The
day after Anschluss, several of Mises’ fellow Kammer

employees greeted each other with ‘Heil Hitler.’ (Ebeling, n.d., 67)

Before founding FEE, Read had previously been the General Manager
of the Los Angeles branch of the United States Chamber of Commerce;
according to Mary Sennholz (1996), Read’s motto was: ‘There is the
Mind of the Universe—God—from which all energy flows. Individuals
are receiving sets of this Infinite and Divine Intelligence.’ With respect
to Fraud, Fascism and Free Market Religion (Leeson 2015b): Hayek pro-
vided the fraud, Mises the ‘Fascism,’ and Read (1969, 48–49), in The
Coming Aristocracy, the ‘free’-market religion:
276    
R. Leeson

The free market way of life depends entirely upon an internal force:
faith - intimately personal and individual. Faith is not spread or even
taught; at best, it is caught, by insight and observation. It is, as St. Paul
tells us, ‘the substance of things hoped for, the evidence of things not
seen’. (Hebrews 11:1)

For public consumption, Mises (1944, 132) described the philosophy

of the ‘advocates of an aristocratic revolution’: ‘You have the choice,
they say, between the tyranny of men from the scum and the benevo-
lent rule of wise kings and aristocracies’—which is remarkably similar
to the sentiments he expressed in private (Chapter 2, above). For pub-
lic consumption, Hayek (1992a [1968], 259, 262) declared: what FEE,
with ‘Read at its head, and all of his co-fighters and friends are com-
mitted to is nothing more nor less than the defence of civilisation against
intellectual error … I mean it literally.’ Read was a ‘profound and orig-
inal thinker,’ who could be relied upon ‘not only to spread the gospel’
but also to contribute to the development of ideas [Hayek’s emphasis].’
When Thomas Hazlett asked ‘So if a businessman says to you, “What
can I do?” from the state down, your suggestion is to send a check to
the IEA or a reasonable facsimile,’ Hayek (1978) replied: ‘Oh, yes. Of
course, do the same thing here.’ Anthony Fisher who has ‘founded, on
my advice,’ the (London) IEA is ‘now creating similar institutes in this
country, in Los Angeles and San Francisco and New York, and he has
already done one in Vancouver’ (the Fraser Institute) which is ‘nearly
as good as the London one.’7 Hayek also told Cubitt (2006, 144) that
Fisher was not ‘intellectually gifted’; Hayek (28 August 1975) was also
obliged to make a ‘confidential’ reply to Arthur Seldon, the other IEA
co-founder, apologising for having apparently stated that he regarded
the IEA as a mere popularising ‘propaganda’ institution. The IEA,
he assured Seldon, was superior to FEE’s ‘propaganda’ efforts (the
Irvington ‘setup’).8

7Friedrich Hayek, interviewed by Thomas Hazlett 12 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

8http://www.margaretthatcher.org/document/114609 Hayek Papers Box 27.6.
 6 ‘Free’-Market ‘Knowledge’: Seven Suggested Research Topics    
277

Hayek (1956) also told a FEE audience that ‘It was not long after
the publication of [Theorie des Geldes und der Umlaufsmittel 1912] and
the appointment to a readership at the university to which it led, that
Professor Mises’ scientific work was definitely interrupted by the out-
break of the first great war and his being called up for active service.’
A readership? This contradicts the Austrian trope—at the University of
Vienna, Mises was never more than an unpaid lecturer. According to
Hülsmann (2007, 209), Mises used his book to obtain the Habilitation
degree and to be admitted as a Privatdozent—a ‘private lecturer.’ He
began lecturing in summer 1913 semester—and taught for three
semesters.
Hayek (1956) told a FEE audience that ‘I had, of course, been a
member of his [Mises’] class at the university … I first sat at the feet of
Professor Mises, immediately after the first war … I am probably the
oldest of his pupils.’9 In the first chapter of The Essence of Hayek (1984
[1975], 5), Hayek stated that he had ‘probably learnt at least as much if
not more than I learnt from personally observing it by being taught to
see - then largely by my teacher, the late Ludwig von Mises.’ And Hayek
(1978) told Earlene Craver that ‘There were a few Privatdozents, or
men with the title of professor like Mises … Though Mises, my teacher,
had such a good position [at the Chamber of Commerce] that I doubt
whether he would have wished to start at a lower level, even for an
extraordinary professor, it was a great chagrin to him that [a chair] was
never offered to him.’10 Hayek (1978) also told Craver, Robert Bork
and Buchanan, respectively: ‘my contact with him [Mises] was entirely
outside the university’11; he ‘had not known’ Mises ‘at the university,

9Hayek (1956) added: ‘But since, as I must mention in my own excuse, I was rushing through
an abridged postwar course in law and did not spend all my spare time on economics, I had not
profited from that opportunity as much as I might have.’
10Friedrich Hayek, interviewed by Earlene Craver date unspecified 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

11Friedrich Hayek, interviewed by Earlene Craver date unspecified 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

278    
R. Leeson

and I had never attended his lectures at the university’12; and ‘I only
met Mises really after I had taken my degree.’13
The dominant influence over Hayek at the University of Vienna was
Spann—the ‘Philosopher of Fascism’ (Polanyi 1934, 1935). Hayek’s
references to Spann in the UCLA oral history interviews are (with one
exception) accompanied by his dissembling word, ‘curious’:

Well, I think the main point is the accident of, curiously enough, Othmar
Spann at that time telling me that the book on economics still to read
was [Karl] Menger’s Grundsetze … It’s a curious factor that Spann, who
became such a heterodox person, was among my immediate teachers
the only one who had been a personal student under Menger.14 Othmar
Spann, a very curious mind, an original mind, himself originally still a
pupil of Menger’s.15 It’s very curious; the man who drew my attention
to Menger’s book was Othmar Spann … He was semicrazy and changed
violently from different political persuasions–from socialism to extreme
nationalism to Catholicism, always a step ahead of current fashions.
By the time the Nazis came into power, he was suspect as a Catholic,
although five years before he was a leading extreme nationalist.16

Five years before the Nazis came to power, Alfred Rosenberg founded
the anti-Semitic Nationalsozialistische Gesellschaft für deutsche Kultur
(‘National Socialist Society for German Culture’), which Spann joined
(Leeson 2017). In taped for-posthumous-general-consumption oral
history interviews, Hayek told Leube (2003, 15) that he had ‘checked
out Mises at the university only once and quickly came to thoroughly

12Friedrich Hayek, interviewed by Robert Bork 4 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

13Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

14Friedrich Hayek, interviewed by Axel Leijonhufvud date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

15Friedrich Hayek, interviewed by Earlene Craver date unspecified 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

16Friedrich Hayek, interviewed by Armen Alchian 11 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 6 ‘Free’-Market ‘Knowledge’: Seven Suggested Research Topics    
279

dislike him.’ When sent for a job interview to Mises, Hayek (1978)
arrived with a

letter of introduction by von Wieser, who was my real teacher, who

described me as a promising economist. Mises looked at me and said,
‘Promising economist? I’ve never seen you at my lectures.’17

How in the space of a few minutes did Hayek come to ‘thoroughly dis-
like’ Mises? Because he had what he described as a ‘very unpleasant’
Jewish accent (Leeson 2015a, Chapter 2)?
Is education a service vehicle for social mobility or a business? How
should it be funded? State funding comes with the possible risk of polit-
ical bias—but one of the DOs and DON’Ts of think tanks and ide-
ology-promoting colleges is ‘Don’t Offend Donors.’ Two pre-eminent
Austrians scholars became FEE President: Skousen (2001–2002) and
Ebeling (2003–2008), who between them, they appear to have a soli-
tary refereed publication in non-Austrian outlets: (Skousen 1997). Both
uncritically consumed Hayek’s fraud about the founder of the market
failure school being a Soviet agent; both used their power as producers
to repeat Hayek’s fraud (Leeson 2015b). When George Roche III was
forced to resign as Hillsdale College President, Ebeling described the
conflict between ‘liberty’ and evidence: ‘The reason George never had a
chance in the court of public opinion is that Hillsdale College depends
on its donor base.’ The trustees ‘panicked over how it would affect sup-
port for the college’ (Washington Times 2005).18
Because it is conspiracy-linked, the evidence contained in Anthony
C. Sutton’s (1976) Wall Street and the Rise of Hitler appears tainted—
Turner’s (1985) evidence and commentary is much more compel-
ling. But influence requires more than compelling evidence and

17Friedrich Hayek, interviewed by Robert Bork 4 November 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
18William Bennett resigned as head of Hillsdale’s search committee for Roche’s replacement

because he suspected a cover-up: ‘There’s a dead woman here. No, it is not over. Not until they
tell us the truth’ (cited by Frey 1999).
280    
R. Leeson

interpretation. D. McCloskey’s (1985) The Rhetoric of Economics, for

example, intensified the examination of one school of economics—
Chicago—but did not lead to the systematic examination of the nature
of influence either within the economics profession or over public
policy.
According to Boettke (2016b), Mises ‘is a story of scientific glory and
personal courage in a very dark time in human history. He stood against
those forces with the tools of reason embedded in economic science at
its finest, and he survived courageously and in doing so provides us with
an exemplar of scientific economist, scholar of political economy, and
bold and creative social philosophy.’ And ‘both in Vienna and NYU he
had full faculty privileges which enabled him to supervise dissertations
and mentor graduate students (he wasn’t an adjunct).’
At the University of Las Vegas, Nevada, ‘Austrians are at the top of
their classes’ (Rothbard 1990, 5). In the ‘free’ market, how do students
get to the ‘top of their classes?’ At NYU, Mises initially gave ‘every stu-
dent an A. When told he could not do that, he alternatively gave stu-
dents As and Bs depending on their alphabetic placement. When told
he could not do that, he settled on a policy of giving an A to any stu-
dent who wrote a paper for the course, regardless of its quality and a
B to everyone else [emphasis in original]’ (Rothbard 1988, 106, n56).
This allowed Wall Street brokers to obtain academic qualifications as
they slept throughout Mises’ class (Doherty 2007, 212).
The Scholastic Aptitude Test assesses writing, mathematics and crit-
ical thought—a score of less than 1000 is below average.19 A Hillsdale
College official told Robert Anderson (1999) that ‘Hillsdale students
have an average SAT score in the nine hundreds and, yet, almost
eighty percent of them are on the dean’s list. What does this say for
our academic standards?’ Caldwell praised Boettke’s contribution—
not to scholarship—but to ideology: he ‘has done more for Austrian
economics, I’d say, than any individual in the last decade’ (cited by
K. Evans 2010).

19The SAT criteria were changed slightly in 1994.

 6 ‘Free’-Market ‘Knowledge’: Seven Suggested Research Topics    
281

David Colander and Arjo Klamer’s (1987) analysis of the school-

specific biases that graduate students absorb from their economics pro-
fessors was metrics-based: it would be useful to have a metrics-based
examination of what type of producer sovereignty students of Austrian
economics have been exposed to. It would also be useful to have a
metrics-based examination of what Austrian donor believe they are
­
funding, plus a systematic study of Mises’ influence over the anti-demo-
cratic spectrum—including those who funded Hitler.

3 Nobel Dysfunction?
Boettke (2014) believes that he is ‘capable of engaging in scholarly
chess,’ while ‘gullible’ historians of economic thought are and capa-
ble only of ‘playing ideological checkers’: a reference to board games
which—like the academic market process—are designed to promote
rules-based competition. Hayek (1986, 143–144) saw this concept as
central to his notion of cultural evolution: in 1936, he ‘suddenly’ saw
that his ‘previous work in different branches of economics had a com-
mon root. This insight was that the price system was really an instru-
ment which enabled millions of people to adjust their efforts to events,
demands and conditions, of which they had no concrete, direct knowl-
edge.’ The Austrian business cycle theory which—Hayek fraudulently
asserted—had allowed him to predict the Great Depression provided
the foundation for his other work: ‘The problem I had first identified
in studying industrial fluctuations–that false price signals misdirected
human efforts–I then followed up in various other branches of the disci-
pline.’ He ‘gradually found that the basic function of economics was to
explain the process of how human activity adapted itself to data about
which it had no information. Thus the whole economic order rested on
the fact that by using prices as a guide, or as signals, we were led to serve
the demands and enlist the powers and capacities of people of whom we
knew nothing.’ The ‘insight that “prices were signals bringing about …
unforeseen coordination” became’ the ‘leading idea behind my work.’
To construct a Welfare State for his academically unqualified
disciples, Hayek (1978) provided fraudulent job recommendations:
282    
R. Leeson

‘That I cannot reach the public I am fully aware. I need these intermedi-
aries.’20 In one instance, he ennobled his library assistant as ‘Dr.’ despite
knowing that his intellectual deficiencies had prevented him from com-
pleting an undergraduate degree. These false price signals allowed ideo-
logues to make illegitimate jumps to become ‘Professors of Economics’
at the expense of ‘opponents’ with genuine academic qualifications.
At zero cost, Hayek was unacceptable to the University of Chicago
Economics Department (even as a courtesy Professor); while at NYU,
Mises was acceptable (but only at zero cost). Seventeen years before
being given a PhD, Ebeling was both an NYU ‘Post Doctoral Fellow’
while also holding a ‘Research Fellowship in Austrian Economics,’
NYU21: does the Sarah Scaife Foundation pay for Austrian ‘academic’
title-holders at NYU? A telephone call was all that was required to
obtain for Skousen (2008) a Columbia University Professorship: ‘I
will be eternally grateful to William F. Buckley, Jr., for opening this
door to my career.’22 How did Boettke obtain a lifetime income from
the taxpayers of Virginia? By open, rules-based competition or the
Austrian ‘free’ market? Having been terminated by NYU, a ‘friend lured
[Boettke] back to George Mason a year after he was denied tenure’
(K. Evans 2010). Was Boettke’s (2010b) ‘friend’ Charles Koch?

Charles is someone I admire and am grateful to for both his support and
his professional friendship over the years.

Rothbard (1994a, 6) explained that ‘the least’ Austrians could do is

‘accelerate the Climate of Hate in America, and hope for the best.’23
Did Sennholz sabotage the Third Reich and save Jews—or was he
a loyal Nazi who promoted the fraudulent ‘Protocols of the Elders

20Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

21http://www.citadel.edu/root/images/Business_Administration/2016_Faculty_CVs/ebeling_

cv_2016.doc.pdf.
22http://www.humanevents.com/2008/02/28/bill-buckley-and-me-a-true-story/.http://www.leg-

acy.com/obituaries/houstonchronicle/obituary.aspx?pid=168459476#sthash.fBuTwjbh.dpuf.
23http://www.unz.org/Pub/RothbardRockwellReport-1994sep-00001.
 6 ‘Free’-Market ‘Knowledge’: Seven Suggested Research Topics    
283

of Zion’? Boettke (2015) promoted what could be described as the

‘Protocols of the Elders of Keynes’ in which the ex-Governor of the
Central Bank of Israel, Stanley Fischer, is the villain: in the academic
‘logjam,’ ‘85% of the plumb positions are controlled by people who
went to Harvard or MIT’ and were Fischer protégés—‘look it up.’
Boettke Jr. enlisted as a private and rose to the rank of ‘Technical
Sergeant’ in the ‘Heavy Bomber’ section of the US Airforce.24
According to Boettke, Sennholz ‘doesn’t reach you with the technical
aspects, but with the ideological aspects’ (cited by Doherty 2007, 423–
424). This infuriated Boettke Jr. who had been involuntarily captured
by a far-right Austrian cult and who had to stop the car to remonstrate
about the ‘crazy thoughts’ being spouted by his Rothbard-cult-captured
son (Boettke 2010a, 62).
According to Boettke (2012, xvii, xx), ‘Sound economic reasoning,
by focusing on exchange, and the institutions within which exchange
takes place, explains how complex social order emerges through the aid
of prices and the entrepreneurial market process … It is a time when
we need sound economic reasoning more than ever.’ But Sennholz’s
elevation of ideology over the ‘technical aspects’ of economics has left
Boettke apparently incapable of distinguishing between prices and
quantities.
Joseph ‘Newton’ Pew (1848–1912) was the founder of Sun Oil
Company (now Sunoco) and a Grove City College donor; his son, J.
Howard Pew (1882–1971), succeeded him in both respects (while also
funding FEE, the Liberty Lobby and Goldwater’s 1964 Presidential
campaign). Like Mises and Sennholt, he was also a major supporter
of the John Birch Society (Mintz 1985). Boettke’s (2015) ‘Freedom
Reader’s’ ‘Pay No Attention to the Man Behind the Curtain’ lec-
ture at Grove City was preceded by an advertisement: ‘I encourage
you to check out the Charles Koch Foundation … if you would like
to be notified by the Koch Foundation go to KochFoundation.org.
KochFoundation.org.’ One ‘Grover’ ‘directly spent summer on Koch’s
dime in Hawaii.’ Boettke then outlined Sennholz’s central message by

24http://wwii-pows.mooseroots.com/l/13569/Frederick-G-Boettke.
284    
R. Leeson

relating wages to marginal quantities of output: if you ‘cost the firm 5

and produce 3,’ employers will be ‘pissed off’; but if on the other hand,
you ‘cost the firm 3 but produce 5,’ firms will ‘line up to hire you.’
If Boettke is referring to quantities of propaganda this has some
merit: Charles Koch can evaluate the quantity and attach an appropri-
ate price. But if he is referring to quantities (barrels) of oil, there is a
missing equation. Boettke had been taught by Sennholz that a ‘logically
competent defense of a free society requires divinely revealed informa-
tion; all other defenses fail. Sennholz, almost alone among eminent free
enterprise economists, rests his defense of a free society on revelation’
(Robbins 1992). And Hayek (1974) referred in his Nobel Lecture to
‘known only to God’ prices. In Austrian economics, prices, it seems,
bring the quantity (marginal product) into equality with wages through
divinely revealed information (which, presumably, is transmitted to
Saudi Arabia and other OPEC members so that the quantity of oil pro-
duction can be adjusted and a price attached to the barrels).
But as first-year students of the ‘technical aspects’ of economics are
taught: the neoclassical firm employs workers until their marginal rev-
enue product (MRP, their marginal product times the price of output,
MP.P) equals their wage (W). Even sympathetic observers noticed that
Boettke has a ‘tendency to ramble, interrupt and use salty language’
(K. Evans 2010). Boettke’s ability to teach the ‘technical aspects’ of eco-
nomics appears to equal his ability to understand it: after almost four
decades, his ‘Grover’ wife told the WSJ that she still couldn’t extract a
signal from the noise of her husband’s prejudices: ‘He refuses to r­ecycle
… Something about how it actually uses more resources’ (cited by
K. Evans 2010).
Boettke (2015) advised his Grove City audience to increase their
marginal product by investing in their human capital. The Austrians
Welfare State is full of ‘academics’ who have low levels of human
capital (bogus and ideologically correct degrees)25; while in the US

25Some Austrians have non-Austrian qualifications—which raises questions about other styles of

‘free’ market religion.

 6 ‘Free’-Market ‘Knowledge’: Seven Suggested Research Topics    
285

labour market, a ‘white name’ on a job application ‘yields as many

more callbacks as an additional eight years of experience’ (Bertrand and
Mullainathan 2003, 2004). Had Hayek persuaded other Austrians to
boycott his ‘gone negro’ Chicago bank, the newly employed African-
Americans could have been assessed as having a negative marginal rev-
enue product.26 Austrians seek to abolish the minimum wage: Should
the bank only employ African-Americans at a negative wage? Boettke
doesn’t alert his students to any of these ‘technical aspects’ of economics.
After the 1974 Nobel Prize, ‘free’ marketeers described themselves
as being ‘on a wave’ (Blundell 2014, 99). According to an article in
Buckley’s National Review, the climax of tax-exempt 1975 Hillsdale
MPS meeting was Roche III toasting Elisabeth II accompanied by a

mood of sheer bliss … as if an Invisible Hand had prankishly arranged a

sneak preview of Utopia … Such fellowship is of course much enhanced
in the vicinity of the bar, which was open three times a day … What we
could not expect was the pampering and elegant food that attended us
from beginning to end … One fellow disappeared into the service regions
with a bottle of champagne for the staffers, and almost immediately a
fresh bottle appeared on his table. It was magic … Clearly, unseen ben-
efactors had picked up the tab; otherwise Hillsdale’s budget would have
rocketed into federal orbit … It was lovely. (Wheeler 1975)

Hayek’s Nobel Prize created a tax-exempt ‘free’-market feeding frenzy—

another would offer a second feast. Is Boettke insisting that the aca-
demic game be rigged so that the crown head or king’s row can only be
reached by his ideological fellow-travellers? Boettke (2005) ‘preference’
would be to see a Nobel Prize go to

William Baumol and Israel Kirzner for the development of the theory
of entrepreneurship in modern economics. Absent that I would like to
see [Jagdish] Bhagwatti and Gordon Tullock win for the development of
rent-seeking. And if that doesn’t occur I guess I would like to see Thomas

26Hayek (5 March 1975) to Neil McLeod at the Liberty Fund. Hayek Papers Box 34.17.
286    
R. Leeson

Schelling and Armen Alchian receive the recognition … I would be sym-

pathetic to a prize for Paul Romer and extremely unsympathetic for one
to Paul Krugman.27

The 1968 decision by the Swedish Central Bank to initiate the Nobel
Prize in Economic Sciences changed professional incentives.28 The dis-
tinguished Cambridge ‘circus’ that sought to improve Keynes’ (1936)
attempt to rescue the world from ‘Austerian’ policy influences did so
anonymously; while the ‘circus’ around Hayek (with the exception of
Fürth) all sought to ‘press their claims and further their own ends’: as
he was dying, he was subject to ‘thieving’ (Cubitt 2006, 321, 329, 334–
335, 356, 358, 372).
In reply to Machlup, Samuelson (1964, 736) concluded that ‘in con-
nection with the exaggerated claims that used to be made in economics
for the power of deduction and a priori reasoning - by classical writ-
ers, by Carl Menger, by the 1932 Lionel Robbins …, by disciples of
Frank Knight, by Ludwig von Mises - I tremble for the reputation of
my subject. Fortunately, we have left that behind us.’ Samuelson won
the Nobel Prize in 1970, and the following year, the selection com-
mittee invited Machlup—Hayek’s disciple, fellow fourth-generation
Austrian School economist and founding MPS member—to write an
‘appraisal’ of Hayek’s worthiness.29 To obtain employment at the LSE,
Hayek lied to Robbins (2012 [1931], Foreword) about having pre-
dicted the Great Depression (Klausinger 2010, 227; 2012, 172, n10)30:
‘I was so extremely fortunate to get, at the age of thirty-two, as good
a professorship as I could ever hope to get. I mean, if you are at thir-
ty-two a professor’ at the LSE, ‘you don’t have any further ambitions.

27http://www.coordinationproblem.org/2005/09/nobel_time_agai.html.

28Why did Don Patinkin launch his largely misinformed but intensely personal attack on

Friedman shortly after the announcement (Leeson 2003a, b)?

29Machlup (19 November 1974) to Hayek. Hayek Papers Box 36.18.

30Hansjörg Klausinger (2010, 227; 2012, 172, n10), the editor of Business Cycles, the seventh vol-

ume of Hayek’s Collected Works, confirmed: ‘there is no textual evidence for Hayek predicting it as
a concrete event in time and place’: we lack ‘convincing evidence of a prediction that conformed
to what Robbins suggested in his foreword.’
 6 ‘Free’-Market ‘Knowledge’: Seven Suggested Research Topics    
287

[laughter]’31 Machlup (1974) repeated the lie to the selection commit-

tee—who reported that Hayek tried to ‘penetrate more deeply into the
business cycle mechanism than was usual at that time. Perhaps, partly
due to this more profound analysis, he was one of the few economists
who gave warning of the possibility of a major economic crisis before
the great crash came in the autumn of 1929.’32
According to DiLorenzo, ‘The Nobel Prize committee would be
shocked indeed to learn that Austrian economics is fraudulent, having
awarded the best-known Austrian of the twentieth century, F.A. Hayek,
the Nobel Prize in Economic Science in 1974.’33 After 1974, what had
been ‘left behind’ was born-again. Was the privately rewarding Nobel
Prize for Economic Sciences a social mistake? It would to useful to have
an examination of the merits and demerits—both for the economics
profession and for public policy—of what has become an intergen-
erational entitlement programme: Hayek’s ‘children’ and the ‘tribe of
Mises’ appear to be the over-privileged offspring of an extramarital affair
between Hayek and Alva Myrdal.

4 ‘Free’-Market Secrets
After the MPS President, Bruno Leoni, was hacked to death by an
underworld business associate, George Roche III emerged as the pre-
mier fund-raising Austrian morality and family values promoter—until
Lissa Roche was either murdered or committed suicide after admit-
ting to George Roche IV that she had been having sex with his father
for 19 years (Rapoport 2000). Along with the Ron Paul Newsletters,
the Rothbard Rockwell Report (1990–1998) also promoted Austrian
morality—with unsourced reports such as ‘A female Secret Service
agent is in big trouble: by mistake, she walked in on a scene of lesbian

31FriedrichHayek, interviewed by Armen Alchian 11 November 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
32http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1974/press.html.

33http://www.lewrockwell.com/dilorenzo/dilorenzo201.html.
288    
R. Leeson

debauchery at the White House, and Hillary was one of the debauchees’
(Barton 1994).34
According to Rothbard (1994c), Hillary Clinton was ‘the evil Witch
in the White House’; according to the Rothbard Rockwell Report, she was
‘a charter member of the feminist coven.’ Bill Clinton’s sexual activi-
ties—‘he seems something of a pervert’—didn’t undermine his electoral
appeal because ‘Very possibly, blacks don’t see what the fuss is about
because Clinton’s behaviour resembles that of many black men’ (Levin
1998, 15, 16).
In Rothbard’s (1992) ‘free’-market Police State, ‘Cops must be
unleashed, and allowed to administer instant punishment, subject of
course to liability when they are in error.’ Rothbard also fuelled Austrian
economists by orchestrating them to chant: ‘We Want Externalities!’
Students who are unable to understand the ‘technical aspects’ of eco-
nomics can, it seems, obtain an Austrian PhD by repeating ‘it cannot be
denied’ logic:

i. externalities were invented by a gunrunner for Stalin to destroy the

‘free’ market;
ii. positive externalities (such as sweet-smelling roses produced by an
amateur gardener) may generate neighbourly gratitude but no mon-
etary compensation;
iii. therefore, those who fund the Austrian School of Economics (the
TOFF industries) must not be regulated—externalities must be
unleashed;
iv. rather than ban lead in paint and petrol, a child that suffers lead-
exposure-induced brain damage can sue for damages;
v. climate change is a hoax; and
vi. since the income elasticity of demand for environmental quality is
positive, as world income rises and Bangladesh sinks, refugees from
that country can petition the courts to determine liability (those
who are ‘in error’).

34The 2016 US Republican Presidential candidate embraced Austrian-style ‘knowledge’ about his

opponent, Hillary Clinton: ‘I don’t even think she’s loyal to Bill, if you wanna know the truth’
(cited by Johnson 2016).
 6 ‘Free’-Market ‘Knowledge’: Seven Suggested Research Topics    
289

Thus, negative externality ‘deniers’ base their argument on a positive

externality: those who sue will create spill-over benefits.
The 2016 Republican Party Presidential nominee made the phrase
‘locker room banter’ infamous. In ‘Milton Friedman Unraveled,’
Rothbard (2002 [1971], 52) explained why Austrians must oppose
Pigouvian externality analysis: ‘whether Women’s Libbers like it or
not, many men obtain a great deal of enjoyment from watching girls
in mini-skirts; yet, these men are not paying for this enjoyment. Here
is another neighborhood effect remaining uncorrected!’ After drench-
ing himself in Rothbard all week, Boettke (2010a, 58) would emerge
from Grove City locker rooms (basketball and football) surrounded
by mini-skirted cheerleaders.35 And on Sunday he attended Sennholz’s
‘compulsory’ ‘obligation’ sermons about, inter alia, ‘vengeance on the
Midianites’: slaughter ‘every woman who has had sex with a man, but
save for yourselves the virgins’ (Numbers 31).36 Rothbard (1994b)
believed that he had solved the ‘coordination problem’ between Austrian
economists and ‘Redneck’ militia groups; while ‘Coach Boettke’
(2014)—who is revered by his students for his locker room-style moti-
vational speeches (A. Evans 2010)—uses his ‘coordination problem’
blog to link Austrian economics with his GMU PhD students through
‘underpants’ videos accompanied by discussions about varieties of
‘masturbation.’
Mises (1951 [1932], 87, 104, n1) reflected: ‘Waking and dreaming
man’s wishes turn upon sex. Those who sought to reform society could
not have overlooked it. This was the more to be expected since many
of them were themselves neurotics suffering from an unhappy develop-
ment of the sexual instinct.’ The Utopian Socialist Charles ‘Fourier, for
example, suffered from a grave psychosis. The sickness of a man whose
sexual life is in the greatest disorder is evident in every line of his writ-
ings; it is a pity that nobody has undertaken to examine his life history
by the psycho-analytical method. That the crazy absurdities of his books

35http://www2.gcc.edu/sports/Cheerleaders/photographs.htm.

36According to Boettke (2010a, 58), ‘everyone at Grove was exposed to Sennholz’s wonderful lec-
tures and a few times every year’ (compulsory sixteen-per-semester) ‘morning church obligation.’
290    
R. Leeson

should have been circulated so widely and won the highest commenda-
tion is due entirely to the fact that they describe with morbid fantasy
the erotic pleasures awaiting humanity in the paradise of the “phalan-
stère” … To examine how far the radical demands of Feminism were
created by men and women whose sexual character was not normally
developed would go beyond the limits set to these expositions.’
Mises (1951 [1932], 100–101) continued: the ‘radical wing of
Feminism … overlooks the fact that the expansion of woman’s powers
and abilities is inhibited not by marriage, nor by being bound to a man,
children, and household, but by the more absorbing form in which the
sexual function affects the female body … the fact remains that when
she becomes a mother, with or without marriage, she is prevented from
leading her life as freely and independently as man. Extraordinarily
gifted women may achieve fine things in spite of motherhood; but
because the function of sex have first claim upon woman, genius and
the greatest achievements have been denied her.’
In Socialism, Mises (1951 [1932], 85, 87, 90) justified his type
of behaviour: in the ‘life of a genius, however loving, the woman and
whatever goes with her occupy only a small place … Genius does not
allow itself to be hindered by any consideration for the comfort of its
fellows even of those closest to it.’ With respect to women, the ‘sexual
function,’ the urge to ‘surrender to a man,’ and ‘her love for her hus-
band and children consumes her best energies’; anything more was a
‘spiritual child of Socialism.’
In ‘The Plague Has Come at Last,’ North (1987) declared that God
had decided to use AIDS to kill all male homosexuals—but that all les-
bians would be saved. In his short essay on the ‘Origins of the Welfare
State in America,’ Rothbard (2006) asserted that ‘the pervasive les-
bianism’ of the progressive movement is ‘crucial to a historical under-
standing of why this movement got under way. At the very least, they
could not simply follow other women and make a career of marriage
and homemaking.’ Jane Addams, he insisted, had ‘no interest in men, so
marriage was not in the cards; indeed, in her lifetime, she seems to have
had several intense lesbian affairs’ and an ‘intimate lesbian friend Ellen
Gates Starr’:
 6 ‘Free’-Market ‘Knowledge’: Seven Suggested Research Topics    
291

Jane Addams was able to use her upper-class connections to acquire fer-
vent supporters, many of them women who became intimate and prob-
ably lesbian friends of Miss Addams … Other society women supporters
of Hull House included Mary Rozet Smith, who had a lesbian affair with
Jane Addams … [who] was able to replace Ellen Starr in Jane Addams’s
lesbian affection … three Yankee lesbians followed by founding the
College Settlement Association … The two other founders of the College
Settlements were Katharine Coman … and her long-time lesbian lover
Katharine Lee Bates.

Rothbard (2006) detected the influence of Jews: ‘While she was not a
Yankee,’ the ‘Jewess’ ‘Lillian Wald continued in the dominant tradition
by being a lesbian, forming a long-term lesbian relationship with her
associate Lavina Dock.’
In the Rothbard Rockwell Report, Michael Levin (1998, 15–16)
asserted that ‘conspicuous postings’ against sexual harassment were

not needed, since women can repel any unwelcome advance with a firm
No, and quit any boss who makes sex a condition of employment …
‘Sexual harassment’ is a distinctively feminist tort, but there is no point try-
ing to understand it in terms of feminism’s incoherent, self-contradictory
ideology. Better to look at it as expressing the emotional core of feminism,
namely man-hating and rage at the attraction between men and women.
It is not by chance that the most prominent feminists have been lesbians
(from Kate Millett to, it now turns out, Angela Davis) or barren hags.

Levin’s Austrian logic and the epistemological foundations of his

‘knowledge’ are further revealed in an interview with Susan Faludi
(1993, 331):

‘I’ve lost a lot of status just talking about feminism.’ But he feels he must
address it – ‘to reclaim my genitalia and my masculinity’ … ‘If a man
does not feel dominant, he won’t feel sexually aroused,’ he recalls tell-
ing [Fox News]. ‘It diminishes his masculinity. That’s why we are seeing
the growth of impotence among younger men.’ But how does he know
there’s a growth of impotence? Levin shrugs good-naturedly. ‘It’s just my
292    
R. Leeson

impression.’ A pause. ‘I suspect it.’ Another pause. ‘I think I saw a maga-

zine article once about it.’

According to Rockwell (1996), the ‘Clintons had been linked to every

manner of depravity, including cocaine use and trafficking, harlotry,
bribery, theft, and murder … the Clintons should not only be toppled,
but exiled to live in Cuba with the former president of Mexico.’ When
Clinton admitted to having an affair with a consenting adult, Monica
Lewinsky, Rockwell (1998) proclaimed that for anyone who ‘longs for
liberty, this is the moment of a lifetime … The humiliation visited upon
the executive branch being one of many signs that the central state is
coming unglued, and that a new era of liberty is dawning.’
According to Block (2005a), ‘The esprit de corps ’ of the Mises
Institute ‘staff is very high.’ Mises insisted that the School’s founder,
Carl Menger, withdrew from academic life because he was a ‘sharp-
sighted’ depressed Austrian; while Hayek insisted that Menger was
working on ‘wider and wider’ material but was defeated by old age
(Leeson 2015b, Chapter 3). The Archives tell a different story: accord-
ing to Hayek, Menger, in his early sixties, fathered an illegitimate son,
Karl Menger (1902–1985).37 According to Eugen Maria Schulak and
Herbert Unterkofler (2011, 32), the mother was a journalist, Hermine
Andermann (1869–1924), who was twenty-nine years his junior;
according to Fürth, Karl’s mother was Menger’s Jewish housekeeper.
Menger got his son legitimised by Imperial decree—but Karl never for-
gave his father for not marrying his mother.38
According to Schulak and Unterkofler (2011, 32), fathering an ille-
gitimate child violated Viennese social conventions: in 1903, Carl was
forced into early retirement and withdrawal from public life. Members
of the Austrian School maintained the ‘esprit de corps ’ posture that he
had taken voluntary retirement for the sake of further studies:

a ‘true Viennese secret’—which everyone in Vienna knew but did not talk
about in public.

37Hayek (2 February 1984) to William Johnson. Hayek Papers Box 29.38.

38Seminar notes (16 February 1993). J. Herbert Fürth Papers Hoover Institution Box 12.
 6 ‘Free’-Market ‘Knowledge’: Seven Suggested Research Topics    
293

5 Suppressed Evidence
Milton Friedman told the WSJ that the war in Iraq had ‘killed the
Republican Party … I do not believe that the United States of America
ought to be involved in aggression’ (cited by Varadarajan 2006). Why
did the Friedmans, Robbins, Haberler, Galbraith, Samuelson et al. not
take their analyses of Hayek’s role in promoting the deflation that facil-
itated Hitler’s rise to power to its logical conclusion? While Friedman
was a graduate student at the University of Chicago (1932–1934), two
of his teachers, Frank Knight and Jacob Viner, apparently uncovered
Hayek’s fraud about having predicted the Great Depression (Leeson
2018); Robbins knew about Hayek’s ‘Nazi relatives’ (Howson 2011,
319). Why has the evidence been suppressed?
The fear generated by the Cold War threw-up strange bedfellows:
the apartheid regime, the Shah of Iran, Saddam Hussein, Pinochet
and other Operation Condor dictators were perceived as allies. Knight,
Robbins, Haberler, and the Friedmans were MPS members—can this
explain their reluctance to embarrass the Society’s founder? Thomas
Hazlett asked: ‘In 1947 you founded the Mont Pelerin Society, an inter-
national group of free-market scholars. Has its progress pleased you?’
Hayek (1992b [1977]) was pleased:

Oh yes. I mean its main purpose has been wholly achieved. I became
very much aware that each of us was discovering the functioning of real
freedom only in a very small field and accepting the conventional doc-
trines almost everywhere else. So I brought people together from different
interests. Any time one of us said, ‘Oh yes—but in the field of cartels
you need government regulation,’ someone else would say, ‘Oh no! I’ve
studied that.’ That was how we developed a consistent doctrine [emphasis
added] and some international circles of communication.

The Old Etonian and Hayek’s fellow Reform Club member, Guy
Francis de Moncy Burgess, had both Russian ‘gold’ and a Foreign Office
supervisor ‘too polite to inquire’ about his spying (Sutherland 2005,
358). Did Samuelson and Galbraith (both on the academic left) regard
it as ‘churlish’ to inquire further (Chapter 9, below)?
294    
R. Leeson

6 Deflation
Three malevolently mentally ill Austrians combined to exert a profound
influence over the post-1929 world. In 1945, one committed suicide
in a Berlin bunker (Hitler); another spent about a decade in a suicidal
depression (Hayek); and the third escaped to neutral Manhattan from
those he had recently praised: ‘It cannot be denied that Fascism and
similar movements aiming at the establishment of dictatorships are full
of the best intentions and that their intervention has, for the moment,
saved European civilization. The merit that Fascism has thereby won
for itself will live on eternally in history.’ The ‘similar movements’ of
‘bloody counteraction’ that Mises was referring to include the French
anti-Semitic ‘l’Action Française’ plus ‘Germans and Italians.’ ‘Italians’
obviously referred to Mussolini’s Il Duce dictatorship (1922–1943);
Mises’ (1985 [1927], 44) reference to ‘Germans’ and ‘Ludendorff and
Hitler’ refers, just as obviously, to the 1923 Ludendorff-Hitler Putsch,
which was a prelude to the Führer’s Third Reich (1933–1945).
In New York, Mises’ ‘spirits’ were at a ‘low point.’

Very often he would say: ‘If it were not for you, I would not want to live
any more.’

Mises did not talk about this to ‘other people,’ but he had ‘friends’ who
understood his situation ‘without his ever having mentioned it’ (Mises
1984, 63).
One of Hayek’s Austrian Wandervogel comrades was Adolf Eichmann
(Cesarini 2005, 21). The Wandervogel was a large circle: they presuma-
bly attended different gatherings. But if they attended the same gather-
ings, was Hayek’s suicidal anxiety intensified by the fear that his family’s
Nazi past could be brought up by Eichmann during his trial? Eichmann
was captured on 11 May 1960; Hayek (11 June 1961) recorded his
year of ‘misery’ for posterity: his depression, he wrote, was sparked by
having to give up smoking on 11 May 1960, which, possibly coinci-
dentally, was exactly two months before his first wife’s premature death.
Not smoking proved hard for another ‘two months.’ Then general dis-
comfort gave way to other more ‘definite’ symptoms which appeared to
 6 ‘Free’-Market ‘Knowledge’: Seven Suggested Research Topics    
295

be unrelated to the cessation of smoking: tiredness, sudden ‘attacks’ of

exhaustion, loss of appetite and weight loss, poor sleep plus ‘depressions’
(Leeson 2015a, Chapter 6).
Hayek and Mises promoted the deflation that assisted Hitler’s rise
to power. At the end of his second (five-year-long) suicidal depression,
Hayek (according to his daughter and daughter-in-law) ended his 1974
Nobel Lecture with a

dramatic thundering peroration that ‘we must not allow deflation to go

too far.’ As he was sitting down his wife, Helene, poked him in the back
and said, you said deflation, it should have been inflation. He turned
around and replied, in a sharp and pointed way, ‘I said exactly what I
meant.’ (Caldwell 2016, 7)

7 The ‘Free’-Market Structure

The tobacco addict, Ayn Rand, died of lung cancer (Burns 2009, 277);
Hayek’s (1978) brother ‘died of heart disease, I think largely induced
by smoking. [laughter]’39; Hayek attributed his own suicidal depres-
sion to tobacco withdrawal symptoms; and Mises ‘loved smoking’ and
it was ‘not easy for him to give it up’ and ‘felt almost ashamed that the
longing for a cigarette could overpower him and break his will’ (Margit
Mises 1984, 144). Miseans appear to disproportionately represented on
the ‘Corporate Corruption of Science’ list of ‘cash-for-comment’ econo-
mists of the tobacco industry.
Two years after embracing political ‘Fascism,’ Mises (1996 [1929],
13), in A Critique of Interventionism, bemoaned:

He who timidly dares to doubt the justification of the restrictions on cap-

italists and entrepreneurs is scorned as a hireling of injurious special inter-
ests or, at best, is treated with silent contempt. Even in a discussion of
the methods of interventionism, he who does not want to jeopardize his

39FriedrichHayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral
History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
296    
R. Leeson

reputation and, above all, his career must be very careful. One can easily
fall under the suspicion of serving ‘capital.’ Anyone using [Austrian] eco-
nomic arguments cannot escape this suspicion.

Students of elementary statistics are taught that an observed regularity

cannot necessarily be detected in all the elements of a population or
sample. Hayek (1974) turned this truism into the central message of his
Nobel Lecture:

In the explanation of the working of such structures we can for this rea-
son not replace the information about the individual elements by statisti-
cal information, but require full information about each element if from
our theory we are to derive specific predictions about individual events.
Without such specific information about the individual elements we shall
be confined to what on another occasion I have called mere pattern pre-
dictions - predictions of some of the general attributes of the structures
that will form themselves, but not containing specific statements about
the individual elements of which the structures will be made up.

Why were ‘von’ Mises and ‘von’ Hayek so unsympathetic to democracy

and so sympathetic to ‘Fascist’ and Operation Condor military dicta-
tors? Herbert Henson, the Bishop of Durham, perceptively noted that
the ‘principle of democracy is personal freedom; the principle of dicta-
torship (No 1: Bolshevist, No. 2: Fascist) is personal servitude [empha-
ses in original]’ (cited by Gilbert 1966, 83). According to Hayek (2011
[1960], 186), ‘To do the bidding of others is for the employed the con-
dition of achieving his purpose.’
Producer sovereignty-driven addiction is a form of servitude.
According to an American Journal of Public Health article on ‘Tobacco
Industry Efforts to Undermine Policy-Relevant Research,’ DiLorenzo,
Professor of Economics at GMU and the Joseph A. Sellinger, SJ School
of Business and Management, Loyola University, Maryland, had
‘worked on a number of tobacco industry projects, including a Philip
Morris and RJ Reynolds-funded project at the Independent Institute
(a tobacco industry-funded think tank).’ In 1995, GMU’s James
 6 ‘Free’-Market ‘Knowledge’: Seven Suggested Research Topics    
297

Bennett ‘billed RJ Reynolds $150,000 for work he and DiLorenzo were

doing on a book titled CancerScam: The Diversion of Federal Cancer
Funds to Politics ’—which

conformed to Philip Morris’ action plan by ‘elevating the issue of pub-

lic funding (primarily federal) to conduct anti-tobacco … research’ and
accusing government agencies and health charities of diverting funding
away from ‘the common goal of finding a cure for cancer.’ (Landman and
Glanz 2009)

Tollison (in 1984)40 and Wagner (in 1988)41 were recruited to GMU
and published The Economics of Smoking (1988) as Boettke was stud-
ying for a GMU PhD (1983–1989).42 (Boettke succeeded Wagner as
director of the GMU graduate program). According to the Tobacco
Institute, their book had been ‘commissioned’ by the Institute to ‘rebut
the “social costs” claims’ made by anti-smokers.43 Bennett and Lorenzo’s
1990 book proposal provided the conclusion that their research would
independently produce: ‘debunking’ what they described as the ‘rhet-
oric’ of the health charities by ‘exposing’ the reality of their opera-
tions and aims so as to ‘discredit’ them in the ‘minds of the public …
op-eds and articles for the media will then be prepared based of these
studies.’44
According to William Thompson and Joseph Hickey’s (2005) Society
in Focus, Boettke Jr. with only ‘high school education’ would have
been classified as ‘working class’; while Boettke’s self-classification—
the 1%—comprised top-level executives, celebrities and heirs, with

40https://www.clemson.edu/business/about/profiles/RTOLLIS.

41http://mason.gmu.edu/~rwagner/Vitae.pdf.

42http://econfaculty.gmu.edu/pboettke/cv.html.

43https://www.industrydocumentslibrary.ucsf.edu/tobacco/docs/#id=yqxm0123.

44https://www.industrydocumentslibrary.ucsf.edu/tobacco/docs/#id=lgkc0081.
298    
R. Leeson

(commonly) both an income of $500,000+ and an ‘Ivy league edu-

cation.’45 In the interests of Myrdal (1969) transparency, shouldn’t
Boettke explain why he and most of his GMU colleagues are on the list
of what sciencecorruption.com calls the ‘cash-for-comments network’
of the tobacco lobby: ‘each op-ed now earned the economists $3,000.
Presentations made to conferences earned them $5,000’?46 Is this a gen-
eral attribute of the Austrian structure?47

References

Archival Insights into the Evolution of Economics

(and Related Projects)

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 Part II
Hitler and the Austrian School ‘United
Front’ with ‘Neo Nazis’
 7
Power, Terror and Rights:
An Overview Chronology

Caldwell describes himself as a ‘renowned Hayek scholar’ who ‘also

contributes a masterly introduction that provides biographical and his-
torical context.’ And the fifteenth volume of his University of Chicago
Press’ Collected Works of F. A. Hayek series, The Market and Other Orders,
forms the ‘definitive compilation of Hayek’s work on spontaneous
order’ in which the author attempts to

come to terms with the ‘knowledge problem’ thread.1

The ‘knowledge problem’ ‘needle’ was threaded in the tax-exempt

• Scholar’s Edition of Human Action (1998)—by deleting Mises’ lobby-

ing for the Warfare State;
• Definitive Edition, where Hayek’s motive for writing The Constitution
of Liberty (2011 [1960])—to market to ‘Fascist’ dictators such as
Salazar—is not reported;

1http://www.press.uchicago.edu/ucp/books/book/chicago/M/bo16956655.html.

© The Author(s) 2019 309

R. Leeson, Hayek: A Collaborative Biography,
Archival Insights into the Evolution of Economics,
https://doi.org/10.1007/978-3-319-78069-6_7
310    
R. Leeson

• Definite Edition of the Road to Serfdom (2007 [1944]) which fails to

mention the oral history interviews in which Hayek implicitly con-
firms the authenticity of Herman Finer’s (1945) account of his ‘thor-
oughly Hitlerian contempt for the democratic man’; and
• The Market and Other Orders (2013) which neglects to report that
Hayek insisted that the spontaneous order would have to be recon-
structed (Chapter 5).

As ‘Fred’ Hayek (a serial liar and thief ) and ‘Lew’ Mises (a card-carrying
Austro-Fascist and ‘Ludendorff and Hitler’ promoter), the ‘free’ market
would be led by those who would be excoriated—not revered—by the
Murdoch-owned press. Faith-based ‘knowledge’ differs from scientific
evidence—but Second Estate ‘vons’ appear closer to ‘God’ and con-
jure-up a magisterial image.
Every major assertion made by Caldwell about his fund-raising icon
is either or flatly contradicted or not supported by the archival evi-
dence (that he seeks to monopolise). According to Caldwell, ‘Caldwell
begins’ Hayek’s Challenge an Intellectual Biography ‘by providing the
necessary background for understanding Hayek’s thought.’2 This ‘nec-
essary background’ does not include the archival evidence about Hayek’s
proto-Nazi and later card-carrying Nazi family; nor Hayek’s visceral rac-
ism and anti-Semitism; nor the seminal influence exerted on Hayek by
Spann, ‘The Philosopher of Fascism’ (Polanyi 1934, 1935).
Hitler absorbed anti-Semitism from prominent proto-Nazi and
later card-carrying Nazi families like the von Hayeks; and Heinrich
von Hayek may have been a war criminal (Hildebrandt 2013, 2016).
Heinrich Himmler was directly responsible for the Holocaust; and his
daughter, Gundrum, married a party official in the Bavarian section
of the far-right Nationaldemokratische Partei Deutschlands (National
Democratic Party of Germany), and was affiliated with Die Stille Hilfe
für Kriegsgefangene und Internierte (‘Silent assistance for prisoners of war
and interned persons’), a relief organization for arrested, condemned

2http://www.press.uchicago.edu/ucp/books/book/chicago/H/bo3624545.html.
 7 Power, Terror and Rights: An Overview Chronology    
311

and fugitive Nazis set up by Helene Elisabeth, Princess von Isenburg.

Stille Hilfe assisted Klaus Barbie (‘the Butcher of Lyon’) to escape to
Bolivia and Adolf Eichmann, Josef Mengele and others to escape to
Argentina. The Guardian reported that Gundrum Himmler

‘created a golden image of her father and she will do anything to keep
that,’ says someone who knows her. Ironically, Himmler was known to be
a poor father, a violent and unfaithful man who neglected his children,
so the image Ms Burwitz is trying to create may well be of the father she
wishes she had.

As Billy Graham observed, religious ‘knowledge’ is consumed by the

lonely, the guilty and those who fear death.3 Boettke (2009) reflected
about Fink’s ‘locker room’ speech: ‘After that speech, Rich’s appearances
at CSMP dwindled due to his increasing involvement with CSE. But
everytime he showed up, there was an electricity that was absent when he
wasn’t there.’ And during the parts of two summers that Caldwell asked to
spend with the AIEE editor while he sought employment in California, a
tragic personality trait was revealed: Hayek was his ‘Holy Father.’ Those
who sell ‘consumer sovereignty’ aspire to possess producer sovereignty—
Caldwell’s contribution to ‘free’-market religion may shed light on other
episodes of religious ‘knowledge’ construction and dissemination.
Karl Marx’s historical materialism prescribed the direction of
history—towards classless communism through the cathartic victory
of the proletariat; while others such as H. A. L. Fisher (1939, ix) detected
nothing of the kind: ‘Men wiser and more learned than I have dis-
cerned in history a plot, a rhythm, a predetermined pattern. These har-
monies are concealed from me. I can see only one emergency following
upon another as wave follows upon wave.’ Yet from the vantage point
of the twenty-first century, some patterns are evident. Military histori-
ans examine victory and defeat, and all ‘local’ history takes place—and
is written—in the ‘global’ context of societal victory and defeat. The
defeated can regroup and ‘live to fight another day.’

3PBS Newshour, 21 February 2018. http://www.thirteen.org/programs/pbs-newshour/billy-

graham-1519256030/.
312    
R. Leeson

This chapter provides a ‘time as context’ overview chronology of three

major societal conflicts: between absolutism and oligarchy ­(feudalism),
between oligarchy and the ‘people’ (neo-feudalism), and between
financial, industrial and service sector ‘barons’ and democracy (new-
feudalism). Behind The Divine Right of the ‘Free’ Market lies a conflict
between two concepts of civilisation: ascribed status versus the achieved
status associated with universal voting rights for adults and universal
compulsory and subsidised education for their children.
In ‘The Foundations of Liberal Policy,’ Mises (1985 [1927], 19,
51, 111, 115) stated that the ‘program of liberalism, therefore, if con-
densed into a single word, would have to read: property [Mises’ empha-
sis] … All the other demands of liberalism result from this fundamental
demand … The victory of Fascism in a number of countries is only an
episode in the long series of struggles over the problem of property.’
Liberals, he asserted, also seek to create the ‘social conditions’ that
will ‘eliminate’ the causes of war. The first requirement in this regard
is ‘private property … once there is free trade and the state restricts
itself to the preservation of private property, nothing is simpler than
the solution of this problem.’ In addition: ‘There is, in fact, only one
solution: the state, the government, the laws must not in any way con-
cern themselves with schooling or education. Public funds must not be
used for such purposes. The rearing and instruction of youth must be
left entirely to parents and to private associations and institutions.’

1 The Façade and Secular Power of Faith

312: according to the unreliable Eusebius of Caesarea, Emperor
Constantine’s victory at the Battle of the Milvian Bridge was made pos-
sible by his conversion to Christianity.
325: Constantine creates and funds the Roman Catholic Church by
establishing the ‘nature’ of Jesus (the Nicene Creed).
390: Ambrose, Bishop of Milan, excommunicates Theodosius I (and
readmits the Emperor to the Eucharist after several months of penance).
391: pressure from ‘Saint’ Ambrose leads to the Theodosian decrees
which condemned the millennium-long religious practices of Rome as
 7 Power, Terror and Rights: An Overview Chronology    
313

satanic heresy. Ambrose warns against intermarriage with pagans, Jews,

or heretics.
395: Theodosius I becomes the last Emperor to rule over both the
Eastern and Western halves of the Roman Empire.
410: for the first time in almost eight centuries, Rome falls to a for-
eign enemy: the Visigoth ‘Sack’ of ‘the eternal city’ and spiritual centre
of the Empire. Christian Rome becomes a failed state.

2 Feudalism (Absolutism Versus Oligarchy);

Neo-Feudalism (Oligarchy Versus
‘the People’)
800: Pope Leo III crowns the Frankish King Charlemagne as Emperor.
Feudalism flourishes for approximately six centuries.
962–1806: the Habsburgs dominate the Holy Roman Empire.
1054: the East–West Schism: the Eastern Orthodox and Western
Catholic Churches excommunicate each other.
1096–1487: the Crusades leads to the murder of thousands of Jews (the
Rhineland massacres) and the establishment of chivalric societies of Knights.
1170: Thomas Becket, the Archbishop of Canterbury, in conflict
with Henry II, is murdered by the King’s barons.
1215: conflict between the House of Anjou and their ‘subjects’ results
in ‘the Great Charter of the Liberties’ (Magna Carta).
1258: the Provisions of Oxford forces upon Henry III a council of 24
members (12 selected by the crown, 12 by the barons) who via ‘voting’
would select a 15-member Privy Council to advise the king and oversee
government. Parliament would meet three times a year to monitor the
performance of this council.
1273–1276: Rudolph of Habsburg becomes King of Germany and
ruler of Austria.
1348: Edward III establishes an English chivalric order: the Most
Noble Order of the Garter.
1351: the Treason Act decrees that those who rebel against (threaten
the ‘property’ of) English Monarchs will be hanged, drawn and quartered.
314    
R. Leeson

1381: dynastic warfare—the Hundred Years’ War for control of

France (between the House of Plantagenet against the House of
Valois)—contributes to the Peasants’ Revolt: the Third Estate demand a
reduction in taxation and an end to serfdom.
1399: England’s Richard II is deposed by barons.
1478–1834: during the reign of Holy Terror, the Spanish Inquisition
uses torture to interrogate about 150,000 ‘heretics’ and execute
thousands.
1487: Malleus Maleficarum (‘Hammer of the Witches’) results in the
execution of 40,000–60,000 women.
1494: the Treaty of Tordesillas divides the newly-discovered lands
outside Europe between Portugal and the Crown of Castile.
1517–1648: the Protestant Reformation weakens the power of the
‘intermediary’ and leads to prolonged religious warfare.
1521: the Habsburg dynasty splits into a junior (Austrian Habsburgs)
and a senior branch (Spanish Habsburgs).
1564: ‘Jesus’ arrives in Spanish American carrying the first cargo of
African slaves.
1606–1609: James I begins the ‘civilising’ Protestant ‘plantation’ of
Catholic Ulster.
1607: the Virginia Company of London establish the British Empire’s
first permanent settlement (Jamestown, named after King James).
1617: the Oñate secret treaty further divides Habsburg ‘property’
between the Austrian and Spanish branches.
1619: the first slave ship arrives in British America.
1620: the Pilgrim Fathers sign the Mayflower Compact: a majoritar-
ian civil contract or covenant which provides the basis for a secular gov-
ernment in America.
1628: the British Parliament constructs the Petition of Right that
delineates the specific liberties of the ‘subject’ that the King is prohibited
from infringing (restrictions on non-Parliamentary taxation, forced billet-
ing of soldiers, imprisonment without cause and the use of martial law).
1629–1640: James’ son, Charles I, dissolves Parliament, imprisons
nine parliamentary leaders, begins the ‘Eleven Years’ Tyranny,’ before
finally being obliged to recall Parliament to levy taxes.
 7 Power, Terror and Rights: An Overview Chronology    
315

1642–1660: the English Civil War leads to the replacement of

Monarchy with what is later called the Interregnum (Commonwealth of
England, 1649–1653, and then Protectorate under Oliver Cromwell’s
personal rule, 1653–1659). Charles had denied the authority of the
court set up by Parliament on the grounds that ‘no earthly power can
justly call me (who am your King) in question as a delinquent.’ After
his trial and execution, the ‘Divine Right of Kings’ ceases to be a potent
catchword. The massacre of civilians during the Cromwellian conquest
of Ireland (1649–1653) leaves a lasting dysfunctional legacy which in
the 1970s provokes revenge on the British mainland. Charles, the Stuart
Pretender, is invited to ‘resume’ ‘his’ crown. On 8 May 1660 (coinci-
dentally, 239 years before Hayek’s birth), Parliament proclaimed that
Charles II had been the lawful monarch since the execution of his
father, Charles I (30 January 1649).
1672: under the reign of Charles II, State debt is repudiated (the
Great Stop of the Exchequer).
1683–1699: the siege of Vienna is lifted and victory achieved in
the War of the Holy League against the Ottoman Turks. The Turkish
invasions provide the Habsburgs with a ‘mission [as] defenders of
Christianity.’ A ‘new, Imperial aristocracy’ emerged: ‘the hangers-on of
the Habsburgs.’
1689: John Locke’s Two Treatises of Government delineate a social
contract theory in opposition to the organic ‘divine right of kings.’
Parliament passes the Bill of Rights which limits the powers of
the Monarch and establishes the rights both of Parliament (regu-
lar parliaments, free elections and freedom of speech) and of the
individual (including the prohibition of cruel and unusual punish-
ment). Parliament invites William (of Orange) and Mary to become
Constitutional Monarchs.
1690: in the Battle of the Boyne, James the Stuart Pretender is
defeated by William of Orange.
Defeat at the Battle of Beachy Head forces the British to rebuild their
Navy.
1694: the Bank of England is established to assist government
fund-raising.
316    
R. Leeson

1700: the inbred (senior) Spanish Habsburgs become extinct. On

his deathbed, Charles II distributes the Spanish component of his vast
European ‘property’ to Philip, Duke of Angie, which sparks the first
Habsburg-influenced ‘World’ War: the War of Spanish Succession.
1720: the bursting of the (insider-trading-driven) South Sea Bubble
leads to widespread economic hardship.
1723: in England, the Black Act introduces the death penalty for
over 50 criminal offences, including being found in a forest while
disguised.
1740–1748: the male line of the inbred (junior) Austrian Habsburgs
becomes extinct with the death of the Holy Roman Emperor, Charles
VI. Salic law did not allow his daughter, Maria Theresa, to inherit
Habsburg ‘property’—which results in the second Habsburg-influenced
‘World’ War: the War of the Austrian Succession (including King
George’s War and the War of Jenkins’ Ear in the Americas, the First
Carnatic War in India, and the First and Second Silesian Wars).
1772–1795: Poland is partitioned by the Romanovs, Hohenzollerns
and Habsburgs.
1773–1775: Pugachev’s Rebellion (the largest peasant revolt in
Russian history) offered the prospect of the abolition of serfdom. The
Romanovs (reigned: 1613–1917) survive and the rebellion is followed
by savage reprisals.
1780: with Maria Theresa’s death, the Austrian Habsburgs become
totally extinct and are succeeded by the House of Lorraine, who
adopt the title Habsburg-Lorraine and become known simply as the
Habsburgs.
1783: at the Temple of Virtue, George Washington’s Newburgh
Address neutralises a potentially seditious meeting of disgruntled
officers who had met to discuss a proposal to march on Congress and
make demands at gunpoint.
1789: the bogus-titled Habsburgs allow Hayek’s family to jump from
the Third Estate (commoners) to the Second (nobles) by attaching ‘von’
to their name.
1789–1791: with the assistance of the House of Bourbon, the
American colonists defeat the House of Hanover: George Washington
becomes President of the American Republic and received an array of
 7 Power, Terror and Rights: An Overview Chronology    
317

powers in excess of those wielded by some European monarchs—he had

a pardoning power, could veto legislation (something no British mon-
arch had done since 1707) and was commander-in-chief of the armed
forces (1743 was the last time a British king had led an army, at the
Battle of Dettingen). The House of Representatives is given the sole
power of impeachment and the Senate the sole power to try impeach-
ments of ‘The President, Vice President, and all civil officers of the
United States’ (who may be impeached and removed only for ‘treason,
bribery, or other high crimes and misdemeanors’).
1791: the VIII Amendment prohibits ‘cruel and unusual
punishment.’
1789–1815: the Bourbon’s financial crisis obliges Louis XVI to sum-
mon the Estates General (for the first time since 1614). His execution
(1793) further diminishes the potency of the ‘Divine Right of Kings’
catchword. The French Revolution creates social revolution, Red and
White Terror, and undermines many of the remaining foundations of
feudalism: the Holy Roman Empire is dissolved.
1813: Prussia’s declaration of war against Napoleon is accompanied
by Frederick William III’s appeal To My People: the war is ‘for liberty
and independence, for God, country and King.’ Later, this becomes
‘God, King and Country’; and after the ‘Great’ War, ‘God, Dictator and
Producer.’
1815: after the Duke of Wellington defeats Napoleon, the slogan
of ‘Justice, Peace and Love’ is used by Prince Metternich’s Congress of
Vienna in an effort to preserve the neo-feudal spontaneous order and
prevent dynastic warfare.
1819: the Peterloo Massacre: the British cavalry charge into a large
crowd (who were demanding the reform of parliamentary representa-
tion). Lord Wellington states that the campaign for democracy will go
on ‘till some of their leaders are hanged.’
1823: in Britain, the Black Act is repealed.
1832: the ‘Iron Duke’ of Wellington is forced to protect his house
with iron shutters. Faced with social revolution and the threat that
William IV will swamp the House of Lords with new peers, the
Barons retreat and allow the passage of the Representation of the
People Act.
318    
R. Leeson

1838–1858: the People’s Charter demands universal adult male suf-

frage; secret ballots; no property qualification for MPs, payment of
MPs, equal constituencies and annual parliament elections.
1839–1860: two Opium Wars against China and the resulting ‘une-
qual treaty’ creates a lasting sense of anti-Western animosity. According
to Mises, at ‘stake was the general freedom of trade and not only the
freedom of the opium trade.’
1844: the founder of the Mormon religion, Joseph Smith, is mur-
dered by a proto-Klan mob.
1846: British agricultural oligarchic retreat: repeal of the Corn Laws.
1848: Metternich’s coordinated Concert of Europe is confronted by
the (uncoordinated) ‘Year of Revolution’: an ad hoc coalition of reform-
ers and elements of the (parliamentary) extramural classes which seeks
to remove the old feudal structures by extending democracy, estab-
lishing freedom of the press, and creating independent nation states.
Serfdom is abolished in Austria and Hungary, absolute monarchy ends
in Denmark, parliamentary democracy introduced in the Netherlands,
and the Capetian monarchy in France falls. The losers—the beneficiar-
ies of neo-feudalism, royalty and the aristocracy, and their props, army
and church—are determined to protect their ‘liberty.’
1853–1854: nine decades before the airship attacks on Pearl Harbor,
Hiroshima and Nagasaki, American gunboat diplomacy ends Japan’s
220-year-old policy of isolation.
1861: the road from serfdom in Russia.
1865–1965: ex-slaves are denied the ‘blessings of liberty’ by
the ex-Confederate States: the intent of the three Reconstruction
Amendments is sabotaged (the XIII, abolishing slavery; the XIV, creat-
ing the privileges and immunities clause, applicable to all citizens; and
making the due process and equal protection clauses applicable to all
persons; and the XV, prohibiting discrimination in voting rights of citi-
zens on the basis of ‘race, color, or previous condition of servitude.’)
1866: defeat in the Austro-Prussian War symbolises the relative
decline of the Habsburgs.
1871: defeat in the Franco-German War is a major cause of the Paris
Commune.
 7 Power, Terror and Rights: An Overview Chronology    
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The labour theory of value is removed from classical economics and

replaced by consumer demand: three branches of the neoclassical school
emerge. The British branch comes to be organised around market fail-
ure (requiring taxes and subsidies) and ‘the middle way.’ In classical
economics, ‘rent’ is something that can be taxed-away: Keynes (1936)
advocates the ‘euthanasia of the rentier.’ The Austrian and Lausanne
branches come to be organised around ordinal utility (taxation is not,
therefore, Pareto optimal) and the embrace of ‘Fascists’ as protectors of
‘property.’
1878: the Congress of Berlin attempts to facilitate an orderly ‘scram-
ble for Africa.’
1879: the Habsburgs and Hohenzollerns form a military alliance.
1881: the Habsburgs turn Mises’ family from ‘Men’ to ‘Knights
on Horseback’ (by jumping an Estate, from the Third to the Second).
The ‘von’ Mises’ coat of arms contained the ‘Stars of the Royal House
of David, a symbol of the Jewish people.’ Six decades later, another
Austrian forces all those with non-‘Aryan’ bloodlines to wear this coat of
arms on their coats; the railways, for which the Mises family were enno-
bled, transport millions to extermination camps.
1882: the Habsburgs and Hohenzollerns form a military alliance
with the Kingdom of Italy (the Triple Alliance).
1896: the Utah Mormons receive a divine message (that overturns a
previous divine message), ban polygamy, and are admitted to the Union
as the 45th state.
1898–1934: during the Banana Wars, the US military frequently
intervenes in Central America and the Caribbean.
1899: von Hayek is born into a prominent proto-Nazi Viennese
family.
1905: Alisa Zinov’yevna Rosenbaum is born to a Jewish bourgeois
family in neo-feudal Russia; she later changes her name to Ayn Rand
and establishes a cult which underpins recruitment to the Austrian
School of Economics.
1907: the petit bourgeois Hitler arrives in Vienna and absorbs the
prevalent anti-Semitism.
The Triple Entente is formed (Romanov Russia, Britain and France).
320    
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1908: the Young Turk revolution seeks to end the absolute rule of
Sultan Abdul Hamid II.
1909: in Greece, the Goudi coup overthrows the government.
1910: a coup deposes Manuel II of Portugal and establishes the
Portuguese First Republic.
Mises promotes the Habsburg Warfare State and, referring to a fel-
low member of the Triple Alliance, states that in the presence of the
Italy’s ‘enormous naval armaments’ which were ‘aimed directly’ against
Habsburg territory, ‘our navy’ will be also forced to construct some
dreadnoughts.
1911: the assassination of the reforming Prime Minister Pyotr
Arkadyevich Stolypin appears to end any possibility that the Romanovs
will adapt.
1912–1933: the USA occupies Nicaragua (part of the Banana Wars)
1913: George I of Greece is assassinated.
1914–1919: the assassination of the heir to the Habsburg throne pro-
vokes (or justifies) the third Habsburg-influence World War and leads
to Austria’s ‘system of extermination’ against the Serbs.
Max von Oppenheim convinces Kaiser Wilhelm that Islam could
become Germany’s secret weapon via a jihad against Britain and France
from within their colonial territories (India, Africa and Indo-China).
Franz von Papen is attached to the Ottoman Army in Palestine and
serves as an intermediary with the Indian nationalists in the ‘Hindu
German Conspiracy.’
The Central Powers launch Zeppelin air raids against civilians and
seek to promote an Irish rebellion against British rule and a Mexican
invasion of the USA (to ‘retake’ Arizona, New Mexico and Texas). As
a prelude to the 1916 Easter Rising, von Papen serves as a gunrunning
intermediary between the Irish rebels and the German government.
The Romanovs are overthrown and replaced by a Provisional
Government of the Russian Republic (which is officially recognised by
the USA, Britain, France and Italy). With Ludendorff’s approval, Lenin
returns to Russia on a sealed train—the first (proto-)Nazi-(proto-)Soviet
Pact—and the Bolsheviks overthrow the Republic. In August 1917,
the Russian Commander-in-Chief General Kornilov attempts a Putsch
 7 Power, Terror and Rights: An Overview Chronology    
321

against the Russian Provisional Government headed by Alexander

Kerensky which is rapidly defeated.
The Austro-German plan succeeds: the Eastern Front is vacated
(through the proto-Nazi/Soviet Treaty of Brest-Litovsk). ‘Peace’ assists
the Bolshevik to defeat their White Terror Civil War opponents and
thus export Red Terror. Allied intervention in support of White Russian
forces (1918–1925) provides the Bolsheviks with a propaganda coup.
The Third Communist International (1919–1943) sets up numerous
Communist Parties: including the USA (1919), Britain (1920), Chile
(1922) and Vietnam (1930).
Five months after the overthrow of the Romanovs, the House of
Saxe-Coburg and Gotha change their name by Royal proclamation to
the House of Windsor. Another five months later, the Chequers Estate
Act of 1917 turns a donated property from Arthur Hamilton Lee, 1st
Viscount Lee of Fareham, into the official ‘country residence’ of the
Prime Minister: Lloyd George, the son of a schoolteacher, becomes the
first inhabitant. In the twentieth century, 1200 English country houses
are demolished.
‘Von’ Mises later describes the philosophy of the ‘advocates’ of an
‘aristocratic revolution’: ‘You have the choice, they say, between the tyr-
anny of men from the scum and the benevolent rule of wise kings and
aristocracies.’ Therefore, the labourer ‘must be deprived of the franchise.
All political power must be vested in the upper classes. Then the pop-
ulace will be rendered harmless. They will be serfs, but as such happy,
grateful, and subservient. What the masses need is to be held under
tight control. If they are left free they will fall an easy prey to the dic-
tatorial aspirations of scoundrels. Save them by establishing in time the
oligarchic paternal rule of the best, of the elite, of the aristocracy.’
And ‘von’ Hayek later reflects about ‘The whole traditional concept
of aristocracy, of which I have a certain conception-- I have moved,
to some extent, in aristocratic circles, and I like their style of life.’ As
Economic Consultant to the Austrian General Staff, Mises reports:
‘Aside from its general political and economic harmful effects, emigra-
tion also involves military disadvantages as well. In the decade before
the war, the monarchy [emphasis added] permanently lost at least
322    
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250,000 conscripts in this way.’ Mises also promotes Austro-German

Lebensraum.
Unrestricted Austro-German submarine warfare provokes the USA to
enter the war. President Woodrow Wilson’s 14 Points seeks to replace
the neo-feudal ‘spontaneous’ order with democracy. Lieutenant Mises
and the teenage ‘Lieutenant’ Hayek fight ‘to prevent the ‘world from
being made safe for democracy.’ Previously, democrats had contested
with aristocrats and their allies; henceforth, they would confront Red,
White and Holy Terror.

3 Democracy and the Dynastic Inheritance:

From ‘the Knight’ to ‘the Man
on Horseback—The Role
of the Military in Politics’
After the Habsburgs and Hohenzollerns are overthrown, von
Ludendorff dons a false beard and escapes to neutral Sweden and prop-
agates the stab-in-the-back myth (to shift responsibility for the Austro-
German defeat onto the ‘November criminals’—democrats and Jews).
With ‘an easy conscience,’ Ludendorff would have democratically
elected politicians ‘hanged, and watch them dangle.’
100,000 Jews are liquidated, mostly by White Terror Romanov
loyalists.
The ‘victorious’ allies act, in effect, as recruiting agents for
‘Ludendorff and Hitler’ et al. by transferring dynastic war guilt and rep-
arations onto the Weimar and Austrian First Republics.
Ho Chi Minh’s failure to gain a hearing for his case for Vietnam’s inde-
pendence from France at the Versailles ‘Peace’ conference leads him to aban-
don faith in Wilsonian idealism in favour of ‘the formula of Karl Marx: we
say to you that your liberation can only come by your own efforts.’
Cuba becomes a mafia-controlled ‘playground’ for Americans
(assisted by the XVIII Amendment—the prohibition of alcohol).
The ‘Second’ Klu Klux Klan attracts between 4 and 5 million members:
about 15% of the eligible ‘nativists’ population (American-born white
 7 Power, Terror and Rights: An Overview Chronology    
323

Protestants). Their animosity is focused primarily on blacks, Catholics,

Jews, immigrants and bootleggers.
24 October 1918: a Naval Order leads to mutiny in the German
Fleet.
3 November: the Kiel mutiny leads to the overthrow of the
Hohenzollerns.
9 November: a Republic is declared, Emperor Wilhelm II abdicates
and flees Germany.
14 November: in Poland, Józef Piłsudski becomes head of the Second
Republic.
4–5 January 1919: right-wing National Democrats led by Prince
Eustachy Kajetan Sapieha attempt to overthrow the Second Polish
Republic.
4–15 January: in Germany, the communist Spartacist uprising is
crushed by the army and Freikorps militia—a (proto-)Nazi-Soviet Civil
War.
19 January: elections for the new Weimar National Assembly are held.
3 April: the status of ‘German Austrian citizens’ equal before the law
‘in all respects’ is forcibly imposed on Austrian nobles: Hayek and Mises
and the rest of the Habsburg Second Estate are stripped of their nobil-
ity and become common criminals by attaching ‘von’ to their names.
The Austro-Hungarian Empire ends. The Austria First Republic (1919–
1934) is denigrated by Hayek as a ‘republic of peasants and workers’
and by Mises as ‘contemptible’: Mises declares that Austro-German
Anschluss is ‘a political and moral necessity’ and will become the ‘starting
point of a new calm and peaceful development in German affairs.’
21 March: communists led by Béla Kun announce the establishment
of the Hungarian Soviet Republic.
July: facing prosecution, the Preface of Nation, State and the Economy
is signed ‘Professor Dr. L. Mises.’ Mises sees himself as a one-man
anti-Comintern force: ‘The most important task I undertook dur-
ing the first period, which lasted from the time of the monarchy’s col-
lapse in the fall of 1918 until the fall of 1919, was the forestalling of a
Bolshevist takeover. The fact that events did not lead to such a regime
in Vienna was my success and mine alone. Few supported me in my
efforts, and any help was relatively ineffective.’
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R. Leeson

6–7 August: after a counter-revolutionary coup, Archduke Joseph

appoints István Friedrich as Hungarian Prime Minister.
11 August: the Weimar Constitution is adopted.
12 September: Hitler attends his first meeting of Deutsche
Arbeiterpartei (German Workers’ Party), whose members ‘were not
workers, as the party’s name implies, but representatives of an intellec-
tual Bohemia, members of the middle-class economically affected or
mentally disorientated by the war.’
1920: the League of Nations is established to promote interna-
tional justice as an alternative to social Darwinism. The First Austrian
Republic is admitted.
The Kapp Putsch, which aims to overthrow the Weimar Republic and
establish a right-wing autocracy, is defeated by a general strike.
1921: in The Political Economy of War, Arthur C. Pigou (a pacifist
Western Front ambulance driver) describes the market failure caused by
‘the private interests of makers of armaments’ who ‘promote war scares’
and who were ‘not without influence in the press and through the press
on public opinion.’
1921–1925: with British assistance, the Pahlavi dynasty (1925–1979)
is established as the ruling House of Iran.
1921–1924: during the Great Inflation, Hitler promotes Austrian
business cycle theory: stopping ‘the printing presses … is a prerequisite
for the stabilisation of the mark … we will no longer submit to a State
which is built on the swindling idea of the majority. We want a dictator-
ship … To make us free, we need pride, will, defiance, hate, hate, and
hate again.’
1922: defeat in the Greco-Turkish War forces Constantine I
of Greece to abdicate and leads to the Second Hellenic Republic
(1924–1935).
Mises presents ‘consumer sovereignty’ as an alternative to voting
rights for the ‘inferior.’
Benito Mussolini wins power through a ‘March on Rome.’
Hitler tells a journalist: ‘Once I really am in power, my first and fore-
most task will be the annihilation of the Jews.’
Post-Habsburg Hungary is admitted to the League of Nations.
 7 Power, Terror and Rights: An Overview Chronology    
325

The Treaty of Rapallo between Weimar Germany and the Soviet

Union.
1923: in Spain, Don Miguel Primo de Rivera y Orbaneja, 2nd
Marquis of Estella, 22nd Count of Sobremonte and Knight of
Calatrava, installs a dictatorship.
In Bulgaria, the military back a coup.
In Greece, a royalist coup is defeated.
On the fourth anniversary of the founding of the German Republic,
Ludendorff and Hitler stage a Putsch in Munich: a prelude to a ‘March
on Berlin’ and an Anschluss ‘March on Vienna.’ Newspapers report that
‘Hitlerites stormed through the town and invaded first class restaurants
and hotels in search of Jews and profiteers.’
1924: following a military coup, Chile is ruled by the ‘September
Junta.’
1925: in Greece, General Theodoros Pangalos seizes power.
Hitler declares: ‘At the beginning of the war, or even during the war,
if 12,000 or 15,000 of these Jews who were corrupting the nation had
been forced to submit to poison gas … then the millions of sacrifices
made at the front would not have been in vain.’
1926: the delusional Mises announces ‘the collapse of the ideology of
socialism.’
General Gomes da Costa’s ‘March on Lisbon’ ends the Portuguese
First Republic and initiates the ‘National Dictatorship.’
In the Polish May Coup, the noble-born Piłsudski announces that he
is ‘ready to fight the evil’ of parliamentary democracy (Sejmocracy ) and
promises a ‘sanation ’ (restoration to health) of the ‘body politic.’
Post-Hohenzollern Germany is admitted to the League of Nations.
1927: in The Road to Restoration, Hitler makes an outreach to
Classical Liberals. One of his targets is ‘international’ (and, therefore,
implicitly, not conservative) Jews: ‘Hitler gave an impressive display of
his chameleon-like skill at adapting himself and his program to what-
ever audience he was at that moment seeking to entice.’
Twelve years before the Nazi-Soviet Pact, Mises proposes himself as
the intellectual Führer of a Nazi-Classical Liberal Pact: ‘It cannot be
denied that Fascism and similar movements aiming at the establishment
326    
R. Leeson

of dictatorships are full of the best intentions and that their interven-
tion has, for the moment, saved European civilization. The merit that
Fascism has thereby won for itself will live on eternally in history.’
The ‘similar movements’ of ‘bloody counteraction’ that Mises refers to
includes the French anti-Semitic ‘l’Action Française ’ plus ‘Germans and
Italians.’ With respect to ‘Ludendorff and Hitler,’ Lenin and others who
used violence to achieve their political goals, Mises declares: ‘Many
arguments can be urged for and against these doctrines, depending on
one’s religious and philosophical convictions, about which any agree-
ment is scarcely to be expected. This is not the place to present and dis-
cuss the arguments pro and con, for they are not conclusive.’
Four years after the formation of the British Fascisti, Edwin Cannan’s
An Economist’s Protest contains no praise of ‘Ludendorff and Hitler’ or
any other ‘Fascist.’
1928: the Sixth World Congress of the Third Communist
International predicts that capitalism had entered its ‘Third Period’—a
prelude for proletarian revolution. Social Democrats are denigrated as
‘social fascists’ (in effect, an unintentional second Nazi-Soviet ‘Pact’ or
Nazi-assistance program).
1929: in what Caldwell suggests is a reference to Mises’ Liberalism in
the Classical Tradition, Hayek, while praising Cannan’s ‘fanatical concep-
tual clarity’ and his ‘kinship’ with Mises’ ‘crusade,’ noted that British-
Austrians had failed to realise the necessary consequences of the whole
system of Classical Liberal thought: ‘Cannan by no means develops
economic liberalism to its ultimate consequences with the same ruthless
consistency as Mises.’
1929–1933: financial fraud of the ‘pools’ (stock price manipula-
tors) contributes towards the Wall Street Crash. Mises and Hayek
promote the deflation that helps end the German and Austrian
Republics. According to President Herbert Hoover, at the onset of the
Great Depression, he is advised by his Austrian (‘Austerian’) Treasury
Secretary, Andrew Mellon, to ‘liquidate labor, liquidate stocks, liqui-
date farmers, liquidate real estate.’ This structural failure (fraud) and
the policy influence of the Austrian School of Economics is interpreted
as a failure of markets which adds legitimacy to communism, fascism
and economic planning. Mises claims to know that the Credit Anstalt is
 7 Power, Terror and Rights: An Overview Chronology    
327

going to collapse: a ‘great “crash” would be coming and that he did not
want his name in any way connected with it.’ He apparently does noth-
ing to alert the authorities. Like Hayek, Mises did not want his name in
any way connected with Hitler’s rise to power.
1931 January: the Brauns Commission is appointed by Heinrich
Brüning’s government to examine expansionary proposals that might
reduce the dramatic rise in unemployment. Hayek writes an article
opposing reflation—but tells Wilhelm Röpke: ‘if the political situation
is so serious that continuing unemployment would lead to a political
revolution, please, do not publish my article.’
January: Hayek gains employment at the London School of
Economics by fraudulently claiming to have predicted the Great
Depression.
1 March: Sir Oswald Mosley forms the New Party, which is endorsed
by the Daily Mail.
11 May: The collapse of Credit Anstalt initiates the second period of
the European economic crisis.
Hitler goes on a fund-raising charm-offensive with the business
community.
24 August: Ramsey MacDonald—the illegitimate son of a Scottish
farm labourer and a housemaid—forms a National Government com-
posed of ‘men from all parties’ to balance the Budget and restore
‘confidence.’
18 September: The Japanese invade Manchuria.
11 October: the Harzburg Front (as a short-lived right-wing alliance) is
formed—including the German National People’s Party dominated by the
press-baron Alfred Hugenberg, the Nazis, the Stahlhelm paramilitary vet-
erans’ association, the Agricultural League and the Pan-Germany League.
8 December: with 5 million registered unemployed, President Paul
von Hindenburg signs emergency decrees increasing taxes and further
reducing wages (by 10–15%), prices and interest rates.
1932: Piero Sraffa, an Italian refugee from Fascism, argues that
Hayek’s business cycle theory rests on a mythical concept: the ‘natural’
rate of interest.
January–March: five years after Mises’ proclaims that ‘The victory of
Fascism in a number of countries is only an episode in the long series
328    
R. Leeson

of struggles over the problem of property. The next episode will be

the victory of Communism,’ Mosley states ‘Communism will quickly
supersede the woolly-headed and woolly-hearted Social Democrats of
Labour, and Communism’s inevitable and historic opponent will arise
to take the place of a flabby conservatism.’
5 July: António de Oliveira Salazar becomes Portuguese Prime
Minister and establishes a Corporate State with a dictatorial constitution.
10 August: José Sanjurjo launches an unsuccessful rebellion against
the Second Spanish Republic.
4 September: Chancellor von Papen introduces ‘Austerian’ deflation-
ary measures (wage and benefit cuts).
September: Mises proclaims that ‘after twelve months Hitler would
be in power.’
1 October: Mosley launches the British Union of Fascists; and the
‘Fascist’ anti-Semite, Gyula Gömbös de Jákfa, becomes Prime Minister
of Hungary.
19 October: in the (London) Times, ‘von’ Hayek argues that a revival
of the prices of the (‘pool’-dominated) stock market will revive the
economy; while ‘lavish’ government expenditure would be ‘perilous in
the extreme.’
17 November: Lieutenant-Colonel von Papen’s ‘Cabinet of Barons’
collapses.
16 December: in a speech to the Deutscher Herrenklub, von Papen
declares its time the Nazis were ‘called in.’
1933: having persuaded von Hindenburg to appoint Hitler as
Chancellor, von Papen asks: ‘what are you worried about? I have
Hindenburg’s confidence. In two months we shall have Hitler squeezed
into a corner so that he squeaks.’
Using the justification of the alleged threat of a communist takeover
(the Reichstag Fire), Hitler creates an organic ‘Divine Right’ state and
ends the Weimar Republic.
The following day, Hayek outlines his own theory of the organic
‘Divine Right’ of the ‘free’ market.
In ‘The Means to Prosperity,’ Keynes makes the commonsensical
observation that it should not seem ‘strange that taxation may be so
high as to defeat its object, and that, given sufficient time to gather the
 7 Power, Terror and Rights: An Overview Chronology    
329

fruits, a reduction in taxation will run a better than an increase in bal-

ancing the Budget.’
Japan and Germany withdraw from the League of Nations.
1934: the Soviet Union is diplomatically recognised for the first time
(by the USA, Spain, Hungary, Czechoslovakia, Romania and Bulgaria).
March: Mises becomes a card-carrying Austro-Fascist and a member
of the official Fascist social club two months before Engelbert Dollfuss
imposes Clerical fascism.
May: Pravda foreshadows the popular front strategy by commenting
favourably on socialist-communist collaboration.
June: Leon Blum’s Socialist Party form a Popular Front with the
French Communist Party.
September: the Soviet Union joins the League of Nations.
October: the Radical Party join Blum’s Popular Front.
March 1935: Hitler repudiates the Treaty of Versailles and officially
begins rearming.
May: a five-year Soviet-French Treaty of Mutual Assistance is signed.
August: the Seven World Congress of the Comintern formally aban-
don the ‘Third Period’ in favour of ‘The People’s Front Against Fascism
and War’ (the Popular Front).
3 October: Mussolini’s Italy invades Ethiopian without a declaration
of war.
7 1936 March: Hitler remilitarises the Rhineland (a violation of the
Treaty of Versailles).
May: Blum’s Popular Front wins a large majority of parliamentary
seats and forms a government.
July: General Francisco Franco launches the Spanish Civil War
(which ends the Second Republic and imposes Clerical fascism).
October: Mosley’s Blackshirt march through the East End of London
(where many Jews lived) results in ‘The Battle of Cable Street.’
November: the Anti-Comintern Pact between Nazi Germany and the
Empire of Japan.
1937: with USA support, Anastasio Samoza becomes Nicaraguan
President.
Italy withdraws from the League of Nations.
In Nanking, the Japanese massacre tens of thousands of civilians.
330    
R. Leeson

1938: Hitler achieves Anschluss. One of Mises’ co-leaders of the

third-generation Austrian School, Hans Mayer, expels all non-‘Aryans’
from the Austrian Economics Association, while the other, Othmar
Spann, is arrested. Mises is shocked when the Nazis ransack his apart-
ment and is physically sick when he is sacked from the Lower Austrian
Chamber of Commerce and Industry.
1939: Spain and Hungary withdraw from the League of Nations.
3 May: the Jewish Maxim Litvinov is replaced as the Soviet People’s
Commissar for Foreign Affairs by Vyacheslav Molotov.
5 August: Admiral the Hon. Sir Reginald Aylmer Ranfurly Plunkett-
Ernle-Erle-Drax is dispatched from Britain to Russia aboard a low-speed
steamer.
12 August: at the first British-French-Soviet discussions, Plunkett-
Ernle-Erle-Drax is revealed to have no authority to negotiate.
23 August: Molotov and Joachim von Ribbentrop construct the
‘third’ Nazi-Soviet Pact: Poland is partitioned by the successor States
of the Romanovs, Hohenzollerns and Habsburgs. Hitler invokes
Ludendorff’s myth of the ‘November criminals’ to justify his invasion of
Poland: ‘November 1918 will never be repeated in German history.’
In the Soviet Union, ‘Fascism’ becomes a non-word.
1940–1945: Mises flees (neutral) Switzerland to (neutral) ‘Fascist’
Portugal and appears content to stay. But his wife insists they depart
for (neutral) America. The ‘ratline’ to Chile, Brazil, Argentina, Uruguay
and Bolivia and the Middle East (plus a few other havens) establishes a
post-war ‘monastery route’ escape for other ‘Fascists.’
Hayek insists it is ‘important to know the sources of Nazi strength.’
In The Road to Serfdom, Hayek propagates a stab-in-the-back myth to
shift responsibility for Nazism (which his family supports) onto demo-
crats: ‘TO THE SOCIALISTS OF ALL PARTIES.’
At the 1943 Teheran conference, Stalin proposes that 50,000
German officers be shot.
At the 1945 Yalta conference—150 years after the Third Partition
of Poland—the country for which Britain and France went to war
becomes part of the post-Romanov Empire.
As the Third Reich collapses, German radio proclaims: ‘Hate is our
prayer. Revenge is our battle cry.’
 7 Power, Terror and Rights: An Overview Chronology    
331

4 Cold War ‘Peace’: From Victory

in Europe to Defeat in Vietnam
1945: the meeting of Russian and American soldiers at the Elbe River
symbolises the (temporary) eclipse of Europe: inflicted, as an unin-
tended consequence, by the ‘Fascists’ that Mises insisted had ‘saved
European civilisation.’
Hayek proposes that ‘thousands, probably tens of thousands’ should
be shot in ‘cold blood.’
The United Nations is established promote international justice as an
alternative to social Darwinism.
Hayek’s Road to Serfdom is used by Winston Churchill as
Conservative Party election propaganda—and is attacked by Herman
Finer, Maynard Krueger and Clement Attlee.
1946–1947: Heinrich von Hayek, who had spent the Third Reich
injecting chemicals into freshly executed victims, is prosecuted under
denazification laws.
1947: in Asia, decolonisation begins.
Hayek establishes the Mont Pelerin Society, and when his brother,
Heinrich, is barred from academic employment, compares the
Holocaust to playing the fiddle in the Viennese Symphony Orchestra.
1948: Apartheid is imposed upon South Africa.
Eighty-eight years after the Democratic Party split over ‘state’s
rights’ and slavery, the Dixiecrats split from the Democrats after
Hubert Humphrey insists that ‘The time has arrived in America for
the Democratic Party to get out of the shadow of states’ rights and to
walk forthrightly into the bright sunshine of human rights.’ Murray
Rothbard embraces the white supremacist Dixiecrats.
The Berlin Blockade (24 June 1948–12 May 1949).
1949: Hayek refers to Austrian disciples as ‘inferior … mediocrities’
who had to be recruited and inspired through ‘visions’ of ‘Utopian’
‘liberty.’
1950: in Korea, the Cold War turns hot.
In Europe, the Schuman Plan seeks to ‘make war not only unthinka-
ble but materially impossible.’
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R. Leeson

1953: Senator Joe McCarthy dispatched his aides, Roy Cohn and
David Schine, to search US Information Service Libraries in Europe
and Asia for ‘subversive’ books. A few suspect books are burnt and
McCarthy-inspired censorship is compared with Hitler’s bonfires of
1933.
20 January: President Dwight Eisenhower, Vice-President Richard
Nixon and Secretary of State John Foster Dulles take office.
26 February: Allen Dulles became the fifth CIA Director
(1953–1961).
5 March: Stalin dies.
16 June: the Red Terror crushing of the Berlin uprising undermines
the legitimacy of communism.
19 August: Mohammad Mosaddegh, the democratically elected
Prime Minister of Iran, is overthrown in a coup orchestrated by the
CIA and ‘intelligence’ leaving a lasting legacy of anti-Western sentiment
in the Middle East. The Shah establishes a modernizing White Terror
Police State.
8 May 1954: the French are defeated in the First Indo-China War.
17 May: the Brown versus Board of Education Supreme Court
school desegregation decision leads to a revival of the (‘Third’) Ku Klux
Klan.
18 June–7 July: a CIA armed, funded, and trained a force invade
Guatemala. The democratically elected president is forced to resign,
fuelling anti-US sentiment in Latin America. An Argentinian doctor,
Che Guevara, is reportedly radicalised by the coup.
15 August: Alfredo Stroessner seizes power and rules Paraguay until
1989 through a regime of torture, a personality cult plus the mainte-
nance of a constant ‘state of siege.’
1956: the Red Terror crushing of the Hungarian uprising further
weakens the legitimacy of communism.
The British-French-Israeli invasion of Suez intensifies anti-Western
sentiment in the Middle East: Nasser recruits the Nazi propagan-
dist, Johann von Leers, as propaganda adviser on Jewish affairs in the
Information Department of the Egyptian Ministry of Guidance and
head of the Institute for the Study of Zionism to manage anti-Israeli
propaganda.
 7 Power, Terror and Rights: An Overview Chronology    
333

1957: Ayn Rand’s Atlas Shrugged is published.

The Institute of Economic Affairs begin ‘body of Hayek’ lunches for
politicians, academics and journalists.
‘Papa Doc’ Duvalier wins a possibly rigged presidential election in
Haiti and rules through a purged military, a personality cult and a rural
militia (Tonton Macoute ).
1958: the ‘Liberty Lobby’ is established to oppose the ‘mongrali-
zation’ of the white race. Mises and the far-right John Birch Society
embrace each other.
Mises tells Ayn Rand that she had the ‘courage to tell the masses
what no politician told them: you are inferior and all the improvements
in your conditions which you simply take for granted you owe to the
effort of men who are better than you.’ This was the ‘truth that had to
be said in this age of the Welfare State.’
1959: in Cuba, Colonel Fulgencio Batista is overthrown and seeks
refuge in Salazar’s Portugal.
1960: beginning of the Guatemalan Civil War.
In The Constitution of Liberty Hayek asserted that: ‘To do the bid-
ding of others is for the employed the condition of achieving his
purpose.’
1961: In What Is to Be Done? Rothbard embraces Lenin’s strategy,
seeks to mobilise White Guard fanatics and proposes a strategy for the
Sovietization of American universities.
1961: the anti-decolonisation Conservative Party Monday Club is
established.
1962: Mises declares: ‘The fact that the majority of our contemporar-
ies, the masses of semi-barbarians led by self-styled intellectuals, entirely
ignore everything that economics has brought forward, is the main
political problem of our age.’
17 January: Eisenhower leaves office warning about the ‘military
industrial complex.’
17 April: the failure of the CIA-sponsored paramilitary group’s
attempt to invade Cuba leads to Allen Dulles’ resignation.
13 August: the erection of the Berlin Wall begins.
8 September: João Goulart is elected President of Brazil on a plat-
form similar to Salvatore Allende’s (increased spending on education to
334    
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combat illiteracy, expanding the franchise, restricting the ability of mul-

tinational companies to transfer profits abroad and land reform).
1962–1963: the French are defeated after the eight-year-long
Algerian War of Independence; and Pierre Vidal-Naquet reflects on
Torture: Cancer of Democracy, France and Algeria 1954–1962.
Hayek sends Salazar a copy of his Constitution of Liberty, hoping
that his book—this ‘preliminary sketch of new constitutional prin-
ciples’—‘may assist’ Salazar in his ‘endeavour to design a constitution
which is proof against the abuses of democracy.’
1963: in Human Action, Mises lobbies for the Warfare State.
In Honduras, the military seize power again (ten days before a sched-
uled election).
1964: after a subsidiary of International Telephone and Telegraph is
nationalised by the Brazilian government, the CIA and ITT orchestrate
a coup and replace a democratically elected government with a military
dictatorship.
1964–1970: the ‘Revolution in Liberty’ pursued by President
Eduardo Frei’s Christian Democratic administration threatens the
‘property’ and ‘liberty’ of high ascribed status Chileans.
1965: Mao Zedong avoids falling from power by mobilising teenage
Red Guard fanatics.
General Suharto seized power in Indonesia leading to the imprison-
ment of about 2 million ‘impurities’ (communists and leftists). In the
‘cleansing’ process that followed, more than 500,000 ‘impurities’ are
liquidated.
The political editors of the Chilean daily newspapers choose Allende
as the best parliamentarian.
The ‘Fascist’ post-war ‘Strategy of Tension’ is launched by the Alberto
Pollio Institute at the Parco dei Principi hotel.
1966: as the Vietnam War accelerates, Mises again lobbies for the
Warfare State and Hayek updates Metternich’s ‘Peace, Justice and Love’
to ‘PEACE, JUSTICE AND LIBERTY.’
Allende’s parliamentary colleagues elect him the 56th President of the
Chilean Senate.
1967: the coup specialist, Brian Crozier, denies that ‘Fascists’ were
responsible for the bombing of Guernica.
 7 Power, Terror and Rights: An Overview Chronology    
335

Hayek praises Suharto and his Generals.

7 February 1968: referring to a decision to bomb Bến Tre regard-
less of civilian casualties, a US Major explains: ‘It became necessary to
destroy the town to save it.’
16 March: in a White Terror atrocity, US troops murder hundreds of
unarmed Vietnamese civilians (the Mỹ Lai Massacre).
4 April: Martin Luther King is assassinated.
20 April: Mont Pelerin Society member, Enoch Powell, makes his
notorious ‘Rivers of blood’ speech about non-white immigration and is
sacked by Edward Heath from the Conservative Shadow Cabinet.
6 June: Robert Kennedy is assassinated.
20–21 August: Warsaw Pact troops invade Czechoslovakia (the
Brezhnev Doctrine).
5 November: Nixon is elected promising ‘peace with honor’ in
Vietnam. The evidence suggests that he committed treason by actively
sabotaged pre-election peace efforts (leading to an additional 20,000 US
and 1 million Asian lives being lost). Promotes the Nixon Doctrine.
10 March 1970: Augusto Pinochet is appointed General-in-
Command of the Santiago Garrison: the start of ‘a new stage in my pro-
fessional life which I have called “Political-Military”.’
4 May: at Kent State University, the Ohio National Guard open fire
on an anti-Vietnam War demonstration, killing four students.
4 September: two-thirds of the Chilean electorate vote for land
reform, increased spending on education etc.: Allende (36.61%) and
the Christian Democrats’ Radomiro Tomic (28.11%).
22–25 October: the constitutionalist Commander-in-Chief of the
Chilean Armed Forces, General Rene Schneider, is assassinated as a
result of a botched kidnap attempt initially orchestrated by the CIA.
26 October: the National Congress overwhelmingly confirms Allende
as President. The outgoing President Frei appoints the constitutionalist
General Carlos Prats as Schneider’s replacement.
5 November: in his Inaugural Address, Allende threatened monopo-
lies, ‘foreign’ owners of industry and ‘the large estates which condemn
thousands of peasants to serfdom’; and promised a literacy program
especially for the benefit of ‘the children of workers and peasants.’
336    
R. Leeson

2 December: Nixon signed an executive order establishing the

Environmental Protection Agency (EPA) and appoints William
Ruckelshaus its first Administrator.
7 December: in Italy, a ‘Fascist’ coup, led by Prince Junio Valerio
Scipione Borghese, is called off after it is discovered by the press.
1971: a Misean establishes ‘the Francisco Marroquín University in
Guatemala to teach Austrian economics to bigger and bigger classes.
[Manuel] Ayau will make it difficult for Nicaraguan Sandinistas and
Castroites to take over in his country.’
Hugo Banzer Suárez becomes military dictator of Bolivia.
In the middle of his second ‘Great Depression,’ Hayek creates a ‘piti-
ful’ impression.
2 January 1972: Nixon tells CBS News that bombing Southeast Asia
has been ‘very, very effective.’
3 January: Nixon tells Henry Kissinger that bombing South East Asia
has achieved ‘zilch’: a ‘failure.’
30 January: British paratroopers shoot 26 unarmed civilians during
a protest march against internment (Bloody Sunday). Most of the press
uncritically report the official story.
15 February: the military seize power in Ecuador.
8 May: Nixon announces Operation Pocket Money—laying mines in
North Vietnam’s harbour—later telling Kissinger: ‘8 May was the acid
test. And how it’s prepared us for all these things. The election for exam-
ple.’ Kissinger replies: ‘I think you won the election on May 8.’
17 June: five men are arrested while attempting to plant electronic
surveillance devises in the Democratic National Committee headquar-
ters, in the Watergate office building in Washington.
19 June: the Washington Post reveals that one of the five arrested
men was a security contractor with Nixon’s Committee to re-elect the
President.
20 June: Nixon meets with his Chief of Staff, Bob Haldeman: 18½
minutes of the tape is later erased.
23 June: after the international press reports the ‘early success’ of
Allende’s ‘socialist experiment,’ Pinochet begins ‘very discretely’ to pre-
pare for a coup.
 7 Power, Terror and Rights: An Overview Chronology    
337

4 December: military coup in Honduras.

4 March 1973: Allende’s Unidad Popular win 11 out of 25 seats in the
Senate election (42.75% of the popular vote) and win two additional seats
in the Chamber of Deputies (44.23% of the popular vote). CIA Station
Chief Ray Warren instructed that an ‘atmosphere of political unrest and
controlled crisis’ should be created to ‘stimulate military intervention.’
28 May: Pinochet, as Allende’s Acting Commander-in-Chief, signs
the instructions for his coup.
27 June: in Uruguay, Juan Bordaberry seizes power (beginning of a
civil-military dictatorship).
29 June: in Chile, Prats and the military defeat a neo-Fascist
Fatherland and Liberty coup.
23 August: Prats succumbs to pressure from the CIA and Fatherland
and Liberty and resigns. Allende appoints Pinochet to succeed him.
11 September: Pinochet ends the Chilean Republic and establishes
a version of Clerical fascism. Allende has no anti-coup planning and
(apparently) commits suicide.
13 September: the Hayekian-Francoist, Jaime Guzmán, is appointed
by Pinochet’s Junta to lead a group to prepare for a new constitution.
20 October: Attorney General Elliot Richardson and his Deputy,
Ruckelshaus, refuse Nixon’s order to fire independent Watergate spe-
cial prosecutor Archibald Cox. The Hayekian Solicitor General Robert
Bork does Nixon’s ‘bidding’ in return for the (corrupt?) offer of the next
vacant seat on the Supreme Court.
22 December: Nixon appears to sound-out his Joints Chief of Staff
about whether they would support a coup to keep him in power:
‘This is our last and best hope. The last chance to resist the fascists [of
the left].’ Defence Secretary James Schlesinger begins ‘to investigate
what forces could be assembled at his order as a counterweight to the
Marines, if Nixon—in a crisis—chose to subvert the Constitution.’
Robert Moss’ Chile’s Marxist Experiment is published.
Hayek alters the post-coup version of Law, Legislation and Liberty
Volume 1 Rules and Order by deleting ‘There may exist today well-
meaning dictators brought to power by a breakdown of democracy and
genuinely anxious to restore it if they merely know how to guard it
against the forces which have destroyed it.’
338    
R. Leeson

5 New-Feudalism and the ‘One God’

of the Bailed-Out Market
1974 January: the Shah of Iran provides Crozier with £1 million.
28 February: Edward Heath fails to win his ‘Who Governs Britain?’
election.
25 April: the Carnation Revolution overthrows Portuguese
Fascism, leading to decolonization and increased apprehension for the
International Right.
June: the first Koch-funded Austrian Revivalist meeting (South
Royalton)—which Hayek lies to avoid attending.
27 June: Pinochet becomes Supreme Leader.
Summer: Hayek tells an interviewer: ‘It may be said that effective
and rational economic policies can be implemented only by a superior
leader of the philosopher-statesman type under powerful autocracy. And
I do not mean a communist-dictatorship but rather a powerful regime
following democratic principles.’
Summer: in another interview, Hayek predicts ‘that inflation will
drive all the Western countries into a planned economy via price con-
trols … and that of course is the end of the market system and the end
of the free political order. So I think it will be via the attempt to regress
the effects of a continued inflation that the free market and free insti-
tutions will disappear. It may still take ten years, but it doesn’t matter
much for me because in ten years I hope I shall be dead.’
8 August: Having proposed the establishment of ‘The Hayek Centre’
(later, the Centre for Policy Studies), Sir Keith Joseph tells Ralph Harris
of the Institute of Economic Affairs: ‘I am steeping myself in Hayek –
and am ashamed not to have read the great Constitution of Liberty long
ago.’
9 August: Nixon resigns to avoid impeachment.
30 September: Prats is murdered (along with his wife) by a car bomb
in Argentina.
9 October: it is announced that Hayek will be awarded the Nobel
Prize for an apparently fraudulent job interview assertion about hav-
ing predicted the Great Depression and for his superior understanding
about knowledge.
 7 Power, Terror and Rights: An Overview Chronology    
339

28 October: Joseph tells Hayek: ‘I am most grateful for your blessing

on what I said at Preston.’ (The speech contributes to Joseph’s demise as
a potential Tory Prime Minister.)
December: Jude Wanniski (WSJ Associate Editor), Donald Rumsfeld
(Chief of Staff to President Gerald Ford), Dick Cheney (Rumsfeld’s
deputy) and Arthur Laffer (‘then professor at the University of
Chicago’) derive ‘The Laffer Curve’ which—according to Paul Craig
Roberts ‘maintains that tax cuts pay for themselves by stimulating the
economy so strongly that revenues pour into the treasury purports to
show that cutting taxes will increase tax revenue.’
A federal audit find that Koch Industries had broken federal oil price
controls.
The Charles Koch Foundation is established by Koch, Ed Crane and
Rothbard (in July 1976, its name is changed to the Cato Institute).
1975: a Koch subsidiary is cited for overcharging their propane gas
customers by $10 million.
In Cambodia and Laos, Pol Pot and the Khmer Rouge (1975–1979)
and the Lao People’s Revolutionary Party (1975–) seize power (after
Nixon’s carpet bombing had effectively destroyed the social fabric of
those countries).
11 February: Margaret Thatcher defeats Heath to become
Conservative Party leader. Referring to Hayek’s Constitution of Liberty,
Thatcher tells the Conservative Research Centre: ‘This is what we
believe.’
5 March: Hayek tells the Liberty Fund that he does not want non-
whites to touch his money—he wishes to find an alternative to his ‘gone
negro’ Chicago bank.
29 April: the last Americans flee Saigon by helicopter, abandoning
many of their supporters to their fate (re-education camps).
7 May: Hayek addresses the Libertarian Party.
8 May: Rothbard addresses the Libertarian Party and Hayek is the
‘respondent.’
20 May: Hayek takes the ‘free’ market exit after a hit-and-run acci-
dent on the Stanford University campus and when apprehended, per-
jured himself.
June: the second Koch-funded Austrian Revivalist meeting.
340    
R. Leeson

August: Rothbard (successfully) proposes that the Libertarian Party

(‘The Party of Principle’) add to their 1976 Platform: ‘We oppose all
attempts to compel “national self-sufficiency” in oil or any other energy
source, including any attempt to raise oil tariffs, revive oil import quo-
tas, or place a floor under world oil prices. We favor the creation of a
free market in oil by repeal of all state pro-ration laws, which impose
compulsory quotas reducing the production of oil. We call upon the
government to turn over the public domain of land resources to pri-
vate ownership, including the opening up of coal fields, the naval oil
resources, offshore oil drilling, shale oil deposits, and geothermal
sources.’ The Platform also adds: ‘We therefore support the abolition of
the Environmental Protection Agency.’4
29 September: Kissinger tells the Chilean Foreign Minister, Patricio
Carvajal (who had coordinated the assault on La Moneda Presidential
Palace): ‘Well, I read the briefing paper for this meeting and it was
nothing but human rights. The State Department is made up of people
who have a vocation for the ministry. Because there were not enough
churches for them, they went into the Department of State.’
6 October: Bernardo Leighton (an exiled Chilean Christian
Democrat, who together with Frei had unsuccessfully sought the release
of some of Allende’s ministers) and his wife survive a Pinochet-directed
assassination attempt and are severely injured by gunshots in Rome.
20 November: Franco’s death further intensifies the apprehensions of
the International Right.
25 November: Operation Condor (an intelligence-sharing arrange-
ment among South American military dictatorships) is established.
Its members include military dictatorships in Paraguay (1954–1989),
Brazil (1964–1985), Bolivia (1971–1997), Uruguay (1973–1985),
Chile (1973–1990) and Argentina (1976–1983); Colombia, Peru and
Venezuela become associate members. An estimated 50,000 are sub-
sequently murdered, 30,000 disappear (and presumed dead), and
400,000 are incarcerated.
17 December: the ‘new’ post-Mises Austrian Economics Seminar
begins at New York University.

4Evers Archives. Box 2 LP Platforms.

 7 Power, Terror and Rights: An Overview Chronology    
341

1976: Hayek’s Law, Legislation and Liberty Volume 2 the Mirage of

Social Justice is published.
16 March: Harold Wilson resigns as Labour Party Prime Minister,
telling a journalist that he feared a military coup.
24 March: in Argentina, General Jorge Rafael Videla seizes power in
a coup. The ‘Dirty War’ results in 22,000 killed or disappeared.
25 March: in Free Nation, the journal of the National Association
for Freedom, Moss and Crozier argue that Queen Elizabeth II should
refuse to see Michael Foot and therefore prevent him becoming Prime
Minister if he is elected leader of the Parliamentary Labour Party.
10 May: Jeremy Thorpe is obliged to resign as leader of the Liberal
Party (within fifteen months, all three major British political parties
have changed leaders).
8 June: Operation Condor meets in Santiago as Kissinger explains to
Pinochet that the prestige of the US State Department was available for
him to exploit, adding: ‘if you could give us advanced information of
your human rights efforts, we could use this … we want to remove the
weapons in the arms of our enemies.’ Pinochet complains: ‘Letelier has
access to Congress … We are worried about our image.’
21 September: on Embassy Row, Washington D.C., Pinochet has the
economist and former diplomat, Orlando Letelier and an American citi-
zen, Ronni Moffitt, assassinated by car bomb.
September: the third Koch-funded Austrian Revivalist meeting held
in Windsor Castle.
28 September: Prime Minister Callaghan announced the end of the
post-war Keynesian consensus to the Labour Party conference and Sir
Keith Joseph formally proposes that Hayek be made a Lord.
2 November: the Koch-funded Libertarian Party obtains 0.2% of the
popular vote in the US Presidential election.
6 December: deposed Brazilian President Goulart is assassinated, pre-
sumably by Operation Condor operatives.
1977: Hayek praises the MPS ‘consistent doctrine’ and ‘international
circles of communication.’ Ayau arranges for Hayek to visit Chile where
he embraces Pinochet and describes him and his White Terror accom-
plices as ‘honourable.’ Austrians later cannot remember—or refuse to
342    
R. Leeson

reveal—the contents of the Hayek-Pinochet interview. Hayek plans

to visit two other Operation Condor countries (‘Dirty War’ Argentina
and Brazil) plus Nicaragua (then owned by the Somoza dynasty, 1936–
1979); adds post-‘Fascist’ Spain and Portugal to his itinerary; and dis-
misses Amnesty International’s documentary evidence about human
rights abuses as the outpourings of a ‘bunch of leftists.’ Under Guzmán’s
influence, Pinochet calls for an ‘autocratic and protected democracy.’
1978: Hayek visits South Africa (a ‘trial run’ for a full Mont Pelerin
Society meeting) where Prime Minister Vorster had previously been
detained as a Nazi activist. Hayek defends the ‘civilisation’ of apart-
heid from the ‘fashion’ of American ‘human rights.’ In promoting
‘Ludendorff and Hitler’ and other ‘Fascists,’ Mises in 1927 had implau-
sibly declared that ‘The only consideration that can be decisive is one
that bases itself on the fundamental argument in favor of democracy.’
Hayek clarified: ‘I believe in democracy as a system of peaceful change
of government; but that’s all its whole advantage is, no other.’ He also
predicts the advent of ‘totalitarian democracy’—an ‘elective dictatorship
with practically unlimited powers. Then it will depend, from country to
country, whether they are lucky or unlucky in the kind of person who
gets in power. After all, there have been good dictators in the past; it’s
very unlikely that it will ever arise. But there may be one or two experi-
ments where a dictator restores freedom, individual freedom.’
Thatcher declares she ‘very much’ wants to ‘bring back’ National
Front voters ‘behind the Tory party’ and had ‘less objection to refugees
such as Rhodesians, Poles and Hungarians, since they could more easily
be assimilated into British society.’
1979: Hayek’s Law, Legislation and Liberty Volume 3 the Political
Order of a Free People is published.
In Chile, inspired by Hayek’s Constitution of Liberty and Law,
Legislation and Liberty, the co-hosts of Hayek’s 1977 visit, Pedro Ibáñez
and Carlos Cáceres, propose a constitution which former Chilean
President Gabriel Videla describes as ‘totalitarian and fascist.’
16 January: 2500 years of Iranian monarchy comes to an end: the
‘King of Kings and Light of the Aryans’ leaves the Peacock Throne for
exile.
1 April: Iranians vote to become an Islamic Republic.
 7 Power, Terror and Rights: An Overview Chronology    
343

4 May: Thatcher becomes Prime Minister. Hayek sends her a tele-

gram stating that her election victory was the ‘best’ possible birthday
present he could have had.
August: Rothbard proposes that the Libertarian Party add to their
1980 Platform: ‘We further oppose efforts to control broadcast content
by banning advertising for cigarettes or sugar-coated breakfast food.’
4 November: hostages are seized at the American Embassy in Iran
(‘Mosaddegh’s Revenge’).
3 December: twenty-six years after the CIA-backed coup which over-
threw their democratically elected government, Islamic revolutionaries
take control in Iran. Khomeini becomes Supreme Leader—Western
‘intelligence’ revives the Divine Right of Ayatollahs.
25 February 1980: a military coup overthrows the government of
Suriname and initiates a military dictatorship (1980–1991).
25 March: Hayek delivers ‘The Muddle of the Middle’ to the
Conservative Party Monday Club Annual General Meeting.
June: the WSJ reports that Koch Industries had been subpoenaed as
part of a federal criminal investigation into fraudulently obtained oil
and gas leases.
June: Hayek drafts an election campaign press conference for Ronald
Reagan.
4 November: the Koch-funded Libertarian party obtain 921,128
votes (1.1%) in the US Presidential election.
The Hayekian Crozier drafts Pinochet’s ‘Constitution of Liberty.’
1981: as Reagan takes office, the American Embassy hostages are released.
There is a suspicion that the Iranians had been encouraged by William
Casey (Reagan’s campaign manager and co-founder of the Manhattan
Institute) not to release the hostages during the election campaign.
Hayek successfully insists that the ‘wet’ Conservative Party leader,
James Prior, must be removed from office.
The Mont Pelerin Society meets in Chile. Hayek found what he
wanted by strolling around Pinochet’s military dictatorship to see
whether ‘people’ were ‘cheerful and content.’ He told Cubitt (2006, 19)
that the ‘sight of many sturdy and healthy children that had convinced
him.’ He was ‘so certain of the value of his findings’ that he writes to
Thatcher to protest about a cartoon ‘lampooning Chile and Poland.’
344    
R. Leeson

Rothbard is expelled from Charles Koch’s ‘the Garden of Wichita’

and uses the Journal of Libertarian Studies (which he edits) to ramp up
his use of Mises as a fund-raising icon: Mises was a ‘proclaimed pacifist’
who ‘trenchantly attacked war and national chauvinism’ and who issued
a ‘radical philippic against Western imperialism.’
1982: when Rothbard hears that he is to ‘head academic affairs’ at the
newly formed tax-exempt Ludwig von Mises Institute, ‘he brightened
up like a kid on Christmas morning.’
In Guatemala, Ríos Montt seizes power.
Ex-President Frei, a vocal opponent Pinochet, dies during routine
surgery. Mustard gas is found in his body; six are later arrested for their
roles in the alleged assassination.
The Rothbard-Rockwell-Report contributor, Michael Levin, publishes
‘The Case for Torture.’
1983: James Buchanan relocates to George Mason University (GMU).
May: in the Cold War magazine, Encounter, Hayek declares: ‘In fact
it’s no longer a question of whether nuclear war can be avoided or not.’
9 June: after defeating the Argentine Junta in the Falklands, Thatcher
defeats Foot and wins a second term.
23 October: the Beirut Barracks Bombings kill 299 American
marines and French servicemen (US troops are withdrawn on 22
February 1984).
25 October: US marines invade Grenada, a British Commonwealth
country.
16 March 1984: William Buckley, the CIA station chief in Beirut (and
participant in the torture-based Operation Phoenix program in Vietnam)
is kidnapped and, over a period of 15 months, tortured to death.
April: the tax-exempt donor class discovers that the tax-evading
Hayek was stealing from them (by double-dipping)—but continue to
fund him anyway.
October: Hayek becomes Queen Elizabeth II’s ‘Companion of
Honour’—which he describes as the ‘happiest day of my life.’
Hayek plans what could have become an ‘October Surprise’ during
Reagan’s re-election campaign: by planning to promote the fraud that
market failure was invented by a communist spy, Pigou.
 7 Power, Terror and Rights: An Overview Chronology    
345

1985: at the start of his second term, Reagan is encouraged by

Crozier to update the Monroe Doctrine: ‘the Reagan Doctrine of aid
to anti-Communist resistance forces.’ Reagan refers to the Nicaraguan
Contras as ‘freedom fighters … You know the truth about them, you
know who they’re fighting and why. They are the moral equal of our
Founding Fathers and the brave men and women of the French
Resistance. We cannot turn away from them. For the struggle here is
not right versus left, but right versus wrong.’
French government agents bomb the Greenpeace ship, the Rainbow
Warrior, in Auckland Harbour, killing a photographer, Fernando
Pereira.
1986: Kurt Waldheim, a suspected Nazi war criminal, becomes
President of Austrian.
1987: Reagan is forced to admit that his government illegally traded
arms for hostages.
1988: Pinochet loses the referendum on a continuation of his dicta-
torship—but warns that Chileans ‘shouldn’t forget something: the army
will always protect my back … The day they touch one of my men, the
rule of law will be over.’
Three years after the end of the Brazilian military dictatorship, the
environmentalist and rubber tapper trade union leader, Chico Mendez,
is assassinated by a neo-feudal rancher.
15 February 1989: Holy Terrorists force the last Soviet troops out
of Afghanistan. Like the 1917 German ‘sealed train,’ the ‘intelligence’
community regards this as a victory (Al-Qaeda had been funded by the
CIA and the Saudi Wahabis).
4 June: the Tiananmen Square Massacre.
19 August: Communist Hungary effectively disables its border with
neutral Austria.
9 November: the Berlin Wall is breached.
25 July 1990: after being covertly supported by the Americans during
the Iran-Iraq War, Saddam Hussein is informed by the US Ambassador:
‘we have no opinion on the Arab-Arab conflicts, like your border disa-
greement with Kuwait.’
2 August: Iraq invades Kuwait.
346    
R. Leeson

15 October: President Bush announces: ‘We’re dealing with Hitler

revisited.’
17 January–28 February 1991: 34 nations led by the USA remove
Iraqi troops from Kuwait (Operation Desert Storm). But the presence
in the Gulf of 650,000 (primarily) American, British and Canadian
troops inflames anti-Western sentiment in Islamic countries.
August: a military coup against Mikhail Gorbachev fails. The ‘free’
market ‘privatisation’ that follows the collapse of Communism later
facilitates the rise of ‘Emperor’ Vladimir Putin’s ‘Russia of the Oligarchs.’
18 November: Bush awards Hayek the 1991 Presidential Medal of
Freedom.
1992: Rothbard denigrates the United Nations Framework
Convention on Climate Change as a ‘few left-wing hysterics’—‘most
real scientists have a very different view of such environmental
questions.’
1993: Rothbard defends the first bombing of the World Trade Center
and acts as a tax-exempt ‘spotter’ for Al-Qaeda by suggesting other New
York buildings to bomb.
1994: Hayek—who is revealed to have frequently resorted to argu-
mentative ad hominem—is publically revealed to have asserted that
externality taxes had been invented by a Soviet agent, Pigou. When
the Clinton administration seeks to stop the use of the atmosphere as
a ‘open sewer’ by levying an externality tax on the heat content of fuels
(the BTU tax), the Koch operative, Richard Fink, confessed to The
Wichita Eagle: ‘Our belief is that the tax, over time, may have destroyed
our business.’
Rothbard defends the Ku Klux Klan assassin of a voter registration
activist (who was convicted because he was politically ‘incorrect’), Silvio
Berlusconi (a ‘dedicated free-marketeer’), Mussolini (because he had a
reluctant ‘anti-Jewish policy’), Islamo-Fascists and those described as
‘neo-fascists.’ In ‘A New Strategy for Liberty,’ Rothbard believes that
he had solved the ‘coordination problem’ between Austrian economists
and ‘Redneck’ militia groups through an ‘Outreach’ program: ‘After the
movement finds itself and discovers its dimensions, there will be other
tasks: to help the movement find more coherence, and fulfil its mag-
nificent potential for overthrowing the malignant elites that rule over
 7 Power, Terror and Rights: An Overview Chronology    
347

us’: ‘the least’ Austrians could do ‘is accelerate the Climate of Hate in
America, and hope for the best.’
1995: inspired by Rothbard-style rhetoric, Timothy McVeigh bombs
the Alfred P. Murrah Federal Building, Oklahoma City (killing 168 and
injuring over 600).
Murdoch newspapers are forced to pay damages after running an arti-
cle: ‘KGB: Michael Foot was our agent.’
1996: after 36 years and 200,000 deaths, the Guatemalan Civil War
ends.
1997: the Nobel Prize in Economic Sciences is awarded to Myron
Scholes and Robert Merton for having discovered a ‘new method to
determine the value of derivatives.’
1998: the internal documents released under the Master Settlement
Agreement (between 46 attorneys general and the major US tobacco
companies) reveals that numerous ‘free’ market economists are on the
payroll of the tobacco lobby.5
Pinochet is indicted for human rights abuses (including murder, tor-
ture and hostage-taking) and detained in Britain. President Bush states
that the case against Pinochet was a ‘travesty of justice’ and he ‘should
be returned to Chile as soon as possible.’ Thatcher expresses ‘outrage at
the callous and unjust treatment of Senator Pinochet’: ‘We must pay
heed to the implications of an international lynch law, which under the
guise of defending human rights now threatens to subvert British justice
and the rights of sovereign nations.’
Scholes and Merton’s Long-Term Capital Management receives a
$3.6 billion bailout.
The Clinton Administration repeals the 1933 Glass Steagal Act.
2000: in addition to promoting terrorism and the ‘Islamic bomb,’
Colonel Gaddafi, ‘The King of Africa,’ apparently provides funds to the
Austrian School of Economics.
2001: the second bombing of the World Trade Centre (coinciden-
tally, on the anniversary of the 1924 and 1973 Chilean coups).
2002: Rumsfeld’s ‘action memo’ approves the use of ‘stress positions’
including ‘inducing stress by use of detainee’s fears (e.g. dogs).’

5https://www.industrydocumentslibrary.ucsf.edu/tobacco/about/history/.
348    
R. Leeson

2003: based on false intelligence about ‘weapons of mass destruction,’

Rumsfeld and Cheney lead an invasion of Iraq: which threatens to cre-
ate, in effect, an Iranian colony (after Civil War and a vacuum that is
exploited by the Islamic State of Iraq and the Levant).
Cheney insists that the invasion—like Laffer curve tax cuts—will be
(almost) self-funding.
Press reports about torture at Abu Ghraib and other American pris-
ons in Iraq fuels worldwide anti-American sentiment.
2004: an Executive Order sanctions the use of ‘enhanced interroga-
tion tactics’ by US military personnel.
L. Paul Bremer III, the post-invasion Administrator of Iraq
announces: ‘I leave Iraq gladdened by what has been accomplished and
confident that your future is full of hope.’ Because the security situa-
tion is so hazardous, he has to sit on the official plane ‘for about 15
minutes while the press and everybody went away. And then we went
off, out over the cargo that was in the C-130, in the back, and flew on
a helicopter to another part of the airport. And instead of going out on
a C-130, we went out on a government plane, a smaller government
plane to Jordan, safely.’
Caldwell’s Hayek’s Challenge (published through funding provided by
what is regarded as a climate change denial organization) establishes the
‘nature’ of Hayek: ‘Hayek made a point of keeping his disagreements
with others on a professional level.’
2005: the Liechtenstein tax haven (which had until recently been
on a list of State-sponsors of terror) begins to openly fund the Austrian
School of Economics.
2006: The Times quotes Merlin Charles Sainthill Hanbury-Tracy, 7th
Baron Sudeley, Vice Chancellor of the International Monarchist League,
as stating, in a report of the Conservative Monday Club’s Annual
General Meeting, that ‘Hitler did well to get everyone back to work.’
2007: Britain suffers the first run on a commercial bank since 1866.
2008: the US Emergency Economic Stabilisation Act provides $700
billion in funding for the Troubled Assets Relief Program.
2009: President Barack Obama declines to release pictures of US
troops inflicting ‘torture, abuse, rape and every indecency’ because it
would ‘inflame anti-American public opinion.’
 7 Power, Terror and Rights: An Overview Chronology    
349

The only person convicted of the Mỹ Lai massacre makes his first
public apology: ‘I was a 2nd Lieutenant getting orders from my com-
mander and I followed them—foolishly, I guess.’
2010: in ‘Citizens United v. Federal Election Commission,’ the US
Supreme Court finds in favour of unlimited election spending by indi-
viduals and corporations.
2011: Hamowy’s The Constitution of Liberty: The Definitive Edition is
published by Caldwell without any reference to Hayek’s original intent:
to market his neo-feudal ‘spontaneous’ order to dictators such as Salazar
and (later) Pinochet.
Inspired by the Austrian School of Economics and 9-11-style religi-
osity, Anders Breivik bombs government buildings in Oslo and shoots
dead 69 participants of a Workers’ Youth League summer camp.
2012: in Guatemala, Ríos Montt is indicted for genocide and crimes
against humanity.
Presidential candidate and devout Mormon, Mitt Romney, tells an
audience of donors and financial sector barons: ‘My job is not to worry
about [47% of the] people. I’ll never convince them they should take
personal responsibility and care for their lives.’
2014: the Rothbard-founded Review of Austrian Economics (‘Editor-
in-Chief ’ Boettke) publishes—apparently un-refereed–Caldwell and
Montes’ academically unpublishable ‘Friedrich Hayek and His Visits to
Chile’ which establishes the ‘nature’ of Mises: he could not have been a
fascist because he was Jewish. Despite having been reminded of Hayek’s
repeated use of argumentative ad hominem, Caldwell and Montes reaffirm
the ‘nature’ of Hayek: ‘Hayek had throughout his career been known for
keeping his disagreements with opponents on a professional level.’
In the WSJ, Charles Koch states: ‘A truly free society is based on a
vision of respect for people and what they value.’ To illustrate his
‘Christ-centred life,’ the Koch-funded Boettke circulates to his GMU
PhD students and others an ‘underpants’ video together with a discus-
sion of varieties of ‘masturbation.’
2016: in the Washington Post, Charles Koch states that ‘Democrats
and Republicans have too often favored policies and regulations
that pick winners and losers. This helps perpetuate a cycle of control,
dependency, cronyism and poverty in the United States.’
350    
R. Leeson

2017: at Donald Trump’s EPA and the Interior Department

(two government agencies that are ‘vital’ to the profit levels of Koch
Industries), ‘top personnel have deep ties to the Kochs.’ Scott Pruitt—a
major recipient of TOFF funding and a self-described ‘leading advo-
cate against the EPA’s activist agenda’—becomes the fourteenth EPA
Administrator.
The Koch-funded Caldwell publically sneers at the archives (which
he seeks to control and which reveals Hayek to be a fraud, a racist and a
congenital liar) and instructs members of the GMU ‘Hayek-Fink-Koch’
PhD production line to ‘forget the name’ of the Archival Insights into the
Evolution of Economics and its editor.
2018: the Washington Post reports that Charles Koch has been pick-
ing ‘winners’ (typically from low-status universities) and that Boettke is
monitored by an ‘Advisory Board’ and his ‘1%’ financial status has been
derived from what appear to be ‘under the counter’ payments chan-
nelled from Koch to GMU (which GMU President Cabrera was appar-
ently unaware of ).

References

Other References

Boettke, P. J. (2009, April 17). Inspiring Message: Rich Fink and Center for
the Study of Market Processes Circa 1984. Coordination Problem. http://
www.coordinationproblem.org/2009/04/inspiring-message-rich-fink-and-
center-for-the-study-of-market-processes-circa-1984.html.
Cubitt, C. (2006). A Life of August von Hayek. Bedford, UK: Authors Online.
Finer, H. (1945). The Road to Reaction. Chicago: Quadrangle Books.
Fisher, H. A. L. (1939). A History of Europe. London: Eyre & Spottiswoode.
Hayek, F. A. (2007 [1944]). The Road to Serfdom, Texts and Documents: The
Definitive Edition: The Collected Works of F.A. Hayek (B. Caldwell, Ed.).
Chicago: University of Chicago Press.
Hayek, F. A. (2011 [1960]). The Constitution of Liberty: The Definitive
Edition—The Collected Works of F.A. Hayek (R. Hamowy, Ed.). Chicago:
University of Chicago Press.
 7 Power, Terror and Rights: An Overview Chronology    
351

Hayek, F. A. (2013). Law Legislation and Liberty a New Statement of the Liberal
Principles of Justice and Political Economy. Oxford, UK: Routledge Classics.
Hildebrandt, S. (2013, July). Wolfgang Bargmann (1906–1978) and Heinrich
von Hayek (1900–1969): Careers in Anatomy Continuing Through
German National Socialism to Postwar Leadership. Annals of Anatomy
Anatomischer Anzeiger, 195(4), 283–295. http://www.sciencedirect.com/
science/article/pii/S0940960213000782.
Hildebrandt, S. (2016). The Anatomy of Murder Ethical Transgressions and
Anatomical Science During the Third Reich. New York: Berghahn.
Keynes, J. M. (1936). General Theory of Employment, Interest and Money. New
York and London: Harcourt, Brace.
Mises, L. (1985 [1927]). Liberalism in the Classical Tradition (R. Raico, Trans.).
Auburn, AL: Ludwig von Mises Institute.
Polanyi, K. (1934). Othmar Spann: The Philosopher of Fascism. New Britain,
3(53), 6–7.
Polanyi, K. (1935). The Essence of Fascism. In D. Lewis, K. Polanyi, &
J. Kitchen (Eds.), Christianity and the Social Revolution. London: Gollancz.
 8
From Metternicht’s ‘Justice, Love
and Peace’ to Mises’ ‘Oligarchic’ ‘Liberty’
and Russia of the Oligarchs

This chapter examines the neo-feudal ‘spontaneous’ order—from

Metternicht’s Concert of Europe to Mises’ oligarchic ‘liberty’ and
beyond.
According to the Austrian School monarchist, ‘Ritter von’ Kuehnelt-
Leddihn (2000, 36, n90), in the ‘Middle Ages, European monarchs
were very much subject to Constitutions. There was the principle of
rex sub lege ’ (‘the King beneath the law’). In 1215, the conflict between
Monarch and ‘his subjects’ resulted in ‘the Great Charter of the
Liberties’ (Magna Carta) through which a council of 25 barons would
provide protection to the First and Second Estates. Its failure resulted in
the First and Second Baron’s War (1215–1217 and 1264–1267). After
King Charles I was executed in 1649, the ‘Divine Right of Kings’ ceased
to be such a potent ‘catchword’: ‘von’ Hayek (1899–1992) and ‘von’
Mises (1881–1973) sought ‘catchwords’ to promote The Divine Right of
the ‘Free’ Market (Leeson 2017)—a subtle, only slightly disguised ver-
sion of the Divine Right of TOFF ‘barons.’
In 1789, as Washington became the first American President, the
financial difficulties of the House of Bourbon led King Louis XVI to
summon the first meeting since 1614 of the Estates-General (Les

© The Author(s) 2019 353

R. Leeson, Hayek: A Collaborative Biography,
Archival Insights into the Evolution of Economics,
https://doi.org/10.1007/978-3-319-78069-6_8
354    
R. Leeson

États-Généraux de 1789 ). The first item on the agenda had symbolic

potency: should voting be by feudal function—which would guarantee
an advantage to the First and Second Estates (the clergy and the nobil-
ity)—or by individual representative—which would favour the Third
(the commoners)? The King favoured functional representation—but
the Third Estate formed a National Assembly and invited the other two
Estates to join.
Thus was born the modern configuration of politics: typically
two major parties occupying the democratic centre—Labour/Social
Democratic/Democratic (soft and hard left) plus Conservative/
Christian Democratic/Republican (‘wet’ and ‘dry’)—with Red and
White Terror fraternities scheming in the wings to impose varieties
of ‘equality’ (communism) or ‘liberty’ (‘fascism,’ monarchism or oli-
garchy).1 The ‘middle way’ between these two anti-democratic tails is
permanently under threat (and appeared especially fragile during the
interwar period and the 1970s). The Times (26 March 1980) published
an extract from Hayek’s ‘The Muddle of the Middle’ address to the
Conservative Party Monday Club, which was almost identical to the let-
ter from Hayek (5 March 1980) they had just published:

No inflation has yet been terminated without a ‘stabilization crisis.’2

The eighth University of London Tooke Professor of Economic Science

and Statistics (A. W. H. Phillips)—who spent three-and-a-half years as a
prisoner of the Japanese in a war that had been facilitated by the deflation-
ary policy promoted by his predecessor (Hayek), used his post-war liberty
to devise stabilisation policies (Leeson 1997, 2000). For his predeces-
sor, crisis—‘extensive unemployment’—was the optimal Austrian policy
response to either inflation or deflation-induced double-digit unemploy-
ment: the ‘central theme’ of Hayek’s (1933, 16–17) Monetary Theory and
Trade Cycle was a ‘critique of the programme of the “Stabilizers”.’

1While ‘liberty’ in both its positive and negative sense has a useful abstract quality, as a slogan it

becomes ‘a snare and a delusion.’

2http://www.margaretthatcher.org/document/114503.
 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
355

The British branch of the neoclassical school and its behavioural eco-
nomics augmentation emphasises social cost-benefit analysis: the rela-
tive efficiency of markets and governments as social organisers should
be evaluated on a case-by-case basis. From this perspective, it is, there-
fore, entirely consistent to conclude that benefits of regulating banks,
deregulating airlines and legalising (and thus regulating) ‘recreational’
drugs exceed the costs. With respect to the other major branch of the
neoclassical school: Paul Einzig (1937, 204) reported that at the LSE,
Robbins and his collaborators ‘set up a cult of the Austrian economist,
Professor Ludwig von Mises, with his fanatic belief in cutting down
prices, and especially wages, as a remedy for all evil’ during the Great
Depression. In his Memoirs, Hugh Dalton (1953, 115) concluded that
Robbins, his LSE colleague, had become an ‘addict of the Mises-Hayek
anti-Socialist theme’: ‘variety’ had tended to disappear, and the LSE
began to teach a ‘more uniform brand of right wing economics.’
‘Free’-market policy proposals are defended through the fallacy of
argumentum ad verecundiam—by appealing to the authority of two
transparent frauds, ‘von’ Hayek and ‘von’ Mises. In The Road to Serfdom,
Hayek (2007 [1944], 178, 201, n31, 171)—a serial liar—declared:

The word ‘truth’ itself ceases to have it’s old meaning.

Instead, it describes ‘no longer something to be found, with the individ-

ual conscience as the sole arbiter’ of whether in any particular instance
the ‘evidence’ or the ‘standing’ of those ‘proclaiming’ that they have
evidence warrants belief; but had become something to be established
by ‘authority,’ something which must be believed in the interests of
the ‘unity of the organised effort,’ and which may have to be fiendishly
‘altered’ in line with the requirements of the organised effort. Quoting
R. A. Brady, Hayek stated that the Nazis were able to

‘co-ordinate’ scholars and scientists with relative ease.

In ‘The End of Truth,’ Hayek perceptively described a propaganda-

based ‘spontaneous’ order: the most effective way of making
356    
R. Leeson

‘everyone serve the single system of ends’ towards which the ‘social’
plan is directed is to make ‘everybody’ believe in those ends. In The
Constitution of Liberty, Hayek (2011 [1960], 186–189) described the
satisfaction of those who take instructions from their social, finan-
cial and intellectual superiors: ‘To do the bidding of others is for the
employed the condition of achieving his purpose.’ And in The Road to
Serfdom, Hayek described an analogous outcome: to make a ‘totalitar-
ian system function efficiently it is not enough that everybody should
be forced to work for the same ends. It is essential that the people
should come to regard them as their own ends.’ Producer sovereignty
was required behind the façade of ‘spontaneous’ consumer sovereignty:
‘Although the beliefs must be chosen for the people and imposed upon
them, they must become their beliefs, a generally accepted creed which
makes the individual as far as possible act spontaneously in the way the
planner wants.’
Hayek (1978a) described the deferential remnants of neo-feudalism
that underpinned his ascribed status: ‘in the countryside of southwest
England, the class distinctions are very sharp, but they’re not resented.
[laughter] They’re still accepted as part of the natural order.’3 In The
Road to Serfdom, he noted that techniques of propaganda were not
peculiar to totalitarianism—but that the totalitarian state was more
efficient: ‘all’ the instruments of propaganda are ‘coordinated’ to influ-
ence individuals in the same direction and produce the ‘characteristic
Gleichschaltung [intellectual coordination] of all minds.’
In ‘The Totalitarian in our Midst,’ Hayek (2007 [1944], 195–196)
stated that there is ‘scarcely’ a leaf out of Hitler’s book which ‘someone
or other’ in Britain has not ‘recommended us to take and use for our
own purposes.’ Caldwell (2007, 171, n2) provided an illustration of
Gleichschaltung: ‘The forced reorganisation of the disparate trade unions
into a single labour “front” is a standard example.’ Boettke’s GMU
students are coordinated through his ‘Coordination Problem’ blog

3Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
357

and—funded by employer trade unions—the MPS coordinated both its

Austrian and Chicagoan branches with a ‘consistent doctrine’: its

main purpose has been wholly achieved. I became very much aware
that each of us was discovering the functioning of real freedom [empha-
sis added] only in a very small field and accepting the conventional doc-
trines almost everywhere else. So I brought people together from different
interests. Any time one of us said, ‘Oh yes—but in the field of cartels
you need government regulation,’ someone else would say, ‘Oh no! I’ve
studied that.’ That was how we developed a consistent doctrine and some
international circles of communication. (Hayek 1992b [1977])

In 1932, Dalton wrote to a friend that the ‘Robbins-Hayek tendency

(and they have several echoes on the staff) is very retrograde’ (cited
by Pimlott 1985, 215). After a visit to Nazi Germany in the spring of
1933, Dalton noted that ‘Geistige Gleichschaltung is the Nazi ideal in
education. There is something of this to in the economics department
of the [London] school of economics’ (cited by Durbin 1985, 103).
Point 20 of the Nazi’s 25 Point programme insisted on a ‘thorough
overhaul of our national education system. The curriculum of every edu-
cational establishment must be adapted to the demands of practical life.
The school must impart an understanding of State and public affairs at
the earliest stage in the child’s intellectual development’ (cited by Fischer
2002, 159). As the first Nazi to hold any ministerial-level post in pre-
Nazi Germany, Wilhelm Frick, the State Minister of the Interior and of
Education in the Thuringian coalition government, attempted to ‘turn
every school and educational agency into an instrument of propaganda’
(Clark 1964 [1935], 323). According to Hitler, the ‘task which therefore
falls to all really great legislators and statesman is not so much to prepare
for war in a narrow sense, but rather to educate and train thoroughly a
people so that to all reasonable intents and purposes its future appears
inherently assured. In this way even wars lose their character as isolated,
more or less violent surprises, instead becoming part of a natural, indeed
self-evident pattern of thorough, well-secured, sustained national devel-
opment’ (cited by Fischer 2002, 153).
358    
R. Leeson

For the benefit of Otto the Habsburg Pretender, Mises (2012

[1940], 154) proposed to rebuild post-war Austria education by
eliminating what Austrians regard as malinvestment: elementary
education will be under the ‘control of the central government.’ ‘All’
matters relating to elementary education will be under the ‘overall
control’ of the Office of Education, but ‘directly supervised’ by the
school inspector of the district authority. ‘All’ institutions of higher
education will be under the ‘direct supervision’ of the Office of
Education. Mises also insisted that gymnasiums and other second-
ary schools ‘will expand their curricula.’ English and French instruc-
tion will be part of the ‘compulsory’ programme. Students will be
‘held to substantially higher standards of achievement. Only gifted
and hardworking students deserve to have the state devote special
resources to their education.’
After World War II, the opportunities for human capital acquisition
were greatly expanded. Although the supply of teachers is a policy-
influenced variable, Mises (2012 [1940], 154) insisted that higher
standards will ‘reduce crowding ’ so that the number of secondary schools
can be reduced. This reduction is ‘essential’ for budgetary reasons and
also because ‘truly suitable ’ teaching staff were in short supply (emphases
added).
In the British neoclassical tradition, wages are analysed through
the interaction of supply and demand, where demand is deter-
mined by the marginal revenue product of labour which, in turn,
is largely determined by the (often tax-subsidised) human capital of
the worker. A relative rise in productivity should boost exports and
increase the ability of domestic producers to compete with imports,
and thus allow real wages to rise. In the Pigouvian British tradi-
tion, providing an incentive for employers to bring forward invest-
ment expenditure will increase the current demand for labour. In
contrast, in the Austrian neoclassical supply-side tradition, ‘peasants
and workers’ are ‘inferior’: the export of workers through migration
reduces the pool of potential conscripts, weakens the Warfare State,
increases real wages above their ‘natural’ rate which undermines the
natural order.
 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
359

Seven years after Sraffa (1932a, b) debunked the ‘natural’ rate of

interest, Hayek (2017 [1939], 339, n146) praised Henry Thornton’s
1802 reference to ‘a rate of interest lower than that which was the nat-
ural one of the moment.’ Mises (2012 [1913], Chapter 7) promoted a
‘natural wage,’ and a necessary ‘reaction’ that re-establishes the ‘natural’
market situation: the ‘only interventions’ that can influence the level of
‘market-determined wages’ are those that work ‘within the laws of the
market.’

Any wage policy that wishes to change the level of wages from the one
that tends to form on the unhampered [emphasis added] market, and
which we can call the ‘natural wage,’ must modify the factors whose
interactions jointly determine the actual level of wages prevailing on the
market.
For example, it is possible to lower wages if one encourages the immi-
gration of foreign workers, and one can push wages up if one restricts the
influx of workers.
The market price for labor is indirectly influenced by the use of these
methods; the market wage that is formed under the influence of these
changed conditions is the ‘natural wage’ in this new state of affairs. Any
direct influence on wages is as unworkable as with any other price on the
market. It necessarily leads to a reaction that reestablishes the ‘natural’
market situation.
This is equally true for tax rates as it is for the wage policy of organized
labor through trade unions.

Mises added that the older Classical School ‘already understood this,’
even though it was based on the ‘untenable’ labour theory of value.
The (London) Times (29 March 1980, 2) reported that Hayek had
told an IEA lunch that ‘tackling the problem of trade unions was more
urgent and important than pursuing a sound monetary policy.’ He was
‘convinced the only way to restore the market in the field of wages is
to appeal to the people by referendum to rescind every single privilege
granted to trade unions which the ordinary citizen does not possess. If
you ask people whether they wish trade unions to be subject to the law
360    
R. Leeson

and not have any special privileges, you would get an overwhelming
result.’4
Mises (1912) provided the foundations of modern Austrian business
cycle theory with Theorie des Geldes und der Umlaufsmittel (Theory of
Money and Credit). The following year, complaining that wage earn-
ings have been ‘steadily rising’ for ‘several decades’ and referring to the
‘groups’ that ‘initiate the rise in prices,’ Mises (2012 [1913], Chapters 7
and 8) promoted a cost-push explanation of inflation:

We set aside for any further consideration the role organized labor may
play for economic life, in politics, for law and social customs, or for
national identity. We have only one question before us: whether or not
organized labor can raise wages above their natural level. This question is
immediately answered in the affirmative for all those cases in which labor
unions can succeed in influencing the conditions of the labor market. As
for influencing the demand side, in general the answer is no. More often
the unions can succeed in influencing supply according to their wishes. If
this influence is limited to individual industries, it always comes down to
a question of advantages for the workers in one branch of production at
the expense of all other workers. Artificially reducing the supply of labor
in one or more branches of production results in an increased supply of
labor in all other branches of industry; if the wages are pushed up in the
former, then they must fall in the latter … It is true that no effort by
labor unions can permanently succeed in pushing wages above their nat-
ural level. In the best of cases, all that they can achieve is to raise wages,
but they cannot prevent the necessary adjustment of wages back to their
natural level. The adjustment, however, does not come about by nominal
wages coming down again to their old level. The money wage remains
unchanged. The rise in the prices of goods has the effect of bringing real
wages back to the ‘natural’ wage that corresponds to the given conditions
of the market.

According to Ebeling (2000, xiii), Mises (a business sector lobby-

ist) ‘evaluated and made recommendations about various legislative

4http://www.margaretthatcher.org/document/114504.
 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
361

proposals in the areas of banking, insurance, monetary and foreign-

exchange policy, and public finance.’ Mises (2012 [1910], Chapter 6)
promoted light-touch regulation 19 years before the 1929 Wall Street
Crash and almost a century before the Global Financial Crisis. Mises
denigrated a ‘new plan’ which had been ‘stirring up vigorous opposition’
in the ‘commercial and industrial circles’ (who employed him) which
proposed that ‘fiscal authorities’ will have the ‘right’ to inspect their
books: ‘Austrian entrepreneurs rightly’ see in this arrangement an ‘inten-
sification of the harassment that the authorities display toward them.’
The Viennese bank, Credit Anstalt, declared bankruptcy on 11 May
1931, ‘exactly’ as Mises had told his fiancé ‘beforehand’ (Mises 1976,
23). Less than three months later, Mises (2012 [1 August 1931],
Chapter 26) complained: ‘Secret dealings’ had turned out to be ‘espe-
cially harmful for the banks.’ It has been discovered that ‘often there
were reasons for the taciturnity in bank reports as a means of covering
up the losses being suffered.’ Mises flip-flopped: ‘Oversight by the gen-
eral public is an indispensible element in maintaining the soundness of
our banking institutions.’
A decade before the invasion of Poland (1 September 1929), the
Nazis had only 150,000 members; this grew to 210,000 (by March
1930), 400,000 (by the end of 1930) and 800,000 (by the end of 1931)
(Bullock 1962, 150, 169, 190). Between May 1928 and September
1930, their vote increased from 810,127 to 6,379,672 (Noakes and
Pridham 1994, 64, 70). The Wall Street stock price bubble (which began
to burst in October 1929) had been inflated by price-manipulating
‘pools’ and fuelled by bank lending. In a letter to the Times, Keynes
et al. (17 October 1932) advocated a boost to spending as a remedy
for the Great Depression. On 19 October 1932, ‘von’ Hayek and three
LSE colleagues, Robbins, Arnold Plant and Theodore Gregory, pub-
lished a rejoinder on ‘Spending and Saving’: a revival of the prices of the
(‘pool’-dominated) stock market will revive the economy, while ‘lavish’
government expenditure would be ‘perilous in the extreme.’
Kuehnelt-Leddihn (2000, 38) reflected about the French Revolution:
‘It was obvious that the new order could tolerate no estates, and, soon,
the demand arose to eliminate social differences based on wealth and
income, as well as those based on birth [emphases added]. In 1794,
362    
R. Leeson

the popular ire also turned against the rich, and some were guillo-
tined for just that reason. Needless to say, the new horizontalism was
in conflict with the Christian tradition, which emphatically does not
stand for equality.’ And eight years before his forced abdication, the
Hohenzollern Kaiser Wilhelm II promoted the Divine Right of Kings:
his crown had been ‘granted by God’s grace alone and not by parlia-
ments, popular assemblies and popular decisions … Considering myself
an instrument of the Lord, I go my way’ (cited by Shirer 1960, 126).
According to Mises (2009a [1978 (1940)], 21–22), it was ‘only in
Vienna that there was still a small number of people who concerned
themselves with methods of preserving the state. The destruction of
the Hapsburg monarchy and the events it triggered later revealed that
these men took pains to save Europe and all of civilization from great
catastrophe. But lacking in any sustainable ideological base, their efforts
were destined to be in vain.’ Thirteen years previously, in ‘Foundations
of [Austrian Classical] Liberal Policy,’ Mises (1985 [1927], Chapter 10)
had sought to provide a ‘sustainable ideological base’ for ‘fascism.’
Charismatic leaders absorb the needs of those who empower them.
Epigone-generation Austrians project their needs onto caricatures of
‘von’ Hayek and ‘von’ Mises—who in turn projected their needs onto
Pinochet, ‘Ludendorff and Hitler’ and other ‘Fascists.’ From post-
‘Great’ War exile in the Netherlands, Wilhelm hoped that Hitler would
allow his family to resume ‘their’ throne. When his son Prince August-
Wilhelm, a Nazi Party and SA member, became involved in street
brawls, his father told him: ‘You may be proud that you were permitted
to become a martyr of this great people’s movement’ (cited by Heiden
1944, 422).
When ‘Prince August-Wilhelm of Prussia’ addressed Nazi rallies,
he was ‘always paired with an “ordinary citizen,” usually a farmer or
a worker.’ One upper-middle-class Hamburg lady noted in her diary:
‘every person who thinks and feels as a German, the bourgeois, the
farmer, the aristocratic, the prince, and the intelligentsia, stand by
Hitler. It is the nationalist movement’ (cited by Noakes and Pridham
1994, 80–81).
In the 1932 presidential election, the German National People’s Party
(Deutschnationale Volkspartei ) candidate, Theodore Duesterberg, was
 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
363

revealed to have Jewish ancestry. In the run-off, Wilhelm’s eldest son,

former Crown Prince Frederick announced: ‘Since I regard it as abso-
lutely necessary for the national front to close its ranks, I shall vote for
Adolf Hitler’ (cited by Heiden 1944, 449).
On 9 November 1918, Count Kuno von Westarp recorded the delib-
erations that led Field-Marshall von Hindenburg and Colonel-General
von Plessen to explain to the Hohenzollern King that his plan to march
at the head of ‘his’ army to suppress the German revolution would fail
because the ‘whole revolution had turned directly against the person of
the Kaiser.’ To preserve itself, the Prussian army had decided to ditch
the King. Two years later, the ex-Kaiser’s adjutant recorded the exiled
monarch’s reaction to the 1920 Kapp Putsch (which he may have inter-
preted as a prelude to his own restoration): ‘Tonight we will have cham-
pagne’ (cited by Röhl 1970, 185–187, 23).
President von Hindenburg’s final ‘Political Testament’ sought a resto-
ration of the monarchy (Röhl 1970, 141). When his adopted country
surrendered in May 1940, the ex-Kaiser wrote to Hitler: ‘My Fuhrer,
I congratulate you and hope that under your marvelous leadership the
German monarchy will be restored completely’ (cited by Beevor 2013,
92–93). When Paris fell, he told Hitler that he was comparable to
Frederick the Great (Van der Kiste 1999, 223). Hayek (1997 [1949],
231) regarded his disciples as typically ‘inferior … mediocrities’ who
had to be recruited and inspired through ‘visions’ of ‘Utopian’ ‘lib-
erty’5; and Hitler responded to Wilhelm’s obsequiousness by exclaiming:
‘What an idiot!’ (Beevor 2013, 92–93).
Wilhelm insisted that the ‘British people must be liberated from
Antichrist Juda [emphases in original]. We must drive Juda out of
England just as he has been chased out of the Continent.’ The ‘Jews
[are] being thrust out of their nefarious positions in all countries, whom

5‘Itseems to be true that it is on the whole the more active, intelligent, and original men among
the intellectuals who most frequently incline toward socialism, while its opponents are often of an
inferior calibre.’ Nobody ‘who is familiar with large numbers of university faculties (and from this
point of view the majority of university teachers probably have to be classed as intellectuals rather
than as experts) can remain oblivious to the fact that the most brilliant and successful teachers are
today more likely than not to be socialists, while those who hold more conservative political views
are as frequently mediocrities.’
364    
R. Leeson

they have driven to hostility for centuries.’ He also promoted a United

States of Europe: ‘The hand of God is creating a new world & working
miracles … We are becoming the U.S. of Europe under German leader-
ship, a united European Continent’ (cited by Röhl 2007, 151).
As did Otto the Habsburg Pretender, ‘another politician’ Hayek
‘wished to further.’ Hayek told Margaret Thatcher that ‘he had always
regarded him as one of the most sensible and best informed men among
his associates,’ while also telling Cubitt (2006, 48) that Otto was ‘not
particularly intelligent.’ Hayek, however,

did not cease to promote von Habsburg, and subsequently asked me

to make inquiries about the ‘Karlspreis,’ which is given by the town of
Aachen persons for their contributions to European unity - for exam-
ple to [Konrad] Adenauer, [Winston] Churchill, and [Edward] Heath -
because he intended to recommend von Habsburg for it.

John Locke (1689) provided a social contract theory as an alternative

to the Stuart’s Divine Right of Kings. In The Constitution of Liberty, in
a chapter on ‘Freedom, Reason and Tradition,’ Hayek (2011 [1960],
108–109) contrasted the eighteenth-century theory of liberty as devel-
oped in England—that ‘knew liberty’—and France, which ‘did not’: the
first based on an ‘interpretation of traditions and institutions which had
spontaneously grown up and were but perfectly understood,’ and the
second ‘aiming at the construction of the utopia, which has often been
tried but never successfully.’ But it had been the ‘rationalist, plausible,
and apparently logical argument of the French tradition, with its flatter-
ing assumption about the unlimited powers of human reason, that has
progressively gained influence,’ while the ‘less articulate and less explicit
tradition of English freedom’ has been ‘on the decline.’ The two tradi-
tions ‘finally became confused when they merged in the liberal move-
ment of the nineteenth century and when even leading British Liberals
drew as much on the French as on the British tradition.’ It was,

in the end, the victory of the Benthamite Philosophical Radicals over the
Whigs in England that concealed the fundamental difference which in
 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
365

more recent years has reappeared as the conflict between liberal democ-
racy and ‘social’ or totalitarian democracy.

These chapters will examine Hayek’s assertions in an appropriate histor-

ical context:

i. His eugenic and proto-Nazi background;

ii. His promotion of (amoral) social Darwinism—cultural evolution—
behind the smokescreen of ‘morality’;
iii. His recruitment of disciples by persuading ‘inferior mediocrities’ to
aim at the construction of Utopia;
iv. His promotion of crisis (‘extensive unemployment’);
v. The overriding importance Austrians attach to defending their
property and evading taxes and progressive taxation in particular; and
vi. Their attempt to enlist domestic political ‘fascism’ to support the
Austrian version of economic liberalism.

The Habsburgs were the ‘last possessors of the shadowy universal mon-
archy of the Middle Ages.’ Their Empire was a ‘geographic nonsense,
explicable only by dynastic grasping and the accidents of centuries of
history.’ Their Österreich (Eastern Reich, Austrian) Empire was only
partly European: as Foreign Minister (1809–1848) Prince Klemens
Wenzel von Metternich noted, ‘Asia begins at the Landstrasse,’ the east-
ward road out of Vienna. The zenith of its power was reached in the
sixteenth and seventeenth centuries. During the Counter-Reformation,
the Jesuits helped the Habsburgs regain the Germanic lands; the siege of
Vienna was lifted (1683) and victory achieved in the War of the Holy
League against the Ottoman Turks (1699). The Turkish invasions pro-
vided the Habsburgs with a ‘mission’ as ‘defenders of Christianity.’ A
‘new, Imperial aristocracy’ emerged: ‘the hangers-on of the Habsburgs’
(Taylor 1964, 11–15, 284).
In the 1891 Coal Creek War, Tennessee Governor John Price
Buchanan (1847–1930) faced insurrection when a mining company
attempted to replace striking miners with convicts leased from the State
(Kyle 2012). His grandson, James Buchanan (1992, 130), who recalls
meeting his first ‘Princess’ through a ‘luxurious’ MPS gathering, asked
366    
R. Leeson

Hayek about ending the universal adult franchise of the new order:
‘this relates to a question, though, and again it creates the problem of
whether or not we can get things changed. It’s something that people
don’t talk about now, but a century ago John Stuart Mill [1806-1873]
was talking about it: namely, the franchise.’ Buchanan—a direct recip-
ient of ‘government largesse’ (at GMU and elsewhere) and the benefi-
ciaries of tax-exempt ‘transfers’—continued: ‘Now, it seems to me that
we’ve got ourselves in--again, it goes back to the delusion of democracy,
in a way--but we’ve got ourselves into a situation where people who
are direct recipients of government largesse, government transfers, are
given the franchise; people who work directly for government are given
the franchise; and we wouldn’t question them not having it. Yet, to me,
there’s no more overt conflict of interest than the franchise [given] to
those groups. Do you agree with me?’ Hayek (1978a) replied that he
had found that another solution in his ‘Model Constitution’ (that he
had pressed upon Pinochet): ‘No, I think in general the question of the
franchise is what powers they can confer to the people they elect.’6
In late 1931, Hitler assured the judge in a trial of three of his disci-
ple (who were charged with spreading Nazi propaganda in the Army)
that he sought power through ‘constitutional means.’ He later stated:
‘if the German nation once empowers the National Socialist Movement
to introduce a Constitution other than that which we have today, then
you cannot stop it.’ When a Constitution ‘proves itself to be useless for
its life, the nation does not die - the Constitution is altered’ (cited by
Bullock 1962, 166, 191–192).
Hayek (1978a) promoted catchword propaganda: ‘Why shouldn’t--
as a proper heading--the need for restoring the rule of law become an
equally effective catchword, once people become aware of the essential
arbitrariness of the present government.’ Buchanan asked, ‘Well, how
would you see this coming about, though? Would you see us somehow
getting in a position where we call a new constitutional convention and
then set up this second body with separate powers? Or how would you

6Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
367

see this happening?’ Hayek (1978a) explained that the ‘spontaneous’

order would have to be reconstructed: ‘I think by several experiments
in new amendments in the right direction, which gradually prove to be
beneficial, but not enough, until people feel constrained to reconstruct
the whole thing.’7
William Volker (1859–1947)—who funded Hayek and Mises—felt
that it was his duty was ‘to be his brother’s keeper’ (Boutrous 2004,
2): Hayek (1978a) used this tax-exempt funding to promote the idea
that ‘Government should have no, under no circumstances--except
perhaps in an emergency--power of discriminatory coercion.8 All limi-
tations--certainly all discriminatory infringements of property rights--I
object to.’9 Hayek (1983, 56)—a serial tax-evader—was referring to
taxes on himself and those who were funding him: ‘We’ve been suffer-
ing from progressive taxation for 70 years, and that would simply be a
reinforcement of the progression under another name. I made myself
unpopular years ago when I attacked the whole ideal of progressive
taxation. Any reinforcement of the progression I can only regard as
disastrous.’
‘Free’-market religion turns a special case into a general the-
ory. Keynes (1972 [1933], 338), for example, made the common-
sense observation that it should not seem ‘strange that taxation
may be so high as to defeat its object, and that, given sufficient time
to gather the fruits, a reduction in taxation will run a better than an
increase in balancing the Budget.’ But for Paul Craig Roberts (1984,
27) and others: at any rate of income tax (5, 45% etc.) the Laffer
curve always and everywhere ‘maintains that tax cuts pay for them-
selves by stimulating the economy so strongly that tax revenues pour
into the Treasury’ (see also Fink 1982). Roberts was GMU Professor of

7Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

8Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

9‘But apart from this very troubling issue of expropriation, I think all limitations–certainly all

discriminatory infringements of property rights–I object to.’ Friedrich Hayek, interviewed by

Robert Bork 4 November 1978 and Robert Chitester date unspecified 1978 (Centre for Oral
History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
368    
R. Leeson

Business Administration and Professor of Economics, a Cato Institute

‘Distinguished Fellow,’ and WSJ columnist.
Mises (2012 [1910], Chapter 6) described nineteenth-century Laffer
curve advocacy: in 1898, the creation of the new income tax led to the
reported fear that the provinces and municipalities could collect tax
supplements ‘too liberally’ and thus raise the level of taxation to the
point that the ‘temptation’ to make ‘false’ declarations would become
‘very great.’ The government was also proposing to increase the income
tax, which was ‘provoking much greater attention and opposition.’ In
1910, the highest income tax rate was just below 5%; but subsequently,
it will ‘reach 6.5 percent.’
In the early twenty-first century, only five of the 50 States of the USA
(Alaska, Delaware, Montana, New Hampshire and Oregon) levy no
sales tax. Two classes pay no income tax: low-income earners plus hedge
fund barons (whose income is preferentially taxed as ‘carried interest’).
Between 2009 and 2017, the White House had—from an Austrian per-
spective—‘gone negro,’ as Hayek (5 March 1975) had earlier explained
to the Liberty Fund.10 In 2012, at a private $50,000-a-plate 2012 US
Presidential campaign fundraiser held at hedge fund manager Marc
Leder’s mansion, the private equity baron and devout Mormon, Mitt
Romney, addressed the new-feudal ‘Austrian’ base:

There are 47 percent of the people who will vote for the president no
matter what. All right, there are 47 percent who are with him, who are
dependent upon government, who believe that they are victims, who
believe the government has a responsibility to care for them, who believe
that they are entitled to health care, to food, to housing, to you-name-it.
That’s an entitlement. The government should give it to them. And
they will vote for this president no matter what. And I mean the pres-
ident starts off with 48, 49 … he starts off with a huge number. These
are people who pay no income tax. Forty-seven percent of Americans pay
no income tax. So our message of low taxes doesn’t connect. So he’ll be
out there talking about tax cuts for the rich. … My job is not to worry
about those people. I’ll never convince them they should take personal

10Hayek Archives. Box 34.17.

 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
369

responsibility and care for their lives. What I have to do is convince the
5–10% in the center that are independents, that are thoughtful, that look
at voting one way or the other depending upon in some cases emotion,
whether they like the guy or not. (cited by Corn 2012)

In Chile, the right tail described their fears of the left:

The prevailing perception among upper- and middle-class Chileans is

that the poor, el pueblo, are Communists—‘Allende’s people.’ When
Pinochetistas talk about the ‘8 per cent’ of Chileans who still vote for the
Communist Party, they point an accusing finger toward Santiago’s slums.
(Anderson 1998)

The year after visiting some of these Pinochetistas, Hayek (1978a)

described the aspirations of the right tail:

there may be one or two experiments where a dictator restores freedom,

individual freedom … A kindly system and a one-party system. A dicta-
tor says, ‘I have 9 percent support among the people.’11

In the 2010 ‘Citizens United v. Federal Election Commission,’ the

Supreme Court of the United States found in favour of unlimited elec-
tion spending by individuals and corporations. Mises (2012 [1935],
Chapter 28) provided the ideological foundations: the ‘market selects
the entrepreneurs and capitalists’ and it makes them rich; but the mar-
ket can also make them poor again and remove them from their posi-
tion, if they ‘fail to satisfy consumer wants.’ On the market there are
universal ‘but not equal voting rights. Voting power increases with
the size of income. But this greater voting power is itself the result of
the voting of the market. It can be won and held only by the test of the
market, by the successful use of the means of production that is in com-
pliance with the wishes of consumers.’

11FriedrichHayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
370    
R. Leeson

In a ‘capitalist economy’ unrestrained by government intervention,

‘ownership is the result of a daily plebiscite of the consumers, who have
a sovereign and revocable mandate.’ Even though landownership has its
‘origin in precapitalist times, the wealth of the landowners must meet
this test if it is to be preserved; therefore, real estate, too, is subject to
the law of the market.’
Thus the ‘structure of political democracy corresponds to the dem-
ocratic structure of the market.’ The ‘citizen as well as the consumer
decides who should direct production according to his desires; just as
he replaces the entrepreneur and the capitalist who does not satisfy his
consumption wants with other men, so it is granted to the hands of the
electorate to replace political leaders who do not lead where the voter
wants to go.’ Just as the ‘market sees to it that production is directed
according to the desires of the consumers, so a democratic constitution
makes sure that governmental power is exercised in agreement with the
political ideals of the electorate.’
The House of Romanov ruled Russia between 1613 and 1917. Peter
the ‘Great’ (reigned 1682–1725) gifted entire villages to his favoured
nobles; while Catherine the ‘Great’ (reigned 1762–1796) attached
the nobility more firmly to the monarchy by reinforcing their ‘legal’
authority over serfs. The rebellion-inducing British Stamp Act of
1765 occurred alongside fifty Russian peasant revolts (1762–1769);
and between the Boston Tea Party and the start of the American
Revolutionary War (1773–1775), Yemelyan Pugachev led the largest
peasant revolt in Russian history—offering the prospect of the abolition
of serfdom. The defeat of Pugachev’s Rebellion was followed by savage
reprisals: the road back to serfdom.
Feudal Estates had also been central to the Habsburg-dominated
Holy Roman Empire (962–1806) and their overseas colonies. As Hayek
was writing The Constitution of Liberty, Mises (2009b [1958], 13–14)
defended oligarchic ‘liberty’:

We must not condemn as hypocrites the men who in those ages praised
liberty, while they preserved the legal disabilities of the many, even serf-
dom and slavery. They were faced with a problem which they did not
know how to solve satisfactorily. The traditional system of production was
 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
371

too narrow for a continually rising population. The number of people for
whom there was, in a full sense of the term, no room left by the pre-
capitalistic methods of agriculture and artisanship was increasing. These
supernumeraries were starving paupers. They were a menace to the preser-
vation of the existing order of society and, for a long time, nobody could
think of another order, a state of affairs that would feed all of these poor
wretches. There could not be any question of granting them full civil
rights, still less of giving them a share of the conduct of affairs of state.
The only expedient the rulers knew was to keep them quiet by resorting
to force.

Dynastic rulers cemented their power by providing a government-spon-

sored layer of loyal nobles: turning ‘men’ into ‘noblemen’ and ‘Knights
on Horseback.’ In 1789, the House of Habsburg enrolled Josef Hayek
into their intergenerational entitlement programme by allowing him
and his heirs to jump an Estate—from the Third to the Second—for as
long as the Habsburgs remained in power. The career of his great-great-
grandson was organised around efforts to preserve this ascribed status
hierarchy (‘liberty’).
Napoleon abolished the Holy Roman Empire in 1806. In 1907,
that social and political hierarchy had been further undermined when
the Habsburgs voluntarily surrendered to the forces against which
the Bourbons in 1789 had resisted (and which had cost them their
throne and some of their heads). Feudal functional representatives—
including the Lower Austrian Chamber of Commerce and Industry
(Niederösterreichische Handels-und Gewerbekammer or Kammer )—were
eliminated from Parliament: until 1907, the sixty Austrian chambers of
commerce had been directly represented in the Austrian parliaments,
according to the ‘older’ parliamentary model

where ‘representation’ referred to predefined interest groups, such as the

nobility, the clergy, the city dwellers, but also ‘commerce and industry.’

But the introduction of universal suffrage supplanted the ‘old’ system

and the Vienna Kammer, which had ‘traditionally’ been at the centre of
the ‘whole’ network of Austrian Chambers of Commerce abruptly found
372    
R. Leeson

itself bereft of ‘direct’ political influence (Hülsmann 2007, 187–188).

They recruited the 27-year-old von Mises (2009a [1978 (1940)], 59–60):
the Kammer offered him the ‘only field’ in which he ‘could work’ in
Austria. Mises ‘created a position’ for himself—although officially he was
‘never more than an officer’ (Beamter) in the Kammer’s executive office.
Mises always had a ‘nominal superior’ and colleagues—but his ‘position
was incomparably greater than that of any other Kammer official or of
any Austrian who did not preside over one of the big political parties.’
Mises modestly described himself as ‘the economist of the country.’
Kuehnelt-Leddihn was ‘a Catholic, an Old Liberal, and a trusted
advisor to Otto von Habsburg and Cardinal Ratzinger (now Benedict
XVI). He was a hereditary knight of the Holy Roman Empire and an
adjunct scholar of the Mises Institute (great combination!)’ (Rockwell
2008). According to Kuehnelt-Leddihn (1992), the ‘representatives of
the Austrian school of economics were old liberals and significantly,
with few exceptions, noblemen.’
Why ‘significantly’? Nobles were above both the Third Estate and
(in part) the law. For public consumption, Hayek (1976a) stated that
‘Equality before the law, the application of the same rule to every cit-
izen is an absolute essential foundation of liberty … I’m all in favour
of treating people under the same rule for equality under the law.’12 In
1919, the Déluge washed away the legal basis of the Habsburg inter-
generational entitlement programme: the status of ‘“German Austrian
citizens” equal before the law in all respects’ was forcibly imposed on
Austrian nobles (Gusejnova 2012, 115). Hayek’s and Mises’ lives were
dominated by resentment towards this abolition of coats of arms and
titles (Adelsaufhebungsgesetz, the Law on the Abolition of Nobility,
passed 3 April 1919). Facing prosecution, the Preface of Nation, Staat,

12‘Equality before the law, the application of the same rule to every citizen is an absolute essential

foundation of liberty, but if you have equality before the law you cannot make people materially
equal because people are in fact very unequal in their gifts, in their environment, in their oppor-
tunities. And if you want to make people who are very unequal in their gifts and opportunities
equal, you have to treat them differently. In this sense, treating under the same rule and making
people equal are absolutely in conflict. I’m all in favour of treating people under the same rule for
equality under the law, but I’m all against Governmental effort of making people equal because
that requires treating them differently.’
 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
373

und Wirschaft (Nation, State and the Economy ) (1983 [1919]) was signed
‘Vienna, beginning of July 1919 Professor Dr. L. Mises.’
The heavy-industry-funded German ‘Fatherland Party’ was founded
on 24 September 1917 to ‘resist moves towards parliamentary democ-
racy. The party soon acquired over one million members, mainly among
the middle-class. The Pan-Germans were, however, particularly anx-
ious to reach the working class.’ From the autumn of 1917 onwards,
‘anti-Semitism came to play an increasing role in Pan-German propa-
ganda’ (Noakes and Pridham 1994, 5–6).
As Hayek (1994, 53) founded the ‘German Democratic Party,’13 Hitler
(12 September 1919) attended his first meeting of the German Workers’
Party (Deutsche Arbeiterpartei), whose members were ‘not workers, as
the party’s name implies, but representatives of an intellectual Bohemia,
members of the middle-class economically affected or mentally disorien-
tated by the war’ (Fest 1970, 16, 21; Shirer 1960, Chapter 2; Noakes and
Pridham 1994, 11; Bullock 1962, 64–66, 78; Turner 1985, 47).
Electoral statistics reveal that in the cities, the Nazis ‘tended to draw
most support from upper-middle-class districts’ (Noakes and Pridham
1994, 82). When asked ‘How did you get interested in the social
sciences?’ Hayek (1978a) replied:

It’s hard to say. I had a maternal grandfather who was a constitutional

lawyer and later a statistician, but there’s no influence from that side. The
background was purely biological, which has now been passed on to my
children. I don’t know quite how it happened. I think the decisive influence
which interested me and which led me to be interested in politics was really
World War I, particularly the experience of serving in a multinational army,
the Austro-Hungarian army [emphasis added]. That’s when I saw, more or
less, the great empire collapse over the nationalist problem. I served in a
battle in which eleven different languages were spoken in a single battle. It’s
bound to draw your attention to the problems of political organization.14

13According to Leube (2003, 14) the ‘party’ was a student association: the Deutsch-Demokratische
Hochschüler Vereinigung. In his interview with Skousen and North, Hayek also referred to an
‘association.’
14Friedrich Hayek, interviewed by Jack High date unspecified 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

374    
R. Leeson

According to Leube (1994, 163)—who knows Hayek I, II and III—

Hayek’s ‘Theory of the Spontaneous Order’ emerged from observing
the retreat from the Piave River of these ‘multinational, multiracial
troops, speaking at least seventeen different languages’ who ‘left with-
out any legally binding command or even common moral obligation.’
But according to Caldwell (2004, 135, n3)—who knows only Hayek
I—Hayek and/or Luebe were fabricating evidence: ‘to my knowledge,
Hayek never said anything like this in any written sources … The
reconstruction seems suspect. It has the ring of a retrospective search for
antecedents.’
Hayek (1978a)

grew up in a war, and I think that is a great break in my recollected his-

tory. The world which ended either in 1914 or, more correctly, two or
three years later when the war had a real impact was a wholly different
world from the world which has existed since. The tradition died very
largely; it died particularly in my native town Vienna, which was one of
the great cultural and political centers of Europe but became the capi-
tal of a republic of peasants and workers afterwards. While, curiously
enough, this is the same as we’re now watching in England, the intellec-
tual activity survives this decay for some time. The economic decline [in
Austria] already was fairly dreadful, [as was] cultural decline. So I became
aware of this great break very acutely.15

Hitler recalled that when he became aware of the Austro-German

defeat, ‘Everything went black before my eyes as I staggered back
to my ward and buried my aching head between the blankets and
pillow … The following days were terrible to bare and the nights
still worse … During these nights my hatred increased, hatred for
the originators of this dastardly crime’ (cited by Bullock 1962, 60).
According to Leube (2003, 13–14), the experiences of his war ser-
vice, the ‘loss of his best friend, and the collapse of his social and

15Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
375

political milieu’ left a ‘lasting impression’ on Hayek. It was, as he

remarked in a taped interview, ‘like being shipwrecked which also
leaves you without any doubt that one has to start anew, rather than
a slow decline.’ Hayek’s family-derived ‘fascination’ with the nat-
ural sciences ‘thus gave way to the problems of individual behavior
and economic organization.’ Within this ‘political void, Hayek, like
many of his fellow veterans, looked for some lead and intellectual
orientation and attempted to find them in the few books they could
get.’ And in a letter to a Swedish neurologist, Hayek (17 February
1983) explained that

only the political excitements of the time after WWI have ‘abducted’
him [sic] into the social sciences. (cited or summarised by Leube 2003,
14, n5)

Abducted? The ‘Great’ War and its aftermath undermined dynas-

tic intergenerational entitlement programmes. The Habsburg-born,
Austrian–educated Arthur Koestler (1950, 19) described some of
the affected: ‘Those who refused to admit that they had become
déclassé, who clung to the empty shell of gentility, joined the Nazis
and found comfort in blaming their fate on Versailles and the Jews.
Many did not even have that consolation; they lived on pointlessly,
like a great black swarm of tired winter flies crawling over the dim
windows of Europe, members of a class displaced by history.’ Hitler
shared Viennese doss houses with ‘impoverished Hungarian nobles’
(Fest 1970, 4). Previously, Austrian School economists tended to
be Habsburg loyalists; after being declassed, they promoted both
the far-right of the democratic spectrum and its anti-democratic
appendage.
The constraints of democratic politics resemble the prohibition
on torture—they appeal to long-run self-interest. Those in the demo-
cratic centre tend to alternate in power and thus have an incentive to
shake hands with their opponents to acknowledge either election defeat
or victory. In contrast, those in the tails clench fists or extend arms in
376    
R. Leeson

an upwards direction—and seek permanent and irreversible victory.

The 1933 images of Nazi salutes performed by the heir to the British
crown, the Prince of Wales (the future Edward VIII), the future Queen
Mother and her two daughters (the future Queen Elisabeth II and
Princess Margaret)—which may have been inadvertently released by
Buckingham Palace for an exhibition on ‘Royal Childhood’ (Whitehead
and Rayner 2015)—appear to reveal at least some of the aristocratic
‘presuppositions’ (in England, Austria, in exile in the Netherlands and
elsewhere) that were respectable before the Holocaust.
During the dynastic Hundred Years’ War (1337–1453), the House
of Plantagenet fought the House of Valois for control of France—
and found itself confronted by the 1381 Peasants’ Revolt. During the
dynastic Hundred Years’ ‘Peace’ (1815–1914), those with low ascribed
status—‘the masses,’ ‘peasants and workers,’ or ‘the many-headed mon-
ster’—were an ever-present threat to the fragile neo-feudal equilibrium.
As Kuehnelt-Leddihn (1943, 86)—the author of The Menace of the
Herd (1978 [1943])—explained, socialism is—to Austrians—taxation:
the transfer of property ‘to that great nobody, the hydra with a million
heads and no soul, Society.’
In England, Hayek marketed The Constitution of Liberty (1960) to
the Queen Mother; in Chile to Pinochet; and in Portugal to António
de Oliveira Salazar.16 To tackle ‘the problem of democracy,’17 Hayek
(1978a) also sought to recruit the Fourth Estate to neutralise the
Third18: ‘You have to persuade the intellectuals, because they are the
makers of public opinion. It’s not the people who really understand
things; it’s the people who pick up what is fashionable opinion. You
have to make the fashionable opinion among the intellectuals before

16The Queen Mother’s Private Secretary declined the offer of a complimentary copy of Hayek’s

Constitution of Liberty on the grounds that the author was not ‘personally known’ to her. Hayek
Archives. Box 18.26.
17Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

18Outside Austria, the Fourth Estate means the press.
 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
377

journalism and the schools and so on will spread it among the people at
large’19; and ‘ultimately reach the masses of the people.’20
In a dictatorship, he had a more direct route to influence. The ‘Model
Constitution’ that Hayek (1979, Chapter 17) sent to Pinochet was
based on political eugenics: ‘At least at the time, which I believe is not
far off, when the traditional beliefs of socialism will be recognize as an
illusion, it will be necessary to make provisions against the ever-recur-
ring infection [emphasis added] with such illusions that is bound again
and again to cause an inadvertent slide into socialism.’
In 1914, the ‘spontaneous’ catchword of ‘God, King and Country’
still had competitive potency: talk about the international ‘solidarity’ of
the Third Estate almost instantly evaporated into nationalist-militaristic
‘sacred unions’: ‘as soon as the French, German and Austrian Socialists
had voted in favour of the war credits the Second International in effect
ceased to exist’ (Joll 1978, 184). As Hitler (1939 [1925], 139) percep-
tively noted: ‘In the August of 1914 the German worker was looked
upon as an adherent of Marxist socialism. That was a gross error. When
those fateful hours dawned, the German worker shook off the poison-
ous clutches of that plague [emphasis added] otherwise he would not
have been so willing and ready to fight.’
In 1914, ‘the last fight let us face’ socialist jingle was alchemised by
‘God-anointed’ Kings into ‘The War to End All Wars.’ But within three
years, those condemned by the dynasties to become ‘the lost generation’
produced a spontaneous order: fraternisation with the ‘enemy,’ a refusal
to obey orders, mutiny, widespread desertions, etc. (see, e.g., John
Williams’ [1962] Mutiny 1917 ). The title of Wilfred Owen’s 1917 ‘gas
poem,’ Dulce et Decorum est, was taken from the Roman poet Horace:
‘it is sweet and honorable to die for one’s country.’
The 1917–1919 final demise of the 1815 ‘Vienna System’ was fol-
lowed—causally—by both Mises’ (1985 [1927]) embrace of political
‘fascism’ and the advance of political liberalism (‘one man one vote’

19Friedrich Hayek, interviewed by Thomas Hazlett 12 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

20Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

378    
R. Leeson

and ‘votes for women’). Bullock (1962, 59) reported that in Germany,
it was ‘openly said that loyalty to the Fatherland required disloyalty to
the Republic. This mood was not only to be found among the classes
which had hitherto ruled Germany, the noble families, the Junkers,
the industrialists, the big businessman, and the German Officer Corps.
It was also characteristic of many wartime officers and ex-servicemen,
who resented what they regarded as the ingratitude and treachery of the
Home Front and the Republic towards the Frontkämpfer.’
In the German-Austrian context, Hayek (1978a) described the bene-
ficiaries of the overthrow of the ruling dynasty and their aristocracy as ‘a
republic of peasants and workers.’21 In 1938, Hitler described the inter-
war ‘revival’: ‘I now head the procession of my people as first soldier
and behind me -- may the world know this -- there now matches a peo-
ple and a different one than that of 1918. Errant mentors of those times
succeeded in infiltrating the poison of democratic phrases [emphasis
added] into our people, but the German people of today is not the
German people of 1918.’22
After the failed Munich Beer Hall Putsch, Hitler gradually worked his
way towards an understanding that in ‘these elections democracy must
be destroyed with the weapons of democracy’ (cited by Heiden 1944,
348). Hayek (1978a) described his own struggle: ‘I think I was just
taken in by the theoretical picture of what democracy was--that ulti-
mately we had to put up with many miscarriages, so long as we were
governed by the dominant opinion of the majority. It was only when
I became clear that there is no predominant opinion of the majority,
but that it’s an artifact achieved by paying off the interests of particular
groups, and that this was inevitable with an omnipotent legislature, that
I dared to turn against the existing conception of democracy. That took
me a very long time.’23

21Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

22http://www.greatspeeches.net/2013/05/adolf-hitler-no-more-territorial-demands.html.

23Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
379

Hayek (1992a [1944], 208), who became famous for his understand-
ing of ‘Economics and Knowledge’ (1937), ‘The Use of Knowledge
in Society’ (1945) and ‘The Pretence of Knowledge’ (1974a), asserted
that the rules of ‘just conduct’ involved subscribing to ‘certain moral
standards’ including the ‘sacredness of truth.’ In Mein Kampf, Hitler
(1939 [1925], 14, 363, 150, 161, 100, 518) advised: ‘Do you feel
that Providence has called you to proclaim the Truth to the world? If
so, then go and do it …’ According to Pinochet (1982, 150), the ‘free-
dom-seeking spirit’ inspired the ‘Chilean people to defeat international
Marxism. That is why all over the world a campaign against Chile has
been set going by the communist countries. Slander and deceit are per-
manently called upon to distort abroad the real image of Chile; but the
nations are now beginning to realise the cunning of international com-
munism. And truth will once more prevail over falsehood.’ Mises (1985
[1927], 48) noted that Red Terrorists, like his fellow White Terrorists,
deemed ‘any crime, any lie, and any calumny permissible in carrying on
its struggle.’ Both Hayek’s and Pinochet’s tangled webs included false-
hoods plus contradictions of their own lies—apparently for bragging
purposes.
Hayek (1983, 54) favoured a nuclear arms race; and Hitler, as he pre-
pared for suicide, was unconcerned about having left Austro-Germany
as a scorched earth. Hayek, who had suicidal tendencies, was also appar-
ently unconcerned about the consequences that his for-posthumous-
consumption boastful and self-incriminating oral history tapes would
have on his disciples’ fundraising (Leeson 2015, Chapter 2). Pinochet
(1982, 65, 248, 252) was prepared to admit culpability: ‘another kind
of political behaviour was required, together with courage and abso-
lute secrecy.’ The press was told by Cesar Mendoza Duran, one of
Pinochet’s co-conspirators, that the coup was undertaken ‘to restore
public order and turn the nation back to the path of compliance with
the Constitution and laws of the Republic.’ The Standing Committee
of Chilean Bishops believed that Chile would ‘return very soon to
institutional normality, as the members of the Government Junta have
promised.’ In reality, Pinochet (1982, 69) intended that the Armed
Forces would ‘stay in power for an indefinite period, until Chilean life
was modernized, harmony was reinstated, an institutional regime was
380    
R. Leeson

created in consonance with the problems and threats of the times, and
the nation was prepared to defend its own democracy.’
How did one employer-funded Austrian—Hitler—captivate Austro-
Germans and almost colonise Europe? And how did another—Hayek—
acquire policy influence in democracies and White Terror dictatorships?
To kick-over the traces of Austrian School culpability for Hitler, Hayek
(2007 [1944], v) wrote The Road to Serfdom in which he protested:
‘When a professional student of social affairs writes a political book, his
first duty is plainly to say so. This is a political book.’ He then retreated
behind Second Estate ‘values’: ‘But, whatever the name, the essential
point remains that all I shall have to say is derived from certain ultimate
values. I hope I have adequately discharged in the book itself a second
and no less important duty: to make it clear beyond doubt what these
ultimate values are on which the whole argument depends. There is,
however, one thing I would like to add to this. Though this is a political
book, I am as certain as anybody can be that the beliefs set out in it are
not determined by my personal interests.’
In for-posthumous-general-consumption oral history interviews,
Hayek explained what these ‘ultimate values’ were: fraud. The Road to
Serfdom, he explained, had been written for personal interests: to allow
the ‘old aristocracy’ to resume their ascribed status and to drive the ‘new
aristocracy’—labour trade unionists and elected politicians—back down
the road to serfdom (Leeson 2015, Chapter 3). He also told Cubitt
(2006, 10) ‘that all his professional decisions had been based on finan-
cial considerations.’
World War I began by Germany invading British-protected Belgian
and dismissing the 1839 Treaty of London as just a ‘scrap of paper’
(Zuckerman 2004, 43). World War II became inevitable when the
‘peace with honour’ that Neville Chamberlain thought he had nego-
tiated with Hitler also became just another ‘scrap of paper.’ What was
the truth-content of the ‘Arbeit macht frei ’ (‘work sets you free’) sign
that hung over the entrance of Auschwitz and other concentration
camps? In preparation for war, Hitler declared that he was ‘thankful to
Mr. Chamberlain for all his trouble and I assured him that the German
people wants nothing but peace, but I also declared that I cannot go
beyond the limits of our patience. I further assured him and I repeat
 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
381

here that if this problem’ of Czechoslovakia ‘is solved, there will be no

further territorial problems in Europe for Germany.’24
This statement should be evaluated in the context of the agenda laid
out in Mein Kampf; and Hayek’s published work should also be eval-
uated alongside the archival evidence and his ‘unemployment sets you
free’ (or ‘[their] unemployment sets us free’) oral history interviews
(some of which he may not have known were being recorded).
Hayek received an anonymous letter (23 July 1975) which explained
that for participants of the ‘second’ Austrian revivalist conference

spiritually and intellectually Vienna will always be our home: and we

will always return to the charge against the forces of macro-darkness now
threatening to overwhelm the world, carrying aloft the intellectual flag
of Austria-Hungary … we still love you: and we feel that by continued
association with us, we may yet show you the light and truth of anar-
cho-Hayekianism … And so, ladies and gentlemen, I give you two toasts
to victory in the future, and to the best legacy of Vienna to the world,
Professor Hayek [emphases in original].25

Austrian School ‘trade’ followed the Habsburg ‘flag.’ According to the

Laffer Centre: Arthur B. Laffer’s

economic acumen and influence in triggering a world-wide tax-cut-

ting movement in the 1980s have earned him the distinction in many
publications as ‘The Father of Supply-Side Economics’ … Dr. Laffer has
been widely acknowledged for his economic achievements … His cre-
ation of the Laffer Curve was deemed a ‘memorable event’ in financial
history by the Institutional Investor … Dr. Laffer is the author of a num-
ber of books, including the End of Prosperity: How Higher Taxes Will
Doom the Economy—If We Let it Happen, which was a nominee for
the F.A. Hayek book award in 2009 … He was an Associate Professor of
Business Economics at the University of Chicago from 1970 to 1976 and

24http://www.greatspeeches.net/2013/05/adolf-hitler-no-more-territorial-demands.html.
25Hayek Archives. Box 26.28.
382    
R. Leeson

a member of the Chicago faculty from 1967-1976 … Dr. Laffer received

… a PhD in economics from Stanford University in … 1972.’26

According to Martin Anderson (1990, 147),

Professor Laffer never received much applause from his colleagues in the
academic world. In fact, some of their criticism of his work has been
unmerciful, and, in at least one instance, downright mean. From the very
beginning of his academic career, Laffer was treated almost as an outcast.
One low in personal nastiness occurred early in Laffer’s career, in 1971,
when Nobel laureate Paul Samuelson, the most distinguished member
of the economics faculty of MIT, presented a lecture at the University of
Chicago ‘Why They Are Laughing at Laffer.’

Anderson concluded that ‘what he did to Laffer that day in Chicago,

even by academic standards of morality, was an extraordinary example
of intellectual bullying.’ But according to the Chicago oral tradition,
Samuelson began his seminar with ‘good morning Mr. Laffer.’ The
University then set up an ‘Ad Hoc Committee on Arthur Laffer’ which
concluded (2 June 1971) that ‘Laffer became an assistant and then an
associate professor without fulfilling the known requirements for these
appointments and at the very minimum permitted misunderstandings
favourable to himself to persist. We consider this conduct deplora-
ble … This cloud of suspicion, whether of judgement or of character,
introduces a serious impairment of Laffer’s value to the University of
Chicago’ (cited by Leeson 2003, 189, n7).27
The Laffer curve was popularised by Wanniski, who was obliged to
resign as WSJ Associate Editor (1972–1978) after having being dis-
covered distributing leaflets supporting a Republican Party senato-
rial candidate (Miller 2005). Wanniski then became affiliated with the
Nation of Islam and founded Polyconomics where a photograph of the

26http://www.laffercenter.com/the-laffer-center-2/.
27Laffer has been ‘Distinguished’ University Professor at Pepperdine University and a mem-

ber of the Pepperdine Board of Directors and the Charles B. Thornton Professor of Business
Economics at the University of Southern California (1976–1984). http://www.laffercenter.com/
the-laffer-center-2/.
 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
383

Laffer-signed ‘to Don Rumsfeld’ napkin is preserved.28 According to

Anderson (1990, 147), the curve was

not first drawn on one of a restaurant napkin. That whimsical story was
an apparent invention of one of Laffer’s first protégé, Jude Wanninski.
I have talked to Laffer directly about this and he has ‘no recollection
whatsoever of drawing on a napkin.’ It’s just as well he doesn’t. The res-
taurant was the Two Continents, formerly located in the Washington
Hotel across the street from the Treasury Department. It was a quality
restaurant and is reported to have used only expensive linen napkins.

Thus the frequently broadcast Bloomberg television ‘The Napkin

Doodle That Launched the Supply-Side Revolution’ re-enactment
involving Laffer, Rumsfeld, and Cheney is—like the justification for
invading Iraq—a hoax.29
Hitler (who would shout: ‘Propaganda, propaganda, all that mat-
ters is propaganda’) referred to the ‘intellectual classes’: ‘Unfortunately
we need them; otherwise we might one day, I don’t know, exterminate
them or something like that. But unfortunately we need them’ (cited by
Fest 1970, 63, 259). Hayek (1978a) told Robert Chitester

what I call the intellectuals, in the sense in which I defined it before--the

secondhand dealers in ideas--have to play a very important role and are
very effective. But, of course, in my particular span of life I had the mis-
fortune that the intellectuals were completely conquered by socialism.
So I had no intermediaries, or hardly any, because they were prejudiced
against my ideas by a dominating philosophy. That made it increasingly
my concern to persuade the intellectuals in the hopes that ultimately they
could be converted and transmit my ideas to the public at large. That I
cannot reach the public I am fully aware. I need these intermediaries, but
their support has been denied to me for the greater part of my life.30

28http://www.polyconomics.com/gallery/Napkin003.jpg.
29 http://www.bloomberg.com/bw/articles/2014-12-04/laffer-curve-napkin-doodle-

launched-supply-side-economics.
30Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

384    
R. Leeson

According to Mises (2009a [1978 (1940)], 7), the

university ‘enterprise’ of economic political science was off-putting to

young people of intelligence and genuine curiosity. In contrast, it held a
strong attraction to halfwits.

These halfwits found that it was ‘not difficult’ to walk into an archive
and ‘paste together a historical thesis from a stack of official reports.’
Inevitably, most university positions were held by ‘men who could be
classified as intellectually limited, were their abilities to be measured
against those of men in independent professions.’ It was essential to
bear this in mind when ‘wanting to understand how men’ such as the
German Historical School economist Werner Sombart ‘acquired such
great reputations. Not being entirely stupid and uneducated had its
merits.’
Discriminatory taxation (treating baronial income as ‘carried inter-
est’) was promoted by those who ‘held the status’ of titled academics.
Hayek (2011 [1960], 158; 1974b) explained his philosophy: ‘Reward
according to merit must in practice mean reward according to assess-
able merit, merit that other people can recognise and agree upon and
not merit merely in the sight of some higher power.’ Merit, he asserted,
‘is not a matter of the objective outcome but of subjective effort. The
attempt to achieve a valuable result may be highly meritorious but
a complete failure, and full success may be entirely the result of acci-
dent and thus without merit.’ Although he regarded his retinue to be
‘secondhand dealers in opinion,’ he valued their subjective effort (their
merit). Having noted that ‘the Nobel Prize confers on an individual an
authority which in economics no man ought to possess’ (1974b), he
proceeded to use his ‘higher power’ to construct a Welfare State for his
academically unqualified devotees.
Merit plays no role in social Darwinism. Hazlett asked: ‘You have
written almost alone on the subject’ of the ‘separation of the concept
of value and the concept of merit--that good people don’t deserve
more money but that, in the economic system, people get money for
a lot of reasons that we can’t even describe. And this is a subtle point.
I don’t know if libertarians, even people that agree with your political
 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
385

conclusions, have caught on to this. Do you find that this point is being
missed?’ Hayek (1978a) thought it had ‘been missed, and when I put it
in The Constitution of Liberty (2011 [1960], Chapter 6) I even followed
it up to its ultimate conclusion. I think it’s all a matter of the basic dif-
ference between the attitudes we developed in the closed, face-to-face
society and the modern, abstract society. The idea of merit is an idea
of our appreciation of known other persons in the small group--what
is commonly called the face-to-face society; while in the greater open
society, in apparent terms, we must be guided purely by abstract con-
siderations, and merit cannot come in.’ ‘Curious’ was one of Hayek’s
dissembling words; and ‘anticipated’ is a translation from the Austrian
of ‘was plagiarized by.’ Hayek continued: ‘Incidentally, this is a point
which, curiously enough, has been seen by Immanuel Kant [1724-
1804]. He puts it perfectly clearly--yes, I think he uses the equivalent of
merit--that merit cannot be a matter of general rule.’31
Some Germans regard some of their southern neighbours as storytell-
ers: ‘Österreicher! … who will remember tomorrow [the lies told today]?’
Hayek (1978a) was ‘so extremely fortunate … extremely lucky. In fact,
I owe my career very largely to a fortunate accident.’ By the time, he
had been invited to the LSE in 1931 to ‘speak on a subject I had more
or less already published--that book [Hayek 1932] on monetary theory
and the trade cycle.’ Robbins, who did ‘not know me personally, made
this the occasion of asking me to give the lectures; but the form which
the lectures took was due to a fortunate accident; I was able to explain
it in a way which impressed people [emphasis added], in spite of the fact
that I still had considerable difficulties with English.’
To obtain employment at the LSE, Hayek apparently lied about hav-
ing predicted the Great Depression (Leeson 2018): like Robbins (2012
[1931]), the 1974 Nobel Prize selection committee was impressed. In
1924, Hayek (1994, 27) may also have lied to obtain another job: if
‘a young man had studied law and spoke two [emphasis added] for-
eign languages, he could get a much better paid position in the

31FriedrichHayek, interviewed by Thomas Hazlett 12 November 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
386    
R. Leeson

circumstances. I was one of these fortunate men.’ But on Armistice

Day, Hayek (1978a) told Armen Alchian that he had ‘returned from
America; I used to speak French fairly well, which I have almost com-
pletely forgotten; and I knew even some Italian, which I had picked up
in the war. The three [emphasis added] foreign languages, plus law, plus
economics, qualified me for what was comparatively a very well-paid
job.’32 And four days later, Hayek (1978a) told Rosten that he had been
‘tortured all my childhood being taught French--irregular verbs and
nothing else--and consequently never learned to speak it really. I picked
up Italian during the war in Italy--well, sort of Italian … I don’t dare to
speak it in polite society. [laughter].’33
According to Hayek (1994, 76), the LSE employed him, in part,
because of his ‘fluent English.’ However, Ronald Coase (1994, 19)
referred to the ‘difficulties of understanding Hayek’—who apparently
used Nicholas Kaldor as an interpreter in his seminars.34 Shenoy (2003)
recalled that her father, B. R. Shenoy, one of Hayek’s 1930s LSE stu-
dents, found him incomprehensible: he

still had a thick Viennese accent at the time. He was uncertain about his
English: ‘Money he does this, money he does that.’ My father couldn’t
really follow because of the accent.

In 1924, how many foreign languages was Hayek ‘fluent’ in when he

secured his ‘very well-paid job’: three, two, one, or none? After arriving
at the LSE, he attended an English language immersion course at the
Berlitz School (Cubitt 2006, 4).35
To win the evangelical vote, ‘conversions on the road to Des Moines,’
Iowa (where the first primaries are held), have become a standard

32Friedrich Hayek, interviewed by Armen Alchian 11 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

33Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

34Allan G. B. Fisher (9 August 1975) to Roger Randerson. Hayek Archives. Box 45.5.

35Arnold Plant’s widow, Edith (1 May 1978), reminded Hayek of the ‘halting beginnings of your

knowledge of the English language when we first met you here.’ Hayek Archives. Box 43.31.
 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
387

feature of American politics. As self-appointed leader of the ‘free’ world,

America is weakened by a perception of ‘exceptionalism’ (which dimin-
ishes the ability to understand other cultures while also conjuring up
numerous ‘Party of God’ Davids to confront Goliath, en route to ‘para-
dise’). Hayek and Mises are comprehensible only in their Eastern Reich
context and thus are incomprehensible to American Hayekians and
Misesians—many of whom had been recruited to the ‘liberal Utopia’
through publications such as ‘Prometheus, the Journal of the Libertarian
Futurist Society … People come to libertarianism through fiction.’36
Nixon (presumably coincidently) protected himself through three
devout ‘Berlin Wall’ operatives with Germanic surnames: Halderman,
Erlichman and Ziegler (who had been recruited while working as a
guide for the Disneyland jungle tour). After five-and-a-half years as
Nixon’s Press Secretary, Ron Ziegler is primarily remembered for a sen-
tence and a word. The sentence described Daniel Mitrione Sr.’s ‘devoted
service to the cause of peaceful progress in an orderly world’ which will
‘remain as an example for free men everywhere.’ Mitrione, previously
a small-town Indiana police chief, illustrates what Hayek’s Committee
on Social Thought colleague, Hannah Arendt (1963), described as ‘the
banality of evil.’ As a CIA operative in Brazil and Uruguay, Mitrione
taught ‘public safety’ to the police which apparently consisted of ‘elec-
trically shocked his victims’ mouths and genitals, among other ghastly
things. In one of the most disturbing revelations, reported by a CIA
operative from Cuba named Manuel Hevia Conculluela, Mitrione was
said to have practised on beggars picked up from the capital’s streets,
four of whom reportedly died while serving as human guinea pigs’
(Norman 2005).
Pushed by David Frost (1978, 270–271), Nixon admitted that he
had gone ‘right to the edge of the law … I would have to say that a
reasonable person could call that a cover-up.’ Which is the ‘true’ Nixon:
on stage or on tape? Ziegler—who criticised the ‘shoddy’ Watergate
journalism of the Washington Post—became famous for referring to
White House lies as ‘inoperative’ (Kelly 2003). Ziegler, who didn’t go

36http://www.lfs.org/index.htm.
388    
R. Leeson

to jail, but instead followed Nixon to California, was a ‘crook’ for ‘lib-
erty’: ‘Years after he left the White House, Ziegler claimed that he had
never said anything he thought was a lie. There were many Washington
reporters ready to contest the claim, and it was certainly not my experi-
ence’ (Jackson 2003).37
In the Eastern Reich, dictatorship-promoters regarded ‘Western
democracy’ as an alien implant:

Democracy of the West today is the forerunner of Marxism, which would

be inconceivable without it. It is democracy alone which furnishes this
universal plague with the soil in which it spreads. In parliamentarianism,
its outward form of expression, democracy created ‘a monstrosity of filth
and fire.’ (Hitler 1941 [1925], 41, 99)

Caldwell (2010) appears to regard evidence of Austrian ‘hucksterism’

as sacrilege. According to Caldwell and Montes (2014a, 52; 2014b;
2015, 305), Hayek ‘always insisted that he was a supporter of democ-
racy, but that democracy had to be limited.’ ‘Always’ may be a trans-
lation from the Austrian of ‘for propaganda purposes’: according to
Kuehnelt-Leddihn (n.d.) during the Great War, Hayek and Mises
fought ‘to prevent the “world from being made safe for democracy”.’38
Who is more reliable: Hayek on Hayek or Caldwell on Hayek? Hayek
told Cubitt (2006, 18) that Kuehnelt-Leddihn was a ‘stout monar-
chist and devout Catholic, who had married into the highest reaches
of the aristocracy.’ The two men ‘disagreed on religious and other mat-
ters, but their arguments were always concluded amicably.’ In con-
trast, Caldwell’s (2009, 319) only direct contact with Hayek led him to
exclaim: ‘So much for going to the horse’s mouth for clarification!’
Kirzner appeared to have participated in an attempt to influ-
ence NYU’s tenure-granting process–a decidedly less impressive
image than that which he would like to project (Chapter 1, above).
Kirzner (1995) found that Hayek on Hayek ‘jars one’s view of one of

37http://www.theguardian.com/news/2003/feb/12/guardianobituaries.usa.
38http://mises.org/pdf/asc/essays/kuehneltLeddihn.pdf.
 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
389

this century’s most eminent thinkers’: the projected ‘Hayek I’ personal-

ity created

the definite impression of austere and magisterial eminence, both intellec-

tually and morally. There is nothing in this book (or any other book) that
can erase the truth [emphases added] contained in this conventional pic-
ture of Hayek. Unfortunately, however, this book does project an image
which is decidedly less impressive. Hayek [II] himself put it best (p.95): ‘I
don’t keep my mouth shut; my stories about Laski and Beveridge can be
rather malicious.’

In Hayek on Hayek (1994, 83, 85), disagreements are revealed to have

been conducted by spreading rumours about Beveridge’s alleged erectile
dysfunction. Kirzner (1930–) is the last surviving member of the fourth
Austrian generation and mentor to the epigone Caldwell (2004, 147)
who told the Truth: ‘Hayek [I] made a point of keeping his disagree-
ments with others on a professional level.’ On the SHOE list (28 May
2014), Caldwell was reminded about Hayek II’s repeated use of argu-
mentative ad hominem. Three, four and sixteen months later, Caldwell
and Montes (2014a, 17; 2014b; 2015, 275) repeated their Truth:
‘Hayek [I] had throughout his career been known for keeping his disa-
greements with opponents on a professional level.’
The ‘Liberal Awakening’ in Britain was based on the faith that the
extended franchise would be used to ‘promote high ideals’ rather than
self-interest.39 ‘Trust the People’ was their motto: William Gladstone
had more faith in Scottish crofters than ‘the upper ten thousand’
(Bradley 1980, 15, 49, Chapter 6). In addition to peace-promoting free
trade, these economic and political liberals sought to advance achieved
status and human rights, extend the franchise and subsidise education
(for legitimacy and other benefits). In contrast, Austrian economic lib-
erals worship one ‘God’—their entitlements (inherited or otherwise):
and regard political liberalism—extending the franchise and subsidising
education—as craven images.

39Self-interest combined with idealism: many were excluded from office by the aristocratic
establishment.
390    
R. Leeson

In The Road to Serfdom, Hayek (2007 [1944], 132) noted: ‘It is often
said that political freedom is meaningless without economic freedom.’
Nine years after declaring that ‘It cannot be denied that Fascism and
similar movements aiming at the establishment of dictatorships are full
of the best intentions,’ Mises (1985 [1927], 51) declared that ‘economic
and political liberalism go hand in hand, and appeared in history at the
same time.’ Only in the second half of the nineteenth century did ‘politi-
cal parties begin to believe that in the long run it was possible to success-
fully combine liberalism and democracy with interventionist, statist, and
socialist economic policies.’ Nine years after promoting Fascist dictators as
being ‘full of the best intention,’ Mises (2000 [1936], Chapter 28) com-
plained that ‘year by year dictatorship advances and parliamentary gov-
ernment and democracy lose ground.’ Only ‘yesterday many Englishmen
expressed the idea that Western Europe and the states founded by
Western Europeans around the world were immune from all dictatorial
ventures. The nations that had created modern culture, they thought,
would never abandon such essential elements of their culture as represent-
ative government and the citizens’ right to political freedom.’
The political ‘Fascists’ courted by Mises (1985 [1927], 27) included
the anti-Semitic l’Action Française. Nine years later, Mises (2012 [1936],
Chapter 28) complained that the parliamentary constitution of France
is already ‘seriously threatened.’ In what appears to be a reference to Sir
Oswald Mosley’s British Union of Fascists, Mises pretended to complain
that in England, the ‘land of habeas corpus, a party advocating dicta-
torship is raising its head.’ And in what may be a reference to Walter
Lippmann’s (1935) ‘The Permanent New Deals,’ Mises noted that a
‘great’ writer believes he must ‘warn’ Americans about the ‘danger of los-
ing their freedoms.’
The British neoclassical tradition seeks to use the price mechanism
to improve market outcomes; while TOFF industries (assisted by hired
‘free’ Austrian neoclassical ‘academics’) seek to avoid externality-based
full-cost pricing. According to Mises (2012 [1936], Chapter 28),
the democratic system (which he despised) ‘rests on the market econ-
omy with private ownership of the means of production.’ Because
each ‘penny represents a ballot,’ consumers, by ‘buying and abstaining
from buying, control the market system.’ Therefore, entrepreneurs and
 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
391

capitalists are ‘forced to follow the instructions that the consumers give
them on the market.’ If they are ‘unable to fulfill the desires of the mar-
ket in the best and least expensive way, they experience losses’; and face
the prospect of being ‘removed from their favored position’ into other
roles where they ‘no longer have control over some of the means of pro-
duction, and therefore can no longer do harm.’
Austrians promote their version of economic liberalism: ‘tax evaders
are my heroes.’40 Many also openly or surreptitiously oppose or seek to
neutralise political liberalism: the advance of ‘rights’—human and voting
(because it undermines ascribed status)—and universal adult suffrage for
‘girls’ and ‘peasants and workers’ (because it threatens their economic lib-
eralism). Austrians believe that Human Action involves purposeful goal-
focused behaviour: according to Hayek III (1995 [November 1929], 68),
economic liberalism—when developed ‘to its ultimate consequences’—
implies the promotion of domestic political ‘fascism.’ ‘Micro’ analysis
reveals that behind the ‘macro’ aggregation of economic and political lib-
eralism, Austrians embrace the first while loathing most of the second:
Hayek (1978a) believed ‘in democracy as a system of peaceful change of
government; but that’s all its whole advantage is, no other.’41
Those who seek to establish a universal caliphate would prohibit or
severely limit the education of women. Some Miseans supply paranoia
and doomsday provisions to ‘survivalists’ who fear ‘one world govern-
ment’ (Skousen 1977); while others, such as Arthur Robinson and
Gary North (1986), advocate increased government expenditure on
civil defence.42 Using the language of eugenics, Mises (1985 [1927],
150–151) promoted a world superstate with a single ‘frame of mind’ (or
will) following ‘unqualified, unconditional acceptance’ of his dictates

40As a major Hayekian fundraiser put it, in conversation with the AIEE editor.
41Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
42Norman Cousins (1962, 174–175), the editor of the Saturday Review, to whom Hayek (Hayek

Archives. Box 62.7) sent a complimentary copy of Constitution of Liberty, reported that the head
of the Los Vegas civil defence agency sought to recruit a 5000 strong militia to protect local citi-
zens from ‘the swarm’ of survival-seekers who would need to escape from a nuclear-attacked Los
Angeles. Cousins also reported that a religious journal advised Christians to ‘think twice before
they rashly give their family shelter space to friends or neighbours or to passing strangers.’
392    
R. Leeson

(economic liberalism). The League of Nations cautiously held out the

prospect of protecting national minorities and adjusting national
boundaries. This allowed Mises to hope that from these ‘extremely
inadequate beginnings’ a ‘world superstate really deserving of the name
may some day be able to develop that would be capable of assuring the
nations the peace that they require.’
But this was an ‘ideological question’ which required ‘creating
throughout the world a frame of mind’—‘nothing less than the unqual-
ified, unconditional acceptance of liberalism.’ Mises identified the five
source of the threat of ‘Open warfare’:

• protective tariffs;
• immigration barriers;
• compulsory education;
• interventionism; and
• etatism.

While secular education promotes critical thought and the evaluation

of evidence, Mises promoted subservience to his prejudices; and Hayek
(1978a; 2011 [1960], 187, 194–195) hoped to promote a ‘turn against
the existing conception of democracy.’43 This would leave ‘shaped opin-
ion’ to ‘wealthy man of affairs’ and those that do their ‘bidding’—their
‘secondhand dealers in opinion.’ If this failed, ‘Fascists’ were required
(Mises 1985 [1927]) or a ‘dictator’ who ‘can say no’ (Hayek 1978a).44
According to Hayek, modern democracy is ‘certainly ultimately ideolog-
ically determined’45; and ‘the will of the majority, or the opinion of the
majority’ was part of the corruption of democracy.46

43Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
44Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

45Friedrich Hayek, interviewed by Robert Bork 4 November 1978 and Robert Chitester date

unspecified 1978 (Centre for Oral History Research, University of California, Los Angeles,
http://oralhistory.library.ucla.edu/).
46Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
393

Mises (2009a [1978 (1940)], 54–55) was aware that the Divine
Right of Kings was no longer a potent catchword: ‘The people must
decide.’ It is the ‘duty of economists to inform their fellow citizens.’
According to Mises (1993 [1964], 36), Edwin Cannan (1861–1935)
was ‘the last [emphasis added] in the long line of eminent British econ-
omists.’ The third-generation Austrian School was riddled with Nazis
(Leeson 2017)—Mises (2009a [1978 (1940)], 54–55) then described
non-Austrian economists: ‘what should happen if economists do not
measure up to the dialectic task and become pushed aside by dema-
gogues, or if the people lack the intelligence to grasp their teachings?
With the awareness that men like J.M. Keynes, Bertrand Russell,
Harold Laski, and Albert Einstein could not comprehend the problems
of economics, must not the attempt to guide the masses in the proper
direction be considered hopeless?’ Mises denigrated education: it has
‘been said that the problem lay within the realms of public education
and public information. But we are badly deceived if we believe that the
right opinions will claim victory through the circulation of books and
journals and with more schools and lectures; such means can also attract
followers of faulty doctrines.’ Mises (whose motto was: ‘Do not give in
to evil, but proceed ever more boldly against it’) continued: ‘Evil con-
sists precisely in the fact that the masses are not intellectually enabled to
choose the means leading to their desired objectives. That ready judg-
ments can be foisted onto the people through the power of suggestion
demonstrates that the people are not capable of making independent
decisions. Herein lies the great danger. Thus had I arrived at the hope-
less pessimism that had long pervaded the best minds of Europe.’
Do Classical Liberals aspire to defend ascribed status or promote
achieved status? Austrian School economists and philosophers acquired
ruling class status through dynastic patronage. The horrors of the
‘Great’ War between the dynasties led to nostalgia for the Belle Époque:
in her 15 years of service, Cubitt (2006, 106, 50, 119, 211) noticed
that Hayek and his second wife were only ‘at peace’ with each other
when they reminisced about the ‘shared time of their early’ childhood.
Hayek (1997 [1949], 237) sought ‘return’ through the promotion of ‘a
truly liberal radicalism … What we lack is a liberal Utopia.’ Kuehnelt-
Leddihn (1978 [1943]) did not hesitate to announce that he was
394    
R. Leeson

a ‘reactionary. I take a deep pride in the fact. I see no more virtue in

looking forward longingly to an unknown future than in looking back-
ward nostalgically to known and proven values … I am personally a
reactionary of the traditional Christian faith, with a liberal outlook and
agrarian propensities.’ The term

‘reactionary’ as I use it does not stand for a definite and immutable set
of ideas. It stands for an attitude of mind. As a reactionary I resent and
oppose the spirit and the trends of the epoch I am forced to live in, and
seek to restore the spirit which had its finest embodiment in by-gone
periods.

Mises (2009b [1958], 12) described ‘oligarchic’ ‘liberty’ to the MPS:

It was a privilege of the minority, to be withheld from the majority. What

the Greeks called democracy was, in the light of present-day terminology,
not what Lincoln called government by the people, but oligarchy, the sov-
ereignty of fullright citizens in a community in which the masses were
meteques or slaves. Even this rather limited freedom after the fourth cen-
tury before Christ was not dealt with by the philosophers, historians, and
orators as a practical constitutional institution. As they saw it, it was a
feature of the past irretrievably lost. They bemoaned the passing of this
golden age, but they did not know any method of returning to it.

Aspects of feudalism (circa ninth-fifteenth century) lingered on: serf-

dom wasn’t abolished in Austria and Hungary until 1848 and in
Romanov Russia until 1861, and many African Americans were uncon-
stitutionally denied voting rights for a century after the abolition of
slavery (1865–1965). While promoting other superstitious beliefs,
Hayek (1978a) was aware that the origins of the neo-feudal ‘spontane-
ous’ order were far from spontaneous. Robert Bork stated: ‘It has been
suggested that feudal structures really evolved spontaneously.’ Hayek
(1978a) replied: ‘I don’t think so. They arose from military conquest.’
Bork retorted: ‘Always? Or were there occasions where —’. Hayek
(1978a) interrupted: ‘I haven’t come across it. I haven’t really exam-
ined history on this, but in the European history with which I am most
 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
395

familiar, it’s fairly clear that it was military bands which conquered the
country. It seems that the German tribes were expanded from Germany
south and west. Conquerors of the country established a feudal regime.
The conqueror acquiring the land and having people working as serfs
on it seems to have been the origin of-.’ Bork continued to search for
something spontaneous: ‘Or I suppose you would suggest that some-
times it may have grown up in defense against, for the need for protec-
tion against, outsiders, but-.’ Hayek (1978a) replied: ‘Yes, of course. It
need not have been a foreign conqueror; it very frequently was the need
for establishing a military class in defense, who then became dominant
in a feudal way. But it was really military organization rather than eco-
nomic organization for feudalism.’47
Napoleon (1769–1821) compromised the foundations of what
remained of feudalism. After escaping from imprisonment on the
Island of Elba, he was defeated at the Battle of Waterloo by Arthur
Wellesley, 1st Duke of Wellington. Napoleon’s ‘100 days’ were followed
by 100 years of fragile neo-feudal equilibrium: Metternich’s attempt
to re-establish the spontaneous ‘order’ of domestic deference through
international dynastic cooperation (the Concert of Europe). But that
order was threatened from below: in 1819, a demonstration in the
emerging industrial city of Manchester in favour of extending the
franchise lead to the Peterloo Massacre in which several people were
killed and hundreds wounded.
Wellington earned his ‘Iron Duke’ reputation through his efforts to
preserve aristocratic property and privileges: the campaign for democ-
racy would go on, he thought, ‘till some of their leaders are hanged’
(cited by Hibbert 1997, 218). The following year most of the Cato
Street Conspirators (who planned to murder British cabinet ministers)
were sentenced to medieval execution: hanged, drawn and quartered.
All receive a form of ‘leniency’: five were hanged and beheaded, and five
others were transported to Australia (Stanhope 1962).

47Friedrich Hayek, interviewed by Robert Bork 4 November 1978 and Robert Chitester date
unspecified 1978 (Centre for Oral History Research, University of California, Los Angeles,
http://oralhistory.library.ucla.edu/).
396    
R. Leeson

In July 1828, Daniel O’Connell won a by-election on the platform

of Catholic emancipation. As Prime Minister, Wellington pushed
through the Catholic Relief Act of 1829 in the face of Tory opposi-
tion. The Earl of Winchilsea accused him of ‘an insidious design for
the infringement of our liberties and the introduction of Popery into
every department of the State’—which inevitably resulted in a feudal
duel. Equally inevitably, when Wellington and the Tories prevented
the passage of the first and second Whigs Reform Bills (which sought
to extend the franchise and abolish ‘rotten boroughs’), the Iron Duke
was obliged to install iron shutters to protect his house from further
damage by angry crowds. Symbolically, this obliterated his view of the
Wellington Monument (produced from melted-down captured enemy
cannon) which had been erected on the seventh anniversary of the
Battle of Waterloo.
The Monument had been commissioned by George III, who had
lost the American colonies and whose reign (1760–1820) coincided
with the beginnings of the Industrial Revolution. His third son William
IV (reigned: 1830–1837) was the last Hanoverian Monarch. The
Wellington Monument is adjacent to Duke of Wellington Place which
stands, again symbolically, in front of Buckingham Palace, from where
the smashing of Wellington’s windows could have been heard.
The 1832 Great Reform Act was preceded by talk about the abolition
of the nobility. ‘The Days of May’ led to a run on the Bank of England
and the demand that supply (funding) be withheld until the Lords
acquiesced. When William IV threatened to dilute the Lords by creat-
ing new peers, the barons surrendered: the Representation of the People
Act was allowed to pass. Wellington was on the relatively moderate wing
of the Tory Party: the Ultra-Tories (informally led in the Commons by
Sir Edward Knatchbull and Sir Richard Vyvyan, and in the Lords by
Winchilsea and the Dukes of Cumberland and Newcastle) had unsuc-
cessfully sought to uphold an earlier equilibrium: the Whig Revolution
equilibrium (settlement) of 1689.
Edmund Burke (1729–1797) is regarded as the founder of mod-
ern British conservatism. Hayek (1994, 141), who stated that he was
‘becoming a Burkean Whig,’ told North and Skousen that conservative
Americans were the modern equivalents of nineteenth-century Classical
 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
397

Liberals.48 In ‘Why I am not a Conservative,’ Hayek (2011 [1960],

530–531) objected to the term ‘libertarian’ because he found it ‘singularly
unattractive.’ For his ‘taste’ it had the flavour of a ‘manufactured’ term
and a ‘substitute.’ What he wanted is a word which describes the ‘party
of life, the party favours free growth and spontaneous evolution.’ We
should remember, however, that when the ideals which I have been try-
ing to restate first began to spread through the Western world, the party
which represented them had a generally recognised name. It was the
ideals of the English Whigs that inspired what later came to be known
as the liberal movement in the whole of Europe and that provided the
conceptions of the American colonialist carried with them and which
guided them in their struggle for independence and in the establish-
ment of their constitution. Indeed, until the character of this tradi-
tion was altered by the accretion due to the French Revolution, with
its totalitarian democracy and socialist leanings, Whig was the name by
which the party of liberty was generally known.
One hundred and forty years separated Whig Revolution (‘emanci-
pation’ from revived Stuart absolutism) from Catholic Emancipation.
During this period, the aristocracy and clergy had the House of Lords
to themselves and the aristocracy were also heavily represented (in both
parties) in the House of Commons. Hayek (1978a) stated: ‘The whole
traditional concept of aristocracy, of which I have a certain conception--
I have moved, to some extent, in aristocratic circles, and I like their style
of life.’49
According to J. C. D. Clark’s (2000) English Society, 1688–1832.
Ideology, Social Structure and Political Practice During the Ancien Regime,
the three years between Catholic Emancipation and the Representation
of the People Act shattered a ‘whole social order….What was lost at that
point…was not merely a constitutional arrangement, but the intellec-
tual ascendancy of a worldview, the cultural hegemony of the old elite.’
One hundred and fifty years later, the social Darwinist Hayek (1978a)

48http://contemporarythinkers.org/friedrich-hayek/multimedia/interview-hayek-gary-north-

part-1/.
49FriedrichHayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral
History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
398    
R. Leeson

denigrated social justice: ‘It’s not facts which are fair, it’s human action
which is fair or just. To apply the concept of justice, which is an attrib-
ute of human action, to a state of affairs, which has not been deliber-
ately brought about by anybody, is just nonsense.’ Rosten asked: ‘Yes,
but can people accept that? They don’t seem to be willing to accept that.
Under the training of voting, mass education, and so on, we are raised
on the assumption that problems can be solved, that we can solve them,
and we can solve them fairly.’ Hayek (1978a) replied:

That brings us back to things we were discussing much earlier: the revolt
against this is an affair of the last 150 years. Even in the nineteenth cen-
tury, people accepted it all as a matter of course. An economic crisis, a
loss of a job, a loss of a person, was as much an act of God as a flood
or something else. It’s certain developments of thinking, which happened
since, which made people so completely dissatisfied with it. On the one
hand, that they are no longer willing to accept certain ethical or moral
traditions; on the other hand, that they have been explicitly told, ‘Why
should we obey any rules of conduct, the usefulness or reasonableness
of which cannot be demonstrated to us?’ Whether man can be made to
behave decently, I would even say, so long as he insists that the rules of
decency must be explained to him, I am very doubtful. It may not be
possible.50

Two concepts of civilisation continue to compete for dominance: one

dominated by ascribed status; the other promoting achieved status.
Initially, the ‘spontaneous’ and ‘omnipotent’ Divine Right of Kings
openly—but unsuccessfully—competed against ‘The Rights of Man and
of the Citizen’; later, more persuasive language was required: ‘liberty’
required an assault on ‘omnipotent’ democracy. Hayek (1978a) told
Bork:

You know, I’m frankly trying to destroy the superstitious belief in

our particular conception of democracy which we have now, which is

50Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
399

certainly ultimately ideologically determined, but which has created

without our knowing it an omnipotent government with really com-
pletely unlimited powers, and to recover the old tradition, which was
only defeated by the modern superstitious democracy, that government
needs limitations. For 200 years the building of constitutions aimed at
limiting government. Now suddenly we have arrived at the idea where
government, because it is supposedly democratic, needs no other limita-
tions. What I want to make clear is that we must reimpose limitations on
governmental power.51

Hayek (1978a) told Rosten that ‘omnipotent democracy which we

have is not going to last long … in the long run, the only chance is
to alter our constitutional structure and have no omnipotent sin-
gle representative assembly, but divide the powers on the traditional
idea of a separation of powers.’52 Hayek (1978a) told Buchanan that
as ‘long as you elect a single, omnipotent legislature, of course there
is no way of preventing the people from abusing that power without
the legislature’s being forced to make so many concessions to particu-
lar groups.’53 Hayek (1978a) objected to the ‘fraudulent rhetoric’ of
‘social justice’:

why then speak about justice? It’s to appeal to people to support things
which they otherwise would not support … Its really a pretense that
there is some common principle which people share with each other. But
if they were deprived of the use of this term, they would have to admit
it’s their personal preference … I would just stick to ‘the free society,’
or ‘the society of free men’—‘free persons’ … Omniscience itself would
not be sufficient, but omniscience would at least create the possibility of
agreeing on the things which, without omniscience, you can’t [agree on].

51Friedrich Hayek, interviewed by Robert Bork 4 November 1978 and Robert Chitester date
unspecified 1978 (Centre for Oral History Research, University of California, Los Angeles,
http://oralhistory.library.ucla.edu/).
52Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

53Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

400    
R. Leeson

While you may be unable to agree even with omniscience, without it, it’s
clearly totally impossible. [laughter]54

The 1832 Great Reform Act was followed by the 1867 enfranchisement
of the ‘labour aristocracy,’ and the 1884 enfranchisement of agricultural
labourers: stepping stones on the road to the universal franchise. Britain
avoided political revolution in 1848 in part because of the expansion of
the franchise; but the potential neo-feudal losers from further reform—
royalty, aristocracy, army and church—still retained institutional
power. The Jewish-born, middle-class, Tory Prime Minister, Benjamin
Disraeli (later the 1st Earl of Beaconsfield), who complained that the
1867 Act would ‘lead to an American constitution,’ contemptuously
described Richard Cobden and John Bright as ‘the two members for
the United States.’ The 3rd Viscount Palmerston complained that they
had ‘run amuk against everything that the British Nation respects and
values – Crown, Aristocracy, Established Church, Nobility, Gentry and
Landowners’ (Bradley 1980, 62–63).
In January 1885, the Birmingham industrialist and Liberal Party
Cabinet Minister, Joseph Chamberlain, asked rhetorically: ‘what ransom
will property pay for the security of property it enjoys?’ The word ‘ran-
som’ suggests brigandage, rather than justice, and nine days later was
replaced with ‘insurance.’ Chamberlain explained that he was propos-
ing that ‘the community as a whole, cooperating for the benefit of all,’
could improve the lot of the poor (Marsh 1994, 186). The Pigouvian
framework provides the legitimizing foundations of democracy—by
breaking the nexus of intergenerational ascribed status via tax-funded
opportunities for human capital formation.
Like Mises, Hayek identified ‘social justice’ with progressive tax-
ation. In his Hillsdale College Ludwig von Mises Lecture on ‘Coping
with Ignorance,’ Hayek (1978b) reflected that the second-generation
Austrian co-leader, Wieser, ‘unlike most of the other members of the

54Friedrich Hayek, interviewed by Robert Bork 4 November 1978 and Robert Chitester date

unspecified 1978 (Centre for Oral History Research, University of California, Los Angeles,
http://oralhistory.library.ucla.edu/).
 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
401

Austrian School … had a good deal of sympathy with the mild Fabian
socialism to which I inclined as a young man. He in fact prided himself
that his theory of marginal utility had provided the basis of progressive
taxation, which then seemed to me one of the ideals of social justice.’
This was reinforced in Hayek’s (1978a) UCLA interviews: Wieser was
a ‘liberal’ in the American sense: ‘slightly tainted with Fabian socialist
sympathies. In fact, it was his great pride to have given the scientific
foundation for progressive taxation … Wieser and the whole tradition
really believed in a measurable utility.’55 The American-Austrian School
of Eugen Ritter von Böhm-Bawerk ‘and Mises even more’ were ‘liberals’
in the European or ‘Classical Liberal’ sense (Hayek 1978b).
In Liberalism in the Classical Tradition, Mises (1985 [1927], 51)
insisted that ‘The victory of Fascism in a number of countries is only
an episode in the long series of struggles over the problem of property.’
For Hayek (1978a), public policy was a struggle between competing
religions: ‘Socialism was just another religion’ (Cubitt 2006, 60); and
‘of course, socialism and unlimited democracy come very much to the
same thing.’56 Twenty-six years after Mises complained about not know-
ing ‘any method of returning to’ oligarchic liberty, Hayek told MPS
members that they should be concerned with ‘changing opinion …
Its intellectuals who have really created socialism … who have spread
socialism out of the best intentions.’ He emphasised the ‘moral inher-
itance which is an explanation of the dominance of the western world,
a moral inheritance which consists essentially in the belief in property,
honesty and the family, all things which we could not and never have
been able adequately to justify intellectually’ (cited by Leeson 2013,
197).57 Of this Holy Trinity (‘belief in property, honesty and family’),
the atheist Hayek believed only in one: property.

55Friedrich Hayek, interviewed by Axel Leijonhufvud date unspecified 1978 (Centre for Oral
History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
56Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

57http://www.margaretthatcher.org/document/117193.
402    
R. Leeson

Hayek (1978a) saw a return to ‘dictatorial democracy’:

I believe Schumpeter is right in the sense that while socialism can never satisfy
what people expect, our present political structure inevitably drives us into
socialism, even if people do not want it in the majority. That can only be pre-
vented by altering the structure of our so-called democratic system. But that’s
necessarily a very slow process, and I don’t think that an effort toward reform
will come in time. So I rather fear that we shall have a return [emphasis added]
to some sort of dictatorial democracy, I would say, where democracy merely
serves to authorize the actions of a dictator. And if the system is going to break
down, it will be a very long period before real democracy can reemerge.58

The crucial issue driving this ‘return’ to ‘dictatorial democracy’ was that
a ‘democratically organised’ system led to progressive taxation, that is,
‘discrimination’:

I did see that our present political order made it almost inevitable that
governments were driven into senseless policies. Already the analy-
sis of the The Road to Serfdom showed me that, in a sense, Schumpeter
was right--that while socialism could never do what it promised, it was
inevitable that it should come, because the existing political institutions
drove us into it. This didn’t really explain it, but once you realize that a
government which has power to discriminate in order to satisfy particu-
lar interests, if it’s democratically organized, is forced to do this without
limit-- Because it’s not really government but the opinion in a democracy
that builds up a democracy by satisfying a sufficient number of special
interests to offer majority support. This gave me a key to the reason why,
even if people understood economics correctly, in the present system of
government it would be led into a very stupid economics policy.59

New-feudal wealth derives not from land but from hedge funds and
other speculative ventures (Mallaby 2010). Their ‘get the govern-
ment of the people’s back’ logic is that cutting their taxes will increase

58Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
59Friedrich Hayek, interviewed by Jack High date unspecified 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
403

employment. Earlier, the Second Estate had been significant local

employers: income trickled down to the surrounding communities. But
as rents decreased, and real wages and taxation increased, many of the
‘Stately Homes of England’ were sold or fell into disrepair. Tax cuts for
the aristocracy would have allowed many domestic servants to retain
their jobs and neo-feudalism to survive.
Kuehnelt-Leddihn (2000, 37–38) contrasted the ‘traditional’ vertical
social ‘order’ with the ‘new’ horizontal ‘order’:

The traditional outlook of our culture, indeed, was vertical: God the
Father in Heaven, the Holy Father in Rome, the King as the Father of
the Fatherland, and the Father as the King in the Family. (In the lands of
the Reformation, the monarch, not the Pope, was the head of the Church.)
Connected with the Fathers were the Mothers, from the Regina Coeli
down to the Queens and the various matriarchs. Following the [French]
Revolution, the new order was increasingly flattened until it became hori-
zontal. Of course, the people as such could not rule; rather, majorities
could rule over minorities, so numbers assumed immense importance.
Even truth became a matter for majorities, so the bigger the majority, the
‘truer’ the right answer. The ideal was the consent, the affirmation by
the majority, which in its ultimate form achieves a totality. Hence, we
see the totalitarian root of democracy [emphasis added], which stands for the
‘politization’ of the entire people. Even the children, although not allowed
to vote, are now educated in that direction.

Kuehnelt-Leddihn (2000, 29, n66, 33, 34, 36, n90) expressed standard
Austrian disdain about democracy: Looking back to World War I, the
‘old democratic enthusiasm for extending the great ideals of the French
Revolution reappears, even at the price of enormous bloodshed, because
democracy means to simple spirits freedom from rule from above or
outside.’ But

‘Democracy’ is a theological problem, since government is the result of

Original Sin. Democracy embodies the illusion that ‘Self-Government’
means really to rule oneself and nobody else involved, whereas it is simply
the rule of the majority over the minority.
404    
R. Leeson

Hayek (1978a) saw merit in dictatorships: ‘I think I have discovered

the origin of this. It begins with the Utilitarians,’ with Jeremy Bentham
(1748–1832) and ‘particularly’ James Mill (1773–1836), who ‘had this
conception that once it was a majority who controlled government, no
other restriction on government was any longer possible.’ But

it’s, of course, no longer the will of the majority, or the opinion of the
majority, I prefer to say, which determines what the government does, but
the government is forced to satisfy all kinds of special interests in order to
build up a majority. It’s as a process. There’s not a majority which agrees,
but the problem of building up a majority by satisfying particular groups.
So I feel that a modern kind of democracy, which I call unlimited democ-
racy, is probably more subject to the influence of special interests than
any former form of government was. Even a dictator can say no, but this
kind of government cannot say no to any splinter group which it needs to
be a majority.60

Bork replied: ‘yes, it would be possible to have a constitution which

is merely organizational, and which, as you say—’; to which Hayek
(1978a), interrupting, added that he sought to restrict the power of the
‘people’: ‘--which, in limiting the powers of government and legislation
to coercion only according to formal rules, would delimit power, not
lay down any rules of law. We would just say that people had no other
power than that.’61
Hayek (1978a) described ‘social justice’ as ‘undefinable. People don’t
know what they mean when they talk about social justice. They have
particular situations in mind, and they hope that if they demand social
justice, somebody would care for all people who are in need, or some-
thing of that kind.’ The phrase ‘social justice’ has ‘no meaning, because

60Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
61Bork retorted: ‘Dr. Hayek, I think you just laid down a rule of law with that. [laughter]’ Hayek

(1978a) replied: ‘Well it depends on whether you call this a rule of law. It’s a rule of organization
determining what powers particular people have.’ Friedrich Hayek, interviewed by Robert Bork 4
November 1978 and Robert Chitester date unspecified 1978 (Centre for Oral History Research,
University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
405

no two people can agree on what it really means.’ Referring to what he

had written in the Preface to Law, Legislation and Liberty Volume 2—
The Mirage of Social Justice (1976b), Hayek (1978a) asserted that he had
‘written quite a different chapter on the subject, trying’ the concept of
social justice ‘in practice in one particular case after another, until I dis-
covered that the phrase had no content, that people didn’t really know
what they meant by it. The appeal to the word justice was just because
it was a very effective and appealing word; but justice is essentially an
attribute of individual human action, and a state of affairs as such can-
not be just or unjust. So it’s in the last resort a logical muddle. It’s not
that I’m against it, but I say that it has no meaning.62 It’s completely
empty. I’m convinced it’s completely empty.’63
In social Darwinist ‘evolution,’ the strong conquer the weak. Bork
asked: ‘Well, that really means, then, if we’re talking about an evolu-
tionary society--one without strong central direction; one in which
property is safeguarded--that your conception of justice is really closely
bound up with a capitalist order, or at least a free-market order?’ Having
defined ‘full justice’ as ‘shooting in cold blood,’ Hayek (1992a [1945],
223; 1978a) replied: ‘A free-market order based on private property, yes.
You know, that’s a very old theory. I think John Locke already argued
that-- In fact, he asserts at one stage that the proposition which can be
demonstrated, like any proposition of Euclid, is that without property
there can be no justice.’64
Mises (2003 [1969], 7, 13) described what he believed to be ‘The
German Rejection of Classical Economics.’ There was ‘no room left’ in
the Second Reich for the ‘alien’ doctrines of ‘Manchesterism and lais-
sez faire.’ In its place, Bismarck introduced a version of the German
Historical School’s ‘Sozialpolitik, the system of interventionist measures

62Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
63Friedrich Hayek, interviewed by Robert Bork 4 November 1978 and Robert Chitester date

unspecified 1978 (Centre for Oral History Research, University of California, Los Angeles,
http://oralhistory.library.ucla.edu/).
64Friedrich Hayek, interviewed by Robert Bork 4 November 1978 and Robert Chitester date

unspecified 1978 (Centre for Oral History Research, University of California, Los Angeles,
http://oralhistory.library.ucla.edu/).
406    
R. Leeson

such as labor legislation, social security, pro-union attitudes, progressive

taxation, protective tariffs, cartels, and dumping.’ The only disagree-
ment in this ‘state socialism’ related to which group should ‘operate the
supreme planning board: the Junkers, the professors and the bureau-
cracy of Hohenzollern Prussia, or the officers of the Social-Democratic
party and their affiliated labor unions.’
The three items to the left of ‘progressive taxation’—‘labor legislation,
social security, pro-union attitudes’—threaten property and ascribed
status; while the three on the right—‘protective tariffs, cartels, and
dumping’—were Mises’ trade union card. In Liberalism in the Classical
Tradition, Mises (1985 [1927], 19, 51) explained that

The program of liberalism, therefore, if condensed into a single word,

would have to read: property [Mises’ emphasis], that is, private owner-
ship of the means of production (for in regard to commodities ready for
consumption, private ownership is a matter of course and is not disputed
even by the socialists and communists). All the other demands of liberal-
ism result from this fundamental demand … The victory of Fascism in a
number of countries is only an episode in the long series of struggles over
the problem of property.

The fraud-inflated bubble that burst in 1929 was followed by the

Austrian deflationary policy that facilitated Hitler’s rise to power and
thus the subsequent advance of Soviet Red Terror into the heart of
Europe.

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Roberts, P. C. (1984). The Supply-Side Revolution an Insider’s Account of
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 8 From Metternicht’s ‘Justice, Love and Peace’ to Mises’ …    
413

Rockwell, L. H., Jr. (2008, July 31). Remembering Erik von Kuehnelt-Leddihn.
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 9
Cold War ‘Peace’

1 Consciously Devoted to the Vision

and Splendour of the Habsburg Empire
Through ‘God and Gold’ conquistadors, the Eastern Reich came
to own vast tracts of the West: ‘property’ acquired at the expense of
pre-Columbian property-owners (whose ‘property,’ in turn, had often
been derived from military conquest or raiding). Missions were con-
structed, and ‘free’-market African slaves and indigenous Indians were
persuaded to embrace the religion of those who had dispossessed them.
Some became ‘houseboys’ and sexually-available maids; while others,
such as Dutty Boukman (‘Book Man’), acquired literacy. But (as in
Australia and elsewhere), ‘heathen’ hunter-gatherers stood in the way
of the ‘civilisation’ and ‘morals’ of Hayek’s ‘Christian west’: ‘Flourishing
lands were laid waste; whole peoples destroyed and exterminated’ (Mises
1985 [1927], 125).
For their Chilean audience, Caldwell and Montes (2015b, 87) elimi-
nated all reference to Mises’ promotion of political ‘Fascism’; and also rec-
tified Hayek’s three episodes (1960–1961; 1969–1974; 1985–) of severe

© The Author(s) 2019 415

R. Leeson, Hayek: A Collaborative Biography,
Archival Insights into the Evolution of Economics,
https://doi.org/10.1007/978-3-319-78069-6_9
416    
R. Leeson

mental illness (Chapter 1, above). Mises died on 10 October 1973; eight

days before, it was announced that the Soviet-trained Wassily Leontief
(1906–1993) would be rewarded with the Nobel Prize for the ‘develop-
ment of the input-output method and for its application to important
economic problems … Among recent developments of the method may
be mentioned its extension to include residuals of the production system
- smoke, water pollution, scrap, etc., and the further processing of these.
In this way the effects of the production on the environment can be stud-
ied.’ In summer 1974, Hayek (1975a [1974]) expected ‘price controls
and that of course is the end of the market system and the end of the free
political order. So I think it will be via the attempt to regress the effects of
a continued inflation that the free market and free institutions will disap-
pear. It may still take ten years, but it doesn’t matter much for me because
in ten years I hope I shall be dead.’ The Austrian School of Economics
appeared to be nearing an inglorious fourth-generation end.
Gold rushes are a perennial magnet for scoundrels: Koch Industries
and the 1974 Nobel Prize in Economic Sciences created an inflation-
ary boom by facilitating the flood of ‘God and Gold’ reconquistado-
res into universities and think tanks. The ‘get-rich-quick’ ‘49ers’ who
flooded into the Sierra Nevada mountains symbolise the dynamism of
American capitalism; while in Australia, the 1854 Eureka gold miners
who rebelled against their mining licenses obliged the colonial author-
ity to enact the Electoral Act of 1856 (universal white male suffrage
for elections to the Lower House of the Victorian Parliament). In con-
trast, the fraudulent job recommendations through which ‘von’ Hayek
(1978a) constructed a Welfare State for his academically unqualified
‘74ers’ harks back to Habsburg nepotism: ‘That I cannot reach the pub-
lic I am fully aware. I need these intermediaries.’1
It is ‘common knowledge’ in the ‘free’-market community that
Hayek (1978a) ennobled his library assistant as ‘Doctor’ so as to fraud-
ulently obtain for him a tenured Professorship of Economics at a North
American public university (despite knowing that his intellectual

1Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 9 Cold War ‘Peace’    
417

deficiencies had prevented him from passing his undergraduate units in

economics). Block (2018) proposes that those who don’t fawn before the
‘free’ market should be punished: ‘Must this consist of the death pen-
alty or even a jail sentence? Maybe. But not necessarily so. There are also
lesser forms of approbation. For example, doctors are struck off for med-
ical malpractice, priests and ministers are unfrocked, and lawyers are dis-
barred for professional misconduct and professors are stripped of their
tenure and fired, if their offense is serious enough … The lowest rung
in legal hell should be reserved for Ph.D. economists who were in a [sic]
effect traitors to their profession … At the very least, they should have
their advanced graduate degrees revoked.’
Non-Austrian neoclassical analysis penetrates the veil of money and
religiosity. When unobserved (i.e. not advertised), morality (religious
or secular) can be expected to reduce dishonesty (because the ‘costs’ are
greater). But conscious of being observed, ‘Honest Pete’ the ‘carnival
barker’ can be expected to be more dishonest: ‘Faith’ is the perfect pred-
atory front. Holy Men (‘Holy Rollers’) selling ‘get-rich-quick’ schemes
are also a perennial component both of American capitalism and the
Austrian School of Economics.
Hayek (1978a), who expected that the ‘people’ will ‘come to dislike
government interference,’2 aimed at ‘completely eliminating all direct
interference with the market’3: ‘human rights,’ he complained, ‘leads to
a degree of interference with the policy of other countries’ such as apart-
heid South Africa.4 Interference, or observation, also turns the probabil-
istic ‘wave function’ of Austrian ‘liberty’ into the ‘particle’ of domestic
political ‘Fascism’ and conscription.
Caldwell (2007a, 22) complained that condensed and cartoon ver-
sions had turned The Road to Serfdom into a ‘symbol’ for both his
‘admirers and his critics.’ The ‘sad result’ is that,

2Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
3Friedrich Hayek, interviewed by Axel Leijonhufvud date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

4Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

418    
R. Leeson

as John Scoon put it, ‘People still tend to go off half-cocked about it; why
don’t they read it and find out what Hayek actually says!’ (emphasis in
original)

In ‘On the Job Training with F. A. Hayek,’ Caldwell (2007b, 353)

provided a few ‘aphorisms’ including: ‘Make friends with the archival
record.’ Hayek, who inspired the construction of Austrian ‘missions,’
explained how his symbolic truth was constructed: ‘I am hardly capable
of restating the ideas of another person because I read and embody what
I like to my own thought. I cannot read a book and give an account
of its arguments. I can perhaps say what I have learnt from it. But that
part of the argument which is not sympathetic to me, I pass over’ (cited
by Kresge 2002, 504).
At Charles Koch’s Mercatus Center, Caldwell (2017) sneered at the
evidence contained in the Hayek Archives (which he seeks to monop-
olise). Epigone-generation Austrians are, in this sense, a-literate: they
typically don’t read the archival evidence—and those that do ‘pass over’
that which is not sympathetic to their fund-raising, or allude to it only
in footnotes. The oral history tapes that Hayek wished to be made pub-
lic (post-2003) are being suppressed because their release would almost
‘exterminate’ the Austrian School: they could still hunt—and ‘accelerate
the Climate of Hate in America’ (Rothbard 1994, 6)—but their ability
to gather tax-exempt donations would diminish.
According to Kuehnelt-Leddihn (2000), monarchs were ‘not only
an international, but also an interracial breed, a great advantage to
nations they ruled because it gave them a certain distance from their
subjects whom they could, thus, judge more objectively.’ ‘Self-control,
good manners, and generosity belonged to a monarch’ who as a ‘mem-
ber of a dynasty, can plan for the distant future, even for generations.’
According to Alan Bullock (1962, 41–42), the ‘Germans of Vienna
and the Austrian lands, who identified themselves with the Habsburgs,
looked on themselves as an imperial race, enjoying a position of politi-
cal privilege and boasting of a cultural tradition which few other people
in Europe could equal. From the middle of the 19th century, however,
this position was first challenged and then undermined.’
 9 Cold War ‘Peace’    
419

In a taped oral history interview, Hayek allegedly told Leube (2003,

12), Caldwell’s fellow epigone-generation co-leader, that he ‘never
doubted that there are things in life worth fighting for and risking one’s
own life for.’ Leube added that Hayek had been born into an ‘aristo-
cratic family that could not only lay claim to a long academic tradition
but also to a long and dutiful service to the Empire … Thus, con-
sciously devoted to the vision and splendour of the Habsburg Empire
he joined up in March 1917 … he was anxious to be sent as an artil-
lery sergeant cadet to the intensely embattled Italian front … much to
his dislike he missed by a few days the Battle of Caporetto in October/
November 1917 that left many dead and wounded.’
Behavioural economics describe human behaviour by invoking
‘bounded rationality’ or limited computational ability: smokers (or
potential smokers) may need a nudge to quit (or not begin) so as to
align short-run behaviour with long-run reported desires. To tobacco-
defending Austrians this is the ‘Nanny State’ (Boudreaux 1997).
Kuehnelt-Leddihn (1998, 11) explained about the Austrian problem
of democracy: ‘Of course, the vast majority of the masses everywhere
is politically ignorant. Politics today requires (theoretically and practi-
cally) a simply immense amount of knowledge as well as skill - which
can only be acquired and mastered in rare cases.’
In the post-Nobel celebratory Essays on Hayek, Gottfried Dietze
(1976, 142) cited from Hayek’s 1953 Cairo Lecture on ‘The Safeguards
of Individual Liberty,’ which was headed by a quote from J. Ortega y
Gasset, the author of The Revolt of the Masses: ‘Order is not a pressure
imposed upon society from without, but an equilibrium that is set up
from within’ (see also Hayek 2011 [1960], 215; 2014 [1955], 160).
‘God, King and Country’ is an unpersuasive rhetorical basis when for-
cibly imposed by a foreign ‘God, King and Country’: how is Imperial
‘order’ to be maintained when spontaneous ‘wars of national liberation’
undermine the power of an ‘alien’ ruling class? Habsburg Germans,
‘excluded from the new German Empire by the War of 1866 and
deprived of their influence in Hungary by the compromise of 1867,
tended to regard the strivings of the subject nations as a direct threat
420    
R. Leeson

to their traditional position’ (Joll 1978, 10). Hayek’s (1978a) first essay
had been an attempt to preserve the legal foundations of his nobility by
facilitating the survival of the multinational Habsburg Empire: ‘let the
nationalities have their own cultural arrangements’ (see Budd 2018).5
In The Russian Roots of Nazism: White Émigrés and the Making of
National Socialism, Michael Kellogg (2005, 125) reported that General
Baron Pyotr Nikolayevich Wrangel (or Vrangel) stressed that he had
been fighting not only against the Bolsheviks but also against ‘the fun-
damental causes of the destruction that threatens the entire world.’
Colonies of Russian émigrés—aristocrats, generals etc.—settled in the
world’s major cities: ‘martyrs of the great Bolshevik terror which kept
the post war world a-tremble.’ Their message was that from Russia ‘the
Antichrist was sending forth his new armies’ (Heiden 1944, 31–32;
Bullock 1962, 79).
‘White’ Austrians also believe that democracy is a ‘bad’ of which
less is preferred to more. Hayek (1978a), who sought ‘to recover the
old tradition,’6 described the neo-feudal hierarchy that he shared with
Kuehnelt-Leddihn as ‘my traditional environment.’7 He was introduced
to the Austrian School of Economics by the proto-Nazi Spann and ‘von’
Wieser (1983 [1926], 226) who reflected on the consequences of the
Great War: ‘When the dynastic keystone dropped out of the monarchi-
cal edifice, things were not over and done with. The moral effect spread

5‘I think the first paper I ever wrote--never published, and I haven’t even got a copy--was on a

thing which had already occurred to me in the last few days in the army, suggesting that you
might have a double government, a cultural and an economic government. I played for a time
with this idea in the hope of resolving the conflict between nationalities in the Austro-Hungarian
Empire. I did see the benefits of common economic government. On the other hand, I was very
much aware of all the conflicts about education and similar problems. And I thought it might be
possible in governmental functions to separate the two things--let the nationalities have their own
cultural arrangements and yet let the central government provide the framework of a common
economic system. That was, I think, the first thing I put on paper.’ Friedrich Hayek, interviewed
by Axel Leijonhufvud date unspecified 1978 (Centre for Oral History Research, University of
California, Los Angeles, http://oralhistory.library.ucla.edu/).
6Friedrich Hayek, interviewed by Robert Bork 4 November 1978 and Robert Chitester date

unspecified 1978 (Centre for Oral History Research, University of California, Los Angeles,
http://oralhistory.library.ucla.edu/).
7Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 9 Cold War ‘Peace’    
421

out across the entire society witnessing this unheard-of event. Shaken
was the structure not only of the political but also of the entire social
edifice, which fundamentally was held together not by the external
resources of power but by forces of the soul. By far the most important
disintegrating effect occurred in Russia.’
According to Hayek (1978a), ‘von’ Wieser ‘floated high above the
students as a sort of God’ and was for a ‘long time my ideal in the
field.’8 Stephan Zweig (1943, Chapter 4) recalled that a ‘romantic
nimbus’ (a cloudy radiance which surrounds a classical deity when on
earth—special dress and the right to fight duels with impunity) hovered
around Austrian universities:

with the increasing democratisation of public life, when all the other
medieval guilds and corporations were being destroyed, these academic
prerogatives were done away with throughout Europe. In Austria and
German Austria alone, where class consciousness always predomi-
nated over the democratic idea, the students stubbornly clung to these
long-outdated privileges and even evolved their own student code …
They looked with disdain upon the ‘rabble’ who could not properly
appreciate this academic culture and German virility.

To his disciples, Hayek (1978a) appears to ‘float’ between ‘God’ and

‘Man’—as a religion-promoting atheist who used religious analogies to
promote his Constitutional revolution: ‘I am very much convinced that
if democracy is not to destroy itself, it must find a method of limiting
its power without setting above the representatives of the people some
higher power.’9 Buchanan asked: ‘Given this reading of the history of

8Friedrich Hayek, interviewed by Earlene Craver date unspecified 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
9Hayek (1978a) continued: ‘That, I think, can only be done by distinguishing between two dif-

ferent representative assemblies: one confined to legislation in the classical sense of laying down
general rules of conduct; and the other directing government under the rules laid down by the
first. Thus, we get a limitation which results in nobody having the power to do certain things at
all. You see, one assembly has only the power of laying general rules; the other can only, within
these general rules, organize the means entrusted to government for its own purpose. There will
be no authority who can lay down discriminating rules of any kind.’ Friedrich Hayek, inter-
viewed by Robert Bork 4 November 1978 (Centre for Oral History Research, University of
California, Los Angeles, http://oralhistory.library.ucla.edu/).
422    
R. Leeson

the last century, and given this destruction of these moral values, which
we did not really understand why we hold, how can we expect some-
thing analogous to that to be restored? Or how can we hope that can be
restored?’ Hayek (1978a) replied: ‘Well, I wish I knew. My present con-
cern is to make people see the error. But that’s an intellectual task, and
how you can undo this effect-- Well, I have an idea the thing is on the
whole effective via its effect on the teaching profession. And probably
that generation which has been brought up during the last thirty years is
a lost generation on that point of view. I don’t think it’s hopeless that we
might train another generation of teachers who do not hold these views,
who again return to the rather traditional conceptions that honesty and
similar things are the governing conceptions.’10
As Hayek (1976) perceptively noted: ‘equality, like most politi-
cal terms, is a term of a great many meanings.’ Like abstract ‘equality,’
abstract ‘liberty’ is a form (or mould) into which almost any substance
(toxic or otherwise) can be poured. For non-aristocrats, ‘liberty’ is a
more persuasive rallying cry than ‘God, King and Country’ or ‘Work,
Family, Fatherland.’ Pinochet, Mises and Hayek appear to have organ-
ised their professional lives around ‘deception plans.’
Kuehnelt-Leddihn (2000, 38) complained that children were being
‘educated’ in the direction of democracy. Hayek (1997 [1949], 231;
1978a), who regarded his disciples as typically ‘inferior … mediocrities’
who had to be recruited and inspired through ‘visions’ of ‘Utopian’ ‘lib-
erty,’ proposed to establish an educational system devoted not to critical
thinking but to the cultivation of

an ‘un-understood’ moral tradition.’11 If you persuade the teaching pro-

fession, I think you would get a new generation brought up in quite a
different view.12

10Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

11Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

12Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 9 Cold War ‘Peace’    
423

In ‘Professor NSDAP: the Intellectuals and National Socialism,’ Fest

(1970, 252, 352, n9) describes the atmosphere of the 1920s: the
‘renewal of the German reality must spring not from the head but from
the heart, not from doctrines but from visions and instincts; we must
distrust the intelligence and the conscience, and must place our trust in
our instincts.’ Hitler (1939 [1925], 98–99) complained about ‘the doc-
trines taught by Socialism, Pacifism etc.’ and

our totally inadequate system of education, the defects of which are

responsible for the lack of devotion to our own national ideas … The
only way to remedy the evil I have been speaking of is to train the
Germans from youth upwards to an absolute recognition of the rights of
their own people, instead of poisoning their minds, while they are still
only children, with the virus of this curved ‘objectivity,’ even in matters
concerning the very maintenance of our own existence.

Dynastic Warfare States often relied on press-gang ‘conscripts’ to do the

fighting for them. The neo-feudal ‘spontaneous’ order was built on con-
scription: the ‘difficulty which was to face the governments of Europe
during the 19th century was how … to fashion armies which would be
not only politically reliable but also militarily effective’ (Howard 1981
[1961], 8).
The House of Hanover was (locally) dethroned by the American
War of Independence; and between 1783 and 1833, the rest of con-
tinental America was de-colonized.13 For ‘Restoration’ purposes, in
1815 Metternicht constructed the Holy Alliance to unite Orthodox
Russia, Protestant Germany and Catholic Austria behind the catchword
‘Justice, Love and Peace’ (a translation from the Austrian of ‘against
democracy, revolution and secularism’). But to ‘make the world safe
for democracy,’ all three dynasties—Romanov (1917), Hohenzollern
and Habsburg (1918)—were dethroned and obliged to abandon
much of their ‘property.’ The rhetorical foundations of neo-feudalism
(‘God, King and Country’) had been compromised; the post-Habsburg

13In 1836, the Spanish House of Bourbon renounced sovereignty over its former ‘property.’
424    
R. Leeson

catchword of the Austrian School defence of ascribed status became, in

effect, ‘God, Dictator and Producer.’
Mises (2012 [Summer 1918], Chapter 12) lobbied for the Warfare
State and taxes: it has been observed that ‘money, money, and more
money’ are needed to wage war—which contains a ‘kernel of truth.’ But
from an economic perspective, what counts is ‘necessary material.’ What
matters in war is whether ‘people’ have ‘more or less commodities avail-
able for waging war.’ Had the ‘Austro-Hungarian economy spent several
billions more in money than it actually possessed, it would hardly have
made any difference, since these billions could not have been used to
procure goods from other countries.’
In the Rothbard-edited Journal of Libertarian Studies, Rothbard
(1981, 242) asserted that ‘Mises’s radical laissez faire was marked by
uncompromising attachment to freedom of immigration’—he was ‘a
bitter critic of Western imperialism and colonialism.’ But according to
Mises (2012 [Summer 1918], Chapter 13), ‘Combating Emigration ’ was
required to bolster the Austro-German Second Reich: immigration to
‘overseas colonies also exercised, in part, a certain attraction before the
war, because there was no obligatory military service in those countries.’
A shortening of the ‘term of military service will undoubtedly contrib-
ute to reducing the desire to emigrate.’
In 1956, Mises received the William Volker Distinguished Service
Award (Mises 1984, 156). According to the Philanthropy Roundtable
(which works to ‘strengthen our free society’), Volker’s family migrated
to the USA because they feared that their 12-year-old son would be
conscripted to fight for Prussia (against France). In Hayek, Volker ‘dis-
covered a thinker who made sense of his experience’ who did ‘not live to
see all of the Mont Pelerin Society’s accomplishments. With that assis-
tance to a group of penurious writers and scholars, however, he helped
launch an international network that distinguished itself in defending
freedom in the West during the last half of the 20th century.’14
Hitler, who attached ‘no value to human life except as an instrument
for the satisfaction of his own ambition for power,’ announced:

14http://www.philanthropyroundtable.org/almanac/hall_of_fame/william_volker#a.
 9 Cold War ‘Peace’    
425

we must be prepared for the hardest struggle that a nation has ever had
to face. Only through this test of endurance can we become ripe for the
dominion to which we are called. It will be my duty to carry on this war
regardless of losses. The sacrifice of lives would be immense. We all of us
know what world war means. As a people we shall be forged to the hard-
ness of steel. All that is weakly will fall away from us. But the forged cen-
tral block will last forever. I have no fear of annihilation. We shall have to
abandon much that is dear to us and today seems irreplaceable. Cities will
become heaps of ruins; noble monuments of architectural will disappear
forever. This time our sacred soil will not be spared. But I am not afraid
of this. (cited by Fest 1970, 51, 57)

In 1953, the democratically elected Prime Minister, Mohammad

Mosaddegh—who sought the nationalisation of Iranian oil—was over-
thrown in a coup organised by the CIA and the UK’s Secret Intelligence
Service. The Shah of Iran—Shahanshah (‘King of Kings’) and Aryamehr
(‘Light of the Aryans’)—was put in power to protect Western oil inter-
ests. His modernizing ‘White Revolution’ was backed-up by White
Terror: the torture and execution of political opponents by SAVAK
(‘Organization of National Intelligence and Security’). After the Shah—
who provided £1 million to the Hayekian Crozier (1993) to prop-up
his dictatorship—was deposed (11 February 1979), Hayek told the New
York Times that the Shah’s ‘best possible intentions’ had failed because
they were ‘intolerable to people who have not yet learned the base of the
moral conception on which capitalism rests.’ In contrast, he had ‘seen
in some South American countries the most extraordinary progress. In
that much condemned country, Chile, the restoration of only economic
freedom and not political freedom has led to an economic recovery that
is absolutely fantastic’ (cited by Geddes 1979).
Before the 1982 Falkland War, Cubitt (2006, 47) hadn’t ‘realized
how much in favour’ Hayek was of ‘immediate military action to solve
international incidents and how exciting he found warfare.’ When asked
in Chile, ‘How did you view Carter’s position towards Iran?’ Hayek
(1981) responded ‘Very weak. Very weak.’ Did he propose the equiva-
lent of the 1972 Christmas bombing of Hanoi? Caldwell and Montes
(2014a, 42–43; 2014b; 2015a, 297) summarised one of his interviews
426    
R. Leeson

with a Chilean newspaper during his 1981 visit: Hayek regarded the
Iranian hostage crisis as a ‘fundamental’ violation of international law—
the Carter should have responded immediately with an ‘ultimatum’:
unless the hostages were released Tehran would be ‘bombarded: no gov-
ernment should depart from general principles when dealing with ter-
rorists.’ Yet Hayek made no criticism of the ‘neo-Fascist’ White Terror
which undermined the Allende government.
For 18 months prior to the Falklands invasion (2 April 1982), the
Thatcher government had approval ratings of less than 30%. One
Operation Condor country (Argentina) revived her 1983 election pros-
pects, while another (Chile) provided her with military assistance. On
9 June 1983, she won a second term with a swing of only 1.5% against
her party: the ‘Falklands factor’ appeared to be more important than the
extensive unemployment that Hayek had encouraged her to create.15
Although Argentina surrendered on 14 June 1982, Hayek (the Times 13
February 1983) kept victory in the electors’ minds:

Sir, Though I can well understand that the British Government does not
wish to mention this, Argentina ought perhaps to be reminded that no
rule of international law would forbid to retort to another military attack
on what for 150 years has been under the jurisdiction of Britain by some
counter-attack on the geographical source of such bellicose action.
That might well be a more effective protection than turning the
Falklands into a fortress. An aggressor has no right to demand that hostile
action be confined to the region he chooses.16

In 1915, Keith Murdoch (1885–1952) was a ferocious critic of the

British ‘Great’ War officer class: ‘The conceit and self complacency of
the red feather men are equalled only by their incapacity. Along the
line of communications … are countless high officers and conceited
young cubs who are plainly only playing at war … appointments to

15By coincidence, Thatcher’s first victory occurred four days before Hayek’s 80th birthday; and

her second occurred four days after (what would have been) Keynes’ 100th.
16http://www.margaretthatcher.org/document/117186.
 9 Cold War ‘Peace’    
427

the general staff are made from motives of friendship and social influ-
ence.’17 His son’s relentless promotion of Hayek in the (London) Times
culminated in a profile by Mises’ daughter-in-law, Gitta Sereny (1985),
on ‘The Sage of the Free Thinking World.’ In a Manhattan Institute
third annual Walter B. Wriston Lecture in Public Policy, Rupert
Murdoch (1990) described ‘The War on Technology’ in Hayekian
terms: ‘we were encouraged by Mrs. Thatcher’s victory in the min-
ers’ strike and by signs that authorities were prepared to protect pri-
vate property from the actions of massed pickets … Modernization is
Americanization. It is the American way of organizing society that is
prevailing in the world.’ The ‘immediate result’ of his victory against the
print unions was ‘greater freedom and flexibility, and higher profits, for
News Corp.’ But the 1986–1987 ‘Battle of Wapping also ushered in a
silver age of British newspaper journalism.’18 In a hagiographic edito-
rial, the Murdoch-owned WSJ (12 July 2018) described the Manhattan
Institute as ‘Where New York Goes to Think.’19
On 4 May 1982, Murdoch’s Sun celebrated the sinking of the
Argentine Belgrano and the loss of 323 lives with a front page head-
line: ‘Gotcha.’20 Hayek (21 February 1983) promoted the ‘war party,’
informing a correspondent that a submarine equipped with high explo-
sive rockets, ‘permanently’ stationed in the South Atlantic could inex-
pensively destroy targets in Buenos Aires or elsewhere. Awareness of
this fact might well ‘somewhat dampen’ the enthusiasm for what he
described as another venture of the (conscripted) Argentine ‘masses.’21
While ‘anticipated’ is a translation from the Austrian of ‘was plagia-
rised by,’ it is not clear what ‘anticipated in advance’ means. According
to Hülsmann (2007, 257), Mises ‘anticipated’ the outbreak of World

17 http://www.dailytelegraph.com.au/news/special-features/in-depth/letter-that-changed-

the-war-sir-keith-murdochs-expose-of-the-bloody-fiasco-at-gallipoli/news-story/768cfc
6f634e7091e2620927fc328eee.
18http://www.city-journal.org/article01.php?aid=1631.

19https://www.wsj.com/articles/where-new-york-goes-to-think-1531438118?mod=hp_opin_pos2.

20http://www.bl.uk/onlinegallery/features/frontpage/gotcha.html.

21Hayek to Professor Woodell. Hayek Archives. Box 59.27.

428    
R. Leeson

War I ‘years in advance’ and ‘dreaded’ it. As a Habsburg Lieutenant he

‘dearly loved’ Austria but ‘was no chauvinist and despised the milita-
rism and statism’ that was about to engulf Europe. Bertha von Suttner
in Austria and Bertrand Russell in England felt the ‘same way’ as Mises
and sought to fight the ‘frenzy of nationalism.’ But the ‘war party’ could
not be tamed: the ‘ruling philosophy of government glorification under
the guise of patriotism’ had made war ‘irresistible.’
Political liberals on both the left—e.g. Bertrand Russell (1995)—
and on the right—e.g. Milton Friedman—regard military conscription
as tantamount to slavery: ‘No public-policy activity that I have ever
engaged in has given me as much satisfaction’ as the 1969–1970 All-
Volunteer Commission: ‘I regarded the draft as a major stain on our free
society’ (Friedman and Friedman 1998, 381).
In Britain, the ‘Great’ War and the Military Services Bill of 1916
divided the (governing) Liberal Party and contributed to its demise.
In 1939, conscription was introduced as soon as war was declared. In
June 1940, General Charles de Gaulle escaped to London and became
the de facto leader of the Free French Forces. His ‘Appeal ‘of 18 June
1940 is regarded as the origins of the coordinated French Resistance:
‘I, General de Gaulle, currently in London, invite the officers and
the French soldiers who are located in British territory or who might
end up here, with their weapons or without their weapons, I invite
the engineers and the specialised workers of the armament indus-
tries who are located in British territory or who might end up here,
to put themselves in contact with me. Whatever happens, the flame
of the French resistance must not be extinguished and will not be
extinguished.’22
Mises had ‘believed’ that the French would fight and could resist
Germany: Hitler’s defeat, he was ‘sure,’ was ‘just a matter of time’
(Mises 1976, 52–53). Austrian theory is an extrapolation from obsessive
self-interest—and, presumably describing himself, Mises (2012 [1936],
Chapter 28) stated that the ‘power of the totalitarian state is so great
that it can take control over every conceivable activity without arousing

22http://lehrmaninstitute.org/history/index.html.
 9 Cold War ‘Peace’    
429

resistance [emphasis added].’ Mises described the German philosopher

and historian, Johann Christoph Friedrich von Schiller (1759–1805), as
being

able to evade the tyranny of the twelve dukes of Württemberg by fleeing

to the nearby ‘abroad.’

Nine years after insisting that ‘Fascists’ had ‘saved European civiliza-
tion,’ Mises pondered: ‘Where will a sanctuary be open for a persecuted
genius if all states become totalitarian?’
On 4 July 1940, the 58-year-old Mises fled from (neutral)
Switzerland to (neutral but) ‘Fascist’ Portugal and then reluctantly to
(neutral) America (Leeson 2018, Chapter 8). Had he been unable to
escape but instead found himself in invasion-threatened England, he
could have been obliged to fight in the Home Guard (the National
Service Act of 1942 mandated compulsory enrolment when units were
below strength).
After 1815, the Prussian army was regarded as ‘the training school
of the entire nation for war’ (Joll 1978, 3). The Austrian School of
Economics was founded out of a sense of resentment towards those who
had excluded them from the Second Reich (Leeson 2015a, Chapter 2).
In 1910, as Europe drifted towards war, the Habsburg Warfare State
sought to emulate the Hohenzollern Welfare State. Mises (2012 [1910],
Chapter 6) assisted: ‘enormous expenses’ will soon have to be met. The
army and the fleet have been ‘completely neglected’ for ‘many’ years.
Their allocation has not been raised for ‘twenty years, while at the
same time all the other European states have considerably increased
their defense forces.’ Worse still, the army’s weaponry ‘leaves much to
be desired,’ and the ‘reduction of service time from three years to two,
which cannot be postponed much longer, will entail enormous costs.’
The navy will also become the ‘object of more serious attention’ in the
future.
Later, Mises (2012 [1936], Chapter 28) bemoaned ‘our weap-
ons-choked world.’ In the prelude to the ‘Great’ War, Mises (2012
[1910], Chapter 6) lobbied for an arms race against a fellow member
of the Triple Alliance: Italy’s ‘enormous naval armaments’ which were
430    
R. Leeson

‘aimed directly’ against Habsburg Austria meant that ‘our navy’ will be
forced to construct some ‘dreadnoughts.’
Miseans describe Friedman as a ‘Fascist,’ in part, because as a pub-
lic servant (in the cause of defeating, the ‘Fascists’ that, according to
Mises, had ‘saved European civilisation’) he had formulated a method
of collecting income tax at source (Friedman and Friedman 1998,
Chapter 7).23 In defence of the Habsburg Empire, Mises (2012 [1910],
Chapter 6) addressed the same problem: the ‘obligations of social
insurance’ will impose ‘heavy expenses’ on the state. The ‘contribution
of the state’ to social insurance will ultimately amount to ‘100 million
crowns per year.’ How, Mises asked would the ‘needed resources’ be
‘obtained?’
The year after the Bolsheviks seized power and refused to honour the
debts incurred by the Romanovs, Mises (2012 [1918], Chapter 11) sup-
ported devaluation for a similar purpose: for the ‘Treasury, which has
primary responsibility for all debts incurred by the state, devaluation
offers financial relief.’ As the value of the currency falls, the ‘burden
carried by the debtor decreases.’ The State ‘only the same fixed amount
of principle and interest to eventually pay back in crowns, regardless of
whether or not the purchasing power of the crown has decreased’ in the
meantime. Likewise, devaluation allows the State to collect more reve-
nue from the private sector in real terms: as the currency is ‘devalued,
state revenues partly will increase.’ The revenues from ‘various taxes

23‘One of Friedman’s most disastrous deeds was the important role he proudly played, dur-
ing World War II in the Treasury Department, in foisting upon the suffering American public
the system of the withholding tax. Before World War II, when income tax rates were far lower
than now, there was no withholding system; everyone paid his annual bill in one lump sum, on
March 15. It is obvious that under this system, the Internal Revenue Service could never hope to
extract the entire annual sum, at current confiscatory rates, from the mass of the working pop-
ulation. The whole ghastly system would have happily broken down long before this. Only the
Friedmanite withholding tax has permitted the government to use every employer as an unpaid
tax collector, extracting the tax quietly and silently from each paycheck. In many ways, we have
Milton Friedman to thank for the present monster Leviathan State in America’ (Rothbard 2002
[1971], 41). For the assault on Friedman as a ‘Fascist’ see Leeson (2015b).
 9 Cold War ‘Peace’    
431

will increase because real estate, dividends, and income expressed in

money terms will also go up.’ The abandonment of hard money had
produced ‘favourable’ results: ‘This explains the favorable trends in
income taxes, capital gains taxes, stamp duties, death duties, and various
other taxes. So while state revenues as expressed nominally in money
terms are largely on the increase, the greater part of the state’s debts, also
expressed in money terms, remain unchanged.’
Mises later objected to two components of the Hohenzollern Warfare
State: the Welfare State and the influence of the German Historical
School. In the original 1940 German-language version of Human
Action, Mises had argued: ‘Military conscription leads to compulsory
public service of everyone capable of work. The supreme commander
controls the entire people … the mobilization has become total; people
and state have become part of the army; war socialism has replaced the
market economy’ (cited by Herbener et al. 1998, xxi). But with respect
to the relative weights that Austrians attach to political and economic
liberalism, Mises (1998 [1949], 283) also emphasised in Human Action
that there was only a

spurious distinction between two realms of human life and action,

entirely separated from one another, viz., the ‘economic’ sphere and the
‘noneconomic’ sphere.

Having declared that ‘It cannot be denied that Fascism and similar
movements aiming at the establishment of dictatorships are full of the
best intentions and that their intervention has, for the moment, saved
European civilization,’ Mises (1985 [1927], 51; 1998 [1949], 283) later
denied the importance of the ‘noneconomic’ sphere: ‘Freedom, as peo-
ple enjoyed it in the democratic countries of Western civilization in the
years of the old liberalism’s triumph, was not a product of constitutions,
bills of rights, laws, and statutes.’ Those documents ‘aimed only at safe-
guarding liberty and freedom,’ which had been ‘firmly established by
the operation of the market economy,’ against ‘encroachments on the
part of officeholders.’
432    
R. Leeson

In 1998, Putin became Director of the Federal Security Service;

a prelude to becoming Secretary of the Security Council and Prime
Minister and President of Russia. Mises’ disciples promoted the market
economy (botched privatisation) that facilitated the rise of Putin’s gang-
ster State (Haiduk 2015). In Human Action, Mises (1998 [1949], 283)
stated that ‘No government and no civil law can guarantee and bring
about freedom otherwise than by supporting and defending the funda-
mental institutions of the market economy.’ Government means ‘always
coercion and compulsion and is by necessity the opposite of liberty.’
Government is a ‘guarantor of liberty and is compatible with liberty
only if its range is adequately restricted to the preservation of economic
freedom.’ Where there is ‘no market economy, the best-intentioned pro-
visions of constitutions and laws remain a dead letter.’
Austrian ‘liberty’ is a magnet for homosexuals seeking to escape legal
and social prejudices and theocratic homophobes who seek to pub-
licly stone them to death. To such ‘scholars,’ Hayek and Mises are the
‘ozone layer’ which protects ‘liberty’ from sunlight: ‘Even today, Human
Action points the way to a brighter future for the science of economics
and the practice of human liberty’ and made ‘possible the continuation
of the Austrian School after the mid-twentieth century.’ This continua-
tion was made possible through what could be interpreted as either aca-
demic fraud or delusional faith (or a mixture of the two): Mises ‘added
passages in later editions’ which go ‘even further to permit [emphasis
added] conscription, and it is here we find a direct inconsistency with
Mises’s prior writings’ (Herbener et al. 1998, xxiv, xxi).
In Mises’s prior writings, conscription wasn’t permitted—it was an
accepted assumption. Weeks before the collapse of the Austro-German
Second Reich, Mises (2012 [Summer 1918], Chapter 12) had plans:
‘If we leave aside the payment of war damages by the defeated enemy,’
one of the three options for the State Treasury in ‘acquiring the means
to pay for the war’ was to ‘take possession’ of the required goods ‘with-
out compensation.’ This, Mises noted would seem to be the ‘simplest
approach.’ From the perspective of ‘equity one could justify it by say-
ing that taking commodities away from their owners, while a serious
encroachment on the personal rights of individuals, is far less serious
and onerous than universal conscription.’ The ‘readiness to give one’s
 9 Cold War ‘Peace’    
433

life for one’s country calls for a far greater sacrifice than to give up a
large part of one’s property.’24
Forty-five years later, Mises became incensed by some production
errors which had crept into the second edition of Human Action: ‘the
present management of the Yale University Press does not like my
book.’ Referring to Chester Kerr, Director of Publications, Mises con-
tinued: ‘You regret the fact that the previous management of the Press
published it. You are fully entitled to think and to feel as you do. But
you are not free to neglect the responsibilities which the Press has
assumed in signing an agreement for the publication of this extremely
successful book’ (cited by Herbener 1999). Would Mises have approved
of the Ludwig von Mises Institute Human Action the Scholars Edition?
The Austrian branch of the neoclassical school replaced the labour
theory of value with an anti-labour (oligarchic or employer) theory of
value. There are five fundamental components of their philosophy:

i. The dynasties had created a form of ‘genetic’ superiority through

their intergenerational entitlement programme;
ii. Despite social Darwinian eugenics representing the amoral victory
of the strong over the weak, ‘cultural evolution’ is morality;
iii. ‘No one has done better out of capitalism than the working class.
Granted, capitalism created the proletariat, but not by making
anyone any the worse off; rather by enabling many to survive who
would not otherwise have done so. In this sense the poor have

24Mises added: ‘There are strong reasons, however, why states avoid this option in wartime and
generally pay compensation for property that is taken. States were unwilling and unable not to
take advantage of that strongest of incentives for maximizing economic activity, namely self-
interest. If goods that were available at the beginning of the conflict had been sufficient for
the pursuit of the war, it would have been a different matter. These goods could then have
been confiscated and used for the war. But a sufficient quantity of such goods was in fact non-
existent or inadequate at the beginning of the war. Production had to be converted to meet mil-
itary demands. Factories making sewing machines and typewriters had to be converted to the
production of machine guns, factories making agricultural implements had to be converted to
ammunition production, and so on. Maximizing the production of military goods was the ulti-
mate objective, which could be achieved only by giving entrepreneurs a free hand and letting
their material interests serve as their incentive. If factories had been taken over by the state, indi-
vidual initiative would have been stymied.’
434    
R. Leeson

always done better than the rich: they owe capitalism their lives’
(Hayek 1983, 55);
iv. Government ‘is beating, imprisoning, hanging. Whatever a govern-
ment does it is ultimately supported by the actions of armed consta-
bles’ (Mises 2009 [1958], 35);
v. Governments or ‘Fascist’ militia must defend ‘civilisation’ (= ‘eco-
nomic liberalism’ = ‘property’ = ascribed status) and the low-born
must learn that they are ‘inferior’ (Mises 2007 [1958], 11) and ‘do
the bidding’ of their superiors (Hayek 2011 [1960], 186).

As one Vietnam War criminal explained: ‘We weren’t in My Lai to kill

human beings. We were there to kill ideology. That is carried by - I don’t
know. Pawns. Blobs. Pieces of flesh. And I wasn’t in My Lai to destroy
intelligent men. I was there to destroy an intangible idea, communism’
(William Calley Jr., cited by Ayers 2001, 274). Calley later explained
that he was doing the bidding of superiors: ‘If you are asking why I did
not stand up to them when I was given the orders, I will have to say
that I was a 2nd Lieutenant getting orders from my commander and I
followed them—foolishly, I guess.’25
Human Action the Scholars Edition silently corrected—that is,
deleted—the defining link between governments and ‘Fascist’ militia
and that which they were defending: ‘property.’ Instead, an allusion was
made to ‘unnecessary, and, in some cases, unfortunate additions and
revisions made to later editions’ (Herbener et al. 1998, xxiv).
What was deleted? Despite common international characteristics,
‘Fascism’ is first and foremost a national phenomenon: the govern-
ment must expropriate property (through taxes and the violation of
human rights) to feed the Warfare State (armaments and conscrip-
tion). Influential elements of the British aristocracy were as attracted
to ‘Fascism’ as their Austrian Second Estate cousins. In Omnipotent
Government, Mises (2010 [1944], 189) insisted that the ‘only way to
stop Hitler would have been to spend large sums for rearmament and to

25http://www.npr.org/sections/thetwo-way/2009/08/william_calley_makes_first_pub.html.
 9 Cold War ‘Peace’    
435

return to conscription. The whole British nation [emphasis added], not

just the aristocracy, was strongly opposed such measures.’
In 1928, the Sixth World Congress of the Communist
International—as deluded as Mises had been in Liberalism in the
Classical Tradition the year before—predicted that post-war capital-
ism had entered its ‘Third Period’: a prelude for proletarian revolu-
tion. Social Democrats were denigrated as ‘social fascists’ (in effect, an
unintentional second Nazi-Soviet ‘Pact’). In August 1935, the delusion
was amended: the Seven World Congress formally abandon the ‘Third
Period’ in favour of ‘The People’s Front Against Fascism and War’ (the
Popular Front). In France, the Socialist Leon Blum formed a Popular
Front with the Communist Party and the Radical Party and in May
1936, won a majority of parliamentary seats (378 deputies against 220)
and became Prime Minister.
In 1936, the intensely anti-communist General Franco began his
assault on the Second Spanish Republic (July), and Nazi German and
the Empire of Japan signed the Anti-Comintern Pact (November):
Hayek and Mises must surely have approved of both events. In 1936,
it looked as though ‘the only way to stop Hitler’ and his allies were
through the democracies cooperating with Soviet Russia. In that year,
in ‘Economic Order and the Political System,’ Mises (2012 [1936],
Chapter 28) stated that it could be argued that ‘free’ elections in
Germany would have produced a different outcome. But any German
opposition to Hitler would not be ‘striving for the return to capital-
ism. It, too, wants a planned and controlled economy, although under
the direction of a different leader and for other foreign and domestic
purposes.’
The deflation that Mises and Hayek promoted facilitated Hitler’s rise
to power and thus the expansion of the Soviet Empire into the heart
of Europe (1945–1989). But Mises (2012 [1936], Chapter 28) asserted
that the ‘Left parties’ of England, France and the USA suffered an
‘insoluble conflict’ in their policies—they ‘advocate a planned economy
while refusing to realize that they are preparing the way for dictatorship
and the abolition of civil liberties.’ Their ‘conceptual confusion is so
great that they wish to fight for the preservation of democracy in coop-
eration with Soviet Russia.’
436    
R. Leeson

As the Vietnam War accelerated, Mises (1963, 282; 1966, 282), in

the second (Yale) and third (Regnery) editions, didn’t ‘permit conscrip-
tion’—he defined it as the foundation of liberty: ‘He who in our age
opposes armaments and conscription is, perhaps unbeknown to himself,
an abettor of those aiming at the enslavement of all.’ In the same year
as the Regnery edition, Hayek (1984 [1966], 381)–putting Mises’ con-
clusions into a ‘more effective form’—replaced Metternicht’s ‘love’ with
capitalised ‘liberty’ in his definition of ‘The Principles of a [Classical]
Liberal Social Order’: ‘all the coercive functions of government must
be guided by the overwhelming importance of what I like to call THE
THREE GREAT NEGATIVES: PEACE, JUSTICE AND LIBERTY
[Hayek’s capitals].’
In Guatemala in 1975, students of Manuel Ayau’s Universidad
Francisco Marroquín began to graduate; Franco died (25 November
1975); and the Argentine ‘dirty war’ military dictatorship seized power
on 29 March 1976. Less than six months later, in an Epilogue to Mises’
Notes and Recollections, the ‘Misean for life’ Luftwaffe bomber pilot,
Sennholz (2013 [12 September 1976])—quoting approvingly Mises’
sentiments about conscription—stated that in ‘many other countries,
from Japan to Guatemala, from Argentina to Spain, his students and
disciples are imparting Misesian knowledge and stimulating their fel-
lowmen in its love and pursuit.’
In 1977, Ayau organised Hayek’s trip to Pinochet’s Chile. The fol-
lowing year, Hayek (1978a) stated that he regarded conscription as ‘nor-
mal’: ‘The normal thing is, of course, that every man has to’ register at
a ‘certain phase of his age; so if he was not suitable for armed service,’
service would be extended to ‘another of the duties. It should be the
same for all men. The problem is one of the distinction between sexes.
But even there, people have been insisting that women should do some
sort of national service instead.’26
The First Estate had long derived revenue by marketing ‘holy’ rel-
ics. Neo-feudalism had been propped-up by deferential ‘working

26Friedrich Hayek, interviewed by Robert Bork 4 November 1978 and Robert Chitester date

unspecified 1978 (Centre for Oral History Research, University of California, Los Angeles,
http://oralhistory.library.ucla.edu/).
 9 Cold War ‘Peace’    
437

class Tories’; and many Second Estate houses survived by allowing

entry (through the paying front door rather than the paid tradesman’s
entrance) to day trippers from the Third Estate. Drugged and ‘drunk-as-
a-Lord’ musicians of the 1960s fuelled the ‘culture wars.’ Yet before the
1974 Nobel Prize for Economic Sciences, nostalgia for the neo-feudal
‘spontaneous’ order was largely restricted to aficionados of Romantic
poetry and chivalric literature. Hayek (1978a) believed that

if the politicians do not destroy the world in the next twenty years, there’s
good hope. Because among the young people there is a very definite rever-
sion. There is an openness [emphasis added] which is the most encouraging
thing that I’ve seen in recent years, even in the countries where intellec-
tually the situation seemed to me most hopeless, largely because it was
completely dominated by the Cartesian rationalism.27

Government agencies have a motive to maximise their influence and

revenue. In the CIA-financed Cold War magazine Encounter, Hayek
(1983, 54) explained what ‘peace’ meant:

I am convinced Reagan is right not to reduce arms expenditure. World

peace depends upon America staying strong. We already have so many
atomic weapons that a nuclear war would mean the end of civilisation: so
the discussion as to whether arms increases intensify the threat of war is
nonsense. In fact it’s no longer a question of whether nuclear war can be
avoided or not; the real problem is whether we have got ourselves into a
situation in which the Soviets can intimidate us to such an extent that we
knuckle under completely. We can’t afford that kind of weakness. Ergo,
the West must stay at least as strong as the Soviet Union. It is a complete
delusion—not, I think, necessarily a malicious one but to some extent
Communist-inspired—when they try to make us believe that the arms
increases needed to achieve a balance increase the threat of nuclear war.
Instead it becomes less. I don’t believe any Russian is daft enough to start
a nuclear war. But if ever the Soviets are in a position to intimidate us
with military superiority, they won’t hesitate to do whatever they want.

27FriedrichHayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral
History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
438    
R. Leeson

The CIA funded Encounter via Charitable Trusts and Foundations.

When Stephen Spender realised he had been ‘systematically deceived
for fourteen years’—the victim of ‘insufficient frankness’—he resigned
as editor and ‘never read the magazine again’ (Sutherland 2005, 356,
409, 439, 455). When Hayek opened the Times on his 68th birth-
day (8 May 1967) to read a front page story entitled ‘Spender quits
Encounter: British Poet says Finding about CIA Financing Led to his
Leaving Magazine,’ he must have wondered what the fuss was about:
he and Mises had been funded by Charitable Trusts and Foundations
for decades. Spender’s biographer concluded that Encounter ‘limped on
until 1991’ (Sutherland 2005, 455)—but it still attracted articles from
‘free’-market frauds like ‘Deacon’ McCormick (1981) and Hayek (1971,
1975b, 1977, 1978b, 1983). The year after stating that ‘Reagan is right
not to reduce arms expenditure,’ Hayek planned to use Encounter (or
the Times ) to promote the fraud that Pigou, a Western Front ambulance
driver, opponent of the armaments industry, and founder of the mar-
ket failure school, was a gunrunner for Stalin (Leeson 2013, Chapter 9;
2015b).

2 The Myrdals and Nuclear War

According to Caldwell and Montes (2014a, 42–43; 2014b; 2015a,
297), the 1979 Thatcher and 1980 Reagan election victories gave
Hayek some ‘hope’ for the future, because both sought to limit
the power of government and ‘return to the principles of classical
liberalism.’
What was the context of Hayek’s Encounter assertion (published
in May 1983): ‘In fact it’s no longer a question of whether nuclear
war can be avoided or not’? When the Bank of Sweden established
the Nobel Prize in 1969, it was specified that a Swede could not be
awarded the Prize in the first five years. The Nobel Prize selection com-
mittee was, apparently, under pressure for an early award to a member
of the Stockholm School of economics. As Assar Lindbeck (1985, 47)
explained:
 9 Cold War ‘Peace’    
439

The Nobel Prize functions as a ‘collective good’ for Sweden as a nation,

like having internationally successful athletes … a ‘public relations’ value
that is good both for the academic community … and for the scientific
and cultural reputation of the country.

Gunnar Myrdal co-won the 1974 Nobel Prize with Hayek: the New
York Times (1987) reported that ‘Both recipients are said to have been
annoyed by the pairing.’ Myrdal was, reportedly, personally and polit-
ically disliked by members of the selection committee. He had been
co-chair of the International Commission of Inquiry into US War
Crimes in Indochina and head of the Swedish Vietnam Committee,
which supported American conscription evaders and deserters (Barber
2008, 160); post-Vietnam America, Myrdal (1973, 278) insisted,
needed to go through ‘a catharsis in order to be at peace with itself.’
Friedman speculated that the Nobel committee wanted to ‘honor
Myrdal but feared criticism because of his notoriety as an extreme left-
ist. Hence they decided to link him with an equally notorious rightist’
(Friedman and Friedman 1998, 78).
Myrdal’s (1944) An American Dilemma: The Negro Problem and
Modern Democracy had been cited by the Supreme Court to justify
desegregating schools (Brown Versus Board of Education ). Myrdal told
his daughter that the greatest moment in his life was when he stood at
the Princeton train station ‘with the manuscript of American Dilemma
in my hands – ready! All that I had lived for’ (Bok 1996, xxi–xii).
The racist Hayek may have been chosen primarily for a petty reason:
to maximize the discomfort that somewhat abrasive Myrdal would feel
when receiving the Prize. Gustav Lennart Jörberg (1927–1997), an
associate member (1993) of the Nobel selection committee, reportedly
stated during a seminar at Lund University that it had been decided
that Myrdal’s discomfort would be maximised by his pairing with
Hayek because Hayek had ‘paired’ with Myrdal’s wife, Alva, in an extra-
marital affair. If the intention had been to aggravate Myrdal, it suc-
ceeded: he later regretted accepting the Prize (Barber 2008, 164–165;
Bok 1991, 306).
440    
R. Leeson

The twentieth century has been called ‘The Hayek Century’ (Cassidy
2000); but in 1974, it looked more likely to be called the ‘Myrdal
Century.’ Hayek (1978a) reflected that ‘recognition … except in a very
narrow group of colleagues is a new experience to me’: in the three dec-
ades between The Road to Serfdom and the Nobel Prize he had ‘become
relatively unknown.’28 In the year before the Nobel Prize, Myrdal
(1973) published Against the Stream: Critical Essays on Economics; Hayek
insisted that his own biography should also be entitled ‘Against the
Stream’ (Leeson 2013, 178).
Shortly before the announcement of his Nobel Prize, Hayek was
asked: ‘As you know there is in America a small faction of Austrian
economists who do disagree with most other economists on techni-
cal issues. Do you think the Austrian approach in economics will be
renewed?’ Hayek’s (1975a [1974]) reply suggested that he regarded the
Austrian School as an historical curiosity:

One would have to define ‘Austrian’ in a very wide sense to regard

that as a possibility. But in a way when people defend microeconom-
ics against macroeconomics, this could be called Austrian economics. In
this wide sense, revival or renewal of the influence of the quasi-Austrian
school would be very desirable and I hope will be forthcoming. In the
narrow sense, the specific Austrian tradition has on the whole merged
with the Laussanne and the Cambridge tradition to become part of
what is called neoclassical economics. What we can hope for is just that
this neoclassical tradition again becomes influential, not its specific
Austrian branch which constitutes a particular phase in the neoclassical
development.

The Nobel Prize appeared to rescue Hayek from suicidal depression.

His mood lifted and he promptly began to abuse the selection commit-
tee for soiling his Prize with unworthy recipients: Jan Tinbergen 1969,
Wassily Leontief 1973, who was engaged in ‘agitation’ for planning

28Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 9 Cold War ‘Peace’    
441

(‘I don’t think he ever understood any economics’29), Myrdal 1974,

and Sir Arthur Lewis 1979. The complaints began almost immediately:
in response to a letter which is not in the Hayek archives, Peter Bauer
(17 August 1975) sympathised with Hayek’s resentment about being
a co-recipient: Myrdal’s and Tinbergen’s Nobel Prizes revealed a ‘lot’
about the state of economics.30
The mutual dislike between Myrdal and Hayek can be traced back
to the 1930s. In 1933, Hayek reluctantly published an essay by Myrdal
which was critical of Hayek’s (and Keynes’) monetary economics
(Barber 2008, 25). In 1935, Robbins—presumably with Hayek’s sup-
port—denied Brinley Thomas’ (1991, 268) suggestion that Myrdal be
invited to deliver two or three lectures at the LSE on the Stockholm
School.
In 1982, Jan Myrdal published a book about his childhood. His sis-
ter, Sissela Bok (1991, 340), recounted that the Swedish press carried
exerts from the book under headlines such as ‘Jan Myrdal Gets Even
With His Parents.’ Jan Myrdal must been privy to his parents’ animos-
ity towards Hayek. An editorial writer for Svenska Dagbladet forwarded
the book and subsequently (7 March 1983) wrote again to Hayek:
‘Jan has sent me another of his books in German and asked me to for-
ward it to you.’ The ‘public debate about his parents has been a great
shock to them. They are not saints any longer, not outside the Party,
not after Jans [sic ] book about his childhood – which is one of the best
books Hayek about being a child I have ever read.’31 Hayek (11 March
1983) replied immediately: he would read the book with ‘great’ interest.

29Referring to economic planning, Hayek (1978a) stated: ‘It had died down very much, but
when two years ago in this country this planning bill of Senator [Hubert] Humphrey’s and the
agitation of Leontief and these people came forward, I was amazed that people were again swal-
lowing what I thought had been definitely refuted.’ Friedrich Hayek, interviewed by Jack High
date unspecified 1978 (Centre for Oral History Research, University of California, Los Angeles,
http://oralhistory.library.ucla.edu/).
30Hayek Archives. Box 11.33.

31Hayek Archives. Box 29.27.

442    
R. Leeson

Hayek was ‘particularly’ anxious to get hold of Jan Myrdal’s other

account of his parents and childhood in English, German or French.
Hayek was most ‘grateful,’ offered ‘repeated’ thanks, and was most anx-
ious to see more material.32
The Cold War entered its final phase when Reagan announced his
Presidential candidacy (13 November 1979) and the Soviets invaded
Afghanistan (27 December 1979). Hayek’s (1983) statement in
Encounter was made, presumably, shortly after Alva Myrdal was awarded
the 1982 Nobel Peace Prize. In his presentation address, the chairman
of the Nobel Award Committee cited Galbraith: ‘this small planet
cannot survive a nuclear exchange.’33 Alva Myrdal wrote Dynamics of
European Nuclear Disarmament (1981) and The Game of Disarmament:
How the United States and Russia Run the Arms Race (1982) and had
been awarded the 1980 Albert Einstein Peace Prize.
Two events helped revive the anti-nuclear movement: the Three
Mile Island disaster in Pennsylvania (28 March 1979) and NATO’s
announcement of the deployment of 572 new nuclear weapons to
various locations in Europe (December 1979). In 1980, Nicholas
Kaldor’s daughter, Mary Kaldor and others formed European Nuclear
Disarmament; they were further energised by their confrontation with
what E. P. Thompson (1985, 114) described as the ‘well funded lobby’
of the ‘Star Warriors.’
According to the features editor of the Guardian, Richard Gott
(1983, 61), the anti-nuclear movement had hitherto been in decline;
but in 1982, the British government were obliged to cancel a civil
defence exercise (many local authorities had declared themselves
Nuclear Free Zones and had refused to cooperate). Jean Stead (2006),
also a Guardian features editor, compared the Greenham Common
anti-nuclear protesters to the Suffragette movement and the wartime
Resistance: ‘You can’t kill the spirit.’
In June 1982, a group of American scientist obtained funding for
an analysis of The Cold and the Dark: The World After Nuclear War

32Hayek Archives. Box 29.27.

33http://www.nobelprize.org/nobel_prizes/peace/laureates/1982/presentation-speech.html.
 9 Cold War ‘Peace’    
443

(Ehrlich et al. 1984). And on 31 October 1983, an impressive col-

lection of scientists met in Washington to discuss this theme. The
best-selling scientist, Carl Sagan (1984, 5), compared a nuclear war to
the extinction of planetary life that occurred 65 million years before.
Donald Kennedy (1984, xxiv), the President of Stanford University
(where Hayek’s Hoover Institution was under siege), reiterated the
importance of the Strategic Arms Limitation Talks. There was also a tel-
evision hook-up with Soviet scientists (‘Moscow Link’).34
Referred to the Dalai Lama’s statement that ‘the greatest single dan-
ger facing human beings is the threat of nuclear destruction,’ ‘Deacon’
McCormick (1986, 116, 135, 133), asserted in the Truth Twisters that
the ‘threat is not the danger, only the fear and panic which the largely
imaginary threat poses.’ He claimed that in 1984 alone, the Russians
had spent £6 million on anti-nuclear activity in Western Europe: the
‘anti-nuclear lobby is not so much genuinely won over to the ecolog-
ical cause as it is politically-minded and Soviet-oriented.’ Hayek (9
June 1985) told Sagan that his familiarity with communist ‘thinking’
had convinced him that the ‘Five Continents Peace Initiative’ could not
have the ‘least’ effect on Russian policies, would only reduce Western
defence efforts—which alone protects ‘us’ against Russian ‘extortion,’
and would ‘inevitably’ lead to war.35
In 1983, the Cold War appeared far-from-won. For example, in
We Will Bury You: The Soviet Plan for the Subversion of the West by the
Highest Ranking Communist ever to Defect, Jan Sejna (1982, 108–109)
asserted that the ‘fourth and final phase of the Plan’ would undermine
the USA by the ‘use of external economic weapons, and so create the
economic conditions for progressive forces to emerge inside the country.
In this phase, the Plan envisaged a resurgence of the arms race, leading

34The official Soviet scientists uttered predictable expressions of official Kremlin thinking: ‘the
authority of scientists is very great and we should all try to bring our influences to bear in order
to bring about an end to the arms race … this must form the background for the policymakers
of the world … there is a consensus that the Conference is a very important step; perhaps it will
indeed give a new impulse in the direction of nuclear disarmament’ (cited by Ehrlich et al. 1984,
149–151).
35Hayek Archives. Box 96.1.
444    
R. Leeson

to the eventual military superiority of the Warsaw Pact, which the

United States would accept.’
The British Labour Party entered the 1983 general election with a
leader (Michael Foot) and a platform committed to unilateral disarma-
ment: both Gott (1999) and Foot were subsequently accused of being
KGB agents. In Foot’s case, this resulted in substantial damages being
paid by Murdoch’s newspapers.36
In the 1930s, Appeasement was accompanied by the hope that
the Nazis would invade the Soviet Union; and was followed by
Chamberlin’s recognition that ‘It is evil things that we will be fighting
against.’ In the 1980s, detente was succeeded by a new perception in
the Reagan administration that the Cold War could be won. On 23
March 1983, President Reagan (in what became known as his ‘Star
Wars’ speech) called on scientists ‘to give us the means of rendering
these nuclear weapons impotent and obsolete.’ This appeared to esca-
late Cold War rhetoric and whipped-up Soviet fears that the USA was
planning a pre-emptive nuclear strike. The Soviet leader, Yuri Andropov,
described American policy as ‘not just irresponsible but insane’ and
accused Reagan of fostering a ‘deliberate lie’ (cited by Steele and
Abraham 1983, 183).
Referring to ‘Tsar’ Putin, the KGB-trained President of post-­communist
Russia, President George W. Bush (‘Reagan’s son’) ‘looked the man in the
eye. I found him to be very straight forward and trustworthy and we had
a very good dialogue. I was able to get a sense of his soul’ (cited by Wyatt
2001). Reagan’s faith was tangled-up with admiration for spycatchers.

36In February 1994, the Sunday Times ran an article under the headline ‘KGB: Michael Foot

was our agent’; and the News of the World printed a similar story: Foot sued both papers and
their owner, Rupert Murdoch. The News of the World immediately paid compensation, but the
Sunday Times allowed the matter to go to court. The Independent (8 July 1994) reported that ‘The
Sunday Times was forced into a humiliating climb-down at the High Court.’ Foot’s lawyer said
that ‘Times Newspapers’ unsuccessful attempt to prevent Mr Murdoch from appearing in court
had prompted the company’s decision to reach a settlement.’ Foot added that if Murdoch ‘owns
newspapers which can make accusations of this nature, he should appear in court when they are
raised’ (Williams and Higgins 1995; Williams 1995).
http://www.independent.co.uk/news/sunday-times-pays-foot-damages-over-kgb-claim-
1590325.html.
 9 Cold War ‘Peace’    
445

On 8 March 1983, he asked the annual convention of the National

Association of Evangelicals not to ‘ignore the facts of history and the
aggressive impulses of an evil empire … Whittaker Chambers, the man
whose own religious conversion made him a witness to one of the terri-
ble traumas of our time, the Hiss-Chambers case, wrote that the crisis of
the Western world exists to the degree in which the West is indifferent to
God.’
Chambers (1901–1961) had been dead for many years and the Hiss
House Un American Activities Committee hearings related to 1948.
Two Presidential Medals of Freedom followed: in 1984, to Chambers
for his contribution to ‘the century’s epic struggle between freedom and
totalitarianism’; and in 1991 to

honor Professor Friedrich von Hayek for a lifetime of looking beyond

the horizon. At a time when many saw socialism as ordained by history,
he foresaw freedom’s triumph. Over 40 years ago, Professor von Hayek
wrote that The Road to Serfdom was not the road to the future or to the
political and economic freedom of man. A Nobel laureate, he is widely
credited as one of the most influential economic writers of our century.
Professor von Hayek is revered by the free people of Central and Eastern
Europe as a true visionary, and recognized worldwide as a revolutionary
in intellectual and political thought. How magnificent it must be for
him to witness his ideas validated before the eyes of the world. We salute
him.37

Behind the façade of ‘liberty,’ Hayek and Mises were, apparently, ‘con-
sciously devoted to the vision and splendour of the Habsburg Empire’
that had once owned much of the Americas. Reagan (1984, 198) wrote:
‘von Mises … rekindled the flames of liberty in new generations of
thinkers … we owe an incalculable debt to this dean of the Austrian
school of economics for expanding our knowledge and inspiring a new
vision of liberty in our age.’

37http://bushlibrary.tamu.edu/research/public_papers.php?id=3642&year=&month.
446    
R. Leeson

In ‘Taking von Mises to pieces,’ the Economist (18 November 2010)

surmised that ‘Being associated with Mr Beck will not persuade many
academics to take Austrian economic ideas seriously.’38 But Glenn
Beck’s ‘puffing’ of the Definitive Edition may have earned Caldwell
$1,000,000 in royalties in a single month (Leeson 2015a). On his web-
site, the Fox News pundit and conspiracy theorist proclaimed that The
Road to Serfdom was like a ‘Mike Tyson (in his prime) right hook to
socialism in Western Europe and in the United States. But its influence
didn’t stop there. It has inspired political and economic leaders for dec-
ades since, most famously, Ronald Reagan. Reagan often praised Hayek
when he talked about people waking up to the dangers of big govern-
ment’ (cited by Gaspari 2010).
Should the ‘leader of the free world’ pay homage to the intellectual
who promoted the deflation that allowed ‘Fascism’ to flourish? On 23
March 1992, President George H. W. Bush—a decorated war hero in
the ‘Fight against Fascism’—issued a press release:

Barbara and I are saddened by the death of Friedrich August von Hayek.
I presented him the Presidential Medal of Freedom in 1991 because he
was one of the great thinkers of our age who explored the promise and
contours of liberty. Professor von Hayek revolutionized the world’s intel-
lectual and political life. Future generations will read and benefit from his
works.39

The following year, Rothbard (1993, 1), Hayek’s co-leader of the

Austrian School and co-founder of the Ludwig von Mises Institute,
defended the first bombing of the World Trade Center: the ‘A-rabs’
under investigation

haven’t done anything yet. I mean, all they’ve done so far is not assassi-
nate former President George Bush … I must admit I kind of like that
bit about blowing up the UN building, preferably with [United Nations
Secretary General] Boutros Boutros-Ghali inside.

38https://www.economist.com/node/17522368.
39http://bushlibrary.tamu.edu/research/public_papers.php?id=4098&year=1992&month=all.
 9 Cold War ‘Peace’    
447

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Archival Insights into the Evolution of Economics

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 10
‘Shooting in Cold Blood’

After the ‘Great War’ between the dynasties, the ‘Kingdom of God’ had
manifestly failed to bolster the neo-feudal hierarchy. Describing God-
given ‘natural law’ and ‘natural rights’ as ‘nonsense on stilts,’ Jeremy
Bentham (1823, 1, 310) in The Principles of Morals and Legislation,
famously stated that

Nature has placed mankind under the governance of two sovereign mas-
ters, pain and pleasure. It is for them alone to point out what we ought
to do, as well as to determine what we shall do. On the one hand the
standard of right and wrong, on the other the chain of causes and effects,
are fastened to their throne. They govern us in all we do, in all we say, in
all we think. In words a man may pretend to abjure their empire; but in
reality he will remain subject to it all the while.

The ‘fundamental axiom’ of his philosophy was the potentially social-

ist principle that ‘the greatest happiness principle’ which he defended
on ethical grounds: ‘Ethics at large may be defined, the art of directing
men’s actions to the production of the greatest possible quantity of hap-
piness, on the part of those whose interest is in view.’ Four years after

© The Author(s) 2019 453

R. Leeson, Hayek: A Collaborative Biography,
Archival Insights into the Evolution of Economics,
https://doi.org/10.1007/978-3-319-78069-6_10
454    
R. Leeson

the demise of the Habsburg Empire, Mises (1922, 435; 1951, 443), in
Die Gemeinwirtschaft: Untersuchungen über den Sozialismus (Socialism ),
cynically stole Frank A. Fetter’s intellectual property to use his power as
a sovereign producer of ‘knowledge’ to promote the myth of consumer
sovereignty: ‘the Lord of Production is the Consumer’ (‘Der Herr der
Produktion ist der Konsument ’).
Mises flip-flopped on ‘Fascists’ (1927–1938); before flip-flopping on
bank regulation (1929) and theocrats (1922–c1947) (Leeson 2018).1
In Apologetics: A Justification of Christian Belief, John Frame (1987, 45)
explained that Presuppositionalism ‘merely applies the doctrine of scriptural
infallibility to the realm of knowing.’ Five years before his proposed Pact with
‘Fascists,’ Mises (1922, 410; 1932, 389; 1951 [1932], 416, 420) insisted that
the Church must liberate itself from ‘the words of the Scriptures’:

Considering the attitudes of Jesus to social life, no Christian Church

can ever make anything more than a compromise here, a compromise
that is effective only as long as nobody insists on a literal interpreta-
tion of the words of the Scripture. It would be foolish to maintain that
Enlightenment, by undermining the religious feeling of the masses, has
cleared the way to Socialism. On the contrary, it is the resistance which
the Church has offered to the spread of liberal ideas which has prepared
the soil for the destructive resentment of modern socialist thought. Not
only has the church done nothing to extinguish the fire, it has blown the
embers.

Mises also described the ‘böse Saat ’—‘evil seed’—of Christianity: ‘Faith
and faith alone, hope, expectation—that is all he needs. He need con-
tribute nothing to the reconstruction of the future, this God Himself
has provided for. The clearest modern parallel to the attitude of com-
plete negation of primitive Christianity is Bolshevism.

One thing of course is clear, and no skilful interpretation can obscure

it. Jesus’ words are full of resentment against the rich, and the Apostles
are no meeker in this respect. The Rich Man is condemned because he

1Presumably, not all the Christians who funded Mises were theocrats.
 10 ‘Shooting in Cold Blood’    
455

is rich, the Beggar praised because he is poor. The only reason why Jesus
does not declare war against the rich and preach revenge on them is that
God has said: ‘Revenge is mine’ … Up to the time of modern Socialism
no movement against private poverty which has arisen in the Christian
world has failed to seek authority in Jesus, the Apostles, and the Christian
Fathers, not to mention those who, like Tolstoy, made the Gospel resent-
ment against the rich the very heart and soul of their teaching. This is a
case in which the Redeemer’s words bore evil seed.

Like Mises, Hayek (1978) was a religion-promoting atheist: both pro-

moted dictators; both promoted the sovereignty of the producers who
were funding them; and both promoted ‘consumer sovereignty’ as a jus-
tification for restricting democracy: ‘I believe in democracy as a system
of peaceful change of government; but that’s all its whole advantage is,
no other.’2
In The Constitution of Liberty, Hayek (2011 [1960], 228–229) stated
that the ‘enemies of liberty have always based their arguments on the
contention that order in human affairs requires that some should give
orders and others obey.’ Hayek’s acknowledged source was the Divine
Right of Kings promoter, James I of England (whose son, Charles I, had
been executed in 1649): ‘Order was dependent upon the relationships
of command and obedience. All organisation derived from superiority
and subordination.’ Hayek’s unacknowledged source was ‘von’ Mises,
who explained to Ayn Rand about the need for subordination from
those with low ascribed status: ‘You have the courage to tell the masses
[in Atlas Shrugged ] what no politician told them: you are inferior and all
the improvements in your conditions which you simply take for granted
you owe to the effort of men who are better than you. If this be arro-
gance, as some of your critics observed, it is still the truth that had to
said in the age of the Welfare State.’3
Hayek sought a more subtle defence of ascribed status. The anthro-
pologist, Edward Saphir (1949, 548), described the kinship relations

2Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
3https://mises.org/library/ludwig-von-misess-letter-rand-atlas-shrugged.
456    
R. Leeson

of ‘an Australian native’: while ‘well known’ to him, this ‘knowledge

is not capable of conscious manipulation in terms of word symbols.
It is, rather, a very delicately nuanced feeling of subtle relations, both
experienced and possible.’ Hayek (2011 [1960], 217, n6; 1978) cited
from Saphir, extrapolated from the ‘Australian native,’ and reflected
that as a (bogus) Austrian ‘von,’ he didn’t feel any ‘sharp resentment.
And the curious thing is that in the countryside of southwest England,
the class distinctions are very sharp, but they’re not resented. [laughter]
They’re still accepted as part of the natural order.’4 These were the def-
erential sentiments that Hayek expected to be generated by his ‘Model
Constitution’ (Leeson 2019).
The third generation of the Eastern Reich School of Economics was
led by the proto-Nazi Spann, the Jewish-born Mises (a card-carrying
Austro-Fascist) and the Jew-hating Mayer, described by Hayek as a
‘ferocious Nazi’ (cited by Klausinger 2015). The fourth generation was
led by the Jewish-born Rothbard (1992)—whose ‘Outreach’ included
anti-Semitic, white supremacist, neo-Nazi militia groups—and the rac-
ist anti-Semite, Hayek—whose ‘Outreach’ extended to White Terror
dictators. The epigone generation appears to be split between overt
white supremacists and those (funded by TOFF industries) who seek a
bare minimum of academic respectability. As Boettke (2009) put it, he
‘went off to graduate school’

inspired by the idea of mimicing Murray Rothbard’s scholarly efforts, and

romanticizing the role of the ‘professor’ as found in the character of Hugh
Akston in Ayn Rand’s Atlas Shrugged … when I showed up for gradu-
ate school at GMU, my personality was one that looked for inspirational
talks and rallying cries for a mission to be accomplished.

Boettke found his mission through ideological correctness: ‘in intellec-

tual affairs, or, as some might say in less than charitable moments, ideo-
logical affairs.’

4Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 10 ‘Shooting in Cold Blood’    
457

Mises (2009b [1958], 30) criticised Bolshevik attitudes (‘This is cer-

tainly the most arrogant disdain of the plain citizen ever devised’) while
simultaneously displaying Austrian disdain: ‘The common man may
look with indifference and even contempt upon the dealings of bet-
ter people.’ According to Kirzner (1997), ‘Rothbard was unquestiona-
bly a genius. His History of Thought exemplifies his life-long ability to
absorb an enormous amount of literature and write clearly. He played
an important role in inspiring young scholars to take a careful look at
the Austrian body of thought.’
What is that ‘body of thought’? In ‘Right-Wing Populism: A Strategy
for the Paleo Movement,’ Rothbard (1992, 8–9) described the ‘strategy
of Outreach to the Rednecks.’ In addition to the ‘Defend Family Values’
strategy, Rothbard proposed to establish an Austrian Police State with,
in effect, only notional controls on coercive power (Chapter 2, above).
Austrians oppose the Eighth Amendment to the Constitution of the
United States which prohibits ‘cruel and unusual punishment.’ Rockwell
(1991)—Rothbard’s co-founder of the Ludwig von Mises Institute—
asserted: ‘As recently as the 1950s–when street crime was not rampant
in America–the police always operated on this principle: No matter the
vagaries of the court system, a mugger or rapist knew he faced a trounc-
ing–proportionate to the offense and the offender–in the back of the
paddy wagon, and maybe even a repeat performance at the station house.
As a result, criminals were terrified of the cops, and our streets were safe.’
A new wave of anti-Semitism began with the ‘Great Depression’
of 1873–1896 (Noakes and Pridham 1994, 1). Was the Jewish-born
Mises (1881–1973) aware of this before he promoted the next Great
Depression? The Jewish-born, mathematically trained, Columbia
University educated Rothbard (1926–1995) must have been trau-
matised by the Austrian-fuelled Holocaust. Levin (1943–) and
Block (1941–) are both Jewish-born, philosophy-trained, Columbia
University educated, City University of New York employed, contribu-
tors to the Rothbard-Rockwell Report. Levin (1982) is the author of ‘The
Case for Torture,’ and Block (2009a, 142, n15), who equated govern-
ments with ‘gangster activity’ and insisted that justice involving ‘two
teeth for a tooth’ plus ‘costs of capturing and scaring,’ described what
would happen after an Austrian-induced ‘voluntary confession’:
458    
R. Leeson

Accordingly, to the ‘two teeth’ penalty already imposed upon A, we addi-

tionally scare him. How can this be done? One reasonable option is to
force him to play Russian roulette with himself, with the number of bul-
lets and chambers to be determined by the severity of the crime perpe-
trated upon B by A. When we add to this a reasonable amount for the
costs of capturing A, our story in this regard is complete.

Neoclassical economics eliminated the labour theory of value (and

replaced it by consumer demand) because Marxists had used it to jus-
tify the ‘expropriation of the expropriators.’ According to ‘von’ Hayek
(1978): ‘The whole traditional concept of aristocracy, of which I have a
certain conception– I have moved, to some extent, in aristocratic circles,
and I like their style of life.’5 And according to Mises (1985 [1927, 51):
‘The victory of Fascism in a number of countries is only an episode in
the long series of struggles over the problem of property. The next epi-
sode will be the victory of Communism.’ As The Constitution of Liberty
(2011 [1960], 153) explained, this related to ‘von’ Hayek’s and ‘von’
Mises’ inherited property: many of those who ‘agree’ that the family is
desirable as an instrument for the transmission of ‘morals, tastes, and
knowledge’ still question the desirability of the transmission of material
property. Yet there could be ‘little doubt’ that, in order that the former
may be possible, some continuity of standards, of the external forms of
life, is essential, and that this will be achieved only if it is possible to
transmit not only immaterial but also material advantages. There is, of
course, neither greater merit nor any greater injustice involved in some
being born to wealthy parents than there is in others being born to kind
or intelligent parents. ‘The fact’ is that there is ‘no less of an advantage
to the community if at least some children can start with the advantages
which at any given time only wealthy homes can offer than if some chil-
dren inherit greater intelligence or are taught better morals at home.’
In the British neoclassical tradition, fiscal rationality implies that
taxes should be levied where they discourage that which we (collec-
tively) wish to discourage and not where they will discourage that which

5Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 10 ‘Shooting in Cold Blood’    
459

we (collectively) wish to encourage. Thus, every dollar raised by taxing

inherited wealth becomes available to reduce taxes on the creation of
new wealth. If taxes on inherited wealth are considered ‘unjust,’ those
who pay them could be compensated by an extra reduction on taxes
paid on any new wealth they create.
According to anarchists, ‘all property is theft’; and according to anar-
cho-capitalists, ‘Actually, it is logically impossible to steal from a thief;
one can only steal from the rightful owner, which, manifestly, the rob-
ber is not’ (Block 2009a, 145, n22). Who Austrian-owns the property
that Hayek stole from tax-exempt educational charities? And who owns
the property that Henry VIII expropriated from the Catholic Church?
Kuehnelt-Leddihn’s (1989) complaint—‘From an intellectual point of
view, the French Revolution was a conglomeration of un-thought out
but fanatically believed inconsistencies’—applies equally to the Austrian
counter-revolution.
Rothbard (1994a, 10; 1995, 5)—who sought to replace democracy
with a ‘small, self-perpetuating oligarchy of the ablest and most inter-
ested’—insisted that the Austrian ‘Outreach to the Redneck’ was ter-
rifying to ‘social democrats and their ilk’ because they ‘know full well
that we express the deepest albeit unarticulated beliefs of the mass of the
American people.’ Social democrats ‘are vastly out-numbered if only the
American people were clued in to what is going on … What we need
to learn is how to mobilize the overwhelming support of the mass of
Americans, and thus to undercut, or short circuit, their domination by
a small number of opinion-molding leaders.’
The Hayeks were elevated into the Second Estate in 1789. Seeking
to escape being the ‘property’ of European Empires, one famous 1787
Preamble stated: ‘We the People of the United States, in Order to form
a more perfect Union, establish Justice, insure domestic Tranquility,
provide for the common defence, promote the general Welfare, and
secure the Blessings of Liberty to ourselves and our Posterity, do ordain
and establish this Constitution for the United States of America.’ The
‘Constitutional Revival’ movement had ‘Originated as The George
Mason Movement’ because Mason (1725–1792) had ‘assured the
460    
R. Leeson

adoption of the Bill of Rights.’6 Hayek (1978) told Buchanan—the

‘George Mason Nobel Laureate’—that he sought to overthrow the
Constitution of the United States and replace it by a single sentence
written by a dictatorship-promoting European aristocrat:

After all, the one phrase in the American Constitution, or rather in the
First Amendment, which I think most highly of is the phrase, ‘Congress
shall make no law….’ Now, that’s unique, but unfortunately [it goes]
only to a particular point. I think the phrase ought to read, ‘Congress
should make no law authorizing government to take any discriminatory
measures of coercion.’ I think this would make all the other rights unnec-
essary and create the sort of conditions which I want to see.7

With respect to his ‘system of really limited democracy,’ Hayek (1978)

thought that this would be easy to achieve because it didn’t ‘concern the
people’:

Now, I think we ought to recognize that with all the reverence a consti-
tution deserves, after all a constitution is something very changeable and
something which has a negative value but doesn’t really concern the peo-
ple very much. We might find a new name for it, for constitutional rules.
But we must distinguish between the laws under which government acts
and the laws of organization of government, and that’s what a constitu-
tion essentially is. A law of organization of government might prohibit
government from doing certain things, but it can hardly lay down what
used to be [known as] the rules of just conduct, which once were consid-
ered as law.8

A 1945 Preamble echoed the sentiments of 1787: ‘WE THE

PEOPLE OF THE UNITED NATION DETERMINED to save
succeeding generations from the scourge of war, which twice in our

6Evers Archives. Box 14. LNC 1982.

7Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
8Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 10 ‘Shooting in Cold Blood’    
461

lifetime has brought untold sorrow to mankind, and to reaffirm faith in

fundamental human rights.’
Metternicht’s Concert of Europe was a backward-looking reaction to
the French Revolution (1789–1815). But after the 1848 Revolutions,
its members fought among themselves: the Crimean War (1853–1856),
the Italian War of Independence (1859), the Austro-Prussian War
(1866) and the Franco-Prussian War (1870–1871). After the Germanic
powers formed a military alliance (1879), two blocks emerged: the
1882–1914 Triple Alliance (Germany, Austria-Hungary, plus the
Kingdom of Italy) versus the 1907–1917 Triple Entente (the ‘old’ mon-
archy of Russia, the constitutional monarchy of Britain, and Republican
France—plus Japan and Portugal). One Concert of Europe success was
the negotiated independence and neutrality of Belgian (1830–1839)
which lasted until the 1914 German invasion.
The League of Nations—a forward-looking reaction to World War
I—was fatally weakened by the aggression and departure of the Axis
powers (Germany, Japan, Italy and Spain). It was hoped that the United
Nations—a forward-looking reaction to World War II—would provide
international ‘justice’ and conciliation as an alternative to war. In pro-
claiming the 1948 Universal Declaration of Human Rights, Eleanor
Roosevelt stated ‘We stand today at the threshold of a great event both
in the life of the United Nations and in the life of mankind. This dec-
laration may well become the international Magna Carta for all men
everywhere.’9
Hayek (1978) told Chitester: ‘You see, I’m very interested in pol-
itics; in fact, in a way I take part. I now am very much engaged in
strengthening Mrs. Thatcher’s back in her fight against the unions.’10
‘Friedrich von Hayek’ (1966, 33) complained that the British repre-
sentatives on the committee that provided the ‘intellectual backbone’
of the Declaration of Human Rights ‘were Professor H. J. Laski and
E. H. Carr!’: it was ‘meaningless to speak of rights in the sense of a
claim on a spontaneous order, such as society constitutes, unless it is

9https://www.americanrhetoric.com/speeches/eleanorrooseveltdeclarationhumanrights.htm.

10FriedrichHayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral
History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
462    
R. Leeson

meant to imply that somebody has the duty of transforming this spon-
taneous order into an organisation, and thus to gain the power to con-
trol the result.’
Checks and balances limit the power of totalitarian governments—
including those who seek legitimisation through the divine right of
kings (Scott 1999). Galbraith (1952) promoted ‘countervailing power’
(labour trade unions, citizens’ organisations etc.) as a balance to those
who were funding the MPS (corporate producers and employer trade
unions).
Shortly after World War II, the Austrian School banker, Felix
Somary, informed Otto the Habsburg Pretender that ‘Aristocracy has to
begin somewhere,’ and—pointing to westbound ‘unkempt’ train pas-
sengers (some presumably refugees)—added: ‘These are going to be our
overlords in the future’ (cited by Watters 2005). Hayek, Hitler, Mises
and Pinochet sought to reconstruct a version of the past. The ‘Thousand
Year’ Third Reich was a union between Germany and the Eastern Reich:
the Reich Ministry for the Occupied Eastern Territories administered
‘their’ Lebensraum; and the subhuman Untermensch were ‘the masses
from the East.’ Mises (2009b [1958], 13–14) referred to the ‘supernu-
meraries … for whom there was, in a full sense of the term, no room
left by the pre-capitalistic methods of agriculture and artisanship.’
In 1920, Hitler declared that all Jews who had entered the Reich
after 2 August 1914 were to be expelled (Shirer 1960, 61; Noakes and
Pridham 1994, 15). According to Hayek (1994, 61), the masses from
the East caused the Holocaust: ‘The Jewish problem in Vienna only
became acute only as a result of emigration from Poland’ (which was
then part of the Habsburg Empire). The ‘violent anti-Semitism occurred
when very primitive, poor Polish Jews immigrated, already before the
war and partly in flight before the Russians during the war. Vienna
became filled with the type of Jew which hadn’t been known before,
with cap on and long beards, which hadn’t been seen before. And it was
against them that anti-Semitism developed.’
According to The Last Knight of Liberalism, while Mises ‘dearly loved’
Austria, he was ‘no chauvinist’ and ‘despised’ the ‘militarism and stat-
ism’ that characterised the end of the neo-feudal century (Hülsmann
2007, 257). In June 1918, the Italians inflicted a terminal defeat on
 10 ‘Shooting in Cold Blood’    
463

the Austrians at the Battle of the Piave River. And shortly afterwards,
the delusional Mises (1983 [1919], 131) gloated in chauvinism: ‘The
Italians themselves lost all the battles they fought against Austria.’
Jack High asked Hayek: ‘I seem to recall you telling a story in
Claremont. You presided over the retreat of some troops. You were a
lieutenant and ran into quite an interesting-’ The teenage Lieutenant
Hayek (1978) interrupted by revealing the multi-national reasons why
‘subjects’ of the German-speaking Habsburgs did not wish to sacrifice
themselves: the ‘very few German-speaking men’ were ‘the only reliable
men in these conditions.’11 The German military were contemptuous
of their Austrian allies—it was like being ‘shackled to a corpse’ (Rose
2017). But shortly before the Austro-German collapse, Mises (2012
[summer 1918], Chapter 12) referred to ‘The Habsburg’s great military
successes of the previous four years’ which should credited as much to
the ‘efforts of our entrepreneurs, workers, and farmers as to our brave
soldiers.’
According to Hitler, ‘justice is what benefits my people, injustice
what harms my people’ (cited by Heiden 1944, 314). Point 3 of the
Nazi 25 Point program stated ‘We demand land and soil (colonies) for
the nourishment of our people and the settlement of a surplus popula-
tion’ (cited by Fischer 2002, 157). Some German business leaders agi-
tated ‘for sweeping annexationist war policies’ and ‘eagerly endorsed the
military dictatorship headed by Hindenburg and Ludendorff’ (Turner
1985, 6). During the ‘Great’ War, Austrians essentially became part of
the Second Reich from which they had been excluded in 1871. In addi-
tion to lobbying for the Warfare State, Mises (2012 [December 1916],
Chapter 10) lobbied for Austro-German Lebensraum: the ‘industrialized’
countries are not in a position to prevent the agricultural countries from
‘transitioning into being industrial nations, which would have been an
effective means of retaining the status quo in the international economy,
if it had only been possible to do so.’ From the ‘national point of view,’
another method is available: the ‘annexation of colonies that have a pri-
marily agricultural character to the extent that the home country and

11FriedrichHayek, interviewed by Jack High date unspecified 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
464    
R. Leeson

the colonies together form an area that appears to be, in relation to the
quality of its natural production conditions, no more densely populated
than the territory of other nations.’ This, according to Mises, is the ‘path
that England has followed and which Germany ought to have followed,
had it not degenerated into the misery of provincial factionalism while
the Russians and the Anglo-Saxons conquered the world.’
According to Mises (2012 [December 1916], Chapter 10), the ‘foun-
dations of a global empire are its population.’ But unfortunately, the
‘German people currently lack these foundations.’ Germany can ‘only
provide for the population within its territory’ by ‘manufacturing goods
made with foreign-supplied raw materials that are then sold to foreign
buyers, in order to acquire those raw materials required for its own con-
sumption, and to pay wages and other industrial incomes.’ But this was
a situation which ‘cannot be sustained over the long term.’ Therefore,
the ‘German people need colonies for settlement if they do not wish to lose
their global ranking [emphases added].’
Shortly afterwards, Mises (2002 [May or June 1919], 52) was hor-
rified at the prospect of his own property becoming Lebensraum: given
the ‘mental disposition’ of the population, ‘nasty’ riots would ensue:
looting would begin with retail stores and then extend to public build-
ings, banks and private apartments and the last ‘shreds’ of governmen-
tal authority will ‘disappear.’ Both Hungary and Czechoslovakia had a
strong and well-trained army and may be ‘inclined, for political reasons
and for the sake of chauvinistic prestige, to occupy parts of German-
Austria,’ and Vienna in particular. Mises was prone to providing grossly
inaccurate caricatures not just about the ‘free’ market but also about
nationalities. The Czechs, he insisted had been ‘humiliated’ because
their independence had been gained without ‘glorious’ military exploits;
and Czech ‘militarists’ were ‘understandably ashamed’ by the ‘cowardly
retreat’ of their army as the Hungarian ‘Bolshevist’ advanced and would
like to ‘erase this shame.’

Hungarian troops, in turn, thirst for a ‘national’ claim to glory, an expedition

worthy of Kurdish marauding raids. Both the Czechs and the Hungarians
would be only too happy to loot Vienna and will seize any opportunity to
settle scores for some alleged injury done to them by ‘Vienna.’
 10 ‘Shooting in Cold Blood’    
465

According to the editor of the volume in which this essay appeared,

Mises

pointed out that the distinctive feature of economic nationalism in

Germany under the Nazis was the German political leadership’s confi-
dence it could use military force to conquer Lebensraum (‘living-space’)
for the German people—living space in terms of resources, land, markets,
and military security in a world in which other nations were also attempt-
ing to close off their markets for the exclusive advantage of their own citi-
zens. (Ebeling 2000, xviii)

Mises (2000 [1941], 8) later attributed Lebensraum not to the promo-

tion of lobbyists like himself but to the Nazis:

‘We Germans,’ say the Nazis, ‘were injured in the distribution of the
world. Of course, it was our own fault. In those centuries in which the
British, the Spaniards, and the Portuguese conquered the newly dis-
covered territories there was virtually no German empire. Germany
was divided and weak. The Germans fought each other and missed the
opportunity to colonize overseas countries. The result is that they are now
forced to crowd together in an overpopulated area. They are prevented
from exploiting idle resources in countries that nature has better endowed
for production. They have to be content with a standard of living much
lower than the standard of living in Anglo-Saxon countries. Every
German suffers from the present state of things and every German citi-
zen’s lot could be improved by changing it.’

Mises (2000 [1941], 8–9) correctly pointed out that the ‘most popular
fallacy concerning Nazism is the belief that its ideas and its program are
in any way new and different from the ideas and program of the German
nationalists of the Kaiser’s time.’ This was ‘absolutely wrong.’ The Nazi
ideology was ‘completely’ laid out by authors writing in the last three
decades of the nineteenth century. Hitler and Rosenberg merely repeated
earlier authors without adding a ‘single idea or a single point.’
Mises was one of these proto-Nazis from whom Hitler had plagia-
rised: ‘Every emigration will lead to a loss of energetic, bold men …
It’s accumulated through the decades and centuries and gave a new
466    
R. Leeson

consonant a highly valuable human content. We came face-to-face with

it in 1918 on the Western Front’ (Hitler, cited by Heiden 1944, 322).
According to Rothbard (1981, 242), ‘Mises’s radical laissez faire was
marked by uncompromising attachment to freedom of immigration’—
he was ‘a bitter critic of Western imperialism and colonialism.’ For
the Austrian General Staff, Mises (2012 [summer 1918], Chapter 13)
delineated the ‘difficult’ problem of ‘how the losses suffered by the
home country due to permanent migration can be avoided.’ An effort
must be made to ‘get emigrants to go to those regions in which they
will have a more assured opportunity to maintain their national iden-
tity and preserve their loyalty to the home country.’ The ‘best way to
achieve this end would be the establishment of an independent Austro-
Hungarian colonial possession.’ And in ‘The acquisition of a settlement
region,’ Mises again lobbied for Austro-German Lebensraum: it would
be ‘most advantageous if we acquired a colony’ capable of accommodat-
ing a ‘large number of settlers’ and which also could either partially or
completely supply those raw materials that were ‘not available at home’
(especially cotton, wool, produce and certain metals):

These two goals for a colonial possession, however, are difficult to achieve
in one and the same territory, since these colonial products grow only
in tropical or subtropical regions, but are areas not suitable for the set-
tlement of white [emphasis added] workers. Therefore, we must try to
acquire both types of territories: those in which we can produce desired
colonial goods and those in which we can accommodate truly large num-
bers of settlers.

According to Hülsmann (2007, 299), for ‘quite some time’ Mises had
‘anticipated’ a ‘dreadful’ end to the Great War. Weeks before the end
of the war, however, von Mises (2012 [summer 1918], Chapter 13)
assumed that this latest outbreak of dynastic warfare would end in
dynastic compromise: when the time comes for ‘peace negotiations, the
opportunity will arise to deal with the question of acquiring colonial
possessions.’
The German delegation to the first Plenary Session of the Paris Peace
Conference was led by Count Brockdorff-Rantzau who complained
 10 ‘Shooting in Cold Blood’    
467

that ‘We are required to admit that we alone are war-guilty; such an
admission on my lips would be a lie.’ In response, Sir Horace Montagu
Rumbold, 9th Baronet (17 February 1919) hoped that the ‘new armi-
stice terms will be really stiff’ (cited by Gilbert 1966, 6). They were: in
Article 119, Germany was obliged to renounce ‘all her rights and titles
over her colonial possessions.’
In lobbying for Lebensraum, Mises (2012 [December 1916],
Chapter 10) complained that Germany had ‘degenerated into the mis-
ery of provincial factionalism’ while the ‘Russians and the Anglo-Saxons
conquered the world.’ The ‘German people need colonies for settlement
if they do not wish to lose their global ranking.’ Likewise, Hitler (22
August 1939) told his Generals that in the east he had put his ‘death-
head formation in place with the command relentlessly and without
compassion to send into death many woman and children of Polish ori-
gin and language. Only thus can we gain the living space that we need’
(cited by Röhl 1970, 153).
The Locarno Treaties which sought to normalise relations with
Germany were signed on 1 December 1925. The British Ambassador in
Berlin, Viscount D’Abernon (1929, 18) reported that ‘three years after
the signature of the Treaty of Locarno, it may safely be asserted that a
considerable majority of the German people is resolutely in favour of
peace … The peace spirit in Germany requires nourishing.’
But the Hayek-and-Mises-promoted-deflation that intensified the
Great Depression transformed this situation. In early 1932, the Old
Etonian Rumbold (D’Abernon’s successor) reported from the British
Embassy in Berlin that the Nazis were like ‘a lot of ill-bred schoolboys,
who, to our ideas, behave like cads. The thought that the destinies of
the country might be entrusted to such people is rather depressing, but
we are far from that yet.’ Hitler resembled a ‘Revivalist preacher with
the appearance of a greengrocer wearing an Air Force moustache’ (cited
by Röhl 1970, 72, 97). Rumbold (26 April 1933) later cautioned that
it would be ‘misleading to base any hopes on a return to sanity.’ Hitler’s
government is ‘encouraging an attitude of mind’ which can ‘only end in
one way.’ He had the ‘impression that the persons directing the policy
of the Hitler government are not normal’ (cited by Barnett 2002, 387).
468    
R. Leeson

Yet to those on the International Right, Hitler had several merits. On

2 May 1933, labour trade unions were made illegal and communists,
socialists and labour unionists were imprisoned and murdered. This
was one method of attempting to ‘make all socialist measures for redis-
tribution impossible’; another was the ‘Model Constitution’ that Hayek
(1979, Chapter 17) sent to Pinochet. And as Viscount Halifax (19
November 1937) told Hitler, in addition to ‘performing great services
in Germany,’ he had ‘been able, by preventing the entry of communism
into his own country, to bar its passage father west’ (cited by Röhl 1970,
101). After serving as Secretary of State for War (1935), Halifax became
the Hitler-appeasing Secretary of State for Foreign Affairs (1938–1940).
Hitler’s Third Reich elevated ‘Aryan’ German Austrian citizens; hav-
ing established his own ‘Aryan’ identity, Hayek (1978) was more con-
cerned about the ‘whole traditional concept of aristocracy.’12 Between
1700 and 1740, the Habsburgs, too inbred to breed, became extinct—
which throws a monkey-wrench into Hayek’s ‘cultural evolution’. To
Otto the Habsburg (or rather Lorraine double) Pretender, political
aristocrats, like the Kennedy and Bush dynasties, were acceptable: ‘It
isn’t bad for a country to have people with a certain tradition, where
the father gives the son the same outlook and training’ (Watters 2005;
Morgan 2011).13 Kuehnelt-Leddihn (1989; 2000, 2, 37–38), who
complained that ‘The speech of the elite is hardly tolerated anymore,’
appealed to the fallacy of quae sumitur ex parte status adscripsit (‘the
argument from ascribed status,’ or ‘based on the state of the Saints’) to
justify Austrian disdain of democracy:

From childhood, monarchs were prepared for their duties. They ‘inher-
ited’ their profession as traditionally as craftsmen did theirs. The son of a
tailor became a tailor, and so forth. These tailors produced sometimes bad
garments, occasionally excellent ones but usually passable ones. So, too,
with monarchs.

12Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

13Otto von Habsburg continued: Sarkozy ‘points out that a state which subsidizes football clubs

and refuses to do any economic favors to religions who want to build churches is absurd’.
 10 ‘Shooting in Cold Blood’    
469

Yet when non-monarchs entered government this produced ‘only

monstrosities’—just as if ‘dentists, lawyers, cobblers, farmers or
plumbers’ were asked to do a tailor’s work. Kuehnelt-Leddihn
extrapolated from this simple analogy to explain world history:
‘Hence, the decline of Europe, already lasting more than 200 years,
which also means that one should not forget the already mentioned
fact that monarchy compromised with democracy during the nine-
teenth century, and thus acquired merely a psychological role in the
twentieth.’
Hayek’s (2011 [1960], 194; 1978) ‘natural’ ‘living space’ related to
independent income and related status: ‘I have moved, to some extent,
in aristocratic circles, and I like their style of life.’14 He bemoaned the
absence of ‘gentleman-scholars’ who could mix on ‘equal’ terms with
the ‘wealthy and powerful.’ The almost complete disappearance of this
class—and the absence of it in most parts of the USA—had produced
the lamentable situation in which the ‘propertied class,’ now almost
exclusively a business group, lacked ‘intellectual leadership’ and even a
‘coherent and defensible philosophy of life.’
Hayek’s MPS (1947–) provided both that ‘intellectual leadership
and that ‘style of life.’ Baron Harris of High Cross (2000), the IEA
co-founder, recalled that the MPS grew from 36 members to ‘almost
500,’ half from ‘America, South America, the other half Asia and
Europe.’ According to Hamowy (2003), the editor of The Constitution
of Liberty: The Definitive Edition: ‘Mt. Pelerin meetings were held in one
of the most expensive hotels in the city as befitted the fact that almost
all attendees were either think-tank executives traveling on expense
accounts, South American latifundia owners, for whom hundred-dollar
bills were small change, or the officers of the Society itself, a self-
perpetuating oligarchy who, thanks to its members’ dues, traveled
around the world in first-class accommodations.’
Although the ‘new’ money of the American ‘chip chop aristocracy’
could never buy ‘old’ money ‘class,’ it could secure tax-exempt access

14FriedrichHayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral
History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
470    
R. Leeson

to the White Terror promoters, ‘von’ Hayek and ‘von’ Mises.15 By the
late 1960s, MPS sessions had, according to one member, lost their intel-
lectual character and become ‘a businessmen’s sort of trade association
meeting’ (cited by Burgin 2012, 146). Friedman (29 August 1989)
complained to Nobutane Kiuchi that:

the major feature that bothers me is that the proportion of thinkers and
doers to what I am inclined to call ‘fellow travelers’ has gotten too small
and the size of our Society has gotten too large. A large fraction of the
people who come to our Society meetings are there in considerable part as
tourists.16

The Hillsdale College Ludwig von Mises Professor of Economics and

MPS member was horrified by a ‘Red reign of terror’: Bela Kun was
‘able to eliminate the more moderate elements in the government
through a reign of Red terror’ by implementing a ‘Red reign of terror
along the lines of Lenin in Russia.’ Between March and May 1919,
there was a ‘brief Soviet Republic established in Munich, Bavaria under
the leadership of a group of German and Russian Marxist revolutionar-
ies, who also imposed a brutal Red reign of terror’:

The Social-Democratic Army, officially called the ‘Organizers,’ [Ordner ]

conducted open marches and field exercises which the government was
unable to oppose. Unchallenged, the Party claimed the ‘right to the
street.’

Ebeling (2002, 38, n7, 48, n8, 187, n8) continued: the ‘terror caused
by the Social-Democrats forced other Austrians to build their defenses.’
Hayek (1978) recruited ‘secondhand dealers in opinions.’ In their
effort to distance Hayek from Pinochet’s White Terror dictatorship,
Caldwell and Montes (2014a, 2, n5; 2014b; 2015a, 262, n5) took the

15‘Old’ money Americans use such phrases to disparage those members of the nouveau riche

whose daughters managed to marry the sons of impecunious European aristocrats. William
Volker used the fortune he made in the picture framing and window shading business to fund the
Austrian School of Economics.
16Friedman Archives. Box 200.5.
 10 ‘Shooting in Cold Blood’    
471

high moral ground: ‘some’ may question the ‘objectivity of our opin-
ion.’ Declining to mention the climate change deniers that funded
them, they offered a ‘full disclosure’: Caldwell is the ‘General Editor of
The Collected Works of F. A. Hayek, and has been a member of the Mont
Pèlerin Society since 2010.’ Caldwell (2004, x; 2007, x), who referred
to this position as a ‘dream’ assignment, first sought financial support
for the Collected Works project at the MPS meetings in ‘London in
October 2002.’17
Caldwell (2004, x) reported that Mary Morgan alerted him to a
Lachmann Fellowship which would allow him to spend a year with
her at the LSE: ‘Mary read through what I had finished and offered me
detailed editorial comments. Popper once said that Hayek saved his life
twice; I feel the same sort of gratitude towards Mary.’ Morgan chaired
the HES committee which awarded Caldwell and Montes (2014a, b;
2015a, b) the 2016 ‘Craufurd Goodwin Best Article in the History of
Economics Prize.’ Their academically unpublishable paper was pub-
lished un-refereed in the ‘referred’ in the Boettke-edited Review of
Austrian Economics; and Goodwin—who in conversation expressed con-
cern about the Austrian-colonisation of his disciple—is the author of
‘The Heterogeneity of the Economists’ Discourse: Philosopher, Priest
and Hired Gun’ (1988).
Block (2000, 40), Caldwell’s fellow Koch-funded Austrian and MPS
member, described their ‘united front’ with ‘Neo-Nazis’:

I once ran into some Neo-Nazis at a libertarian conference. Don’t ask,

they must have sneaked in under our supposedly united front umbrella.
I was in a grandiose mood, thinking that I could convert anyone to liber-
tarianism, and said to them, ‘Look, we libertarians will give you a better
deal than the liberals. We’ll let you goosestep. You can exhibit the swas-
tika on your own property. We’ll let you march any way you wish on your
own property. We’ll let you sing Nazi songs. Any Jews that you get on a
voluntary basis to go to a concentration camp, fine.’

17Ina footnote, Caldwell thanked himself: ‘We thank the estates of F. A. Hayek …’ (Caldwell
and Montes 2014a, 1).
472    
R. Leeson

Block is a Mises Institute Senior Fellow. In ‘Mises Institute Strikes

Gold,’ Boettke (2007) insisted that the

Mises Institute is so vitally important to the Austrian/libertarian move-

ment … the Mises Institute is a major force for good in the world
of ideas and policy affairs. I share that commitment to both a consist-
ent and uncompromising libertarianism, and to the advancement of the
teachings of the Austrian School of Economics. The goals are shared in
common between what I am trying to do here at GMU and what the
Mises Institute is doing, the means suggested for the most effective way to
achieve those ends is where we differ … But our goals don’t differ, and the
job they are doing in making material available to students and scholars is
amazing and vital to our common cause. So I acknowledge the great work
that they do, and I respectfully ask my friend Joe Salerno to just have
patience with me (and my former students) as we pursue common goals
with different means (at least on the academic front).

The ‘gullible’ HES is the vehicle by which Boettke (2014) et al. seek
academic respectability. In Human Action, Mises’ (1949, 85, 90)
asserted that

Asiatics and the Africans no less than the peoples of European descent
have been eager to struggle successfully for survival and to use reason as
the foremost weapon in these endeavors. They have sought to get rid of
the beasts of prey and of disease, to prevent famines and to raise the pro-
ductivity of labor. There can be no doubt that in the pursuit of these aims
they have been less successful than the whites. The proof is that they are
eager to profit from all achievements of the West … It is vain to deny
that up to now certain races have contributed nothing or very little to the
development of civilization and can, in this sense, be called inferior.

The delusional Mises (1985 [1927]) expected to become the intellec-

tual Führer of a Nazi-Classical Liberal Pact; while his disciples appear
deluded whether looking forward or backwards: ‘The problem with
Nazism is not its ends, from the libertarian point of view, rather it is with
their means. Namely, they engaged in coercion. But, the ends are as just
as any others; namely, they do not involve invasions [emphases added].
 10 ‘Shooting in Cold Blood’    
473

If you like saluting and swastikas, and racist theories, that too is part
and parcel of liberty. Freedom includes the right to salute the Nazi
flag, and to embrace doctrines that are personally obnoxious to me.
Under the libertarian code, you should not be put in jail for doing that
no matter how horrendous this may appear to some. I happen to be
Jewish, and my grandmother is probably spinning in her grave as I write
this because we lost many relatives in the Nazi concentration camps’
(Block 2000, 40).
According to Block (2013, 16, 17–18, 19), Austrian logic is a
‘madness’ that it is ‘imperative’ to maintain:

I am not seeking popularity. Rather, truth … Yes, Friedman is less social-

istic than 96% of people, we presume. According to the relativist view-
point, he cannot be a socialist. But, according to objective scientific
considerations, he most certainly is. From the point of view of making
distinctions, it is absolute madness to count Friedman as a socialist. The
word will lose virtually all, but not quite all, of its meaning, if we do so.
However, from the perspective of maintaining an unwavering yardstick,
it is imperative to view him in this way … Mises, as usual, was correct.
Friedman is a socialist. For that matter, he and his entire Chicago School
are a ‘bunch of socialists.’

As to distinguishing between Friedman and Marx: the ‘former was

a moderate socialist, the latter a radical one.’ It ‘matters not at all that
most of the world is far more socialist than’ Friedman. It would ‘not
deflect this accusation if he were the most capitalist, the least socialist,
of any person on the entire planet. He would still be a socialist, objec-
tively speaking.’
Block (2006, 72; 2009a, 148) embraced the language of eugenics:
‘were the politicians and top bureaucrats to decamp, and not be repli-
cated, we would be well on our way toward the free society; My com-
plaint against Hayek is that he gave too much away in his attempt to
defang the socialists.’ The atheist Block (2009b) addressed the deceased
Laurence Moss: ‘you did the Lord’s work, promoting liberty and
Austrian economics.’ Block, the editor of the Mises Institute’s I Chose
Liberty (2010), stated that Rand’s (1957) Atlas Shrugged is ‘the best
474    
R. Leeson

novel ever written,’ and that slavery ‘wasn’t so bad. You could pick cot-
ton, sing songs, be fed nice gruel, etc. The only real problem was that
this relationship was compulsory … Woolworth’s had lunchroom coun-
ters, and no blacks were allowed. Did they have a right to do that? Yes,
they did. No one is compelled to associate with people against their
will’ (cited by Jaschik 2014). With respect to the view ‘that Hayek
was in effect a politician, or mediator, or conciliator,’ Block’s (2006,
74) ‘objection to it is not that it is not true, but that it is (almost)
despicable.’

What would you think of me trying to convert you to orthodox Judaism

by telling you that under this philosophy it is all right to eat pork, work
on the Shabbat, etc.? Surely, this would not be a ‘good job’ from the per-
spective of the Hasidim; rather, it would be a betrayal. Well, I feel that
Hayek betrayed the philosophy of libertarianism with his numerous
concessions.

Hayek made him ‘sick’ to his ‘stomach.’ Block (2006, 63) told
Friedman that he didn’t ‘favor picking up the gun and shooting bureau-
crats and politicians.’ But in a Festschrift essay for Hoppe on ‘Towards
a Libertarian Theory of Guilt & Punishment for the Crime of Statism,’
Block (2009a, 143) referred to the ‘distractions’ that are so ‘numerous
and deeply embedded in our societal mores that even I, the author of
this paper, feel a certain reluctance to overcome them. For one thing,
politicians are the leaders of our present society [Block’s emphasis]. To
contemplate incarcerating them, particularly en masse, is more than suf-
ficient to make the most hardy intellect blanch.’ But

facts are facts, and we cannot take our eye off of the ‘ball’ if we are to shed
any sort of social scientific light on the problems to which we are address-
ing ourselves: given that governments are illicit invasive criminal insti-
tutions, and that people who aggress are justifiably punished, we must
contemplate retribution, on a massive scale, against all those responsible.

Block added a footnote which indicated that democratically elected

socialists would also be targeted: ‘Political entities operating in the past
 10 ‘Shooting in Cold Blood’    
475

which fall into this category, include the USSR, any of the countries of
Eastern Europe until the fall of communism in that part of the world,
Nazi Germany, Fascist Italy, Chile under Salvatore Allende and Uganda
under Idi Amin.’ Reisman (1991), the Misean Professor of Economics
at Pepperdine University, appeared to add environmentalist to the list.
They were like ‘raw sewage’: ‘Clearly, the most urgent task confronting
the Western world, and the new intellectuals who lead it, is a philosoph-
ical and intellectual cleanup. Without it, Western civilisation simply
cannot survive. It will be killed by the poison of environmentalism.’
According to Caldwell (2007, 108), the last Chancellor of pre-Hitler
Germany, Kurt von Schleicher (1882–1934) and his wife were ‘tried
on trumped-up charges and executed by the Nazis.’ Reisman (2006)
provided more information about overcoming distractions: Pinochet
was ‘one of the most extraordinary dictators in history, a dictator who
stood for major limits on the power of the state, who imposed such
limits, and who sought to maintain such limits after voluntarily giv-
ing up his dictatorship.’ Reisman then set-up a straw man: ‘Contrary
to the attitude of so many of today’s intellectuals, Communists do not
have a right to murder tens of millions of innocent people and then to
complain when their intended victims prevent their takeover and in the
process kill some of them.’ Reisman knew who to blame: ‘As for the
innocent victims in Chile, their fate should overwhelmingly be laid at
the door of the Communist plotters of totalitarian dictatorship. People
have an absolute right to rise up and defend their lives, liberty, and
property against a Communist takeover. In the process, they cannot
be expected to make the distinctions present in a judicial process. They
must act quickly and decisively to remove what threatens them.’
On Stalin’s orders, about 1 million were shot during the 1937–1938
Great Terror (including the bulk of the Soviet officer corps); and about
22,000 Polish officers were shot in 1940 (Conquest 1968; Crozier
2000). At the 1943 Tehran Conference, Stalin proposed that 50,000
German officers ‘must be shot’ (Churchill 1951, 330).18 Hayek’s (1992
[1945], 223) ‘Plan for the Future of Germany’ began with a description

18For reasons that are not immediately clear, Churchill thought that Stalin was joking.
476    
R. Leeson

of what became Pinochet’s ‘Plan for the Future of Chile’: ‘Neither legal
scruples nor a false humanitarianism should prevent the meeting out of
full justice to the guilty individuals … There are thousands, probably
tens of thousands, who fully deserve death; and never in history was it
easier to find the guilty men.’19
General Motors had a post-Third Reich public relations prob-
lem associated with their 1929 purchase of the German Adam Opel
Company.20 Their 1945 Road to Serfdom in Cartoons warned of the
dangers of propaganda and insisted that government intervention in
the economy was poison: the choice lay between firing squads or the
right to fire employees.21 At the Hayek-inspired (British) Centre for
Policy Studies, Alfred (later, Sir Alfred) Sherman ‘thought that a fir-
ing-squad was too good for anyone who disagreed with him’ (Anderson
2006). Rothbard (1994b) believed that Richard Herrnstein and Charles
Murray’s (1994) The Bell Curve: Intelligence and Class Structure in
American Life had put a ‘bullet through the heart of the egalitarian-
socialist project.’ Hayek (1992 [1945], 223) proposed ‘shooting in cold
blood’; and Pinochet added torture, pour encourage les autres.
In Pinochet’s Police State tens of thousands were rounded up, mal-
treated and tortured. At the Sheraton Hotel in Santiago, Hayek lec-
tured on ‘The Ethical Foundations of a Free Society’ to the (Chilean)
Centre for Policy Studies (of which he was Honorary President). Hayek
reflected: that ‘part of the argument which is not sympathetic to me,
I pass over’; and Caldwell and Montes (2014a, 38, 27; 2014b; 2015a,
293, 283) referred to one of Hayek’s sentences that would

19Hayek was talking about Germany—but not Austria, where Hitler had acquired anti-Semitism

from a climate co-created by the von Hayek family (Leeson 2015, Chapter 3). Since Heinrich
Hayek was one of those who could have faced this cold-blooded Hayekian shooting-squad, his
brother could not have been telling the truth about his feelings towards the Nazis—the words
were written for the purposes of kicking over the traces both of his family’s Nazi enthusiasms and
of the Austrian School origins of the policies that facilitated Hitler’s rise.
20In General Motors and the Nazis: the struggle for control of Opel, Europe’s biggest carmaker, Turner

(2005) emphasised that General Motors had essentially lost control of their subsidiary.
21Mises (1974 [1950], 34) asserted that ‘The few books which tried to explain adequately the

working of the free market economy were hardly noticed by the public. Their authors remained
obscure, while such authors as [Thorstein] Veblen, [John R.] Commons, John Dewey and Laski
were exuberantly praised’.
 10 ‘Shooting in Cold Blood’    
477

cause even his staunchest allies to wince: ‘I have not been able to find a
single person even in much maligned Chile who did not agree that per-
sonal freedom was much greater under Pinochet than it had been under
Allende.’

After the Munich Putsch failed and the Nazi Party banned (1923–1924),
Ludendorff stood in the 1925 German Presidential election for the
Deutschvölkische Freiheitspartei (German Völkisch Freedom Party). Two
years later, in ‘The Foundations of [Austrian Classical] Liberal Policy,’
Mises (1985 [1927], 47–48), referring to ‘Ludendorff and Hitler’
et al., stated: ‘The militaristic and nationalistic enemies of the Third
International felt themselves cheated by [Austrian classical] liberal-
ism’ because of the exclusion of ‘murder and assassination from the list
of measures to be resorted to in political struggles.’ In future, it would,
therefore, be an error to ‘respect certain liberal principles.’ Hayek (1978)
then defended the ‘civilisation’ of restricted-franchise apartheid (led by
the former Nazi and current Prime Minister, Balthazar Johannes Vorster)
from the American ‘fashion’ of ‘human rights’ (Chapter 4, above): he
had no reason to make Pinochet (or any other White Terrorist) feel
‘cheated’ by those who had hijacked the ‘Classical Liberal’ label.
Hayek and Hitler sought to create irreversible versions of the past.
Hitler’s method was to ‘cleanse the nation of its enemies’ (cited by
Heiden 1944, 312). The ‘Model Constitution’ that Hayek (1979,
Chapter 17) sent to Pinochet ‘would of course make all socialist meas-
ures for redistribution impossible’—and could, therefore, only be
imposed when socialists were unable to effectively object. J. L. Talmon
(1970 [1952], 3) asked whether the ‘absolute purpose’ would be
achieved by ‘all’ having ‘leaned to act in harmony, or because all oppo-
nents have been eliminated’? Aspects of Hayek’s ‘Model’ appear to have
been plagiarised from the Babouvist ‘Ultimate Scheme’ that Talmon
(1970 [1952], Chapter 6) outlined.
Hayek (1981) supported Pinochet and other ‘transitional’ dictators as
‘a means of establishing a stable democracy and liberty, clean of impuri-
ties.’ Jon Anderson (1998) had dinner at the elegant Sheraton Hotel in
Santiago with a ‘close friend’ of the Pinochet family, whose late husband
had been a military officer:
478    
R. Leeson

When I asked her if he had participated in the coup, she replied emphat-
ically, ‘Oh yes! He was very active. He even dealt with the prisoners.’ She
grimaced theatrically. I realized that what she meant was that he had been
involved in the roundup of leftist suspects and their subsequent torture
and execution. I tried to get her to be more specific. ‘You’re talking about
los fusilamientos—the firing squads?’ I asked tentatively. She nodded. ‘But
my husband liked to do things correctamente, and he always secured the
help of lawyers.’ She was referring to the lawyers who served as prosecu-
tors in the martial-law ‘war tribunals’ set up to try the thousands of peo-
ple detained following the coup. Even so, I ventured, that kind of duty
must have been difficult for him. She nodded, but explained that the area
they lived in had been a stronghold of leftist terrorists. ‘It was a war,’ she
said. ‘It was either you or them [emphases in original].’

The correctamente firing squads began on the morning of Pinochet’s

1973 9–11 coup (Dinges and Landau 1980, 65). In one neo-feudal
society—the ex-Confederate South—Ku Klux Klan assassins were virtu-
ally guaranteed acquittal; Anderson (1998) reported on what passed for
evidence in a similar society:

One of the more common stories—delivered with expressions of

shocked repugnance—is that Allende was drunk at the time he died in
La Moneda: that an autopsy found his body to be ‘full of alcohol.’ An
octogenarian lawyer and former judge, Alfredo del Valle, told me,
‘Allende was a man without any moral caliber.’ When I asked him what
he meant, he paused, and then confided that among his friends was an
Army officer who, after the coup, led a search of Allende’s home and
became ‘physically sick’ by what he saw. ‘What was there?’ I asked. The
old lawyer shook his head. ‘Pornography,’ he replied in a disgusted whis-
per. ‘Mountains of it—of the worst kind.’

In 1977, Hayek sent Pinochet a draft of his ‘Emergency Powers’ from

‘A Model Constitution,’ Chapter 6 of Law, Legislation and Liberty
Volume 3: The Political Order of a Free People (1979, 124): ‘The basic
principle of a free society, that the coercive powers of government are
restricted to the enforcement of universal rules of just conduct, and can-
not be used for the achievement of particular purposes, though essential
 10 ‘Shooting in Cold Blood’    
479

to the normal workings of such a society may yet have to be tempo-

rarily suspended, when the long-run preservation of that order is itself
threatened.’ Caldwell and Montes (2014a, b; 2015a) fail to connect
this defence of Pinochet and other Operation Condor dictators with
Hayek’s (2007 [1944], 156) sentiments about Hitler in The Road to
Serfdom, Texts and Documents: The Definitive Edition (which Caldwell
edited): it is ‘essential’ that we should

relearn frankly to face the fact that freedom can be had only at a price
and that as individuals we must be prepared to make severe material sac-
rifices to preserve our liberty. If we want to retain this, we must regain the
conviction on which the rule of liberty in the Anglo-Saxon countries has
been based and which Benjamin Franklin expressed in a phrase applicable
to us in our lives as individuals no less than as nations: ‘Those who would
give up essential liberty to purchase of little temporary safety deserve nei-
ther liberty nor safety.’

Hayek (1978) told Rosten: ‘I believe in democracy as a system of peace-

ful change of government; but that’s all its whole advantage is, no
other.’22 Friedrich Meinecke sought to explain Nazism by examining
the ‘egotistical caste of nobles and officers’ who had grown ‘comforta-
bly important in the militarist atmosphere’ which lingered on into the
twentieth century (cited in Röhl 1970, 6).
The ‘soldiers in governments’ who promoted Hitler believed that he
would establish a ‘democratic dictatorship’ (Heiden 1944, 427). Hayek
(2007 [1944], 75–76) quoted approvingly from Elie Halévy–a com-
posite photograph of three aristocrats, Lord Eustace Percy, Sir Oswald
Mosley and Sir Stafford Cripps, would reveal a ‘common’ feature: all
would say ‘we are living in economic chaos and we cannot get out of it
except under some kind of dictatorial leadership.’
Mosley (1896–1980; 6th Baronet of Ancoats and relative of the wife
of King George VI) left the Labour Party to become leader of the British
Union of Fascists—he would presumably have been praised by Mises.

22FriedrichHayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
480    
R. Leeson

Cripps (1889–1952—like Mosley, a graduate of Winchester College)

argued that an incoming Labour government should abolish the House
of Lords; enact an Emergency Powers Act, allowing it to rule by decree
and thus ‘forestall any sabotage by financial interests’; nationalise banks,
land, mines, power, transport, iron and steel, cotton; control foreign
trade; restrict compensation; accept ‘work or maintenance’ in principle;
plus full civil rights for all State employees. In 1939, he was expelled
from the Labour Party for his advocacy of a Popular Front with the
Communist Party, the Independent Labour Party, the Liberal Party and
anti-appeasement Conservatives (Strauss 1942, 108; Estorick 1949,
120; Pimlott 1977, 9, 52).
The Old Etonian Percy (1887–1958; the seventh son of the 7th
Duke of Northumberland and the nephew of the ninth Duke of Argyll,
who was married to a daughter of Queen Victoria) promoted employee
ownership—a direct attack on those who were funding Hayek: ‘Here is
the most important challenge to political invention ever offered to the
jurist or the statesman. The human association which in fact produces
and distributes wealth, the association of workmen, managers, techni-
cians and directors is not an association recognised by law. The asso-
ciation which the law does recognise - the association of shareholders,
creditors and directors - is incapable of producing and distributing and
is not expected to perform these functions. We have to give law to the
real association and withdraw meaningless privilege from the imaginary
one’ (cited by Oakshott 2000, 33).
Talmon (1970 [1952], vii, 1) cited three scholars antithetical to the
‘free’ market—Harold Laski, E. H. Carr (both of whom Hayek rid-
iculed) plus Ralph Miliband—as the progenitors of his Origins of
Totalitarian Democracy. Talmon described the ‘most vital issue of our
time’ as the conflict between ‘empirical and liberal democracy’ and
‘totalitarian Messianic democracy.’ His characterisation of the lat-
ter—‘based on the assumption of a sole and exclusive truth in poli-
tics’—described both Mises and Hayek.
In Mises in America, William Peterson (2009, 8) reflected on the
‘nature of this leader of the Austrian School of economics.’ At the 1949
MPS meeting,
 10 ‘Shooting in Cold Blood’    
481

Mises expressed fear that some of the members were themselves becom-
ing inadvertently infected by the virus of intervention—minimum wages,
social insurance, contra-cyclical fiscal policy, etc. ‘But what would you
do,’ it was put to him, ‘if you were in the position of our French col-
league, Jacques Rueff?’ who was present and at the time responsible for
the fiscal administration of Monaco. ‘Suppose there were widespread
unemployment and hence famine and revolutionary discontent in the
principality. Would you advise the government to limit its activities to
police action for the maintenance of order and the protection of private
property?’ Mises was intransigent. He responded: ‘If the policies of non-
intervention prevailed—free trade, freely fluctuating wage rates, no form
of social insurance, etc.—there would be no acute unemployment. Private
charity would suffice to prevent the absolute destitution of the very
restricted hard core of unemployables.’

When the founder of one of his funding bodies, F. A. ‘Baldy’ Harper of

the IHS, impertinently asked ‘If the socialist economy were more effi-
cient than the free market, would you favor socialism?’ Mises replied:
‘But it isn’t more efficient.’ When Harper repeated the question, he
received the same reply (North 1992, 57).
According to Talmon (1970 [1952], 5): ‘Totalitarian Messianism
hardened into an exclusive doctrine represented by a vanguard of the
enlightened.’ Hayek (1975) described his own role as Messiah:

For forty years I have preached that the time to prevent a depression is
during the preceding boom; and that, once a depression has started, there
is little one can do about it. My advice was com-pletely disregarded as
long as the boom lasted. Now suddenly, when my prediction has come
true and we have reached the stage where, in my opinion, little can be
done about the inevitable reaction which has set in, people suddenly turn
to me and ask for my opinion. I am very much tempted to answer, ‘Well,
if you had listened to me before, you wouldn’t be in that mess.’

He reassured his American Enterprise Institute audience: ‘Of course, I

do not mean you—I mean the public in general.’
Referring to his ‘thing taking over,’ Hayek (1978) reflected:
482    
R. Leeson

So, again, what I always come back to is that the whole thing turns on
the activities of those intellectuals whom I call the ‘secondhand dealers in
opinion,’ who determine what people think in the long run. If you can
persuade them, you ultimately reach the masses of the people.23

According to Talmon (1970 [1952], 5), liberal democracy ‘flinched

from the spectre of force.’ Mises (1985 [1927], 35, 37, 41, 50)
embraced the use of force to establish a dictatorship: ‘To be sure, it
should not and need not be denied that there is one situation in which
the temptation to deviate from the democratic principles of liberal-
ism becomes very great indeed. If judicious men see their nation, or all
the nations of the world, on the road to destruction, and if they find
it impossible to induce their fellow citizens to heed their counsel, they
may be inclined to think it only fair and just to resort to any means
whatever, in so far as it is feasible and will lead to the desired goal, in
order to save everyone from disaster. Then the idea of a dictatorship of
the elite, of a government by the minority maintained in power by force
and ruling in the interests of all, may arise and find supporters.’ But
what ‘distinguishes liberal from Fascist political tactics is not a differ-
ence of opinion in regard to the necessity of using armed force to resist
armed attackers, but a difference in the fundamental estimation of the
role of violence in a struggle for power. The great danger threatening
domestic policy from the side of Fascism lies in its complete faith in the
decisive power of violence … It is a victory that can be won only with
the weapons of the intellect, never by force.’ Fascism needed to be sup-
plemented by (Austrian) Classical Liberalism.
According to Talmon (1970 [1952], 6): ‘Modern totalitarian democ-
racy is a dictatorship resting on popular enthusiasm’; or as Mises (1985
[1927], 45) put it, the ‘tyranny of a minority can never endure unless
it succeeds in convincing the majority of the necessity or, at any rate,
of the utility, of its rule. But then the minority no longer needs force

23Friedrich Hayek, interviewed by Jack High date unspecified 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/). Friedrich

Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History Research,
University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
 10 ‘Shooting in Cold Blood’    
483

to maintain itself in power.’ Government by a ‘handful of people—and

the rulers are always as much in the minority as against those ruled as
the producers of shoes are as against the consumers of shoes—depends
on the consent of the governed, i.e., on their acceptance of the existing
administration.’ Whether they saw it as ‘only as the lesser evil, or as an
unavoidable evil,’ they still must be of the ‘opinion that a change in the
existing situation would have no purpose.’ But once the ‘majority of the
governed becomes convinced that it is necessary and possible to change
the form of government and to replace the old regime and the old per-
sonnel with a new regime and new personnel, the days of the former
are numbered.’ The ‘majority will have the power to carry out its wishes
by force even against the will of the old regime.’ Therefore, in the ‘long
run no government can maintain itself in power if it does not have pub-
lic opinion behind it, i.e., if those governed are not convinced that the
government is good. The force to which the government resorts in order
to make refractory spirits compliant can be successfully applied only as
long as the majority does not stand solidly in opposition.’
Talmon (1970 [1952], 2) described the ‘extreme forms of popu-
lar sovereignty’; and four years after the demise of the Habsburgs and
the Hohenzollerns, Mises (1922, 435; 1951, 443) described ‘consumer
sovereignty’: ‘the Lord of Production is the Consumer’ (‘Der Herr der
Produktion ist der Konsument ’). Harris and Seldon (1977, 5) extolled
this ‘sovereignty of the consumer’:

exits that make consumer ‘voices’ effective … no business can flour-

ish unless it gives good value to its customers and is responsive to their
changing preferences.

The decision to smoke is the outcome of an arm wrestle between adver-

tising pressure and public health campaigns. The IEA and the Adam
Smith Institute (ASI)—both funded by tobacco companies—criticised
bans on smoking in pubs as an ‘attack on civil liberties.’ The IEA’s direc-
tor, Mark Littlewood, described the plan to introduce plain packaging
as the ‘latest ludicrous move in the unending, ceaseless, bullying war
against those who choose to produce and consume tobacco.’ In March
2011, Eamonn Butler, the ASI’s director, signed a letter to the Daily
484    
R. Leeson

Telegraph attacking the British government’s position on tobacco control

(Doward 2013).
‘Dr.’ Butler described himself as having an ‘honorary D Litt
from Heriot-Watt University and ‘Vice-President of the Mont
Pelerin Society, an international association of distinguished econ-
omists and entrepreneurs’ which ‘does not issue corporate views
on any subject.’24 He is the author of Hayek: His Contribution to
the Economic and Political Thought of Our Time (1985), Austrian
Economics: A Primer (2010a), Ludwig Von Mises: A Primer (2010b)
and Ludwig Von Mises: Fountainhead of the Modern Microeconomic
Revolution (1988). Margit Mises (1984, 143–144) reported that her
addicted husband ‘loved’ smoking and after medical advice to quit
found it impossible to change his behaviour in line with his changed
preferences. Although could tell when he had been smoking, she
‘understood’ and kept silent while he felt ‘almost ashamed’ about
having succumbed to producer sovereignty: although he had a ‘will
of iron,’ the ‘longing’ for a cigarette was able to ‘overpower’ him and
‘break his will.’
Harris created FOREST (Freedom Organisation for the Right to
Enjoy Tobacco) and appointed Stephen Eyres as director. Eyres had
been recruited from the Freedom Association (National Association For
Freedom) where he had succeeded Robert Moss as editor of Free Nation.
Eyres describes himself as a ‘happy passive smoker’ and anti-smoking
campaigners as ‘busybodies’:

He is particularly alarmed at any attempt by the state to dictate to peo-

ple what they can and cannot do. ‘Seventeen million adults in the UK
choose to smoke. That’s their business, not the state’s. What will they out-
law next? Obesity?’25

According to documents on the University of California San Francisco

website, Eyres fraudulently milked the organisation while doing the

24https://eamonnbutler.com/mont-pelerin-society/.

25http://takingliberties.squarespace.com/taking-liberties/2010/11/14/archive-interview-with-for-

ests-first-director-stephen-eyres.html.
 10 ‘Shooting in Cold Blood’    
485

bidding of the tobacco industry.26 The IEA also published Roger

Scruton’s attack on the World Health Organisation without revealing
that this ‘free’ market philosopher was on the payroll of the tobacco
industry (Kmietowicz and Ferriman 2002).
Speaking in the House of Lords in July 2005 about figures for deaths
by passive smoking, which he ‘refused to credit,’ Lord Harris—the IEA’s
co-founder—railed against ‘statistical jiggery-pokery,’ ‘selective sur-
veys’ and ‘spurious precision to two decimal places.’ He suspected that
‘untruths were being peddled to curb liberty, and he was having none
of it.’ The only ‘false step’ that he ever attributed to Hayek was that ‘he
had let other people persuade him to give up smoking’ (Economist 2
November 2006).27 Hayek (1978) was ‘convinced that cigarettes are
harmful, although my own brother, the late anatomist, was the one
who argued most convincingly that it was not cigarettes but the effu-
sion of cars and so on which was the main cause of lung cancer. But
I’m afraid he died of heart disease, I think largely induced by smoking.
[laughter]’28
Hayek (1978) was also optimistic about the prospects for his ‘con-
sumer sovereignty’ counter-revolution:

You see, I believe Schumpeter is right in the sense that while socialism
can never satisfy what people expect, our present political structure inevi-
tably drives us into socialism, even if people do not want it in the major-
ity. That can only be prevented by altering the structure of our so-called
democratic system. But that’s necessarily a very slow process, and I don’t
think that an effort toward reform will come in time. So I rather fear that
we shall have a return to some sort of dictatorial democracy, I would say,
where democracy merely serves to authorize the actions of a dictator. And
if the system is going to break down, it will be a very long period before
real democracy can reemerge … My present aim is really to prevent the
recognition of this turning into a complete disgust with democracy in any
form, which is a great danger, in my opinion. I want to make clear to

26https://www.industrydocumentslibrary.ucsf.edu/tobacco/docs/#id=rhlg0201.

27https://www.economist.com/node/8103545.

28FriedrichHayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral
History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
486    
R. Leeson

the people that it’s what I call unlimited democracy which is the danger,
where coercion is not limited to the application of uniform rules, but you
can take any specific coercive measure if it seems to serve a good purpose.
And anything or anybody which will help the politician be elected is by
definition a good purpose. I think people can be made to recognize this
and to restore general limitations on the governmental powers; but that
will be a very slow process, and I rather fear that before we can achieve
something like this, we will get something like what Talmon has called
‘totalitarian democracy’–an elective dictatorship with practically unlim-
ited powers. Then it will depend, from country to country, whether they
are lucky or unlucky in the kind of person who gets in power.29

Having visited Pinochet the previous year, Hayek (1978) told a shocked
Rosten: ‘After all, there have been good dictators in the past; it’s very
unlikely that it will ever arise. But there may be one or two experiments
where a dictator restores freedom, individual freedom.’30 After decades
of devotion to Hayek and his ‘pretend to agree’ use of Franklin’s rheto-
ric, Rosten must have been horrified to discover what lay behind it:

I can hardly think of a program that will be harder to sell to the American
people. I’m using ‘sell’ in the sense of persuade. How can a dictatorship
be good?’

Hayek (1975) had earlier described his ‘sole and exclusive truth’
knowledge construction model: ‘You might object that I have left out
some facts, and that the result would have been different if I had not
neglected those other facts. Well, my answer to this objection would
be: quote the facts, please, and I shall be willing to consider them.’
The Austrian School deflation that facilitated Hitler’s rise to power was
based on the ‘alternative explanation of extensive unemployment—
which, until the middle of the’ 30s, was fairly widely accepted and
which,’ Hayek (1975) believed, ‘is still the true and correct one.’

29Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

30Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 10 ‘Shooting in Cold Blood’    
487

But it had the ‘unfortunate prop-erty of not being verifiable by statisti-

cal methods. To an economist today, however, only that is true which
can be proved statistically, and everything that cannot be demon-
strated by statistics can be neglected; hence, the true theory has been
disregarded.’
Hayek (1975) continued: ‘You may be puzzled by the assertion
that there should be a true theory which cannot be statistically con-
firmed. The explanation is somewhat complex and I can indicate it only
very briefly. I have made the subject the main content of my Nobel
Memorial lecture, which I delivered in Stockholm four months ago, but
I will try to put it concisely. It is a very good illustration of a more gen-
eral phenomenon, namely, that with modern scientific prejudices about
what is to be accepted a valid argument, it can happen that a false the-
ory is regarded as true because there is some statistical evidence in its
favor, and that the true theory is rejected because, by its very nature, it
cannot be supported by statistical evidence—which is the only kind of
observation which counts for that point of view.’
Hayek (1975) described the ‘prime duty of an economist to devote at
least a large part of his energies to persuading the public of one essen-
tial truth which people will have to understand before we can hope for
a more sensible policy. And that basic truth, as I see it, is simply that
the present unemployment is a direct and inevitable consequence of
the so-called full employment policy we have been pursuing for the last
twenty-five or thirty years.’
Hayek (1978), who had a patronising attitude towards his serf-like
disciples, presumably regarded Rosten as one of his ‘inferior mediocri-
ties,’ and so replied nonchalantly: ‘Oh, it will never be called a dicta-
torship; it may be a one-party system.’ Apparently clutching at straws,
Rosten asked: ‘It may be a kindly system?’ To which Hayek (1978) reas-
sured him:

A kindly system and a one-party system. A dictator says, ‘I have 9 percent

support among the people.’

In The Road to Serfdom, Hayek (2007 [1944], 75–76) stated that it was
‘important to remember’ that, for some time before Hitler took power,
488    
R. Leeson

Germany had reached a stage in which it ‘had to be governed dicta-

torially.’ Hayek—who promoted the deflation that fatally weakened
democracy—continued: ‘Nobody could then doubt that for the time
being democracy had broken down and sincere democrats like Bruning
were no more able to govern democratically than Schleicher or von
Papen.’

Hitler did not have to destroy democracy; he merely took advantage of

the decay of democracy and at the critical moment obtained the support
of many to whom, though they detested Hitler, he yet seemed the only
man strong enough to get things done. (emphasis added)

References

Archival Insights into the Evolution of Economics

(and Related Projects)

Leeson, R. (Ed.). (2015). Hayek: A Collaborative Biography Part II Austria,

America and the Rise of Hitler, 1899–1933. Basingstoke, UK: Palgrave
Macmillan.
Leeson, R. (2018). Hayek a Collaborative Biography Part XI: Orwellian
Rectifiers, Mises’ ‘Evil Seed’ of Christianity and the ‘Free’ Market Welfare State.
Basingstoke, UK: Palgrave Macmillan.
Leeson, R. (2019). Hayek: A Collaborative Biography Part XVII Pinochet,
Human Rights, and Law, Legislation and Liberty. Basingstoke, England:
Palgrave Macmillan.

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presidents-monarchs-dictators.
 11
What ‘Things’ Did Hitler ‘Get Done’?

1 Defending ‘Private Property’

and Eliminating the ‘Danger to Intellectual
Freedom’ Posed by Labour Trade Unions
Two trade unions emerged from the Third Estate: for employers and
for labour. Hitler (1939 [1925], 44) reflected: ‘The political bourgeoi-
sie failed to understand – or, rather, they did not wish to understand
- the importance of the [labour] trades union movement. The Social
Democrats seized accordingly the advantage offered them by this mis-
taken policy and took the labour movement under their exclusive pro-
tection, without any protest from the other side.’
Time (1967 [13 March 1933], 96) reported that ‘von Hindenburg
signed a decree giving Chancellor Hitler & Cabinet a tyrant’s powers.’
Chief Government Press Officer Walther Funk declared: ‘A new era has
begun! Parliament and Democratic times are past.’ Funk later testified
at his Nuremberg trial that by 1931, ‘my industrial friends and I were
convinced that the Nazi party would come to power in the not too dis-
tant future.’ By the end of 1930, Hitler needed to meet the payroll of

© The Author(s) 2019 497

R. Leeson, Hayek: A Collaborative Biography,
Archival Insights into the Evolution of Economics,
https://doi.org/10.1007/978-3-319-78069-6_11
498    
R. Leeson

hundreds of full-time officials and about 100,000 SA and SS members.

In his 1934 memoirs, Hitler’s (then) chief press officer, Otto Dietrich,
recalled in the summer 1931, the ‘Führer suddenly decided to concen-
trate systematically on cultivating the influential industrial magnets’ and
‘traversed Germany from end to end, holding private interviews with
prominent’ business ‘personalities … Hitler had considerable finan-
cial backing from a fairly large chunk of the German business world’
(cited by Shirer 1960, 180–181, 183; Fest 1973, 448; Turner 1985,
173).1 Also in 1931, Hitler’s advisory group of German industrialists
was formed (Schweitzer 1964, 100–101); and ‘von’ Mises (2006 [28
February 1931], 158, 166–167)—a lobbyist for the Lower Austrian
Chamber of Commerce and Industry—informed the Association of
German Industry that labour unions were aiming for ‘pseudo-economic
democracy … If this system were carried out, it would disorganize the
entire production apparatus and thus destroy our civilization.’
Mises was expressing a standard bugaboo for the business commu-
nity: one tenet of the socialist trade union

program called for an ever-increasing voice for workers in decision-

making at the company level. Since that could come about only at the
expense of the authority of management, ‘economic democracy’ appeared
to Germany’s business leaders as nothing other than socialisation in new
garb. (Turner 1985, 45)

Thyssen, whose views were ‘shaped by Catholic social thought,’ was an

‘implacable foe of the Republic’ (Turner 1985, 51–52, 45). Referring
to the Social Democratic leaders who ‘rose to power after the collapse
of the empire,’ ‘von’ Mises (1985 [1927], 43) denigrated ‘everywhere
ridiculous’ democracy: ‘Those of the old regime had displayed a certain
aristocratic dignity, at least in their outward demeanor. The new ones,
who replaced them, made themselves contemptible by their behavior.’
In Socialism, Mises (1951 [1932], 99, 156, 157, 168, 190) declared
that ‘In the life of a genius, however loving, the woman and whatever

1Turner (1985, 171–172) noted that Dietrich, a proponent of ‘the big lie,’ wrote a post-war

memoir in which he described the business leaders that Hitler met as displaying ‘a cool political
reserve and awaited developments.’ Was Dietrich lying in 1934? Or after the war?
 11 What ‘Things’ Did Hitler ‘Get Done’?    
499

goes with her occupy a small place … Even the man of genius whose
married life seems to take a normal course, whose attitude to sex does
not differ from that of other people, cannot in the long run feel him-
self bound by marriage without violating his own self. Genius does not
allow itself to be hindered by any consideration for the comfort of its
fellows even of those closest to it. The ties of marriage become intolera-
ble bonds which the genius tries to cast off or at least to loosen so as to
be able to move freely … Talent and genius are the gifts of God, and the
individual is not responsible for them, as is often said. But this does not
solve the problem whether it is expedient or practicable to pay all hours
of labour the same price … why should those be penalized in whose lap
Nature has not placed the great gifts of talent and genius? Distribution
according to the merits of the individual would open the door wide to
mere caprice and leave the individual defenceless before the oppression
of the majority …Genius is truly a gift of God … Genius will soon find
a way to win its own freedom.’
On 26 January 1932, the pin-striped Hitler, at Thyssen’s invitation,
expressed similar sentiments in an address to the Düsseldorf Industry Club:

When the capable minds of a nation, which are always in the minority,
are regarded as only of the same value as all the rest, then genius, capacity,
the value of personality slowly rendered subject to the majority, and this
process is then largely named the rule of the people. This is not the rule
of the people but in reality the rule of stupidity, of mediocrity, of half-
heartedness, of cowardice, of weakness, and of inadequacy. It is more the
rule of the people to let people be governed and led in all the walks of life
by its most capable individuals, those who are born for the task, rather
than … by a majority who in the very nature of things must always find
this realm is entirely alien to them. (Fest 1973, 456, 458–459; Fischer
2002, 29; Noakes and Pridham 1994, 94–95)

Hitler also went to ‘considerable pains to explain, in Social Darwinist

terms, his approval of private enterprise and the unequal distribution
of economic rewards. These could no longer be regarded as self-evident
principles, he warned, but must be ethically justified’ (Turner 1985,
209). When asked about religion, Hayek (1978) justified ‘the ethics of
the market’:
500    
R. Leeson

Well, that’s a very long story; I almost hesitate to talk about it. After
all, we had succeeded, so long as the great mass of the people were all
earning their living in the market, either as head of a household or of a
small shop and so on. Everybody learned and unquestionably accepted
that what had evolved was--the capitalist ethic was much older than
capitalism--the ethics of the market. It’s only with the growth of the
large organizations and the ever-increasing population that we are no
longer brought up on this ethic. At the same time that we no longer
learned the traditional ethics of the market, the philosophers were cer-
tainly telling them, ‘Oh, you must not accept any ethical laws which
are not rationally justifiable.’ These two different effects--no longer
learning the traditional ethics, and actually being told by the philos-
ophers that it’s all nonsense and that we ought not to accept any rules
which we do not see have a visible purpose--led to the present situa-
tion, which is only a 150-year event. The beginning of it was 150 years
ago. Before that, there was never any serious revolt against the market
society, because every farmer knew he had to sell his grain … the revolt
against this is an affair of the last 150 years. Even in the nineteenth
century, people accepted it all as a matter of course. An economic cri-
sis, a loss of a job, a loss of a person, was as much an act of God as a
flood or something else. It’s certain developments of thinking, which
happened since, which made people so completely dissatisfied with it.
On the one hand, that they are no longer willing to accept certain eth-
ical or moral traditions; on the other hand, that they have been explic-
itly told, ‘Why should we obey any rules of conduct, the usefulness
or reasonableness of which cannot be demonstrated to us?’ Whether
man can be made to behave decently, I would even say, so long as he
insists that the rules of decency must be explained to him, I am very
doubtful. It may not be possible.2 To the extent to which science is
rationalistic in that specific sense of the Cartesian tradition, which
again comes in the form of, ‘Don’t believe in anything which you can-
not prove.’ And our ethics don’t belong to the category of that which
you can prove.3

2Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

3Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 11 What ‘Things’ Did Hitler ‘Get Done’?    
501

At his Nuremberg trial, Funk testified that big Rhineland mining con-
cerns had urged him to join the Nazi movement

in order to persuade the party to follow the course of private enterprise

… At that time the leadership of the party had completely contradic-
tory and confused views on economic policy. I tried to accomplish my
mission by personally impressing on the Führer and the party that pri-
vate initiative, self-reliance of the businessman, the creative powers of
free enterprise, et cetera, be recognised as the basic economic policy of
the party. The Führer personally stressed time and again during talks with
me and industrial leaders to whom I had introduced him, that he wasn’t
an enemy of state economy and of so-called ‘planned economy’ and that
he considered free enterprise and competition is absolutely necessary
in order to gain the highest possible production. (cited by Shirer 1960,
180–181)

With respect to the enemy of the ‘free’ market ‘order,’ Hayek (1978)
was ‘most concerned, because it’s the most dangerous thing at the
moment, with the power of the [labour] trade unions in Great Britain.
While people are very much aware that things can’t go on as they are,
nobody is still convinced that this power of the trade unions to enforce
wages which they regard as just is not a justified thing.4 They can use
force to prevent people from doing the work they would like.’5
Wilhelm Keppler recalled Hitler announcing that when he achieved
power, he would abolish labour unions and political parties—although
Turner (1985, 243) doubted that he make such a statement (at least
in public). In power, however, Hitler abolished all non-Nazi political
parties and all labour unions—union leaders were taken into ‘protec-
tive custody’ and workers were obliged to join the National Socialist
Union. Hitler received a 0.03% levy on wages and salaries of employees
of the German Trade Association (Davidson 1966, 192–193, 230, 204;

4FriedrichHayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
5Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
502    
R. Leeson

Shirer 1960, 252–253; Bullock 1991, 133). Deflation had been ‘one of
the strongest agents working towards the Republic’s downfall’ (Stolper
1967, 116–119). Pinochet, the strongest agent working towards the
Chilean Republic’s downfall, sought to abolish all political parties and
trade unions (Barros 2004, 188): Hayek was pleased that his dictator-
ship had avoided ‘[labour] trade union privileges of any kind’ (cited by
Farrant et al. 2012, 522).
In 1919, the Weimar Republic removed the privileges of the German
nobles by imposing equality before the law on them, but unlike their
Austrian cousins, they were allowed to keep the noble appendages to
their surnames. The Social Democratic and Communist parties were
united on one issue: expropriating the ‘property’ of the former ruling
houses without compensation. After gathering more than 30,000 signa-
tures in support, a referendum was held in June 1926: 96.1% voted in
favour of expropriation with compensation (the turnout, however, was
39.3%, too low for the referendum to be legally binding).
In ‘Intellectuals and Socialism,’ Hayek (1949, 432–433) proclaimed:
‘we must be able to offer a new liberal programme which appeals to the
imagination. We must make the building of a free society once more
an intellectual adventure, a deed of courage. What we lack is a liberal
Utopia … a truly liberal radicalism.’ In ‘The Great Utopia,’ Hayek
(2007 [1944], 81), quoting Eduard Heimann—liberalism has the ‘dis-
tinction’ of being the doctrine ‘most hated’ by Hitler—asserted that this
hatred had ‘little’ occasion to show itself in practice because by the time
Hitler became Chancellor, liberalism was ‘to all intents and purposes
dead in Germany. And it was Socialism that had killed it.’
In 1925, Mises (1996 [1929], 71, 94) criticised the Nazis for not
defending ‘capitalism and private property’:

In postwar Germany and Austria, a movement has been steadily gaining

significance in politics and the social sciences that can best be described
as Anti-Marxism. Occasionally its followers also use this label. Their
point of departure, their mode of thinking and fighting, and their goals
are by no means uniform. The principal tie that unites them is their dec-
laration of hostility toward Marxism. Mind you, they are not attacking
socialism, but Marxism, which they reproach for not being the right kind
 11 What ‘Things’ Did Hitler ‘Get Done’?    
503

of socialism, for not being the one that is true and desirable. It would
also be a serious mistake to assert, as do the noisy Social-Democrat and
Communist party literati, that this Anti-Marxism approves of or in any
way defends capitalism and private property in the means of production.
No matter what train of thought it may pursue, it is no less anticapitalis-
tic than Marxist … Anti-Marxism fully subscribes to Marxism’s hostility
towards capitalism. And it resents Marxism’s political program, especially
its presumed internationalism and pacifism. But resentment does not
lend itself to scientific work, or even to politics. At best it lends itself to
demagoguery.

According to Mises’ (1985 [1927], 19, 51) ‘The program of liberalism,

therefore, if condensed into a single word, would have to read: prop-
erty … All the other demands of liberalism result from this fundamen-
tal demand [emphasis in original].’ Having embraced Austrian business
cycle theory, did Hitler—a consummate political opportunist—take
note of Mises’ criticism? In June 1926, the ‘entire propertied classes’
supported the Princes. As did Hitler, who declared: ‘We stand for the
maintenance of private property … We should protect free enterprise as
the most expedient, or rather the sole possible, economic order’ (cited
by Heiden 1944, 287–288; Noakes and Pridham 1994, 47). Goebbels
confided to his diary: ‘I am staggered. Is that Hitler? A reactionary?
Amazingly awkward and uncertain of himself … The Princes’ settle-
ment! Rights must remain rights. Even for the princes. Questions of
private property not to be shaken! (sic!) Dreadful! I no longer believe
unqualifiedly in Hitler: this is a terrible thing: my inner security is gone’
(cited by West 1985, 180). Did Mises (1985 [1927], 51) pander to
Hitler the following year: ‘The victory of Fascism in a number of coun-
tries is only an episode in the long series of struggles over the problem
of property.’
Skousen’s 2013 Freedomfest ‘big debate’ addressed an Austrian obses-
sion: ‘Is democracy compatible with liberty or in conflict with lib-
erty?’6 On 20 February 1933, Chancellor Hitler extolled—to Gustav
Krupp von Bohlen und Halbach, chairman of the National Federation

6http://freedomfest.com/.
504    
R. Leeson

of German Industry (Reichsverband der Deutschen Industrie ) plus two

dozen other invited industrialists—the ‘virtues of private property,
inheritance rights, individual initiative, and personal responsibility. He
repeated his statement of a year earlier at the Düsseldorf Industry Club
about the incompatibility of political democracy with private enterprise’
(Turner 1985, 329–330).
Hayek (1978) reflected to Rosten (Chapter 7, above) and Jack High
about the incompatibility of political democracy with private enterprise:

I did see that our present political order made it almost inevitable that
governments were driven into senseless policies. Already the analysis of
the The Road to Serfdom showed me that, in a sense, Schumpeter was
right--that while socialism could never do what it promised, it was inev-
itable that it should come, because the existing political institutions
drove us into it. This didn’t really explain it, but once you realize that a
government which has power to discriminate in order to satisfy particu-
lar interests, if it’s democratically organized, is forced to do this without
limit-- Because it’s not really government but the opinion in a democ-
racy that builds up a democracy by satisfying a sufficient number of spe-
cial interests to offer majority support. This gave me a key to the reason
why, even if people understood economics correctly, in the present sys-
tem of government it would be led into a very stupid economics policy.
This led me to what I call my two inventions in the economics field.
On the one hand, my proposal for a system of really limited democracy;
and on the other--also a field where present government cannot pursue
a sensible policy--the denationalization of money, taking the control of
money out of the hands of government. Now, once you are aware that,
although I am very little concerned with influencing current politics, the
current institutional setup makes a good economics policy impossible,
of course you’re driven to ask what can you do about this institutional
setup.7

Hayek (1978) also reflected to Buchanan about the incompatibility of

political democracy with private enterprise:

7Friedrich Hayek, interviewed by Jack High date unspecified 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 11 What ‘Things’ Did Hitler ‘Get Done’?    
505

The conception was still very large then that coercion could be used only
in the enforcement of general rules which applied equally to all, and the
government had no powers of discriminatory assistance or prevention of
particular people. Now, the dreadful thing about the forgetting of this
is that it’s, of course, no longer the will of the majority, or the opinion
of the majority, I prefer to say, which determines what the government
does, but the government is forced to satisfy all kinds of special interests
in order to build up a majority. It’s as a process. There’s not a majority
which agrees, but the problem of building up a majority by satisfying par-
ticular groups. So I feel that a modern kind of democracy, which I call
unlimited democracy, is probably more subject to the influence of special
interests than any former form of government was. Even a dictator can
say no, but this kind of government cannot say no to any splinter group
which it needs to be a majority … I believe there is a chance of making
the intellectuals proud of seeing through the delusions of the past. That
is my present ambition, you know. It’s largely concerned with socialism,
but of course socialism and unlimited democracy come very much to the
same thing. And I believe--at least I have the illusion--that you can put
things in a way in which the intellectuals will be ashamed to believe in
what their fathers believed.8

‘Free’ market economists are not ashamed to believe what their

funders believe. According to the Economist (30 June 2018), Bork and
Gregory Sidak’s (2012) AEI paper on ‘Internet Search and the Nature
of Competition’—in which they concluded that ‘Punishing Google
for being a successful competitor would stifle innovation and dynamic
competition’—had been ‘commissioned by Google, which needed
ammunition to defend itself in an antitrust investigation at the time.’9
In the short run, Bork was a beneficiary of Nixon’s 20 October 1973
Saturday Night Massacre. According to a four-star officer, Nixon at his
annual ceremonial meeting with the Joint Chiefs of Staff (22 December
1973)

8Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
9 https://www.economist.com/special-report/2018/06/30/how-regulators-can-prevent-

excessive-concentration-online.
506    
R. Leeson

kept on referring to the fact that he may be the last hope, the eastern
elite was out to get him. He kept saying, ‘This is our last and best hope.
The last chance to resist the fascists [of the left].’ His words brought me
straight up out of my chair. I felt the President, without the words having
been said, was trying to sound us out to see if we would support him in
some extra-constitutional action. He was trying to find out whether in a
crunch there was support to keep him in power. (cited by Hersh 1983)

Five years later, Hayek (1978) implicitly revealed to Bork his delusions
about the self-restraint of dictators: ‘I don’t think you have rules of
conduct, but you emphasize rules that determine a state of affairs. We
can even describe a desirable state of affairs in the form of rules. They
should not be rules of conduct; rules of conduct’ should be ‘only for a
dictator, not for the individuals. Rules of individual conduct which lead
to a peaceful society require private property as part of the rules.’10
Hitler’s strategy was

a ‘policy of catastrophe,’ that is so to muddle things up that of

chaos National Socialism would reap the advantage (Clark 1964 [1935],
323); the Nazi’s behaviour was not dissimilar to that of the apocryphal
(and not always so apocryphal) fireraiser who, as a member of the local
volunteer fire brigade, fights the very fires he has started (Fischer 2002,
92); That is Hitler. The house must burn for the sake of this flame.
(Heiden 1944, 419)

In The Road to Serfdom, Hayek (2007 [1944], 110) pretended to be a

promoter of democracy: it is ‘now’ often stated that democracy will

not tolerate ‘capitalism.’ If ‘capitalism’ means here a competitive sys-

tem based on free disposal over private property, it is far more impor-
tant to realise that only within this system is democracy possible. When
it becomes dominated by collectivist creed, democracy will inevitably
destroy itself.

10Friedrich Hayek, interviewed by Robert Bork 4 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 11 What ‘Things’ Did Hitler ‘Get Done’?    
507

On 13 April 1928, the Nazis issued a statement:

Since the NSDAP accepts the principle of private property, it is

self-evident that the phrase ‘confiscation without compensation’ refers
simply to the creation of possible legal means for confiscation, when nec-
essary, of land acquired legally or not managed in the public interest. It is,
therefore, aimed primarily against Jewish companies which speculate in
land. (cited by Noakes and Pridham 1994, 61)

Simultaneously, Hitler was receiving 1500 marks a month from a

divorced ex-Duchess Eduard von Sachsen-Anhalt, who he had prom-
ised to make a Duchess again (Heiden 1944, 287–288). He also had the
support of the last reigning Duke of Saxe-Coburg and Gotha (a male-
line grandson of Queen Victoria who had been deposed in 1918), who
represented the Nazi Party in the Reichstag (1937–1945) and hosted
the Duke and Duchess of Windsor, the former King-Emperor and his
wife, during their 1937 post-abdication tour of Germany.

2 Anschluss
In Europe, ‘Fascism,’ as defined and praised by Mises (1985 [1927]),
overthrew democracy in Italy (1922), Spain (1923), Portugal (1926),
Germany (1933), Austrian (1934), and Spain (1936), and in Latin
America, similar operations occurred in what became known as the
Operation Condor countries: Paraguay (1954), Brazil (1964), Bolivia
(1971), Uruguay (1973), Chile (1973), and Argentina (1976). Alois
Hudal (1885–1963), a Roman Catholic titular bishop who was head of
the Austrian-German congregation of Santa Maria dell’Anima in Rome,
was one of the links between the two episodes. In his 1937 book,
Die Grundlagen des Nationalsozialismus (The Foundations of National
Socialism ), Hudal praised Hitler, and when it was published sent a copy
to Hitler dedicated to ‘The Siegfried of German Greatness.’ He later
established ‘ratlines’ to Latin America and elsewhere—escape routes for
Nazi war criminals (Steinacher 2011).
508    
R. Leeson

According to Rothbard (1994, 4), the ‘Austrolibertarian wing’

of the Mont Pelerin Society is centred in Spain and Latin America.
Ronald Hamowy (2003) described their influence: ‘As is customary, the
Mt. Pelerin meetings were held in one of the most expensive hotels in
the city as befitted the fact that almost all attendees were either think-
tank executives traveling on expense accounts, South American latifun-
dia owners, for whom hundred-dollar bills were small change, or the
officers of the Society itself, a self-perpetuating oligarchy who, thanks
to its members’ dues, traveled around the world in first-class accommo-
dations.’ Coincidentally, perhaps, in ‘A Prophet Without Honor in His
Own Land,’ Bettina Greaves (1994) reported that Mises associated civ-
ilisation with Vienna’s medieval city fortifications (the ring road around
the Old Town): ‘Maybe our civilization will end, maybe grass will grow
on the Ringstrasse. Maybe we will all have to leave Austria. But where
shall we go and what can we do? For what jobs are we qualified?’ Mises
speculated that ‘he and his friends might wind up in a Latin American
country.’11
Time (1967 [13 February 1933], 94) reported that newly appointed
Chancellor Hitler ‘dynamically but disarmingly’ stated: ‘It is impossi-
ble to head a ship on the right course in a moment. It takes time. All
I ask is four years.’ The Wall Street Journal columnist, William Peterson
(2009, 22), invited his readers to ‘Hear then how Mises put such key
ideas of consumer sovereignty and market democracy … Hear his
style as well as substance.’ Peterson then reproduced a section from
Human Action The Scholars’ Edition from which Mises’ (1998 [1949],
270) lobbying for the Warfare State had been (silently) removed: the
direction of ‘all economic affairs is in the market society a task of the
entrepreneurs. Theirs is the control of production. They are at the helm
and steer the ship. A superficial observer would believe that they are
supreme. But they are not.’ That is because, according to Mises, they
are ‘bound to obey unconditionally the captain’s orders. The captain is

11Tongue-in-cheek, Mises thought that they might all be employed in a night club:

‘Unfortunately, I am no good as a dancer or singer, and I don’t think I would be a good waiter.
I will have to be the doorman standing in a uniform in front of the place.’
 11 What ‘Things’ Did Hitler ‘Get Done’?    
509

the consumer.’ Neither entrepreneurs nor the farmers nor the capital-
ists ‘determine what has to be produced. The consumers do that.’ If a
businessman does ‘not strictly obey the orders of the public as they are
conveyed to him by the structure of market prices, he suffers losses, he
goes bankrupt, and is thus removed from his eminent position at the
helm.’ Other ‘men who did better in satisfying the demand of consum-
ers replace him.’
Even before the disaster of the Austrian-promoted deflation (1929–
1933/1934), the fragile post-dynastic democracies in Austria and
Germany had been undermined by Hayek, Mises et al.
Four years after the demise of the Habsburgs, Mises (1922, 435;
1951 [1932], 443) plagiarised ‘consumer sovereignty’ to provide
an alternative religion to ‘The Kingdom of God’ which had failed
to bolster neo-feudalism (Leeson 2017). Signing himself illegally
‘von Mises’ (1985 [1927], xvi), the Preface to the English language
version of Liberalismus again conflated democracy with this ‘con-
sumer sovereignty’: the ‘social order created by the philosophy of the
Enlightenment assigned supremacy to the common man.’ It was this
social order that Mises and Hayek sought to undermine and replace (or
at least neutralise). The tobacco companies that fund the ‘free’ market
entice consumers into preference-altering addiction (submission)—but
according to Mises, in precapitalistic society, wealth accrued to those
who had the ‘strength to beat’ the weak into submission. In the ‘free’
market, there is ‘only one way open to the acquisition of wealth, viz., to
succeed in serving the consumers in the best possible and cheapest way.’
This ‘democracy’ of the market corresponds to the system of representa-
tive government.
In 1918–1919, the Habsburg Eastern Reich, like the Hohenzollern
Second Reich, had collapsed because it had been a ‘State without full
national support’ (ein Staat ohne Staatsvolk )—and ‘von’ Mises and ‘von’
Hayek lost the institutional apparatus which had provided and pro-
tected their intergenerational entitlement programme. Yet ‘blind obe-
dience to the petty tyrants who ruled as princes’ was ‘ingrained in the
German mind’—and Hitler rose to power ‘aided by a military caste and
many a strange intellectual’ (Shirer 1960, 90).
510    
R. Leeson

Stalin persecuted ‘enemies of the people’, while Hitler condemned

Jews as ‘enemies of the State.’ Referring to ‘the enemies of society,’ Mises
(1927, 31–32; 1985 [1927], 35) promoted the use of ‘violence and
coercion’ (‘Gewalt und Zwang’ ) against those who sought to undermine
the social order (‘die Gesellschaftsordnung zu untergraben ’). In Raico’s
translation, this became an advocacy of ‘force and compulsion against
those who are prepared to undermine society by their behaviour.’ Mises
(1927) made 58 references to ‘social order’ (Gesellschaftsordnung ), but
Raico translated only 28.
Mises (1985 [1927], 37, 160, 170, 175) defined the State as hav-
ing the ability to ‘compel’ those who did not respect the ‘private prop-
erty of others … the protection of property, liberty, and peace.’ The
caste-obsessed ‘von’ Mises denigrated non-Fascists and those who rup-
tured the ‘unity of the state’: contemporary political parties are the
‘champions not only of certain of the privileged orders of earlier days that
desire to see preserved and extended traditional prerogatives that liberal-
ism had to allow them to keep because its victory was not complete, but
also of certain groups that strive for special privileges, that is to say, that
desire to attain the status of a caste. Liberalism addresses itself to all and
proposes a program acceptable to all alike.’ ‘All’ contemporary political
parties and all ‘modern party ideologies originated as a reaction on the
part of special group interests fighting for a privileged status against liber-
alism.’ People have ‘begun to speak of a crisis of the modern state and of
a crisis of the parliamentary system. In reality, what is involved is a crisis
of the ideologies of the modern parties of special interests.’ The ‘parties
of special interests, which see nothing more in politics than the securing
of privileges and prerogatives for their own groups, not only make the
parliamentary system impossible; they rupture the unity of the state and of
society [emphases added]. They lead not merely to the crisis of parliamen-
tarism, but to a general political and social crisis.’
Wolfgang Kapp’s 13 March 1920 coup proclamation declared: ‘We
shall govern not according to theories but according to the practical
needs of the State and the nation as a whole. In the best German tra-
dition the State and the nation must stand above the conflict of classes
and parties’ (cited by Röhl 1970, 122). In ‘Hitler’s Secret Pamphlet
for Industrialists, 1927,’ Turner (1968a, 350–351) reported that The
 11 What ‘Things’ Did Hitler ‘Get Done’?    
511

Road to Resurgence had been written at Emil Kirdorf ’s suggestion for

Germany’s leading industrialists. While promoting Lebensraum, Hitler
insisted that only the National Socialists could ‘provide the ideals
needed to achieve this national solidarity [emphasis added] and bring
to a close Germany’s time of weakness and humiliation.’ According to
Conan Fischer (2002, 53), ‘most Germans did take Hitler’s message to
be allegorical rather than literal, with even some German Jews reluc-
tant to accept that his anti-Semitism might ultimately be played out in
practice. He had provided the mobilising myth which emphasised the
sameness of all Germans precisely at a time when a divided, fragmented
society was looking for such an escape from crisis.’
Mises (2009 [1978 (1940)], 61) insisted that he had ‘always’ drawn a
‘sharp line’ between his ‘scientific’ and his ‘political activity.’ In ‘science,
compromise is a betrayal of truth. But compromise is essential in poli-
tics, where results can oftentimes only be achieved through the reconcil-
iation of conflicting views.’ Although science is typically a collaborative
community effort, Mises asserted that ‘Science is an accomplishment
of the individual, and not, by definition, a collaborative effort.’ In con-
trast, politics is ‘always a collaboration of men and often means compro-
mise.’ Hitler insisted: ‘It ought never to be forgotten that no really great
achievement has ever been affected in this world by coalitions; instead
they have always been due to the triumph of one individual man’ (cited
by Fischer 2002, 174). The anti-Bolshevik role played by ‘Ludendorff
and Hitler’ in Germany and Mussolini in Italy was played in Austria by
Mises (2009 [1978 (1940)], 62–64): his ‘political activity’ from 1918
to 1934 can be ‘broken down’ into four stages. The ‘most important’
task he undertook during the first period—the twelve months after the
Habsburg collapse was the ‘forestalling of a Bolshevist takeover.’ This
was the triumph of one individual man: ‘The fact that events did not
lead to such a regime in Vienna was my success and mine alone. Few
supported me in my efforts, and any help was relatively ineffective.’
According to Bettina Greaves (2015), ‘Mises built on subjective
value theory and added to knowledge. This was Mises’s genius!’ Hitler
insisted that ‘a single idea of genius is worth more than a whole life-
time conscientious office work’ (cited by Fest 1970, 44). In his Memoirs,
Mises (2009 [1978 (1940)], 62–64) prioritised his memories: it is ‘not
512    
R. Leeson

necessary for the purpose of this manuscript to say more about the mul-
tifaceted jobs that consumed my time while with the Handelskammer. It
was hard work, and the many trivialities were often quite burdensome.
But this is uninteresting, and I prefer to address the political aims that
gave my work direction [emphasis added].’
Before the Great Depression, the Nazis were electorally insignifi-
cant. They gained traction by participating in the 1928 ‘Liberty Law’
(Freiheitsgesetz ) campaign to renounce reparations, war guilt and the
Versailles-sanctioned occupation of (what they regarded as) German ter-
ritory. On 3 February 1931, at a meeting organised by Funk, two lead-
ing insurance executives, Kurt Schmitt and August von Finck, promised
Hitler five million marks to fund his storm troopers in the event of a
civil war (Turner 1985, 150). Three months later, the collapse of the
American banking system further weakened the European economies—
thus assisting Hitler’s rise to power.
Mises (2009 [1978 (1940)], 85, 88, 89) was the ‘economist of the
land. I was the economic conscience of postwar Austria.’ Although
Hayek had not predicted the Great Depression, Mises—a quasi-public
servant—was aware that it was coming and did nothing to stop it. He
told his fiancé that he had been offered a ‘high’ position at the Credit
Anstalt bank which he had decided to reject because a great ‘crash’
would soon be coming and he did not want his name in any way con-
nected with it. On 11 May 1931, Credit Anstalt went into bankruptcy,
‘exactly’ as Mises had told her beforehand. Margit Mises (1976, 31) cor-
rectly connected this banking crisis to Hitler’s rise to power.
In December 1931 (seven months after the banking crisis hit
Europe), Chancellor Brüning (30 March 1930–30 May 1932), reduced
most wages by 10–15 per cent; unemployment rose from one-sixth
to one-fifth of the German labour force. He hoped that this austerity
would assist the process of ending reparations (Galbraith 1975, 173;
Haberler 1986, 425; Mommsen 1996, 364; Turner 1985, 104–105,
158–161, 204–205). Andreas Korsh detected the influence of Austrian
business cycle theory: the ‘economic policies carried out by Brüning had
powerful support in neoclassical price theory, according to which a free
market economy left to itself, without state interference, regulates itself
and finds its way back to full employment’ Austrian ‘overinvestment
 11 What ‘Things’ Did Hitler ‘Get Done’?    
513

theory was widely held in Germany at the time of the economic crisis’
(cited by Hutchison 2000, 157).
Hayek (1978) sought to recruit ‘secondhand dealers in ideas’:

what I always come back to is that the whole thing turns on the activi-
ties of those intellectuals whom I call the ‘secondhand dealers in opinion,’
who determine what people think in the long run. If you can persuade
them, you ultimately reach the masses of the people.12

As Hitler was rising to power, Mises had succeeded in this regard.

Referring to Mises’ letter to Ugo Papi, written six weeks after Hitler
became Chancellor, Hülsmann (2007, 585–587) concluded that by
1933, Mises believed that the monetary theory of the trade cycle had
become the ‘dominant’ theory in Germany and Austria. According to
The Last Knight of Liberalism, Mises was in a celebratory mood: three
1931 publications epitomized Mises’ ‘central’ role in this change—the
most important of which was the third edition of Adolf Weber’s text-
book, which Mises concluded was the ‘most significant’ German-
language textbook of economics of its day. On 15 November 1931,
Mises informed Weber that he greeted the ‘success’ of his book as a
‘sign’ that ‘public opinion’ was beginning shifted in the direction of
‘sound ideas.’ Hülsmann (2007, 660) reported that in Georg Halm
revised edition of the late Ludwig Pohle’s standard textbook on capital-
ism and socialism, the ‘great bulk’ of the extensive additions embraced
a more radical rejection of socialism, ‘bolstered’ by quotations from
Mises.
Hülsmann (2007, 660) also noted that in a textbook on mone-
tary economics, a Frankfurt professor (identified only by his surname)
had acknowledged Mises’ ‘achievements.’ Hülsmann was referring to
Siegfried Budge’s (1931) Lehre vom Geld published two years before
Hitler’s Gesetz zur Wiederherstellung des Berufsbeamtentums (The Law
for the Restoration of the Professional Civil Service) which terminated

12FriedrichHayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
514    
R. Leeson

Budge’s (1869–1941) Associate Professorship. In 1942, his wife, Ella

Henriette Adelheid Mayer, was deported to the Thereienstadt concen-
tration camp and exterminated. Coincidentally, ‘Holocaust Victim
Assets Litigation Case No. CV 96-4849’ refers in the same sentence to
the looted assets of both Budge ($4,600,000) and Hayek’s cousin Paul
Wittgenstein ($6,063,918.88), both Jewish.13
Hülsmann (2007, 661) referred to the ‘seeds’ that Mises had ‘planted’
in German ‘soil.’ What were those seeds? Mises ‘hoped’ that monetary
policymakers would be ‘wiser’ in the future and ‘heed’ his teachings.
The ‘Misesian message’ had become more ‘palatable’ to a broad ‘public.’
Schacht was President of the Reichsbank (1923–1930, 1933–1939)
and Reich Minister of Economics (1934–1937). According to Hoppe
(2009 [1997]), before the Christian Social Chancellor Dollfuss
(1892–1934) was ‘murdered for his politics, Mises was one of his clos-
est advisers.’ Mises promoted Anschluss and hoped to be appointed as
the above-party Minister of Finance: ‘At one time, I happen to know
privately, for your information, Mises had in his drawer all the papers
which should have enabled him from moment to moment take over the
finance ministry, which he hoped he would be called for, to stabilise the
currency. But he was never called for it. One of the great disappoint-
ments of his life’ (Hayek 1994, 70; see also Hayek 1956 cited by Mises
1984, 220).
In what according to Sennholz (2011, 71, editor’s note), is a refer-
ence to the Nazis, Mises (2011 [1929], 115), who—allegedly—sought
a ‘healthy recovery of the German economy,’ stated: ‘We can completely
agree with Anti-Marxism that the recovery of Germany must begin with
overcoming Marxism.’ Hitler sought to reconstruct economic life in
Germany and Austria. According to the Jewish-born Mises (2000 [1940],
27), the ‘quick reconstruction of economic life in Europe after 1918 was
the work of businessmen, among whom in Central Europe more than 50
percent and in Eastern Europe more than 90 percent were Jews.’
In The Road to Resurgence, Hitler made one reference to ‘the inter-
national Jew’—which he immediately linked with Marxist, suggesting

13http://www.swissbankclaims.com/Documents/Distribution%20Stats.pdf.
 11 What ‘Things’ Did Hitler ‘Get Done’?    
515

that Conservative Jews ‘were another matter.’ Hitler was ‘plainly seeking
to reassure his business audience that he was not interested in funda-
mental changes in Germany’s economic or social order … clearly seek-
ing to indicate that there was no reason to fear socialism from National
Socialism’ (Turner 1968a, 532). In October 1930, Goebbels organised
the ‘first pogrom’ against Jews, while Hitler proclaimed in Völkischer
Beobachter (Völkische Observer) that the ‘windows of Jewish stores
would be better protected than they were now under the reign of the
Marxist police’ (Fest 1973, 431–432).
The first sentence of Chapter 1 of Mein Kamf (1939 [1925] 17)
relates to ‘destiny’: ‘German Austria must be restored to the Great
German Motherland.’ Mises (2002 [1919], 61–62) insisted that it
was ‘beyond doubt’ that ‘we’ will carry through a political union with
Germany: ‘We’ want to merge with Germany and establish a Greater
German currency union. According to Mises (1985 [1927], 175),
attaching the ‘catchword’ Lebensunfähigkeit (lifelessness) to Austria
had had a ‘damaging’ effect. ‘Everyone’ in Austria and abroad was
‘convinced’ that Austria was not ‘viable’: such a ‘small’ country could
not retain its independence, especially when it needed to import essen-
tial raw materials. Austria should, therefore, seek ‘merger’ with a larger
economic entity, that is the ‘German Reich.’
In ‘The Reentry of German-Austria into the German Reich and the
Currency Question,’ Mises (2002 [1919], 72) stated that there was
‘no ambivalent answer’ to the question of whether German-Austria
shall maintain the independence of her currency or join a currency
union with Germany: ‘Political integration into Germany will necessi-
tate adoption of the German currency … German-Austria must adopt
the German currency if it wants to enter the German state.’ Whether
implemented immediately or in several stages, it was ‘Without a doubt
the ultimate goal of German-Austria’s integration into the German
monetary system must be the implementation of a full union in terms
of every aspect of the monetary and banking regime.’
In 1919, Mises declared that ‘a unitary German state is a political
and moral necessity’ and would become the ‘starting point of a new
calm and peaceful development in German affairs’ (cited by Silverman
1984, 69, 941). John Van Sickle (18 September 1930) recorded in his
516    
R. Leeson

diary that Mises still believed that some form of Anschluss was inevita-
ble (Leonard 2011, 93, n22). According to Leube (2003, 13), Hayek
also favoured Anschluss with Germany (without specifying whether
Hayek later changed his mind). Hitler’s propaganda minister pro-
claimed: ‘There can be no peace and stability in Europe until Germany
and Austria are united’ (Time 1967 [28 August 1933], 144). In 1938,
almost 100% of Austrians were recorded as having voted in favour of
joining Hitler’s Third Reich: the day after Anschluss, several of Mises’ fel-
low Chamber of Commerce and Industry

employees greeted each other with ‘Heil Hitler’. (Ebeling, n.d., 67)

Hayek (2007 [1944], 62) complained about the ‘superficial and mis-
leading view, which sees in National-Socialism merely as a reaction fer-
mented by those whose privileges or interests were threatened by the
advance of socialism.’ Fest (1973, 457) described the

atmosphere of ‘partiality’ or sympathy that surrounded Nazism. Many

elements within industry were frankly in favour of Hitler becoming
Chancellor, even though they were not themselves disposed to do any-
thing about it … They had never really accepted bourgeois democracy
with its consequent rights of the masses. The Republic had never been
their state. To many of them Hitler’s promise of law and order meant a
larger scope for enterprise, tax privileges, and restraints upon the unions.
Implicit within the slogan ‘salvation from the system,’ coined by Hjalmar
Schacht, were vague plans for restoring the old order of things. Petrified
remnants of the authoritarian state paradoxically survived more obsti-
nately in the dynamic business world than in almost any other stratum of
the German social structure.

The Bad Harzburg Front was an attempt by the press baron, Alfred
Hugenberg, to unite his Deutschnationale Volkspartei (German National
People’s Party) with the Nazis, the Stahlhelm paramilitary veterans’ asso-
ciation, the Agricultural League and the Pan-Germany League. Also
involved were two Hohenzollern Princes, retired Generals Walther von
Lüttwitz and Hans von Seeckt, industrialists Thyssen, Ernst Poensgen
(United Steel), Louis Ravene (the Iron Wholesalers’ Association) and
 11 What ‘Things’ Did Hitler ‘Get Done’?    
517

Blohm (Hamburg shipbuilding), plus bankers von Straus, Regendanz,

Sogemeyer and Schacht: ‘all the enemies of the Republic, with the
exception of the Communists, were deployed here: a variegated army of
the discontented, united less by a single aim than by a single animosity’
(Fest 1973, 451). According to Turner (1985, 168–169), nearly a quar-
ter of those attending were (like Mises) staff officials of industrial associ-
ations or cartels.
Schacht desired a ‘great and strong Germany and to achieve it I
would enter into an alliance with the Devil.’ Citing Thomas Mann—
the Devil is already present ‘where intellectual arrogance is wedded
to an antiquated and restricted frame of mind’—Fest (1970, 162)
reflected: ‘this raises the question which side of the table the Devil
was actually sitting in this alliance.’ Mises (2009 [1978 (1940)], 119,
72) later tried to distance himself from his previous advocacy of both
‘Fascism’ and Anschluss: ‘the situation caused me to waver at times
[emphasis added] in my position on the annexation program. I was not
blind to the dangers that would threaten Austrian culture if allied to
the German Reich. But there were moments in which I asked myself
whether the annexation was not a lesser evil than the continuation of a
policy leading, unfailingly, toward catastrophe.’
In The Road to Serfdom, Hayek (2007 [1944], 142) asserted that
‘Socialists, the cultivated parents of the barbarous offspring they have
produced, traditionally hope to solve this problem by education.’ In
May 1943, Mises re-interpreted Fascism as a eugenic or intergenera-
tional status issue: ‘I do not believe that a member of the Hitler youth
or of the equivalent groups in Italy, Hungary or so on can ever turn
toward honest work and non-predatory jobs. Beasts cannot be domes-
ticated within one or two generations’ (cited by Hülsmann 2007, 817).
In ‘Nazi Order,’ Hayek (1997 [1941], 173–174) asserted that the
material contained in Claud Guillebaud’s (1941) The Social Policy of
Nazi Germany was ‘exactly what is needed to disillusion the naive and
gullible who allow themselves to be beguiled by German promises’ and
is ‘certainly the right way to make the public recognise this less palat-
able but no less important truth. It is true that in reading it one feels
at times apprehensive about the effect this objective account will have
some readers to whom official propaganda (if the BBC may be thus
518    
R. Leeson

described) has represented Hitler as the very antithesis of socialism and

as the servant of capitalist interests … It is surely more important to
know the sources of Nazi strength than cherish illusions on this score.’
The proto-Nazi (and later card-carrying Nazi) von Hayek family was
one source of this strength.

3 Hayek, Mises and Hitler’s ‘The Road

to Resurgence’
After the fall of the Berlin Wall, ‘many’ of the 400-strong ‘Von
Habsburg clan have staked claims to properties previously confiscated
by the Communists’ (Watters 2005; Morgan 2011).14 Kirdorf was
a ‘union-hating coal baron who presided over a political slush fund
known as the ‘Ruhr Treasury’ which was raised by the West German
mining interests’ (Shirer 1960, 182; Bullock 1962, 149).
In 1927, Mises (1985 [1927], 49–51) sought to become the intellec-
tual Führer of a Nazi-Classical Liberal Pact. ‘Fascism,’ he insisted, would
never succeed as completely as Russian Bolshevism in ‘freeing’ itself from
the power of liberal ideas. Fascism did nothing to combat socialism except
to ‘suppress’ socialist ideas and to ‘persecute’ those who spread them. If
Fascists ‘really’ wanted to combat socialism, they would have to oppose it
with ideas. Mises would provide those ideas: there was ‘only one’ idea that
effectively opposed socialism—(Austrian) Classical Liberalism.
Assertions about the ‘final solution’ and the ‘last analysis’ are antithet-
ical to the non-Austrian version of Classical Liberalism. Red Terror pro-
moters (and others) sing

So comrades, come rally,

And the last fight let us face,
The Internationale,
Unites the human race.

14Otto von Habsburg continued: Sarkozy ‘points out that a state which subsidizes football clubs

and refuses to do any economic favors to religions who want to build churches is absurd.’
 11 What ‘Things’ Did Hitler ‘Get Done’?    
519

Foreshowing the 1941 Nazi invasion of the Soviet Union, Mises

(1985 [1927], 49–51) declared that the ‘victory of Fascism in a num-
ber of countries is only an episode in the long series of struggles
over the problem of property. The next episode will be the victory of
Communism.’ The ‘ultimate’ outcome of the struggle will be decided—
not by military might—but by ‘ideas’—which ‘group men into fighting
factions,’ encourage the uptake of arms and the decision about who the
arms will kill. Ideas ‘alone, and not arms,’ will in the ‘last analysis’ deter-
mine the outcome.
Two years earlier, Mises (2011 [1929], 81–82) described this emerg-
ing battle of ‘ideas’:

Marxian socialism is beckoning: ‘Class war, not national war!’ It is pro-

claiming: ‘Never again [imperialistic] war.’ But it is adding in thought:
‘Civil war forever, revolution.’ National socialism is beckoning: ‘National
unity! Peace among classes!’ And it is adding in thought: ‘War on the
foreign enemy!’ These solutions distill the ideas which are dividing the
German nation into two hostile camps.

Hitler asked ‘Privy Councillor’ Kirdorf ‘to help propagate these ideas in
your circles’ (Turner 1968a, 365; 1985, 92): Was Otto the Habsburg
Pretender in those ‘circles’?
Mises (2011 [1929], 95, 86, 81, n17) ‘completely’ agreed with the
Nazis that the ‘recovery of Germany must begin with overcoming
Marxism’—adding that the inspirer of ‘nationalistic German Anti-
Marxism’ who had recently introduced Hayek to the Austrian School of
Economics was part of the same coalition: ‘We must not search for ideas
of national socialism just within the National Socialist Party, which is
merely a part—in questions of party tactics an especially radical part—
of the greater movement of national socialism that comprises all people’s
parties. The most eminent literary spokesmen for national socialism are
Oswald Spengler and Othmar Spann.’
Was Mises part of Kirdorf ’s ‘circles’? Mises (2009 [1978 (1940)], 85,
88, 89) described himself as ‘the economist of the land. I was the eco-
nomic conscience of postwar Austria.’ Secretaries and party leaders ‘vis-
ited my office more often than I visited theirs.’ He was the ‘Austrian
520    
R. Leeson

delegate to the international Handelskammer and a member of many

international commissions and committees.’
German big business was a species of ‘organised capitalism’ with,
by 1925, over 1500 industrial cartels, whose function was to ‘stabilise’
the market by setting prices and limiting production. This ‘organized’
character was assisted by a ‘highly developed structure of well-financed
and professionally staffed trade associations, or Verbände,’ which were
coordinated through the Vereinigung der Deutschen Arbeitgeberverbände
(union of employers) and the Reichsverband der Deutschen Industrie. An
intermediary coordinating role for these lobby groups was played by a
‘network of chambers of commerce and industry.’ Government favours
made ‘big business seem very much a pampered child of imperial
Germany’ (Turner 1985, xix, 3).
Along with Dollfuss and Edmund Palla, the Secretary of the
Chamber of Labour, Mises (2009 [1978 (1940)], 62) belonged to the
three-member publication committee of the Economic Commission,
which published a report on Austria’s economic ‘difficulties.’15
According to Margit Mises (1976, 23–24, 30), her husband followed
politics in Germany and Austria with ‘passionate’ interest and fre-
quently travelled abroad as the representative of the Austrian Chamber
of Commerce. Mises (2009 [1978], 85) emphasised his German cre-
dentials: he had participated as a ‘silent’ observer in the 1909 and 1911
meetings of the Verein für Sozialpolitik and in 1919 was elected a mem-
ber of the committee. Recognised as ‘the’ representative of the Austrian
School, he became ‘ever more engaged’ and was elected to the board
of directors and took part in the preparation of the publications con-
cerning the cartel problem. The preparation for and the staging of the
1932 debates on the problem of economic value were ‘predominantly’
his work. He was elected as a member of the Deutsche Gesellschaft für
Soziologie. As a result of these contacts with ‘German societies,’ there
was ‘talk of a possible appointment for me at a German university on
two occasions.’

15According to Mises, the committee received the cooperation of ‘Professor Richard Schüller.’
Schüller (1871–1972) was a four-decade veteran of the Austrian Foreign Ministry and father of
the economist, Ilse Mintz (who had been one of Mises’ students).
 11 What ‘Things’ Did Hitler ‘Get Done’?    
521

In 1926, Mises founded the Austrian Institute for Business Cycle

Research, primarily to provide ‘academic’ employment for Hayek
(Hülsmann 2007, 454; Mises 1976, 48; Doherty 2007, 89). Hayek (2007
[1944], 58) spent about half of his adult life in his native Austria, in ‘close’
touch with German intellectual life—was he also part of Kirdorf’s ‘circles’?
Without mentioning his own Nazi family, Hayek (1978) provided a
top-down explanation: the ‘reason’ he ‘ever wrote The Road to Serfdom
-- In the late thirties, even before war broke out, the general opinion in
England was that the Nazis were a reaction, a capitalist reaction, against
socialism. This view was particularly strongly held by the then-­director’
of the LSE, ‘Lord Beveridge, Sir William Beveridge, as he was then.
I was so irritated by this—I’d seen the thing develop [emphasis added]–
that I started writing a memorandum for him, trying to explain that this
was just a peculiar form of socialism, a sort of middle-class socialism, not
a proletarian socialism.’16 When Skousen and North mentioned Hitler
(when asking about his early intellectual influences), Hayek cut them off
mid-sentence and directed them to look at Ernst Mack.17
In 1928, Baron Kurt Freiherr von Schröder (1889–1966) joined
Hugenberg’s Deutschnationale Volkspartei where he established contact
with Schacht and Thyssen. According to Rothbard (2000 [1963], 151),
to his ‘great credit, Dr. Hjalmar Schacht, in addition to opposing our
profligate loans to local German governments, also sharply criticised the
new-model gold standard. Schacht vainly called for a return to the true
gold standard of old, with capital exports financed by genuine voluntary
saving, not by fiat bank credit.’
Caldwell (2007, 21) cited and summarised Herman Finer’s (1945)
Road to Reaction:

Hayek’s call for constitutionalism and advocacy of the rule of law was
indicative of his antidemocratic biases, the ‘very essence’ of Hayek’s argu-
ment being ‘the idea that democracy is dangerous and ought to be limited
[unattributed emphasis].

16FriedrichHayek, interviewed by Robert Bork 4 November 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
17http://contemporarythinkers.org/friedrich-hayek/multimedia/interview-hayek-gary-north-

part-2/.
522    
R. Leeson

In taped for-posthumous-consumption oral history interviews provided

to Leube, Hayek confirmed the validity of much of Finer’s interpre-
tation of The Road to Serfdom (Leeson 2015a, Chapter 3). In the first
chapter of Leube’s co-edited The Essence of Hayek (1984 [1975], 5), on
‘Inflation the Misdirection of Labour and Unemployment,’ contrast was
made between ‘the disquieting but unalterable truth’ and the ‘false mon-
etary and credit policy’ that had created the post-war ‘Great Prosperity.’
Hayek, who predicted ‘breakdown’ and ‘substantial unemployment,’
added:

I do not want to leave this recollection of the Great Inflation without

adding that I probably learnt at least as much if not more than I learnt
from personally observing it by being taught to see - then largely by
my teacher, the late Ludwig von Mises - the utter stupidity of the argu-
ments then propounded, especially in Germany, to explain and justify
the increases in the quantity of money. Most of the arguments I am now
encountering again in countries, not least Britain and the USA, which
then seemed economically better trained and whose economists rather
looked down foolishness of the German economists. None of these apol-
ogists of the inflationary policy was able to propose or apply measures
to terminate the inflation, which was finally ended by a man, Hjalmar
Schacht, who firmly believed in a crude and primitive version of the
quantity theory.

After the November 1932 election, Schröder wrote to Hindenburg

to ask that ‘the leader [Führer] of the greatest nationalist movement
be named Chancellor of the Reich’ (d’Almeida 2008, 32–34; Bullock
1991, 133; Davidson 1966, 192–193). Also among those pushing
Hitler’s case were eight members of the Keppler Circle, including Ewald
Hecker, President of the Chamber of Industry and Commerce, Hanover
(Turner 1985, 241–242, 303).
It seems likely that during this highly charged episode of Austro-
German history, there would at least some form of information
exchange between the Kammers. Mises may have been privy to these
deliberations: according to Hayek (1995 [1976], 145–146), at a
September 1932 meeting of the Verein für Socialpolitik, Mises pro-
claimed that ‘after twelve months Hitler would be in power.’
 11 What ‘Things’ Did Hitler ‘Get Done’?    
523

In November 1932, Hjalmar Schacht declared that ‘There is only one

man who can become Chancellor at this period and he is Adolf Hitler.
If Hitler does not become Chancellor now, he will within four months’
(Time 1967 [27 March 1933], 97). To Misesians, their hero is a car-
toon caricature with God-like powers. In ‘A Prophet Without Honor in
His Own Land: The Ideas of Mises Live On,’ Bettina Greaves (1994)
referred to the year in which Mises (1985 [1927], 47, 51) praised
‘Fascists’ including ‘Ludendorff and Hitler’ as having ‘saved European
civilization’:

he saw the handwriting on the wall as early as 1927 … But the world
didn’t listen to his warnings. At a garden tea party in September 1932,
during a meeting in Bad Kissingen, Germany, of the Society for Social
Policy (Verein fuer Sozialpolitik) Mises suddenly asked: ‘Do you real-
ize that we are gathered together for the last time? Hitler’s rise to power
will put an end to such meetings as this.’ At first the members of Mises’
audience were aghast at his remark. Then they laughed! Mises continued:
‘Hitler will be in office in twelve months.’ The others present thought
that unlikely. ‘But even so,’ they asked, ‘even if Hitler does come to
power, why shouldn’t the Society meet again?’ Hitler, Mises said, wouldn’t
tolerate gatherings of intellectuals who might someday become his
opponents.

Hitler became Chancellor in January 1933, four months after the

Society for Social Policy meeting. But according to Greaves (1994),
‘Hitler came to power in Germany in March 1933, about six months
after the Society’s September meeting. And as Mises had anticipated,
the Society did not meet again until after the end of World War II.’
Mises’ understanding of politics was as delusional as his understand-
ing of economics. Newspapers reports of the 1923 Ludendorff and
Hitler Bavarian Putsch stated that as a prelude to a ‘March on Berlin,’
‘Hitlerites stormed through the town and invaded first class restaurants
and hotels in search of Jews and profiteers’ (Walsh 1968, 289). Two
years later, Hitler (1939 [1925], 518) asserted in Mein Kampf: ‘At the
beginning of the war, or even during the war, if 12,000 or 15,000 of
these Jews who were corrupting the nation had been forced to submit
524    
R. Leeson

to poison gas … then the millions of sacrifices made at the front would
not have been in vain.’ According to Hülsmann (2007, 560, n67),
Mises ‘Presciently’ understood ‘Fascism.’ Having declared that the ‘vic-
tory of Fascism in a number of countries is only an episode in the long
series of struggles over the problem of property,’ Mises (1985 [1927],
51) then belatedly discovered that ‘Fascism’ was a conveyor belt along
which Jews like himself had their property confiscated: according to The
Last Knight of Liberalism, he was ‘completely’ taken by surprise by the
victory of Fascism and could ‘hardly believe’ what he read in the news-
papers. According to his official biographer, this was the ‘only’ time he
was ‘ever wrong’ in forecasting an important political or economic event
(Hülsmann 2007, 750–751).
According to Mises (1985 [1927], 49), ‘Fascism will never succeed
as completely as Russian Bolshevism in freeing itself from the power of
liberal ideas. Only under the fresh impression of the murders and atroc-
ities perpetrated by the supporters of the Soviets were Germans and
Italians able to block out the remembrance of the traditional restraints
of justice and morality and find the impulse to bloody counteraction.
The deeds of the Fascists and of other parties corresponding to them
were emotional reflex actions evoked by indignation at the deeds of
the Bolsheviks and Communists. As soon as the first flush of anger had
passed, their policy took a more moderate course and will probably
become even more so with the passage of time. This moderation is the
result of the fact that traditional liberal views still continue to have an
unconscious influence on the Fascists.’ Time (1967 [27 March 1933],
96) reported that in ‘less than two weeks Chancellor Hitler had reduced
his opponents to a lower level of groveling fear than did Premier
Mussolini in the two years after the March on Rome, Oct. 30, 1922.’
Had Hayek and Mises been genuine Classical Liberals they would
have objected to human rights abuse; had they been White Terror pro-
moters masquerading as ‘scholars’ they would not. Hayek was contemp-
tuous of what he dismissed as Amnesty International’s ‘bunch of leftists’
who provided evidence about the human rights abuses of Pinochet’s
Junta (Farrant and McPhail 2017). Mises (1985 [1927], 154) was also
unconcerned: ‘Whether or not the Russian people are to discard the
Soviet system is for them to settle among themselves. The land of the
 11 What ‘Things’ Did Hitler ‘Get Done’?    
525

knout and the prison-camp no longer poses a threat to the world today.
With all their will to war and destruction, the Russians are no longer
capable seriously of imperiling the peace of Europe.’
Time (1967 [27 March 1933], 96) reported that Jews were being
‘commonly beaten by Nazis with an instrument consisting of a small
lead ball. The effect: maximum flesh bruises without actually breaking
a bone.’ The retreat from (neutral) Switzerland to (neutral) America via
(neutral) Portugal left The Last Knight of Liberalism in a ‘terrible state of
mind. As calm and composed as he seemed, he was not made for adven-
tures and uncertainties of this kind. I needed all my courage to help
him overcome his desolation’ (Mises 1984, 58).
In ‘Groveling Fear,’ Time (1967 [27 March 1933], 96) reported that
‘Nearly all Communist Deputies and many Socialist Deputies were in
jail. Most Socialist Deputies not in jail were expected to stay out of
sight lest they be harmed.’ Hayek and Hitler sought to create irreversible
versions of the past. Hitler’s method was to ‘cleanse the nation of its
enemies’ (cited by Heiden 1944, 312). The ‘Model Constitution’ that
Hayek (1979, Chapter 17) sent to Pinochet ‘would of course make all
socialist measures for redistribution impossible.’
Hayek (1978) denigrated Austrian democracy as ‘a republic of peas-
ants and workers’18; he and Mises were Pan-Germans, and Mises
was sympathetic towards monopolies and cartels (Leeson 2015a,
Chapter 7). Mises proclaimed ‘capitalists have the tendency to move
towards those countries in which there is plenty of labour available and
in which labour is reasonable.’ Hayek’s (2011 [1960], 381) Constitution
of Liberty contains ‘no systematic discussion of enterprise monopoly.’
This subject was ‘excluded after careful consideration mainly because
it seemed not to possess the importance commonly attached to it. For
liberals antimonopoly policy has usually been the main object of their
reformatory zeal. I believe I have myself in the past used the tactical
[emphasis added] argument that we cannot hope to curb the coercive
powers of labour unions unless we at the same time attack enterprise

18FriedrichHayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral
History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
526    
R. Leeson

monopoly. I have, however, become convinced that it would be disin-

genuous to represent the existing monopolies in the field of labour and
those in the field of enterprise as being of the same kind.’
Hayek (2011 [1960], 381) explained that he didn’t believe that enter-
prise monopoly is in ‘some respects beneficial and desirable’ (as some
others did). Indeed, he thought there were tactical reasons for threat-
ing the monopolist as a ‘sort of whipping boy of economic policy.’ In
the USA, ‘legislation has succeeded in creating a climate of opinion
unfavorable to monopoly,’ and he was ‘seriously alarmed’ by the ‘arbi-
trary nature’ of all policy aimed at limiting the size of individual enter-
prises. It was absurd to make ‘large firms’ feel persecuted and ‘afraid to
compete by lowering prices because this may expose them to antitrust
action.’
Mises (2009 [1978 (1940)], 13) had encountered ‘nearly all’ of the
Marxian theorists in Western and Central Europe and formed an assess-
ment of their quality—only one rose ‘above modest mediocrity’: Otto
Bauer the ‘son of a wealthy north Bohemian manufacturer.’ He surely
would have had an equally wide exposure to those on the right. The
Pan-Germanist Kirdorf, a vigourous advocate of the ‘good intentions
and social utility of the cartels,’ sneered at the Weimar Republic as the
‘rule of the rabble.’ Although he held his nose at the ‘plebian’ charac-
ter of the Nazis, he became a member and a major fundraiser (Turner
1968b, 325, n4, 326, 327). Did he have contact with Mises through
Verein für Socialpolitik—where he had made a ‘guest appearance’ at the
1905 meeting?
According to Hayek (1978), ‘perhaps the danger to intellectual free-
dom in the United States comes not from government so much as from
the [labour] trade unions.’ He was aware that knowledge is a product
that is marketed and bought: ‘this is my present attempt to make the
intellectuals feel intellectually superior if they see through socialism.
[laughter]’19 According to Austrian logic, The Road to Serfdom could
not have been written by someone with a Nazi family, and Mises—a

19Friedrich Hayek, interviewed by Robert Bork 4 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 11 What ‘Things’ Did Hitler ‘Get Done’?    
527

card-carrying Austro-Fascist and member of the official Fascist social

club—could not have been a Fascist because of the ‘obvious’ Austrian
fact that he was ‘a Jew and a classical liberal,’ and Hayek could not have
met Pinochet: ‘show me the picture’ (Caldwell and Montes 2014a, 3,
n8, 3, n9; 2014b, n8, n9; 2015, 263, n8, 263, n9).20
Hayek, Hitler and Mises had common interests—they promoted
Austrian business cycle theory because they were contemptuous of
democracy. Did Hayek, consciously or otherwise, derive the title of The
Road to Serfdom from Hitler’s The Road to Resurgence?

4 Who Did Hayek and Mises Support

in the 1932 German Elections?
Hitler (1939 [1925], 72) proclaimed: ‘Democracy as practiced in
Western Europe today is the forerunner of Marxism. In fact the latter
would be inconceivable without the former. Democracy is the breed-
ing ground in which the bacilli of the Marxist world pest can grow and
spread.’ He renounced his Austrian citizenship on 7 April 1925, became
Stateless and thus ran the risk of deportation. On 25 February 1932,
Brunswick’s Nazi Interior Minister appointed him as administrator for
the State’s delegation to the Reichsrat in Berlin—which made him a
citizen of Brunswick and Germany and thus eligible for public office
(Davidson 1966, 180; Shirer 1960, 198; Bullock 1962, 200). In the
first round of the March 1932 German Presidential election, the incum-
bent von Hindenburg won 53%, Hitler 36.8% and Ernst Thälmann
(Communist Party) 10.2%. In the second round run-off (10 April
1932), Hitler won 33% of the vote.
In the inconclusive July 1932 Federal election, on the one side were
socialists and communists with 35.9% of the vote (Otto Wels, Social
Democratic Party, 21.58% and Thälmann, 14.32%), and on the other
side were Catholics and conservatives with 21.58% of the vote (Ludwig

20Caldwell and Montes were citing Greg Ransom, whose Austrian apriori logic obliged him to
doubt that Hayek had met Pinochet.
528    
R. Leeson

Kaas, Centre Party, 12.44%, Hugenberg, German National People’s

Party, 5.91%, and Heinrich Held, Bavarian People’s Party, 3.23%). The
only other group—the Nazis—won 37.27% of the vote. In the equally
inconclusive November 1932 Federal election, the Nazis lost 4.18%:
the biggest gainer was the Communist Party, up 2.54% since July 1932
(and up 6.66% since the March 1932 presidential election).
In Hitler’s Rival: Ernst Thälmann in Myth and Memory, Russel
Lemmons (2013) described what was, in effect, the second Nazi-Soviet
‘Pact’: Stalin’s insistence that the German Communist Party attack
not Nazis but ‘social fascists’—the Social Democratic Party. From this
perspective, ‘National Fascism [the NSDAP] is the opposite side of
the coin from social fascism [The Social Democratic Party]’ (cited by
Fischer 2002, 193). For Mises (2012 [1926], Chapter 23), they were
the kleptocratic enemy of ‘property’: ‘In spite of the collapse of the ide-
ology of socialism, and the failure of its prescriptions for universal hap-
piness, the Social Democratic Party has not disappeared from the scene.
It continues to exist, even after renouncing its original program. And
although it will not admit it, its new program now means: devour the
wealth that has been accumulated by capitalism.’
Between the Great Inflation and the Wall Street Crash, the Social
Democrats increased their share of the vote in Federal election from
26.0% (1924) to 29.8% (1928), but during the Great Depression, this
fell to 24.53% (1930), 21.58% (March 1932), 20.43% (November
1932), and 18.25% (March 1933).
Hayek stated that ‘there was no conservative group’ which Mises
could ‘support’ (cited by Mises 1984, 221). As the Empire of the Eastern
Reich collapsed, Hayek (1994, 53) formed a ‘German Democratic party
… in order to have a middle ground between the Catholics on one side
and the socialists and communists on the other side.’
Elections are a beauty—or rather least ugly—contest: Who was
Hayek’s and Mises’ preferred candidate? The ‘Muddle of the Middle’
Centre Party? Hindenburg won the 1925 presidential election with
48.3% of the vote, while the Centre Party’s Wilhelm Marx—with SDP
backing—won 45.3% of the vote. Had the Communist Party (6.4%)
joined the proto-Popular Front, Marx would have become president
(1925–1932).
 11 What ‘Things’ Did Hitler ‘Get Done’?    
529

Hugenberg’s German National People’s Party had absorbed the right-

wing component of the National Liberals who were denigrated by Mises
(1985 [1927], 302) as

not, even from the outset—at least in matters of constitutional law—a

liberal party. They were that wing of the old liberal party which professed
to take its stand on ‘the facts as they really are’; that is, which accepted as
unalterable the defeat that liberalism had sustained in the Prussian con-
stitutional conflict from the opponents on the ‘Right’ (Bismarck) and on
the ‘Left’ (the followers of Lassalle).

Three years after Hitler became Chancellor, Mises (2012 [1936],

Chapter 28) concluded that ‘political democracy has decided against
the economic democracy of the market.’ It was an ‘incontestable fact’
that public opinion today wants to ‘replace the capitalist economy’ with
a system in governments—not the market—manages production and
distribution.

No longer will people put up with, as a universally employed slogan

coined by the Marxists says, the ‘anarchy of production’—that is, the
absence of coercion and the freedom of the market. People want interven-
tionism, statism, the planned economy, and socialism.

Mises was contemptuous of the inferior ‘masses’: the outcome of ‘every’

election confirms that the ‘masses do not want capitalism but want a
controlled economy.’ Even where dictators ruled, ‘this, too, is the will of
the masses.’
Lenin emphasised: ‘There is nothing between dictatorship and the
bourgeoisie and dictatorship of the proletariat; the dream of another,
third way is the reactionary lament of the petty bourgeoisie’ (cited
by Fischer 2002, 101). Mises (2012 [1930], Chapter 27) empha-
sised: ‘Either capitalism or socialism; there is no middle way.’ In ‘The
Argument of Fascism,’ Mises (1985 [1927], 47) described one of the
parties that Hitler was competing against in 1932: when the ‘Marxist’
Social Democrats had ‘gained the upper hand and taken power in the
belief that the age of liberalism and capitalism had passed forever’ then
530    
R. Leeson

the ‘last concessions’ to liberal ideology disappeared. The parties of the

Third International ‘consider any means as permissible if it seems to
give promise of helping them in their struggle to achieve their ends.’
Mises—a White Terror promoter who believed that only he had the
correct ideology which his disciples must rigidly adhere to—complained
about Red Terror promoters: ‘death’ and the extermination of enemies
and their ‘whole family, infants included’ was the fate of dissenters.
In 1933, Hitler stated: ‘Because terror is the main weapon of Marxist
struggle, we cannot retreat back into the salon, mouthing idiotic, bour-
geois, legalistic platitudes, or hope for help from the state. Instead
we have to confront Marxism bravely, in order to destroy it’ (cited by
Fischer 2002, 170).
Six years before Hitler gained power, Mises (1985 [1927], 47,
51)—praising the ‘militaristic and nationalistic enemies of the Third
International’ (including ‘Ludendorff and Hitler’)—insisted: ‘It can-
not be denied [emphasis added] that Fascism and similar movements
aiming at the establishment of dictatorships are full of the best inten-
tions and that their intervention has for the moment, saved European
civilization.’
In The Road to Serfdom, Hayek (2007 [1944], 75–76) hinted that
Hitler was the only candidate who could be supported: ‘It is impor-
tant to remember [emphasis added] that, for some time before 1933,
Germany had reached a stage in which it had, in effect, had to be gov-
erned dictatorially. Nobody could then doubt that for the time being
democracy had broken down.’ Democracy had broken down because
Mises, Hayek and others had striven to cause ‘extensive unemployment’
during the deflationary Great Depression.
Hindenburg (1847–1934) died in office at age eighty-seven and had
been suffering from senile dementia for several years. He symbolised
the neo-feudal Hohenzollern legacy: a quasi-monarchist who sought
a government of the right that would be ‘above the parties’ (Davidson
1966, 180, 184). Von Papen’s ‘aristocratic manner’ appealed to von
Hindenburg who (after the inconclusive June 1932 election) appointed
him Chancellor—who rapidly fulfilled one aspect of this role by being
disowned by his Centre Party (Noakes and Pridham 1994, 101).
 11 What ‘Things’ Did Hitler ‘Get Done’?    
531

At the time, the new Chancellor was described by the French ambas-
sador in Berlin as someone who ‘enjoyed the peculiarity of being taken
seriously by neither his friends nor his enemies. He was reputed to be
superficial, blundering, untrue, ambitious, vain, crafty and an intriguer’
(François-Poncet 1949, 24). In Eugene Davidson’s (1966, 177, 178) The
Trials of the Germans: An Account of the Twenty-Two Defendants Before
the International Military Tribunal at Nuremberg, von Papen is described
as coming from an ‘ancient Westphalian family. He was a devout
Catholic, a career officer, a monarchist by conviction.’ During the
‘Great’ War, von Papen organised terrorist operations in North America
and planned to persuade Americans of German descent to sabotage the
‘idiotic Yankee’ war effort. He was also famous for inadvertently allow-
ing sensitive material to fall into enemy hands (Fest 1973, 501).
Hitler was initially interpreted as an ‘inferior sort of Corporal’ (Gilbert
1966, 104). Like ‘Lieutenant’ ‘von’ Hayek and Lieutenant ‘von’ Mises,
Lieutenant colonel von Papen believed that he belonged to the ‘upper
stratum authorised by history’ (Fest 1970, 152). As an adolescent, the
lower-middle-class Hitler had waited patiently in the waiting room of his
Jewish doctor, would make ‘a bow, and always thank the doctor politely’
(Hamann 2010, 20).21 The upper stratum knew that the lower orders
could be kept in their ascribed place: ‘you just had to raise your finger …
and they would give in’ (Hayek 1978).22 Fest (1970, 152) described von
Papen’s characteristics: his ‘unhesitating identification of the interests of
his class with the interests of the state; his socially reactionary attitude,
which he disguised behind a pseudo-Christian vocabulary; his sprinkling
of monarchist ideas; his nationalistic jargon; his tendency to think in long
outdated categories; in short, is anachronistic profile and finally the hint
of caricature which hung over his whole person.’

21The head of Berlin SA, Wolf-Heinrich Graf von Helldorff, was the noble-born son of a land-

owner and (like Mises) a ‘Great’ War Lieutenant. With Job Wilhelm Georg Erdmann Erwin von
Witzleben, Hermann Henning Karl Robert von Tresckow, Werner Karl von Haeften and others,
von Helldorff (like ‘von’ Mises) had second thoughts and participated in Claus von Stauffenberg’s
20 July 1944 plot to kill Hitler (for which he was executed).
22Friedrich Hayek, interviewed by James Buchanan 28 October 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

532    
R. Leeson

According to Ralf Dahrendorf (1967, 43), under the Hohenzollerns,

Germany ‘developed into an industrial, but not into a capitalist soci-
ety.’ Upward social mobility found expression in the feudalisation of
the upper middle class: a ‘Herr-im-Hause (lord-of-the-household)’ atti-
tude towards their business employees. During the Weimar Republic,
the Ruhr magnates looked back nostalgically to the Empire and the
associated serf-like deference of their workers (Turner 1985, 4–5, 41).
In 1958, ‘von’ Mises (2007 [1958], 11) congratulated Ayn Rand on
the message contained in Atlas Shrugged: ‘You have the courage to tell
the masses what no politician told them: you are inferior and all the
improvements in your conditions which you simply take for granted
you owe to the effort of men who are better than you.’ Two decades
later, ‘von’ Hayek (1978) told Rosten: the ‘curious thing is that in the
countryside of southwest England, the class distinctions are very sharp,
but they’re not resented. [laughter] They’re still accepted as part of the
natural order.’23
The Nazis saw the Führerprinzip as the achieved version of ascribed
status:

‘Duke and vassal!’ In this ancient German relationship of leader and fol-
lower, fully comprehensible only to the German mentality and spirit,
lies the essence of the structure of the NSDAP, the driving force of this
aggressive power, the conviction of victory! Heil Hitler! (Gregor Strasser
cited by Noakes and Pridham 1994, 54)

In May 1932, von Papen formed the ‘cabinet of Barons’ or the ‘cabi-
net of monocles,’ including and von Schleicher (Defence), Konstantin
Freiherr von Neurath (Foreign Minister), Wilhelm Moritz Egon
Freiherr von Gayl (Interior), Magnus Alexander Maximilian Freiherr
von Braun (Agriculture), Peter Paul Freiherr von Eltz-Rübenach
(Posts and Transport) and Johann Ludwig Graf Schwerin von Krosigk
(Finance). In keeping with the ‘alliance of iron and rye,’ von Papen

23Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 11 What ‘Things’ Did Hitler ‘Get Done’?    
533

married the daughter of a rich industrialist (Bullock 1991, 133; Davidson

1966, 177, 192–193, 230, 204).
Von Papen had hoped that the Nazis would provide a basis of ‘mass
support’ for the regime. But the Nazis decided to attack—not von
Papen’s cabinet, with its ‘strong aristocratic image’—but ‘the political
system in general.’ It was ‘inexpedient’ to campaign with the slogan:
‘against the rule of the barons’ (Noakes and Pridham 1994, 102–103,
106). After the inconclusive November 1932 election, von Papen
formed another alliance: together with Hugenberg and several leading
industrialists and businessmen, he urged von Hindenburg to appoint
Hitler as Chancellor.
Votes for the ‘Middle class parties’ (excluding the Centre Party)
shrank from 13.2 million (1924) to 4 million (July 1932), while the
Nazi vote had risen from 0.9 million (1924) to 13.7 million (July
1932). While the Nazis lost 2 million votes in November 1932, the
‘Middle class parties’ gained 1.3 million votes—but the Nazis still
held 196 out of 584 seats. Von Papen initially sought to persuade von
Hindenburg to dissolve the Reichstag and establish a dictatorship. Von
Schleicher believed that as Chancellor he could split the Nazi move-
ment by offering Gregor Strasser a government post and form an alli-
ance with labour trade unions the Social Democrats and the ‘bourgeois
parties.’ Von Schleicher’s plan failed—and on 29 January 1933, General
Kurt Freiherr von Hammerstein-Equord decided that the army must
avoid having to fight a Nazi uprising ‘as well as against the Left’: ‘Finally
I decided, in agreement with Schleicher, to seek a meeting with Hitler’
(Röhl 1970, 129, 139–141).
Hitler became Chancellor two days later. Like ‘von’ Mises (1985
[1927]), von Papen and von Schleicher sought to use the Nazis for their
own ends: von Papen told von Schleicher that ‘we have got to make
up our minds what we can offer if we are to get the Nazis to collabo-
rate in a Presidential Cabinet.’ Von Schleicher replied: ‘I have already
had a word with Hitler about that. I told him we would lift the ban on
the Brown shirts, provided they behaved themselves, and dissolve the
Reichstag. He had assured me that in return the Nazis would give the
cabinet their tacit support, even though they are not represented in it’
(cited by Röhl 1970, 136). Von Schleicher and Strasser were murdered
534    
R. Leeson

on Hitler’s orders during the Night of the Long Knives (30 June–2 July
1934), and Mises’ apartment was ransacked by the Nazis in 1938.
In Das Dritte Reich (The Third Reich or Germany’s Third Empire ),
Arthur Moeller van den Bruck (1934 [1923], 101) stated that ‘All
anti-liberal forces are combining against everything that is liberal.’
Using this quote to begin ‘The Socialist Roots of Nazism,’ Hayek (2007
[1944], 181, 189) added that van den Bruck was, along with Spann,
one of the ‘immediate masters’ of National Socialism. Van den Bruck’s
(1876–1925), whose writings strongly influenced the Conservative
Revolutionary Movement and later the Nazis, was the joint founder
of the ‘June Club’ (Juniklub) which opposed the Treaty of Versailles
and was later renamed ‘German Gentlemen’s Club’—‘Deutscher
Herrenklub ’—with the Herr having the overtone of ‘Master’ (Heiden
1944, 422). In 1932, the club assisted von Papen to become Chancellor.
Before the 1923 Munich Beer Hall Putsch, Hitler had addressed
meetings of the Herrenklub (Bullock 1962, 84). On 29 May 1922,
Hitler addressed the army officers, senior civil servants and business-
men of the Munich National Club; was invited back for a second talk;
and then received invitations to address the Munich Herrenklub and
a group of businessmen in the Hall of the Munich Merchants’ Guild.
Hitler also twice addressed the 500 or so aristocrats, officers and busi-
nessmen of the Hamburg National Club; while on 16 October 1931,
Funk addressed the executives of the Berlin Herrenklub on ‘National
Socialism and the Economy’ (Turner 1985, 48–50, 130–131, 250,
182–185). By 1927, the Nazis had become ‘determined to reach the
workers’ (cited by Noakes and Pridham 1994, 53).
In Die Gemeinwirtschaft: Untersuchungen über den Sozialismus
(Socialism ), Mises (1922, 435; 1951 [1932], 443) sought to neutralise
the lower orders by persuading them that they were already King (sov-
ereign consumers): ‘the Lord of Production is the Consumer’ (‘Der Herr
der Produktion ist der Konsument ’). While to Ernst von Borsig, one of
Germany’s most prominent industrialists, Hitler was a man who could
through ‘his [Nazi] movement, make a contribution towards bridging
the cleft between the social classes by reviving the national sentiment of
the working class’ (cited by Turner 1985, 50–51).
 11 What ‘Things’ Did Hitler ‘Get Done’?    
535

Some big business donors were reluctant to endorse or fund Hitler

because of his anti-Semitism which they typically regarded as ‘benighted
and plebian’ (Turner 1985, 252). In 1922, van den Bruck had met and
dismissed Hitler because of his ‘proletarian primitiveness’ (Freitag 2006,
139). In the 1932 presidential election, the aristocratic Hans Grimm
announced that he would vote ‘not for the National Socialist move-
ment, not even for Hitler’s person, but for a new Germany … [his]
new national movement has become - and this is the greatest thing that
can happen to a man - more than he is’ (cited by Heiden 1944, 449).
Simultaneously, Grimm described Hitler as ‘course and demagogic.’
‘Von’ Mises (2002 [1937], 311–312) also held his nose: ‘Of course the
importance of the personal question must not be underestimated. The
prestige which the utterances of men like Mussolini, Hitler, Göring,
and Goebbels enjoy today can only be countered if men of the first
rank who are not limited in their freedom by any diplomatic office are
allowed to speak.’
The anti-Semitic Oskar Morgenstern (Hayek’s successor as director
of the Austrian Institute for Business Cycle Research) was—like Spann,
Hayek, Hitler and Mises—an ‘outspoken Pangerman’ and like Spann a
member of the Deutscher Klub ‘which entertained notoriously close rela-
tions with the Nazi party in the 1930s’ (Klausinger 2013, 8, 12; 2014,
198). The exclusive Deutscher Herrenklub had fewer than 5000 members
in Germany and about 300 in Berlin: ‘they were not all nobles, but they
shared a political ideal.’ On 16 December 1932, von Papen addressed
the Deutscher Herrenklub on ‘The New State’ which Fabrice d’Almeida
(2008, 32–34) summarised: ‘politics required an authoritarian gov-
erning principle and a figure who embodied this principle; that von
Schleicher’s government could not carry out a reform program which
would suffice to rebuild the economy; that therefore a broad coalition
had to be envisaged in order to restore authority.’
According to Davidson (1966, 193, 196, 198), von Papen also
stated that it was time the Nazis were ‘called in.’ Among the audience
was Baron Schröder, President of the Cologne Herrenklub, who also
belonged to a group of businessmen organised by Keppler—the ‘Nazi-
inspired’ Keppler Circle—who believed that a radical change in politics
536    
R. Leeson

was a necessary precondition for economic recovery (Turner 1985,

241). At a meeting at Schröder’s house (4 January 1933), Hitler out-
lined a simple formulation: ‘as Chancellor he would take full charge
of the political sphere, but as for economic affairs, gentlemen - with a
glance at Schröder - that is your province’ (Heiden 1944, 521).
At his Nuremberg trial, Schröder explained that Hitler promised the
‘removal of all Social Democrats, Communists and Jews from leading
positions in Germany and the restoration of order in public life. Von
Papen and Hitler reached agreement in principle whereby many of the
disagreements between them could be removed and cooperation might
be possible … The general desire of businessmen was to see a strong
man come to power in Germany who would form a government that
would stay in power for a long time’ (cited by Noakes and Pridham
1994, 115–116; Fest 1973, 532).
On 26 January 1933, von Hindenburg informed Generals Kurt von
Hammerstein-Equord and Erich von dem Bussche-Ippenburg that ‘you
cannot possibly believe, gentlemen, that I would make the Austrian cor-
poral Reich Chancellor.’ His ‘Palace’ cabinet consisted of his son, Oskar
von Hindenburg, von Schleicher, Otto von Meissner, General Wilhelm
Groener Brüning, and a neighbouring estate owner, von Oldenburg-
Januschau (who asserted that ‘it should always be possible to dissolve
parliament by sending a Lieutenant and ten enlisted men to do the
job’). Meissner and von Hindenburg’s son apparently persuaded him to
become reconciled with Hitler (d’Almeida 2008, 32–36; Shirer 1960,
225–226; Clark 1964, 428; Heiden 1944, 520; Noakes and Pridham
1994, 119; Fest 1973, 495, 539–540). At his Nuremberg trial, Meissner
described a meeting at Joachim von Ribbentrop’s house after which
Oskar von Hindenburg was ‘very silent; the only remark he made was
that there was no help for it, the Nazis had to be taken into the gov-
ernment. My impression was that Hitler had succeeded in getting him
under his spell’ (cited by Noakes and Pridham 1994, 118).
On 27 January 1933, von Ribbentrop noted: ‘Papen is now abso-
lutely certain that he must achieve Hitler’s Chancellorship at all costs’
(cited by Noakes and Pridham 1994, 119). On 30 January, Hitler
became Chancellor. Vice Chancellor von Papen declared: ‘what are you
worried about? I have Hindenburg’s confidence. In two months we
 11 What ‘Things’ Did Hitler ‘Get Done’?    
537

shall have Hitler squeezed into a corner so that he squeaks’ (cited by

Fest 1970, 157; Turner 1985, 328). To another doubter, he remarked:
‘Don’t worry, we’ve hired him.’ In addition to von Papen, three ‘mon-
ocles’ remained in the Cabinet: von Neurath, Count Schwerin von
Krosigk and von Eltz-Rübenach, while General Werner von Blomberg
became Minister of Defence. The Nazis held two crucial Cabinet
posts: Wilhelm Frick (Minister of the Interior) and Hermann Göring
(Minister of the Interior for Prussia), which allowed Hitler to gain con-
trol over the coercive powers of the State (Davidson 1966, 230, 204;
Heiden 1944, 537; Noakes and Pridham 1994, 121). Thälmann was
arrested on 3 March 1933 and after 11 years of solitary confinement
was sentenced to Hayek’s ‘full justice’: ‘shooting in cold blood.’
According to Skousen (2009, 293), a League of Nations commission
was sent to Vienna, where they visited Mises and asked:

‘Professor Mises, how can we stop this inflation?’ He replied, ‘Hear that
noise? Turn it off!’ The building turned out to be the government print-
ing office, which was running round the clock printing new banknotes.
Turning off the noise was precisely what the Austrian government did,
and the inflation ended. (Hayek 1994, 70)

Mises’ Theorie des Geldes und der Umlaufsmittel (Theory of Money and
Credit) was published in Munich in 1912. According to Hitler, he left
Vienna for Munich in spring 1912, but historians believe he left in
1913 (Bullock 1962, 46). Did Hitler acquire his version of Austrian
business cycle theory from popular accounts of Mises’ book?
According to Rockwell (2005), Mises ‘began his adult career as an
economist who sought to advance the profession’s understanding of
what money is and how it integrates into the theoretical apparatus of
economics.’ Mises’ (1953, 17) Preface to a new edition of The Theory
of Money and Credit failed to mention either of his two most influen-
tial recruits (Hayek and Hitler): ‘Forty years have passed since the first
German-language edition of this volume was published. In the course
of these four decades the world has gone through many disasters and
catastrophes.’ Instead, he asserted: ‘None of the arguments that eco-
nomics advances against the inflationist and expansionist doctrine is
538    
R. Leeson

likely to impress demagogues. For the demagogue does not bother

about the remoter consequences of his policies. He chooses inflation
and credit expansion although he knows that the boom they create is
short-lived and must inevitably end in a slump. He may even boast of
his neglect of the long-run effects. In the long run, he repeats, we are all
dead; it is only the short run that counts.’
In his Völkischer Beobachter newspaper, Hitler declared himself to be a
deflationary demagogue:

The government calmly goes on printing these scraps of paper because, if

it stopped, that would be the end of the government. Because once the
printing presses stopped - and that is a prerequisite for the stabilisation
of the mark - the swindle would at once be brought to light … Believe
me, our misery will increase. The scoundrel will get by … The reason:
because the State itself has become the biggest swindler and crook. A rob-
bers’ State! … If the horrified people notice that they can starve on bil-
lions, they must arrive at this conclusion: we will no longer submit to
a State which is built on the swindling idea of the majority. We want a
dictatorship. (cited by Heiden 1944, 131–133; Shirer 1960, 87; Noakes
and Pridham 1994, 19)

Hayek (2011 [1960], 457–458, 460) was a more subtle deflationary

demagogue: it is ‘rather doubtful whether, from a long-term point of
view, deflation is really more harmful than inflation. Indeed, there is a
sense in which inflation is infinitely more dangerous and needs to be
more carefully guarded against. Of the two errors, it is the one much
more likely to be committed. The reason for this is that moderate infla-
tion is generally pleasant while it proceeds, whereas deflation is imme-
diately and acutely painful.’ As soon as deflation ‘makes itself felt, there
will be immediate attempts to combat it - often when it is only a local
and necessary process that should not be prevented [emphasis added].’
There was ‘more danger in untimely fears of deflation than in the pos-
sibility of not taking necessary countermeasures.’ While ‘nobody is
likely to mistake local or sectional prosperity for inflation, people often
demand wholly inappropriate monetary countermeasures when there is
a local or sectional depression.’
 11 What ‘Things’ Did Hitler ‘Get Done’?    
539

Hitler was blunter about Austrian business cycle theory: ‘And what it
even greater mystery descended on us! Let us have misery! … The great-
est must misfortune would be so-called prosperity. We would forget all
our disgrace. If we were getting along, we would stop hating France …
To liberation belongs more than economic policy; more than sweat. To
make us free, we need pride, will, defiance, hate, hate, and hate again’
(cited by Heiden 1944, 131–132). As was his deputy, Gregor Strasser:
‘all that serves to participate the catastrophe … is good, very good for us
and our German revolution’ (cited by Shirer 1960, 189; Bullock 1962,
178–179). Mises (2000 [1944], 128) also explained what Austrian busi-
ness cycle theory meant: in ‘every case, the slump is unavoidable.’ Mises
praised the process which facilitated Hitler’s rise to power: ‘The slump
does not destroy values, but merely illusions. It does not make people
poorer, it merely makes them aware of the impoverishment brought
about by the malinvestment of the boom. It is not the depression that is
an evil, but the preceding boom. The depression is the process of adjust-
ment of economic conditions to the real market state-of-affairs.’
The deflation that Mises and Hayek promoted increased real wages,
created ‘extensive unemployment’ (the equilibrating mechanism) which
reduced nominal wages—the preliminary step towards Hitler’s seizure
of power. Eleven years after Hitler became Chancellor, Mises (2000
[1944], 128) declared that the fall in prices and wage rates is the ‘pre-
liminary step toward recovery and future real prosperity.’ Preventing the
‘recurrence of economic crises’ required the prevention of the ‘resump-
tion of credit expansion.’ The economy would have to ‘pay heavily’ for
the ‘orgy’ of the malinvestment of the ‘artificial boom.’
On 17 June 1934, Vice Chancellor von Papen delivered an ambig-
uous message to a University of Marburg audience: in part, deviancy
from Nazi propaganda; and in part, a reinterpretation of the Nazi rev-
olution. The first two sentences express a version of what would later
become known as Hayekian; the last sentence came close to Mises’
interpretation of Fascism: ‘all of life cannot be organized; otherwise it
becomes mechanized. The state is organization; life is growth. The real
revolution of the twentieth century … is that of the heroic god-bound
personality who struggles against the mechanization and collectivization
540    
R. Leeson

which is only the last degeneration of bourgeois liberalism’ (cited by

Davidson 1966, 208).
The second part is unambiguously Hayekian:

The meaning of the new time is clear: it concerns the decision between
believers and non-believers, whether all eternal values would be secular-
ized or not. The time of the emancipation of the lowest class against the
highest class is over. It is not a question of holding one class down – that
would be reactionary – but to prevent one class from dominating the
state and trying to achieve total control. In that case every natural and
divine order would be lost … The goal of the German revolution, if it
is really to be valid and a pattern for Europe, must be based on a natural
social order. (cited by Davidson 1966, 208; Heiden 1944, 750–751)

Lockeian social contract theory competed with the organic theory of the
state, first in the seventeenth century, in the form of the Divine Right
of Kings; and then in the twentieth century against the Divine Right
of Ayatollahs, Hitler, the Divine Right of the State and Hayek-Mises-
Rothbard-Rand, The Divine Right of the ‘Free’ Market (Leeson 2017).
After Hitler was sworn-in as Chancellor, von Hindenburg agreed
to his request to dissolve the Reichstag, and new elections were sched-
uled for 5 March 1933. On 31 January 1933, Goebbels wrote in his
diary: ‘In a conference with the Leader we establish the directives for the
struggle against the red Terror. For the present we shall dispense with
direct counter-measures. The Bolshevik attempt at revolution must first
flare up. At the proper moment we shall then strike’ (cited by Heiden
1944, 544). On 27 February 1933, Marinus van der Lubbe, a disturbed
Dutch pyromaniac, was found in the smoking ruins of the Reichstag.
Time (1967 [2 October 1933; 9 October 1933], 104–105) reported
that a committee of international jurists provided evidence that the fire
had been ‘instigated’—and the ‘Dim-witted’ van der Lubbe had been
‘helped’—by ‘Nazi firebrands.’ When Georgi Dimitrov asked ‘Who
advised you, who talked to you before you set these fires? With whom
did you discuss them and who were your associates?’ Judge Wilhelm
Bürger adjourned the Court before the defendant could reply.
 11 What ‘Things’ Did Hitler ‘Get Done’?    
541

Cui bono? No consensus has yet emerged about responsibility for the
fire—but there is no doubt about the beneficiary. Shortly afterwards,
von Hindenburg signed the Reichstag Fire Decree into law: civil liber-
ties were suspended and the Nazi dictatorship began.
Hitler promised:

The national Government will allow and confirm to the Christian

denominations the enjoyment of their due influence in schools and edu-
cation … And it will be concerned for the sincere cooperation between
Church and State. The struggle against the materialistic ideology and for
the erection of a true people’s community (Volksgemeinschaft ) serves as
much the interests of the German nation as of our Christian faith …The
national Government, seeing in Christianity the unshakable foundation
of the moral and ethical life of our people, attaches utmost importance to
the cultivation and maintenance of the friendliest relations with the Holy
See …The rights of the churches will not be curtailed; their position in
relation to the State will not be changed. (cited by Conway 1968, 20)

Two days after the Reichstag Fire, ‘von’ Hayek (1933, 122, 124,
128), in his inaugural professorial lecture on ‘The Trend of Economic
Thinking,’ contrasted Pigou’s ‘social enthusiasm’ with the ‘wonder’ asso-
ciated with the movement of ‘heavenly bodies … today it is regarded
almost as a sign of moral depravity if the economists finds anything
to marvel at in his science; i.e. he finds an unsuspected order in things
which arouses his wonder.’ The economy was a mysterious ‘organ-
ism’—but interventionist economists had focused on the ‘unsatisfactory
aspects of economics life, rather than what was owed to the working of
the system.’ As a result, ‘the non economist … is always likely to feel
injured if the economist implies that there are inter-relations between
things which he does not see’:

When we begin to understand their working, we discover again and again

that necessary functions are discharged by spontaneous institutions. If we
try to run the system by deliberate regulation, we should have to invent such
institutions, and yet at first we did not even understand them when we saw
them. There is ‘sense Sinn - in the phenomena; that they perform a necessary
542    
R. Leeson

function it is an animistic, anthropomorphic interpretation of phenomena,

the main characteristic of which is that they are not willed by any mind.

Citing Mises, Hayek continued:

we refuse to recognise that society is an organism and not an organisation

and that in a sense we are part of a ‘higher’ organised system, which without
our knowledge and long before we tried to understand it solved problems
the existence of which we did not even recognise, but which we should have
had to solve in much the same way if we had tried to run it deliberately.

In his Nobel Lecture, Hayek (1974) linked this ‘marvel’ and ‘wonder’
to ‘God’: ‘the chief point was already seen by those remarkable antici-
pators of modern economics, the Spanish schoolmen of the sixteenth
century, who emphasized that what they called pretium mathematicum,
the mathematical price, depended on so many particular circumstances
that it could never be known to man but was known only to God.’ A
decade later, he discovered another ‘unsuspected order’: he ‘saw’ Pigou
as a gunrunner for Stalin (Leeson 2015b).

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Leeson, R. (Ed.). (2015a). Hayek: A Collaborative Biography Part II Austria,
America and the Rise of Hitler, 1899–1933. Basingstoke, UK: Palgrave
Macmillan.
Leeson, R. (Ed.). (2015b). Hayek: A Collaborative Biography Part IV England,
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Leeson, R. (Ed.). (2017). Hayek: A Collaborative Biography Part IX The Divine
Right of the ‘Free’ Market. Basingstoke, UK: Palgrave Macmillan.
 11 What ‘Things’ Did Hitler ‘Get Done’?    
543

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 12
The Unravelling and the Glue

1 The Puzzle
The evidence reveals that

• Hitler acquired anti-Semitism from the culture co-created by prom-

inent proto-Nazis (and later card-carrying Nazis) such as the von
Hayeks.
• Friedrich Hayek’s obsession with his Aryan lineage—Ahnenpass,
ancestor passport—predates Hitler’s.
• The deflation that Hayek and Mises promoted facilitated Hitler’s rise
to power.
• Hayek’s ‘property’ was built-up by stealing from tax-exempt edu-
cational charities and by tax-evasion; and Mises stole Frank Fetter’s
intellectual property by plagiarising the concept of ‘consumer
sovereignty.’
• Referring to ‘Ludendorff and Hitler,’ Mises (1985 [1927], 19, 51)
praised ‘Fascists’ for having ‘saved European civilisation … The pro-
gram of liberalism, therefore, if condensed into a single word, would
have to read: property … All the other demands of liberalism result
© The Author(s) 2019 549
R. Leeson, Hayek: A Collaborative Biography,
Archival Insights into the Evolution of Economics,
https://doi.org/10.1007/978-3-319-78069-6_12
550    
R. Leeson

from this fundamental demand [emphasis in original] … The victory

of Fascism in a number of countries is only an episode in the long
series of struggles over the problem of property.’
• In what Caldwell (1995, 70, n67) suggests is a reference to Mises’
(1985 [1927]) Liberalism in the Classical Tradition, Hayek (1995
[1929], 68), while praising Edwin Cannan’s ‘fanatical conceptual
clarity’ and his ‘kinship’ with Mises’ ‘crusade,’ noted that British-
Austrians had failed to realise the necessary consequences of the
whole system of Classical Liberal thought: ‘Cannan by no means
develops economic liberalism to its ultimate consequences with the
same ruthless consistency as Mises’ Cannan’s (1927). An Economist’s
Protest contains no praise of ‘Fascists,’ ‘Ludendorff and Hitler.’
• Hayek and Mises were White Terror promoters masquerading as
scholars. Had they been genuine Classical Liberals they would have
objected to human rights abuses. Mises was indifferent; while Hayek
(1978) defended the civilisation of Police State Apartheid from
the American ‘fashion’ of ‘human rights’1; and dismissed Amnesty
International’s evidence about torture in Police State Chile as the
outpourings of a ‘bunch of leftists’ (Farrant and McPhail 2017).
• Human rights, Hayek (1979, 202–203, n42) insisted, was a ‘trick’
perpetrated by Marxists.

Hayek—who promoted the fraud that externalities had been invented

by a gunrunner for Stalin—also manufactured the climate of academic
fraud and (through ‘gerrymandering’) placed his unqualified sycophants
in university professorships. Buchanan (1992, 130) observed that at the
MPS there was ‘too much deference accorded to Hayek, and especially
to Ludwig von Mises who seemed to demand sycophancy.’ The ‘free’
market is promoted by those who have systematically suppressed evi-
dence that might impede fund-raising—the ‘Non-Use of Free Market
Knowledge in Society’—but why did ‘von’ Hayek’s critics pull their
punches? Does this illustrate some residual deference to the neo-feudal
‘spontaneous’ order?

1Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 12 The Unravelling and the Glue    
551

2 1945: Herman (and Samuel?) Finer

According to Caldwell (2007, 22), it is ‘notable, and characteristic, that
Hayek’s [I] response … was not to lash out of his critics.’ The evidence,
however, reveals that Hayek II and III (1994, 95) relished argumentum
ad hominem: ‘I’m afraid I am much more open’ than Robbins in ‘this
sort of thing. I don’t keep my mouth shut; my stories about Laski’ (the
LSE Professor of Political Science, 1893–1950) and ‘Beveridge’ (the
LSE Director) can be ‘rather malicious.’ Hayek told Cubitt (2006, 5)
that he and his fellow Europeans émigrés sat in the ‘sardonic corner’ of
the LSE Common Room making ‘malicious’ comments about the com-
petence of their English colleagues, where he was, presumably, over-
heard making derogatory remarks about Jews, non-whites and ‘girls.’
In The Road to Serfdom Texts and Documents The Definitive Edition,
Caldwell (2007, 21) described Hayek’s martyrdom:

The worst of the lot, Herman Finer’s scabrous Road to Reaction, was also
picked out for mentioning by Hayek in the 1956 foreword. The overarch-
ing message of the book was evident in its very first sentence: ‘Friedrich
A. Hayek’s The Road to Serfdom constitutes the most sinister offensive
against democracy to emerge from a democratic country for many dec-
ades.’ According to Finer, Hayek’s call for constitutionalism and advocacy
of the rule of law was indicative of his antidemocratic biases, the ‘very
essence’ of Hayek’s argument being ‘the idea that democracy is dangerous
and ought to be limited [unattributed emphasis].’ Toward the end of the
book (published, we remember, in 1945) we find Finer remarking on
‘the thoroughly Hitlerian contempt for the democratic man so perfectly
expressed by Hayek.’

Referring to Finer, Caldwell (2004, 148, n19) stated that Hayek could
be ‘pushed too far.’ For current consumption, Hayek (1978) fuelled
these perceptions: in the USA, he suffered the ‘worst’ abuse, ‘inciden-
tally, by a man who had been my colleague at the– [laughter].’ Rosten
dutifully supplied the name of the anti-Austrian ‘devil’: ‘Herman Finer.
I think that’s the most savage book I’ve ever read.’ For posthumous con-
sumption, Hayek provided an interpretation of The Road to Serfdom
resembled Finer’s (Leeson 2015, Chapter 3).
552    
R. Leeson

According to Hayek (1978), Herman Finer (1898–1969), the

Professor of Political Science had ‘come to hate’ the LSE and particularly
‘Laski because when he had come to the United States and war broke
out, he had asked for a leave, an extension of leave, and it was denied
him because he was needed for teaching. He was so upset about this that
he turned against’ the LSE and ‘particularly Laski. Then it happened
that I was the first member’ of the LSE on which he could ‘release all his
hatred of the place. So I had to suffer for Harold Laski. [laughter]’2
Hayek (1978) informed Rosten that there was ‘a comic part’ about
his two dead, Jewish-born colleagues: ‘I think I can now tell you the
story behind it.’3 Finer’s parents were killed in Luftwaffe bombing raids.
His brother, Samuel Finer (1958, 1962), also a Professor of Politics,
wrote about a subject close to Hayek’s pocket, Anonymous Empire:
A Study of the Lobby in Great Britain, and a subject close to Hayek’s
heart: The Man on Horseback: The Role of the Military in Politics. Hayek
described Pinochet as an ‘honorable’ general (cited by Caldwell and
Montes 2014a, 38, n121; 2014b, n121; 2015, 293, n121); while in
‘The Retreat to the Barracks: Notes on the Practice and the Theory of
Military Withdrawal from the Seats of Power,’ Samuel Finer (1985, 28)
provided a less hagiographic perspective: ‘Another interest is the contin-
uance of their customary role in society: many armies have felt men-
aced, for instance, when the civilian government established civilian
militias to dilute or counterpoise their own, coercive power. This was
one reason the Chilean armed forces deposed Allende, and it played a
significant role in Boumedienne’s overthrow of Ben Bella’ in Algeria in
1965: ‘Examples can be multiplied.’
At the LSE Hayek was also, presumably, overheard denigrating
republics of ‘peasants and workers.’4 In The Road to Reaction, Herman

2Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

3Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

4Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 12 The Unravelling and the Glue    
553

Finer (1945, xii) believed that he had demonstrated that ‘Hayek’s appa-
ratus of learning is deficient, his reading incomplete; that his under-
standing of the economic process is bigoted, his account of history false;
that is political science is almost non-existent, his terminology mislead-
ing, his comprehension of British and American political procedure
and mentality gravely defective; and that his attitude average men and
women is truculently authoritarian.’

3 1945: Krueger
In his inaugural lecture, Hayek (1933, 133) outlined in embryo his
Road to Serfdom (1944) thesis: ‘most of the planners do not yet realise
they are socialists.’ Twelve years later, Hayek encountered a University
of Chicago critic of The Road to Serfdom, Maynard Krueger (1994 [22
April 1945], 116–117), who accused him of perpetrating a

clear perversion of the historical fact … You wind up, Hayek, using the
term ‘socialism,’ the terms ‘communism,’ ‘totalitarianism,’ ‘planning,’ and
‘collectivism’ interchangeably from one paragraph to the other. You sub-
stitute the one for the other.

Krueger contradicted Hayek: a statement which seems to ‘me to be

nonsense is one of the major assertions of your book. That is the state-
ment made in very plain language that it is historically true that the
rise of totalitarianism and specifically fascism was not a reaction against
collectivist trends in Europe but was the inevitable consequence of the
trend toward socialism.’
Krueger was Hayek’s (1945, 524) ‘man on the spot’: he had been a
student at the University of Berlin in 1899 and had visited Germany
‘many, many’ times, including the period of Hitler’s rise (1924, 1926,
1929, 1930, and 1932) and had ‘exactly the opposite impression’ to
Hayek. The central thesis of The Road to Serfdom was contradicted by
the evidence: ‘It was not the fact of communism but the fear of com-
munism that was the most powerful factor in the development of
Nazism.’
554    
R. Leeson

4 1945: General Election

The Conservative Party used part of the war-rationed paper supply that
they had been allocated for the 1945 election for an abridged version of
The Road to Serfdom. In a 4 June 1945 campaign broadcast, Churchill
took a theme from The Road to Serfdom; and in response, the Labour
leader, Attlee, described Churchill’s ‘Gestapo speech’ as a ‘second-hand
version of the academic views of an Austrian professor, Friedrich August
von Hayek’ (cited by Lane 2013, 52). Hayek (1994, 106) complained
that henceforth he was ‘officially in socialist terms, “Friedrich August
von Hayek”.’ Presumably for tactical reasons, Hayek (1946) signed his
Economica essay on ‘The London School of Economics 1895–1945’
‘FAH.’

5 1945–2009: The Friedmans

As Milton Friedman (1995) observed, Hayek’s exchanges with Keynes
created the impression of a ‘very arrogant, self-centred young man,
which he was.’ While Friedman was a graduate student at the University
of Chicago (1932–1934), two of his teachers, Knight and Viner,
examined and must have rejected Hayek’s assertion about having pre-
dicted the Great Depression; (Leeson 2018a): and circa 1945, Friedman
explained to Hayek why he was unacceptable to the University of
Chicago Economics Department.5
In 1973, 9–11 White Terror ‘liberty’ came to Chile: the cops were
‘unleashed, and allowed to administer instant punishment,’ and thou-
sands forfeited their right to be heard. Victor Jara—the ‘Bob Dylan
of Chile’—was tortured and killed: his fingers and back were bro-
ken (Leeson 2019). Shortly afterwards, Hayek (1975) insisted that
Keynesians had also ‘forfeited their right to be heard.’ Mises (1985
[1927]) had aspired to be the intellectual Führer of a Nazi-Classical

5http://contemporarythinkers.org/friedrich-hayek/multimedia/interview-hayek-gary-north-

part-2/.
 12 The Unravelling and the Glue    
555

Liberal Pact; and Hayek (1975) described his ‘free’ market knowledge
construction model: ‘You might object that I have left out some facts,
and that the result would have been different if I had not neglected
those other facts. Well, my answer to this objection would be: quote the
facts, please, and I shall be willing to consider them.’
The year before meeting Pinochet, Hayek (2013 [1976], 268–269)
defined ‘the market order’ as the ‘order brought about by the mutual
adjustment of many individual economies in a market.’ A catallaxy is
thus the ‘special kind of spontaneous order produced by the market
through people acting within the rules of the law of property, tort and
contract’ which means

significantly, not only ‘to exchange’ that also ‘to admit into the commu-
nity’ and ‘to change from enemy into friend.’

Before The Road to Serfdom (1944), Hayek’s and Mises’ major contribu-
tions to world history had been—from a democratic perspective—the
dysfunctional promotion of the deflationary manipulation of the price
mechanism: falling general prices, rising real wages and thus increased
unemployment. Every member of Rose Friedman’s family that hadn’t
emigrated perished in the Holocaust: ‘We have never learnt where
or how’ (Friedman and Friedman 1998, 3). In a 1961 letter to Barry
Goldwater, Milton Friedman traced the lineage of the Bretton Woods
fixed exchange rate ‘coalition’ back to Schacht and the Nazis (Leeson
2003, Chapter 12). And in an interview reprinted in Hoover Digest,
Friedman came close to apportioning blame (even using a hangman’s
analogy):

I think the Austrian business-cycle theory has done the world a great deal
of harm. If you go back to the 1930s, which is a key point, here you had
the Austrians sitting in London, Hayek and Lionel Robbins, and saying
you just have to let the bottom drop out of the world. You’ve just got
to let it cure itself. You can’t do anything about it. You will only make
it worse. You have Rothbard saying it was a great mistake not to let the
whole banking system collapse. I think by encouraging that kind of
do-nothing policy both in Britain and the United States, they did harm.
(cited by Epstein 1999)
556    
R. Leeson

Friedman (1972, 936–937) attributed the success of the Keynesian rev-

olution to the ‘dismal view’ promoted by Hayek, Mises and Robbins:

the dominant view was that the depression was inevitable result of the
prior boom, that it was deepened by the attempts to prevent prices
and wages from falling and firms from going bankrupt, that the mon-
etary authorities had brought on the depression by inflationary policies
before the crash and had prolonged it by ‘easy money’ policies thereaf-
ter; that the only sound policy was to let the depression run its course,
bringing down money costs, and eliminating weak and unsound firms …
It was the London School (really Austrian) view that I referred to in my
‘Restatement’ when I spoke of ‘the atrophied and rigid caricature [of the
quantity theory] is so frequently described by the proponents of the new
income-expenditure approach - and with some justice, to judge by much
of the literature on policy [emphasis added] that was spawned by the
quantity theorists.’

6 1946: Heinrich Von Hayek

In The Road to Serfdom, Hayek (2007 [1944], 169–170) stated: ‘Neither
the Gestapo nor the administration of a concentration camp, neither
the Ministry of Propaganda nor the SA or SS (or their Italian or Russian
counterparts) are suitable places for the exercise of humanitarian feel-
ings.’ Hayek’s ‘Jewish looking’ brother, Heinrich, was an SA and Nazi
Party member who spent the Third Reich injecting chemicals into
freshly executed victims. According to one of his colleagues, his vic-
tims may not have been dead when delivered to be experimented upon.
From 1934 to 1935, he served as Führer in the Kampfring der Deutsch-
Österreicher im Reich (Hilfsbund ), an organisation of German Austrians
living in Germany that displayed a Swastika in its regalia. His denazifi-
cation trials began in 1946 (Hildebrand 2013, 2016).
Hayek told his second appointed biographer that Heinrich had been
‘no Nazi, that he had been somewhat naive and might even have said
silly things now and then, but that he had probably been influenced
by his North German wife. Hayek was of the opinion that women
 12 The Unravelling and the Glue    
557

in particular had responded positively to Hitler, citing his mother as

another example. After the war his brother had been dismissed from his
university because of his political past but had made quite a living from
producing woodcarvings’ (Cubitt 2006, 51).

7 1947: The Mont Pelerin Society

Hayek (1978) had supreme confidence in his ability to defeat Keynes’
(1936) General Theory of Employment Income and Money (1936) because
he had produced a ‘general refutation’ of its central idea in the 1920s:
‘I’m quite convinced I could have pointed out the mistakes of that book
at that time’.6 But he didn’t. Two months after of the publication of
the second part of Hayek’s (1932) ‘charge’ on Keynes’ (1930) Treatise
on Money, another research project began: Schacht (12 April 1932)
informed Hitler that German industrialists wished to finance an ‘eco-
nomic centre where National Socialist principles could be studied and
brought into agreement with those of a prosperous private economy’
(cited by Davidson 1966, 229).
This was a defining moment in the fortunes of the Austrian School
of Economics: the industrialists were behaving as Mises’ Liberalism
(1985 [1927], 44–51) recommended they should: ‘though its policy has
brought salvation for the moment, it is not of the kind which could
promise continued success. Fascism was an emergency makeshift. To
view it as something more would be a fatal error.’ Fascism will ‘never
succeed as completely as Russian Bolshevism from freeing itself from
the power of liberal ideas. The ‘next episode will be the victory of com-
munism.’ Fascism would fail because of its use of ‘Repression by brute
force’ which was a ‘confession of the inability to make use of the bet-
ter weapons of the intellect.’ This is the ‘fundamental error from which
Fascism suffers and which will ultimately cause its downfall.’

6Friedrich Hayek, interviewed by Leo Rosten 15 November 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
558    
R. Leeson

The American-Austrian Henry Hazlitt (1933, 15) defined Fascism as

‘a dictatorship in the interests of the plutocracy.’ In his recorded com-
ments on John Grey’s (1984) ‘Road to Serfdom After 40 Years,’ Hayek
was ‘bitter’ about liberals thinking that the Nazi movement was pro-
moted by capitalists to stop socialism: this was, he explained, the ‘cor-
nerstone’ around which the MPS had been founded.7
In 1945, when asked by Harold Luhnow of the William Volker
Charities Fund which university he would prefer, Hayek (1994, 127)
replied ‘Chicago’ and also mentioned Stanford as a ‘possibility.’ Within
‘three’ weeks Hayek claims he invitations from the chancellors of ‘three’
universities; and arrangements were made to divide a semester between
Chicago and Stanford. Hayek (1978) reflected about ‘one instance
about four or five years’ after he had published The Road to Serfdom
(1944) when a ‘proposal of an American faculty to offer me a professor-
ship was turned down by the majority.’ It was one of the ‘big’ American
universities.8
According to Caldwell (2004, 297), the ‘deal’ to appoint Hayek to
the Chicago Economics Department ‘fell through in 1948.’ Hayek
regarded his position at the University of Chicago as ‘a scholar’s dream’:
the one prior attempt to informally consider Hayek by the Department
of Economics (in early 1946, before Friedman’s arrival) was ‘unknown
to Hayek and not taken even moderately seriously by most members of
the Chicago Department’ (Mitch 2015). On 14 November 1948, the
Department refused to provide Hayek with a ‘courtesy appointment’
to accompany his forthcoming Committee on Social Thought position
(Mitch 2016).
According to Boettke (2004, 10, n7), ‘Hayek’s rather shoddy treat-
ment by his colleagues in the economics department at the University
of Chicago during the 1950s has only been told in partial tidbits to
date.’ Hamowy (1996, 421) reinforced this image: ‘inasmuch as the

7MPS Archives. Box 25.6.

8FriedrichHayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral
History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
 12 The Unravelling and the Glue    
559

university’ of Chicago had ‘never actually paid Hayek a salary, it refused

[emphasis added] to provide him with a pension.’ As did Rothbard
(2009 [1988], 106, n54): the ‘University of Chicago refused [emphasis
added] to pay Hayek any pension.’
To promote deductive apriori ‘reasoning,’ Austrians embrace confir-
mation bias (a standard error of inductive reasoning). Rockwell (2011)
repeated the Austrian Truth: it was ‘great’ to have ‘historian’ Hamowy
as a ‘distinguished visiting faculty member at Mises University.’
Presumably referring to David Gordon, Rockwell stated that ‘David
Gordan’ reported that ‘Ronald confirmed that it was indeed Milton
Friedman who blocked Hayek from the Chicago economics faculty. As
a result of the Miltonian blackball, Hayek had to take an unpaid posi-
tion at the university, and eventually returned to Austria.’
According to Rockwell (2011), Hayek’s ‘American salary was paid
by the heroic Volker Fund, but there was no pension and certainly no
tenure.’ The evidence, however, reveals that like all other University
of Chicago employees, the tenured Hayek received a pension com-
mensurate with his contributions (Mitch 2015). Two years previously,
Hamowy (1999, 286) had accurately reported that it was the ‘inade-
quacy of the pension arrangements Hayek had with the University of
Chicago’ that had persuaded him to return to Europe in such of funds.
Hamowy (1996, 420) also correctly ascertained that ‘leading mem-
bers’ of the Chicago Economics Department were ‘unalterably opposed
to Hayek’s joining the department in large part because of his connec-
tion to the Austrian School, which they regarded as somewhat disrep-
utable.’ Even a zero price (a 100% subsidy from the Volker Fund) was
not sufficient to induce the Economics Department to consider Hayek.
According to Hamowy (2010, 144), Hayek was rejected because his
‘approach to capital theory was at odds to departmental orthodoxy.’ Yet
Hamowy failed to penetrate beneath mythological Austrian martyrdom
to discover the real reason: Hayek’s fraud about having predicted the
Great Depression had been uncovered in the department in 1932–1934
(Leeson 2018b).
Raico insisted: ‘It should be noted [emphasis added] that Hayek was
turned down for a position in the Chicago economics department by
Friedman and Stigler, because they deemed him not scientific enough,
560    
R. Leeson

that is, not a positivist.’9 Stigler (1911–1991) had a profound under-

standing about how to promote the ideology that he approved of and
how to dispatch that which he didn’t approve of ‘deeper and deeper into
the footnotes’ (Leeson 2000, Chapter 3). But in 1945, this 35-year-
old was not in a position to block Hayek: ‘My teaching began in 1936
at Iowa State College … Two years later, I went to the University of
Minnesota from which I was on leave for several years during the war
as a member of Statistical Research Group at Columbia University.
After the war, I returned to Minnesota, from which I soon moved to
Brown University, and a year later, to Columbia University where I
remained from 1947 until 1958 [when] I came to Chicago where I have
remained.’10
In 1950, after Hayek abandoned his wife, and children, Robbins
abandoned the MPS. The first Mrs. Hayek (Hella) ‘pleaded’ with the
second that she ‘loved her husband and wanted him to stay with her.’
Starting, presumably in 1934, two letters from Helene would arrive
simultaneously: one for Hayek, the other for Hella (in which she was,
apparently, reminded that she was unwanted by her husband and
should, therefore, return to Vienna). Hayek may have intended that 8
Turner Close, Hampstead Garden Suburb, was to be—not for his first
wife (and children)—but for his second.11 For Hayek’s son, Lorenz, the
onset of war brought relief: ‘the dreaded letters from Austria no longer
arrived.’ Hayek and Helene kept in touch ‘via a neutral country’; for
Hella, Lorenz and his sister, Christine, the post-war reappearance of the
letters reawakened the ‘fear of Helene Warhanek’ (Cubitt 2006, 382,
387, 287).
Hayek’s (1951) John Stuart Mill and Harriet Taylor Their
Correspondence and Subsequent Marriage could be interpreted as a

9http://www.economicpolicyjournal.com/2012/04/revealed-men-who-blocked-hayek-from.html.

10http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1982/stigler-bio.html.

11According to Cubitt (2006, 211, 290), Helene informed her that she had been the ‘victim of

ups and downs, believing that at one time divorce was possible, and at other times it was not.’
Helene showed Cubitt some letters dating from 1937 to convince her that she had ‘not persuaded
Hayek to leave his first wife.’ This is of course not inconsistent with other ‘up’ letters in which she
did.
 12 The Unravelling and the Glue    
561

rumination on his own biography.12 In his review of Robbins’ (1970)

The Evolution of Modern Economic Theory, Stigler (1970, 426) asked:
‘What relevance have the details of a man’s personal life to the nature
of his scientific work? I am tempted to answer: biography distorts rather
than illuminates the understanding of scientific work; and Professor
William Jaffe recently gave the opposite answer. Lord Robbins gives evi-
dence enough in this volume of the fascination which economists’ lives
holds for him, and it would be highly instructive to have his views on
the role of such knowledge in the intellectual history of science.’
Paul Bede Johnson is ‘famously Roman Catholic. He kisses the feet
of Christ crucified every morning’ (Grice 2010). According to Johnson
(1997, 255), the ‘workings of mysterious providence balance good and
evil.’ He was referring to cotton and slavery—but could have been refer-
ring to the founder of the MPS of which he was a member. On the
‘Commanding Heights’ television series, Milton Friedman described the
impact of The Road to Serfdom:

It was a very clear, definite statement of certain fundamental ideas. It was

a passionate plea by a passionate man, and so it was very well written,
and for those of us who were concerned about these kinds of issues, I
think it had a tremendous impact. In fact, I’ve often gone around and
asked people what determined their views. I’ve asked people who were in
favor of free markets and free enterprise, people who formerly had been
of a different view, what caused them to change their mind. I’m talking
particularly not about economists, not about professionals, but generally
ordinary people, most of whom had been socialist or in favor of govern-
ment control at one time and had come over to free markets. And two
names have come up over and over again: Hayek on the one hand, The
Road to Serfdom from Hayek, and Ayn Rand on the other, Atlas Shrugged
and her other books.13

The 1974 (Hayek), 1976 (Friedman), 1982 (Stigler) and 1986

(Buchanan) Nobel Prizes created an ideological opportunity for the MPS.

12Stigler (1988, bibliography) referred to it as ‘John Stuart Mill and Harriet Taylor ’.
13https://www.pbs.org/wgbh/commandingheights/shared/minitext/int_miltonfriedman.html.
562    
R. Leeson

In The Economist as Preacher and Other Essays, Stigler (1982 [1976], 91,
93) insisted that when ‘we are told that we must study a man’s life to
understand what he really meant, we are being invited to abandon sci-
ence [emphasis added] … The recipients of a scientific message are the
people who determine what the message is, and no flight of genius
which does not reach the recipients will ever reach and affect the science
… detailed biographical knowledge is irrelevant to the interpretation of
an individual scientific worth.’ Like Mises’ political ‘Fascism,’ Hayek’s
Nazi-style views would not have assisted the influence of the MPS; nei-
ther, after his divorce, would his ‘biography.’

8 Samuelson
When Samuelson (1964, 736) thought about how Miseseans derived
their ‘knowledge,’ he ‘tremble[d] for the reputation of my subject.
Fortunately, we have left that behind us.’ Samuelson (1986, 700)
reflected:

The McCarthy era, in my judgement, posed a serious threat of American

fascism. I knew plenty of people in government and the universities
whose civil liberties and careers came into jeopardy. I observed at close-
hand the fear and trembling the Harvard and MIT authorities experi-
enced, and these were the boldest of the American academic institutions.
As Wellington said of Waterloo, it was a close run thing that Senator
McCarthy was discredited: the Richard Nixon ‘enemy list’ was a joke in
comparison, and my being named on it only added to my fading creden-
tials as a new dealer.

Within weeks of arriving at the University of Chicago, Hayek

began targeting left-wing academics for liquidation: the Jewish-born
Keynesian econometrician, Lawrence Klein, was targeted (Leeson 2017,
Chapter 7). At Harvard, Samuelson (Klein’s PhD supervisor) had been
academically blocked by anti-Semites (Backhouse 2014). Samuelson
(1986, 700) asked:
 12 The Unravelling and the Glue    
563

How did free market advocates among the economists scorers defenders
of personal freedoms and civil liberties? This was a subject of great interest
to me and over several years I kept a quiet tally of the behaviour and pri-
vate utterances of scores of the leading American and continental libertar-
ians almost all of whom I knew intimately. Like a visiting anthropologist
I would ask innocent questions designed to elicit relaxed and spontaneous
views. If it was churlish to keep a record of private conversations, then I
was a churl. The results surprised and distressed me.

Samuelson named names: ‘Worshippers of laissez-faire’ à la Frédéric

Bastiat and Herbert Spencer were ‘insensitive and on the whole unsym-
pathetic towards the rights and personal freedoms of scholars.’ Alone
among members of the MPS the ‘name of Fritz Machlup stood out as
one willing to incur personal costs to speak up John Stuart Mill values.’
Samuelson (1986, 993), who pursued Laffer ruthlessly (Chapter 5,
above), described Pinochet’s regime as ‘Capitalistic Fascism.’ Referring
to his own best-selling textbook, Samuelson (1997, 158) recalled that
his ‘attackers’

included names then considered extremely on the right: a Colonel

Namm, who owned a Brooklyn department store; also someone named
Zoll, from a small fascist-leaning group on the right. There was, too, a
Philip Cortney, who headed the Cody cosmetic company and lectured
at Harvard that Sumner Slichter (who was actually the academic most
beloved by business-group audiences) was ‘the most dangerous man in
America. Worse than an avowed Keynesian is this closet-Keynesian poi-
soning of America’s policy formation.’ Running with that pack was Rose
Wilder Lane.

Rose Lane Wilder told Mises that as an American she was ‘of course
fundamentally opposed to democracy and to anyone advocating or
defending democracy,’ which was in ‘theory and practice’ the ‘basis’ of
socialism. It was ‘precisely democracy which is destroying the American
political structure, American law, and the American economy,’ as James
Madison said it would, and as (Thomas Babington?) ‘Macauley [sic]
prophesied’ that it would (cited by Hülsmann 2007, 859).
564    
R. Leeson

Samuelson and Solow’s (1960) promotion of the Phillips curve trade-

off should be seen in the context of their determination to prevent Vice
President Nixon becoming President in 1961 (Leeson 1997). In his
textbook and in his advocacy, Samuelson sought to locate the American
economy in the low-unemployment section of the Phillips curve; the
‘Austerians’ sought to drive the economy into the high-unemployment
deflationary zone.
Hayek (2007 [18 December 1980], 28–29) complained to
Samuelson that he had found in the 11th edition of his Economics the
‘source of the false allegation’ about The Road to Serfdom which ‘I con-
stantly encounter, most resent and can only regard as a malicious distor-
tion which has largely succeeded in discrediting my argument.’

You assert that I can tend that ‘each step away from the market system
and towards the social reform of the welfare state is inevitably a journey
that must end in a totalitarian state’ and that ‘government modification of
market laissez-faire must lead inevitably to political serfdom [unattributed
emphasis].’ How anyone who has read my book can in good faith say this
when ever since the first edition I say right at the beginning …. ‘Nor am I
arguing that these developments are inevitable. If they were, there would
be no point in writing this. They can be prevented if people realise in
time where the efforts may lead.’

Caldwell (2007, 29 n102) added ‘Hayek was wrong to imply that

Samuelson was a source of the misreading, for it was a common one.
The archives also contains Samuelson’s reply, in which he apologised
and promised to try to represent Hayek’s views more accurately in any
future work.’
Fürth (23 March 1992) told Samuelson that Hayek’s father was
the president of a ‘highly nationalistic society of “German” physi-
cians’ who competed with the politically neutral General Medical
Association. Hayek’s mother was ‘equally nationalistic, and mad at me
because I had “seduced” her son from nationalism.’14 In ‘Road to 1984,’

14Fürth Archives. Hoover Institution. Box 6.

 12 The Unravelling and the Glue    
565

Samuelson (1973), who described Hayek’s (1944) ‘principle thesis’

as ‘wrong,’ also stated that ‘we begin to see … the face of Fascism.’
Samuelson was referring to Nixon’s Watergate: did he regard it as ‘churl-
ish’ to publicly mention Hayek’s Nazi background?

9 Arrow
The Jewish-born Samuelson won the Nobel Prize for Economic
Sciences in 1970; and his Jewish-born brother-in-law, Kenneth
Arrow, won it two years later. Arrow had been an Assistant Professor
of Economics at the University of Chicago (1946–1949) as Hayek was
pointedly not under consideration and so may have heard, second hand,
some of the reasons; and was at Stanford (1979–2017) while Hayek was
a frequent visitor to the Hoover Institution (1975–1985).
The press release accompanying the announcement of Hayek’s Nobel
Prize stated:

The Academy is of the opinion that von Hayek’s analysis of the functional
efficiency of different economic systems is one of his most significant
contributions to economic research in the broader sense. From the mid-
thirties he embarked on penetrating studies of the problems of centralized
planning. As in all areas where von [emphases added] Hayek has carried
out research, he gave a profound historical exposé of the history of doc-
trines and opinions in this field. He presented new ideas with regard to
basic difficulties in ‘socialistic calculating,’ and investigated the possibil-
ities of achieving effective results by decentralized ‘market socialism’ in
various forms. His guiding principle when comparing various systems is
to study how efficiently all the knowledge and all the information dis-
persed among individuals and enterprises is utilized. His conclusion is
that only by far-reaching decentralization in a market system with com-
petition and free price-fixing is it possible to make full use of knowledge
and information.15

15https://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1974/press.html.
566    
R. Leeson

Having ‘carefully’ read Hayek’s (1945) ‘The Use of Knowledge in

Society,’ Arrow (2004, 302) formed a different view:

I think it is incoherent because he stresses the idea that people can only
know their local thing. He doesn’t even answer why the system’s prices
conveys the correct global information.

The ‘Social Contrivance of Money’ (Samuelson 1958) has similarities with

the social contrivance of academic civility and deference to the Second
Estate. Arrow (1921–2017)—who spoke frequently with the AIEE edi-
tor—did not appear to be surprised by Hayek’s Nazi connections, nor his
promotion of the deflation that assisted Hitler’s rise to power nor the infor-
mation about Hayek’s frauds. But as a ‘Grand Old Man,’ Arrow’s (1992,
45) loyalty was to the integrity of the economics profession: ‘Respect for
others is, for me, based on a certain degree of mystery about them.’

10 E. H. Carr
In response to a probe by Chitester about his prejudices, Hayek (1978)
appeared to accept the common justification for apartheid: Africans,
or ‘natives’ were at a lower level of evolution. Chitester asked about the
‘difficulties in Africa of bringing into existence some form of nation-
states. It seems to me that the tribal kinds of organization are an exam-
ple of that.’ Hayek replied ‘Sure. Certainly. Very much so.’ Chitester
continued: ‘The tribes have their own voluntary rules, but they’re all
different’; to which Hayek replied ‘Well, it’s very doubtful whether you
can, under these conditions, impose the whole apparatus of a modern
state.’16
Earlier, Hayek (17 November 1963) had informed Karl Popper that
intellectual freedom existed under apartheid: thoughtful people in
the National Party were reassessing goals. Presumably in response to
anti-apartheid activities, the government was driven more and more

16Friedrich Hayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral

History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 12 The Unravelling and the Glue    
567

into repression. However, Hayek’s overall impression was one of surpris-

ing stability. Hayek also warned that the situation could change over-
night if the exiled leaders of the ‘natives’ returned.17
The trial of Nelson Mandela and nine others began nine days later
(26 November 1963). In his statement from the dock (20 April 1964),
defendant Mandela declared ‘We believed in the words of the Universal
Declaration of Human Rights … The lack of human dignity experi-
enced by Africans is the direct result of the policy of white supremacy
… whites tend to regard Africans as a separate breed.’
In his Nobel Lecture, Gunnar Myrdal’s associate, Ralph Bunche
(1950), reflected that

Words, in a constant flow of propaganda - itself an instrument of war -

are employed to confuse, mislead, and debase the common man … in
‘free’ societies, so-called, individual human rights are severely denied …
Truth and morality are subverted by propaganda, on the cynical assump-
tion that truth is whatever propaganda can induce people to believe.

Among the ‘great issues demanding resolution in the world’ were the
‘widespread denials of human rights’ and the ‘understandable impa-
tience of many among some two hundred million colonial peoples for
the early realization of their aspirations toward emancipation.’18
In his Nobel Lecture, Martin Luther King (1964) declared:

The present upsurge of the Negro people of the United States grows out
of a deep and passionate determination to make freedom and equality
a reality ‘here’ and ‘now.’ In one sense the civil rights movement in the
United States is a special American phenomenon which must be under-
stood in the light of American history and dealt with in terms of the
American situation. But on another and more important level, what is
happening in the United States today is a relatively small part of a world
development. Fortunately, some significant strides have been made in the
struggle to end the long night of racial injustice.

17Popper Archives. Box 35.15.

18http://www.nobelprize.org/nobel_prizes/peace/laureates/1950/bunche-lecture.html.
568    
R. Leeson

King (1964) highlighted what he regarded as five positive developments.

• Using a word that Gunnar Myrdal (1968) later used—the ‘magnifi-

cent drama of independence unfolds in Asia and Africa.’
• The 1954 Supreme Court’s decision outlawing segregation in the
public schools: a ‘beacon light of hope to millions of disinherited
people.’
• The ‘strong Civil Rights Bill … first recommended and promoted
by President Kennedy … Since the passage of this bill we have seen
some encouraging and surprising signs of compliance.’
• In 1964, the electorate ‘overwhelmingly rejecting a presidential can-
didate [Barry Goldwater] who had become identified with extrem-
ism, racism, and retrogression. The voters of our nation rendered a
telling blow to the radical right. They defeated those elements in our
society which seek to pit white against Negro and lead the nation
down a dangerous Fascist path.’
• The evolution of civil rights into the ‘demand for dignity, equality,
jobs, and citizenship … We shall not be cowed. We are no longer
afraid.’

King’s (1964) Nobel Lecture was entitled ‘The Quest for Peace and
Justice.’ During his 1964 presidential campaign, Goldwater—who
famously proclaimed that ‘extremism in the defence of liberty is no
vice’—wrote to Hayek thanking him for his intellectual contributions.19
In May 1931 (shortly after Hayek’s first LSE lecture), Hitler told
an interviewer about those who were ‘lost to the German nation! You
belong in Berlin’s West End! Go there, dance your nigger dances till
you’re worn out, and croak’ (cited by Fest 1973, 453–454). In his his-
tory of the LSE, Dahrendorf (1995, plate 17, between 268 and 269)
reproduced a photograph of dancing academics (a regular lunchtime
activity). Hayek described Sir Arthur Lewis as an ‘unusually able West
Indian negro’; and when asked about his

19Hayek’s side of this correspondence does not appear to be in either the Goldwater or Hayek

archives.
 12 The Unravelling and the Glue    
569

attitude to black people was … he said that he did not like ‘dancing
Negroes.’ He had watched a Nobel laureate doing so which had made
him see the ‘the animal beneath the facade of apparent civilization.’
(Cubitt 2006, 23)

Hayek (5 March 1975) told the Liberty Fund’s Neil McLeod that he
didn’t want non-whites to touch his money—his Chicago bank had
‘gone negro’ and he needed to find an alternative.20 Did Hayek regard
King, Bunche and Mandela as ‘animals’? Did he watch footage of them
dancing during the Nobel Banquet? They were certainly lining them-
selves up for a sarcastic response from Hayek (1966, 35) about the
‘absurdity’ of delineating rights for ‘peasants, the Esquimo, and pre-
sumably the abominable snowman.’ A little over a year after King’s
Norwegian Nobel Lecture, ‘Professor F.A. von Hayek’ (1966) published
‘Misconception of Human Rights as Positive Claims’ in the Norwegian
libertarian journal, Farmand, edited by Trygve Hoff, a founding mem-
ber of the MPS. This was the culmination of two related research pro-
jects that Hayek had undertaken after his first two trips to South Africa:
in the first, Hayek (23 November 1963) received some articles from the
Principal of University of Cape Town about the Broederbond which
‘completed’ his picture of South African politics21; in the second, he
investigated the origins of the Universal Declaration of Human Rights.
Hayek (1966, 33) discovered the source of the Nobel Peace Prize mis-
chief: the British representatives on the committee that provided the
‘intellectual backbone’ of the Universal Declaration of Human Rights
‘were Professor H.J. Laski and E.H. Carr!’ Hayek declared that it was
‘meaningless to speak of rights in the sense of a claim on a spontane-
ous order, such as society constitutes, unless it is meant to imply that
somebody has the duty of transforming this spontaneous order into an
organisation, and thus to gain the power to control the result.’
In Law, Legislation and Liberty: The Mirage of Social Justice, Hayek
(1976, 184, n3) expressed further contempt by inserting an exclamation
mark after citing Carr:

20Hayek (5 March 1975) to Neil McLeod at the Liberty Fund. Hayek Archives. Box 34.17.
21Popper Archives. Box 54.33.
570    
R. Leeson

‘If the new declaration of the rights of man is to include provisions for
social services, for maintenance in childhood, in old age, in incapacity
or in unemployment, it becomes clear that no society can guarantee the
enjoyment of such rights unless it in turn has the right to call upon and
direct the productive capacities of the individuals enjoying them’!

According to Hayek (1976, 103–104), human rights was essentially

derived by combining the ‘old civil rights’ with rights derived from
Marxism: the ‘old civil rights’ and the ‘new social and economic rights’
could not be achieved simultaneously because they were in ‘fact incom-
patible.’ The new rights could not be enforced by law without at the
same time destroying that ‘liberal order’ which the old civil rights aimed
to achieve. The ‘new’ trend was given its chief impetus through the
proclamation by President Franklin Delano Roosevelt of his

‘Four Freedoms’ which included ‘freedom from want’ and ‘freedom from
fear’ together with the old ‘freedom of speech’ and ‘freedom of worship
[emphases in original].’

But the new trend found its ‘definite’ embodiment in 1948 in the
Universal Declaration of Human Rights (adopted by the General
Assembly of the United Nations)—which according to Hayek, was
‘admittedly’ an attempt to fuse the rights of the Western liberal tradi-
tion with the ‘altogether different’ conception derived from the 1917
Marxist Russian Revolution.22

22Hayek (1976, 183, 184, n2) directed his readers to the Universal Declaration of Human Rights

(adopted by the General Assembly of the United Nations on 10 December 1948) and an ‘intel-
lectual background’ report (‘Human Rights, Comments and Interpretations’), a symposium
edited by UNESCO which contains in the Appendix a ‘Memorandum Circulated by UNESCO
on the Theoretical Bases of the Rights of Men’ plus a ‘Report of the UNESCO Committee
on the Theoretical Bases of the Human Rights’ (also described as ‘UNESCO Committee on
the Principles of the Rights of Men’), which, according to Hayek, explained that their ‘efforts’
had been directed towards ‘reconciling’ the two different ‘complementary’ working concepts
of human rights, of which one ‘started, from the premises of inherent individual rights’ while
the other was ‘based on Marxist principles,’ and at finding ‘some common measure of the two
tendencies’.
 12 The Unravelling and the Glue    
571

Carr was the author of The Soviet Impact on the Western World (1946),
the 14-volumes History of Soviet Russia (1950–1978), The Bolshevik
Revolution (3 volumes), The Interregnum (1 volume), Socialism in One
Country (5 volumes) and The Foundations of a Planned Economy (5 vol-
umes), German-Soviet Relations Between the Two World Wars, 1919–
1939 (1952) and The Comintern and the Spanish Civil War (1984).
And in The New Society, Carr (1971 [1960], 19, 21) also addressed the
‘Moral Bankruptcy of Liberalism’: ‘The new society was to be a soci-
ety of free and equal individuals. The dictates of economic morality
were henceforth summed up in obedience to the laws of the market;
the individual pursuing his own economic interest was assumed to
be promoting that of the whole society.’ But the ‘moral foundations
on which laissez faire rested had become ‘more and more hopelessly
undermined.’
For the last 15 years of his life, Hayek employed—but neglected
to pay—his secretary, soiled-bed nurse, cook and chauffeur, who was
‘almost permanently in debt until about three years before Hayek’s
death.’ When Cubitt (2006, 10) asked him if he minded having to ‘beg’
from libertarian charities to pay for her services, he ‘just laughed, said
he did not mind in the least, that all his professional decisions had been
based on financial considerations.’ The financial negotiations of the
divorce, which were protracted and acrimonious, appear to have begun
when their daughter, Christine Maria Felicitas Hayek (1929–) was
eighteen, and her brother, Lorenz (Laurence) Joseph Heinrich Hayek
(1934–2004), thirteen.
Hayek’s ‘spontaneous’ order depended on ‘moral’ restraint by ‘peas-
ants and workers’; and complete personal ‘liberty’ for libertine aristo-
crats like himself: adultery, abandoning wives and children, evading
taxes, double-dipping or stealing, from libertarian think tanks etc.
(Cubitt 2006, 35, 177, 277, 264). To assist the abandonment of his
wife and children and to have unrestricted access to his cousin who’s
cooking and conversation he could barely tolerate, Hayek (7 February
1948) wrote to a potential donor that the period for which he felt
‘morally’ obliged to stay with his first family was approaching its end:
572    
R. Leeson

he now wished to seriously consider the sufficiently attractive position

in the US that he had been offered three years before.23
Immediately after Rothbard (1981, 239, 250–251) was expelled
from the ‘Garden of Wichita,’ he used the Rothbard-edited Journal
of Libertarian Studies to ramp-up his use of Mises as a fund-raising
icon: Mises was a ‘proclaimed pacifist’ who ‘trenchantly attacked war
and national chauvinism’ and who issued a ‘radical philippic against
Western imperialism.’ In 1982, when Rothbard—known by some in
the ‘free’ market as ‘Robhard’ (Skousen 2000)—heard that he was to
‘head academic affairs’ at the newly formed Ludwig von Mises Institute,
‘he brightened up like a kid on Christmas morning’ (Rockwell 2010
[1999], 294).
In 1962, Hayek retired from his Professorship of Social and Moral
Science at the University of Chicago’s Committee on Social Thought
and sought additional sources of tax-exempt donations. In ‘The Moral
Element in Free Enterprise,’ Hayek (1962) promoted a choice-theoretic
approach to voluntary transfers: ‘we are free because the success of our
daily efforts does not depend on whether particular people like us, or
our principles, or our religion, or our manners, and because we [Hayek’s
emphasis] can decide whether the material reward others are prepared to
pay for our services makes it worth while for us to render them.’ For his
Freeman and National Association of Manufacturers audience, Hayek
(1962) related this to the religiosity of those who he hoped would con-
tinue to fund him: ‘All that we can say is that the values we hold are the
product of freedom, that in particular the Christian values had to assert
themselves through men who successfully resisted coercion by govern-
ment, and that it is to the desire to be able to follow one’s own moral
convictions that we owe the modern safeguards of individual freedom.
Perhaps we can add to this that only societies which hold moral values
essentially similar to our own have survived as free societies, while in
others freedom has perished.’

23Hayek Archives. Box 58.19.

 12 The Unravelling and the Glue    
573

Shortly after Carr’s (1892–1982) death, Hayek told the 1984 MPS
meeting:

We have to recognize that we owe our [emphasis added] civilization to

beliefs which I have sometimes have offended some people by calling
‘superstitions’ and which I now prefer to call ‘symbolic truths’ … We
must return to a world in which not only reason, but reason and mor-
als, as equal partners, must govern our lives, where the truth of morals is
simply one moral tradition, that of the Christian west, which has created
morals in modern civilization. (cited by Leeson 2013, Chapter 9)

Before being charged by the Securities and Exchange Commission with

‘massive fraud’ (raising $700 million in investments by orchestrating
an ‘elaborate, years-long fraud in which they exaggerated or made false
statements about the company’s technology, business, and financial per-
formance’),24 Elizabeth Holmes recruited high-status diplomats with
her claim that at Theranos, ‘we believe access to actionable health infor-
mation is a basic human right.’25 The WSJ editorial page writer, Mary
Anastasia O’Grady, is intimately connected to Hayek’s MPS and APEE;
and her colleague, Mary Kissel (14 July 2018), gave a ‘human rights’
‘hit’ to German Chancellor Angela Merkel for meeting Li Wenzu, the
detained wife of a jailed lawyer, during a visit to China.26
But Hayek (1979, 202–203, n42) referred to human rights as a ‘trick’
perpetrated by Marxists: in view of the

latest trick of the Left to turn the old liberal tradition of human rights in
the sense of limits to the powers both of government and of other persons
over the individual into positive claims for particular benefits (like the
‘freedom from want’ invented by the greatest of modern demagogues) it
should be stressed here that in a society of free men the goals of collective
action can always only aim to provide opportunities for unknown people,

24https://www.sec.gov/litigation/litreleases/2018/lr24069.htm.

25https://www.theranos.com/leadership/technology-team.

26http://www.foxnews.com/shows/journal-editorial-report.html.
574    
R. Leeson

means of which anyone can avail himself for his purposes, but no con-
crete national goals which anyone is obliged to serve.

In E. H. Carr: A Critical Appraisal (Cox 2000), Hayek is represented

as his polar opposite. The von Hayeks were proto-Nazis and later
card-carrying Nazis. In the same year that he published The Romantic
Exiles: A Nineteenth Century Portrait Gallery, Carr (1933a, b) also high-
lighted Hitler’s appeal to aristocrats

Hitler’s hymn of hate breathes a sense of the mystical superiority of him-

self and his followers which, though more directly inspired by Lenin
and Mussolini, contains some echoes of the German philosopher of the
abnormal. But the crucial point about Hitlerism is that its disciples not
only believe in themselves, but believe in Germany. For the first time
since the war a party appeared outside the narrow circles of the extreme
Right which was not afraid to proclaim its pride in being German. It will
perhaps one day be recognized as the greatest service of Hitlerism that, in
a way quite unprecedented in German politics, it cut across all social dis-
tinctions, embracing in its ranks working men, bourgeoisie, intelligentsia
and aristocrats. ‘Germany Awake!’ became a living national faith.

11 1971: Robbins
Samuelson (1991) reported that Robbins had described himself as
a former ‘crazy Hayekian deflationist.’ Robbins (1971, 154)—who
knew that Hayek had ‘Nazi relatives’ (Howson 2011, 319)—issued a
post-Austrian mea culpa: ‘I shall always regard this aspect of my dispute
with Keynes as the greatest mistake of my professional career, and the
book, The Great Depression [1934], which I subsequently wrote, partly
in justification of this attitude, as something which I would willingly see
be forgotten.’ Robbins saw some merit:

Now I still think that there is much in this theory as an explanation

of a possible generation of boom and crisis. But, as an explanation
of what was going on in the early ’30s, I now think it was misleading.
 12 The Unravelling and the Glue    
575

Whatever the genetic factors of the pre-1929 boom, their sequelae, in the
sense of inappropriate investments fostered by wrong expectations, were
completely swamped by vast deflationary forces sweeping away all those
elements of constancy in the situation which otherwise might have pro-
vided a framework for an explanation in my terms.

Robbins (1971, 154) concluded that Austrian theory was ‘inadequate’ to

the facts. Nor was this approach any more adequate as a guide to pol-
icy. Confronted with the freezing deflation of those days, the idea that
the prime essential was the writing down of mistaken investments and the
easing of capital markets by fostering the disposition to save and reduc-
ing the pressure on consumption was completely inappropriate. To treat
what developed subsequently in the way which I then thought valid
was as unsuitable as denying blankets and stimulants to a drunk who
has fallen into an icy pond, on the ground that his original trouble was
overheating.

12 1972: Hicks
The following year, John Hicks was the co-recipient (with Arrow) of
the Nobel Prize in Economic Sciences. Hicks (1972), who taught at
the LSE between 1926 and 1935, was ‘deeply ashamed’ of the influence
exerted over him in the first edition of Theory of Wages (1932)

the tradition in which I was working in [chapters] IX-X - the tradition of

Böhm-Bawerk and [Knut] Wicksell - was much less familiar to English
readers than that of Pigou, on whom I was drawing in VI … even before
the General Theory appeared in 1936, I had begun to draw some of the
consequences … The first result of the new point of view, when I reached
it in 1933-35, was to make me deeply ashamed of what in those chapters
I had written. I realised (too late) how inappropriate it was. It had noth-
ing to do with the state of the world at the time when I was writing. I had
diagnosed a disease, but it was not the right disease. The unemployment
of 1932 was of quite a different character from what I had supposed.
576    
R. Leeson

13 1977: Davidson
Margit Mises (1976, Chapter 8) reported that in April 1943, Hazlitt
suggested to Mises that Yale University Press has expressed an interest
in seeing a draft of his Omnipotent Government and suggested that he
send it to Eugene Davidson. Soon a ‘friendly and congenial’ relation-
ship developed between Mises and Davidson: once a month they met to
discuss, over lunch, their publishing plans.
Davidson (24 January 1944) wrote to Mises: ‘The more I’ve been
thinking about your views about bureaucracy the more it has seemed
to me we ought to discuss very seriously the possibility of your writ-
ing them up in book form. Again and again I find myself remembering
your vivid description of the branch office of the Yale University Press
as compared with that of the Internal Revenue Service, and I’d be very
much mistaken if a great many people wouldn’t find that kind of state-
ment clarifying their opinions.’
In December 1944, Mises informed Davidson that Human Action
would require ‘important’ changes from the German version in order
to adapt it to the ‘intellectual climate’ in America. The American reader
approaches economic problems differently from their German coun-
terpart—who remain ‘more or less under the spell of Hegelianism, the
Nazi philosophy and other isms,’ which were ‘fortunately less popular’
in America. When Davidson asked about referees, Hazlitt provided
what appeared to be a rigged list of Austrians—Haberler, Robbins,
Hayek, Benjamin Anderson (UCLA) and Garet Garrett (National
Industrial Conference Board)—plus two of Mises’ students: Haggott
Beckhart of Columbia and Van Sickle of Vanderbilt University (Mises
1976, Chapter 8).
Hayek (1978) had encountered Beckhart in America in 1923–
1924: he was ‘writing his book on the discount policies of the Federal
Reserve system, and it was he who led me in all these discussions on
the possibility of controlling the presumed cycle.’27 Beckhart opposed

27Friedrich Hayek, interviewed by Armen Alchian 11 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 12 The Unravelling and the Glue    
577

publication of Human Action: ‘I doubt if Professor Mises’s work would

have a sufficiently wide sale to justify its translation or publication.
Professor Mises’s theories are developed rather fully in his works which
have already appeared in English.’ As did Haberler: ‘It is a little embar-
rassing for me to answer your question because Professor Mises is a
good friend of mine. Please do keep the contents of this letter strictly
confidential. The book you are considering for translation is a very big
one. It contains Professor Mises’s lifework in economics. It is well writ-
ten and interesting but I must say for my taste it is very extreme, and I
am pretty sure it will not be well accepted in academic quarters’ (cited
by Herbener et al. 1998, xiiv–xiv).
With respect to the printing of the first (1949) edition, Davidson was
a fastidious supervisor—all details no matter how slight were important
to him. He wanted a ‘perfect’ book and a ‘satisfied’ author and even sent
Mises a proof of the binding of the book for his approval. On 9 January
1950, Davidson informed Mises that the Book of the Month Club
would list Human Action in the back part of its monthly bulletin (Mises
1976, Chapter 8).
With respect to the printing of the second (1963) edition Margit
Mises asked: ‘Who wanted to harm my husband by preventing the
book from being read?’ Was Eugene Davidson the ‘only person whose
support had brought Human Action to life?’ Mises consulted a law-
yer: the publication of the second edition was one of ‘only two cri-
ses’ in her husband’s life that so ‘emotionally upset him that his
physical well-being was affected.’ It was the only time in his life that
he had sleeping problems: he was ‘angry. It was an ice-cold, quiet
anger directed against what he felt was an unknown enemy at Yale
University Press, menacing his great book, his creative strength, his
very existence.’
Like Hayek, Mises conjured up a charming and cultivated pub-
lic persona: he was ‘not a man to show his feelings in public.’ He only
recovered his private ‘composure’ after he signed a new contract with
Regnery and observed Henry Regnery supervising the new edition of
Human Action. When he started sleeping well again, Margit ‘knew he
had regained his philosophical inner balance.’ But he ‘never forgot this
traumatic experience. Nor have I.’
578    
R. Leeson

There is another explanation which Margit Mises (1976, 43)

alluded to:

there was one thing about him that I never understood and still don’t
understand. From the day of our marriage he never talked about our past.
If I reminded him now and then of something, he cut me short. It was
as if he had put the past in a trunk, stored it in the attic, and thrown
away the key. In thirty-five years of marriage he never, never-not with a
single word-referred to our life together during the thirteen years before
our marriage. As the past was part of my life, part of the person I became,
I could not forget. His silence about the past remains in my mind like
a crossword puzzle that one cannot solve because one needed letter is
missing.

The second shock was a ‘traumatic experience’ which Mises never forgot.
The first shock (in 1938) related to action taken by those ‘Fascists’ Mises
had described only 11 years before as having ‘saved European civiliza-
tion’ (Chapter 2, above). The third edition of Human Action was pub-
lished in the same year as Davidson’s (1966) The Trials of the Germans:
An Account of the Twenty-Two Defendants Before the International
Military Tribunal at Nuremberg which documented the role played by
Chambers of Commerce and Industry in facilitating Hitler’s rise to
power. Did Davidson uncover details about the denazification trials of
the former Würzburg University Professor of Anatomy, Heinrich von
Hayek? Or links between Mises and Hitler? Via Hecker, President of the
Chamber of Industry and Commerce, Hanover? Or via Kirdorf?
In The Death and Life of Germany an Account of the American
Occupation, Davidson (1959, 229, 231, 402) displayed no scholarly
detachment: unemployment ‘had brought Hitler to power’ and Anne
Frank’s voice ‘can never be silent.’ Davidson also reported about former
Nazis: a ‘concentration camp doctor who had been living securely but
well in West Germany would be discovered, a former SS concentra-
tion camp guard would run for office. The press always set up a hue
and cry.’ Davidson was also author of The Nuremberg Fallacy: Wars
and War Crimes Since World War II (1973), The Making of Adolf Hitler
(1977), The Unmaking of Adolf Hitler (1996), Reflections on a Disruptive
 12 The Unravelling and the Glue    
579

Decade (2000) as well as the ‘Introduction’ to Speer’s Inside the Third

Reich (1970).
Four years after Mises died, in The Narrow Path of Freedom, Davidson
(2002 [1977], 56) implicitly described the epistemological relationship
between Austrian business cycle theory and the underlying prejudices:
‘When we have addressed ourselves to the subject detente or the eco-
nomic policies of the East Bloc countries or the military balance of East
and West, it has always been the concept of the free society as opposed
to the world of coercion and unfreedom that lay behind whatever kind
of technical analysis was being presented. This is the quintessential dif-
ference between the Communist system and that of the West; noth-
ing in the economic or political or ideological basis distinguishes the
two worlds more clearly than the single if often weaselly word freedom
[emphasis in original].’ Did Mises discuss with Davidson an early ver-
sion of Hayek’s (1978) plan to abolish the United States Bill of Rights?

in my opinion the American Constitution failed essentially because it

contains no definition of what a law is, and that, of course, deprives the
Supreme Court of guidance. I believe that, instead of having the Bill of
Rights, you need a single clause saying that coercion can be exercised only
according to and now following a definition of law which is of some lan-
guage which of course explicates what I, in a brief phrase, call general rules.
That would, in the first instance, make all special protected rights unnec-
essary, and it would include all. It excludes all discriminatory action on the
part of government, and it would, of course, give the court guidance.28

Davidson (2002 [1977], 56) reflected:

The Austrian economist and social philosopher Ludwig von Mises would
tell us if he were here that the essence of political freedom lies in private
enterprise and the capitalist system, that no other can foster or even toler-
ate the democracy of the marketplace, the peaceful, voluntary resolution

28Friedrich Hayek, interviewed by Robert Bork 4 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

580    
R. Leeson

of conflicting interests and counterweights, the impulses of the central

government to intervene in the private lives of the citizens. It is only
through the balance of economic and social forces that the individual
obtains the vital guarantees and options that make for a Bill of Rights
that not only exists on paper but is also operational day after day and
especially night after night.
How would Mises explain the phenomenon of the Scandinavian coun-
tries with their advance socialism and their parallel devotion to the Bill
of Rights? I am not certain, but perhaps it would be by emphasising
the fact that their enterprises are still largely private, however heavy the
hand of their government may be in apportioning the distribution of the
goods they produce. But in any case, they along with Finland remain dis-
tinguished far more from their neighbours across the border to the East
by this touchstone of human rights than by the existence of their parlia-
ments or by the products of their economies.

14 Haberler
Did Hayek’s tangled web almost unravel as he succumbed to his third
prolonged depression (1985–)? According to Cubitt (2006, 321, 329,
334–335, 356, 358, 372), this physical and mental decline opened a
‘Pandora’s Box of greed and hypocrisy, the betrayal of Hayek by persons
he had been fond of and whom he trusted, even by his peers.’ With
the exception of his childhood friend, Fürth, all sought to ‘press their
claims and further their own ends.’ The dying Hayek was subjected to
‘thieving.’
In Austrian circles, Haberler and Machlup are described as ‘former’
Austrians and are associated with the view that ‘a separate identity for
an Austrian School was no longer needed’ (Kirzner 2015). Both had
reasons to resent Mises. Machlup, who’s doctoral dissertation ‘The Gold
Exchange Standard’ (Die Goldernwährung ), was dedicated to Mises, his
supervisor and ‘spiritual father’ (Mises 1976, 34, 202), went to extraor-
dinary lengths to find employment for Mises: but when in the 1960s,
he and Haberler began to favour the price mechanism (with respect to
the price of foreign exchange), Mises refused to speak to them for ‘sev-
eral years’ (Machlup 1981).
 12 The Unravelling and the Glue    
581

L. Albert Hahn told Margit Mises (1976, 146) that he had recently
been asked what ‘really’ was the difference between Haberler and Mises,
since both came from Austria, from the same university, from the same
Austrian School of economics? Hahn answered that Haberler says ‘Tout
comprendre c’est tout pardonner (‘To understand everything means to
pardon everything’); while Mises says ‘Tout comprendre c’est rien par-
donner’ (‘To understand everything means to pardon nothing’).
Haberler may have had doubts about Hayek’s integrity—he must
have been aware that the central message of The Road to Serfdom
had been plagiarised from William Rappard. Margit Mises (1976,
32–33, 42) reported that in 1934, Rappard—as he was writing The
Individual and the State in the Constitutional Evolution of Switzerland
(1935)—had recruited Mises to the Swiss Graduate Institute of
International Studies where he, along with Haberler, was a regular
lunch partner of the Mises. Haberler invited Hutchison to deliver an
address to the American Enterprise Institute (October 1979) on ‘The
Limitations of General Theories in Macro-Economics’ which empha-
sised the influence of the Austrian business cycle theory on Chancellor
Brüning’s deflation.29 Haberler (7 February 1979) told Hutchison that
he was in ‘full’ agreement with his position on Keynes and Hayek.30
Fürth (20 April 1984) informed Haberler that Hayek’s family
‘adhered to Nazism long before there was an Adolf Hitler.’31 Two years
later, Haberler (1986, 426) cited one of Hayek’s 1975 reflections. As the
Nazis gaining electoral momentum, Hayek regarded deflation-induced
‘allocative corrections’ and the removal of ‘distorted relative prices’—
that is, eliminating rigidities in wages—as ‘desirable’: ‘at the beginning
of the Great Depression … I believed that a process of deflation of some
short duration might break the rigidity of wages which I thought was
incompatible with a functioning [emphasis added] economy.’
Mises (2009 [1978 (1940)], 75) reported that after the collapse of
the Credit Anstalt in May 1931, he had ‘summoned all of my strength

29Haberler Archives. Box 17 Hutchison file.

30Haberler Archives. Box 4.
31Fürth Archives. Hoover Institution. Box 5.
582    
R. Leeson

to fight the inflationary policy that had again been taken up by the gov-
ernment. That the inflation went no further than to the 175 Austrian
shillings (up from 139 shillings) for 100 Swiss francs and that new
stabilisation at this rate of exchange resulted soon thereafter was my
achievement alone.’
Haberler (2000 [1979]) sought to ‘curb the power of unions and
reduce government regulation.’ But when asked by Ebeling and Salerno
what had led him to ‘question the relevance of Hayekian business cycle
theory?’ he replied:

I realized that you can’t explain a deep depression by real maladjustments

emphasized by Mises and Hayek. It was the so-called ‘secondary defla-
tion’ which made the Great Depression so bad, and not any enormous
real maladjustments.

Haberler thought that Hayek would ‘agree with that now.’ Referring
to the AEI ‘Discussion with Friedrich von Hayek’ (1975), Haberler
explained that he tried to get Hayek to ‘admit that it was the secondary
deflation which made the Great Depression such a disaster rather than
large real maladjustments.’ Again, Haberler speculated that he thought
that Hayek would ‘now agree with that.’
Haberler (9 November 1978) told Ebeling that secondary defla-
tion accounted for over 90% of the unemployment of the Great
Depression.32 Like Ebeling (2016) and Salerno (2005) became a dis-
ciple of a card-carrying Austro-Fascist via Ayn Rand’s fiction. With
Jeffery Heberner and Hoppe, Salerno edited-out of Human Action the
Scholars Edition Mises’ definitional statement about the link between
the Warfare State and economic liberalism. Why was this 1979 devia-
tionist interview only published in 2000—five years after Haberler’s
(1900–1995) death? Did Haberler elaborate further on his reflection:
‘Democracy has its drawbacks, but many of the dictatorships are not
doing much better’?
Bettina Greaves (1994) reflected that

32Haberler Archives. Box 10 Ebeling file.

 12 The Unravelling and the Glue    
583

Mises may very well prove to be, as one admirer described him, ‘the great-
est economist of the century—the next century.’

She also reported that in 1989 when the Soviet Empire began to col-
lapse, Mises’ 98-year-old widow reported that her husband ‘had known
that one day Communism would come tumbling down.’
‘Free’ market policy advice assisted the rise to power of both Hitler’s
Third Reich and Putin’s Oligarchs (Haiduk 2015). Hayek (1978)
despised ‘republics of peasants and workers.’33 In 1917 Russia, the deci-
sive event between the ‘liberal’ February and the Bolshevik October
revolutions was Lenin’s return and his April Thesis: ‘We don’t need
any parliamentary republic. We don’t need any bourgeois democracy.
We don’t need any government except the Soviet of workers,’ soldiers,’
and peasants’ deputies (cited by Crankshaw 1954). The de facto war-
time military dictator, General Ludendorff, created or approved the first
(proto-)Nazi-(proto-)Soviet Pact (Lenin’s return to Russia in a ‘sealed’
train to be followed by the Treaty of Brest-Litovsk) and thus made a sig-
nificant contribution to the Bolshevik overthrow of the nascent Russian
Republic: ‘The long, fantastic train journey, arranged by the German
government, which saw in this obscure fanatic one more bacillus to let
loose in tottering and exhausted Russia to spread infection’ (Crankshaw
1954). In the third Nazi-Soviet Pact (1939–1941), Hitler allowed the
Bolsheviks to advance into Poland; and then cemented Stalin’s power
by allowing him to appeal to the patriotism of ‘old’ dynastic Russia and
expand the Soviet Empire into the heart of Europe (1941–1945).
Between 1924 and 1929, democracy strengthened in post-dynastic
(and post-Great Inflation) Europe: in the 1925 Presidential elec-
tion, Ludendorff and Hitler’s Deutschvölkische Freiheitspartei (German
Völkisch Freedom Party) won only 1.1% of the vote. And 17 months
before the Wall Street Crash, the Nazis won 2.6% of the vote in the
May 1928 Federal elections. But the Great Depression—which Hayek
and Mises sought to deepen—ruptured (or delegitimised) democracy

33FriedrichHayek, interviewed by Robert Chitester date unspecified 1978 (Centre for Oral
History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
584    
R. Leeson

and facilitated regime change. Haberler (1986, 425) described the

policy-induced deflation and labour liquidation (which broke democ-
racy and facilitated Hitler’s rise to power). Simultaneously, Hayek (15
October 1985) told Haberler and other ‘friends’ about his ‘nervous
breakdown’—which must have had an empathetic impact.34 Haberler
(6 February 1987) told Ernst John that he did not want to be ‘too
critical’ of Hayek’s business cycle theory.35 But Haberler (27 May
1992) also told Charles Kindleberger (and several other correspond-
ents) that ‘horrendous’ policy mistakes were the ‘major causes’ of the
Great Depression: Brüning’s deliberate deflation ‘brought Hitler to
power.’36 Like everyone else, Haberler also knew about Hayek’s ‘Great
Depression’—his tendency to fall into a ‘pitiful’ state.37

15 Hutchison
Hutchison came close to blaming Hayek for promoting policies
that deepened the Great Depression and led to Hitler’s rise (see also
Chapter 8, above). But Hutchison (12 January 1980) was also gullible
when it came to another member of the fraudulent right—he encour-
aged ‘Deacon’ McCormick to produce a post-libel edition of The British
Connection, and offered to help find any material about Pigou that may
be in the Alpine Club archives.38 Hutchison was also fearful of what
lay in the extra-parliamentary left. A fierce anti-Marxist, he was ‘furious’
when his PhD student, Robin Ghosh (2007), praised Marx’s writings
on India, he ‘told me, in no uncertain terms, that I must stop writing
such rubbish!’

34Haberler Archives. Box 16 Hayek file.

35Haberler Archives. Box 2.
36Haberler Archives. Box 1.

37Haberler (3 December 1970) told John Van Sickle that Fürth had received a ‘pitiful’ letter from

Hayek. Haberler Archives. Box 39.

38Hutchison doubted that Pigou could have played much of a role as a spy or a recruiter after the

early 1920s. ‘Deacon’ McCormick Archives. Sayer Collection. British Connection folder.
 12 The Unravelling and the Glue    
585

16 Gitta Sereny
Mises met Margit Sereny (1890–1993) when he was 44, rapidly pro-
posed marriage, but refused to sign (in his words) that ‘scrap of paper’
before he was 58 years old. When they met in 1925, she was a 35-year-
old widow with two young children, Guido and Gitta. Mises declined
to marry her until after his mother died—despite knowing that she
needed a father for her children: as a single mother she was well aware
that she was not ‘strong’ enough to give them what they ‘deserved.’
Mises was ‘afraid’ of marriage and of the ‘responsibilities’ that might
distract him from his ‘work.’ They had a ‘stormy’ relationship: we did
‘not live in Paradise - far from it. We never had a fight between us.’ But
Mises ‘fought himself, and then made me suffer’ (Mises 1976, 1, 19;
Hülsmann 2007, 518–522).
Margit (1976, 16, 17) never met Mises’ mother but was told that
she possessed the ‘attitude of a general’ and a ‘will of iron, showing lit-
tle warmth or affection for anyone.’ Adele Mises died on 18 April 1937.
Housing regulations prevented Mises from keeping the family apartment:
by 31 October 1937, he found new tenants who sublet him a room to
store his library and personal documents (Hülsmann 2007, 189, n31). At
Christmas 1937, Mises proclaimed to Margit (1976, 27): ‘I cannot go on
further. I cannot live without you, darling. Let’s get married.’
Mises didn’t inform his brother Richard that he was married
(Hülsmann 2007, 730); and Margit didn’t inform her daughter that she
had been engaged for over 12 years: ‘A few months before the Anschluss,
my mother had become engaged to Ludwig von Mises, one of the coun-
try’s leading economists. He had been living and teaching in Geneva
for several years, spending only his summer holidays in Austria’ (Sereny
2001 [1995], 8).
Like her step-father, Sereny (1921–2012) became a writer. Margit
(1976, 22) recalled that Mises met her children and ‘tried to make
friends with them.’ He apparently failed: Gitta told Cubitt (2006, 152)
that she ‘hated’ her mother and had ‘a difficult relationship’ with Mises.
Her last book, Vienna and the Origins of Bigotry, was apparently unfin-
ished at the time of her death.
586    
R. Leeson

Her Daily Telegraph Obituary (2012) reported that had a ‘diffi-

cult’ relationship with her mother: ‘When seated in Anthony Clare’s
Psychiatrist’s Chair on BBC Radio she alluded to a relationship which
was possibly even abusive.’ In ‘Evil’s Interrogator,’ an interview with
Sereny in the New York Times, James Pollard, the chairman of the
Center for Attachment-Based Psychoanalytic Psychotherapy in London,
reported that the ‘villains have got softer, more deserving of understand-
ing, closer perhaps to her own experience as a girl.’ Her childhood expe-
riences, Sereny insisted to Antony Clare, are

private, though it affords a glimpse of tantalizing material for Sereny’s

own psychobiography and her all-consuming interest in large moral
questions. Her vain and difficult mother, a woman she described as
being ‘without moral opinions,’ the elder brother who left home at 18
and whom she scarcely knew, the early death of her father and Sereny’s
own acknowledged search for figures who could provide her with a moral
or emotional compass – all this is, in Sereny’s words, territory about
which she is uncurious. That does not, of course, invalidate her achieve-
ment, but it does raise the tempting question of Sereny’s own extraordi-
nary personal history and its relationship to her work. For Sereny, that
is off-limits. Asked when she will write her autobiography, her answer is
characteristically forthright. ‘Never’ she says. (Hilton 1999)

Two years later, Sereny’s (2001) published her autobiography, The

Healing Wound Experiences and Reflection on Germany, 1938–2001, which
addressed her own healing process. She found an ‘adopted’ family (2001,
photograph 6); and then one of her own, including a husband, Don
Honeyman, who she married in 1948. Her mother’s book was entitled My
Life with Ludwig von Mises; while in Albert Speer His Battle With Truth,
Sereny (1995a, xviii) reflected: ‘Writers, whether men or women, need
strong and selfless partners. My Don is the rock upon which my life rests.’
One of the themes of The Healing Wound (2001, 66) was the inability
of children to communicate with their parents. A Berlin boy told her he
had had ‘many difficult moments’ with his parents because of an inabil-
ity to talk about ‘the past – its taboo, taboo.’ Gitta planned to become an
actress: instead, she became a child welfare officer, first as a teenage run-
away in Nazi-occupied France, and then for the United Nations Relief and
 12 The Unravelling and the Glue    
587

Rehabilitation Administration (Sereny 2001 [1995], Chapter 1).39 Her

professional interests appear, at least in part, to be a reaction against and/
or a commentary upon, her mother and step-father. So too, perhaps, do
her family choices: Mises is the pop-poster boy of the far-right; Honeyman
created the iconic 1968 pop-poster of Che Guevara.40
Hayek informed Margit (1976, 16, 17) that at meal times, Mises’
mother would sit opposite her eldest son but ‘never spoke a word. She
never participated in the conversation, but one always felt she was
there.’ When coffee was served she ‘quietly got up and left the dining
room.’ Margit reported that Mises ‘rarely mentioned her. However, he
never had a word of criticism for her. I soon realized that this silence
was the result of a long and bitter struggle with himself.’
Sereny was fascinated by Fascists such as Hitler’s Munitions Minister,
Speer, and the Austrian Kommandant of Treblinka, Franz Stangl. Into
that Darkness from Mercy Killing to Mass Murder is Sereny’s (1995b
[1974], 11, 28) attempt to ‘penetrate the personality of at least one
of the people who had been intimately associated with this total evil.’
She also reported that Stangl, co-responsible for the extermination of
900,000 people, had suffered in his youth: he was ‘scared to death’
of his father who used to thrash him until his mother cried out ‘Stop
it, your splashing blood all over the clean walls.’ Sereny reported that
Stangl trained to become a policeman in the ‘Vienna School. They were
a sadistic lot. They drilled the feeling into us that everyone was against
us: that all men were rotten.’
Isabel Hilton (1999) reported that Sereny was fascinated by Mary Bell
who committed murders as a child after her mother forced her ‘as a 4-, 5-
and 6-year-old to perform sex acts for her clientele … a traumatic child-
hood—an appalling catalogue of neglect and physical and sexual abuse’:
Sereny has not written about psychotherapy, and she claims no expertise.
She acknowledges that a therapist wants to help the patient while she
engages in the exercise for herself, because ‘I want to know the reasons for
human or inhuman actions—and write about them.’ Sereny also believes
strongly in redemption, not as a religious concept but as a psychological

39http://www.independent.co.uk/arts-entertainment/my-journey-to-speer-1603539.html.

40http://www.flickr.com/photos/mkh/179617178/.
588    
R. Leeson

process—as she puts it to me, ‘the personal battle to become different …’

There is no particular mystery, Sereny contends, in her desire to under-
stand evil. Her own early life, after all, was shaped by one of the centu-
ry’s greatest evils, the Third Reich, and by the Second World War. Mises
(31 July 1927) wrote passionate letters: ‘I kiss your mouth and your hair.’
Two days earlier, Mises (29 July 1927)—referring to her six-year-old
daughter—explained that he had been too busy to ‘look after the chil-
dren. I would have wanted to send you their love and greetings. I had
some egotistical reasons, too: I wanted to touch Gitta’s hair and think of
you’ (cited by Margit Mises 1976, 15–16). Mises never visited his fiancé
without bringing her children gifts (Mises 1976, 22). Gitta was six when
Mises declared that ‘Ludendorff and Hitler’ and other ‘Fascists’ had
‘saved European civilisation’, and was 17 when Anschluss put an end to
his delusions. Sereny (1995a, 8, 64, 67, 309) cited Hitler’s post-Putch let-
ter: ‘I, Hitler was wounded; Ludendorff, as if protected by God, remained
unhurt… Comrades! Do you wish to be part of the murderers or will you
help to liberate Germany? You will not fight for treacherous Jews. Your
German loyalty brings you to our side.’ She also appears, at times, to
be projecting her own childhood experiences onto her subjects: looking
back, Speer’s relationship with his wife ‘in the mid-1920s seems incom-
prehensible.’ She attended a ‘therapy group composed of children of high
ranking Nazis’ and wondered how much of her ‘buried memory played’
in her responses to Speer: one episode ‘reminded me of a painful occasion
in my own life when I was young.’
Sereny (1995a, 18, 719) spent 12 years investigating Speer who,
she concluded, ‘felt nothing. There was a dimension missing in him, a
capacity to feel which his childhood had blotted out allowing him to
experience not love but only romanticised substitutes for love… He
never realised that his distant relationship with his children was a curi-
ous echo of his difficulties with his own father.’ Speer was responsible
for the Central Department for Resettlement which evicted 75,000
Jewish tenants from Berlin. Goebbels’ diary recorded Hitler stating that
it was ‘outrageous and a scandal that the capital of the Reich still has
70,000 Jews, mostly parasites, spoiling not only the looks of our city
but its atmosphere.’ Speer, like Baldur Benedikt von Schirach (who
made Vienna Judenfrei ), was sentenced to 20 years in Spandau Prison
(Sereny 1995a, 4, 262; Fest 1970, 220–234).
 12 The Unravelling and the Glue    
589

Mises and Hayek both appeared in Albert Speer: His Battle with
Truth. In 1985, Hayek informed Sereny (1995a, 552, 553–554, n) that
the high-ascribed-status Speer was ‘a man born to honour, who chose to
live in dishonour.’ On the following page, she reported that Speer was
a Misean libertarian: his Wehrmacht liaison officer, Manfred von Poser,
informed her that one of Speer’s

‘two very strong beliefs’ was a maximum of individual initiative; he called

it ‘industrial self-responsibility’… i.e. a minimum of state intervention
and thus of state power.

Sereny added: ‘Interestingly, one of the first clippings Speer sent me

after we began corresponding in 1977 was a long article from the
Frankfurter Allgemeine Zeitung on the economic theories of Ludwig
von Mises, one of the founders of Austrian - or Libertarian -School of
Economics, who, as it happened, though Speer didn’t know until much
later, had been married to my mother from 1938 until he died in 1973.’
After 1938, Mises projected himself as one of Hitler’s victims (which,
despite his earlier advocacy, after Anschluss he was). At Nuremberg, Speer
successfully projected himself as one of Hitler’s victims: the ‘good Nazi’
who was unaware of the Holocaust and slave labour. Sereny (1995a, 477)
reported that in March 1945, Speer—allegedly—‘decided to kill Hitler.’
In ‘The Great Lie,’ Sereny (1995a, 2001, 284–285) appeared to relish
Speer’s final admission of partial guilt to the South African Jewish Board
of Deputies: ‘My main guilt however, I still see today in my tacit accept-
ance [Billigung ] of the persecution and the murder of millions of Jews.’
Speer’s explanation was: ‘with these people, I wouldn’t… I couldn’t…
hedge [handeln ].’ Sereny noted that had these words been uttered at
Nuremberg, Speer would have been hanged. Chapter XXV of Albert
Speer: His Battle with Truth was entitled ‘A Twilight of Knowing.’ Sereny
(1995a) wasn’t vindictive: Speer had wearied of the ‘evasion’ and ‘must
now be allowed peace.’
Margit Mises (1976, 8–9) had been a professional actress: her Stage
Director had been accused of ‘morally questionable’ behaviour towards
young actresses, including herself. A ‘sensational’ trial about improper
behaviour followed in which Margit refused to implicate the Director.
Later, she told Mises about it—who, distrustful as always—visited the
590    
R. Leeson

archives of the Neue Freie Presse and looked up all the records of the case
to assure himself that his fiancé had spoken ‘the truth.’
According to Hayek (1994, 48–49), in the immediate post-war
period at the University of Vienna the ‘two chief subjects of discussion’
were ‘Marxism and psychoanalysis.’ In Socialism, Mises (1951 [1932],
87, 89, 104, 105, n1)—a middle-aged bachelor living with his intensely
religious Jewish mother—devoted an entire chapter to sex and relation-
ships: ‘Waking and dreaming man’s wishes turn upon sex.’ Mises pro-
moted Freudian psychology: the ‘new science of psycho-analysis has
laid the foundations for a scientific theory of sexual life.’ He instructed
his disciples to examine ‘life history through the psycho-analytical
method… The sickness of a man whose sexual life is in the greatest dis-
order is evident in every line of his writings.’
My Years with Ludwig von Mises describes a disturbed individual alter-
nating between hysterical anger and suicidal despair. The Sigmund Freud
Archives include a 1953 ‘Interview’ with Mises’ sister-in-law, Hilda (1893–
1973)—presumably about her and her family’s experiences with psycho-
analysis—which is ‘closed’ until 2020.41 Ludwig Mises both promoted
and corresponded with Freud (Hülsmann 2007, 178, 727, n84); and
for Otto the Habsburg Pretender’s benefit, he described two fatal errors.
The first was that the psychoanalytic movement, which spread Vienna’s
‘fame worldwide,’ had been ‘always ignored’ by the Austrian government.
Like Mises, Freud had ‘barely’ managed to become a Privatdozent at the
University of Vienna, and Josef Breuer was ‘barely’ named correspond-
ing member of the Academy of Sciences. Others were even more ignored.
Psychoanalysis and psychoanalytic research are in ‘full swing everywhere
but in Vienna.’ Mises appeared to suggest that the post-war Habsburg res-
toration—on which he had advised Otto—should embrace Freudianism
as an official adjunct to (or subsidised ideology of) government. The sec-
ond fatal error related to the Austrian School of Economics which, he
asserted, had revolutionized thinking about the problems of ‘human
action.’ But recently, the government had done did nothing to ‘promote
its expansion.’ Today, ‘all’ Austrian School economists had ‘transferred their
activity abroad’ (Mises 2000 [1940], 147–148).

41Sigmund Freud Archives. BOX X 9. http://lcweb2.loc.gov/service/mss/eadxmlmss/eadpd-

fmss/2004/ms004017.pdf.
 12 The Unravelling and the Glue    
591

Mises’ statement was false—Spann (who had introduced Hayek to

the Austrian School of Economics) and Hans Mayer (who had super-
vised Hayek’s dissertation) were still in Vienna. But Mises (2009 [1978
(1940)], 59–60) believed that his position as full-time lobbyists for
employer trade unions was the ‘only field’ in which he ‘could work’ in
Austria. His ‘position was incomparably greater than that of any other
Kammer official or of any Austrian who did not preside over one of the
big political parties. I was the economist of the country.’ It was a posi-
tion he had ‘created’ for himself.
J. C. G. Röhl (1970, 177) reflected that ‘Hitler and his henchmen
mostly came from the gutter’ and to ‘many of the aristocrats who
invited him into power, he was little better than a Bolshevik.’ Von
Papen and von Schleicher had the ‘totally unrealistic’ aim of

setting up an authoritarian regime ‘above the parties.’ They finally vied with
one another to win Hitler’s millions for their schemes, only to find that
Hitler, once in office, was less easily controlled than they had imagined.

Lieutenant ‘von’ Mises (1985 [1927], 19, 51) aspired to become the intel-
lectual Führer of a Nazi-Classical Liberal Pact: ‘The program of liberalism,
therefore, if condensed into a single word, would have to read: property
[emphasis in original] … All the other demands of liberalism result from
this fundamental demand … The victory of Fascism in a number of
countries is only an episode in the long series of struggles over the prob-
lem of property.’ Having ‘saved European civilisation,’ what government
position did he expect General ‘Ludendorff and [Corporal] Hitler’ to pro-
vide him with in Austro-Germany? Fascist Minister of Property? One of
the few men Mises ‘really worshipped’ was Richard Schüller, a four-dec-
ade veteran of the Austrian Foreign Ministry (Mises 1984, 66): was Mises
hoping to create a post-war position for himself as a chief government
economist in a restored Habsburg monarchy?
In his defining methodological statement, Mises (1949, 11) defined
praxeology as an extension of Freud’s tripartite distinction between ‘Id,’
‘Ego’ and ‘Super Ego’: ‘Human action is purposeful behavior. Or we may
say: Action is will put into operation and transformed into an agency, is
aiming at ends and goals, is the ego’s meaningful response to stimuli and to
the conditions of its environment, is a person’s conscious adjustment to the
592    
R. Leeson

state of the universe that determines his life. Such paraphrases may clarify
the definition given and prevent possible misinterpretations. But the defi-
nition itself is adequate and does not need complement of commentary.’
In Freudian terms, Mises appeared to have a hair fetish. His mother
sent him ‘camelhair pants and camelhair undergloves’ (Hülsmann 2007,
17–18); Margit (1976, 13, 15–16, 20, 36, 66) recalled a night-time
ritual—for the last thirty years of his life, when she arranged his tray
next to his bed, he took her hand, kissed it, and ‘pulled’ her down so he
could ‘kiss my face, my hair. It was almost a ritual.’
In addition to having only one testicle, Hitler apparently suffered
from hypospadias: a ‘tiny deformed penis’ (Rothwell 2016).42 According
to Konrad Heiden (1944, 383): ‘Exponents of the psycho-analytical
school have diagnosed’ in Hitler a ‘castration complex,’ a ‘pathologi-
cal fear of losing his virility.’ In ‘Medusa’s Head,’ Freud (1941 [1922])
suggested that locks of hair are the sources of man’s fear of castration:
‘they nevertheless serve as the mitigation of the horror, for they replace
the penis, the absence of which is the cause of the horror.’ In Three
Contributions to the Theory of Sex, Freud (1920) asserted that

The substitute for the sexual object is generally a part of the body but
little adapted for sexual purposes, such as the foot, or hair … This sub-
stitution is not unjustly compared with the fetich in which the savage
sees the embodiment of his god. The transition to the cases of fetichism,
with a renunciation of a normal or of a perverted sexual aim, is formed
by cases in which a fetichistic determination is demanded in the sexual
object if the sexual aim is to be attained (definite color of hair, clothing,
even physical blemishes). No other variation of the sexual impulse verging
on the pathological claims our interest as much as this one, owing to the
peculiarity occasioned by its manifestations. A certain diminution in the
striving for the normal sexual aim may be presupposed in all these cases
(executive weakness of the sexual apparatus).

When they first met, the first thing Margit (1976, 170–171) noticed was
that he had ‘not one hair out of place’: when Mises saw Gitta’s daughter,

42The wartime propaganda song ‘Hitler Has Only Got One Ball’ was preserved long enough for

this supporting evidence to be uncovered.

 12 The Unravelling and the Glue    
593

Mandy, ‘his eyes lit up. She was a beautiful little girl, seven years old,
slim, with blond hair and huge blue eyes.’ Margit told Mandy ‘each
evening when I come into your room and find your toys put-away and
the room tidied and nice looking, I’ll give you five cents. After a while
you will have saved enough to buy your Mummy a nice present.’ When
Mises overheard this, he explained to Margit that it was a ‘bad educa-
tional practice to bribe a child.’ But ‘that very evening,’ Mises ‘went into
Mandy’s room to kiss her goodnight’ and told her: ‘Mandy, how would
you like it if I gave you ten cents every night when your room is tidy?’
After the 1982 establishment of the Ludwig von Mises Institute,
Sereny (1985b, ix, xi, xiv, 249, 251–252), coincidentally or otherwise,
spent the next ‘year and a half ’ writing about The Invisible Children:
Child Prostitution in America, West Germany and Great Britain:

Where have we gone wrong in our sense of priorities and responsibilities,

when children of a prosperous society … see nothing wrong in selling
their bodies to supplement their pocket money, and find a ready mar-
ket for their wares? … a child who runs away is giving, loud and clear, a
signal of alarm … their value as children – their right to be protected –
having been taken away from them, they feel worthless as human beings.
Prostitution, this extreme act of self-debasement (and let no one believe
that children do not very soon perceive it as such) serves both to feed
their self-contempt and vengefully to express the anger and fear stored up
against those who caused it – their parents.

Two-thirds of the children she interviewed were ‘disciplined from an

early age – such as three or four years old – by means of physical pun-
ishment, often severe beatings with straps, whips or canes. Twelve of the
sixty-nine children had been sexually abused in childhood.’ Referring
to ‘fathers and male relatives,’ she noted that the ‘active agent is almost
always male, although women are frequently passive partners by their
silent consent … the whole family is bonded into a conspiracy of silence
… It seems extraordinary that in an age when anything is open to dis-
cussion, incest – arguably the most widely prevalent childhood sexual
experience and certainly the most stunting – is still taboo.’
Sereny (1985b, 253–254) was incensed by the response of the courts
to a variety of cases: one involving a step-father, another involving a
594    
R. Leeson

judge’s explanation for his dismissal of a case of a drunken sexual assault

on a 10-year-old girl: ‘It’s the kind of thing that could happen to any-
one.’ She concluded that ‘no child in prostitution wants to be a prosti-
tute. They long to be wanted - as children. They long to be loved. They
long to be children [emphases in original].’ She was fascinated by the
four recorded cases of supposedly ‘evil’ children who murdered adults.
In the Case of Mary Bell, Sereny (1995c [1972], xiii, xiv) concluded that
child murderers expressed ‘ultimate anger, the final cry for help … it
should be considered outrageous that either men or women caring for
children on their own are not provided unstintingly with human and
financial assistance.’
Sereny (2001 [1995], 5, 9) reflected that ‘well brought-up teen-
age girls in Vienna did not leave their families.’ The 16-year-old Gitta
‘ran away’ to London either immediately before or shortly after Mises
became her step-father.43 Her escape in 1938 was preceded by kisses
from Mises: when she and Margit (1984, 31) arrived in Geneva, Mises
‘took me in his arms; he kissed Gitta; he embraced me again and again,
as if he would never let me go.’ Neither Mises’ Memoirs, nor The Last
Knight of Liberalism, nor My Years with Ludwig von Mises mention Gitta
running away.
Mises (2003 [1969], 2) made an extensive study of psychoanalysis:
‘Breuer, Freud, and [Alfred] Adler interpreted neurotic phenomena in a
way radically different from the methods of Krafft-Ebing and Wagner-
Jauregg.’ In the same year as Mises published Liberalism in the Classical
Tradition, the University of Vienna’s Julius Wagner-Jauregg was awarded
the Nobel Prize for Medicine. Hayek (1978) ‘grew up in an atmosphere
which was governed by a very great psychiatrist who was absolutely
anti-Freudian: Wagner-Jauregg, the man who invented the treatment of
syphilis by malaria and so on, a Nobel Prize man.’
Wagner-Jauregg and Richard von Krafft-Ebing practised at the
Neuro-Psychiatric Clinic of the University of Graz. Krafft-Ebing
(1840–1902) was trained at the University of Heidelberg (a stronghold

43http://www.independent.co.uk/arts-entertainment/my-journey-to-speer-1603539.html.
 12 The Unravelling and the Glue    
595

of the Older German Historical School and a magnet for American

Institutionalist PhD students). In 614 pages of Psychopathia Sexualis:
With Special Reference to the Antipathetic Sexual Instincts: A Medico-
Forensic Study, Krafft-Ebing (1899, vi, 245) provided 238 detailed
(and mostly disturbing) examples, many of which resulted in prose-
cution. No attempt was made to construct an overriding theory: ‘It is
not intended to build up in this book a system of the psychology of
sexual life, still from the close study of psychopathology there arise
most important psychological facts about which it behoves the scientist
to notice. The objective of this treatise is merely to record the various
psychopathological manifestations of sexual life in man and to reduce
them to their lawful conditions.’
Krafft-Ebing (1899, 18, 21) concluded that ‘Erotic fetishism makes
an idol of physical or mental qualities of a person … because they
awaken mighty associations with the beloved person thus originating
strong emotions of sexual pleasure … a striking phenomenon in fetish-
ism is that among the many things which may serve as fetishes there
are some which gain that significance more commonly than others
for instance the HAIR, the HAND, the FOOT of woman … fetishes
which produce feelings of delight even ecstasy [emphasis and capitals
in original].’ Mothers sometimes, unintentionally, cultivated this fetish:
‘How carefully the mother looks after her little daughter’s hair.’
In Socialism, Mises (1951 [1932], 20) stated that the ‘problem of
how a socialist society could function is quite separate from the ques-
tion of whether its adherents propose to worship God or not and
whether or not they are guided by motives which Mr. X from his pri-
vate point of view would call noble or ignoble.’ In Planning for Freedom,
Mises (1974, 16) wrote about the ‘happiness’ of Mr. X: ‘But the ques-
tion is not about Mr. X; it is about the consumers.’ Krafft-Ebing’s
(1899, 245–246) Case 102 related to hair fetishism: ‘Mr. X between
thirty and forty years old; of the higher class of society; single … since
his eighth year he has been powerfully attracted by female hair. This was
particularly true in the case of young girls … with advancing years the
fetish grew more and more powerful. Even false hair began to excite
him, although he always preferred natural hair. When he could touch or
kiss it he was perfectly happy.’
596    
R. Leeson

Mises lived with his mother until he was 53: the ‘only’ explanation
that Margit Mises (1984, 25) could find was that his mother’s house-
hold was ‘running smoothly’—their two maids had been served with
them for about two decades and Mises could ‘come and go’ whenever
it pleased him and could work without being ‘disturbed.’ Mises (2003
[1969], 21) associated telephones with religious figures and corrup-
tion44; and used what—from his Freudian perspective—was a sexual
image to defend civilisation: ‘Today the reaction of statism and social-
ism is sapping the foundations of Western civilization and well-being.’
Mises sought relieve when away from his fiancé, Margit (1976, 20–21):
‘Sometimes I did not see him for weeks. But I knew very well that
he was in town. At least twice daily the telephone rang, and when I
answered there was silence at the other end of the line - not a word was
spoken. I knew it was Lu … I was so tormented, so torn to pieces that
the children must have felt it.’ When Mr. X was unable to indulge in
‘kissing and sucking hair … he would attempt to relieve himself, imag-
ining fantastic hair adventures and masturbating’ (Krafft-Ebing 1899,
245–246).
Hayek told Margit that it was universally accepted that Mises was
a ‘confirmed’ bachelor and we never even ‘imagined’ the possibility of
a female relationship.45 A friend since primary school was ‘speechless’
when informed that Mises was getting married: never had she seen any-
one ‘more surprised’ than Hans Kelsen who told Margit that no one
expected Mises to get married.
Margit (1976, 33, 36) recalled that the ‘one thing’ about Mises that
was as ‘astonishing as it was frightening was his temper’—‘terrible’ tan-
trums. Without warning, his ‘temper would flare up, mostly about a

44‘I went home and in the evening the maid told me that the Archbishop had telephoned me.
Now the Archbishop doesn’t telephone at all. But the maid said that he would telephone the next
morning. And sure enough, the legal advisor of the Archbishop, the Canon of the University
whom I knew, phoned. He told me it was important for some students from the educational
institutions in Rome. He said we have to have a sum of money. I promised him that I would
try to get it for him … I want to add only that I didn’t remain very long on this advisory board’
(cited by Ebeling, n.d., n75).
45Hayek Archives. Box 38.25.
 12 The Unravelling and the Glue    
597

small, unimportant happening. He would lose control of himself,’ leav-

ing his fiancé ‘frightened to death.’ What he ‘shout[ed]’ was so ‘unbe-
lievable.’ As Machlup, Haberler, and the inaugural MPS members
discovered, Mises was beyond reason: ‘Whatever I said would enrage
him even more. It was impossible to reason with him. So I kept silent
or went out of the room.’ Margit ‘gradually’ came to a realisation that
has evaded Miseans: his ‘outbursts had nothing to do with me. I was
just there, I was the outlet which gave him the opportunity to relieve
himself.’
In 1919, Mises’ bitter rival, Spann, became a full Professor
(Hülsmann 2007, 181–182, 368). Between 1909 and 1934, Mises had
been a full-time lobbyist with thwarted academic aspirations. Having
described her own relationship with Mises in biblical terms, Margit
(1984, 16, 17) hinted that he was the jealous Cain to his brother’s Abel:
the only family member for whom Mrs. Mises was said to have shown
some affection was Richard, her second son. This, she thought, might
explain why the two brothers were ‘never’ really close to each other.
In 1909, Richard Mises (1883–1953), age 26, achieved what his
older ‘black sheep’ brother would never achieve: a Professorship (at the
German colonised Kaiser Wilhelm Universität which reverted to its orig-
inal name in 1918, University of Strasbourg). In 1919, he became the
director of the new Institute of Applied Mathematics at the University
of Berlin; and in 1921, the founding editor Zeitschrift für Angewandte
Mathematik und Mechanik.
In 1923, Ludwig Mises started his own ‘Circle.’ Hayek (1956) told
Mises: ‘You have seen your pupils reap some of the rewards which were
due to you but which envy and prejudice have long withheld.’ Machlup
listed the twelve apostles who later became professors (Hayek, Haberler,
Machlup, Fürth, Morgenstern, Steffie Browne, Ilse Mintz, Walter Fröhlich,
Paul Rosenstein-Rodan, Felix Kaufmann, Eric Voegelin and Alfred
Schütz)—all were about two decades younger than Mises (Mises 1976).
Bettina Greaves (1994) described the martyrdom: he was obliged to take
only market-based (that is, not tax-subsidised) remuneration from the
University of Vienna: ‘receiving as pay only the fees of students.’ The premier
‘free’ market promoter was obliged to work full time in the Austrian ‘govern-
ment’s chamber of commerce as economic adviser to the national parliament.’
598    
R. Leeson

Margit (1984, 201–203) also described the outrage associated with an opti-
misation problem: Mises’ ‘great desire’ to write articles and books was con-
strained by the necessity to work full time to earn a living.
The Credit Anstalt collapse of May 1931 led to a financial crisis and
panic in all Central Europe. Henceforth, there was ‘hardly a quiet
day in Vienna,’ the city ‘looked like a fortress … no one dared to go
out’ (Mises 1976, 31, 222). In January 1931, Hayek (1978) arrived
at the LSE to give the lectures that were later published as Prices and
Production: ‘I was so extremely fortunate to get, at the age of thirty-two,
as good a professorship as I could ever hope to get. I mean, if you are at
thirty-two a professor’ at the LSE ‘you don’t have any further ambitions.
[laughter]’46 He had leapfrogged over the intensely resentful Mises to
become the Austrian School’s senior officeholder.
Hayek (1994, 59; 1978) asked Skousen and North to be ‘discrete’
about some information he was about to provide because it raises ‘very
touchy problems.’ He was ‘quite certain’ that it is ‘correct’ that ‘von’ Mises
‘asserted’—and it thus became ‘commonly believed’—and that he was
denied a professorship because of anti-Semitism. Recounting this ‘very
comic story’ and saying ‘I don’t think it’s ever been stated,’ Hayek corrected
Mises’ misinformation: ‘Actually I suspect it is not as simple as that.’ Half
the law faculty consisted of ‘Jews’ and in order for a ‘Jew to get a professor-
ship he had to have the support of his Jewish fellows.’ Mises was ‘not of the
Jewish group. He was Jewish, but he was rather regarded as a monstrosity–a
Jew who was neither a capitalist nor a socialist. But an antisocialist Jew who
was not a capitalist was absolutely a monstrosity in Vienna. [laughter]’47
Mises had tried to throw ‘away the key’ to his ‘past’ (Margit Mises
1976, 43). Apart from his Austro-Fascist membership, what else was
Mises trying to suppress? His biographer was fortunate that this prewar
material existed. ‘I’m sure if Mises had had a hand on this—if he could
have determined what survives into the mix and not—most of the stuff

46FriedrichHayek, interviewed by Armen Alchian 11 November 1978 (Centre for Oral History
Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).
47Friedrich Hayek, interviewed by Armen Alchian 11 November 1978 (Centre for Oral History

Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu/).

 12 The Unravelling and the Glue    
599

that is interesting that sheds light on Mises as a person would have

been destroyed. I’m absolutely certain about this because you wouldn’t
find similar writings in his postwar material. He was very discreet about
these social relations. And having that sort of material, it’s not much,
but certainly, his correspondence with his mother, his correspondence
with Margit, whom he later married, then some exchanges with other
people that shed a little light on Mises the person would probably have
vanished if he had a choice in this’ (Hülsmann 2018). While Mises
remained stuck in collapsing Vienna, a special chair was revived for
Hayek: the University of London Tooke Professor of Economic Science
and Statistics. Simultaneously, Gitta Sereny (1985b, x) was a nine-year-
old and Mises was approximately fifty-one. Why did she devote her
life—after Mises died—to exposing interrupted sexual encounters such
as that between a ‘nine-year-old’ and a ‘fifty-one’ year-old man who ‘got
up, discretely turning away from me to button his trousers. The little
girl wiped her tears and pulled down her cotton dress’?

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 Index

A qualified 233
Abdel-Rahman, Omar 125 tax-funded 19
Absolutism 47, 312, 313. See also titled 384
Monarchy Accreditation 82
Abuse 85, 101, 130 Acton-Tocqueville Society 18
child 142 Adam Smith Institute (ASI) 483.
human rights 146, 342, 347, 542, See also Age of Economists:
550 From Adam Smith to Milton
liberties 237 Friedman
physical 587 Addams, Jane 290, 291
sexual 587, 593 Adultery 571
Academic qualifications 282. See Afghanistan 345, 444
also Academics, George African Americans 394
Mason University (GMU) and genetically inferior 95
Universities negative wage 285
Academics. See also University Against the Stream: Critical Essays on
left-wing 118, 234, 562 Economics 440
liberty and 242 Age of Economists: From Adam Smith
low level of human capital 284 to Milton Friedman 209. See
market economics and 242 also Adam Smith Institute

© The Editor(s) (if applicable) and The Author(s) 2019 667

R. Leeson, Hayek: A Collaborative Biography,
Archival Insights into the Evolution of Economics,
https://doi.org/10.1007/978-3-319-78069-6
668   Index

Aggregate price level 187 Amnesty International 146, 342, 524,

Aggregation fallacy 187 550
Agricultural League 516 Analysis
Ahnenpass 549 British neoclassical 51
AIDS 50, 257, 290 non-Austrian neoclassical 417
Albert Speer His Battle With Truth outside 34
586, 589 Anderson, Benjamin 576
Alberto Pollio Institute 334 Anderson, Robert 9
Algerian War of Independence 334 Anderson, Terry 214, 216, 217
Alianza Anticomunista Argentina 17 Andropov, Yuri 444
Allende, Salvatore 333, 335. See also Anonymous Empire: A Study of the
Pinochet, Augusto Lobby in Great Britain 552
elected president 333 Anschluss 34, 184, 185, 275, 325,
government 426 330, 516
socialist experiment 336 Austrian 507
Unidad Popular 337 Germany 507
Allocative corrections 581 Anti-capitalism 55
Alpha Natural resources 180 Anti-capitalists 41
Al-Qaeda 16, 125, 245, 345, 346. See Antichrist Juda 363
also Terrorism Anti-labour theory of value 433
Ambrose, Bishop of Milan 312 Anti-Marxism 502, 503
American Constitution 400, 460, Anti-Pigou ‘Social Cost’ program 248
579 Anti-Semitism 55, 133, 145, 270,
American Economic Review 254 319, 373, 457, 462, 535, 598
American Enterprise Institute (AEI) Anti-smokers 297
18, 242, 243, 505, 582 Anti-tobacco research 297
American public transport system Anti-Vietnam War demonstration
255 335
American Revolutionary War 370 Apartheid
American War of Independence 423 ‘civilization’ of 212
Americanization 427 justification for 566
Americans 30, 98, 215 Police State 550
book readers 254 regime 170, 293
contemptuous of 255 Approbation 417
dim-witted 166 forms of 172
nouveau riche 254 Arbeit macht frei 380
salary 559 Archival evidence 115
unstable 85 Archives 116
 Index   669

Archivists 115 income 189

Arendt, Hannah 387 influence 581
Argentina 16, 17, 338, 340, 341 national savings 189
Argumentum ad hominem 3, 233, 551 natural social order 189
Argumentum ad verecundiam 355 Nobel Prize 189
Aristocracy 400, 403, 462. See also productivity growth 189
Monarchy Austrian Chambers of Commerce
American ‘chip chop’ 469 371
appeal to 181 Austrian Mind: An Intellectual and
concept of 145, 321, 397, 458 Social history 1848-1938 135
Aristocratic revolution 321 Austrian School of Economics 3, 34,
Arkansas Project 49 45, 48, 56, 65, 102, 185, 121,
Arms race 443 213, 288, 319, 326. See also
Arrow, Kenneth 565, 566 Monetary system
Articles 148, 150, 249, 297, 438, 569 defining moment 557
peer reviewed 273 education and 126
pseudo-science 80 exterminate 418
Aryamehr 425 fourth-generation 416
Aryan ancestry 249 fossil fuel industry and 131
Aryan identity 468 founded 429
Ashton, T.S. 119 Hayek introduced to 420
Association for Rational Inquiry into inspired Breivik 349
Claims of the Paranormal 217 Liechtenstein tax haven funding
Association of Private Enterprise 348
Education (APEE) 79 philosophers 393
Atlas Economic Research Foundation Post-Nazi pre-Nobel 274
20 recruits 199
Atlas Shrugged 333, 455, 456, 473, teachings of 472
532, 561. See also Rand, Ayn third generation 393
Attlee, Clement 331 trade 381
Auschwitz 380 Austrian Welfare State 50
Austria 345 Austrians 97. See also Mises, Ludwig
First Republic 323 von and Boettke, Peter
Austrian business cycle model 61 think-tanks 273
Austrian Business Cycle Theory Austro-German Third Reich 123
(ABCT) 65, 137, 168, 185, Austro-Hungarian Empire 323
512, 555, 579 Authoritarianism 41
central banks 189 Autocracy 142, 324, 338
670   Index

B breached 170, 345

Bad Harzburg Front 516 erection 333
Baijter, Howie 103 fall 518
Ball, Whitney 31 Berlusconi, Silvio 346
Banality of evil 387. See also Arendt, Beveridge, William 81, 85, 389, 521,
Hannah 551
Banana Wars 319 Bias 51, 271, 521, 551
Bank of England 315, 396 confirmation 559
Banking industry 97 political 279
Barbie, Klaus 311 school-specific 281
Bartley, William Warren 50, 62, 200, Bill of Rights 315, 579, 580
203, 211, 220 Biography 201, 561, 562
Battle of Beachy Head 315 Black Act 316, 317
Battle of the Boyne 315 Block, Walter 103, 171, 292, 417,
Bauer, Otto 526 471
Baumol, William 285 atheist 473
Becker, Chris 214 Austrian logic 473
Becket, Thomas 313 costs of capturing and scaring 457
Beer Hall Putsch 202 distractions 474
Behaviour 419, 484, 510, 563, 589 Festschrift 474
financial incentives and 226 Friedman as a socialist 473
impulsive 8 gangster activity 457
Nazi 506 hurricane Katrina 272
press 62 I Chose Liberty 473
price-taking 104 language of eugenics 473
producer-manipulated 8 objection 474
purposeful 591 socialists 474
Beirut Barracks Bombing 344 voluntary confession 457
Belgrano 427 Bloody Sunday 336
Bell, Mary 587 Blumert, Burton 178
Benthamite Philosophical Radicals Blum, Leon 329, 435
364 Boettke, Peter 20–23, 28–32, 39,
Bentham, Jeremy 108, 404, 453 44, 46, 80–87, 91–95, 117,
Ethics 453 122, 164, 184–187, 201–205,
fundamental axiom 453 280–284, 350. See also Mises,
greatest happiness principle 453 Ludwig von
pain 453 academic positions 252
Berlin Herrenklub 534 academic respectability 472
Berlin Wall 169, 387 Austrian economics and 188
 Index   671

contract under investigation 245 Boko Haram 10

cross 83 Bolivia 340
depression 203 Bolsheviks 321, 420, 430, 524
economics ‘technical aspects’ 285 Bordaberry, Juan 337
empty tomb 83 Borghese, Junio Valerio Scipione,
exposed as nonsense 221 Prince 336
FEE and 102 Bork, Robert 277, 394, 404, 505
Freedom readers lecture 283 Bostaph, Sam 103
‘Free’ market 83 Boudreaux, Donald 238, 239
Welfare State 230 ‘Cash for Comments Network’ 239
George Mason University 83, 136, scientific data 248
224, 225 Boukman, Dutty 415
‘gullible’ historians 233 Bounded rationality 419
salary 244 Bourbons 371
students 356 BP 23
highest paid GMU employee 243 Branch Banking and Trust (BB&T)
I Chose Liberty 235 162
ideological correctness 456 Brauns Commission 327
incompetent 228 Brazil 340
mission 123 Breivik, Anders 131, 349
myths 243 inspired by Misians 130
New York University 83, 84 Bretton Woods
perceived Hayek ‘a sell out’ 226 Conference 97, 98
PhD in monetary economics 224 fixed exchange rate 555
Post-Doctoral Fellowship at system 169
Stanford University 252 Breuer, Josef 590
Review of Austrian Economics 471 Bright, John 8, 9, 400
‘ridicule and satire’ 230 British American Tobacco (BAT) 105
rigged academic game 285 British Conservatism 396
social mobility 230 British Parliament 314. See also
sporting royalty 202 Democracy and Disraeli,
staunch individualist 229 Benjamin
students 252 British Stamp Act 370
‘Tea Party economist’ 228 British Treasury 99
TOFF hirelings 235 British Union of Fascists 328, 390, 479
TOFF lobby ambassador 250 Brockdorff-Rantzau, Count 466
transparent frauds 252 Brooklyn College 270
Böhm-Bawerk, Eugen Ritter von 575 Brüning, Heinrich Chancellor 36,
Bok, Derek 236 275, 327, 488, 512
672   Index

Brunner, Karl 209 Cadre-building 84

Bruno, Giordano 22 Caldwell, Bruce 29–32, 62, 117,
Buchanan, James 106, 141, 164, 165, 135, 177, 200, 218, 221, 225,
175, 226, 247, 277, 365–367, 309–311, 326, 348, 418, 438,
399, 460 445, 471, 479
democracy 421 archival evidence 219
‘irresponsible’ intellectual 161 curves slope upwards 220
leadership 51 dictatorship 475
Nobel Prize 209, 241 hagiography 220
relocates to George Mason Koch-funded 350
University 344 Lachmann Fellowship 471
secure financial support 52 misreading 565
tactics 232 neoliberals 128
universities taught 80, 94 opponents of police states 128
Buchanan, John Price 365 overcoming distractions 475
Buckley, William 344 uncorrelated random variables 220
Budge, Siegfried 513 Callaghan, James 7, 341
Budget 285, 327 Cambodia 222, 339
balancing 367 Campbell, Glen W. 208
deficit 91, 187 Cannan, Edwin 160, 326, 393, 550
Bulgaria 325 Capital 296
Bullock, Allan 173, 418 changes 37
Bunche, Ralph 567 ‘cheap’ 226
Burckhardt, Karl 143 foundation 226
Bureaucracy 86, 406, 576 fuel-based 225
Burke, Edmund 396 gains 431
Bush, George W. 125, 346, 444 human 226
Business Cycle markets 575
mechanism 287 non-human 4
policy recommendations 143 theory 559
theory 281, 327 Capitalism 64, 101, 506
Austrian 324, 360 American 416
Butler, Eamonn 483 moral conception 425
organized 520
proletariat and 433
C Carbon Footprints 215
Cabinet of Barons 328, 532 Carilli, Tony 103
Cáceres, Carlos 342 Carl Menger Library 210
 Index   673

Carnation Revolution 338 Trump and 245

Carr, E. H. 480, 566, 569, 570 Charles Koch Institute 83, 245
Carried interest 368 Charles, Merlin 348
Cartels 406 Che Guevara 332
Cartesian rationalism 437 Cheney, Dick 348
Carvajal, Patricio 340 Chevron 23
Case of Mary Bell,The 594 Chicago bank ‘gone negro’ 285
Cash for Comments Network 86, Childhood poverty 26, 27
240, 239, 298 Chile 146, 325, 337, 341, 349, 369
Catchword 44, 141, 165, 315, 317, democratically elected government
353, 366, 377, 393, 423, 424, 212
515. See also Propaganda Police State 550
Catherine the ‘Great’ 370 Chile’s Marxist Experiment 337
Cato Institute 104, 368 Chitester, Robert 383
Censorship 141, 332 Choice-theoretic approach 572
Center for Policy Studies 476 Christian West 415
Center for the Study of Market Christianity 312
Processes 32 Churchill, Winston 331, 364, 475
Central Bank of Israel 283 ‘Gestapo speech’ 554
Central banking 97 Road to Serfdom, The 331, 554
Central Powers 320 CIA 16, 334, 335, 344, 425
Centralized planning 565 Ciano, Gian Galeazzo 144
Centre for Libertarian Studies (CLS) Cigar Research Council (CRC) 105
79, 102–105, 178, 180 Cigarettes 88, 239, 248, 249, 343,
Centre for Public Integrity 224 485. See also Tobacco
Centre for the Study of Market Citizens 9, 28, 33, 34, 93, 164, 167,
Processes (CSMP) 21 188, 222, 362, 394
Chafuen, Alejandro 17 Citizens Committee for the Right to
Chamberlain, Houston Stewart 201 Keep and Bear Arms 240
Chamberlain, Joseph 400 Citizenship 119, 122
Chamberlain, Neville 168, 169, 380 Civil rights 49, 123, 227
Chambers of Commerce and Bill 568
Industry 274 evolution of 568
Chambers, Whittaker 46, 445 full 371, 480
Charles I 314 old 570
Charles II 315 Clark, J.C.D. 397
Charles Koch Foundation 46, 224, Clark, J.R. 240, 241
283, 339 Class distinctions 141
influence 244 Classical Liberalism 14, 482
674   Index

Classical Liberals 524 Comintern 329

Climate Change Counter Movement Communism 15, 53, 144. See also
(CCCM) 31 Collectivism, Eastern Bloc
Climate change denialists 25 Countries, Red Terrorism and
Climate change hoax 288 Socialism
Climate Scientists 180 classless 311
Climategate 179 international 379
Clinton Administration 33, 215, 240 legitimacy of 332
Clinton, Bill 49, 130 tumbling down 583
affair 292 victory of 159, 328
sexual activity 288 Communist(s) 99, 118, 369, 517
Clinton, Hillary 288 deeds 524
CLS Board of Directors 102 menace 90
Coal Creek War 365 removal 536
Coalition to Save New York 269 state 52
Coase, Ronald 204, 209, 386 system 579
externalities 205 Community 6
fraud 205 Companion of Honor 344
‘free’ market 205 Competitive Enterprise Institute 180
Coats, Dan 19 Complex structures 96. See also
Cobden, Richard 400 Economics and Eastern Reich
Cohn, Roy 129, 332 School of Economics
Colander, David 281 Compulsory contributions 91
Cold War 415, 437, 442–444 Computational ability 419
fear 293 Confirmation bias 559
magazine 344 ConocoPhillips 23
Peace 331 Conscription 141, 423, 432, 436
Cold War and the Dark: The World Constantine I 312, 324
After Nuclear War 442 Constitution of Liberty and Law,
Collected Works of F. A. Hayek 309, Legislation and Liberty 342
471 Constitution of Liberty, The 147, 207,
Collectivism 61. See also 212, 309, 333, 334, 338, 339,
Communism, Eastern Bloc 356, 370, 385, 525
Countries, Red Terrorism and enemies of liberty 455
Socialism promotional tour 211
Colombia 340 Right of Kings promoter 455
Colonialism 424 Constitution of Liberty: The Definitive
Combating Emigration 223, 424 Edition 349
 Index   675

Constitutional entrenchments 212 Cripps, Stafford 479, 480

Constitutional revolution 421 Crisis
Constitutionalism 521, 551 ideologies 510
Constitutions 119, 353, 404. See also modern state 510
British Parliament parliamentary system 510
Constructed components 116 promotion of 365
Construction model 555 social 510
Consumer(s) 6, 391 Critique of Interventionism, A 295
always right 14 Crozier, Brian 334, 338, 341, 343,
demand 319, 509 345
desires 370 Crusades 313
inferior 14 Cuba 16
literature 64 Cubitt, Charlotte 28, 53, 58, 60, 62,
manipulated 8 218, 220, 270, 380, 425, 571
sovereignty 8, 20, 119, 167, 275, Cult leader 258
485, 508 Cultural evolution 281, 433
plagiarizing 549 Cultural hegemony 397
‘spontaneous’ 356 Currency 430, 514, 515
wishes 369 Czechoslovakia 335, 381
Consumption 370, 406
pressure on 575
public 276 D
Contra-cyclical fiscal policy 481 Dahrendorf, Ralf 532
Contributions to the Theory of Sex 592 Daily Bell 214
Coordination Problem 356 Dalai Lama 443
Corporate Corruption of Science Dalton, Hugh 355
239, 249 Das Dritte Reich 534. See also
Corruption 19, 269 Germany
Cost-benefit analysis 355 Davenport, John 37
Counter-Reformation 365 Davidson, Eugene 575–580
Coup 325, 379. See also Dulles, Allen Davis, Stephen 181
and Dulles, John Foster D-Day 120
military 325, 337, 343, 346 De Gaulle, Charles 428
Cowen, Nick 21 Dealers in opinion 136
Crane, Ed 22 Death and Life of Germany an Account
Creativity 135 of the American Occupation 578
Credit Anstalt 326, 327, 361, 512, Death squads 17. See also Pinochet,
581, 598 Augusto
Criminality 142 Decentralization 565
676   Index

Deception 44, 223, 237 campaign for 395

deliberate act 211 Chile 6. See also Allende, Salvatore
evolutionary advantages 223 collectivist creed and 506
intentional 216 conception of 14, 392, 398
plans 44, 117–146, 422 corruption of 392
Decolonization 331 denigrated 525
Deductive apriori ‘reasoning’ 559 dictatorial 402, 485
Defining methodological statement foundations of 400
591 liberal 482
Definitive Edition 309 liberalism and 390
Deflation 44, 146, 186, 187, 190, limited 460, 504
274, 293, 294, 488, 502, 538 market 508
Austrian model 486 mass 143
Austrian promoted 509, 566 modern 392
demand-pull 6, 15 modern kind 404, 505
extensive unemployment 539 omnipotent 398, 399
freezing 575 opposed to 563
Hayek and Mises promoted 549 parliamentary 373
Hitler’s rise and 435 philosophers and 6
increased real wages 539 political 370, 504
induced ‘allocative corrections’ 186 populism and 126
Mises and Hayek promoted 539 post-dynastic 509
policy-induced 584 post-Habsburg 133
reduced nominal wages 539 principles of 65, 296
Deflationary manipulation 186 problem of 376
Deluder 44, 165 promoter 506
Déluge 372 sham 125
Delusions of grandeur 79 social 365
Demand 358 strengthened 583
Democracy 3, 33, 44, 47, 64, 145, superstitious 399
312, 322, 388, 391, 394, system of peaceful changes 342
421, 422, 423. See also British theological problem 403
Parliament threat to 126
Austrian disdain of 468 totalitarian 365, 403, 486
Austrian problem of 419 undermined 146
autocratic and protected 342 unlimited 401, 486, 505
bad 420 unsympathetic to 296
breakdown 337 weapons 378
 Index   677

Democracy, the God’s That’s Failing Discrimination 402

125 Disequilibrium 126
Democratic Party 33, 228 Dishonesty 120, 417
Democrats 497 Austrian logic and 269
Depression 60–63, 127, 294 intellectual 139, 271
prior boom and 556 Disraeli, Benjamin 400. See also
prolonged 580 British Parliament
Desegregation 121 Distorted relative prices 581
Deutsche Arbeiterpartei 324 Diversification 104
Deutscher Herrenklub 535 Dividends 431
Deutscher Klub 535 Divine Intelligence 275
Deutschnationale Volkspartei 516, 521 Divine Right 328
Deutschvölkische Freiheitspartei 583 Divine Right of Ayatollahs 343, 540
Devaluation 430 Divine Right of the ‘Free’ Market, The
Dictators 11, 312, 353
Fascist 309 Divine Right of the State 540
good 342 Divine Right of TOFF barons 353
self-restraint 506 Divine Rights of Kings 315, 364,
well-meaning 337 393, 398, 540
Dictatorship 325, 377, 425, 436 Dixiecrats 331
advances 390 Doctrine(s) 93, 423
Brazilian military 345 Brezhnev 335. See also Soviet
communist 142, 338 Union
elective 486 consistent 293, 357
establishment of 91 embrace 473
Fascist 92 exclusive 481
merit 404 history of 565
military 15, 340 Manchesterism 405
Die Gemeinwirtschaft: Untersuchungen Monroe 345
über den Sozialismus (Socialism) Dold, Malte 21
534 Donation(s) 180, 418
Dietze, Gottfried 419 Donor Trust 31
Die Wirtschaft 274 Donors 242, 247
Dilas, Milovan 200 business conservative 274
DiLorenzo, Thomas J. 86, 188, 287 objectives 274
Dimitrov, Georgi 540 Down and Out in Paris and London
Directing class 231 253
Dirty War 17, 341 Duesterberg, Theodore 362
678   Index

Duke of Wellington 317 Economics. See also Complex

Duke University CHOPE 32 structures
Dulles, Allen 333. See also Coup and Austrian 287, 289, 336
CIA post-Mises 340
Dulles, John Foster 332. See also CIA basic function of 281
and Coup Behavioural 355, 419
Dumping 406 central problem of 35
Duplicity 135 classical 319
Düsseldorf Industry Club 175, 499, divinely revealed 132
504 Eastern Reich 37
Duties 30, 231, 367, 380, 436, 425, Keynesian 225
462, 468, 478 laws of 275
Death 431 Mises’s 117
economists and 393, 487 modern 173
Stamp 431 monetary 441, 513. See also
Dynamics of European Nuclear Austrian School of Economics
Disarmament 442 neo-classical 458
Dynastic Inheritance 322 resource 214
school of 174
study 83
E technical aspects of 283, 288
East Bloc countries 579 understood 402
Eastern Front 321 Economist 185, 215, 445, 505
Eastern Reich 388, 415 Economist as Preacher and Other
Eastern Reich School of Economics Essays, The 562
456. See also Complex Economists 289
structures Austrian School 65, 86, 217, 288,
East-West Schism 313 375, 393
Ebeling, Richard 102, 103, 171, 173, cash-for-comment 31, 294, 295,
179, 205, 206, 221, 279, 282, 298
360, 470 ‘free’ market 225
devotee of Rothbard 164 non-Austrian 393
externalities 244 Economist’s Protest, An 160, 326, 550
spokesman for Austrian School of Economy 187, 222, 229, 339, 361,
Economics 222 367
total fool 164 capitalist 370
Economic Affairs 220 competitive 104
Economic Freedom Fighters 213 functioning 581
Economic order 281 planned 338
 Index   679

political 280, 324 free 19, 315

Education 9 spending unlimited 349
Austrian School of Economics and Elisabeth, Helene 311
126, 177 Elizabeth II, Queen 142, 341
compulsory 392 Emergency Powers Act 480
compulsory programme 358 Emigration 33
compulsory public 10 Employment policy 487
control of central government 358 Encounter 344, 437, 438
denigrated 393 Enfranchisement 400
direct supervision 358 English Civil War 315
elementary 358 English Society 1688–1832. Ideology,
formal 11 Social Structure and Political
ideological correctness and 123 Practice During the Ancient
inadequate system of 423 Regime 397
mass 398 Enterprise monopoly 526
non-concept of 92, 103 Environmental controls 127
post-war 358 Environmental protection 86
secular 392 Environmental Protection Agency
social mobility and 279 (EPA) 24, 25, 336, 340
subsidize 389 Environmentalism 475
system 357 EPA 350
tax-funded 5 Epigone generation 6, 54, 55, 116,
universal compulsory 47 136, 160, 184, 226, 233, 362,
Educational charities 459 418, 456
Educationism 84 Epigones 44, 257, 273
Edward III 313 Equality 4, 38, 39, 148, 362, 372,
Egalitarian socialist project 476 422
Egalitarianism 148 Equilibrium 396, 419
Ego 591 neo-feudal 376, 395
E. H. Carr: A Critical Appraisal 574 unobservable 127
Eichmann, Adolf 294, 311 wage 189
Einstein, Albert 393 Erhard, Ludwig 148
Einzig, Paul 355 Esquire 237
Eisenhower, Dwight 123, 332, 333 Essence of Hayek, The 277, 419, 522
Elections 7, 33, 125, 258, 318, 323, Essential von Mises, The 134
333, 336–338, 341, 343, 444, Etatism 392
522, 540 Ethics 12, 453, 499, 500
beauty ugly contest 528 capitalist 500
democratic 48 journals 273
680   Index

market 500 F
traditional market 500 Faith 45, 137, 276, 461, 482, 574
Eugenics 117, 250, 377 Austrian 271
language of 391, 473 delusional 432
social Darwinian 433 libertarian 131
Evan, Antony 162 religious 203
Evidence 4, 12, 19, 26, 28, 31, 37, secular power 312
43, 44, 50, 53, 54, 58, 80, 84, Faith-to-Fascism 159
90, 100, 101, 116, 355, 551, Faith-to-Fraud (F2F) 159–178
553 Falklands 344
archival 32, 115, 310, 381, 418 invasion 426
conspiracy linked 279 War 425
dispassionate evaluation of 45 Family 401
documentary 218, 219, 342 Famodimu, Eunice 22
empirical 22 Fascism 14, 41, 52, 81, 91, 118, 145,
fabricating 374 231, 294, 325, 326, 330
incriminating 48 clerical 329, 337
not ‘selected’ 106 emergency makeshift 557
oral history 135 European civilization and
scientific 310 Liberalism 431
spontaneous and constructed 116 fundamental error 557
statistical 487 glorification of 92
suppressed 6, 87, 293, 550 Italian 272
threat to democracy 65 merit 177
uncomfortable 63 national 528
Evolution of Modern Economic Theory national phenomenon 434
561 philosopher of 310
Exceptionalism 387 plutocracy and 558
Exchange rates 169 political 117, 294, 391, 415
Ex-slaves 318 Portuguese 338
Externalities 94, 205, 244, 288, 550 Russian Bolshevism and 557
negative 289 sustainable ideological base for 362
negative deniers 289 victory of 118, 159, 163, 327,
Pigovian 289 401, 406, 503, 591
positive 288, 289 Fascists 44, 47, 91, 117, 160, 173,
regulated 288 177, 319, 330, 331, 342, 429,
unleashed 288 430
Exxon Mobil 23 bombing of Guernica 334
 Index   681

deeds 524 Four Freedoms 570

militia 434 Fourier, Charles 289
party 119 Framework Convention on Climate
political 390 Change 346
social 435, 528 France 133, 144, 314, 318, 320, 322,
social club 90, 247, 329, 527 435, 461, 586
states 52 Franco, Francisco 329, 340, 435,
Strategy of Tension 334 436
Fatal Conceit of the Errors of Socialism Franco-German War 318
274 Fraternization 377
Fatherland Party 373 Fraud 117, 148, 185, 269, 275, 293
Fear of castration 592 academic 6, 216
Feminism 290, 291 Austrian School 162
Fest, Joachim 199 externalities 550
Fetishism 592, 595 financial 326, 344
Feudal estates 370 sector 139
Feudal function 354, 371 ‘free’ market 257
Feudalism 135, 313–321, 395 Great depression predicted 559
aspects of 394 Hayek’s 279
economic organisation of 395 massive 573
Financial sector bubble 190 public policy and 6
Finer, Herman 48, 65, 331, 521, 551, transparent 355
552 ultimate values and 380
Fink, Richard 346 Fraud, Fascism and ‘Free’ Market 275
First Austrian Republic 324 Fred C. Koch Foundation 105
First Estate 142 Free choice 92
First Indo-China War 332 Free enterprise 121
Fiscal authorities 361 Free growth 397
Fiscal rationality 273, 458 Free health care 88
Fischer, Stanley 283 Free market 4, 10, 19, 22, 27, 28, 39,
Fisher, Antony 276 47, 84, 90, 94, 171, 280, 288,
Foot, Michael 341, 347, 444 328, 338, 415–417
Footnote Austrians 54 alternative 216
Ford, Gerald 62 Austrian 282
Foreign languages 386 calculation debate 243
Fossil fuels 23–26, 131, 180, 225 community 416
Foundation for Economic Education conditions 38
(FEE) 38–40, 91, 103, 238, economics 40, 214
275, 277 economists 23, 82, 89, 505
682   Index

Environmental Law Clinic 179, Free Nation 341

180 Free price-fixing 565
environmentalists 214 Freedom 11, 93, 187, 431
feeding frenzy 285 academic 236
Foundation 218 danger of losing 390
fraud 54 economic 425
funded by TOFF lobbyists 166 fest 503
historians 101 future of 134
knowledge 269 global markets and 241
knowledge construction model of immigration 424
138 individual 22, 369
libertarians 105 limited 394
medicine 88 Organisation for the Right to
monopolists 115 Enjoy Smoking Tobacco
neo-feudalist view and 181 (FOREST) 40, 41, 484
order 405 perished 572
personal freedoms and 563 personal 296
philosopher 485 political 390, 425
Police State 288 real 357
policy advice 583 values and 572
policy proposals 355 Freeman 572
prevail 224 Frei, Eduardo 334
process 242 Freikorps 271, 323. See also Germany
promoters 199 Freud, Sigmund 590, 592, 594
religion 161, 367 Freudian psychology 590
‘remake’ experiment 163 Freudianism 590
rule 19 Friedman, Milton 9, 26, 33, 34, 37,
scholars 293 38, 42, 48, 170, 188, 293, 428,
scholars antithetical 480 430, 473, 554, 561
secrets 287 Friedrich, István 324
strategy 102 Friedrich von Hayek Foundation
structure 294 (Moscow) 136
study kits 104 Frist, Bill 169
swamp 25 Frontkämpfer 378
tax dependency ratio (X/Y) 269 Frost, David 387
truth 80 Führer 93, 118
way of life 276 competition 501
witches 51 free enterprise 501
Free marketeers 285 self-reliance 501
 Index   683

Third Reich 294. See also German students 91, 251, 252
Presidential election 1932 ‘undistinguished’ institution 225
Führerkult 57 German Gentlemen’s Club (Deutscher
Functional efficiency 565 Herrenklub) 534
Functional representation 354 German Historical school 405, 431
Fundamental Freedoms 123 German Presidential election 1932
527. See also Anschluss Germany
and Führer Third Reich
G German Youth Movement 56
Gadhafi family 170 Germany 488, 517, 522. See also
Galbraith, John Kenneth 187, Freikorps
190, 293, 442, 462. See also imperial 274
Economics, Keynesianism, national life 275
Knowledge economics and Ordo-Liberalism 148
Market academic political integration 515
Garrison, Roger 21 pre-Hitler 15
Geistige Gluchschaltung 234, 257 proud military heritage 275
General Motors 476 Weimar 325
General Theory of Employment Income Gerrymandering 550
and Money 557 Gesetz zur Wiederherstellung des
Genetic superiority 433 Berufsbeamtentums 513
Genie of centralization 188 Get-rich-quick schemes 417
Gentry 400 Gharib, Abu 348
George I of Greece 320 Gladstone, William 389. See also
George Mason University (GMU) British Parliament
20, 21, 27, 83, 103, 122, Glass Steagall Act 347
207, 227, 297, 344, 472. See Gleichschaltung 356, 357
also Academics and Academic Global Financial Crisis 51, 361
Qualifications Globalization 126
Austrian economics 247 Global warming 26, 39, 49, 214,
economists 23 215, 239
‘fledgling institution’ 225 God 275, 290
mission 23 God and Gold 415, 416
PhD students 103 God, King and Country 317, 422
procedures 238 Goebbels, Joseph 202
self reported institution 225 Gold 416
seminars 94 Austrian 170, 233, 416
State-funded 230 standard 5, 83, 98, 136, 137, 521
684   Index

Goldberg, Jonah 18 Great Reform Act 396, 400

Goldwater, Barry 568 Great War 33, 375, 420, 428, 429,
Gömbös de Jákfa, Gyula 328 453, 463
Goodwin, Craufurd 85 Greaves, Bettina 508, 511, 582, 597
Gorbachev, Mikhail 346 Greco-Turkish War 324
Gordon, David 559 Greece 325
Göring, Hermann 132, 165 Greenpeace 31, 345
Gott, Richard 442 Greenspan, Alan 45, 169
Goudi coup 320 Gregory, Theodore 361
Goulart, João 333, 341 Grenada 344
Government Grimm, Hans 535
beating 434 Grinder, Walter 178
constitutional 22 Groups
discriminatory coercion 367 citizen activist 33
Fascist militia 434 honest 140
favours 274 identity 102
‘Free’ 123 implementation 33
interference 417 interests 34
largesse 366 Redneck militias 274, 289
liberty and 432 Guardian, The 31, 242, 442
limited 30 Guatemala 344, 349
omnipotent 14 Guatemalan Civil War 333, 347
ownership 92 Guiliani, Rudy 39
paternal 93 Guillebaud, Claud 517
power of 438 Guzmán, Jaime 337
property and 434
ruling philosophy of 428
social organizers 355 H
transparency 30 Haberler, Gottfried 86, 580–582
Grant, David 173 Habilitations-Vater 234
Great Depression 44, 81, 139, 146, Habsburgs 313, 316, 319, 322, 330,
281, 286, 293, 327, 338, 355, 360, 365, 468, 509
457, 467, 528, 581–583 Austrian 316
deflationary 530 Dynasty 314
major causes 584 Eastern Reich 509
predicted 554 Empire 415, 419, 445, 454
second 336 nepotism 416
Great Depression, The 574 Spanish 316
Great Inflation 5, 324, 522, 528 Habsburg, Otto von 372
 Index   685

Hagiography 30, 162 Hegelianism 576

Hair fetish 592, 595 Heimann, Eduard 502
Haldeman, Bob 336 Henderson, Neville 176
Halfwits 384 Herbert, John N. 95
Handelskammer 520 Herrnstein, Richard 476
Hanson, Charles 41 Hicks, John 49, 61, 65, 575
Harberger, Arnold 173 Hickson, John 89, 105
Hard hats and hard work 229 Hierarchy 420
Harper, F. A. ‘Baldy’ 481 Higher Education in America 235
Hatred 50, 128, 173, 374, 502 High, Jack 21, 107, 463
Hayek-and-Mises promoted-deflation High-unemployment deflationary
467. See also Liberalism zone 565
Hayek, Christine Maria Felicitas 135, Hillsdale College 279
571 Hilton, Isabel 587
Hayek-Fink-Koch knowledge pro- Himmler, Gundrum 311
duction 29, 33, 84, 219, 246, Himmler, Heinrich 310
251, 350 Hired Gun 85
Hayek, Heinrich von 310, 331, 556 Historians 102, 116, 117
Führer 556 military 311
Kampfring der Deutsch-Österreicher professional 271
im Reich (Hilfsbund) 556 susceptibility of 271
Nazi Party member 556 Historical materialism 311
Hayekian business cycle theory 582, History of Economics Society (HES)
584 6, 44, 471, 472
Hayek, Lorenz (Laurence) Joseph Hitler 6, 15, 33, 44–47, 51–56, 64,
Heinrich 571 65, 91, 93, 117, 132, 143, 145,
Hayek-Mises-Rothbard-Rand, The 294, 310, 319, 328–330, 357,
Divine Right of the ‘Free’ Market 363, 377–380, 432, 435, 463,
540 465, 512. See also Germany,
Hayek’s Challenge 348 Holocaust and Von Papen
Hazlett, Thomas 276, 293, 384 abolish labour unions 501
Hazlitt, Henry 97, 98, 558 Akademie der bildenden Künste
Healing Wound Experiences and Wien 128
Reflection on Germany, The 586 anti-Semitism 511, 549
Health care 27, 86, 88, 127, 216, antithesis of socialism 518
229, 238 appeal to aristocrats 574
Health expenditure 229 Austrian Business Cycle Theory
Heath, Edward 338 and 129, 503, 537, 538
Heckman, James 27 castration complex 592
686   Index

Chancellor 523, 529, 533, 540 private property 503

colonize Europe 380 promise of law and order 516
concession 169 promoted 479
death-head formation 467 psyche of broad masses 231
deflationary demagogue 538 reassure business audience 515
democratic dictatorship 479 regime 144
destroy democracy 488 rise to power 293, 406, 486, 509,
Dusseldorf Industry Club 499 513, 566, 578, 584
economic rewards and 499 Road to Restoration, The 325
electoral momentum 186 Road to Resurgence, The 514, 518
‘enemies of the State’ 510 Road to Serfdom, The and 479
first victim 133 seize power 146
funded 274, 281, 535 self-interested 232
German Industrialists and 498 stand by 362
German provinces supported 132 status of working man 230
‘gutter pamphlets’ 256 strategy 506
Hayek and 477 support 507
hypospadias 592 terror 530
inferior sort of Corporal 167, 531 Thyssen invitation 499
influencing masses 232 took power 487
intellectual classes and 383 trade unions illegal 468
intelligentsia and 362 ultimatum 168
International Right 468 underestimating 176
irreversible versions of the past 525 version of the past 477
labour unionists imprisoned 468 Vienna days 199
lack of intellectual honesty 128 Hitler’s Rival: Ernst Thälmann in Myth
legitimized 188 and Memory 528
living space 467 Hoax 383
Mein Kampf 138, 374, 379 Hoff, Trygve 569
mental security 231 Hohenzollerns 319, 322, 330
national solidarity 511 Holmes, Elisabeth 37, 573
no value to human life 424 Holocaust 40, 43, 48, 53, 58, 189,
para-military forces 126 310, 331, 376, 457, 462, 514..
philosophy 230 See also Hitler
political bourgeoisie 497 denial literature 250
position of father 230 Holy Terror 322
praised 507 Holy Terrorists 345
prince and 362 Homosexual closet 220
private enterprise and 499 Honduras 337
 Index   687

Honesty 101, 121, 128, 139, 401, Universal Declaration of 567

422 Hume, David 108
Honour 139 Humphrey, Hubert 331
Hoover Institution of Stanford Hundred years’ ‘Peace’ 376
University 140, 209 Hundred Years’ War 314, 376
Hoover, Herbert 36, 163, 168, 326 Hungarian Soviet Republic 323
Hostility 135 Hungary 330
House of Bourbon 316 Hungary communist 345
House of Commons 397 Hussein, Saddam 293
House of Habsburg 371 Hutchison, Terence Wilmot 581, 584
House of Hanover 316, 423 Hyperinflation 136
House of Lorraine 316
House of Plantagenet 376
House of Representatives 317 I
House of Romanov 370 I Chose Liberty 17, 22, 85, 93, 123,
House of Valois 376 162, 206, 235, 256, 473
House That Hitler Built, The 176 Id 591
Housing shortage 38 Ideals 389
Hucksterism 388 Ideological agenda 251
Hugenberg, Alfred 516 Ideological checkers 233, 281
Hülsmann, Guido 144 Ideologies new 14
Human Action 223, 391, 405, 432, Ideologues 225, 273, 282
433, 472, 576, 591 Ideology 119, 123
Human Action publication 577, 578 Ideology elevation of 283
Human Action the Scholars Edition Ideology-promoting colleges 279
582 Ideology quasi-official business sector
Human capital 4, 5, 226, 284, 358, 274
400 Ikeda, Sanford 21
acquisition 358 Immigration 6, 33, 35, 118, 222,
creation 126 335, 424
Human rights 146, 342, 389, 417, barriers 392
477 freedom of 424
abuses 550 restrictions 223
denials of 567 Impeachment 317
derived from Marxism 570 Imperialism Western 344, 424
fashion of 212 Imperial order 419
perpetrated by Marxists 550 Income 431
touchstone of 580 elasticity of demand 288
trick perpetrated by Marxists 573 inequality 38
688   Index

tax rate 367, 368 International Commission of Inquiry

Independence 13, 225, 236, 245, into US War Crimes in
250, 317, 568 Indochina 439
Independent Institute 241 International Monarchist League 348
Independent Institute TOFF-funded International Right 338, 340
235 International solidarity 377
Individual and the State in the International Sugar Research
Constitutional Evolution of Foundation 89
Switzerland, The 581 International Telephone and
Industrial fluctuations 281 Telegraph 334
Industrial revolution 396 Interventionism 86, 146, 392, 529
Inflation 13, 137, 338, 354, 522 Interventionism, methods of 294,
consequences of 184 295
continued 416 Into that Darkness from Mercy Killing
cost-push explanation of 360 to Mass Murder 587
stop 537 Investment expenditure 358
Inflationary policy 522 Invisible Children: Child Prostitution
Inherited wealth 459 in America, West Germany and
Inside the Third Reich 579 Great Britain 593
Instincts 423 Iran 343, 425
Institute for Humane Studies (IHS) Iranian hostage crisis 426
26 Iraq invasion 348
Institute for the Study of Zionism Isolationism 166
332 Italy 329
Institute of Economic Affairs (IEA) 7,
32, 40, 60, 172, 207, 276, 359,
483, 485 J
Insurance 400 James I 314
Integrity 123 Jesuit Loyola University New Orleans
Intellectuals 160, 232 269
irresponsible 161 Jesuits 365
second-hand dealers in ideas 12, Jesus 314
160, 212, 226, 383, 513 Jewish Libertarian blog 270
Interest rates 97, 98 Jews 120, 141, 145, 282, 291, 313,
Intergenerational entitlement pro- 322, 329, 363, 515, 525
gramme 433 ‘enemies of the State’ 510
Intergenerational privileges 140 liquidated 322
Intermediaries 160, 162, 282, 383, mistreatment 165
416 save 282
 Index   689

Jihad 320 Kerensky, Alexander 321

John Stuart Mill and Harriet Taylor Kerr, Chester 433
Their Correspondence and Kersey, John 181
Subsequent Marriage 560 Kershaw, Ian 143
Johnson, George 80 Keynesian system-inflation 138
Johnson, Paul Bede 141, 561 Keynesianism 97, 286, 319. See also
Johnson, William 135 Galbraith, John Kenneth
John W. Pope Foundation 30, 31 Keynesians 554
Joseph, Keith 338, 341 Keynes, John Maynard 4, 34, 393,
Journal of Libertarian Studies 141, 557, 574
223, 344, 424, 572 The General Theory of Employment,
Journal of Social, Political and Interest and Money 5
Economic Studies 249 The Means to Prosperity 328
Journals reputation 138
ideologically correct Khmer Rouge 339
Cato Journal 235 Khomeini 343
Independent Review 235 Kiel mutiny 323
Journal of Private Enterprise 235 King, Martin Luther 335, 567, 568
Choice 235 Kingdom of God 453
peer reviewed 273 Kinship relations 455
June Club 534 Kirzner, Israel 20, 101, 173, 285,
Junta 17, 146 388, 389
Justice 39 Rothbard and 457
Justice, Peace and Love 317, 353 worthiness 243
Kissel, Mary 573
Kissinger, Henry 169, 336, 340, 341
K Klamer, Arjo 281
Kaldor, Nicholas 386 Klein, Lawrence 218, 219, 562
Kammer 371, 372, 522 Klu Klux Klan 95, 247, 322
official 591 Knight, Frank 286, 293
Vienna 183 Knowledge 10, 160
Kant, Immanuel 385 amount 116
Kapp Putsch 324 Austrian-style 39, 54, 273
Kapp, Wolfgang 510 biographical 562
Kellog, Michael 420 bridge 178
Kennedy, Donald 443 collect 106
Kennedy, Robert 335 commodity and 106
Keppler Circle 522, 535 common 416
Keppler, William 501 constructed 6, 34, 35, 43, 63
690   Index

construction 486 Koch, David funding 244

constructors 182 Koch, Fred 104
derived 116 Koch, Fred John Birch Society (JBS)
dissemination 63 and 246
divinely revealed 93 Koch Industries 79, 219, 343
dynamics 47 Koch Industries externalities 250
economics and 107, 139, 379 Koestler, Arthur 375
epistemological foundations 291 Koether, George 167
examined 43 Kovacevich, Richard 169
expanding 445 Krafft-Ebing, Richard von 594, 595
fabricated 80 Krueger, Maynard 48, 331
faith-based 310 contradicted Hayek 553
‘free’ market 126 fact of communism 553
gain 106 fear of communism 553
Hayek-Fink-Koch 29 Hayek ‘man on the spot’ 553
imaginary voices and 148 Road to Serfdom contradicted 553
inductive 178 Krugman, Paul 286
marketed 6 Kuehnelt-Leddihn, Erik 141, 353,
marketed and bought 526 372, 388, 393, 403, 418, 422,
Miseans 436 468, 469
pretense of 139 Kun, Béla 323, 470
problem 309 Kuwait 346
production, Hayek-Fink-Koch 33,
44, 84
and Progress Fund 31 L
religious 311 Labour
sovereign producers of 54 aristocracy 400
tree of 30 human capital 4
use of 106, 139 internationally 223
utilized 565 legislation 406
Wikipedia derived 273 market 187, 285
Knowledge-based strategy 147 movement 17
knowledge-to-faith spectrum 45 party 100, 341
Koch, Charles 20, 22, 28, 31, 104, theory of value 319, 433, 458
105, 282, 284, 349, 350 Laffer Centre 381
Koch, Charles academic network 252 Laffer Curve 339, 368
Koch, Charles Key Performance increase tax revenue 339
Indicator 252 tax cuts 339
Koch, David 40, 105, 225 Laffer, Arthur 339, 382, 383
 Index   691

Laissez faire 86, 97, 405, 424, 571 strategy 333

Lange, Oskar 228 Leoni, Bruno 287
Laos 222, 339 Leontief, Wassily 440
Laos People’s Revolutionary Party 339 Lerner, Abba 234
Laski, H.J. 393, 480, 569 Letiecq, Bethany 236
Last Knight of Liberalism, The 462, Leube, Kurt R. 32, 35, 200, 208,
513, 524, 525 209–211, 213, 216, 218, 374
Law Levin, Michael 291
Austrian 119 Levy on wages and salaries 501
biblical 119 Lewis, Arthur 441, 568
Canon 142 Liberal Awakening 389
corn 318 Liberales Institut 210
denazification 331 Liberal ideology 530
international 426 Liberalism 11, 56, 118, 502, 510,
rule of 22, 521 557
Salic 316 advance of political 377
Law-and-economics 162 bourgeois 540
Law, Legislation and Liberty Volume 1 classical 518
Rules and Order 337 demands of 312, 549, 591
Law, Legislation and Liberty Volume 2 economic 391, 392
the Mirage of Social Justice 341, political 389–391
569 principles, of 438
Law, Legislation and Liberty Volume program of 312, 406, 549
3 the Political Order of a Free property and 434
People 342 unconditional acceptance 392
Lawsuits 24 Liberalism in the Classical Tradition
Lazarus, Emma 215 159, 223, 401, 550, 594
Leadership 12 Liberalismus 509
League of Nations 144, 324, 328, Liberal order 570
392, 461 Liberal radicalism 502
Lebensraum 34, 322, 462, 511 Libertarian 397
Lebensunfähigkeit 515 Alliance 41
Lee, Dwight R. 241, 248, 249 anarchist 42
Leers, Johann 332 movement 43
Leeson, Pete 249 Party 88, 92, 99, 339, 340, 343
Leighton, Bernardo 340 Libertarianism 130, 131, 387, 471
Lemmons, Russel 528 commitment 162
Lenin, Illych 320, 326 fantasy and 256
dictatorship of the proletariat 529 fiction and 256
692   Index

field of 105 Littlewood, Mark 483

philosophy of 474 Litvinov, Maxim 330
Libertarians 39, 101, 102, 384 Living Economics Yesterday Today and
Libertarian Vanguard 99 Tomorrow 163
Liberty 4, 12, 17, 28, 33–41, 44, 61, Living space 469. See also Lebensraum
116, 120, 121, 191, 292 Locarno Treaties 467
abstract 422 Locke, John 11, 315, 364, 405
American 123 Locker room banter 289
applied 18 Lomborg, Bjorn 25, 26
Austrian 117, 432 London School of Economics (LSE)
economics and 251 81, 327, 385, 386
blessings 30 Long-Term Capital Management 347
collectivism and 92 Lord of Production is the Consumer
defenders of 117 534
eighteenth century theory of 364 Louis XVI 317
enhance 123 Louw, Leon 217
evidence and 279 Lower Austrian Chamber of
extremism and 568 Commerce 371
façade of 445 Loyalty 275
flames of 445 Ludendorff and Hitler 160, 177, 201,
foundation of 372 294, 322, 326, 342, 362
Fund 30, 212, 339, 368 Bavarian Putsch 523
tax-exempt 120 Ludendorff, Erich von 91, 117, 322,
ideas of 163 477
interpretation of traditions and Ludwig von Mises Center for
institutions 364 Property and freedom 181
Law 512 Ludwig von Mises Institute 445
Lobby 250, 333 establishment of 593
oligarchic 47, 160, 353, 370, 394, South Africa 213
397, 401 Luftwaffe 202
party of 397 Luhnow, Harold 558
prosper 124 Lung Association 215
slogan of 17, 97, 165 Lynch, Benegas 11
University 204
utopian 58, 363
vision of 445 M
Liggio, Leonard 101, 102 MacDonald, Ramsey 327
Lincoln, Abraham 188 Machlup, Fritz 86, 286, 287, 563,
Lipsett, Seymour Martin 199 580
 Index   693

Maclean, Nancy 121 system 390, 416

Magna Carta 313, 353, 461 theory of 107
Major social instability 126 unhampered 359
Making of Adolf Hitler, The 578 Market and Other Orders, The 309,
Mal-investment 4 310
Malleus Maleficarum 314 Marro, Andre 181
Man on Horseback: The Role of the Martyrdom 551
Military in Politics 552 Marx, Karl 311, 322
Mandela, Nelson 567 Marxian socialism 519
Manipulation 10 Marxism 15, 64, 91
Mao, Zedong 53, 84, 222, 270, 334 forerunner of 388, 527
Marginal disutility 5 hostility towards 502
Marginal revenue product (MRP) overcoming 519
284 psychoanalysis and 590
Market Marxist experiment 63
academic 281 Marxist myth 274
bailed-out 338 Marxist Russian Revolution 570
book 64 Marxists 8, 54, 458
democracy of 509 Masculinity 291
democratic structure 370 Mashaba, Herman 213
destabilized 97 Mason, George 242, 244
economy 86, 431 Mass consumption 166
efficiency 355 Master Settlement Agreement 23
exo-somatic sense organ 96 Mayer, Hans 330
financial 97 Mayer, Jane 101
free play 127 Mayflower Compact 314
interfere with 38 McCarthy, Joe 332
interference with 417 McCormick, ‘Deacon’ 257, 443
laissez-faire 565 McVeigh, Timothy 130, 347
law of 359, 370 Means of production 369
outcomes 390 Measurable Utility 401
process 207 Median research output 273
Process Centre 32 Mediocracy 44
restoring 127 Mediocrities 120, 233, 422
Say’s Law 126 Medusa’s Head 592
select 369 Mein Kampf 381, 515, 523
situation 359 Mengele, Joseph 311
society 163 Menger, Carl 292
694   Index

illegitimate son 292 A Critique of Interventionism 294

Menger, Karl 57, 278, 292 achieved status 167
Mental illness 59, 135 advocates of aristocratic revolution
obsessive self-interest 59 276
suicidal depression 59 annexation 517
Mercatus Center 23, 24, 29, 31, 84, annexation of colonies 463
207, 218, 236 Anschluss 183, 514, 517
influence 244 anti-Marxism 514
PhD Fellows 28, 246 Argentinian lectures 167
Program for Advanced Study Argument of Fascism 529
in Philosophy, Politics, and Aristocratic Doctrine 126
Economics 253 attacked war and national chau-
scholarships 246 vinism 134
Merit Austria’s economic difficulties 520
concept of 384 Austrian Institute for Business
idea of 385 Cycle Research 521
rewardable 384 Austro-Fascist membership 598
Merkel, Angela 573 Austro-German Lebensraum 463
Metternicht, Klemens von 318, bank regulation and 454
353–405, 436, 460 betrayal of truth 511
Migrants 33 beyond reason 597
Mihn, Ho Chi 322 Bolshevik’s attitudes 457
Miliband, Ralph 480 Bolshevism 454
Militarism 428 böse Saat 454
Milk shortage 38 character traits 50
Mill, James 404 Christian Church 454
Mill, John Stuart 366, 563 Circle 597
Mind construction 116 Classical Liberals 159
Mirowski, Philip 30 colonial possession 466
Misconception of Human Rights as common criminals 141
Positive Claims 569 confirmed bachelor 596
Miseans 430 conscription 432
Mises, Adele 585 consumer sovereignty 483
Mises-Breivik association 130 consumers 167
Mises-Hayek anti-Socialist theme 234 correspondence 599
Mises, Ludwig von 3–5, 28, 33, corrupt practices 178
34, 87, 89, 90, 92, 273, 282, court manners 96
290–294, 429, 432 criticized Nazis 502
 Index   695

cultivated public persona 577 freedom of immigration 466

cultural heritage 232 full employment 172
Czech ‘militarists’ 464 German Reich 517
Czechs humiliated 464 Germans and Italians 271
delusional 472, 523 Germany 464. See also Das Dritte
democracy 125, 509 Reich
denigrated immigration 167 global ranking 464
Deutsche Gesellschaft für Soziologie need colonies 464
520 global empire 464
dictatorship 482 Great War 466
Die Gemeinwirtschaft: Haberler and 581
Untersuchungen über den halfway bridge 159
Sozialismus (Socialism) 454 Hitler and 232, 578
disciples 188 Hitler in office 523
doctrine of force 125 Human action 16, 90, 91, 97, 120,
domestic policy 482 334
economic conscience 512 Hungarian ‘Bolshevist’ 464
economic democracy 498 ideological figure 85
economic democracy of the mar- imitators 173
ket 529 inaccurate caricatures 464
economic nationalism 465 inferior ‘masses’ 529
economist of the land 519 inherited property 458
enemies of society 510 Institute 42, 123, 134, 272, 344,
epistemological problems 85 472
excellent manners 133 natural aristocracy 126
fallacy concerning Nazism 465 self-perpetuating oligarchy 126
far right John Birch Society and tax-exempt 269
333 Trump and 127
Fascism 223, 275, 482, 517, 524, intellectual Führer 188, 472, 518,
530 554, 591
defined and praised 507 intellectual refugee 134
praise of 177 international economy 463
Fascists and 159, 271 interpretation of Fascism 539
political tactics 482 intertwined research programs 160
praised 523 interventionists 178
fetish 258 Jesus 454
flow of capital 222 John Birch Society 204
free movement of people 222 labor 222
696   Index

Laffer curve advocacy 368 peace 510

Lebensraum 221, 464–467 plagiarized consumer sovereignty
Liberal Policy 362 509
liberalism 85, 272, 503 political activity 511
liberalism and capitalism 529 political democracy 529
Liberalism in the Classical Tradition political fascism 274
92, 272, 326 politics 511
Liberalsimus 272 power of liberal ideas 524
liberty 510 praised ‘Fascists’ 549
Liberty and Property 86 prestige of Mussolini, Hitler,
lobbyist for Warfare State 223 Göring 535
Lord of Production is the Privatdozent 277
Consumer 454 private property 510
Ludendorf and Hitler 270, 271, problem of property 458
511, 523, 549 promoted deflation 183
lying 272 promoted Ludendorf and Hitler
Marxism 514 125, 133, 184
masses 126, 532 property kleptocratic enemy 528
member of Austro-Fascist party protection of property 510
134 proto-Nazis 465
member of Fascist social club 134 provincial factionalism 464, 467
Memoirs 511 quasi-public servant 183
mental disposition 464 radical laissez faire 466
Middle-of-the-Road Policy Leads recovery of German economy 514
to Socialism 86 Red terror 125
Minister of Finance 514 re-interpreted Fascism 517
monetary theory 513 ridiculous democracy 498
moral tone 178 Right-Freudian cult 188
mother 596 Russian Bolshevism 524
nasty riots 464 science 511
Nation State and the Economy 323 scientific development 172
Nazi-Classical Liberal Pact 325 scientific work 277
Nazis 465 Second Estate 202
Nazi-Soviet Pact 325 self-interested 232
need for subordination 455 seminar 173
obligations of social insurance 430 social cooperation 222
one of Hitler’s victims 589 social order 509, 510
opposing inflation 183 social philosopher 579
outcome of elections 529 socialism 85, 134, 290, 454, 498
 Index   697

socialist critics 272 German 363

socialists 178 Habsburg 362
spirit of Moscow 234 restoration of 363
subjective value theory 511 Monetary system 515. See also
support 1932 German elections Austrian School of
527 Monetary theory 385
temper 596 Monetary Theory and Trade Cycle 354
Third International 530 Money 5, 28, 31, 41, 43, 81, 77–
Third Reich 183 109, 120, 127, 181, 210, 212,
unbelievably stubborn 132 225, 253, 417, 424
understanding of 523 contrivance of 566
understanding of economics 523 denationalization 504
unhampered labor market 172 easy 556
unitary German state 515 extra 103
university enterprise 205 fiat 97, 136
Verein für Sozialpolitik 523, 520 good people and 384
version of the past 462 hard 431
victory of Communism 458, 519 income and 431
victory of Fascism 458, 519, 524 Kochs 236
violence and coercion 510 mother’s milk of politics 238
Warfare State 334, 463 new 469
Western imperialism and 221 old 254, 469, 470n15
White Terror promoter 530 paper 97
White Terrorists 125 pocket 187, 336, 593
Mises, Margit 134, 166, 183, 512, problem 43, 79
520, 575–578, 597, 589, 596 quantity increase 522
addicted husband 484 sound 97, 136
Mises, Richard 597 spending 253
Misesians 387 supply of 129
Mitrione, Daniel 387 talent and 79–113
Model Constitution 366, 478, 525 theory of 85, 136, 360, 537, 557
Modernization 427 transforming 275
Molotov, Vyacheslav 330 votes and 275
Monakow, Constantin von 59 wages 5, 360
Monarchism 354 war and 424
Monarchs 317, 353, 418, 468 Mont Pelerin Society (MPS) 19, 37,
Monarchy 65, 370. See also 43, 87, 119, 293, 331, 335,
Absolutism and Aristocracy 394, 484, 557
compensation 288 accomplishments 424
698   Index

Austrolibertarian wing 508 Myrdal, Gunnar 187, 439, 568

Chile 343 Myrdal, Jan 441
consistent doctrine 341 My Years with Ludwig von Mises 590,
cornerstone 558 594
funding 462
gathering 365
inflation 137 N
meetings 120, 175, 188, 469 Nanny State 419
self-perpetuating oligarchy 508 Napoleon 317, 395
sessions 470 Narrow Path of Freedom, The 579
Montes, Leonidas 117, 415, 438, 479 Nation 10, 34, 98, 120, 134, 187,
Montt, Ríos 344, 349 318, 366, 379, 425, 435, 477,
Mood swings 58, 59 482, 510, 525
Moral Bankruptcy of Liberalism 571 National chauvinism 344
Morality 417, 433 National identity 360
Austrian 287 Nationalism 56, 57, 98, 278, 503,
economic 571 565
smokescreen of 365 economic 465
Moral tradition 13 frenzy of 428
Moral values 422 National Review 18, 34
Morgan, Mary 471 National self-sufficiency 340
Morgenstern, Oskar 86, 535 National Socialism 184, 231, 519,
Mosaddegh, Mohammad 332, 425 534
Mosley, Oswald 390 Natural law 453
Mosley’s Blackshirt march 329 Naval Order 323
Moss, Laurence 173 Nazi 26, 55, 118, 159, 278, 328,
Moss, Robert 63, 337, 484 444, 467, 512, 525
Muddle of the Middle, The 343, 354 background 565
Multi-national state 34 card-carrying 574
Munich Beer Hall Putsch 271, 378, co-ordinate scholars 355
477, 534 dictatorship 541
Munich Herrenklub 534 Führerprinzip 532
Murdoch, Rupert 37, 237, 427 funded 275
Murray, Charles 476 ideal in education 235
Mussolini, Benito 144, 324, 329, 346 ideology 465
Mỹ Lai Massacre 335, 349, 434 invasion 519
Myrdal Century 440 legal means for confiscation 507
Myrdal, Alva 47, 287, 442 movement promoted 558
 Index   699

Neo 47 tenure-granting process 388

order 517 New-Feudalism 47, 312, 338
organisation 249 Nicaraguan Contras 345
Party 173, 497 Nick-Khan, Edward 30
philosophy 576 Nixon, Richard 335–338, 387
principle of private property 507 Nobel Prize 60, 273, 285, 347, 338
principles of Command and authority 384
Obedience 175 Baumol, William 285
propaganda 366, 539 Buchanan, James 561
relatives 574 Coase, Ronald 209
seizure of power 274 committee 287
support 373 Economic Sciences 61, 142, 161,
youth movement 102 204, 226, 234, 243, 286, 437,
Nazi-Classical Liberal Pact 118, 204 565, 575
Nazionalsozialistische Gesellschaft fur Friedman, Milton 561
deutsche Kultur 278 Hayek, Friedrich von 142, 172,
Nazism 53, 57, 270 243, 273, 285
Nazi-Soviet Pact 53, 144, 188, 325, ideological opportunity for Mont
330, 583 Pelerin Society 561
Neglect 538, 587 Klein, Lawrence 234
Neoclassical model 161 Merton, Robert 347
Neoclassical school 5, 319, 355, 433 Myldar, Gunnar 440
Neoconservatism 130 Peace 165
Neo-feudal Hohenzollern legacy 530 Samuelson, Paul 286
Neo-feudalism 47, 312, 356, 403, Scholes, Myron 347
436 Stigler, George 209, 561
Neo-Nazis 274, 471 winners 226
Nepotism 234 Nobility 400
Neue Freie Presse 272 Nomenklatura 233
Neurotics 289 Non-directing class 231
New Class: An Analysis of the Non-Fascists 510
Communist System, The 200 Non-monarchs 469
New Deal 101 Non-Use of Free Market Knowledge in
New horizontal ‘order’ 403 Society 550
New Society, The 571 Non-whites 120, 200, 212, 551,
New York Times, The 180, 142, 425 569
New York University (NYU) 20, 21, Northern League 249
118, 282 North, Gary 391
700   Index

Nuclear Arms Race 379. See also Operation Desert Storm 346
Nuclear destruction Operation Pocket Money 336
Nuclear destruction 443. See also Opium Wars 318
Nuclear Arms Race and Oppenheim, Max von 320
Nuclear War Optimal extraction problem 225
Nuclear War 438 Oral history interviews 32, 35, 116,
Nuremberg Fallacy: Wars and War 278, 380, 381, 419, 522
Crimes Since World War II 578 Ordinal utility 319
Nuremberg trial 497, 501, 536 Ordo-Liberalism 148
Nutter, Warren 51 Origins of Totalitarian Democracy 480
Orwell, George 35, 253
Österreich 365
O Otten, Shane 22
Obama Administration 25 Ottoman Turks 315, 365
Obama, Barack 348 Owen, Wilfred 377
Obesity 87, 88, 90, 94, 484 Ownership 222, 370
Objectivity 423 employee 480
O’Connell, Daniel 396 government 92
O’Driscoll, Gerald 20, 162, 180 land 8
O’Grady, Mary Anastasia 573 private 340, 390, 406
Oil 4, 40, 284, 340, 343 Ozone 215
companies 24, 283
deposits 340
free market 340 P
import 340 Pacifism 423, 503
Iranian 425 Padden, David 104
prices 339, 340 Page, Mary 41
Oligarchs 353, 583 Pahlavi dynasty 324
Oligarchy 47, 164, 312, 313, 354 Paine, Thomas 140, 141
Olmsted, Scott 180 Pangalos, Thodoros 325
Omnipotent Government 434, 576 Panic 60
Omnipotent legislature 399 Paraguay 340
Omniscience 399 Paris Climate Accord 25
One-dollar-one-vote 275 Paris Peace Conference 466
One-party system 369 Party 33, 99, 574
Open warfare 392 Anti-Bretton Woods 99
Operation Condor 341, 342, 426, Center 528, 530, 533
479, 507 Communist 46, 163, 329, 369,
dictators 293, 340, 341 435, 480, 503, 527, 528
 Index   701

Conservative 100, 331, 333, 339, Phillips curve 564

343, 354, 554 Phillips, A.W.H. 354
Monday Club 333 Philosopher of Liberty 201
propaganda 100 Philosopher-statesman 338
Democratic 33, 99, 228, 310, 331, Pigou, Arthur C. 10, 39, 164, 324,
371, 527, 528 344, 541, 575
Labour 48, 100, 341, 444, 479, Pigouvian framework 400
480 Pilgrim Fathers 314
National 566 Piłsudski, Józef 323, 325
Nazi 173, 186, 362, 477, 497, Pinochet, Augusto 16, 45, 170, 293,
507, 535, 556 335–337, 341, 343–347, 362,
single united bourgeois 275 376, 422, 462, 476. See also
Tea 228, 370, 523 Death squads
Paternalism 41, 145 abolish political parties 502
Patriotism 428 abolish trade unions 502
Pattern prediction 224 Capitalistic Fascism 563
Paul, Ron 188, 272, 287 coup 478
Peace 123, 133, 220, 256, 321, 335, defeat Marxism 379
376, 437 dictator 185
bloc 166 Junta 337, 524
Cold War 331, 415–443 meeting 555
dividend 19 Model Constitution 468, 478, 515
negotiations 466 Police State 476
Versailles 322 seized power 142
Peace, Justice and Liberty 334 supported 477
Peace, Justice and Love 317, 334, supreme leader 338
353–399 White Terror 146, 470
Peace-promoting free trade 389 Pinochetistas 369
Pearson, Roger 249 Plague Has Come at Last, The 290
Peasants Revolt 376 Planning for Freedom 595
People’s Charter 318 Plant, Arnold 361
Pereira, Fernando 345 Plunkett-Ernle-Erle-Drax, Reginald
Personal life 560, 561 330
Peru 340 Plutocracy 17, 165
Peter the ‘Great’ 370 Pogrom 515
Peterloo Massacre 317 Pol Pot 339
Peterson, William 169 Poland 146
Pew, Joseph ‘Newton’ 283 annihilate 143
702   Index

invasion, of 361 particle 215

partitioned 316 water 416
Police State 128, 130, 189, 288, 332, Pope Leo III 313
457, 476, 550 Popper, Karl 566
Policy Popular Front 329, 480
Austerian 286 Populism 117
critique 242 Populism right wing 127
deflationary 354 Pornography 257
false monetary and credit 522 Portugal 342
inflationary 582 Portuguese First Republic 320
interference with 212 Powell, Enoch 335
interventionists 390 Power 54, 309, 314
middle-of-the-road 86 coercive 128, 189, 457, 552
monetary 359 dictatorial 188
non-intervention 169 liberal ideas 223
public 280 of discriminatory coercion 176
socialist economic 390 political 8, 11, 126, 321
stabilization 354 purchasing 187, 430
statist 390 requirements, for 8
Polish May Coup 325 rights and 309–343
Political Economy of War, The 324 secular 312
Political eugenics 377 separation of 399, 400
Political Left 271 state 475
Political police 141 terror and 309–343
Political Testament 363 union 6, 187
Politics 134, 138, 143, 183, 221, 535 Prats, Carlos 337, 338
authoritarian governing principle Pravda 329
535 Praxeology 591
constraints of democratic 375 Predetermined pattern 311
German 574 Presuppositionalism 454
modern configuration of 354 Presuppositionalist 22, 132, 257
progressive 25 Pretium mathematicum 542
role of military 322 Prices
selective excise taxes 239 adjustment 163
Soda 30 controls 416
Pollution 168 equilibrium structure 127
air 216 fall 539
controls 127 foreign exchange 98
 Index   703

general 186 Pan-German 373

guide 281 purposes 388
market 509 quantities of 284
mechanism 90, 127, 186, 226, scientific 240
390, 580 teach nuanced 273
quantities and 283 Property 91, 312, 401, 406, 423,
signals 281 427, 459, 503
social order and 283 aristocratic 395, 400, 415
unforeseen coordination 281 expropriate 502
Prices and Production 598 Hayek’s 549
Price-wage-depression spiral 5 owners 415
Pricing private 160, 312, 497, 503, 506
externality-based full-cost 390 problem, of 503, 519, 550
full-cost 5, 35 theft 459
Prince of Wales 376 Property and Environment Research
Principles of Morals and Legislation Centre (PERC) 31, 118
453 Property-rights 162
Private property 22, 86, 91, 106, 170 Prostitution 594
Private sector 34, 161 Protective tariffs 392
Privatization 19, 170, 431 Protestant Reformation 314
Producer sovereignty 281, 356 Protracted struggle 84
Production Pro-Trump dictates 237
anarchy of 529 Pruitt, Scott 24, 25
structure of 97 Prychitko, David 103
traditional system 371 Psychoanalysis 590, 594
Productivity 187, 358 Psycho-analytical method 590
Progressive tariffs 406 Psychobiography 586
Progressive taxation 401, 402 Psychological predispositions 199,
Projected needs 362 258
Projected self-image 116 Psychopathia Sexualis: With Special
Proletarian revolution 435 Reference to the Antipathetic
Proletariat 311 Sexual Instincts: A Medico-
Propaganda 44, 126, 383 Forensic Study 595
catchword 366 Psychosis 289
catchwords 165 Psychotherapy 587
coup 321 Public Choice 161, 162
dangers of 476 Public health 41, 94, 248
instruments of 356 Public Interest 161
704   Index

Pugachev’s Rebellion 316, 370 North Korea 247

Pugachev, Yemelyan 370 promoters 518, 530
Putin, Vladimir 163, 346, 431, 444 Soviet 406
Putsch 325 Red Terrorists 222, 379
Pyne, Derek 80 Reflections on a Disruptive Decade 578
Reforms 91, 92
Regimes
Q Apartheid 45, 170, 293
Quality control mechanisms 6 authoritarian 591
Quantity theory 522 banking 515
dictatorial 187
military 17
R new 483
Racism 568 old 483, 498
Radicalism 393 policy 28
Radical philippic 221, 344, 572 Reichstag Fire 541
Raico, Ralph 270, 272 Reichsverband der Deutschen Industrie
Rainbow Warrior 345 520
Rajagopalan, Shruti 21 Reisman, George 173, 475
Rand, Ayn 29, 45, 120, 162, 170, Chile innocent victims 475
205, 217, 229, 294, 319, 333, Communist takeover 475
455, 456, 473, 532, 561. See Communists 475
also Atlas Shrugged Relationships 590
fiction 582 Rent 229, 242, 285, 319
masses 170 control 37–39
neo-feudal Russia 170 decreased 403
Ranfurly, Reginald Aylmer 330 Rent-seeking 285
Rank Not Published (RNP) 224 Representation 371
Ratzinger, Cardinal 372 Representation of the People Act 396,
Read, Leonard 36, 39, 275 397
development of ideas 276 Research 89, 162, 208, 215
‘Free’ market religion 275 center 134
Mises not gentle 132 disinterested 273
Reagan Administration 99, 121, 343, Hickson-related 106
345, 444 institutional 64
Red Reign of terror 470 legitimate 81
Red Terror 54, 322, 332, 354, 470, libertarianism and 162
540 policy 246
 Index   705

programs 160 Right-Wing Populism: A Strategy for

sugar 106 the Paleo Movement 457
topics 269–299 Ritter, Gerhard 132
Restoration 423 Rizzo, Mario 21
Retirement 127 Road to Reaction 551, 552
Retrogression 568 Road to Resurgence 511, 527
Revenue state 430 Road to Serfdom After 40 Years 558
Review of Austrian Economics 349 Road to Serfdom Definitive Edition
Revivalists 26 221
Revolt of the Masses, The 419 Road to Serfdom in Cartoons 476
Revolution 423, 539 Road to Serfdom Texts and Documents
aristocratic 115–127, 321 The Definitive Edition 551
French 4, 54, 317, 361, 397, 403, Road to Serfdom, The 65, 98, 100,
459, 461 138, 146, 147, 254, 310, 330,
German 540 355, 356, 380, 390, 402, 417,
Keynesian 556 440, 445, 487, 504, 506, 517,
Revolutionary Movement 534 521, 522, 526, 527, 530, 551,
Revolution in Liberty 334 554–556
Rex sub lege 353 impact 561
Ribbentrop, Joachim von 330, 536 plagiarized 581
Richard II 314 Robber baron 140
Richardson, Elliot 337 Robbins, Lionel 61, 86, 234, 235,
Rights 121, 309–355, 423, 579 286, 355, 361, 385, 441
advance of 391 abandoned Mont Pelerin Society
civil 123, 227, 371, 568, 570 560
gay 270 Austrian theory ‘inadequate’ 575
human 16, 146, 170, 212, 213, crazy Hayekian deflationist 574
340, 341, 347, 389, 417, 434, Roberts, Paul Craig 367
461, 550, 567, 573, 580 Robinson, Arthur 391
natural 453 Rockwell, Llewelyn Jr. 98, 132, 134,
new social and economic 570 292
personal 432 Austrian libertarianism 131
police 49 blame libertarians 130
power and 309–355 discretionary violence 131
property 162, 367 fascism 133
terror and 309–355 freedom 133
voting 47, 312, 369, 394 I Chose Liberty 123
neo-conservatism 130
706   Index

peace 133 left-wing hysterics 346

socialism 133 Libertarian Party 129
use of violence 131 lower-middle-class 232
war 133 Milton Friedman Unravelled 289
Röhl, J. C. G. 591 Mises proclaimed pacifist 141
Romanovs 321, 330 neo-Nazi militia groups 456
Romantic Exiles: A Nineteenth Century The New Menace of Gandhism
Portrait Gallery 574 131
Romney, Mitt 349 New Strategy for Liberty 128, 346
Roosevelt, Franklin 120, 570 non-violence of Gandhism 131
Roosevelt, Theodor 147 non-violent action 131
Rosenberg, Alfred 278, 465 opinion moulding leaders 459
Rosten, Leo 56 Outreach 456
Rothbard Rockwell Report 130, 291 The Progressive Era 104
Rothbard, Murray 9, 16, 22, 33, Redneck militia groups 128
40–43, 54, 63, 79, 84, 88, Review of Austrian Economics 63
94–96, 101, 102, 134, 145, ‘Robhard’ 129, 572
221, 272, 273, 282, 288, 339, self-perpetuating oligarchy 459
340, 424, 445 social democrats 459
Austrian-fuelled Holocaust 457 spotter for Al-Qaeda 16, 245
Austrian Police State 128, 457 violence based Austrian Police 189
Charles Koch and 344 White terror promoter 250
coercive power 457 What is to Be Done 333
co-founder 457 Rothbard-Rockwell report 457
Columbia PhD 128 Royal Dutch Shell 23
control broadcast content 343 Rudolph of Hapsburg 313
controls on coercive power 128 Rumbold, Horace Montagu 467
data mining 129 Rumsfeld, Donald 348
Defend Family Values 457 Russell, Bertrand 393, 428
devoted to truth 132 Russia 13, 19, 163, 170, 171, 318,
economic consultant 274 320, 330, 346, 353–415, 461,
failure 129 470, 583
funding 174 market experiment 171
Garden of Wichita 572 post-communist 170
influence of Jews 291 post-Romanov 171
Khrushchev and 123 Russian Bolshevism 518
lack of intellectual honesty 128 Russian gangster State 163
 Index   707

S Schuman Plan 331

Sacred unions 377 Schumpeter, Joseph 190, 402, 485
Sagan, Carl 443 Secession 189
Salazar, Antonio de Oliveira 328, 376 Secondary contraction 127
Salerno, Joseph 21 Second Estate Truth 136
Samoza, Anastasio 329 Secondhand dealers in ideas 160,
Samuelson, Paul 85, 205, 270, 286, 161, 231, 232, 383, 384, 470,
293, 382, 562–565, 574 482, 513
Saphir, Edward 455 Second Reich 223, 424, 405, 463
Sarah Scaife Foundation 282 Second Spanish Republic 435
Saturday Night Massacre 505 Secularism 423
Saudi Wahhabis 345 Seeckt, Hans von 516
SAVAK 425 Segregation 122, 568
Scaife Foundation 104, 179 Sejna, Jan 443
Schacht, Hjalmar 521–523 Seldon, Arthur 172, 276
Schiller, Johann Christoph Friedrich Self complacency 426
von 429 Self-control 418
Schine, David 332 Self-education 103
Schizophrenia 60, 63 Self-interest 58, 115, 389, 428
Schneiderman, New York Attorney Semi-private self-reflections 116
General 236 Senholz, Mary 275, 289
Schneider, Rene 335 Sennholz, Hans 284
Scholar’s Edition of Human Action 309 Sereny, Gitta 427, 585–599
Scholars 136, 94 childhood experiences 586
Scholastic Aptitude Test 280 Central Department for
Schools Resettlement 588
desegregating 439 The Great Lie 589
government 92 human or inhuman actions 587
government ownership 92 investigating Speer 588, 589
intersecting 162 redemption 587
operation 92 running away 594
regulation 92 understand evil 588
subsidy of 92 Sereny, Margit 585
system 9 Serfdom 93, 318, 394
understanding of the State 357 Servants 185
Schröder, Kurt Freiherr von 522, 535, domestic 186, 187
536 problem 189, 190
Schüller, Richard 591 public 187
708   Index

Service sector barons 312 Social insurance 481

Sex 289, 290, 590 Social justice 147, 401
Sexual harassment 291 concept of 405
Sexual predator 221 denigrated 398
Shackle, G.L.S. 136 fraudulent rhetoric 399
Shahanshah 425 progressive taxation and 400
Shearmur, Jeremy 88 undefinable 404
Shenoy, Sudha 27, 93, 96, 172, 182, Social market economy 148
200, 201, 207 Social mobility 7, 9, 33, 276
academic fraud 27, 32 Social order 163, 186, 189, 283, 397,
imitating mannerism 96 436, 509, 510, 515, 540
Koch-funded IHS Austrian revival Social Policy of Nazi Germany 517
40 Social Sciences 375
Sherman, Alfred 476 Social unrest 127
SHOE list 218, 232, 233 Socialism 37, 38, 56, 64, 86, 101,
Shultz, George 169 423, 485, 590, 595. See also
Sigmund Freud Archives 590 Collectivism
Slavery 394, 474 advance of 516
Smith, Adam 4, 108, 237 combat 518
Smith, Joseph 318 defence of 228
Smoking 41, 60, 88, 166, 167, 238, form of 521
239, 248, 249, 295, 483–485. rejection of 513, 515
See also Tobacco and Cigarettes religion 401
cessation, of 294 Scandinavian countries 580
Smyth-Pigott, John Hugh 258 taxation and 376
Social conditions 312 traditional beliefs 377
Social contract theory 364 war 431
Social contrivance of academic civility Socialist Roots of Nazism 534
566 Socialists 17, 44, 48, 56, 90, 99, 146,
Social Contrivance of Money, The 566 178, 253, 271, 330, 377, 468,
Social cost-benefit analysis 273 473, 474, 477, 517, 527, 528,
Social costs 99 553
Social Darwinian eugenics 433 Socialpolitic 274
Social Darwinism 324, 365, 384 Societal conflicts 312
Social Darwinist evolution 405 Society 508, 510, 510, 532. See also
Social Democrats 435, 528, 536 Mont Pelerin Society
Social differences 361 double entendre 254
Social institution 92 existing order of 371
 Index   709

free 502 Stroessner, Alfredo 332

precapitalistic 509 Stabilizers 354
Soda companies 89 Stahlhelm 516
Soda taxes 89 Stalin, Joseph 11, 53, 123, 164, 330,
Somary, Felix 462 332, 438
Sombart, Werner 384 enemies of the people 510
Sovereign producers 167 gunrunner for 205, 542
Soviet Empire 583 Tehran Conference 475
Soviet Impact on the Western World, Stangl, Franz 587
The 571 Statism 428
Soviet Union 270, 329, 437. See also Statue of Austrian Liberty 120
Doctrine Brezhnev Status
Soviet-French Treaty of Mutual achieved 7, 33, 47, 54, 167, 234,
Assistance 329 312, 389, 393, 398
Sozialpolitic 405 ascribed 8, 13, 14, 33, 47, 167,
Spain 330, 342 202, 253, 312, 334, 356, 371,
Spanish Civil War 329 376, 371, 376, 380, 391, 393,
Spanish Inquisition 314 398, 400, 398, 400, 406, 424,
Spann, Othmar 12, 57, 519, 597 434, 455, 468, 532, 589
nationalism 278 hierarchy 231
Philosopher of Fascism 56 Steele, David Ramsey 41
proto-Nazi 420 Stigler, George 33, 34, 37–39, 52,
socialism 278 209, 559–561
Spartacist uprising 323 Stille Hilfe 311
Speer, Albert 589 Stock exchange 140
Spengler, Oswald 519 Stock exchange ‘securities’ 139
Spontaneous evolution 397 Stock market 8, 328, 361
Spontaneous growth 108 Stockholm School of economics 438
Spontaneous order 10, 47, 184, 309, Stolper, Wolfgang 161
367, 374, 377 Stolypin, Pyotr Arkayevich 320
inflation and 184 Stony Brook State University of New
moral restraint and 571 York 270
neo-feudal 164, 322, 349, 353, Strategic Arms Limitation Talks 443
394, 423, 550 Suárez, Hugo Banzer 336
propaganda-based 355 Suarez, Paola 21
re-establish 395 Subsidies 5, 232, 319
special kind of 555 Suffragette movement 442
Sraffa, Piero 218 Sugar 89, 90
710   Index

Suicidal anxiety 294 income 431

Suicidal depression 166, 294, 440 increasing 327
Sun Oil Company 283 local soda 88
Superego 591 Pigouvian 35, 248
Superior white race 249 revenues 187
Supernumeraries 371 sales 368
Superstitions 573 sin 239
Supply 358 Tax-evader 147
Survivalists 391 Tax-exempt funding 367
Sutton, Antony C. 279 Tax-funded bubble 226
Swedish central bank 286 Taxpayer 269, 273, 282
Sycophancy 19, 79, 120, 550 Teheran Conference 330
Terror 17, 54, 309. See also Al-Qaeda
Terrorism 17, 347. See also Al-Qaeda
T Teutonic supremacy 201
Tactics 31, 228, 232, 248, 480–483, Thatcher, Margaret 7, 339, 342, 343,
519 364
Tame Libertarian Alliance 181 Theorie des Geldes und der
Tanaka, Seigen 142 Umlaufsmittel (Theory of Money
Tariffs 36, 86, 89, 90, 100, 229 and Credit) 277, 360, 537
oil 340 Theory of Money and Credit, The 136
protective 392, 406 Theory of Wages 575
reductions 35 Think tanks 54, 85, 217, 279, 416,
Taxation 13, 94, 328 571
cartels and 406 Third Communist International 321
discriminatory 384 Third Estate 316, 497
increased 403 Third International 118, 530
level of 368 Third Reich 91, 146, 282, 330
progressive 147, 365, 367, 406 Thomas Jefferson Center for Studies
protective tariffs 406 in Political Economy 121
pro-union attitudes 406 Thomas, Brindley 234
Tax-cutting movement 381 Thorpe, Jeremy 341
Tax(es) 5, 88, 94, 424, 458 Thyssen Catholic social thought 498
cuts 269, 367, 402, 403 Thyssen Foundation 274
dependency ratio (X/Y) 273 Thyssen, Fritz 274
Austrian 45 Time 165, 176, 275, 508, 524
evading 365 Times, The 182, 348, 359, 438
externality 10, 36, 39, 90, 164, Tinbergen, Jan 440
238, 250, 346 Titles 140, 141
 Index   711

Tobacco 238, 419, 484. See also mentality 61

Cigarettes and Smoking reorganisation 356
companies 41, 239, 347, 483, 509 Traditional Britain Group 182
crusade against 248, 249 Transfers tax-exempt 366
industry 23, 86, 106, 166, 238, Traumatic experience 577, 578
241, 295, 485 Treason Act 313
projects 296 Treatise on Money 557
industry-funded think tank 296 Treaty of Rapallo 325
Institute 23, 31, 239, 248, 297 Treaty of Tordesillas 314
Institute ‘Cash for Comments Treaty of Versailles 165, 329
Network’ 235, 239 Trials of the Germans: An Account
lobby 298, 347 of the Twenty-Two Defendants
lobbyists 64 Before the International Military
price mechanism and 248 Tribunal at Nuremberg 578
profits 166 Triple Entente 319
quit 166, 168 Troubled Assets Relief Program 348
settlement, 1998 24 Trump, Donald 24, 25, 204, 236,
use 168, 238 258, 350
Tobacco, Obesity and Fossil Fuel Entrepreneur Initiative 236
(TOFF) 3, 6, 24, 87, 350, 390 Mafia and 237
funded ‘Professors’ 243 mob dealings 237
funding 248, 274 Truth 139, 389, 487
lobbyists 242 Austrian 559
paymasters 19, 23 basic 487
products 47 symbolic 418, 573
regalia 243 Tullock, Gordon 285
think tanks 47 Turner, Henry Ashby 139, 270, 271
Torture 348 Tyranny of Gun Control, The 173
Torture: Cancer of Democracy, France
and Algeria 1954-1962 334
Totalitarianism 356 U
Totalitarian Messianism 481 Unemployment 5, 187, 381, 426,
Totalitarians 55 481, 575
Trade 127 alternative explanation 486
Trade associations 520 deflation-induced double-digit
Trade cycles 37, 385 354
Trade unions 5, 359 double-digit 6
employer 90 extensive 190, 354, 530
labour 6 general 127
712   Index

Hitler 186 V
increased 186 Value 384, 437
prolonged 127 Van den Bruck, Arthur Moeller 534
rise in 327 Vane-Tempest-Stewart, Edith 143
trade-induced structural 126 Venezuela 340
Unilateralism 41 Verbände 520
United Fruit Company 87, 170 Verein für Socialpolitik 522, 526
United Nations 166, 331, 461 Vereinigung der Deutschen
United States 9, 25, 28, 33, 40, 87, Arbeitgeberverbände 520
89, 119, 188, 213, 275, 444, Vidal-Naquet, Pierre 334
459 Videla, Jorge Rafael 16, 341
Universal compulsory education Vietnam 331
312 Vietnam War 163, 334, 434, 436
Universal Declaration of Human Viner, Jacob 293
Rights,461 569, 570 Violence 118
Universal franchise 400 Virginia Company of London 314
Universal suffrage 371 Volksgemeinschaft 541
Universal voting rights 47, 312 Voluntary retirement contributions
Universities 52. See also Academics 91
blackmail 82 Voluntary transfers 572
economics of 82 Von Papen, Franz 328, 530–533,
ideas and 226 535–537, 539
University of Central Arkansas 269, Von Schleicher, Kurt 533, 535
270 Voters 274
University of Chicago 100, 234, 282, Voting 354
309, 382, 558, 562
University of Las Vegas 280
University of Salzburg 142 W
Unmaking of Adolf Hitler, The 578 Wage(s) 5, 284
Unsuspected order 542 earners 274
Untermensch 462 earnings 360
Uruguay 337, 340 eliminating rigidities 186, 581
US Emergency Economic higher 87
Stabilization Act 348 level of 359
Utah Mormons 319 market determined 359
Utilitarianism 107, 108 money 360
Utilitarians 404 natural 359
Utopia 364, 365, 393, 502 necessary adjustments 360
 Index   713

rates 539 inherited 459

real 186, 190, 358, 403 landowners 370
reduce 126 new-feudal 402
reducing 327 Wealth of Nations 237
Wagnerism 201 Weber, Adolf 513
Wagner-Jauregg, Julius 594 Weimar Constitution 324
Wagner, Richard E. 225, 239, 248, Weimar National Assembly 323
297 Weimar Republic 133, 328, 502, 526
Waldheim, Kurt 345 Weintraub, Roy 218
Wall Street and the Rise of Hitler 279 ‘documentary evidence’ 219
Wall Street Crash 528, 583 misinform society 219
Wall Street Journal (WSJ) 23–27, 84, Welfare state 9, 168, 269, 270, 281,
236, 237, 284, 293, 343, 349, 333, 384, 416, 431, 455
508 Austrian School 200
monopoly 242 Austrians 284
Murdoch-owned 427 epigone 233
Wandervogel 294 full employment 172
Wanniski, Jude 339 Hohenzollern 429
Warfare 425 non-Austrian 26, 230, 269
State 137, 141, 223, 358, 424, social reform of 565
431, 434, 508 Wellington, Lord 396
dynastic 423 Liberties infringement 396
economic liberalism and 582 Monument 396
Habsburg 320 Popery 396
War of the Holy League 315, 365 Whigs Reform Bills 396
War party 427, 428 Weltanschauung 273
Warren, Ray 337 Whig Revolution 397
Warsaw Pact 335, 444 Whigs 8, 364, 396, 397
Wars of national liberation 419 White Revolution 425
Washington, George 16, 316 White supremacy 274, 567
Washington Post 142, 179, 221, 223, White Terror 53, 54, 116, 117, 322,
236, 243, 336, 349, 350, 387 332, 341, 354, 425, 426
Washington Times 179 atrocity 335
Watergate 336, 387, 565 Chile 554
Watts, Orval 38 dictatorship 380
Wave function 417 promoters 470, 524, 550
Wealth 13, 17, 38, 143, 165, 361, White trash 230
509 White, Lawrence 4, 21
714   Index

Wicksell, Knut 575 World War I 320, 380

Wieser, Friedrich von 11–13, 17, World War II 35, 358, 380
165, 420, 421 Wright, Emily Chamlee 103
The Law of Power 12
Wilder, Rose Lane 563
Wilhelm II, Kaiser 323, 362 Y
William IV 396 Yale University Press 433, 575, 576
William Volker Distinguished Service Yalta Conference 330
Award 424 Yasin, Abdul Rahman 125
Wilson, Harold 341 Young Turk 320
Wilsonian idealism 322
Winder, Alan 41
Wirtschaftpolitik 275 Z
World income 288 Zeppelin air raids 320
World Trade Center 125, 247, 346, Zwangswirtschaft 56
347 Zweig, Stephan 421