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The Legacy of Friedrich Von Hayek:
Fascism Didn't Die With Hitler

by Jeffrey Steinberg

September 1995

On September 3, 1995, EIR editor Jeffrey Steinberg addressed the Schiller Institute/ICLC Labor Day Conference in Tyson's Corner, Va. A transcript of his speech follows. Subheads have been added.

In the summer 1994 issue of the Heritage Foundation's Policy Review, Representative Dick Armey, perhaps the leading candidate for the honorary title of the ``Robespierre of the 1990s Conservative Revolution in America,'' delivered a glowing tribute to his intellectual mentor, Dr. Friedrich von Hayek, on the 50th anniversary of the publication of the professor's most well-known work, The Road to Serfdom. With blood dripping from his Jacobin lips, Armey proclaimed:
``Liberation is at hand.... A paradigm-shattering revolution has just taken place. In the signal events of the 1980s--from the collapse of communism to the Reagan economic boom to the rise of the computer--the idea of economic freedom has been overwhelmingly vindicated. The intellectual foundation of statism has turned to dust. This revolution has been so sudden and sweeping that few in Washington have yet grasped its full meaning.... But when the true significance of the 1980s freedom revolution sinks in, politics, culture--indeed, the entire human outlook--will change.... Once this shift takes place--by 1996, I predict--we will be able to advance a true Hayekian agenda, including.... radical spending cuts, the end of the public school monopoly, a free market health-care system, and the elimination of the family-destroying welfare dole. Unlike 1944, history is now on the side of freedom.''
Phil Gramm, Milton Friedman, and Malcolm Forbes, Jr. all joined Armey in the pages of the summer 1994 Policy Review to praise von Hayek as the man who snatched the Conservative Revolution from the jaws of defeat, following World War II.
Champions of the American System, left to right: Abraham Lincoln, Henry Carey, Friedrich List, Franklin Delano Roosevelt.
Conservative Revolutionaries against the American System, left to right: Phil Gramm, Wendy Gramm, Alvin Toffler, Newt Gingrich

Also, during the summer of 1994, another, more secretive commemorative event for The Road to Serfdom took place in Cannes, France. This was the annual gathering of the Mont Pelerin Society, the institution founded by von Hayek in 1947 to advance the Conservative Revolution by launching the radical insurgency that has now overrun the corridors of power in Washington and other capitals around the globe. The keynote speech at the Cannes event was delivered by Alain Madelin, a leading translator of von Hayek's works into French, and the man who President Chirac just fired as France's Economics and Finance Minister--much to the chagrin of London.

left to right: Milton Friedman, Friedrich Von Hayek

Writing The Road to Serfdom in London in 1944, while teaching at the British Fabian Society's London School of Economics, von Hayek was certainly in no position to pen an apology for Adolph Hitler and National Socialism. Instead, he took a sophisticated detour to arrive at the same end result. Von Hayek denounced National Socialism as a classic expression of statist, totalitarian ideology, and then argued that all forms of dirigist government involvement in the economy strangle freedom, crush the free market, and lead inevitably to Hitlerian totalitarianism.

Von Hayek slandered Friedrich List, Germany's great ``American System'' economist, and the Weimar-era German political figure, Walter Rathenau, as part of the same ``socialist'' camp as Hitler and Lenin. Von Hayek let his own Anglophiliac sentiments all hang out, as he pilloried List as the principal author of the ``German thesis'' that ``free trade was a policy dictated solely by, and appropriate only to, the special interests of England in the nineteenth century.''

He slandered Walter Rathenau, the German foreign minister whose assassination in 1923 helped break the resistance to the draconian conditionalities that the Versailles Treaty imposed on Germany, and also proved to be a key step toward the Nazi Party's rise to power:

``Ideas very similar to these [anti-individualist views] were current in the offices of the German raw-material dictator, Walter Rathenau, who, although he would have shuddered had he realized the consequences of his totalitarian economics, yet deserves a considerable place in any fuller history of the growth of Nazi ideas.''
Talk about Nazi ideas! The radical alternatives that von Hayek posed--strict monetarism, near-total deregulation, and Pan-European federalism--were all expressions of the same feudalist outlook that produced Hitler's National Socialism and the thousands of other varieties of Conservative Revolutionism after World War I.

``We shall not rebuild civilization on the large scale,'' he wrote in The Road to Serfdom.

``It is no accident that on the whole there was more beauty and decency to be found in the life of the small peoples, and that among the large ones there was more happiness and content in proportion as they had avoided the deadly blight of centralization.''
Prince Philip Mountbatten, head of the Worldwide Fund for Nature (WWF), who advocates the genocidal elimination of 80 percent of the world's population, could not have been more explicit.

The Austrian School

Friedrich von Hayek was born in Vienna in 1899. After obtaining a doctorate in political science from the University of Vienna and spending the early 1920s in New York City, von Hayek returned to his birthplace to participate in a private seminar series given by the Austrian School ideologue Ludwig von Mises.

The Austrian School had been founded by Carl Menger (1840-1921), a retainer of the Hapsburg and Wittelsbach royal houses of Austria and Bavaria, who was a fanatical opponent of Prussia's industrialization policies, which were modelled on the American System of Political Economy. Menger was the first of the Austrian free market economists to equate these American System ideas with state socialism, lumping Friedrich List together with Henri St. Simon, G.W. Hegel, and Karl Marx.

Menger trained a generation of Austrian School economists, including Eugen von Boehm-Bawerk, Ludwig von Mises, and Friedrich von Hayek. Before his brief New York City venture, von Hayek attended the Boehm-Bawerk seminars at Vienna--along with future Bolshevik leader Nickolai Bukharin. This convergence of radical free market and Bolshevik personalities under the Vienna School tutelage was not as strange as it might seem on first reflection. Boehm's insistence on the inevitability of the collapse of capitalism due to ``over-production'' caused by the reinvestment of profit into new infrastructure, research and development, and other capital improvements through the mechanism of credit, was stolen directly from Karl Marx. And Boehm fully subscribed to the superiority of the pre-capitalist feudal guild society over the modern industrial state, a theme Bukharin would elaborate in his own 1914 work, The Economic Theory of the Leisure Class.

Attack on the Renaissance

Another seminal figure in the formation of the Austrian School was the nineteenth century ``individualist philosopher'' Jacob Burckhardt, who would provide the inspiration for the pre-Nazi philosopher Friedrich Nietzsche, and his overtly Nazi successor, Martin Heidegger.

Burckhardt attacked the fifteenth century Golden Renaissance as one of the worst events in history. For Burckhardt, the pre-Renaissance feudal alliance between the oligarchy and the Church represented the high point of civilization. It was a theme that von Hayek would take up more than half a century later in The Road to Serfdom, and in another critical work, The Counter-Revolution of Science, which he published in 1952.

In that 1952 book, von Hayek, reflecting the strong influence of Burckhardt, railed against the two great achievements of the Council of Florence and the Golden Renaissance: the creation of the modern nation-state governed by principles of natural law, and the development of modern science. Von Hayek rejected the idea that the individual was capable of creative scientific discovery, describing it as a fraudulent construct, demonstrating the ``collectivist prejudices'' which he claimed were inherent in all science.

Von Hayek devoted an entire chapter of The Counter-Revolution of Science to an attack against France's L'Ecole Polytechnique, and particularly against its two greatest figures, Gaspard Monge and Lazare Carnot. What he specifically detested about the L'Ecole Polytechnique--which he ridiculed as the ``new temple of science'' and the ``source of the scientistic hubris''--was, in his own words, the L'Ecole's notion that there were ``no limits to the power of the human mind and to the extent to which man could hope to harness and control all the forces which had so far threatened and intimidated him.'' This, he denounced as ``a metaphysical fiction.''

Von Hayek didn't stop there. He then argued that the L'Ecole Polytechnique was the source of all subsequent socialist ideas, from Henri Saint-Simon, to Auguste Comte, to Karl Marx. He then went one step further. He lumped together as leading Saint-Simonists, the great American System political economists Henry Carey and Friedrich List!

Von Hayek totally rejected the principle that man was created in the image of God. In fact, he traced his own philosophical roots to the early eighteenth century Satanist, Bernard Mandeville. In a lecture he delivered at the British Academy on March 23, 1966, von Hayek lauded Mandeville as a ``master mind,'' as the inventor of modern psychology, and as the true intellectual forbearer of David Hume, Adam Smith, Jeremy Bentham, Carl Savigny and Charles Darwin.

Von Hayek argued in his Mandeville lecture that Mandeville's poem, ``The Fable of the Bees,'' was perhaps the greatest philosophical treatise ever composed. He credited Mandeville with inspiring Adam Smith's argument for the unbridled free market.

Organizing the Conservative Revolution

After attending the Von Mises seminars in the mid-1920s, von Hayek became the first director of the Austrian Institute for Business Cycle Research. Wesley Clair Mitchell during the same period founded a parallel institution in the United States--the National Bureau of Economic Research. Mitchell would go on to train Milton Friedman.

In 1931, von Hayek accepted an invitation to visit London to deliver a series of lectures at the London School of Economics. During this period, he became formally affiliated with the British Fabian Society. He eventually accepted a full-time teaching chair at LSE. And in 1939, he initiated an organization that would evolve into the Mont Pelerin Society. The earlier group, the Society for the Renovation of Liberalism, included Frank Knight and Henry Simons, both of whom would train Friedman at the University of Chicago; the American Fabian socialist Walter Lippman; Viennese Aristotelian Society leader Karl Popper; fellow Austrian School economist Ludwig von Mises; and Sir John Clapham, a senior official of the Bank of England who from 1940-46 was the president of the British Royal Society.

It was this group, with the exception of Knight, who died, that gathered--at von Hayek's initiative--at Mont Pelerin, Switzerland in April 1947 to form the Mont Pelerin Society. Among the other founders of Mont Pelerin were Otto von Hapsburg, the heir to the Austro-Hungarian throne; and Max von Thurn und Taxis, the Regensberg, Bavaria-based head of the 400-year-old Venetian Thurn und Taxis family. The explicit purpose of the society was to revive and spread the Conservative Revolutionary ideas spelled out in von Hayek's The Road to Serfdom.

The sister organization to Mont Pelerin from the very outset was the Pan European Union. Leading Mont Pelerin figures, including von Hapsburg and Walter Lippman, were pivotal figures in the Pan Europe movement. The concept of a Pan-European federation was a cornerstone of von Hayek's scheme, which demanded the replacement of the nation-state with a ``benign'' feudalist system.

Count Coudenhove-Kalergi, the founder of the Pan-Europa Union, was himself the offspring of an 800-year-old oligarchical family. The Kalergi branch had ruled the island of Crete and forged the thirteenth century treaty that brought Crete under Venetian control. The Kalergi family eventually migrated to England as part of the ``Venetian Party'' takeover of the British isles. However, as late as the turn of the 20th century, the Kalergi's Venetian salon provided refuge to such degenerate figures as the composer Richard Wagner.

In 1923, Count Coudenhove-Kalergi launched the Pan-Europa Union, an organization that won the immediate support of the very people who would install Hitler in power. The first person to join the PEU was Hjalmar Schacht, later Hitler's finance minister and the actual author of Hitler's slave labor programs. Other Nazi and fascist luminaries, including Walter Funk, Schacht's handpicked successor as finance minister, Prof. Karl Haushofer, the head of the Geopolitical Institute in Munich and a leading ideologue of the Nazi Party, and Benito Mussolini, were supporters or members of the PEU.

In 1943, Coudenhove-Kalergi wrote Crusade for Pan-Europe: Autobiography of a Man and a Movement to set the stage for a postwar revival of his vision of a feudal Europe, regardless of the outcome of the war. Even at this late date, Coudenhove-Kalergi noted with pride that ``Haushofer, Schacht, and Funk did and probably still do everything to convince Hitler of the necessity of creating some kind of European federation under German hegemony.'' At the same time, Pan-Europa enjoyed the active backing of Winston Churchill; Columbia University President Nicholas Murray Butler--the leading patron of the Comintern's Frankfurt School; Archduke Otto von Hapsburg; and Walter Lippman. The latter two, were also founders of von Hayek's Society for the Preservation of Liberalism and the Mont Pelerin Society.

The fact that Winston Churchill was an advocate of Pan-Europa would prove to be particularly significant. Following the defeat of Hitler, and the further collapse of the Hapsburgs' power, Churchill became the leading postwar patron of the Conservative Revolution. Today, the entire Mont Pelerin apparatus is an asset of the House of Windsor-led Club of the Isles.

The Mont Pelerin Society

The Mont Pelerin Society, from the outset, was to be a clandestine agency committed to implementing the ``Hayekian'' Conservative Revolution.

One of the key figures in this effort was Antony Fisher. Born in London in 1915, educated at Eton and Cambridge, Fisher was elected to the Mont Pelerin Society in 1954. The following year, he founded the Institute of Economic Affairs in London, as the first of dozens of front groups for Mont Pelerin that he would help launch. Other IEA founders included von Hayek, who at this point was at the University of Chicago; Ralph Harris, a leader of the British Eugenics Society which had earlier helped draft Hitler's race laws; Keith Joseph and Allan Walters.

When Margaret Thatcher was elected Prime Minister of Britain in 1979, the Mont Pelerin apparatus moved right into 10 Downing Street. In recognition of the Mont Pelerin Society's loyal service to the House of Windsor, Queen Elizabeth II appointed Ralph Harris a peer for life, as Lord Harris of High Cross, and knighted Antony Fisher and Allan Walters. Walters was given an office at 10 Downing Street as Thatcher's resident economic advisor.

By this time, Fisher had already furthered the Mont Pelerin subversion by establishing the Fraser Institute in Vancouver, Canada in 1974, the Manhattan Institute in New York City in 1977, and the Pacific Institute for Public Policy Research in San Francisco in 1978. In 1973, Mont Pelerin had also been instrumental in launching the Coors family think tank, the Heritage Foundation, in Washington, D.C. Following the Thatcher victory, Mont Pelerin launched an ambitious overhaul of Heritage, importing a half dozen British Mont Pelerinites in anticipation of the 1980 Presidential run by Ronald Reagan.

Launching a New Fascist International

Following the Thatcher election in Britain, Fisher also contacted von Hayek, Milton Friedman, and other leading Mont Pelerin figures and spelled out an ambitious expansion effort; in effect, the launching of a new fascist (ie. Conservative Revolution) international.

On New Years Day 1980, von Hayek wrote back to Fisher:

``I entirely agree with you that the time has come when it has become desirable and almost a duty to extend the network of institutes of the kind of the London Institute of Economic Affairs. Though it took some time for its influence to become noticeable, it has by now far exceeded my most optimistic hopes.... What I argued thirty years ago, that we can beat the Socialist trend only if we can persuade the intellectuals, the makers of opinion, seems to me more than amply confirmed. Whether we can still win the race against the expanding Socialist tide depends on whether we can spread the insights, which prove much more acceptable to the young if rightly expounded than I had hoped, fast and wide enough... The future of civilization may really depend on whether we can catch the ear of a large enough part of the upcoming generation of intellectuals all over the world fast enough. And I am more convinced than ever that the method practiced by the IEA is the only one which promises any real results.... This ought to be used to create similar institutes all over the world and you have now acquired the special skill of doing it. It would be money well spent if large sums could be made available for such a concerted effort.''
On Feb. 20, 1980, Margaret Thatcher added her endorsement to the project in a letter to Fisher; and May 8, Milton Friedman threw his support behind the international effort: ``Any extension of institutes of this kind around the world is certainly something ardently to be desired.''

To carry out this global effort, Fisher launched the Atlas Economic Research Foundation in 1981. Originally based in San Francisco, Atlas is now headquartered on the campus of George Mason University in Fairfax, Virginia near Washington, D.C. In a strategy paper written in February 1985, Fisher wrote of the need to transform the ``extremist'' anti-government, radical free market policies of the von Hayek Mont Pelerin Society apparatus into the ``new orthodoxy'' through the launching of hundreds of small think tanks on every continent. ``To inform the public, it is necessary to avoid any suggestion of vested interest, or intent to indoctrinate.... Furthermore, increasing numbers of academic experts feel free to criticize government when their research is not sponsored by government.''

Newt Gingrich with his cronies from the 1970s.

The lesson in all of this? Don't be fooled by cheap Madison Avenue propaganda. There is nothing ``American'' about Newt Gingrich's ``new American civilization,'' and there is no truth in Dick Armey's ``true Hayekian agenda.'' And, as this morning's panel amply demonstrated, there is no ``free market.'' Remove sovereign nation-states from a role in economic development and all you have is the oligarchy's cartels. The so-called Gingrich Revolution is just the latest effort by the House of Windsor's agents and useful fools to repackage the same Conservative Revolution that has brought death and destruction to civilization throughout much of the past century.

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