Europe’s neo-liberal road began at Mont Pélerin

By Luciano Gallino

When I open the windows in the morning these days, my gaze inevitably falls on Mont Pélerin, beyond the lake. It is a hill a few kilometres from Switzerland’s Montreux, known since the twenties for good hotels and a good climate. It is also the birthplace of  the Mont Pélerin Society in 1947, when neoliberalism began the long march to a totalitarian hegemony over the economy and politics of Europe. Today we are experiencing the dramatic consequences. Gramsci would have been fascinated by the strategy adopted by the Mont Pelerin Society to win hegemony, which the father of Italian communism saw as a power exercised with the consent of those subject to it. Rather than being yet another foundation or a think tank specializing in promoting this or that branch of the economy, the Mont Pélerin Society chose to build a large-scale “collective intellectual”.

When Friedrich Hayek in 1947 called together a small group of economists and other intellectuals (including Maurice Allais, Walter Eucken, Ludwig von Mises, Milton Friedman and Karl Popper) to found the society, there were only 38 members, for the most part European. In the late ’90s they had become a thousand, scattered throughout the world, although the majority continued to come from Europe.

Rooted mostly in academia, this collective intellectual did not draft ambitious manifestos (the “intent” formulated in ’47 at the time of its foundation amounted to just one page, you can also read it today on the website of Mont Pélerin Society ), or large projects of institutional reforms. Instead it produced thousands of essays and books, many to a remarkable level, which all revolve around the issues that members of the society saw as the essence of neo-liberalism: the free movement of capital; the unquestioned superiority of the free market; the brutal reduction of the role of the state to the builder and guardian of the conditions that allow the widest possible dissemination of both.

Thanks to this vast and detailed work, around 1980 economic doctrines and neo-liberal policies became embedded in universities and governments. It was not of course only the Mont Pelerin Society which was responsible for this,  but its role has been overwhelming. The neo-liberal historian Dieter Plehwe was not exaggerating when, years ago, he called society  “one of the most powerful bodies of knowledge of our time.”

However, its members did not limit themselves to publishing articles and books. Many of them have come to occupy central positions in the apparatus of the governments of a number of countries. At the time of the Reagan presidency (1981-88), about more than a quarter of the eighty  economic advisers of the President were members of the Mont Pélerin Society. The financial liberalization decided by the Thatcher government in the first half of the 1980s, which has changed the face of the British economy, were developed largely by the Institute of Economic Affairs, a subsidiary of the society founded and directed by two partners, Antony Fisher and Ralph Harris. The captains of industry in France and Germany have always been numerous among the ranks of the Mont Pélerin Society, entertaining close relationships with members in the world of politics.

The Italian participation in the society was significant. Among its first members there was Luigi Einaudi, the former Italian president and famed intellectual. Two Italians were presidents of the society: Bruno Leoni  (1967-68) and Antonio Martino  (1988-1990), which continues to be one of the partners, along with Domenico da Empoli, Alberto Mingardi, Angelo Maria Petroni, Sergio Ricossa.

Two characteristics strongly mark the hegemony of the Mont Pélerin Society on the culture and the practice of European states in economic policy since the ’80s. The first is the scale of the victory over every other school of thought – especially in economy. Keynesianism, from the beginning, the arch enemy of the Mont Pélerin Society, has been reduced to insignificance, and with it the ideas of Schumpeter, Graziani and Minsky. They survive here and there in some university departments, but in the economic policy of the EU they count for nothing. Thanks to the liberalization inspired by the culture of the society, the financial system dominates politics as well as the economy  – as demonstrated once again in the case of Greece.  The public systems of social protection are in a state of advanced demolition: they have no use, rather they are harmful, because each individual, according to the neo-liberal culture, is responsible for his own fate. Schools and universities are being reformed, from Germany to Italy, to operate as businesses. Wilhelm von Humboldt  must be turning in his grave.

The second characteristic of the neo-liberal economic culture of the Mont Pélerin Society is its incredible resistance to the heavy rebuttals imposed by reality these past 15 years. The early 2000s saw the collapse of the dot.com companies, glorified by neoliberal economists, that in nine cases out of ten were gimmicks on which stock exchanges, in the name of the hypothesis that markets are always efficient, bet billions of dollars. The latter 2000s instead witnessed the near collapse of the world economy, deliberately undermined by finance, based on millions of mortgages that families did not have the means to repay.

After 2010, the neo-liberal economists and the politicians they indoctrinated, have imposed on the people of the EU austerity policies that proved a total failure in the opinion of their own promoters. In summary, economists in the mould of the Mont Pélerin Society produced the Great Depression; they did not see it coming; they have not been able to explain it, and proposed remedies which have worsened the situation. In spite of everything, they continue to occupy the heights of economic policy in the EU.

If one could ask Gramsci why the European left, in its various guises, and starting with that of Italy, has been swept away, without mounting resistance, by the hegemonic neoliberal offensive started in 1947 from Mont Pélerin. Perhaps he would answer ‘because they did not know how to to imitate it.’  In response to the flood of publications seeking to affirm the idea of ​​efficient markets they have not been able to oppose with anything like this, proving with solid arguments that models which seek to demonstrate this idea are based on entirely inconsistent assumptions.

Also, Gramsci might well have continued, where are your articles and books, addressing both the experts and politicians and the public at large, to seek to engage every day, with solid arguments, the technical superiority, economic, civil, moral, of publicly owned and run health services over those run by private companies; public pensions over private pensions, in the face of daily attacks at the Big Media and politicians, generally based on incorrect data; of the record on private companies in innovation and development, now and in the entire second half of the twentieth century; the economic and political absurdity of the privatization of common goods?

Since nature abhors a vacuum, the cultural, political and moral vacuum of the Left was gradually filled by successive cohorts of readers, voters, teachers, party officials and the European institutions, educated by the collective intellectual founded by Mont Pélerin Society. Consensus needs to be built, and the Mont Pélerin Society has shown it is able to do it. The Left does not even try.

Micromega

Translation by Revolting Europe