The Schism of 1947: The Lasting Impact of the Mont Pelerin Society’s Ideological Division
In 1947, after witnessing the horrors of totalitarian regimes in Nazi Germany, fascist Italy and communist Russia, the Austrian economist Friedrich August von Hayek invited some of the leading minds of classical liberalism to join him in a new intellectual society. The aim was to defend the principles of individual freedom, free markets and limited government against the rising tide of collectivism and statism. The society was named after the Swiss town of Mont Pelerin, where the first meeting took place. However, not everything went smoothly during that historic gathering. A dramatic episode that would have lasting consequences for the future of liberalism occurred when one of the participants, Ludwig von Mises, stormed out of the room after accusing everyone else of being a socialist.
Mises was Hayek’s former teacher and mentor, and one of the most influential economists of the 20th century. He had developed a rigorous and uncompromising system of economic thought based on the axiom of human action and the logic of praxeology. He rejected any form of government intervention or social planning as a threat to the spontaneous order of the market and the sovereignty of the individual. He was also a staunch opponent of socialism, which he considered to be an impossible and irrational scheme that would lead to chaos and tyranny. Mises had no patience for those who tried to compromise with socialism or reform it from within. He considered them to be either ignorant or dishonest, and he did not hesitate to express his disdain for them. This attitude alienated him from many of his colleagues and peers, who were more willing to accept some degree of state involvement in the economy and society for the sake of pragmatism, stability or social justice. Among them were some of the most distinguished liberal thinkers of the time, such as Wilhelm Röpke, William E. Rappard, Milton Friedman, George Stigler, Fritz Machlup, Frank H. Knight, Frank Graham, Lionel Robbins, Aaron Director, John Jewkes, John Davenport, Henry Hazlitt, Leonard E. Read, F. A. “Baldy” Harper, V. Orval Watts, Felix Morley, Michael Polanyi, Karl Popper, and Bertrand de Jouvenel. They were all present at the Mont Pelerin Society meeting, and they all felt the wrath of Mises when he denounced them as socialists and left in a huff.
Rather than dismissing this incident as a trivial quarrel or a regrettable misunderstanding, it is important to recognize its significance and implications for the development of liberalism in the following decades. Mises and his followers, who deviated from the mainstream and moderate version of liberalism represented by the Mont Pelerin Society, would later establish their own institutions and networks, such as the Mises Institute, to promote their radical and uncompromising vision of liberty. Their influence would shape the rise of libertarianism, anarcho-capitalism, and the Austrian school of economics, which would challenge and criticize the dominant paradigms of Keynesianism, welfare state liberalism and classical Liberalism. Whether one agrees or disagrees with Mises and his disciples contribution to the diversity and vitality of liberal thought cannot be denied. They remind us that liberalism is not a monolithic or homogeneous doctrine, but a plural and dynamic tradition that encompasses a variety of perspectives and arguments. The debate between Mises and the other Mont Pelerin Society members was not only a clash of personalities, but also a clash of ideas that still resonates today.
Mises was undoubtedly a good and influential economist, whose work contributed to the advancement of economic science and the defense of liberty. However, his legacy is also marred by his dogmatic and intolerant approach, and that of his followers, such as Murray Rothbard, Walter Block and the contemporary leaders of the libertarian movement like Hans-Hermann Hoppe. They have taken Mises’s ideas to the extreme, rejecting any form of social cooperation, political compromise or ethical restraint. They have also aligned themselves with reactionary and authoritarian forces, both in theory and in practice, undermining the credibility and appeal of liberalism. This rigid and radical mindset has helped to fuel the rise of far-right populism, represented by politicians such as Donald Trump, Viktor Orban, Jair Bolsonaro and Javier Milei, who cleverly exploit some of Mises’s concepts to advance their own agendas and gain political power.
The split that occurred in 1947 between Mises and the rest of the Mont Pelerin Society members had a lasting and profound impact on the evolution of liberalism and its relationship with other political ideologies. It marked the emergence of a new and distinct branch of thought. This ideological schism, which still persists today, poses a serious threat to the stability and sustainability of democratic institutions and values, and to the common ground and dialogue that are necessary for a diverse and pluralistic society. It also jeopardizes the legacy and reputation of liberalism, which is a rich and dynamic tradition that encompasses a variety of perspectives and arguments, and that has contributed to the advancement of civilization and humanity.
