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The IEA begins. The origin story of the “Tufton Street” cabal


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Over the third week of April, the IEA hosted three international delegations (two from Sweden and one from the Netherlands), who listened to a series of presentations. One of the speakers was the IEA’s Editorial Director Dr Kristian Niemietz. The article below is a mashup of his presentations. 

 

The Institute of Economic Affairs has an indirect founding father: the great Anglo-Austrian classical liberal economist Friedrich August von Hayek. It also has two indirect founding documents, both written by Hayek.

One is, of course, Hayek’s seminal book The Road to Serfdom. In 1946, Anthony Fisher, the future founder of the IEA, read a Reader’s Digest version of it, and it changed his life. It won him over to Hayek’s arguments, and it propelled him to action. It convinced him that Britain was heading down the wrong path, and he wanted to do something about it.

So Fisher visited Hayek at the London School of Economics, where Hayek was teaching at the time, and told him about his plans. Fisher initially wanted to become a politician. It seems obvious: Fisher thought that British politics was going in the wrong direction, and if that’s what you think, you should go into politics, and try to change things from within, right?

Wrong, said Hayek. He dissuaded Fisher from that plan by convincing him that politics is downstream from the battle of ideas. According to Hayek, you need to win the upper hand in the battle of ideas first. If you do that, you no longer need to influence politics directly, because there is a good chance that politics will follow. But if you don’t win the upper hand in the battle of ideas, there is not much you can do achieve in politics. You will be isolated, and outnumbered.

The story of what happened next has been told many times by John Blundell, the IEA’s Director General from 1993 to 2009, most notably in his book Waging the War of Ideas.

But today, I won’t focus on those events, but on the theory behind them: on Hayek’s theory of the battle of ideas. He outlined it in his book The Intellectuals and Socialism (initially published in 1949, as a paper in the University of Chicago Law Review), which makes this the second indirect founding document of the IEA.

Hayek’s theory could be summarised as follows:

In an advanced, complex society, we rely on an extensive division of labour. We specialise heavily on a small number of tasks, and we buy everything else from people who specialise on other things. We don’t brew our own beer, and we don’t grow our own food. We don’t even buy most things directly from their producers. We don’t buy our beer directly from the brewery, and we don’t buy our food directly from the farm. Rather, we buy them from specialised intermediaries, such as retailers.

The same is true in the area of political ideas. We don’t produce our own ideas. We don’t even obtain them directly from the original idea producers, that is, original thinkers, or scientists who come up with original insights. We get them from “ideas retailers”.

Who are those people? They include the people who work in the media sector, the education sector, and the arts and culture sector. They also include people who are genuine experts in one particular area, and who use the professional authority they derive from this to talk about ideas outside of their area of expertise. (Think Noam Chomsky, or any of today’s doctor-activists, for contemporary examples.)

Hayek called these people “the intellectuals”, perhaps a poor choice of words, because it sounds very high-brow, but that is not at all what Hayek meant. Rather, for him, the “characteristic function” of the intellectual:

“is neither that of the original thinker nor that of the scholar or expert in a particular field of thought. The typical intellectual need be neither: he need not possess special knowledge of anything in particular, nor need he even be particularly intelligent, to perform his role as intermediary in the spreading of ideas. What qualifies him for his job is the wide range of subjects on which he can readily talk and write, and a position or habits through which he becomes acquainted with new ideas sooner than those to whom he addresses himself.”

They are masters of the technique of conveying ideas but are usually amateurs so far as the substance of what they convey is concerned.”

According to Hayek, these intellectuals have an outsized influence on the climate of opinion, because they are the gatekeepers of ideas:

“There is little that the ordinary man of today learns about events or ideas except through the medium of this class; […] we are […] dependent for our information and instruction on those who make it their job to keep abreast of opinion. It is the intellectuals in this sense who decide what views and opinions are to reach us, […] and in what form and from what angle they are to be presented. Whether we shall ever learn of the results of the work of the expert and the original thinker depends mainly on their decision.”

Note that Hayek did not think of the intellectuals as an elite. This is not a Chomsky-style theory of “manufactured consent”, of manipulation, or brainwashing of the masses. No: in Hayek’s version, the position of the intellectuals is simply a consequence of the division of labour. To say that we get our ideas from the intellectuals is no different from saying that we get our beer from the supermarket, or the pub.

They have no power to force anything on us, and we can bypass them if we want to. If you want to get your beers directly from a tiny microbrewery, you are free to do that. But most people are not going to. In the same way, you can get your political ideas directly from obscure scholars, but again – most people are not going to. They are going to consume those ideas that are prominently displayed in the supermarket of ideas – and these are not necessarily the best ones:

“[E]very scholar can probably name several instances from his field of men who have undeservedly achieved a popular reputation as great scientists solely because they hold what the intellectuals regard as “progressive” political views […]

Although […] all the scientific evidence may be against it, it will nevertheless, before the tribunal of the intellectuals and in the light of the ideas which govern their thinking, be selected as the view which is best in accord with the spirit of the time. The specialists who will thus achieve public fame and wide influence will thus not be those who have gained recognition by their peers but will often be men whom the other experts regard as cranks, amateurs, or even frauds, but who in the eyes of the general public nevertheless become the best known exponents of their subject.”

(I could name a few contemporary examples. But I’m not going to.)

In this way, even though they have no special powers, the ideas of the intellectuals spread, and become the general climate of opinion:

“[O]nce the more active part of the intellectuals has been converted to a set of beliefs, the process by which these become generally accepted is almost automatic and irresistible. These intellectuals are the organs which modern society has developed for spreading knowledge and ideas, and it is their convictions and opinions which operate as the sieve through which all new conceptions must pass before they can reach the masses.”

Eventually, politics follows:

“[I]t is merely a question of time until the views now held by the intellectuals become the governing force of politics. […] [T]he views of the intellectuals influence the politics of tomorrow […]

What to the contemporary observer appears as the battle of conflicting interests has indeed often been decided long before in a clash of ideas confined to narrow circles.”

“Hang on”, a progressive would interject at this stage. “Surely, what matters is who owns the media outlets! The Murdoch press tells us what Rupert Murdoch wants to hear. What individual employees think is irrelevant.”

Not so, according to Hayek. He believed that this is an area where top-down direction is often impractical:

“Even where the direction of policy is in the hands of men of affairs of different views, the execution of policy will in general be in the hands of intellectuals, and it is frequently the decision on the detail which determines the net effect. We find this illustrated in almost all fields of contemporary society. Newspapers in “capitalist” ownership, universities presided over by “reactionary” governing bodies, broadcasting systems owned by conservative governments, have all been known to influence public opinion in the direction of socialism, because this was the conviction of the personnel.”

(The idea of a right-wing university administration sounds quaint today. Every now and then, you can tell that this is a text from 1949, even if much of it could have been written last week.)

This does not mean that the intellectuals are all independent, free thinkers. They are subject to peer pressure:

“[T]he pressure of opinion among intellectuals will often be so strongly in favor of socialism that it requires more strength and independence for a man to resist it than to join in what his fellows regard as modern views.”

Hayek did not see this dominant position of ideas retailers as a bad thing, necessarily. But, as has already become clear, he did believe that by the late 1940s, most intellectuals – or at least the more active ones among them – were, to varying degrees, socialists.

But why were they? It had not always been that way. There was a time when liberals had a decent market share of the ideas retail market. Why had they lost it, and why had the socialists managed to crowd them out?

Hayek said that there was something about the dreamy, speculative, blue-sky nature of socialist ideology that made it attractive to intellectuals:

“[S]ocialist thought owes its appeal to the young largely to its visionary character; the very courage to indulge in Utopian thought is in this respect a source of strength to the socialists which traditional liberalism sadly lacks. […] The intellectual, by his whole disposition, is uninterested in technical details or practical difficulties. What appeal to him are the broad visions”.

Can liberalism not be like that, too?

Not entirely. Once you live in a broadly market-based economy, and a political system where liberal principles such as freedom of expression, freedom of conscience, the rule of law etc, are at least broadly respected, a liberal can no longer claim to be a revolutionary. A liberal is then someone who seeks improvements within the current system, not someone who wants to overthrow everything and start from scratch again:

“Once the basic demands of the liberal programs seemed satisfied, the liberal thinkers turned to problems of detail and tended to neglect the development of the general philosophy of liberalism, which in consequence ceased to be a live issue offering scope for general speculation.”

But there are many things in between being a revolutionary, and being a technocrat who only talks about minor adjustments within the system. A liberal could not be the former, but they did have to be the latter either.

According to Hayek, liberals of his day often presented themselves as the latter, because this is how they thought they could secure some political influence:

“Whatever power he [the liberal thinker] has to influence practical decisions he owes to his standing with the representatives of the existing order, and this standing he would endanger if he devoted himself to the kind of speculation which would appeal to the intellectuals and which through them could influence developments over longer periods. In order to carry weight with the powers that be, he has to be “practical,” “sensible,” and “realistic.””

And therein lay the dilemma for liberals. The very strategy that gave them political influence in the short term – presenting themselves as “practical”, “sensible”, and “realistic” undermined – eroded their long-term influence, because it made them unattractive to the intellectuals:

“The main lesson which the true liberal must learn from the success of the socialists is that it was their courage to be Utopian which gained them the support of the intellectuals and therefore an influence on public opinion which is daily making possible what only recently seemed utterly remote. Those who have concerned themselves exclusively with what seemed practicable in the existing state of opinion have constantly found that even this had rapidly become politically impossible as the result of changes in a public opinion which they have done nothing to guide.”

Liberals, or at least some liberals, had to break with those habits. To hell with being “practical”! To hell with being “sensible”! To hell with being “realistic”! Be interesting instead! If that means losing influence on day-today politics, so be it. You will win a different kind of influence instead.

“[W]e must be able to offer a new liberal program which appeals to the imagination. We must make the building of a free society once more an intellectual adventure, a deed of courage. What we lack is a liberal Utopia, a program which seems neither a mere defense of things as they are nor a diluted kind of socialism, but a truly liberal radicalism which does not spare the susceptibilities of the mighty […], which is not too severely practical, and which does not confine itself to what appears today as politically possible. We need intellectual leaders who are willing to work for an ideal, however small may be the prospects of its early realization. They must be men who are willing to stick to principles and to fight for their full realization, however remote.”

What this means in practice, Hayek did not say. The Intellectuals And Socialism is definitely not a manual for how to run a think tank (a term which would probably have meant nothing to Hayek, at least not in the 1940s). But this institute is one possible way of putting Hayek’s recommendations from The Intellectuals and Socialism into practice. In that sense, you could say that that book has since been turned into an institution. You are standing in it.

 

Head of Political Economy

Dr Kristian Niemietz is the IEA's Editorial Director, and Head of Political Economy. Kristian studied Economics at the Humboldt Universität zu Berlin and the Universidad de Salamanca, graduating in 2007 as Diplom-Volkswirt (≈MSc in Economics). During his studies, he interned at the Central Bank of Bolivia (2004), the National Statistics Office of Paraguay (2005), and at the IEA (2006). He also studied Political Economy at King's College London, graduating in 2013 with a PhD. Kristian previously worked as a Research Fellow at the Berlin-based Institute for Free Enterprise (IUF), and taught Economics at King's College London. He is the author of the books "Socialism: The Failed Idea That Never Dies" (2019), "Universal Healthcare Without The NHS" (2016), "Redefining The Poverty Debate" (2012) and "A New Understanding of Poverty" (2011).


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