European Diary: Prague, November 2021

Unsurprisingly, Prague has become one of the most popular tourist destinations in Europe. It was long the capital of the Kingdom of Bohemia and the residence of several rulers of the Holy Roman Empire, and although that strange entity was neither Holy, Roman, nor Empire, its rulers certainly lived in magnificient palaces. Many of Prague’s impressive buildings date from the late Middle Ages, and the city mostly escaped destruction in the Second World War. It has a peculiar quaint charm, not least because of its many old churches, monasteries and private palaces: it is indeed called ‘the city of a hundred spires’. On the left bank of the Vltava River (Moldau), the Prague Castle towers over the city, the world’s largest ancient castle, with the picturesque fourteenth-century Charles Bridge connecting the two banks. On the right bank are the Old town, the New Town (which is also quite old) and the Jewish Quarter.

Two Meetings of the Mont Pelerin Society

I first visited Prague in 1991, attending a regional meeting of the Mont Pelerin Society, the international academy of liberal scholars that Friedrich von Hayek founded in 1947. The 1991 meeting was organised by the economist Vaclav Klaus who had been Finance Minister since 1989, when communism collapsed. He became Prime Minister of Czechoslovakia in 1992 and after the secession of Slovakia a year later Prime Minister of the Czech Republic for five years and then President for ten years, in 2003–2013. In the chapter on Milton Friedman in my two-volume book Twenty-Four Conservative-Liberal Thinkers I describe the comprehensive and successful economic liberalisation in Central and Eastern Europe which was inspired by Friedman and in the Czech Republic implemented by Klaus. My friend Birgir Isl. Gunnarsson, Governor of the Central Bank of Iceland, was my guest at the meeting, and the two of us had a good time at some of the city’s jazz clubs. A lawyer by training and a former Mayor of Reykjavik, Gunnarsson was a jazz enthusiast and an accomplished piano player.

In 2012, I returned to Prague to attend the general meeting of the Mont Pelerin Society, where Klaus, now President, played a major role. One night, he hosted an unforgettable party for us in the large gardens of his residence, the Prague Castle, in the mild September weather, with an unparalleled view of the city in the twilight. I used the occasion to chat with my old friend Dr. Edwin Feulner, who helped me a lot when I organised a meeting of the Society in Iceland in 2005. He was President of the Society in 1998–2000. I also had an interesting discussion with Professor Allan Meltzer, a renowned monetarist and author of a seminal work on the US Fed. He had recently written a book, In Defence of Capitalism. In Prague he was nominated President of the Mont Pelerin Society for 2012–2014.

On another Prague night, I had dinner with an old friend, Elisalex, whose full name is Marie Elizabeth von Wuthenau-Hohenthurm. Her husband Eduardo Helguera was a member of the Mont Pelerin Society. Elisalex and Eduardo had been my gracious hosts when I visited Argentina in 1997. Then staying in her sister’s place on the Recoleta in the centre of Buenos Aires, I noticed a lot of books about Austria under the Habsburgs. I asked the sisters about their interest in this period. The explanation turned out to be that Sophie Duchess von Hohenberg, the wife of Archduke Franz Ferdinand of Austria and shot with him in Sarajevo in 1914, was their great-aunt, sister of their maternal grandmother. Indeed, Elisalex’ father, Franz Ferdinand von Wuthenau-Hohenthurm, was named after the Austrian heir to the Habsburg throne. He had emigrated to Argentina after the First World War, arriving penniless. The great-grandfather of the two sisters had been a Bohemian nobleman and diplomat, Bohuslav Count Chotek of Chotkowa and Wognin. Elisalex was not only attending the Mont Pelerin Society meeting, but also travelling in Central Europe to take a look at some of the castles that had belonged to her family in the past. A melancholic journey, I would think.

The Platform of European Memory and Conscience

I have also been a frequent visitor in Prague in connection with my participation since 2012 in the Platform of European Memory and Conscience which has its headquarters there. The Platform was established in 2011 at the urging of the European Parliament, and its main goal is to keep alive the memory of the many victims of totalitarianism in the twentieth century, the ‘ravaged century’, as Robert Conquest called it. I learned a lot from my conversations at Platform meetings in Prague with Mustafa Dzhemilev, leader of the Crimean Tatars, Sofi Oksanen, the award-winning Fenno-Estonian novelist, Vytautas Landsbergis, former President of Lithuania, Bishop László Tökes, a Hungarian-speaking former Romanian dissident and MEP, and Professor Stéphane Courtois, who in 1997 edited the seminal Black Book of Communism which I subsequently translated into Icelandic.

On 11–13 November 2021 the Platform held its annual Council of Members in Prague, alongside an international conference on the fateful year of 1991. I delivered the keynote paper at the conference where I argued that the failure of the Bolshevik Revolution in November 1917 was not primarily because the wrong people had made it (although that was certainly true), but because the Marxist project itself was unrealistic and therefore bound to fail. Thus, Stalinism and Maoism were the inevitable outcomes of Marxism. The main reason was that without a capital market there was no way of making rational decisions about the utilisation of capital goods, as the Austrian economists Ludwig von Mises and Friedrich von Hayek had demonstrated. The heroic Prometheus seizing fire from the gods, in Marxist mythology, therefore would turn into the vicious Procrustes trying to force all his guests to fit in the same bed. I recalled the failed coup attempt in the Soviet Union in August 1991 which provided an opportunity for the Baltic nations to reaffirm their independence after decades of occupation. My old friend, Prime Minister David Oddsson of Iceland, long a firm anti-communist, used the occasion to resume diplomatic relations with the Baltic countries. I emphasised that even if the Marxist project was bound to fail economically, it was by no means certain that communists would relinquish political power peacefully, as the Soviet coup attempt in 1991 indeed showed.

(The Conservative 26 November 2023.)

European Diary: Budapest, November 2021

Budapest is one of the many European cities that breathe history. It was originally two cities, Buda and Pest, on the opposite banks of the Danube River, populated by the Hungarians who in the ninth century suddenly appeared in Europe from the Asian steppes. Pillaged by Mongolian invaders in mid-thirteenth century, Buda, the capital of the Kingdom of Hungary, nevertheless became a centre of Renaissance culture, which abruptly ended when the Ottomans occupied it in 1526. The two cities were only liberated by the Habsburgs in 1686. They were unified into one city, Budapest, in 1873 and formed the co-capital of the Austro-Hungarian Dual Empire until 1918. This was the golden age of Budapest, with many magnificent neo-classical buildings being constructed and the city becoming a vibrant, cosmopolitan centre. After the First World War, however, Hungary lost two thirds of her territory while more than three million Hungarians suddenly found themselves subjects of other countries, mainly Czechoslovakia and Romania, but also Yugoslavia. (So much for national self-determination!) The monarchy was not formally abolished, and Miklós Horthy, an Admiral in the former Austro-Hungarian Navy, suppressed a communist insurrection and became regent. The wits observed that Hungary was a monarchy without a king, governed by an admiral without a navy, in a country without a coast.

Three Hungarian Economists

Moreover, Hungary almost became a country without thinkers, because in those hard times many original and significant writers and scholars moved abroad, including the brilliant novelist and polemicist Arthur Koestler, later to become the most effective anti-communist intellectual of the Cold War, Michael Polanyi, a renowned chemist, but also a respected philosopher of science and society, and Peter Bauer, a specialist on economic development, elevated by Margaret Thatcher to the House of Lords. I knew Lord Bauer personally: we often met at meetings of the Mont Pelerin Society, an international academy of scholars founded by Friedrich von Hayek in 1947. Bauer was a persuasive critic of the aid without development which could be witnessed in poor countries, wanting to replace it with development without aid, through free trade, foreign investments and the rule of law. Incidentally, two other Hungarian economists with very different political views had in the 1960s been influential advisers to British Labour governments, Nicholas Kaldor and Thomas Balogh, both eventually elevated to the House of Lords. They were known as the ‘Budapest lords’, as Kaldor was fat and jovial and therefore obviously the Buddha, whereas Balogh was thin and unpleasant, the pest. I once met Kaldor. He denounced monetarism in a lecture at the University of Iceland on 18 June 1981 where I asked some critical questions which he politely answered. It is a different story that Kaldor’s suggestion of an expenditure tax has some merits.

Wine Tasting in Budapest

After the collapse of communism, Budapest has regained a lot of its old charm, and I visited the city in November 2021 as the guest of the Danube Institute, ably run by John O’Sullivan who was an adviser to and speechwriter for Margaret Thatcher, and later an editor at Radio Free Europe and then National Review. John, a practising catholic and a thoughtful conservative with classical liberal leanings, wrote a remarkable book, The President, the Pope, and the Prime Minister, where he argued that the Soviet Union was really brought down by the singular coincidence that three forceful and charismatic anti-communists occupied at the same time the offices of the President of the United States, the Head of the Catholic Church, and the Prime Minister of the United Kingdom, Ronald Reagan, John Paul II (Karol Wojtyla), and Margaret Thatcher. A friend of mine, Richard Bolton, a wine collector and connoisseur, was in Budapest at the same time as I. He had brought with him a few nice bottles from his large collection and we had a memorable wine-tasting afternoon at John’s place with a few sponsors of his institute.

I spent a few days in Budapest, and I would recommend the excellent coffeehouses in the centre. One of them, Scruton, is named after the English philosopher and polymath Sir Roger Scruton who has many admirers in Hungary, including Prime Minister Viktor Orbán. (Incidentally, Orbán attended the same Oxford college as I, Pembroke, but a few years later.) Budapest is however probably best known for the many thermal baths which make use of the city’s hot springs. The biggest and most popular one is Széchenyi, located inside Budapest’s City Park. It is well worth a visit. Again, one night in Budapest I went to the excellent Michelin-one star restaurant Laurel. The decor was modern and the food light and tasty while the waiters were friendly and cheerful.

When Did Conservative Liberalism Emerge?

I spoke at a meeting of the Danube Institute on 8 November about my two-volume book, Twenty-Four Conservative-Liberal Thinkers. In my talk, I identified John Locke, David Hume, and Adam Smith as the founding fathers of the conservative-liberal tradition with their defence of commercial society, spontaneously developed and based on free trade and private property. However, conservative liberalism as a separate tradition was only clearly articulated with the critical response to the French Revolution by Edmund Burke, Benjamin Constant, and Alexis de Tocqueville. The British Revolution of 1688 and the American Revolution of 1776 were made to preserve and expand existing liberties, whereas the French Revolution of 1789 and, much later, the Russian Revolution of 1917, were attempts to reconstruct society according to the ideas of Rousseau and Marx, respectively. Such attempts were bound to fail, as Ludwig von Mises and Hayek demonstrated.

I offered my opinion that Hayek was the most distinguished modern representative of this conservative-liberal tradition. His theory of spontaneous order described how coordination without commands was possible and indeed indispensable, utilising both the price mechanism and time-tested practices. Another intriguing conservative-liberal thinker was Michael Oakeshott who argued that modern man had acquired the will and the ability to make choices and that accordingly the society fit for modern man was that in which government only enforced general (end-independent) rules enabling different individuals to live peacefully together.

Is Something Amiss in Classical Liberalism?

Two scholars associated with the Danube Institute, Professor Ferenc Hörcher and Dr. David L. Dusenbury, commented on my presentation. They both criticised it from a conservative point of view, although they agreed that conservatives and liberals should stand united against socialism. It seemed to them that I was really presenting classical liberalism rather than any kind of conservatism. What was lacking in classical liberalism was however a sense of community, an awareness of the many ties and commitments people had by virtue of their identity rather than their choices. In response, I pointed out that especially Burke and Tocqueville were very much aware and in favour of such ties and commitments: they envisaged a vibrant civil society, not only an almighty state confronting separate and therefore powerless individuals. It was true, I conceded, that commercial society could dissolve or at least challenge some traditional communities, but at the same time it facilitated the creation of new communities. The best example was the family: there comes a day when you leave your old family and form a new one. Even in what appears to be a concrete, heartless jungle, such as New York City, there are many active communities, spontaneously formed, although not always visible at first sight.

(The Conservative 26 November 2023.)

European Diary: Warsaw, November 2023

Probably no major European city illustrates as well the ravages of recent European history as Warsaw, the capital of Poland. Originally a small fishing town on the Vistula River, it was the capital of the vast Polish-Lithuanian Commonwealth from the late sixteenth century until 1795 when Poland ceased to exist as an independent country, infamously having been partitioned thrice by her neighbours, Prussia, Russia, and Austria. In late nineteenth century the city nevertheless prospered and became known for its fine architecture and broad boulevards: It was even called the ‘Paris of the North’. It was then the capital of the semi-autonomous Kingdom of Poland under Russian rule, and the third-largest city of the Romanov Empire, after St. Petersburg and Moscow. In 1918 Warsaw became the capital of the new Republic of Poland and continued to flourish. However, in the battles following the Nazi invasion of Poland on 1 September 1939, large parts of the city were destroyed. Responding to the attack, the United Kingdom and France declared war on Nazi Germany, as they were obliged to do under treatises with Poland, but they did not declare war on the Soviet Union which invaded Poland from the east on 17 September, completing the fourth partition of Poland. In 1944, it was clear that Nazi Germany was losing the war. In July, Stalin’s Red Army was approaching the Vistula River. The Polish resistance movement decided to rise up. But then Stalin ordered his army to halt on the eastern bank of Vistula, giving the Nazis opportunity brutally to suppress the uprising. The Poles fought valiantly, retreating into any hidden nook and cranny of the city and even hiding in its sewage system. Enraged, Hitler ordered the city to be razed to the ground. Only about 15 per cent of Warsaw survived.

The 1944 Rising Museum

As Polish soldiers desperately fought for their lives, from house to house, the Red Army passively looked on from the eastern bank of the Vistula River. This was, according to Anglo-Hungarian novelist Arthur Koestler ‘one of the major infamies of this war’. Stalin did not want any potential challenges to the communist puppet government he intended to install in Poland after the war. He encouraged Hitler to destroy all such challenges. There is in Warsaw a magnificent museum devoted to the tragic 1944 Rising, very moving, even haunting. Its deputy director, Dr. Pawel Ukielski, is a friend of mine: He has lectured in Iceland on my invitation, and I have had the pleasure to visit him and his lovely family at their home in Warsaw. We are both active in the Platform of European Memory and Conscience which seeks justice for the many victims of totalitarianism in Europe.

Perhaps it is at least poetic justice that the enormous headquarters of the Polish Communist Party in the city centre were after the collapse of communism taken over by the Warsaw Stock Exchange which used it until 2000. Now the building complex (depicted above) is a commercial centre, and one of the businesses located there is the Freedom Lounge, run by the free-market Warsaw Enterprise Institute, a bar, a restaurant and a meeting venue. The cocktails served at the Lounge are named after leading classical liberal thinkers and leaders such as Ludwig von Mises, Ayn Rand and Margaret Thatcher.

Inspired by Friedman and Hayek

It was at the Freedom Lounge on 2 November 2021 that I presented my book in two volumes on Twenty-Four Conservative-Liberal Thinkers, in a panel with Marek TataÅ‚a from the Economic Freedom Foundation and Sebastian Stodolak from the Warsaw Enterprise Institute. Stodolak also interviewed me for the Polish newspaper Dziennik Gazeta Prawna and recorded a podcast with me. In my introductory talk, I pointed out that in the chapter on Milton Friedman in the second volume of my book there is a brief account of the rapid and successful process in which the Poles and other Central and Eastern European nations, inspired not least by Friedman and Friedrich von Hayek, returned to normalcy in the 1990s, after having had socialism forcibly imposed on them for more than forty years.

The Free-Market Solution of Environmental Problems

In the lively discussion at the Freedom Lounge following my introductory talk I emphasised that environmental problems usually were caused not by capitalism but by the absence of private property rights. Elephants in Africa were endangered because there were no owners to care for them, whereas privately-owned sheep in Iceland were plentiful. In just one stroke of the pen African poachers could be turned into gamekeepers if their communities would be given property rights to the elephant stocks. The same applied to polluted lakes and overfished rivers: Environmental protection required protectors who had a private and personal interest in the maximum long-term profitability of natural resources, be they land, fish stocks, oil wells, rivers, lakes or forests. In the case of the environment, as elsewhere, the best remedy for freedom was more freedom.

Why Iceland Crashed in 2008

Asked about the 2008 bank collapse in Iceland, I pointed out that at the time the assets of the Icelandic banks were probably as good (or bad) on average as the assets of banks in neighbouring countries, although the Icelandic bankers should have been more cautious in expanding their activities. The difference was that Iceland was denied the liquidity assistance from the U. S. Federal Reserve Board which the Scandinavian countries and Switzerland received, enabling those countries to rescue banks which otherwise would have gone under, such as Danske Bank in Denmark and UBS in Switzerland. Moreover, the British government, led by Prime Minister Gordon Brown and Chancellor Alistair Darling, closed down Icelandic-owned British banks at the same time as they rescued all other banks in the United Kingdom, invoking moreover an anti-terrorism law against Iceland, a longtime friend and ally with no military of her own. Their unprecedented action was, I suggested, motivated by their desire to demonstrate to their Scottish voters the perils of independence. Iceland’s rapid recovery after the collapse bore however witness to the soundness of the comprehensive liberalisation of the economy in 1991–2004.

(The Conservative, 26 November 2023.)

Mont Pelerin-samtökin voru stofnuð í apríl 1947, þegar nokkrir frjálslyndir fræðimenn komu saman í Sviss, þar á meðal hagfræðingarnir Ludwig von Mises, Frank H. Knight, Friedrich A. von Hayek, Milton Friedman, George J. Stigler og Maurice Allais og heimspekingurinn Karl R. Popper. Var tilgangurinn að blása nýju lífi í menningararf Vesturlanda með frjálsri rannsókn og rökræðu. Ég hef verið félagi frá 1984 og sat í stjórn 1998–2004.

Dagana 29. október til 2. nóvember 2023 héldu samtökin ráðstefnu í Bretton Woods í Bandaríkjunum um skipulag alþjóðaviðskipta, tæpum 80 árum eftir að þar var haldinn frægur fundur, þar sem Keynes lávarður og fleiri lögðu á ráðin um stofnun Alþjóðabankans og Alþjóðagjaldeyrissjóðsins í því skyni að koma á festu í alþjóðaviðskiptum. Segja má, að Bretton Woods-samkomulagið hafi brostið, þegar Bandaríkin hættu að tryggja gjaldmiðil sinn í gulli árið 1971. Eftir það hefur heimurinn notast við pappírspeninga, sem eru ekkert annað en ávísanir á sjálfar sig.

Við Ragnar Árnason, prófessor emeritus í auðlindahagfræði, og dr. Birgir Þór Runólfsson, forseti hagfræðideildar Háskóla Íslands, sóttum þessa ráðstefnu. Erindi á ráðstefnum Mont Pelerin-samtakanna eru flutt í trúnaði, en óhætt er að segja frá því, sem birst hefur annars staðar að frumkvæði höfunda sjálfra. Þrennt stóð upp úr. Prófessor Douglas Irwin lýsti með traustum gögnum hinum stórkostlega ávinningi af frjálsum alþjóðaviðskiptum. Phil Gramm, fyrrverandi öldungardeildarþingmaður og hagfræðiprófessor, sýndi fram á, að opinber gögn um tekjudreifingu í Bandaríkjunum væru meingölluð, þar eð tekjur væru ekki reiknaðar eftir skatta og bætur, sem hvort tveggja jafna þær mjög. Tyler Goodspeed, hagfræðingur í Hoover-stofnuninni, benti á, að frjáls alþjóðaviðskipti gætu orðið sumum hópum í óhag til skamms tíma, þótt þau væru öllum í hag til langs tíma. Sjálfur lýsti ég íslenska bankahruninu 2008 í löngu máli fyrir David Malpass, bankastjóra Alþjóðabankans 1919–2023, þegar við sátum saman kvöldverð.

(Fróðleiksmoli í Morgunblaðinu 2. desember 2023.)

Öfgamúslimar hata vestræna menningu. Þeir telja hana spillta: hún tryggi rétt einstaklinga til eigna og viðskipta, hvetji þá til frjálsrar rannsóknar og rökræðu, veiti þeim kost á að stunda lífsnautnir í stað bænahalds og leyfi konum og meinlausum minnihlutahópum (eins og samkynhneigðum) að njóta sín.

Munurinn á kristninni, sem er ein undirstaða vestrænnar menningar, og öfgaíslam er, að kristnin skilur að veraldlegt vald og andleg áhrif. Menn gjalda keisaranum það, sem keisarans er, og Guði það, sem Guðs er (Mt 22, 21). Samkvæmt öfgaíslam er kalífinn hins vegar í senn veraldlegur og andlegur leiðtogi, og í Íran er klerkaveldi. Kristnin viðurkennir líka, að allir séu jafnir fyrir Guði, Gyðingur eða Grikki, karl eða kona, ríkur eða fátækur (Gl 3, 28). Kenningin um sameðli alls mannkyns er einn kjarni kristninnar. Öfgamúslimar skipta fólki hins vegar í rétttrúaða og vantrúaða, og urðu vantrúaðir til dæmis jafnan að greiða hærri skatta í Tyrkjaveldi soldánsins en múslimar.

Kristur var mildur boðberi kærleiks, en Múhameð þungbúinn hermaður, sem þeysti á stríðsfáki með reidda sveðju milli Medína og Mekka. Fylgismenn hans stofnuðu víðáttumikið nýlenduveldi. Eðli öfgaíslams sést ef til vill best af fyrirheitinu, ef öfgamúslimar falla í bardaga fyrir trú sína, að þeir fari þá rakleiðis inn í paradís, þar sem fagureygar þokkadísir beri þeim dýrar veigar.

Kristnir menn bundu enda á þrælahald að eigin frumkvæði, og undan ströndum Afríku stöðvaði breski flotinn þrælaflutninga. Múslimar í Arabaríkjum hófu þrælahald hins vegar fyrr og hættu því seinna en Vesturlandamenn.

Kristnin á sér rætur í gyðingdómi. Framlag Gyðinga til vestrænnar menningar hefur verið stórkostlegt. Um tvö hundruð Nóbelsverðlaunahafar hafa komið úr röðum þeirra, en þrír Arabar fengið Nóbelsverðlaun í vísindum. Ekki munar síður um Gyðinga í fögrum listum. Öfgamúslimar fara ekki leynt með, að þeir vilja ljúka því verki, sem nasistar hófu, og útrýma Gyðingaþjóðinni.

(Fróðleiksmoli í Morgunblaðinu 25. nóvember 2019.)

315 starfsmenn Háskólans, innan við þriðjungur þeirra, hafa sent frá sér yfirlýsingu „gegn ísraelskri nýlendustefnu og þjóðarmorði“. Á meðal þeirra eru Vilhjálmur Árnason heimspekingur og Pia Hansson, forstöðumaður Alþjóðamálastofnunar Háskólans. Ekki er í yfirlýsingunni minnst á hina villimannslegu árás Hamas-liða á Ísrael 7. október 2023, þar sem þeir myrtu alla óbreytta borgara, sem fyrir urðu, brenndu börn lifandi og nauðguðu konum á almannafæri. Þessum ódæðum var fagnað ákaft í Gaza. Ekki er heldur minnst á, að Hamas-liðar tóku fjölda ístaelskra gísla og nota þá og eigið fólk sem lifandi skildi gegn varnarviðbrögðum Ísraelshers.

Þau Vilhjálmur og Pia og félagar þeirra misnota alþekkt hugtök. Nýlendustefna er, þegar ríki leggur með hervaldi veikari lönd undir sig og stjórnar, og hún einskorðast ekki við Vesturveldin. Kína og Japan hafa til dæmis verið nýlenduveldi. Saga Gyðinga í Ísrael er allt önnur. Þetta eru þeirra fornu heimkynni, og alltaf hefur búið þar eitthvað af Gyðingum, en innflutningur þeirra færðist í auka upp úr 1882 vegna Gyðingaofsókna í Rússlandi og víðar. Þá réðu Ottomanar Ísrael. Keyptu Gyðingar sér land og voru orðnir þriðjungur íbúa í landinu um 1940. Sameinuðu þjóðirnar lögðu til, að landinu yrði skipt milli þeirra og Araba. Ísraelsmenn samþykktu það, en Arabaríkin höfnuðu tillögunni og hófu stríð gegn Ísrael, en biðu herfilegan ósigur, og varð Ísrael talsvert stærra en gert hafði verið ráð fyrir. Þetta getur ekki talist nýlendustefna.

Hugtakið þjóðarmorð er notað um skipulagða útrýmingu fólks fyrir þá sök eina, hvað það er, og er skýrasta dæmið helför Gyðinga. Nasistar ákváðu beinlínis að útrýma Gyðingum. Engin sambærileg herferð hefur verið rekin gegn Palestínumönnum, og hefur þeim raunar fjölgað úr tveimur í fimm milljónir árin 1990 til 2022.

(Fróðleiksmoli í Morgunblaðinu 18. nóvember 2023.)

European Diary: Vienna, November 2021

In the spring of 1985, a few of us who had formed the Hayek Society at Oxford for discussing classical liberal and conservative ideas invited Friedrich von Hayek to dinner at the Ritz in London. At the close of the event, a group of musicians approached our table and asked if we wanted any special tunes to be played. I whispered to them that they should play ‘Vienna, the City of My Dreams’ by Rudolf Sieczyński. When our guest heard the tune, he beamed and burst out singing the song in German. He was of course only 86 years old at the time. Hayek had been born and brought up in Vienna, the magnificent city in Central Europe which had in 1683 bravely withstood an Ottoman attack and thus probably saved European civilisation. It is one of the great historical cities of Europe, and in the twilight of the Habsburg Empire it must have been a fascinating place in which to live. As Karl Kraus remarked, ‘The streets of Vienna are paved with culture, the streets of other cities with asphalt.’

Coffee in Vienna

Indeed, it is always a pleasure to come to Vienna, as I did in November 2021, going to the opera (depicted above) where the ballet ‘Peer Gynt’ by Edvard Grieg was being performed, dining in the Rote Bar at the Hotel Sacher, and spending an afternoon at Café Landtmann where Carl Menger, Ludwig von Mises and other economists of the renowned Austrian School of Economics used to have heated discussions on economic problems and political challenges. Vienna is justly famous for its coffeehouses. It was once observed that if you walked into one of them in 1903, you might have found Gustav Klimt, Sigmund Freud, Leon Trotsky, and Adolf Hitler sitting there at the same time, sipping coffee and reading newspapers, presumably at different tables.

This time I could also catch up with my Austrian friends, first and foremost Dr. Barbara Kolm, who runs the Austrian Economics Centre and the Hayek Institute as well as being Vice-Chairman of the Board in the Austrian Central Bank. She is certainly one of the world’s most effective and active intellectual entrepreneurs. It was also encouraging to see how Vienna was, like other European cities, recovering from the Covid Epidemic, as if suddenly waking up after a nightmare.

Menger’s Seminal Contribution: Marginal Analysis

In 2021, it was 100 years since Menger, the father of the Austrian School of Economics, passed away, and on that occasion I was a keynote speaker at a conference the Austrian Economics Centre held at the Central Bank. I had devoted a chapter to Menger in my two-volume book on Twenty-Four Conservative-Liberal Thinkers, and in my lecture I pointed out that his contribution to economic analysis was in many ways as seminal as that of Adam Smith. What Menger did was to break economic goods up into units, and then to find how many units of each good could equally satisfy human wants: this was the crucial concept of marginal utility. He treated all goods according to their potentiality for satisfying human wants, not according to their history, for example cost of production.

Georgism and Marxism Irrelevant

This had important political implications because it meant that two political ideas, or rather dogmas, of late nineteenth century became theoretically irrelevant, Georgism and Marxism. Georgism ascribed special significance to land because its supply was more or less fixed, but for Menger it was just another good, to be valued and priced according to its marginal utility. Marxism ascribed special significance to labour because it was supposed to have created all value, whereas Menger regarded it as a good to be priced according to its marginal utility. It was not labour that created value: it was the potentiality of labour inputs or units to satisfy human wants which created the value of those inputs. Menger’s great insight not only disqualified Marxism, but also government redistribution of income such as John Rawls and Thomas Piketty demanded on various grounds. Such redistribution distorted the information provided in an effective labour market on how different units of labour—individual skills, talents, and abilities—could best be employed to satisfy human wants.

Spectres Still Haunting Europe

I observed that nevertheless the spectres of Georgism and Marxism were still haunting Europe. For example, in Iceland there was widespread agitation for a special tax on fish stocks, a resource rent tax, based solely on the false premises of Georgism. More generally, both radical feminism and ecofundamentalism, vocally promoted in universities and the media, had much in common with Marxism. Radical feminists believed that women were exploited by the ‘Patriarchy’, paid wages below their real value (marginal price). But if true, in a competitive economy this would provide profit opportunities for those who wanted to run companies solely staffed by women. Why was this not done? Ecofundamentalists believed that nature was exploited far beyond what was reasonable. But over-exploitation of natural resources could only occur if they were not correctly priced, at the margin, and this was usually because private property rights to them had not been developed. For example, whales and rhinos were endangered and lakes and rivers were polluted if nobody owned those goods. In most cases it was quite feasible to define private property rights to such goods, take them into stewardship, appoint their protectors.

(Column in the online journal The Conservative 12 November 2023.)

European Diary: Paris, October 2021

In Paris, intellectuals are taken much more seriously than elsewehere. On French television, frequently there are long and animated debates about ideas. Books sometimes become sensations. The French would not say flippantly like the English: What is mind? No matter. What is matter? Never mind. When I was growing up in the 1950s and 1960s, the most famous Parisian intellectuals were the writer couple Jean-Paul Sartre and Simone de Beauvoir. They frequented the Café de Flore on the left bank of the Seine and were deeply hostile to the West, although they both, as existentialists, promoted the self-expression denied to individuals in communist countries. With their passing, the best-known intellectual celebrity of Paris became Michel Foucault who taught at the prestigious Collège de France, denouncing all hierarchies, however useful they might be, and adopting various left-wing causes.

Why Were They Not Cancelled?

Those three Parisian luminaries were however guided less by reason than passion, or even lust. Sartre and Beauvoir, who were themselves in an open relationship, used their exalted position in intellectual circles to exploit impressionable youngsters. Bianca Bienenfeld was a seventeen-year-old student at a French lycée (grammar school, senior high school) when she was seduced by her teacher Beauvoir who then passed her on to Sartre, while finally they abandoned her, as she describes in a memoir, A Disgraceful Affair. Natalie Sorokin was also seventeen years when she was Beauvoir’s student and seduced by her. Her mother complained to the authorities, and Beauvoir lost her job and had her teaching licence suspended. The young actress Olga Kosakiewicz had affairs with both Sartre and Beauvoir and later said, like Bienenfeld and Sorokin, that the couple left deep emotional scars. When Foucault briefly taught philosophy in Tunisia, he was reputed to have abused very young Arab boys, desperately poor and ready to accept his gifts. His defenders retort angrily that his sexual partners in Tunisia may have been older than alleged, seventeen or eighteen years. In their eyes, that seems to make all the difference.

Of course, a serious debate with those intellectuals should focus on their ideas and arguments, not on their personal preferences and private lives. Raymond Aron has subjected French leftism to a searching critique in the Opium of the Intellectuals (1957) and History and the Dialectic of Violence (1975). Sir Roger Scruton has perceptively analysed the works of both Sartre and Foucault in his Fools, Frauds, and Firebrands (2017). It is nevertheless a relevant question why Sartre, Beauvoir and Foucault have not been much affected by the present and powerful ‘cancel culture’, despite their abuse of vulnerable teenagers. I can think of at least one answer: They were anti-Establishment intellectuals of the Left, whereas the advocates of ‘cancel culture’ are mainly looking for Establishment targets.

Antipathy Towards the Rich

Today, probably the best-known Parisian luminary is the economist Thomas Piketty, the author of the best seller Capital in the 21st Century, the title being a direct reference to The Capital by Karl Marx. Indeed, the book, a massive tome, can be regarded as an updated version of Marx’ book. Gone is the prophecy about the inevitable collapse of capitalism, but what is kept is the antipathy towards the rich. Piketty repeatedly quotes from yet another famous Parisian, Honoré de Balzac, whose celebrated novel, Père Goriot, takes place in Paris during a few months in 1819–1820. Piketty claims that the story illustrates what kind of society is being developed by 21st century capitalism, with the rich becoming ever richer and wealth clinging obstinately to some families. According to him, the French nineteenth-century novelist ‘depicted the effects of inequality with a verisimilitude and evocative power that no statistical or theoretical analysis can match’. Piketty asserts that ‘inherited wealth comes close to being as decisive at the beginning of the twenty-first century as it was in the age of Balzac’s Père Goriot’ and that this novel reveals ‘the cynicism of a society entirely corrupted by money’.

The Fragility of Wealth

When I read Piketty’s book, I found these assertions surprising: Balzac’s novel could be read quite differently. I persuaded an American foundation, Liberty Fund in Indianapolis, to hold a colloquium in Paris on Balzac and capitalism on 28–31 October 2021. It took place at the Hilton Opera, but the night before it began I went with a friend to one of the best restaurants in Paris, L’Ambroisie in Place des Vosges, a Michelin three-star restaurant. The food was exquisite, very French indeed, and to my quiet amusement the waiters were just as arrogant as the intellectuals on the Left Bank.

In the lively discussion at the colloquium in the next few days, other participants and I pointed out that the chief protagonists of Balzac’s novel are all in thrall to their passions, not to money except as a means. Old Goriot has transferred almost all his wealth to his two ungrateful daughters and lives modestly in a boarding house. One of his daughters desperately needs money to pay the gambling debts of her lover. The other daughter has seen her husband use her dowry on speculation, with no certainty that its value will be maintained or increased. Another resident in the boarding house, Vautrin, turns out to be a runaway prisoner who had assumed responsibility for a crime he had not committed, because he had passionately loved the real perpetrator. Thus, the novel is really about the fragility of capital and the frailty of human beings. They are not corrupted by money but rather by passions which they cannot completely control. Indeed, Balzac refutes Piketty.

(Column in The Conservative, November 2023.)

European Diary: Akureyri, October 2021

Most of Iceland’s population live in the southwestern corner of the country, in the capital Reykjavik, and in towns nearby. The only sizeable town elsewhere is Akureyri in the north of the island, a busy port, the site of flourishing fishing firms and a service centre for the adjacent rural regions. It is a nice little place, peaceful and pleasant, although an unkind (and unfair) joke about it is that it is a wonderful place until the locals wake up. The region has been inhabited since the settlement of Iceland in late ninth century. Its first settler was Helgi the Skinny Eyvindsson who was of Swedish and Irish origin. He got his nickname because his parents had for two years left him in the Hebrides with people who so starved him that when the parents picked him up they could hardly recognise him. Helgi the Skinny was a nominal Christian unlike most other Icelandic settlers, but he prayed to the heathen god Thor when at sea or in battle.

Aquinas’ Politics of Imperfection

On 6 October 2021, Akureyri was the venue of an international conference on policing and crime where I gave a paper. My topic was so-called victimless crimes which I argued should not be illegal, although some of them might be vices. In my support I quoted one of the eminent philosophers I discussed in my recent two-volume work, Twenty-Four Conservative-Liberal Thinkers, St. Thomas Aquinas (Summa Theologiae, I, ii, Question 96, Article 2): ‘Now human law is made for the multitude of men, and the greater part of this multitude consists of men who are not perfected in virtue. And so not all the vices from which virtuous men abstain are prohibited by human law. Instead, the only vices prohibited are the more serious ones, which it is possible for the greater part of the multitude to abstain from—especially those vices which are harmful to others and without the prohibition of which human society could not be conserved. For instance, homicide and theft and other vices of this sort are prohibited by human law.’

Prostitution and Pornography

In this connection, I discussed four somewhat disreputable activities, prostitution, pornography, insider trading and tax avoidance. Radical feminists hold that prostitution and pornography are not victimless: on the contrary, they say that both these activities involve the degradation and exploitation of women and should be banned. In my talk, I agreed with them that prostitution was degrading, but not only for women but rather for all who participated in them. Aquinas would have said that they were vices from which virtuous men should abstain. But this did not necessarily mean that they should be prohibited by law, I added. Probably, the consequences of prohibiting prostitution and pornography were worse than the consequences of tolerating and quietly monitoring these activities. I also pointed out that the internet had largely removed the rogue intermediaries who had in the past oppressed prostitutes and porn actresses (and actors). Now sex workers were often in direct contact with their customers online. This at least weakened the argument from exploitation. The limited resources of the police should be spent on suppressing vices harmful to others, as Aquinas had sensibly suggested.

Insider Trading

In my talk, I observed that the widely-held idea that insider trading was harmful was not necessarily plausible. How could you lose money on stock you did not own? It was wrong, I submitted, to conceive of it as a loss for someone if he or she did not make the same profit from trading in stocks as an insider did. Of course the insider information should be obtained legally and not fraudulently, not by breach of trust. Moreover, insider trading arguably increased efficiency in that it hastened the adjustment of the market to new information. It tended to correct situations in which some companies were valued below or above their real worth. I mentioned a famous example Aquinas used about a merchant from Alexandria who arrived in Rhodos after a famine. He brought a lot of desperately needed wheat on his ship, but he knew unlike the islanders that more ships were on their way. Did he have to reveal this ‘inside’ information? Aquinas replied: No. The merchant would be generous if he did so, but he did not act unjustly by not disclosing his educated guess that the supply would soon increase. Generosity might be a moral duty, but it was not, and should not be, a legal duty.

Tax Avoidance

In my talk I emphasised the distinction between tax evasion and tax avoidance. Tax evasion was usually both immoral and illegal, and it was plausible to regard it as indirectly harmful. Thus it was not only a vice, but should also be regarded as a crime, at least according to Aquinas. On the other hand, there was nothing wrong with tax avoidance when it simply meant that you tried not to pay more in taxes than you were obliged to do. It was no more wrong than when you wanted to travel and you searched online for the best airfare. Those who criticised it seemed to assume that the given level of taxation was optimal, which was hardly ever the case. Indeed, the possibility to move from one country to another was an indispensable source of information about the preferences of taxpayers, how much they wanted government to provide of public goods. It was also a necessary constraint on government. Tax avoidance was not only about the mobile rich transferring assets to low-tax countries. It was also about ordinary people responding to a heavy tax burden by switching from work to leisure. The main reason, for example, that the Europeans worked fewer hours than the Americans was that their income was taxed much more. Excessive taxation shrunk the tax base. I concluded that tax avoidance was not only useful, but that it was also a virtue rather than a vice, because it was an instance of thriftiness. Needless to say, some in the audience gasped at my audacity.

(Column in The Conservative November 2023.)