Beacon of Liberty Amid Depression

Just over 70 years ago, a group of intellectuals met in Paris to revive liberalism. Their views have an eerie echo today

Think of Paris and think of intellectuals and one is almost inevitably reminded of Jean-Paul Sartre and Simone de Beauvoir. For good or ill, they established what it meant to be an intellectual in France. It was to embrace the myth of the Left: to be against capitalism, soft on communism and the Soviet Union, hostile towards the United States, to support the struggle against colonialism, to believe in the proletariat and in revolution. Above all, it was to display “commitment”.

If this posturing exercised a near monopoly during the Cold War, its roots were clearly discernible during the interwar years. In 1927, Julien Benda published what was to become one of the most famous books of this time, La Trahison des Clercs. Benda’s complaint was that intellectuals had subordinated their lofty mission “to the service of their political passions”, abasing the abstract values of truth and justice before those of action. By doing nothing to resist the passions of race, class and nation, he argued, modern intellectuals had proclaimed that the intellectual function was respectable only to the extent that it pursued concrete advantage and that an intelligence disinterested in these ends was to be scorned.

The response to this plea for intellectuals to recover their vocation came in the form of Les Chiens de Garde, published by Paul Nizan, a Marxist, in 1932. “Every philosopher,” Nizan wrote, “though he may consider that he does not, participates in the impure realities of the age.” Thus Benda’s talk of abstract verities was less a choice made by eternal man than the decision of a partisan. For Nizan, the alternative facing the intellectual was a simple one. He was either for the oppressed or for the oppressors. “If we are to betray the bourgeoisie for the sake of mankind,” he wrote, “let us not be ashamed to admit that we are traitors.”

As the economic depression of the 1930s worsened and the political extremes of totalitarianism came to the fore, it was this doctrine of commitment that was to prevail. A generation of young French intellectuals sought to escape from what they regarded as a crisis of civilisation. Often undecided about the relative merits of communism and fascism, they were nevertheless almost universally anti-liberal, against capitalism and critical of parliamentary democracy. Disillusionment and self-doubt were combined with an illiberal radicalism and ideological blindness. However, this was not the only response to be articulated in these troubled times. Indeed, as we ourselves face a year of mounting economic uncertainty and escalating international tension, it might be worth pausing and reflecting upon how one group of intellectuals provided a different answer to the economic crisis and moral dramas of their day.

The event in question took place over four days in an obscure building, the Musée Social, just off the Boulevard Saint-Germain in Paris at the end of August, 1938. Present were some 26 academics, business people and writers, mostly from Europe, but including the American commentator and journalist Walter Lippmann (who, as it turned out, was in Paris on honeymoon at the time). Also in attendance, apart from the young Raymond Aron, were some of Europe’s leading economists: Louis Rougier and Jacques Rueff from France, Ludwig von Mises and Friedrich von Hayek of the Austrian School, and two Germans, both living in exile, Wilhelm Röpke and Alexander Rüstow. Although invited, neither the future Italian President Luigi Einaudi nor the Spanish philosopher José Ortega y Gasset was able to attend.

The immediate cause of this coming together was the publication of a French version of Lippmann’s An Inquiry into the Principles of the Good Society by the Librarie de Médicis, the same publisher that had also recently published Rougier’s Les Mystiques Economiques and von Mises’s anti-collectivist broadside, Socialism. The wider context was the challenge to liberalism and the free market posed by the rise of a generalised state interventionism in the form of planning, corporatism and socialism. Capitalism seemed on the brink of systemic failure and for many it was capitalism itself that was to blame. Its decline and its end appeared inevitable.

But the participants also saw that the challenge they faced was directed against more than simply the liberal economic order and the political democracy born out of the 19th century. “The totalitarian rebellion,” Lippmann commented in his introductory remarks to the conference, “attacks the entirety of the Western tradition – its religion, its science, its law, its state, its property, its family, its morality and its conception of the human person.” As a matter of urgency, the civilised world had to find a response to an inhuman enemy.

And, like Benda, they saw that intellectuals were aiding and abetting this enemy. Never, Rougier asserted, had the clercs betrayed as much as they were now doing. They denounced the crimes of Hitler and of fascism but remained silent before the Moscow show trials. They called for the socialisation of the economy without understanding that they were weakening democracy and helping dictators. Believing themselves to be the most implacable enemies of tyranny, they were in fact its best allies. They were betraying the very cause that they professed to serve. To be a clerc who did not betray, Rougier therefore responded, it was not enough to be a scholar and a teacher. The clerc had to enter the fray in defence of the free use of reason.

To read the transcript of these (often heated) discussions today is to enter a world that is eerily familiar. The participants reflected upon the rise of protectionism and economic nationalism. They saw the pressures placed upon governments to save big companies from bankruptcy. They acknowledged that people were perplexed and bewildered by the economic phenomena of the modern world. One French professor even commented: “An unreasonable optimism and enthusiasm took hold of the public and led bankers to excessive courses of action; the federal reserve banks were unable to temper such an élan.” For good measure, he then added: “The fall that followed the boom was that much more catastrophic.”

But the big questions they addressed are also recognisable. Who was to blame for the world economic crisis? How should the proponents of economic liberalism respond? Did market capitalism have a future? What level of state intervention, if any, was necessary and appropriate? Did laissez faire mean laissez souffrir? In what ways could economic liberalism respond to the social problems of the day? How could economic equilibrium be restored? Everyone agreed that bureaucratic state planning (much in vogue during the 1930s) was not the way forward and that liberal socialism was a contradiction in terms. They similarly agreed that a free-market economy was best equipped to maximise levels of productivity (even in times of war) and was best able to attain the highest standard of living for all consumers. They defended free trade and the international division of labour. More than this, they saw that a market economy was alone compatible with human liberty and dignity.

Yet their disagreements were no less fundamental. Viewed superficially, they gravitated around the issue of the level of state intervention compatible with the maintenance of the price mechanism. At the bottom, however, the question was whether the very principles of economic liberalism required radical renovation and whether liberalism’s decline could be reversed simply by reasserting the virtues of free competition and the regulatory role of prices. Men such as Lippmann and Rougier evidently thought that significant innovations were required, both men arguing that the doctrinaire and complacent formulas of 19th-century laissez-faire economics were no longer of relevance to the workings of modern capitalism. Others, most notably Mises and Hayek, saw nothing essential to criticise in these principles, placing the blame for the economic ills of their day upon distortions to the market resulting from state intervention. For the Austrian school, the market was the product of a natural spontaneous order: for their opponents, it was a juridical order that presupposed the legal intervention of the state and that required constant adaptation to meet new social and industrial conditions.

Put simply, the ambition was to sketch out a general framework and programme that would allow the revival of economic (and political) liberalism. In August 1938, there could be no broad agreement upon such an important issue. Nor are we seemingly any closer to agreement today. Yet, the meeting in Paris tried to sketch out an agenda for the future of liberalism that was surprisingly innovative. If it placed a return to a free and competitive market as its first priority, it did not exclude the pursuit of collective ends and was prepared to contemplate the redistribution of wealth through taxation, government spending on social insurance and education, and a new legal regime for banks and financial services. Not to everyone’s delight, Jacques Rueff labelled it a “liberalism of the Left”. Others were happier with the term “positive liberalism”. Rougier spoke of a “constructive liberalism”.

Little of practical substance actually came out of the Paris meeting. It was resolved to establish the Centre International d’Etudes pour la Rénovation du Libéralisme. One meeting was held in January 1939. Lippmann, Hayek and Röpke were delegated to set up American, British and Swiss sections. Nothing came of this and the society ceased to exist with the outbreak of war. Subsequently, however, Louis Rougier was to describe the Colloque Lippmann as the founding moment of neo-liberalism and it is clear that the idea of an international association of liberals lived on. It was indeed the case that, after the war, 12 of the conference participants were to be found at the first meeting of the free-market Mont Pelerin Society. Left-wing critics in search of a neo-liberal conspiracy have since drawn a direct line from these two meetings to the Thatcherism and Reaganomics of the 1980s. To do so is both naïve and simplistic. It can just as well be claimed that the Lippmann colloquium contributed to the theory that underpinned the post-war German social-market economy. Yet there can be no doubting that the men who gathered together in August 1938 in the shadow of totalitarianism and of war did so in the belief that free markets best produced wealth, best guaranteed peace and best preserved freedom, and that the worst of courses was the pursuit of a generalised state interventionism. The proper function of the state was to determine the legal framework that best served the free development of economic activities.

In other words, when all around were saying that doing nothing was not an option, their reply was that what mattered was doing the right thing. We should perhaps leave the last word to Rougier, the man who brought the participants of the Colloque Lippmann together: “This truly was,” he wrote, “a gathering of men of good faith, of good men and of free men, convinced that western civilisation’s best chance lay in its return to liberalism rightly understood, the only way of assuring an improved standard of living for the masses, peace among peoples, freedom of thought, and the honour of the human spirit.” Today such men seem in short supply.

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