Mont Pelerin in Virginia

Mont Pelerin in Virginia

A new book on James Buchanan and public-choice theory explores the Southern roots of the free-market right.

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In the spring of 1972, a small group of thinkers met at the Russell Sage Foundation in New York City to discuss the role of “altruism and morality” in shaping social life. Among them was James Buchanan, an economist then teaching at Virginia Tech, who was best known as one of the founders of “public choice” theory—a branch of economic thought that sought to apply the methodology of economics to political decision-making.

At the conference, Buchanan delivered a paper on the theme of what he termed the “Samaritan’s dilemma.” Using the framework of game theory, he argued that most people had a strong incentive, in the short term, to extend charity to others. There was a definite loss of “utility” associated with denying help to someone who needed it. But the problem was that this innate longing to be charitable opened up the possibility that “parasites” would take advantage. To counter it, people would need to sacrifice their immediate utility for long-term well-being—just as a mother might have to spank her child (an example Buchanan used) in order to encourage good behavior in the long term. “A species that increasingly behaves so as to encourage more and more of its own members to live parasitically off and/or deliberately exploit its producers faces self-destruction at some point in time,” Buchanan concluded. In the context of the early 1970s—shortly after the heyday of Lyndon Johnson’s War on Poverty programs and the welfare-rights movement—there could be little mystery about the political significance of Buchanan’s arguments. The implication of his argument was clear: For the sake of the few, the American welfare state had ended up putting the whole in jeopardy.

Buchanan never achieved the fame of Milton Friedman, who made popularizing free-market ideas via his PBS show Free to Choose and his columns in Newsweek his life’s mission, nor has he ever received the same amount of attention as Friedrich Hayek and Ludwig von Mises in historical accounts of the free-market right in America. But in Democracy in Chains: The Deep History of the Radical Right’s Stealth Plan for America, Nancy MacLean tries to provide a critical history of the role of Buchanan’s ideas in the modern conservative movement. MacLean asserts that his thinking—and especially his caustic attitude toward the state and government—became a critical source of inspiration for several generations of conservative thinkers and activists. Using Buchanan’s papers, she also seeks to excavate his relationship to Charles Koch, one of the Wichita, Kansas–based oil billionaires whose financial contributions have been integral to building the intellectual infrastructure for libertarianism.

Democracy in Chains has already become the object of much controversy. A variety of libertarians and political philosophers—many, though not all, working in Buchanan’s tradition—have attacked the book, arguing that MacLean has read Buchanan’s work (and their own) out of context, distorted quotes, overreached on the available evidence, and failed to grapple adequately with Buchanan’s ideas. They also contend that her vision of Buchanan is Manichaean and melodramatic, and that her assertion that the many Koch-funded organizations comprise a “fifth column” bent on undoing majority rule is, at the least, unfair. Meanwhile, liberal and left-leaning commentators have offered mixed reviews, with some, like political scientists Steven Teles and Henry Farrell, arguing that MacLean doesn’t do enough to engage with the substance of public-choice theory, and others, like historians Bethany Moreton and Colin Gordon, have praised MacLean’s hard-hitting analysis of the libertarian right’s fundamental hostility to ideas about majority rule. (I should say here that MacLean reviewed my first book and we know each other professionally; in fact, because we have participated in conference panels together, my name appears in her acknowledgements.)

Democracy in Chains isn’t a perfect book, if such a thing exists, and there are certainly many places one might criticize her argument. Seen as political history, MacLean’s suggestion that Buchanan’s thought provides, as she puts it, a “master plan” for thinking about the goals of Charles Koch suggests too seamless a connection between the two men, and as intellectual history, the book also could have done much more to clarify Buchanan’s ideas and public-choice theory for a general readership, as well as to give some sense of why it appeals to so many, a point made by Teles and Farrell.

But despite its flaws, MacLean’s book makes two important interventions in the literature on the rise of the right. The first is that, by showing the various points of contact between free-market intellectuals and those organizing in opposition to the civil-rights movement, Democracy in Chains brings the Southern context of libertarian ideas to the forefront. Going back to George Nash’s 1976 intellectual history of American conservatism, most treatments of right-wing thinkers in the 1940s and ’50s say little about the opposition to desegregation, giving the impression that it was an unsavory product of shadowy grassroots groups like the Ku Klux Klan that has little to do with libertarian thought. But MacLean’s book shows how difficult it is to separate race from the history of the free-market right. She highlights how the work of thinkers like Buchanan echoed common arguments being made by anti-integration journalists and legislators and how, in turn, those opponents of civil rights then used his and other libertarian arguments to further their cause. Where other intellectual historians of the right have focused on the intent of the thinkers and the content of their work, MacLean’s emphasis is on how Buchanan’s ideas were used. This leads her to tell a story about the history of free-market conservatism that is very different from what libertarians tell themselves, which is likely one reason that her book has become such a lightning rod for the right.

Her book’s second contribution is in some ways more complex: It is a question and a provocation more than an answer. By exploring the role played by the Kochs and others in financing various centers of intellectual and political activity, Democracy in Chains raises the question of how historians should approach and write about right-wing efforts to reshape political ideas. How can historians write about business activists such as the Kochs without overstating their influence? They may have believed they had a “master plan,” but how can we offer accounts of them without taking them at their word and making them appear all-powerful?

The first half of Democracy in Chains deals with Buchanan’s biography and the development of his career at the moment when “massive resistance” in the South was at its height. Buchanan grew up in small-town Tennessee, the grandson of a man who had been governor during the Populist era. Although his family was hardly well-to-do, they were not impoverished: The Buchanans were attended (at least when James was born) by an African-American live-in servant, and their farm was worked by a family of black sharecroppers. Intellectually ambitious, Buchanan attended a local teachers college before moving on to the University of Tennessee for his masters and then the University of Chicago for his PhD, where he was influenced by Frank Knight and Milton Friedman (though he flatly disliked Friedman for the haughty superiority with which he treated students).

Shortly after his graduation from Chicago, Buchanan was hired by the economics department at the University of Virginia. He arrived there in 1956. It was, at the time, an all-male institution (women were not admitted to UVA until 1970) and almost all-white—the first black student came to the university’s law school in 1950 and withdrew after one year. The state as a whole was not much more egalitarian. Virginia in the mid-1950s was not only highly segregated but still tightly controlled by the Democratic Party, under the leadership of its longtime US senator, Harry F. Byrd. The Byrd Organization, as the Democratic machine in Virginia was known, recognized that enfranchising African Americans would mean the end of its own power, and so it had political as well as racist motives to fight the end of Jim Crow. As political scientist V.O. Key put it in his famous study of Southern politics, “Of all the American states, Virginia can lay claim to the most thorough control by an oligarchy.”

In 1956, the battle over integration was at its peak. High-school students from Prince Edward County, a district in central Virginia, had been among the plaintiffs in Brown v. Board of Education—the only one of the five cases that Brown comprised to have originated with students (they had organized a school strike over unequal facilities, and then agreed to work with the NAACP to challenge segregation more generally). Following the Supreme Court’s decision, the State Legislature passed a law stating that the governor had the right to close any school district that attempted to integrate. Tax-funded “tuition grants” for private schools would be given to families instead—effectively, a subsidy for the private “segregation academies” that were springing up throughout the South. The Legislature’s intransigence was buttressed by the writings of thinkers like James J. Kilpatrick, the editor of The Richmond News Leader, who argued in his 1957 book The Sovereign States that not just Brown, but the entire legal and constitutional infrastructure that supported central pieces of the New Deal—including Social Security, the federal minimum wage, and the National Labor Relations Act affirming the right to form unions—represented a breach of the Constitution that Virginia should resist.

From his position at the University of Virginia, Buchanan weighed in on the noisy debate over integration. Along with another UVA colleague hired at the same time, he wrote a report for the State Legislature making the case for ending the “monopoly” of “state-run schools” and replacing it with a system in which any parent who wanted to send a child to private school could do so with a tax-subsidized voucher. In this way, “every parent could cast his vote in the [educational] marketplace and have it count.” So that public schools didn’t enjoy an unfair advantage, Buchanan and his colleague suggested that the state should sell off its equipment and resources to private operators. (The economists shared a draft of their report with Milton Friedman, who said he didn’t think it went far enough—for example, parents should bear the full cost of their offspring’s education, Friedman argued, to ensure they had “the appropriate number of children.”)

In April 1959, the Virginia Legislature voted on whether counties could choose to abandon public education altogether and replace it with a “scholarship” approach; shortly before the vote, Buchanan’s report was published in the Richmond Times—Dispatch. But the measure did not pass, losing by a margin of 53–45; most legislators recognized that their constituents wouldn’t be happy to see public schools disappear. Still, in September of 1959, Prince Edward County simply closed all of its public schools, for white and black children alike. Nor did the Legislature order the county to reopen its schools, which would remain padlocked for the next five years, until the closure was ruled unconstitutional.

MacLean doesn’t show (or seek to show) that Buchanan himself held racist views, nor does she cite extensive correspondence with Kilpatrick or other advocates of segregation. But her reconstruction of this early episode in Buchanan’s career, she believes, demonstrates his willingness to work with the forces eager to find an alternative to integration, and it also shows the confluence between his vision of public schools as a government “monopoly” on education and those who wanted to found all-white private schools in Virginia. Perhaps of greater importance to MacLean, it offers us a critical historical context for interpreting Buchanan’s larger intellectual project and, in particular, his skepticism toward the state. The emergence of libertarianism in America, MacLean wants to show, had close connections to the resurgence of right-wing segregationism in the 1950s and ’60s.

In 1962, only a few years after the battle over the Virginia schools, Buchanan and his colleague Gordon Tullock published The Calculus of Consent, the founding text of public-choice economics. In it, they sought to bring the insights of economics—especially the methodology that takes the utility-maximizing individual as its starting point—to bear on politics. Most interpretations of the state and of government, they argued, were “grounded on the implicit assumption that the representative individual seeks not to maximize his own utility, but to find the ‘public interest’ or ‘common good.’” In contrast, they suggested that a clear-eyed, unsentimental analysis focused on “individualism” and on self-interest as key motivators would prove far more capable of explaining political outcomes.

The mode of analysis embodied by public-choice theory caught fire in the discipline. Some were drawn to the frisson of using economic thought to understand politics. Others appreciated the ironies and paradoxical outcomes it exposed: how its stance of realism and cool reason could allow an economist to dissolve the fuzzy clichés of the “public good.”

The shift that it made—away from totalizing concepts of the state, to focus instead on the self-interested individual as the starting point of analysis—was echoed in other works of social science written in the era by liberals as well as conservatives: most notably, John Rawls’s A Theory of Justice, which took the opposite position about the desirability of the welfare state. Still, regardless of Buchanan and Tullock’s intentions, the attack on public goods and institutions could not help but resonate, in the Southern context, with the long-standing antipathy toward any institutions capable of challenging the racial hierarchies that structured social life in the region. As MacLean puts it, “The driving analysis was less original in its basic convictions than later reviewers imagined. It was midcentury Virginia wine with a Mont Pelerin label.”

Koch only comes into the book in its second half, as MacLean traces Buchanan’s participation in the developing world of the libertarian right. By the mid-1960s, the UVA administration began to grow anxious about his influence. Criticism circulated within the university that the economics department was “too far to the right,” and that “absolute doctrinalism breeds absolute authoritarianism absolutely.” Someone at the top of the UVA administration commented that there was no one in the department “to the left of the John Birch Society.” When Tullock (whose degree was actually in law rather than economics) failed to be promoted to full professor, Buchanan threatened to leave UVA in protest. The university president stood his ground. Buchanan opted to exit, and he headed west for the University of California at Los Angeles.

UCLA turned out to be an even less accommodating home for a Southern economist. The wave of student-led protests over civil rights and against the escalating war in Vietnam swept through the UCLA campus in the late 1960s. Buchanan would go on to co-author a brief polemic about the state of affairs in American universities, titled Academia in Anarchy, with Nicos Devletoglou. The main thrust of their argument: Free or cheap tuition gave students an incentive to take advantage of their universities.

Never at home on the West Coast, Buchanan returned to the South in 1969, this time to Virginia Tech—an institution with little national reputation and far more modest resources at the time. From his new post, Buchanan renewed his attempts to build an intellectual movement—-recruiting donors, bringing together small groups of like-minded thinkers, discussing the need to “create, support and activate an effective counterintelligentsia” to reshape “the way people think about government” (as he put it at one small gathering at his country cabin).

By the early 1970s, Buchanan wasn’t alone in these efforts; many on the right were discouraged and frightened by the emergence of the New Left, and MacLean describes the wide array of conservative political and intellectual organizations that developed in this period, including the Institute for Contemporary Studies in California; the Law and Economics Center at the University of Miami; the Liberty Fund, which ran annual summer conferences promoting the work of younger scholars; and the Institute for Humane Studies, an intellectual organization that offered seminars and conferences on free-market ideas. Through this growing constellation of libertarian academic organizations, Buchanan ends up meeting the other main character of Democracy in Chains: Charles Koch. Koch’s first major financial contributions went to the Center for Independent Education, a group promoting voucher programs and private schools in Kansas. The two men connected quickly: After meeting Buchanan, Koch invited him to be the first dinner speaker at the newly formed Charles Koch Foundation.

As the 1970s wore on, the relations between Buchanan and his department chair at Virginia Tech worsened. In 1983, after a stint in Chile (where Buchanan advised Gen. Augusto Pinochet on the Chilean Constitution, a move he seems never to have regretted), Buchanan moved on to George Mason University. Once again, he chose a less prominent public institution to which he promised to bring new funds through his connections with conservative circles. In these years, Buchanan’s reputation was on the rise—he won the Nobel Prize in 1986—but he was largely immune to the euphoria that swept the right during the early years of Ronald Reagan’s presidency. Speaking at a Mont Pelerin Society meeting in Chile in November 1981, Buchanan warned: “We should not be lulled to sleep by temporary electoral victories of politicians and parties that share our ideological commitments.”

Like Buchanan, Charles Koch was pessimistic about the prospects of American conservatism. Especially after the failure of House Speaker Newt Gingrich’s “Contract With America” in 1994, Koch feared that his beloved libertarian movement was under siege by “personality cults” and “ossified by purity tests,” and his donations certainly suggested that he wanted to elevate the reputation of public-choice theory. In fact, he would eventually move the Institute for Humane Studies from its base in California to George Mason University, which was rapidly (partly as a result of Buchanan’s time there) becoming an epicenter of conservative thought.

The relationship between Buchanan and Koch was not without its own tensions. In the final chapter of her book, MacLean skips forward to the late 1990s, when Koch donated $10 million to George Mason University to support the expansion of the James Buchanan Center. Oddly, this culmination of their partnership seems to have put the two at odds. A year after Koch’s grant to GMU, Wendy Lee Gramm (an economist and the wife of Senator Phil Gramm) wrote a fund-raising letter to potential donors promoting the Buchanan Center on the grounds that its close proximity to Washington, DC, meant that it was “uniquely positioned to advance freedom…to the very people who’ll make a difference.” She mentioned, in particular, House majority leader Dick Armey’s efforts to cut personal, corporate, and capital-gains taxes.

Buchanan, who hadn’t been told about the fund-raising letter, became anxious that its explicitly political nature might violate the center’s tax-exempt status, and he complained to one colleague that it “amounts to exploitation of me” and verges on “fraud.” Buchanan may have also been worried that the intellectual center that bore his name was being conscripted into a narrowly partisan battle: “Quite frankly,” he added, “I am ‘pissed off,’” and he warned the GMU administration that the people running the center included “no-one with academic standing.” In part because of this experience, Buchanan seems to have withdrawn from the center’s active life. He died in 2013, and MacLean notes, Charles Koch didn’t attend his memorial service.

Although this runs counter to one of the arguments in her book, MacLean also delineates some of the limits of Koch’s funding efforts. While he may have wanted to build an intellectual movement, Koch wound up alienating the very thinkers like Buchanan who were drawn to the cause but grew frustrated by Koch’s involvement. Mac-Lean quotes with relish the various documents, letters, and speeches in which Buchanan outlined his desire to build a “Third Century” movement that would be able to reverse the trend toward ever-larger governments that he found so alarming. While such language indeed suggests the political energy and sense of momentous self-importance that could make a gathering of economists in the mountains feel like a world-historic event, Democracy in Chains also shows (perhaps inadvertently) how difficult it was to translate these grand sentiments into political or even intellectual change—despite the involvement of powerful businessmen like Koch and their vast resources, or ambitious academics like Buchanan, who repeatedly tapped into this network over the course of his career.

Certainly, by their standards, both Koch and Buchanan have accomplished much—weakening unions, attacking regulations, building organizations to push their policies at the state level—and their relentless denigration of collective action and veneration of the market’s wisdom have helped to shape the political climate that enabled Donald Trump’s victory. Yet today, the movement they helped build is being consumed by infighting; its policy proposals remain as unpopular as ever; and its agenda is now improbably linked to a president who came to power with cynical promises to not cut the entitlement programs (like Social Security) that the Koch brothers have long hated.

Where political sentiments have changed, it’s far from clear that the Kochs and their money, or Buchanan and his ideas, are solely or even primarily responsible. Take the issue of charter schools and vouchers, for example. While the current prominence of the idea of an alternative to public education grew out of the work of thinkers like Buchanan and Friedman and the financial activism of the Koch brothers—and while it also has its roots, as MacLean shows, in the “segregation academies” that promised white families a “choice” about how to spend their education dollars—the charter-school movement can also trace part of its lineage to the support of United Federation of Teachers leader Albert Shanker and many intellectuals associated with the Democratic Leadership Council. No doubt there has been a real transformation of attitudes toward public education and teachers’ unions, but the Kochs are only one part of this, not the whole story.

Obviously the Kochs, Buchanan, and their ilk have played a significant role in helping influence elections and policy—making. Their pools of money and their ideas have transformed the political terrain in countless ways. Writing about their activism, as MacLean does in her timely and thought-provoking book, is one way to demystify and contest it. But there is also a danger in charting the rise of the right as though it has simply unfolded from a “stealth plan” to political reality: It can make it seem almost impossible to resist, and history doesn’t work that way—not even for the Kochs.

Editor’s note: This article has been updated to correct an error introduced in editing.

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