 The Book of the Month Club distributed 600,000 copies of the book itself. The University of Chicago then published the book, The First American Edition, on September 18, 1944. In the book, Hayek warned against the danger of postwar socialism and the threat it posed for individual freedom. He believed with David Hume that, quote, it is seldom that liberty of any kind is lost all at once. In other words, he warned against what people today call creeping socialism. And he argued passionately for a liberal international order grounded in limited government, free trade, and the rule of law. Hayek, like many of the 18th and 19th century liberals, recognized the close relationship between economic freedom and personal freedom. And Hayek emphasized, quote, political freedom is meaningless without economic freedom. Indeed, he warned that, quote, to be controlled in our economic pursuits means to be controlled in everything. And of course, the first thing that the Nazis did was to take the property rights, the private property rights, against the Jewish population in Germany. That occurred initially, and the other horrors followed after that. So we should remember the importance of economic liberty. Indeed, his message is as relevant today as it was in 1944. The forces of collectivism may be softer today, but they have not gone away. This is certainly clear from the failure to cut the size of government, either in the United States or in Europe. James Buchanan, who is with us today, is certainly correct when he said, quote, liberals should not lean back and say our work is done. And of course, he refers to liberals in the classical sense of the term. He goes on to say that the organization and the intellectual bankruptcy of socialism in our time have not removed the relevance of renewed and continuing discourse and political philosophy. We need to discourse to preserve, save, and recreate that which we may properly call the soul of classical liberalism. Well, clearly our four speakers today have done much to preserve, save, and recreate the soul of classical liberalism. Our first speaker, Ed Crane, needs little introduction. He's the founder and president of the Cato Institute, now in its 27th year. And I guess that would make at about two years old in 1977. He serves on the board of the US term limits and is a member of the Mount Pellerin Society, which Hayek founded in 1947. Ed's leadership has resulted in millions of people around the world being introduced to classical liberal principles. He has been consistent and persistent in his defense of limited government, individual freedom, and personal responsibility. Hayek had great respect for Ed and was honored to be associated with Cato as a distinguished senior fellow and a member of the editorial board of the Cato Journal. In 1990, at Cato's historic conference in Moscow, Ed presented a bust of Hayek to then-Chairman of the Council of the Union of the Supreme Soviet, Evgeny Primakov. But I'll let him tell you that fascinating story and also plug Cato's forthcoming Russian conference. Ed? Thank you, Jim. I was born in 1944. And it kind of, when I heard that Hayek was having his 60th anniversary of the Road to Serfdom here, it was kind of a shock. The Road to Serfdom is a brilliant, courageous, and most of all, prescient book. And as I will attempt to demonstrate very much relevant to the political situation in America today, one of the things that endures me most to Hayek is the way he defined intellectual, so broadly, he dumbed it down so much that I could include myself in the group. He even said that to be an effective public intellectual, you didn't even have to be intelligent. Thank Dan Rather, Katie Cork, I could go on. And Hayek, as Jim mentioned, had a special relationship with the Cato Institute that began back as far as 1978 when we first started paying the salary of Hayek's secretary, which we did until his death in 1992. Hayek, of course, was also very close to Ed Fullner in the Heritage Foundation. But I think he took a special pleasure in seeing the growth of a classical liberal think tank like Cato, because Hayek took great pains to explain that he was not a conservative. To our delight, as Jim mentioned, he did accept the honorific title of Distinguished Senior Fellow of the Institute. And Hayek had a tremendous influence on virtually every policy person here at Cato. It is not for nothing that this is the Hayek Auditorium. I remember the first time that Hayek visited the Cato Institute when we were on Capitol Hill in a townhouse there, the Waterston House. He often visited Cato, if he could, when he was in the States. And we were nervous. This is the first time the great man was coming to our institute and he got there around 3 o'clock. And Christina, my wife, she wasn't my wife then. She was working at Cato. I didn't realize she was actually plotting to marry me. But she went to the store and got every kind of English tea you could think of in the hopes of taking care of F.A. Hayek. And so she went up to him. He was in this big winged chair kind of nervously and said, Professor Hayek, may I get you some tea? And he looked at her and kind of half-smiled and said, Scotch, actually. So she had to run around and take care of that. And then he gave a great lecture after the Scotch. And he was such a gracious gentleman, old world gentleman, a wonderful, kind, gentle person. One of the great honors of my life was the opportunity in 1990 to go to the Soviet Union and present that bust of Hayek Primikov, who was like the number three guy in the government then. And it still was the Soviet Union. This was at the October Sky Hotel in Moscow, which was the home of the hotel built for the Communist Party Central Committee. And this was the first conference held in the Soviet Union devoted to liberty. I mean, in 1988, Cato held a conference like this in Shanghai, China. And I think that was the first time in Communist China's history that there had been such a conference. So we're very proud of both of those events. But the one in Moscow was particularly fun because we brought buttons that said Cato Institute on them. And then in Russian, on the top, it said private property on the bottom. It said capitalism. And they were the most popular item at this Communist Party hotel. Everyone, all the workers, all the waiters, everybody had one of these buttons. Anyway, here's what I read at the presentation of the bus to Primikov. It is an honor to present this bus of F.A. Hayek to Mr. Primikov, a senior member of Mr. Gorbachev's cabinet. In the 1930s and 40s, when state economic planning was very much in fashion, not just in the Soviet Union, but throughout the West as well, F.A. Hayek, Ludwig von Mises, and a handful of others stood against the intellectual tide of socialism. Hayek pointed out the knowledge problem confronting planners who are inherently unable to calculate prices in a manner that would lead to the efficient allocation of resources in the economy. Hayek's 1944 book, The Road to Serfdom, remains a classic demonstration of the incompatibility of socialism with economic progress and human liberty. He is a great champion not only of capitalism, but of a free society itself. It is therefore particularly appropriate here in this lavish hotel built exclusively for the Communist Party Central Committee to acknowledge to the presentation of this bus that Hayek was right and Marx was wrong. It is the Cato Institute's sincere hope that this bus of F.A. Hayek will rest in a prominent place in the Kremlin where it will remind Mr. Gorbachev and other leaders of the Soviet Union that there are answers readily at hand to the problems that beset the Soviet Union. So Primikoff accepted the bus. I wasn't arrested or anything, but he got up and said, thank you, Mr. Crane. When I am next in the United States, I will present you with a bust of linen, and you can put it wherever you want. We had a couple of storage knives later, and we were all friendly. Anyway, I forward all this material to Hayek, and I received back a letter on December 20th, 1990, which his secretary said may be the last cogent letter he ever wrote, and I'll just read part of it. I am, of course, greatly pleased by the news and can only tell you how deeply grateful I am for all you have done. I could not imagine a more impressive symbol of the ultimate victory of our side in the long dispute of the principles of the free market, and will at the moment only say that I hardly expected to live to experience this. And I felt so proud that we had done this, and in fact that he got to see this dramatic symbol of the victory of his hard work when there were so many days he must have felt, my God, this is hopeless. So that's a nice thing that he lived to see that. Well, before I raise the level of discourse here by sitting down and letting some real scholars talk, I want to ask us to consider a couple of statements by Hayek and Jim Buchanan that are remarkably similar. When two great champions like Hayek and Buchanan have a point to make that's the same, then I think it's worth all of us listening seriously. Hayek said in The Intellectuals and Socialism, the main lesson which the true liberal must learn from the success of the socialist is that it was their courage to be utopian, which gained them the support of the intellectuals and therefore an influence on public opinion. Those who have concerned themselves exclusively with what seemed practicable in the existing state of opinion have constantly found that even this has rapidly become politically impossible. And then Jim wrote a couple of years ago in The Wall Street Journal, my larger thesis is that classical liberalism cannot secure sufficient public acceptability when its advocates are limited to does it work pragmatists. Science and self-interest do indeed lend force to any argument. But a vision, an ideal, is necessary. People need something to yearn and struggle for. If the liberal ideal is not there, there will be a vacuum and other ideas will supplant it. Classical liberals have failed singularly in their understanding of this dynamic. Creating a new vision, a new soul for liberalism, is our most important task now. Well, we really haven't had a visionary on the national policy scene, or political scene, since Ronald Reagan in 1980. And even by 1984, I think that vision had been corrupted. The Morning in America campaign was a great lost opportunity, in my view, to really lay out an agenda for liberty and for reducing the federal government's role in our lives. And whether it's because Reagan was already starting to decline in health or just the Machiavellian activities of that guy's administration, it was a huge lost opportunity for an enormously popular president. To make matters worse, Bush more or less Reagan more or less anointed Bush to be the next president. And Bush, of course, was really hampered in terms of the vision thing. He was utterly befuddled by the idea that there was some kind of political vision that America should have. Coupled with that, in the late 80s and early 90s, the supply side revolution, I consider myself a supply sider. I want lower taxes. I think marginal tax rates matter. The strategy of the supply siders explicitly, Jude Wyniski, Jack Kemp, Art Laffer, and others, was that, look, we don't want to get involved in this nasty battle over the proper role of government. We don't want to say you need to cut spending. All we want to do is cut marginal tax rates, grow the economy faster than government. Government shrinks as a percentage of GDP. And as a result, I think that kind of, because they were the best and the brightest very often, it sucks some even more of the ideology or vision out at least of the GOP. And then you had candidates like Bob Dole and the younger George Bush, and the whole thing has been kind of a disaster. So Buchanan is right. There's very little vision to inspire anyone, at least from a political standpoint. And Buchanan's also right that other ideas are filling the vacuum left by a lack of a classical liberal vision, and it's called neoconservatism. I mentioned that Hayek went out of his way to say he was not a conservative, and I want to read this from the preface of one of the additions of the road to serfdom. I am still puzzled by those in the United States who truly believe in liberty should not only have allowed the left to appropriate this almost indispensable term, liberalism, but should also have even assisted in beginning to use it themselves as a term of appropriation. This seems to me to be particularly regrettable because of the consequent tendency of many true liberals to describe themselves as conservatives. It is true, of course, that in the struggle against the believers in the all-powerful state, the true liberal must sometimes make common cause with the conservative. And in some circumstances, as in contemporary Britain, he has hardly any other way of actively working for his ideals. But true liberalism is still distinct from conservatism, and there's a danger in the two being confused. Conservatism, though a necessary element in any stable society, is not a social program. In its paternalistic, nationalistic, and power adoring tendencies, it is often closer to socialism than true liberalism. And with its traditionalistic, anti-intellectual, and often mystic propensities, it will never accept, in short periods of disillusionment, appeal to the young. When Hayek talks about conservatism, being closer to socialism than true liberalism, he's not talking about, for the most part, the classical liberal conservatism of, say, the Heritage Foundation. But I believe he is talking about neoconservatism, whose founding fathers were after all socialists. And it's important to understand the manner in which Hayek uses the word socialism, because what he really means is statism. That's why he dedicated the road to serfdom to the socialist of all parties, right, left, center. To Hayek, if you were for collectivism, over individualism, or for coercion, over volunteerism, you were a socialist. That's just the word he used. And he recognized, because the road to serfdom itself was a direct attack on classic socialism, on government control and ownership of the means of production. And he pointed out that this was kind of logically lacking, and also that liberties would be endangered because of it. But afterwards, a decade or so later, people had come to realize that he was right about the government owning these big industries and so forth. But he recognized that socialism had kind of morphed into the Swedish model of welfare state redistribution of income. And the point is that the socialism that he talks about in the road to serfdom is applicable to any kind of statism. Now, the neocons are widely recognized to have co-opted the Bush foreign policy, the Bush administration's foreign policy, which I think is lamentable. But what is not recognized as a very significant role they have played in shaping the GOP domestic agenda, and I would say for the worse? To begin with, there's a whole issue of big government. Urban Crystal had a piece where he self-identified himself as the father of neoconservatism in the weekly standard, in which he openly criticized Hayek and kind of mocked the idea of the road to serfdom. We're not on a road to serfdom, he said. And neocons are very comfortable with the big government that's been created in the 20th century. On specific issues, and then I will sit down, there's education where Bill Bennett was the first education secretary to really push for a bigger federal role in education. And I'd wager that Bennett is a neoconservative. I'm sure he'd take me up on it. Here's what Bush said in late 1999. He spoke during the campaign to the Manhattan Institute, and he said, so as president, here's what I'll do. First, I will fundamentally change the relationship of the states and the federal government in education. We will praise and reward success and shine a spotlight of shame on failure. There is a role for a centralized education authority to distribute state and federal money and to set clear goals and hold districts and schools accountable for achieving these goals. Now that is a fundamental change because there's no power in the Constitution given to the federal government to be involved in education at all. He wants to go right down not just to districts, but to schools to hold them accountable. That's a dangerous thing, and that's a neoconservative initiative. The faith-based initiative is another one. Bill Crystal had an editorial recently in the neoconservative weekly standard kind of extolling how wonderful it was that this campaign for president may be developing to be one between the religious and the secular. This conflating of religion and public policy is a horrible mistake, but that is what the faith-based people have done. Leslan Kowski, a neoconservative, is the intellectual force behind all of it. And here is what Bush said just last week in a speech in LA, quote, we need to expand the faith-based programs. There are more souls to be saved, and the government's got the resources. Well, you don't want the government's saving souls to begin with, but what resources are we talking about? And finally, there's the issue of national greatness, which all of these things that Hayek warns about in the road to serfdom lead to this kind of national greatness thinking that is so dangerous. Living in a free country is not enough for neoconservatives. To me, America is a great country because it was designed to allow us to pursue our own goals, our own values, do so with our family, with other groups voluntarily. But it's our decision on what is important in our life, and the government otherwise leaves us alone. That makes a great country, but not to the neoconservatives. David Brooks writes about it and says, we talked about the need of a vigorous one-nation conservatism, initial caps, one-nation conservatism that will connect the revived sense of citizenship with the longstanding national greatness Americans hold dear. Ultimately, he writes, American purpose can find its voice only in Washington. Individual ambition and willpower are channeled into the cause of national greatness. And by making the nation great, individuals are able to join their narrow concerns to a larger national project, which I gather is why we're going to go to Mars. In any event, I guess I would make the point that the road to serfdom is a living document. It's a warning about what's happening in our country right now, and I'm pleased to be part of this program. Thank you. Thanks very much, Ed. It's too bad you couldn't run for president of the United States, instead of president of the Cato Institute. Our next speaker is James M. Buchanan. We're very pleased to have Jim with us today. He's got extremely busy schedule. He never seems to slow down. He seems to gather momentum. He's distinguished professor emeritus of economics at George Mason University, the 1986 recipient of the Alfred Noble Memorial Prize in Economic Sciences, advisory general director of the James M. Buchanan Center for Political Economy at George Mason University, distinguished fellow at the Cato Institute and past president of the Mount Pellerin Society. And that's a very short list. His bio is thicker than most books I've seen. His pioneering work in public choice theory and constitutional political economy have led to a massive body of scholarship devoted to understanding how rules influence outcomes in the public sector. His collective works now have been published by the Liberty Fund and fill already 20 volumes with probably more to come. Professor Buchanan knew Hayek for many years and hopefully will share some of his memories as well as discuss the continued relevance of Hayek's liberal vision. Jim. Thank you very much, Jim. I appreciate the opportunity to be here and participate in this 60th anniversary celebration of the road to serfdom. It was in August of 2001 that Curt Logby organized a Liberty Fund conference at Ubergurgle, which was Hayek's summer place for about 30 years. And this August 2001 conference was in celebrating a 20-year anniversary of another conference that several of us had had. Again, a Liberty Fund conference at Ubergurgle, which is high in the Tyrolian Alps above Innsbruck. In the 81 conference, the purpose of the conference was to give Hayek some advice and criticism of the three volume book that he was working on, which later became the Fatal Conceit. And so we went back to this place where Hayek had claimed that he did a lot of work on all of his works at this summer place. And in the preliminary to that Liberty Fund conference in August 2001, I gave a little opening talk. And what I did in that talk, and it seemed to me appropriate to do the same thing here, was to ask myself, what was the Hayek difference? What would have happened in the century that we have just finished had Hayek never existed? Use the old-fashioned Henry Simon type imputations problem that is simply say, well, let's take Hayek out of the picture. How would the century have been different? Now, I think in that sense, if you look at it that way, what is the Hayek difference? It seemed to me we can pay relatively little attention to some of Hayek's early work in economic theory, especially his work on business cycle theory and capital theory, although they were important at the time. They didn't exert a major influence on the course of development of economics. Somewhat more controversially, I think we don't need to pay much attention to Hayek's later works, which emphasize the evolutionary elements in the development of economic and social institutions. I think his recognition of the evolutionary emergence of some behavioral norms and practices that helped us make the leap into what he called the great society possible, that was an important contribution. But I think the later Hayek's overemphasis on evolutionary explanation fostered a stance of acquiescence, which Hayek himself really violated his own raison d'etre. So within economic theory, we're left with two major contributions, and I think they are important elements in our enhanced scientific understanding of how an economy works. The first involves the comprehensive vision of the market process as a nexus of relationship among separate decision makers, that is, as a catalaxi, rather than as an analog computing device or mechanism that is somehow designed to produce externally defined value. Now, Hayek did not originate this vision, nor was he its only expositor. But he was its most articulate expositor, and especially because he was able to integrate this vision of the market process in an even more inclusive constitution of liberty. Hayek's second major contribution to economics was, in a sense, corollary to the first. Interpreting the market order as a catalaxi focuses our attention on the choices and the actions of the several participants and upon the knowledge that these participants bring to an exchange process. Hayek recognized that this knowledge was indeed unique to those participants, and in their separately confronted choice settings, that no other knowledge could possibly inform the ultimate outcomes that were produced. And because this knowledge was itself subjectively perceived, it could not possibly be available to anybody outside of the process. It follows that the market alone could utilize this knowledge. This proposition was, of course, central to Hayek's argument in the great debate over the possibility of socialist calculation. But its implications are much broader. During the last decades of the century, the so-called economics of information has emerged as a separate research program. Initially, however, on the presumption that information is something out there to be discovered through adequate investment. Only within the last decade or so have the superior insights of Hayek assisted in dispelling the false trails that were initially laid down by George Stigler and others in this respect. Now, these two contributions that I've identified, along with certain elements of the evolutionary emphasis, they do warrant assigning Hayek a significant rank as a social scientist, as an economist. I suggest, however, that Hayek's marginal product, his net contribution to the century, was much larger in his role as classical liberal social philosopher. Of course, we misrecognize that the philosophical position that he espoused and articulated emerged from his scientific insights in part. We might say that the putative classical liberal, who does not really understand and interpret the market process as catalaxy, constructs his philosophical stance on much more vulnerable foundations. So let me come back to my initial question. What was Hayek's net contribution to the century? How would the century have been different, both in ideas and in its historical development, had Hayek never been born? First, it must be acknowledged that articulate classical liberals had developed the central tenets of a coherent philosophy long before Hayek came along, and also that many of Hayek's close and near contemporaries, such as Frank Knight, Ludwig von Mises, Karl Popper, and others, formed a supporting cast that was important in many dimensions. But Hayek was different, and we agree on that. But how was he different? I do not think that Hayek's contribution here is reflected in any articulation of a philosophical perspective that is analytically more coherent rhetorically than that found in the writings of the other classical liberals. Nor do I think that his contribution stems from his willingness to move outside the disciplinary boundaries of political economy. The Hayek difference lies, I think, instead in creating himself as the classical liberal, which in turn provided a personalized target for his socialist enemies everywhere and a personalized flag bearer for his ideological soulmates. Who could have filled this role other than Hayek? And how different indeed would the century have been without his presence in this respect? There are two separate but related stages in the creation of this role for Hayek. The first is, of course, the publication of the Road to Serfdom in 1944, and the second is the organization of the Montpellron Society in 1947. Hayek told us that he did not expect or anticipate the reaction that he got from the Road to Serfdom. When he wrote that book, he was a wartime internee of sorts. He was pessimistic about the future of Western societies. He wrote the book both as a prediction and as a cautionary tale. I don't think even for a moment he thought of himself as a new messiah leading the children out of the wilderness. More descriptive metaphor might be that he was someone crying in the wilderness. At best, he hoped that some of the intellectual leaders in Britain particularly might read and understand his argument and that ultimately these leaders might exert some influence on the politicians. He was surprised by the violent attacks mounted by the socialist, who thereby revealed their own lack of philosophical self-confidence. Hayek could not understand or appreciate just where the socialist attitudes were coming from. And he perhaps gave too much credence to the lasting strength of these mysteries. Maybe it's our good fortune that he did. It was almost as if by accident, Hayek's small book became something quite different from the original intent of its author. And especially in the United States, through the dissemination of the argument in condensed form in the reader's digest, which Ed is already referred to, Hayek as an old-fashioned liberal seemed to enter public and political discourse. And given the media bias then and now toward the socialist alternatives, Hayek was painted as a moss-bound reactionary radical who sought to turn the clock back toward the depression that was, of course, created by the excesses of capitalism and away from the romanticized collectivist utopia that had so captured mid-century imaginations. To his surprise, Hayek found himself shunned, sent to Coventry, even by his peers in the World Academies of Science, who simply did not bother to examine the very solid scientific foundations upon which Hayek constructed his normative argument. To far too many of his peers, Hayek had broken the invisible barrier. He had politicized himself and for the wrong cause, which was an unforgivable sin in the intellectual atmosphere of mid-century. Hayek found himself placed in a role that he had never anticipated. He was lionized by the scattered adherents of classical liberalism, but also by non-thinking conservatives who would remain lost before the sweep of historical change, almost a natural stage in the progression. Hayek assumed a leadership role, but this leadership emerged in a form that tended to maximize the range and tenure of his influence. Hayek made no claim to private possession of public wisdom, but he did convey a firmness in his conviction that there wasn't attainable great society, that is his term, in which persons could remain at liberty while enjoying economic prosperity. He was never bedeviled by the profound skepticism that Frank Knight, for example, exhibited toward the potential efficacy of Indian Ostrom, reluctantly extended to those offered by the classical liberals. Hayek was not a classical liberal by default, as it were. In taking on this representative leadership role, Hayek was mightily aided by his intellectual and political adversaries. We'd eat only speculate counterfactually on the history that might have been had Hayek's small book, The Road to Serfdom, had that book fallen stillborn from the press. But such a history was not to be. The very notoriety accorded to The Road to Serfdom ensured that Hayek would never, never again return to his disciplinary roots, but would instead extend his horizons, first to political economy in a broader definition and even beyond into the reaches of ethics, law, philosophy and politics. His first self-assigned task was to articulate more fully the bases upon which the arguments in The Road to Serfdom were grounded. This task, what took him 10 years more to complete, became the Constitution of Liberty, published in 1960. Again in retrospect, Hayek's long sustained entrepreneurial effort in establishing, promoting and protecting the Montpellon society seems only a natural follow-on to the position that he found himself in after the end of World War II. The Road to Serfdom, with its many detractors as well as many who he praised upon its author, this book set up Hayek as the focal point for almost any organizational thrust. Furthermore, Hayek was already internationalist. He was an Austrian native, a British citizen and soon to be an occupant of a chair outside his own discipline in the United States. He's willing to pick up and put life into a moribund project aimed at some sort of association worldwide among classical liberals. This seems to us now almost pre-programmed to happen. Again, however, as with the book, it was Hayek whose work brought the society into being and kept it alive almost single-handedly for roughly three full decades. In a sense, as its members have long recognized, the Montpellon society is perhaps more noteworthy of what is reputed to be than what it actually is or was. As with the book, the very existence of that society seemed to threaten and did so threaten in a way the dominance of the socialist idea among intellectual leaders in all parts of the world. Even if at its meetings, the members of the society largely reinforced each other, such support, especially in those heady decades of the 50s, 60s, and 70s was essential. The socialists were put on guard in the sense that they knew we were there. But let me return to the main theme. When I commenced with the question, what was Hayek's net contribution to the century? In its broadest terms, my answer is that this contribution is found in Hayek's role as classical liberal social philosopher rather than in his role as an economic theorist. Further, even within the role as social philosopher narrowly defined, Hayek's net contribution does not lie in a set of identifiable themes or propositions. Hayek found his own niche or slot in the century's history as the classical liberal. In a very real sense, Hayek represented and epitomized the stylized classical liberal, whose work embodied so much that it's common among all who fit this rubric. So come back to the subsidiary question. Who might have felt such a role if Hayek had never been born? Short of the history of the century would have been different and substantially so in Hayek's absence. Socialism, both in idea and in substance, might well have collapsed of its own weight sooner rather than, later rather than sooner. But the Hayek great society, the attainable and coherent alternative to socialism would never have been omnipresent as an ideal through a whole half century. That's quite an accomplishment. In one ceremony, we might commence with on this rock as we establish yet another memorial to Hayek. And actually at this particular conference in Obergergel in August 2001, we put a plaque in a rock upon the mountain where Hayek himself said he had gotten a lot of his ideas. When all is said and done, Hayek's work, Warts and All, is the rock upon which classical liberalism rested in the last half of the 20th century. Thank you. Thank you very much, Jim. Our next speaker is Leonard Ligio. He's an old friend of Kato's. In fact, he was the vice president of Kato back in 1977, 78 when we were in a much nicer city, San Francisco. Ed likes to call Leonard the Johnny Apple seed of liberalism and that's true. Much of Leonard's time is spent traveling around the world speaking and encouraging young scholars to spread the freedom virus as Jose Pinyar likes to call it. And Leonard is currently the executive vice president of the Atlas Economic Research Foundation and distinguished senior scholar at the Institute for Humane Studies at George Mason University. He's also president of the Mont Pelerin Society, the trustee of the Philadelphia Society and a research professor at the George Mason University School of Law. I'm pleased to tell you that Leonard will receive the prestigious International Award for Liberty from Societa Libera in Italy this June. Leonard? I'd like to begin by referring to Ed's point of the inspiration of Scotch. I was visiting at the home of Bertrand Russell in North Wales and at the time he was living on Redhackle, Single Mold Scotch and Metrocow Liquid Nutrients and that was all. But he continued to be productive. The rote de serfdom sometimes is referred to as a popular work. I've read it a number of times and each time find it more and more challenging intellectually. There's a vast amount of the history of classical liberalism in rote de serfdom and Hayek was thinking he would then be writing several books on the history of classical liberalism. The only one that came along was the counter-revolution of science challenging the growth of statists versus liberal thought in France. And he then decided to move on from doing that kind of research. He says that at that time he said, but though I tried hard to get back to economics proper, I could not free myself of the feeling that the problems on which I had so undesigningly embarked were more challenging and important than those of economic theory and that much that I had said in my first sketch needed clarification and elaboration. And the spirit was caught by Milton Friedman when he wrote the introduction to the first edition published in Germany itself in 1971 and then reproduced in the 50th anniversary edition. Milton Friedman said, over the years I have made it a practice to inquire believers in individualism how they came to depart from the collectivist orthodoxy of our times. For years the most frequent answer was a reference to the book for which I have the honor of writing this introduction. Professor Hayek's remarkable and vigorous tract was a revelation particularly to the young men and women who had been in the armed forces during the war. Their recent experience had enhanced their appreciation of the value and meaning of individual freedom. In addition, they had observed a collectivist organization in action. For them, Hayek's predictions about the consequences of collectivism were not simply hypothetical possibilities but visible realities that they had themselves experienced in the military. Hayek's contributions have been multiple and in many different directions but one inspiration that I went to mention is one that only more recently has gained attention. And that is the contribution to historical studies. At the first meeting in 1947, Hayek had a whole session on historical research but over the years not many historians were encouraged to participate in the MPS meetings. More recently there has been research in the direction that Hayek and others have called attention to. One has been encouraged by and then rewarded with the Nobel Prize in the case of Douglas North and Douglas North's work on historical institutions. From the beginning it is valuable to remember that the emphasis by Douglas North on time, the evolution of social institutions means the evolution over time, which is what history is. Time can be affected during the life of an individual and it can be a factor over the lives of succeeding individuals. Rules and practices develop over a long time period. They continue because they solve pre-existing problems. The rules provide order and deter disorder. The majority of a society prefer order or certainty. One area of success had been the work stimulated from an early MPS meeting which were the papers later published as capitalism and the historian. Dealing with the myths about the Industrial Revolution and providing a corrective to those myths. More recently has been the work dealing with the social institutions that dealt with what now are dealt with by the welfare state in particular social security. The work for instance about England and about Australia by David Green of the Institute of Economic Affairs. By David Beto formerly of the Institute for Humane Studies and now at University of Alabama. Dealing with the fraternal societies and how they had provided all of the unemployment health and retirement solutions to the problems people faced and how those were destroyed when the government itself went into these practices. Sometimes because of for instance in England because the existing institutions covered only 90% of the population and only a government institution would cover 100% and at the price of trying to cover that last 10% all the valuable parts of these private fraternal societies contributions was destroyed. They provided risk averting insurance and social functions. Early in the 20th century evidence shows that American blacks both in the North and the South had the best records for punctual payment of their association's insurance premium payments. In all the groups, local officers monitored the illnesses or job searching by members of fraternal societies since they were paying for their health coverage or their unemployment situation. This voluntary social role was destroyed by the government's compulsory insurance system. Another area of important contribution in this Hayekian research program was that work of Ronald Coase starting with his work on the lighthouses and the discovery that for instance in the Middle Ages and early modern times all lighthouses were provided by private suppliers and a number of other important services were likewise bridge building, road maintenance and others were provided by societies devoted to those purposes. This only scratches the surface but indicates why a Hayekian program in historical research would be so valuable for classical liberals, one that has tended not to be at the center of attention. We're looking at a new century and a new century of challenges for classical liberalism but one area that Hayek himself has indicated and that Coase and then Douglas North have presented is to try and develop these areas of research showing where private market, private associations, fraternal groups have provided all of the coverage which government is mythically thought to be the only possible provider and the best possible provider. Thank you very much. Thank you very much Leonard. Our final speaker is Daniel Juergen. He's co-author of The Commanding Heights, The Battle for the World Economy and Chairman of Cambridge Energy Research Associates. Commanding Heights has received wide attention for its analysis and narrative of how the world is changing its mind about markets and governments. The Wall Street Journal said, quote, no one could ask for a better account of the world's political and economic destiny since World War II. It's been translated into 13 languages. Dan, as executive producer, led the team that turned Commanding Heights into a six-hour PBS, BBC documentary. The major PBS television series on globalization. The series received three Emmy nominations, a CINE Golden Eagle Award and the New York Festival's Gold World Medal for the best documentary. Dr. Juergen holds a PhD from Cambridge University where he was a Marshall Scholar and is taught at the Harvard Business School and the Kennedy School of Government. We'll forgive him for that, I guess. He was kind enough to have his staff edit the six-hour film down to 20 minutes and that's very admirable. The film will feature those segments devoted to the battle for the soul of liberalism as seen in the contrast between post-war socialism and market liberalism and what we'll do is Dan's gonna give a few introductory remarks to the film and then what we'll do is we'll have a brief time for Q&A for the speakers here and then we'll go immediately to the video which I think you will all find very interesting and enjoyable. It features many clips of Hayek with Jim Buchanan interviewing Hayek and so forth but Dan will tell us about that. So it's a real pleasure to have Dan Juergen with us today. Thank you very much. I'm really actually very honored to be here to be part of this very distinguished panel great respect for the panelists and of course for Kato. In fact, what I really wanted to do was be here to listen to the other panelists but I have a very modest job which is indeed to introduce the film that you'll see in a few minutes. I think Leonard set it up in a way by his discussion about the importance of history and the sense that Commanding Heights is a history of the battle of ideas on the role of government and the role of markets. And of course Hayek is central to it. You'll see the film and I didn't realize where those interviews done by Jim that are in. Yeah, yeah, yeah. So you'll, I mean, it may be very familiar to you indeed but Hayek says in it as a young man he was a young economist who was very highly respected and then in his middle years he was ignored. I think Ed described it as the days that were hopeless and then kind of rediscovery. And in a sense that is the story of the Commanding Heights and Hayek is central to that story. And as Jim Buchanan said, his singular contribution to this battle of ideas is extremely noteworthy. Commanding Heights began as a book. It was really about the battle of ideas and the power of ideas which as you'll see Hayek understood very well. It really started for me in a park on the outskirts of Moscow a few years after what Ed Crane described walking in his mail of a market where all these different things were for sale from icons to little pins with Lenin to South Korean electronics. And the man who was a British ambassador at that time said how much easier it would have been for the Russians if communism had collapsed in the 1970s. And I thought this is very interesting. I asked him why. He said because in the 1970s, most everybody believed in the mixed economy. So they could have taken down the portraits of Marx and Engels and Lenin and kept these state-owned enterprises and just kind of gone on as they were. And that in a sense was one of those little epiphany moments that said, you know, the world really has changed its mind. I mean, not a surprise to you all here but sort of standing back and looking at it. And so set out to try and tell it as a story. It was really gonna be an article then it turned into a book because the narrative elements. But then the challenge is to turn it into a movie basically, a six-hour movie. And it is very challenging because in an hour of television you have about as many words as you have in 10 pages of a book. So you can't tell a story the same way. You tell it through emotions, through visual images and you tell it through people. And so the organization became very clear that in a sense that dominating personalities would be Hayek and Keynes to capture the story, to capture the battle of ideas. As Jim said in his introduction, Kato has reached millions of people discussing classical liberalism. And I think in a way we were able to, in a very concentrated way, to reach a lot of people to whom this was really pretty unfamiliar, particularly viewers of public television. And I think I sometimes wonder how many of them, many more of them probably knew the name of Keynes and Hayek, at least before the show. And I found for many people a sense of revelation of it. So what will you see in this? And as I say, it carries a story. And Leonard talked about the impact that Hayek, that the road to serfdom had on many people. You're gonna see one particular, very important example of that in the films. What you're gonna really see is, instead of a play within a movie within a movie, because what we did is we took the six hours and really edited it down into this 20 minute film and it was quite amazed at the end of it to see that it works very well as a 20 minute film, which is a sort of daunting thought. You'll see the foundation, the first meeting of the Mount Peleron Society. And the person I don't think he's, Jim says, I don't think he has the lower thirds, the identification is Ralph Harris, Lord Harris of the Institute of Economic Affairs who was at that original meeting and talking about it. As I was sitting there listening, I thought, oh, I think we left out one scene in which Ralph Harris, it may be in there, but I think it's not, so I'll just tell you about it. It's when Ralph Harris describes what happened to Winston Churchill during the general election of 1945 when he quoted the road to serfdom and rather than tell you what happened, I'll just say you have to watch the six hour version to see that, so thank you very much. Thank you very much, Dan. Just a couple of notes, there's information about the commanding heights out on the table there that you might wanna take a look at and if you really like this 20 minute or so video, you might try to get Dan to distribute that as well because I know I've tried to use a six hour video in my class, the students like it because I don't have to lecture for six hours. But 20 minute version focusing on Hayek versus Keynes I think will be very, very useful. Also, I'd like to bring your attention to Jim Buchanan's article, Saving the Soul of Classical Liberalism which is also out on the table, it was first published in the Wall Street Journal. And finally, Kato as I said, will be holding a conference, a major conference in Moscow and also St. Petersburg in April, April 8th, 9th and 12th. The information's on our website, it's gonna be a very good program and I hope some of you can join us at that. Now, we'll take maybe 10 or 15 minutes of questions and then we'll go right to the film and then we'll have a nice reception upstairs that you're all invited to. So if you have a question, please raise your hand and identify yourself and keep the question short and there's a microphone coming around. Yes. Thank you. And a person from country which exactly on the road to Sertum. This country was selected the experiment by Russians in 1921 and has huge territory and small population. And the most dangerous thing is this country isn't able to identify on the road to Sertum because we don't have any economic free marketing tank in this country and to deliver this great message to the people of this country. And personally I'm planning to set up free marketing tank and to deliver this timeless message to the people of this country. And I expect that if this message, the Hayak wrote on the road to Sertum, it will be, wouldn't be successful enough without your tireless effort to develop this idea. And I mean the think tank people develop this idea and keeping this idea for a long time. And this country's name is Mongolia and located between Russia and China. And I know we need some help and to develop a think tank idea in Mongolia and especially central message of the road to Sertum and Daniel Juergens book I read and watch the six hours TV. And I would like to attract your attention and if you possible, could you give me some advice and how can I develop my think tank idea? And thank you very much. It's my pleasure to be here in this distinguished audience. Thank you. Sure, is anybody, is this on? The panel's one of, I think that's pretty, anybody wanna say anything? Okay, we appreciate your message and you can talk to some of the people afterwards and I'm sure they'll have some advice and helpful comments. Other questions, please? Yeah. It's a while, John Kelly. Several years ago, George Stigler made a statement that preserving a large role for local governments in the economy was a widely accepted and important social goal. How would, as opposed to centralized large government, did Hayek make a distinction between larger governments and smaller governments or do you think he would agree with that statement of a large role of for local governments in the economy, local public enterprises, for example? Clearly he did and one of his seminal contributions actually was a very important article on federalism and a very useful, it's preferred to still, you find it's very often cited now. It's the argument for decentralized political control to the extent that it's possible and very few people at that time picked up on this but it's been referenced a lot in the more recent literature on federal structures and so I've used it and other people have used it in relation to the European Union problem. To what extent are they going down the road of over-centralizing as opposed to leaving competitive structures in such that the different nation states can compete with each other on regulatory and taxation matters and so forth. So Hayek was a central contributor in that whole discussion. Can we get a question in the back there? My name is Tony Maul. I had a question regarding the universality or the universal appeal of Hayek's beliefs in light of population declines in Western Europe. You're looking at a replacement rate of 1.3 in the next 50 years when we celebrate the 100th anniversary of this book. There'll be 17 fewer Italians and same percentage decline in Spaniards and French and so you'd almost have to believe that from a population perspective that the West is declining. The people who will take up that additional space will Hayek's teachings have appeal to them? What is it they will believe? I think that Hayek's contributions in an area that was not scientific, let's say, at the center of scientific social science, but was his later contribution dealing with evolutionary development. I think that is a theme and something that is very meaningful for solutions to some of the problems that are rising in Europe in the 21st century. So I think there are areas. The problem is not the ideas, it's the marketing of ideas, it's getting ideas out into a wider constituency and that's where Hayek in his book, Intellectuals and Socialism made such a mark. Indicating that it's most important for classical liberals to work to disseminating the ideas, to influencing the people who do disseminate the ideas, the journalists, we might say, public intellectuals. So you're not going to reach millions and millions of individuals directly, you're going to reach them the way the socialists reached them 100 years ago, which is by reaching public opinion through editors, writers, journalists, popular essayists, et cetera. Any other questions? You want to get right to the film. Yep. Go ahead. Could you direct it to a specific speaker if possible? Here's another question. Well, probably Professor Buchanan. You mentioned Hayek's earlier work as an economist in particular, he did a lot of work on business cycle theory, gave the lectures at the London School of Economics, wrote prices and production, that sort of thing, and wrote a book on capital theory and then quit, but almost no one seems to follow it up on that, particularly in terms of any kind of model building, empirical test of the Austrian theory, the business cycle. And I was curious why you thought that has never happened and has become so peripheral to mainstream economics. I don't think it's necessarily peripheral so much. I think what I said would probably have been more relevant 10 years ago than now, because within the last decade, there has been a kind of a rediscovery of the Austrian theory of the cycle, brought back through the so-called real business cycle theory stuff. It's been revised in the context of this later recession to some extent and there have been people who have modern techniques of model building and so forth who are attempting to make that revival. I just don't think that I'm personally not very much an adherent of that theory. Maybe I was biased in some of my statements, but you can find people around in the economics profession now who are much more favorable to the Austrian theory of the cycle than they were 10, 15 years ago or 20 years ago. And it may possibly ultimately get much more attention than I gave it credit for being. Capital theory, I think, is still up for grabs. It seems to me that the Austrian theory of capital, the time period of production theory, has major flaws in it, but capital theory has still not been resolved. It's still hanging as if a major problem in economics. Yeah, up in the back there on the right-hand side. Nigel Ashford, Institute for Humane Studies. Would anyone on the panel care to comment on part three of the Constitution of Liberty? Because in part three, Hayek articulates a set of policy proposals, which favors a limited government, but nonetheless a much more extensive government than the Cato Institute itself would endorse. And I wonder whether people on the panel thought that there was a contradiction between Hayek's principles and the policies he advocated, at least in that part of the book, or is there something missing from the principles themselves? I'd say even Homer nods. Even Homer nods, even Homer doesn't pay attention. Hayek lapses into constructionism himself in the third volume of Law, Legislation and Liberty. He constructs this sort of fantastic way of trying to solve political problems. And the same with that section of Constitution of Liberty, he felt people were demanding to give positive answers in this, he fell into the trap of talking on their terms. So I think it was a lapse on his part, failure to keep attentive to the main point. I also think that he hadn't quite come around yet had he littered to this anti-constructivism quite so much in the Constitution. I think that was later, I think that came in the 60s. Also, Hayek, to his credit, questioned the monopoly of money and argued for private competing currencies, which is pretty radical, so he changed his mind on that. Maybe we'll take one more question. Dan, you mentioned that effectively, Fred Smith C.I. Dan, you mentioned that in effect, many people probably knew Keynes much better than Hayek. This, of course, was a major breakthrough, especially for the PBS audience. Is this the first of many, or is this the last shot in an array of trying to educate even the PBS audiences? I wouldn't say it's the first of many, but it certainly seems an activity that one should continue to do, so not quit. Thank you.