Ch. 2: Academic White Supremacy
Part 4: The Ideas - Austrian Economics: A Gateway to Extremism
The 2017 Mises University not only featured several Koch-funded academics, but also several glimpses into the dark implications of the Mises Institute’s Austrian Ideology. Mises Institute staff made overt Neo-Nazi appeals to “blood and soil,” referenced political assassination using the popular Alt-Right slang reference to Augusto Pinochet’s “helicopter rides,” and described the global advancement of radical Alt-Right ideology.
The Mises Institute is devoted to the propagation of Austrian economics, better known as "anarcho-capitalism" (what Austrian economists claim is “classical liberalism”), which seeks a full and final erosion of government. Some have already begun to observe how this ideology creates a “libertarian to Alt-Right pipeline,” a slippery slope from free-market economic ideas into violent anti-leftism.
The year after the League of the South was founded, a Koch funded professor at George Mason University, Peter Boettke, described the spread of Austrian economics through Koch’s Institute for Humane Studies and the Mises Institute:
Austrian economics is still not on the required reading list at Harvard, but it has experienced great growth in terms of thought and influence. Formal instruction in Austrian economics is no longer limited to Grove City College. Many colleges across the land now offer explicitly or implicitly Austrian courses at both the undergraduate and graduate levels. Some two dozen faculty at more than a dozen colleges and universities come immediately to mind, and no doubt many more would figure on a complete list. Moreover, the Ludwig von Mises Institute, with its summer “Mises University” program, FEE and the New York University Austrian Economics Program with their joint Advanced Seminar in Austrian Economics, and IHS, with its Liberty and Society seminar program, continue to introduce and cultivate student interest in Austrian scholarship. (FEE.org, 1995)
Peter Boettke was a student of Grove City College professor, Hans Sennolz, who was a student of Ludwig Von Mises, a Mises Institute scholar, and longtime contributing editor of the John Birch Society’s publication, American Opinion. Sennholz chaired the Grove City College economics department for 37 years (North, 2007). Boettke has been a contributor to Mises Institute publications, a Mises Institute apologist, and leader in Koch’s Association for Private Enterprise Education. In a 2010 APEE publication, Boettke’s aims for the Austrian, or “classical liberal,” movement were quoted by Mises scholar, Ed Stringham:
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 (Stringham, 2010).
Paleo-Libertarianism: Original Alt-Right
After founding the Ludwig von Mises Institute (LVMI) in 1982, Murray Rothbard and Lew Rockwell were charter members of the LOS in 1994, along with several other founding members Mises Institute.
After white nationalists murdered Heather Heyer at August 2017 “Unite The Right” rally in Charlottesville, Virginia, the LOS President Michael Hill re-affirmed his participation without apology, asserting that “[o]pen cooperation with other groups on the hard right can be to our benefit, and we shall continue to pursue those opportunities to cooperate with them."
This is a clear description of a pan-right (“Unite the Right”) strategy, which was pioneered by the openly racist efforts and newsletters by Mises Institute/LOS founders, Lew Rockwell and the late Murray Rothbard. Rothbard was a longtime collaborator of Charles Koch throughout the 1970’s including co-founding the Cato Institute, before the relationship deteriorated and Rothbard became a fierce critic of Koch.
Rothbard is heralded as the father of modern anarcho-capitalism; his “paleo-libertarianism” involved coupling his anti-state economic positions with hard-right social conservatism in order to build the largest possible political coalition against the state.
Even members of Koch’s academic network have pointed out the problematic ideology produced by the Mises Institute’s paleolibertarian agenda. Steven Horwitz, a Koch-funded professor at Ball State University, called the Mises Institute “a fascist fist in a libertarian glove,” explaining how an:
attempt to court the right through appeals to the most unsavory sorts of arguments was a conscious part of the “paleolibertarian” strategy that Lew Rockwell and Murray Rothbard cooked up in the late 1980s. . . The paleo strategy was a horrific mistake, both strategically and theoretically, though it apparently made some folks (such as Rockwell and Paul) pretty rich selling newsletters predicting the collapse of Western civilization at the hands of the blacks, gays, and multiculturalists. . . There was way more than the Ron Paul newsletters. There was the Rothbard-Rockwell Report, which was another major place publishing these sorts of views. They could also be found in a whole bunch of Mises Institute publications of that era. It was the latter that led me to ask to be taken off the Institute’s mailing list in the early 1990s (BHL, 2011):
The Mises Institute certainly practices what it preaches when it comes to marrying hard-right ideologies with libertarianism. Several Mises Institute scholars have had long-standing ties to white nationalist and anti-immigrant hate groups.
Mises scholars like Hans Hermann Hoppe and Paul Gottfried, are contributors to the white nationalist hate group VDARE., so named after Virginia Dare, the first English child born in what became Virginia. Ironically, VDARE is notoriously anti-immigrant.
Paul Gottfried is also a contributor to American Renaissance, a white nationalist hate group with close ties to neo-nazis. Another frequent collaborator with American Renaissance, Joseph Sobran, was a frequent contributor to Mises Institute publications and, as eulogized by Jeffrey Tucker, was a “good friend” of the Mises Institute “without a malicious bone in his body.”
Gottfried is credited for inspiring Richard Spencer, and even being the first to coin “Alternative Right,” now “Alt-Right.” Richard Spencer is now the president of the white nationalist think-tank, the National Policy Institute. Spencer was invited to participate at Hans Hermann Hoppe’s international gathering of the Property and Freedom Society in 2010 alongside Mises scholars Hoppe, DiLorenzo, Gottfried, and Hunt Tooley.
PayPal founder and Facebook board member Peter Thiel presented at Hans Hermann Hoppe’s Property and Freedom Society conference in 2016, alongside Hoppe and other VDARE contributors like Hoppe and Sean Gabb, as well as Koch-funded economist Walter Block.
Neo-Reactionary “Helicopter-ism”: Libertarian-Fascism and the Violent Alt-Right
Mises Institute scholar Hans Hermann Hoppe is arguably one of the most popular figures in the global libertarian movement, and in particular, with the Alt-Right. He considered by some Mises scholars to be “the greatest living embodiment of [Murray] Rothbard’s thought” (video at 1:30).
In a candid interview at the 2017 Mises University (since taken offline), Mises Institute staff proudly described him as one of the “most dangerous thinkers” in the world.
This is because Hoppe’s most recent surge in popularity has come from his 2001 book “Democracy: The God That Failed.” Hoppe describes a reactionary theory of conflict he declares that for a libertarian social order to be maintained, people with beliefs that conflict with their concept of “private property” (namely a right to discriminate), would have to be disallowed from existing within libertarian communities.
One may say innumerable things and promote almost any idea under the sun, but naturally no one is permitted to advocate ideas contrary to the very covenant of preserving and protecting private property, such as democracy and communism. There can be no tolerance toward democrats and communists in a libertarian social order. They will have to be physically separated and removed from society.
Likewise, in a covenant founded for the purpose of protecting family and kin, there can be no tolerance toward those habitually promoting lifestyles incompatible with this goal. They – the advocates of alternative, non-family and kin-centred lifestyles such as, for instance, individual hedonism, parasitism, nature-environment worship, homosexuality, or communism – will have to be physically removed from society, too." (Democracy: The God that Failed, pg 218).
He clarifies the “correct premise” that “in order to maintain a liberal social order, “it is necessary that its members be in the position to pressure (by threatening or applying violence) anyone who does not respect the life and property of others to acquiesce to the rules of society” (Hoppe, 2001, pg 226).
Hoppe‘s “physical removal” has become a euphemism for political assassination of leftists.
A similar euphemism is “helicopter rides,” which is a reference to the political assassinations committed by U.S. backed Chilean dictator Augusto Pinochet. This has become so normalized in Alt-Right/Neo-Nazi communities that people like Christopher “the Crying Nazi” Cantwell sells merchandise featuring dead bodies hanging or being thrown from helicopters, with slogans “I ♥ Physical Removal” and “Physically Remove Democrats” (the latter accompanied by a long Hoppe diatribe).
The main source of Hoppe’s popularity has been through the spread of internet memes depicting his violent economic ideology, known as “Hoppe Snake Memes.”
Many take the form of advertisements for a Hoppe’s “physical removal” service or adding “so to speak” after Hoppe’s words. Recurring characters and symbols include: Hoppe (often with a weapon), Pepe the frog, an anarcho-capitalist rattlesnake, characters are often wearing Pinochet’s hat, the yellow-and-black anarcho-capitalist flag, and Nazi flags.
Tropes include: reading Hoppe’s Democracy, deciding communists “aren’t people,” murdering communists with helicopters or otherwise. One recurring feature included teaching economics with a graph that shows “economic growth” as a function of the mass murder of “marxists” from helicopters. Other economists featured in the memes include Hans Hermann Hoppe, Murray Rothbard, and Ludwig von Mises (often crossed with the mascot of the Alt-Right, “Pepe” the frog).
Reddit’s page for Hoppe memes, r/physical_removal, was banned “due to a violation of our content policy, specifically, the posting of content that incites violence.”
Mises Institute’s Tho Bishop gave an interview during the 2017 Mises University, where he discussed the popularity of Hoppe’s ideology:
It’s amazing to see the impact that memes can have in spreading these ideas. I remember talking with a fellow here. He was involved in Students for Liberty France, and he was talking about how he was either ignored, or kind of seen as a scary figure amongst many people in France, just because people have taken one line out of context and just ran with it. And so with the Great Triple H removal service page, they expanded on it, they made it a joke. People had fun with it. And really, his ideas today, he’s one of the great thinkers in this decentralized political structure environment, one that we desperately need, and so he is now being read more and more because [of] meme magic. It’s a beautiful thing. I’ve never quite appreciated the full intellectual firepower that memes have until this. It’s pretty cool. . . He’s one of the most dangerous thinkers in America, or in the world (Audio, transcript).
During that same interview, a Mises Fellow from the London School of Economics, George Pickering, remarked on Hoppe’s significance and upcoming visit:
there’s basically two kinds of people in economics. There’s Austrian economists, and there’s commies. And you know whose side you want to be on. So sign up to the Mises Institute's newsletters, think about heading on over to that event in New York, October, see the man himself, Hans Herman Hoppe.
To which Bishop replied “It’s the best way to avoid a future helicopter ride.” The interviewer, Taleed Brown, a 2017 Mises fellow, continued:
Yea, exactly. Speaking of helicopter rides and the commies . . I’m sure you guys are aware of the recent emboldening of anti-fa[scists], and different communist groups like them.
Brown is a young libertarian in the Alt-Right that has been heavily influenced by the Mises Institute. He worked for a time at the Foundation for Economic Education, often boasts of his close personal relationship with Jeffrey Tucker. He is also a Twitter and Youtube personality, ThatGuyT, where he discusses his anti-communist, anti-feminist ideology, even going so far as to embrace “race realism,” a modern term for the eugenicist belief that some races are biologically inferior to others.
Brown has stirred up controversy on Twitter posting “I might be a fascist,” and then, “Just to clarify, I’m not actually a fascist, just a very principled libertarian who’s ready to start winning. Fashies are friends.”
This led to his most alarming video to date is entitled “The Case for Libertarian Fascism,” where he suggest that “homogeneity doesn’t really benefit society if it’s filled with Communists,” and that ”one of the strengths of libertarian fascism” would be “securing a free society via collective investment and determination in the preservation of our [libertarian] principles. He compares this to “left-libertarianism” who are more “about being a suicidal philanthropist.”
Brown concludes that ”If fascists are willing to assist in pushing back against this wave of cultural Marxism that left libertarians are complicit in endorsing, I mean, who am I to deny a soldier his rifle?” (Brown, 2017). Other videos include “The Necessary Oppression of the Left,” which itself links to other violent Alt-Right videos.
In 2018, Taleed Brown’s interview at 2017 Mises University was taken down from his Youtube page. This was most likely in response to a controversy involving a Mises researcher, Chase Rachels.
The Alt-Right/Mises Feedback Loop
In his 2018 book, White, Right, and Libertarian, Chase Rachels demonstrates another way that Mises Institute free-market scholars are aiding and abetting extremism, namely, intellectualizing the violent ideology of the Alt-Right and Hoppe memes. Rachels argues that “the alternative right (Alt-right) and libertarianism are revealed as complementary movements worthy of being aligned.”
In a letter Rachels wrote to Hans Hermann Hoppe, he described the book’s purpose in hopes that Hoppe would agree to write the foreword. Rachels expressed his aim to “entice the Alt-Right to adopt the political/economic theory of genuine libertarians, and libertarians to adopt the cultural positions of the Alt-Right.”
Hans Hermann Hoppe agreed to write a forward to the book.
Hoppe had already written the forward when Rachel’s cover art was leaked, featuring four dead bodies hanging from a helicopter. The bodies hanging from the helicopter each had symbols for heads, depicting a communist, a muslim, an anti-fascist, and a feminist.
Another intellectual interpreter for the Alt-Right is League of the South co-founder Jeffrey Tucker. Tucker was a longtime VP of the Mises Institute, Hoppe’s U.S. homebase. Compared to the hard-right and racist positions he defended with the League of the South, the Rockwell/Rothbard Report, and Ron Paul’s racist newsletters, Tucker is now a celebrated figure in the youth-oriented/Koch-funded “Liberty Movement.”
In a Facebook post, Tucker described his 2017 book Right Wing Collectivism: The Other Threat to Liberty as an effort to show how:
The media tends to treat the alt-right very superficially and gives the wrong impression. It is rendered as a movement of hateful misfits with a weird and inexplicable loathing of blacks, Jews, and women, a group that dares say things that violate well-established civic codes, basically un-PC bad boys, which is exactly how the alt-right would script it.
The thesis of my new book is that this view completely neglects that the political and philosophical tradition behind their worldview is not a random assembly of hates but a rather consistent take on social and political theory, formed in fierce revolt against laissez-faire liberalism from 1820 onward, with predictable tropes that were accumulated and tried throughout the 19th century and culminated with full force in the interwar period as the resentment against modernity, population mobility, and mass prosperity reached a fevered pitch. (Jeffrey Tucker Facebook post September 19, 2017)
Tucker describes the Unite the Right strategy as "right-Hegelianism," offering highly valuable academic feedback and political weight to the Alt-Right, framed as a work of warning about a movement that is:
as powerful a force for state centralism and violence as communism on the left. Indeed, it is a different species of socialism, shorn of features of the Marxian brand that so upsets the lower and middle classes, and therefore it can be more politically dangerous because it pushes values generally accepted by the cultural, linguistic, and racial majority populations. (Tucker Facebook post September 19, 2017)
These ideological developments at the Mises Institute are made more startling by when one considers how many economists celebrated in the Koch network - including Milton Friedman, Ludwig Von Mises and Friedrich von Hayek - have exhibited a distinct pattern of sympathy, if not direct support, to fascist dictatorships who have overthrown of a democracy, resulting in the political assassination and mass arrest of socialists.
Neo-Nazi Rhetoric for Free-Markets: “Blood and Soil”
A recent New York Times profile on American Nazi Tony Hovater cited the ideological influences that led him to violence:
Ask him how he moved so far right, and he declares that public discourse has become “so toxic that there’s no way to effectively lobby for interests that involve white people.” He name-drops Murray Rothbard and Hans-Hermann Hoppe, architects of “anarcho-capitalism,” with its idea that free markets serve as better societal regulators than the state.” (NYT, 2017)
The President of the Mises Institute, Jeff Deist, in the opening remarks of Mises University, a week-long summer school with over 150 students in attendance, delivered a speech entitled For a New Libertarian. He calls for libertarians to be inclusive of farther right ideologies, and take advantage of the resurgence of far-right nationalism:
Libertarians are busy promoting universalism even as the world moves in the other direction. Trump and Brexit rocked the globalist narrative. Nationalism is on the rise throughout Europe, forcing the EU to defend itself, secession and breakaway movements exist in Scotland, in Catalonia, in Belgium, in Andalusia, even in California. Federalism and states’ rights are suddenly popular with progressives in the US. The world desperately wants to turn its back on Washington and Brussels and the UN and the IMF and all of the globalist institutions. Average people smell a rat. We should seize on this. (Diest, 2017)
Diest closes his speech by name dropping neo-reactionary bloggers, challenging listeners to consider the use of violence, and making an overt appeal to neo-Nazis:
What would you fight for? The answer to this question tells us a lot about what libertarians ought to care about. By this I mean what would you physically fight for, where doing so could mean serious injury or death. . .I’m sure all of us would fight for our physical persons. . . We might fight for property too, maybe not as fiercely. We certainly would protect our homes, but that’s because of the people inside. . . How about your wallet? How about someone stealing 40% of your income, as many governments do? Would you take up arms to prevent this?. . .How about an abstraction, like fighting for “your country” or freedom or your religion? This is where things get more tenuous. Many people have and will fight for such abstractions. But if you ask soldiers they’ll tell you that in the heat of battle they’re really fighting for their mates, to protect the men in their units--and to fulfill a personal sense of duty. In other words, blood and soil and God and nation still matter to people. Libertarians ignore this at the risk of irrelevance. (Diest, 2017)
“Blood and Soil” is a well known Nazi phrase, alluding to a key part of Nazism that maintains a mystical connection between the Aryan blood of Germanic people and the “fatherland,” i.e. between “blood and soil.” Scholars have examined how Nazis used a “concrete body language“ exemplified by continuous, unceasing reference to ‘the blood,’” in an effort to create a sense of physical unification and moral identity among the German people. Other key phrases included the “voice of the blood,” “the song of my blood,” etc. (Weinstein, The Dynamics of Nazism, 1980, p.136).
This rhetoric was part of the Nazi’s successful cultural campaign invade neighboring countries, including the full annexation of Austria. It is troubling that von Mises would celebrate this unification strategy so soon after he fled World War II Europe.
On August 11, 2017, the League of the South joined Neo-Nazis and other white nationalist groups, chanting “blood and soil” at the University of Virginia at the deadly “Unite the Right” rally in Charlottesville, Virginia.
In February of 2018, the League of the South’s Michael Hill clarified that despite the fact that the LOS is technically a Southern Nationalist organization, by ‘fighting to preserve the blood and soil South and her people, we are indirectly serving the cause of a larger White nationalism” (Hill, 2018).
Hill makes an appeal to expanding their concept of “blood and soil” in order to extend their membership to extremists everywhere:
we dare not isolate ourselves and ignore the plight of our White cousins elsewhere—in other States, Canada, Europe, southern Africa, Australia, New Zealand, and wherever else our people may live. Yes, they are our racial cousins. While they might not be as close and as dear to us as our fellow Southerners, they are still part of our larger racial/ethnic family. And we must treat them as such. . . [W]e ought to seek them out as allies, supporters, and often as actual members. . . [Some] may simply identify with the South in fundamental ways despite having no native connection to Dixie. We should embrace them as our extended family, meaning that we should elicit their support and even their membership in our organization if they show a willingness to serve the primary cause we serve: the survival, well-being, and independence of the Southern people (Hill, 2018).
Less than a week after the Mises Institute President Jeff Deist made his “blood and soil” speech, the Chair and Vice Chair of the national Libertarian Party, Nicholas Sarwark and Arvin Vohara, publicly condemned Deist:
at the current time, Mises Institute has been turned into a sales funnel for the White Nationalist branch of the Alt Right. I'm not talking about the troll or general asshole side of the alt right; I'm talking about the white nationalist side. The authoritarian, racist, nazi side. Like any effective cult, Mises will continue to put out useful information as bait. But that will be just the bait to lead unsuspecting people down this path of collectivist, racist lunacy (Vohra, August 14 2017).
Echoes of Mises’ “Voice of the Blood”
The Nazi rhetorical strategy was generalized and promoted by Ludwig von Mises in his 1949 book Human Action. He describes how the concept of the “voice of the blood” is something that can be generalized for use in compelling human action:
The voice of the blood is not an original and primordial phenomenon. It is prompted by rational considerations. Because a man believes that he is related to other people by a common ancestry, he develops those feelings and sentiments which are poetically described as the voice of the blood. The same is true with regard to religious ecstasy and mysticism of the soil. (Mises, 1949)
Mises’ generalized “blood and soil” rhetoric appears to be seeing a resurgence from the Mises Institute at a time when violent white nationalism and Neo-Nazism is on the rise in the U.S.
On July 8, 2017, LOS co-founder and longtime Mises Institute Vice President, Jeffrey Tucker, rehashed Mises’ argument that, rather than literal “blood and soil,” - “Western Civilization” is a “portable idea” idea that can include anyone.
On July 28, 2017, Jeff Deist delivered his version of generalized “blood and soil” above, calling for libertarians to consider unifying with far-right factions.
On August 11, 2017, the League of the South joined Neo-Nazis and other white nationalist groups, chanting “blood and soil” at the University of Virginia at the deadly “Unite the Right” rally in Charlottesville, Virginia.
Mises-Based Management: The Koch/Hoppe Science of Human Action
Mises’ Human Action and “Inferior” Races
In Ludwig von Mises’ 1949 book, Human Action, he calls his theory of purposeful human action “Praxeology,” clarifying that:
It is neutral with regard to all judgments of value and the choice of ultimate ends. Its task is not to approve or to disapprove, but only to establish facts. The subject matter of praxeology is human action. It is not concerned with human beings who have succeeded in suppressing altogether everything that characterizes man as man: will, desire, thought, and the striving after ends (pg 28-29).
In the passage of Human Action which defines “human action,” we see that the very next paragraph uses eugenic language to draw troubling conclusions that fill the rest of Mises’s book, including the claim that some races are “inferior.”
Mises describes that people who could not adhere to his particular definition of action, using the eugenics term of the time “unfit,” he described how they “lack the essential features of humanity” and are “practically not human”:
Man must yield to the inevitable. He must submit to destiny. These are the general conditions of human action. Man is the being that lives under these conditions. He is not only homo sapiens, but no less homo agens. Beings of human descent who either from birth or from acquired defects are unchangeably unfit for any action (in the strict sense of the term and not only in the legal sense) are practically not human. Although the statutes and biology consider them to be men, they lack the essential features of humanity. (Human Action, pg 14) (Emphasis added)
Dispelling further doubts about his meaning, Human Action’s entire third chapter, entitled “Economics and the Revolt Against Reason,” is a tirade against “Marxianists” and their “socialist schemes” against reason. In it, Mises clarifies that he doesn’t believe other races simply have different logic (“racial polylogism”) - but that they are genuinely “inferior,” because despite being motivated by the same things, they have been “less successful” than “the white race”:
Some ethnologists tell us that it is a mistake to speak of higher and lower civilizations and of an alleged backwardness of alien races. The civilization of various races are different from the Western civilization of the peoples of Caucasian stock, but they are not inferior. . .These ethnologists are right in emphasizing that it is not the task of a historian-and the ethnologist too is a historian-to express value judgments. But they are utterly mistaken in contending that these other races have been guided in their activities by motives other than those which have actuated the white race. The 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 productivity 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 (Human Action, pg 85).
Concluding the chapter with a section called “The Case for Reason,” Mises’ is unmistakably clear:
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 (Mises, Human Action, 1949, pg 90).
The director of Ball State University’s Koch-funded academic center, Steven Horwitz, paraphrases Mises’ description of human action as the harmless assertion that:
Mises was making a Kantian claim about the human mind and the way in which minds are similarly structured across humans. We all have “a set of tools for grasping reality” that comes to us from our evolutionary heritage. The commonality of those tools allows us to engage in the reflection on action and the development of that core of economics, as a set of necessary insights about how humans act. This core economic knowledge is not contingent but part of the very structure of human minds and is something that we can come to know. (Horwitz, Cato, 2012)
Hoppe’s Science of Human Action
A zeal for Mises concept of “human action” is shared by the Austrian-style praxeologists of the Ludwig von Mises Institute. Most notably, Hans Hermann Hoppe has described the Misean belief “that economics is but a part of the larger discipline of praxeology: the science of human action” (Rockwell, 1995).
In Hoppe’s incendiary book, Democracy: The God that Failed, he cites Mises’ Human Action twenty-two times. Hoppe’s dangerous ideology is derived from Mises’ definition of “human action,” exploring the transition from purposeful action to preemptive reactionary violence.
His presentation to the 2011 Mises Institute’s summer school, Mises University, was entitled “The Science of Human Action.” Other notable Mises-inspired praxeologists include Charles Koch.
Koch’s Science of Human Action
Charles Koch’s proprietary philosophy, called Market Based Management® (MBM®), is based so heavily in Mises’ Human Action that Koch calls MBM® “the Science of Human Action.” MBM is first outlined publicly in Koch’s 2005 book, the Science of Success:
Market Based Management® is a holistic approach to management that integrates theory and practice and prepares organizations to deal successfully with the challenges of growth and change. The theory of MBM® is rooted in the Science of Human Action.
This science is the study of how humans can best achieve their ends through purposeful behavior. (Science of Success, 2005, pg 25)
Koch’s 2007 book is entitled Market Based Management: The Science of Human Action Applied in the Organization.
In Koch’s 2015 book, Good Profit, he includes “praxeology” among his primary interests:
When I am not in the office, I’m either studying praxeology, working out in our basement gym, . . . or trying to understand what my toddler grandsons are saying when we FaceTime. (Koch, 2015)
While Koch’s philosophy also borrows from Friedrich Hayek and Michael Polanyi, he makes it clear that his concept of “human action” relies on the definition given by Ludwig von Mises, citing the specific pages of Mises’ book Human Action:
To design effective incentives, we must first have an understanding of human action. Ludwig Von Mises posits that three requirements must be present for individuals to take action11. These are: (1) unease or dissatisfaction with the present state of affairs, (2) a vision of a better state, and (3) belief that they can reach a better states. . . 11. Ludwig von Mises, Human Action. . . pp. 13-14” (Koch, 2005, pg 144 and 179)
Charles Koch’s books, Science of Success (2005) and Good Profit (2015), quote and cite Mises’ definition of human action. This passage of Human Action is followed by Mises’ eugenicist musing about how people who don’t “submit to destiny” are “practically not human” (Human Action, pg 14).
As recently as 2016, the Charles Koch Institute can be seen celebrating Human Action, even linking to the Mises Institute website:
Mises’ human action model is important to the Charles Koch Institute as we work to advance an understanding of how to help people improve their lives by examining critical issues that impede societal well-being. . . [W]e work to continue his legacy of improving well-being for all. (Charles Koch Institute, 2016)
Human Action is a prominently featured book in Koch-funded academic reading groups across the country. In 2011, students from around the country travelled to Washington D.C for an event cosponsored by The Liberty Fund and The Charles G Koch Charitable Foundation on “the foundations of liberty and spontaneous order, and their readings will include selections from: Mises’ Human Action” (FGCU CKF report, 2011).
Regarding his proprietary philosophy, Koch goes so far to make the dubious claim that he has discovered the “fixed laws” that “govern human well being”:
As an engineer, I understood that the natural world operated according to fixed laws. Through my studies, I came to realize that there were, likewise, laws that govern human well-being. It seemed to me that these laws are fundamental not only to the wellbeing of societies, but also to the miniature societies of organizations. Indeed, that is what we found when we began to apply these principles systematically at Koch Industries. Through our observation of how they could create prosperity in an organization, I began to systematize my beliefs into Market Based Management®. (American Journal of Business, 2009)
Other Austrian economists, including Hans Hermann Hoppe and Murray Rothbard, have asserted the existence of a “natural law” or “natural order,” synonymous with “pure capitalism” or “anarcho-capitalism” (Hoppe, 2001, pg xxi).
Neo-Fascist “Constitutions of Liberty”
Several organizations in Charles Koch’s network support the effort, having convinced 28 states to pass resolutions calling for a convention, out of the 34 total states required to by Article V of the U.S. Constitution.
There are concerns that a radical corporatist constitution could drastically limit democracy.
Meanwhile, Koch’s premiere free market academic association, the Association of Private Enterprise Education (APEE), is holding their 2018 conference on “Constitutions of Liberty: How to Bring Leviathan to Heel?” Their call for papers reads:
Friedrich Hayek conceived of a Constitution of Liberty as “a limitation of the means available to a temporary majority . . . by general principles laid down by another majority for a long period in advance.” But as Hayek was surely aware, the latter majority is never present to enforce the former’s adherence to such principles. As Douglass North and Barry Weingast have observed, “constitutional restrictions must be self-enforcing, they must serve to establish a credible commitment by the state to abide by them.”
Under what conditions will liberty-preserving limitations on state agents be self-enforcing? When will a constitution bring Leviathan to heel? This question is important and relevant not only in regard to authoritarian states. Liberal democracies are often subject to “constitutional drift” whereby particular state agents encroach upon both individual liberties and the authority of other state agents. In the latter case, the system of checks and balances is placed in threat. In the U.S., for example, instances of constitutional drift include the executive’s usurpation of authority to initiate war, the use of eminent domain to expropriate property for private use, and the increased use of executive orders as substitutes for (or the means to void) legislation.
This political tactic coming from Koch’s Austrian-inspired network gives much reason for pause, as several Austrian icons have a track record for getting involved in actually overthrowing democracy for libertarian-fascism, and capturing long term power through a radical corporatist constitution.
Before he came to the United States, Ludwig von Mises was chief economist for the Austrian Chamber of Commerce. He also served as an advisor to Federal Chancellor Engelbert Dollfuss.
In 1933, exploiting a political crisis in pre-WWII Austria, Dollfuss seized dictatorial power, suspending parliament and abolishing Austria’s democracy.
Dollfuss banned their main conservative political opposition, the Austrian Nazi party. While it is often argued that Austro-fascism was intended to stop Nazis from taking the nation, Dollfuss did not stop political persecution after banning the Austrian Nazi party.
Using a private militia similar to the German SS, the Patriotic Front (“Vaterldändische Front”), Dollfuss initiated a civil war to eradicate his remaining political rivals, the Austrian socialists. Hundreds of socialists were murdered, and thousands were taken as political prisoners (Leeson, Hayek: A Collaborative Biography, Part II, Austria, America and the Rise of Hitler, 1899-1933, 2015).
A single-party corporatist state was created through an authoritarian constitution, the “May Constitution of 1934.” With this, Dollfuss installed what came to be known as “Austro-fascism,” which consolidated power in the hands of politically appointed representatives from a small number of “estates.”
According to recently discovered papers from Ludwig von Mises himself, he became member no. 282632 of the Patriotic Front on March 1, 1934, the Chamber of Commerce, Trade, and Industry branch (Hulsmann, 2007, pg 677).
Prior to this, Mises had written sympathetically, if hesitantly, about fascism in his 1927 book, Liberalism:
It cannot be denied that Fascism and similar movements aimed 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. . . But 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.
Despite Mises’s conclusion, he was part of Dollfuss’s fascist regime several years later, described by Hans Hermann Hoppe as “one of [Dollfuss’] closest advisers” (Hoppe, 1997).
After Dollfuss was assassinated, July 25 1934, Mises fled the country the next month. His wife’ Margit von Mises recalled in her memoir meeting up with Ludwig (“Lu”) in August to tell her he was leaving:
For Lu this had been an unusually quick decision. Lu was usually so slow in deciding important matters that I once jokingly called him Fabius Cunctator. In taking leave of absence from the Chamber of Commerce, the university - and of me - he found the courage to tell me about it only after he had decided. (M. Mises, 1976, pg 33)
Mises’s organizations and successors have retained a characteristic Dollfuss-ian antagonism towards democracy. This includes Mises’ most notable Austrian student, and Charle Koch’s late friend Koch-network darling, Friedrich von Hayek.
Chilean Dictator Augusto Pinochet
This was not the only time that free-market and Austrian economists aided fascist dictatorships. A better known example was the active role played crafting economic policy for Augusto Pinochet in Chile.
Pinochet was a Chilean general who rose to power in a U.S. backed coup that overthrew the democratically elected communist government of Salvador Allende. Pinochet famously murdered his communist political enemies, many of whom were thrown from planes and helicopters.
After Pinochet’s free-market military junta suspended the constitution, their radical pro-corporate political reforms were implemented by free-market economists trained at the University of Chicago with the help of local business and the Mont Pelerin Institute, an international society of free-market economists co-founded by Friedrich Hayek (of which Charles Koch has been a member since 1970).
Nobel economist Chicago economist Gary Becker recalled how he trained Chilean economists who “generally advocated widespread deregulation, privatization, and other free market policies for closely controlled economies. They rose to fame as leaders of the early reforms initiated in Chile during the rule of General Augusto Pinochet” (Becker, 1997).
Notable economists with relationships to Pinochet and top government officials included Milton Friedman and Friedrich Hayek. Milton Friedman provided Pinochet with direct help. After meeting directly with the regime in 1975. Friedman wrote:
Dear Mr. President: During our visit with you on Friday, March 21, to discuss the economic situation in Chile, you asked me to convey to you my opinions about Chile’s economic situation and policies after I had completed my visit. This letter is in response to that request. (Letters, April 1975)
Friedman proceeded to lay out many radical privatization reforms that he described as “shock therapy.” Pinochet wrote in response:
I am pleased to acknowledge receipt of your courteous letter of this past April 21 in which you gave me the opinion you formed about the situation and economic policy of Chile after your visit to our country. . . .The valuable approaches and appraisals drawn from an analysis of the text of your letter coincide for the most part with the National Recovery Plan proposed by the Secretary of the Treasury, Mr. Jorge Cauas. The Plan is being fully applied at the present time—a plan for which we have high expectations of advancing the Chilean economy. (Letters, May 1975)
Friedrich Hayek made several visits between the late seventies and early eighties.
His 1977 trip was coordinated by Pinochet’s Finance Minister Carlos Cáceres. In addition to presenting several lectures, he was to “visit the highest government authorities,” which included a personal meeting with Pinochet himself, where they discussed using a model constitution to limit democracy.
One Hayek historian noted the substance of his visit, quoting an interview Hayek gave to Chilean media, saying he:
talked to Pinochet about the issue of limited democracy and representative government on which he wrote a book. He said that in his work he argues that unlimited democracy cannot work because, in his opinion, it creates different forces that end up destroying democracy. . . [Pinochet] listened carefully and asked him for the documents that he had written on the issue. (Caldwell, 2014)
Caldwell noted that this was consistent with Hayek’s secretary’s recollection, that “on his return Hayek asked her to send Pinochet a copy of his chapter on ‘The Model Constitution’” (Caldwell, 2014).
The following year, 1980, Pinochet entrenched his regime using a radical libertarian constitution with the help of Chicago trained economists and members of the Mont Pelerin Society.
In 1981, the Mont Pelerin Society decided to hold their annual meeting in Viña del Mar, the Chilean town where the coup was originally launched. During this visit, an interviewer asked Hayek “should we have of dictatorships?” Hayek responded that he was “totally against dictatorships” as “long-term institutions”:
But a dictatorship may be a necessary system for a transitional period. At times it is necessary for a country to have, for a time, some form or other of dictatorial power. As you will understand, it is possible for a dictator to govern in a liberal way. . . As a means of establishing a stable democracy and liberty, clean of impurities. This is the only way I can justify it – and recommend it. (Interview in El Mercurio,1981)
He specifically defended Pinochet’s regime:
My personal impression — and this is valid for South America – is that in Chile, for example, we will witness a transition from a dictatorial government to a liberal government. And during this transition it may be necessary to maintain certain dictatorial powers, not as something permanent, but as a temporary arrangement. (Interview in El Mercurio, 1981)
Hayek acknowledges the seeming hypocrisy given that he advocates “limiting government’s powers in people’s lives” and lamenting “too much government”:
it is also possible for a democracy to govern with a total lack of liberalism. Personally I prefer a liberal dictator to democratic government lacking liberalism (Interview in El Mercurio, 1981)
As Karin Fischer noted in The Road to Mont Pelerin, the there was an incredibly close relationship between the University of Chicago before the coup.
In a program called Project Chile, “approximately thirty Chilean economists were trained in Chicago between 1956 and 1964,” who “succeeded in substantially altering the way economics was taught in the whole Chilean University system” (Fischer, pg 310).
Fischer found that many Chicago trained economists used these college campuses to create a radical “gremialista” (“guildist”) political movement that was “an essential recruitment base for the pro-coup coalition that led to the the deadly military coup.” This included “intellectual leaders of the military regime” who “sought to replace party politics with an authoritarian corporatist regime . . grounded in ultraconservative Catholicism” (Fischer, pg 312).
While sympathetic free-market historians have attempted to provide “context” for these collaborations, we can see that embracing libertarian fascism is not necessarily a new idea within Koch’s academic network.
In Chapter 3, we examine the decades old ties between the Koch family, white supremacists, and the corporate funded fight against anti-civil rights.