Most of the 20th century proved a disaster for classical liberalism. By 1945, the cumulative result of the two world wars and the Great Depression was that most people, especially academics and other intellectuals, had abandoned their belief in the efficacy of limited government, the rule of law and open, competitive markets. They had arrived at the conclusion that governments had to actively intervene in private affairs, especially in the economy, to ensure public peace, prosperity, and harmony. The effect was the abandonment of classical liberalism, which had embraced the free unconstrained interaction of individuals in both social and economic affairs. Indeed, in the United States, by the early part of the 20th century, the word liberalism had come to denote something quite different from its 19th‐century meaning; it now meant that extensive intervention in the economic life of the community was essential to stave off cycles of boom and bust, mass unemployment, and economic chaos. It seemed likely that true liberalism would soon become an odd relic of a benighted past.
In 1944, F. A. Hayek published The Road to Serfdom, wherein he argued that even well‐intentioned interventions in private affairs, even by democratically elected governments, inexorably led to more and more intervention, increasing centralization of power, and a loss of individual liberty. Although the authoritarian powers were about to be defeated, interventionism, Hayek argued, would gradually lead to future tyrannies that were likely to be just as bad. Serfdom was already the fate of the people of the Soviet Union, and after 1945 it oppressed most of Eastern Europe.
Hayek thought that the only way that this descent to serfdom could be halted and reversed was if the principles of classical liberalism were kept alive, nurtured, developed, widely disseminated, and, eventually, widely adopted. That small remnant of intellectuals who still supported classical liberalism was widely dispersed and often isolated. Hayek thought it would be useful to form an organization that would make it possible for these thinkers to regularly come together for mutual encouragement and assistance to continue to fight the battle of ideas with interventionists and to keep liberalism alive. To discuss the possibility of forming such an organization, Hayek convened a meeting of 39 classical liberals from Western Europe and the United States that was held at Mount Pelerin, Switzerland, in April 1947. The participants at that conference came from 10 different countries and included academics from the disciplines of economics (the majority), law, history, political science, and philosophy, as well as three journalists. Among those joining Hayek at the meeting were Milton Friedman, George Stigler, Aaron Director, Ludwig von Mises, Leonard Read, Karl Popper, and Wilhelm Ropke. They agreed to form an organization that they named the Mont Pelerin Society, dedicated to reviving, sustaining, and spreading classical liberalism. Hayek became its first president, a post that he held until 1960. Hayek and most of the founding members were opposed to the Society involving itself in direct political action and advocacy. In Hayek’s words, the purpose of the Society:
is not to spread a given doctrine, but to work out in continuous effort, a philosophy of freedom which can claim to provide an alternative to the political views now widely held.… Our goal … must be the solution not of the practical task of gaining mass support for a given programme, but to enlist the support of the best minds in formulating a programme which has a chance of gaining general support.
The Mont Pelerin Society (MPS) was conceived as and remains a voluntary community of individuals who share a dedication to the principles of a free society. Its activities consist of developing the principles of liberty and helping its individual members more effectively articulate those principles. There is no central headquarters, and there is no paid permanent staff. There are no official MPS publications except for a small quarterly newsletter designed to keep members informed of future meetings and changes of membership. The Society takes no official position on political issues or on public policy. The external face of the MPS is what its members, as individuals, write, say, and do.
Although all MPS members share a dedication to the concept of a free society, its members differ on many of the details. For example, they all believe in limited government, but they disagree on what those limits should be. A few members are confident in the power of the market to generate voluntary solutions to all problems, whereas others embrace the view that governments should be limited to the protective functions of the classical night watchman state (national defense, police, and a judiciary). Still others add some “productive” functions (such as the provision of roads and the financing of some educational services) to the list of acceptable government activities. Among the more contentious issues are those centering on money and banking, monetary policy, and foreign exchange. Some members argue in favor of a return to a strict gold standard, whereas others hold that gold is simply a commodity like any other and that a country can have sound money without gold playing any monetary role. Some oppose fractional reserve banking and others support it. Although all of its members endorse free trade, some favor fixed exchange rates, whereas others advocate flexible exchange rates. These and other points of disagreement are sometimes explored at the Society’s various meetings.
By the first decade of the new century, membership had grown to approximately 500 people from North America, Western Europe, Eastern Europe, Central and South America, Hong Kong, Taiwan, Japan, India, Australia, New Zealand, South Africa, and Turkey. Among its members are academics in the disciplines of economics (still a majority), history, philosophy, political science, law, and sociology. Others are business people, associates of private research institutions, lawyers, judges, journalists, clergy, and even a few politicians.
The Society is now well known and widely respected even by those who differ with its goals. Its individual members are even better known and respected for their own accomplishments. Eight of its members have won the Nobel Prize in Economic Science: F. A. Hayek (1974), Milton Friedman (1976), George Stigler (1982), James Buchanan (1986), Maurice Allais (1988), Ronald Coase (1991), Gary Becker (1992), and Vernon Smith (2002).
Membership in the Society is by invitation on the recommendation of two members and the approval of the Board of Directors. There is no formal ceiling on total membership, but the Board attempts to assure that membership does not get so large that the intimate nature of the Society’s meetings is lost.
With the collapse of communism in the Soviet Union and eastern Europe, which Hayek lived to see, it certainly can be said that classical liberalism did not die in the 20th century. To the contrary, it is alive and well, especially in formerly subjugated countries such as the Czech Republic. Much of the credit for this revival must go to F. A. Hayek and many of the Society’s other members.
Hartwell, R. M. A History of the Mont Pelerin Society. Indianapolis, IN: Liberty Fund, 1995.
Hayek, F. A. The Road to Serfdom. Chicago: University of Chicago Press, 1944.
———. “Why I Am Not a Conservative.” Postscript to The Constitution of Liberty. Chicago: University of Chicago Press, 1960. 397–411.