The Kochtopus vs. Murray N. Rothbard

by David Gordon
Feb. 25, 2011

[An excellent history on the "Beltway Libertarian" Koch brothers, from David Gordon of LewRockwell.com and the Mises Institute.]

The "Kochtopus" is a derogatory name coined by the late Samuel Edward Konkin, III, an anarcho-libertarian, for the group of libertarian organizations funded by billionaire Charles Koch. (Konkin, a gifted wordsmith, also is responsible for the term "minarchism" for the libertarian view that accepts a minimal state.) Murray Rothbard often used this term when referring to organizations within the Koch ambit, with the Cato Institute foremost among them. To say the least, Rothbard's enthusiasm for Cato was not unbounded; and employees of the Kochtopus often treat Rothbard with hostility and contempt. Further, the Kochtopus has displayed unremitting hostility toward the organization with which Rothbard was associated from 1982 until his death in 1995, the Ludwig von Mises Institute.

Someone acquainted only with these facts would never suspect that Rothbard was a principal founder of Cato and that the organization had been established to promote his distinctive variety of libertarianism. From this beginning, how did it come about that Cato shifted course and now takes Rothbard to be an enemy?

To understand what happened, one must begin with Charles Koch. He and his brothers inherited an oil business from their father, Fred Koch, a stalwart of the John Birch Society and long active in rightwing causes. They developed and massively extended the family business, to the extent that Charles Koch and his brother David rank among the wealthiest people in the United States. On the current Fortune 400 list, the brothers are 9th and 10th, each with $17 billion; if the net worth of the brothers is taken together, the Kochs are second only to Bill Gates and Warren Buffett.

Charles, influenced from an early age by the pro-capitalist beliefs of his father, became interested in libertarianism. He attended Robert LeFevre's Freedom School and became acquainted with the work of Murray Rothbard. He met Rothbard and was so impressed with him and his ideas that he decided to endow an organization to promote libertarian theory and policies.

In this endeavor of his, Rothbard was a main collaborator.It was not widely known, but stockholders, who had the power to dismiss the Board of Directors, controlled the Cato Institute. The original stockholders were Charles Koch, Rothbard, an employee of Koch, and Edward Crane, whom Koch hired to run the day-to-day operations of the Institute. Koch, by his control of the majority of the stock, had absolute control of the newly formed group. Of course, he would have possessed a large measure of influence anyway, because he was by far the largest donor; but he wanted to ensure complete dominance.

Rothbard had some misgivings: might it not be unwise to rest so much on the good intentions of a single donor, however extensive his benefactions? Nevertheless, he embraced the new group with enthusiasm. Who would not be happy if one of the wealthiest men in the country embraced one's views and offered to set up an institute to promote them?

It needs always to be kept in mind, to reiterate, that the Cato Institute was at its inception distinctly Rothbardian in orientation. I first encountered the Cato Institute at a summer program held in Eugene, Oregon, in June 1979. Most of the lecturers were committed Rothbardians. The speakers included, besides Rothbard himself, some of his closest intellectual associates: Ralph Raico, Ronald Hamowy, Leonard Liggio, and Walter Grinder. The conference was designed to appeal especially to historians, but participants received a thorough grounding in the Austrian economics that Rothbard favored. Nor did the conference shy away from the most controversial parts of Rothbard's intellectual system. Rothbard, like almost all libertarians, supported a non-interventionist foreign policy. "War is the health of the state," as Randolph Bourne presciently remarked; those opposed to a powerful state must then shun foreign quarrels. But Rothbard had the courage of his convictions; unlike all too many others, he refused to make an exception for World War II, "the good war." The conference featured the well-known historian James J. Martin, who presented a strong defense of both World War I and World War II revisionism. This was no isolated occurrence. The Institute published a pamphlet by the dean of revisionist historians, Harry Elmer Barnes: Revisionism: A Key to Peace, in which Barnes made clear his opposition to American entry into both world wars.

After the conference, I was offered a job at the Institute, and I arrived in San Francisco in the fall of 1979. I was eager to work with a group centered on Rothbard, whose great work Man, Economy, and State I had read when it was published in 1962. There was much to admire in the activities of Cato as it was then. In particular, Ralph Raico, in charge of the book review section of Inquiry magazine, a public affairs magazine that Cato published, had somehow managed to persuade world-renowned scholars, including Noam Chomsky, Peter Strawson, Maurice Cranston, and Donald Davie, to contribute.

But already problems were developing. A number of the executives did not get along with one another. Crane was for long periods barely on speaking terms with the Vice President, David Theroux. More important for our purposes, Crane and the editor of Inquiry, Bill Evers, were at odds. Evers and Crane differed on libertarian political strategy. Further, Crane, primarily interested in campaign organizing and influencing public policy, regarded intellectual affairs as of secondary significance, and Inquiry accordingly he viewed as little more than a distraction. He berated Evers because of Inquiry's budgetary problems. Evers was at this time Rothbard's closest political associate, and Rothbard supported him over Crane in these disputes.

I later learned that Crane's impatience with intellectuals extended to Rothbard himself. Crane evidently believed that books were like automobiles, to be produced assembly line fashion. Rothbard had received a grant to write Ethics of Liberty, but Crane was not satisfied with Rothbard's progress. Rothbard was an incredibly fast writer, but, as Crane did not grasp, it takes time even for someone of Rothbard's speed to read and think about the relevant material. He demanded results; on one occasion, I have been reliably informed, Rothbard had to seek refuge in a closet to escape his verbal barrage. After the break, Crane claimed that Rothbard had received an $80,000 grant for a book on the Progressives but produced nothing. One may be confident that, had the breach between Rothbard and Cato not occurred, Crane would once again have been proved unreasonable and impatient. Was not Ethics of Liberty worth the wait?

I have jumped ahead of the story, referring to the break that I have not yet explained. But one more background matter should be mentioned in order to grasp the issues. Charles Koch has made a great fuss about "market-based management." The key to business success, in his opinion, lies in reliance on initiative from below rather than on rigid control from the top. Yet at Cato all important decisions were made only in consultation with Koch: Crane was constantly on the telephone to him in Wichita.

Three main issues led to the irreparable rupture. First, as I have already mentioned, Austrian economics was central to Rothbard's system. He did not embrace all economists who more or less favored a free market: quite the contrary, he wished sharply to differentiate Austrian economics from the Chicago School. This is not the place to discuss the theoretical differences between the two approaches, but one issue in dispute assumed great importance later. Austrian economics is in itself a value free science, but Austrian economists, like Rothbard, fully committed to a free society, rely on Austrian monetary theory to demand a return to the gold standard and abolition of the Federal Reserve System. The Chicago School strongly disagrees. The greatest representative of Chicago economics, Milton Friedman, thought that the monetary authority should follow a fixed rule of moderate expansion and held a diametrically opposed theory of the causes of the Great Depression of 1929 to Rothbard's.

Rothbard was thus not pleased when Cato hired David Henderson, who leaned toward the Chicago School, as an economist. Rothbard had no personal animosity toward Henderson. Quite the contrary, he liked him, and Henderson has gone on to produce excellent work. (I'm sure that Rothbard would have liked his penetrating articles critical of the Iraq war.) But to hire a non-Austrian was hardly in keeping with the original mission of Cato.

Rothbard, as usual, saw something before everyone else. In the years since Rothbard's break with Cato, the Institute has no longer supported the abolition of the Fed. Quite the contrary, the Institute now endeavors to attract high officials of that organization to participate in its seminars and conferences. The aim now is to influence policy in Washington. Legislators who wish to restore the gold standard, Ron Paul chief among them, are shunned and defamed.

If we ask how it came about that Henderson was hired we immediately arrive at the second main incident leading to the split. Roy Childs, the editor of Libertarian Review, and Henderson were friends, and Henderson secured his post largely through Childs's recommendation.

Childs was a gifted theorist and writer, largely self-taught. He and Rothbard had once been close, but he did not get along well with Evers. Childs was given to sudden enthusiasms from which he could not be dissuaded. One such concerned nuclear power. Childs and some of his followers, such as Milton Mueller, the head of Students for a Libertarian Society (another group within the Kochtopus) fell under the influence of John Gofman, a Berkeley medical physicist associated with the Lawrence Livermore Laboratory. Gofman had once strongly supported nuclear power, but he switched course and became its leading opponent. In his view, nuclear power plants emitted levels of radiation unacceptably dangerous to health. Childs maintained, relying on Gofman's data, that emitting nuclear radiation violated the libertarian non-aggression principle and ought to be forcibly curtailed. An issue of Libertarian Review featured Gofman on the cover and contained a long interview with him.

Rothbard rejected this position. The strict application of Childs's approach to aggression, he maintained, would cripple economic production. All of our physical actions emit particles of some sort or other. Does anyone who objects to having a subatomic particle impinging on his body have the libertarian right to forbid the activity that generates it? Such a consequence is absurd, but as Rothbard often noted, for many libertarians this is no problem. If one took the less radical view that only dangerous radiation could be prohibited, Rothbard's response was that Gofman had not made out a good case for his alarmist assertions.

Rothbard made no secret of his disapproval of the anti-nuclear position, and doing so estranged him from Childs. Bill Evers circulated a letter critical of Gofman's contentions, which about one dozen people, including Rothbard, signed. The letter infuriated Crane. I do not think he held strong views on the nuclear question. Rather, as was his wont, he saw the issue as a power struggle, in this case between Evers and Childs. He was upset that the letter had brought to public attention that dissent from a single party line existed among libertarian groups sponsored by Koch. He thought the dispute should have been kept private. Crane, before hiring me, called me on the carpet for having signed the letter. I had the strong feeling that he did not withdraw the offer of employment only because he thought that I had not grasped Evers's intentions in drafting the letter.

Childs, stung by Rothbard's opposition, became intensely critical of him. By telephone calls and letters, he incited anti-Rothbard feeling among his immensely wide circle of libertarian friends and acquaintances.

The tension might eventually have been contained had nothing else intervened, but the 1980 libertarian campaign for the presidency of Ed Clark ended all hopes of reconciliation. Both Koch and Crane hoped to transform the Libertarian Party from a fringe group to a real presence on the national scene. To this end, Koch was prepared to spend vast sums of money. His brother, David Koch, was nominated as the vice-presidential candidate in order to evade the limits the law imposed on campaign contributions from a single donor. David Koch, and Charles standing behind him, was not subject to these legal limits: David could spend all he wished on his own campaign.

In order to achieve wide popular support for a libertarian candidate, Crane believed that he had to conceal aspects of the libertarian program that many voters would consider extreme. Under his guidance, Clark campaigned for a reduction in government welfare spending rather than its total elimination. Rothbard saw matters differently. For him, libertarianism was a coherent system of ideas that a libertarian candidate ought fully to embrace. He had his own political group, the Radical Caucus, on which Evers and Justin Raimondo were leading lights. As its name suggests, the Radical Caucus favored a much more confrontational approach to politics than did Crane. For Rothbard, the last straw was Clark's depiction of himself as a "low-tax liberal." Rothbard in his privately printed publication Libertarian Forum assailed this as a betrayal of libertarian principle: Clark, after all, was campaigning as an explicit libertarian. Rothbard would not have objected to a self-consciously "moderate" policy of tax and welfare reform had these been part of a Constitution Party platform. But the candidate of the Libertarian Party, he thought, must embrace libertarianism in uncompromising form.

Rothbard's differences with Crane and Koch went beyond this one political campaign. He thought that Cato's primary mission should be scholarship rather than political campaigns and attempts to secure audiences with the high and mighty in Washington. His antagonists emphatically disagreed.

Crane and Koch could not tolerate what they deemed blatant disloyalty. Even though Rothbard was the leading theorist of libertarianism and the Cato Institute had been established to promote his views, they expected him to obey the orders sent down from on high. No one at all acquainted with Rothbard could have reasonably expected him to do so. He was always his own man and would agree with Dante: "Follow your own course, and let the people say what they will."

Rothbard was removed from his position at Cato, and he was no longer invited to lecture at the summer conferences of the Institute for Humane Studies, another organization under Koch's patronage. Rothbard did not go quietly. He was, it will be recalled, a stockholder in the Cato Institute; and he intended to make clear his opposition to current policy at stockholders' meetings. In addition, his public criticisms would draw attention to a fact that Koch preferred to keep hidden, i.e., that the stockholders, principally Koch himself, and not the Board of Directors, held final control.

Koch and Crane were determined to prevent Rothbard from doing so. Koch refused to return Rothbard's shares, which he had supposedly been holding in safekeeping for him. When Rothbard appeared at the Cato offices for a stockholders' meeting, Crane informed him that his shares had been voided. Though the legality of this was eminently questionable, Rothbard elected not to pursue the case further. Lawsuits against billionaires often have unhappy endings.

After Rothbard departed from Cato, he joined forces with the Mises Institute, established in 1982 by Lew Rockwell. The new group was a standing reproach to Koch and Crane, since its consistent defense, encouragement, and development of a Rothbardian program were exactly the program that the Cato Institute had betrayed. The Koch forces endeavored to strangle the new group in its cradle. Rockwell received a telephone call from George Pearson, Koch's Wichita lieutenant in charge of libertarian programs. He screamed at Rockwell that he must on no account found a group named after Ludwig von Mises. Pearson informed him that Mises was an extreme and polarizing figure who should be downplayed. When Rockwell nevertheless proceeded as planned, Koch and his minions actively sought to discourage contributions to the new group. (Incidentally, Pearson, despite years of faithful service to Koch, was eventually discharged without notice. He had incurred the enmity of Richard Fink, who turned on his former mentor after supplanting him in the Koch hierarchy.)

Unfortunately, the efforts of the Kochtopus against the Mises Institute have continued to the present. The current campaign for the presidency of Ron Paul has secured for libertarian ideas a greater public hearing than ever before. But owing to Paul's long association with Rothbard and Rockwell, his campaign had little appeal to Cato. High officials of Cato cooperated with James Kirchick's malicious smears against him in The New Republic. (After his losing Senate campaign to Phil Gramm, Paul had been employed by Koch as chairman of Citizens for a Sound Economy, but his contract was not renewed. Like Rothbard, Ron Paul is a man of principle and would not compromise on his advocacy of the gold standard and opposition to the Federal Reserve System. Charles Koch did not want this: such measures would hardly help him gain influence with the Republican Party, to which, if I am not mistaken, he and his brother are the largest private contributors.Further, Paul would have no part of Koch's efforts to have the CSE, beneath free market rhetoric, lobby to promote legislation beneficial to his business interests.) It should come as no surprise that Matt Welch, the new editor of Reason, has published a viciously negative piece against Rockwell and Paul. Koch is a large funder of the magazine, and, as Murray Rothbard learned to his cost, he expects those he funds to obey his dictates.

To Be Continued.

April 22, 2008

The Kochtopus vs. Murray N. Rothbard, Part II

After Murray Rothbard and the Cato Institute permanently parted company, in the manner described in Part I, a fundamental issue arose. Would Cato, and the other organizations in the Kochtopus, continue to promote the same ideas as they had previously done? Ostensibly, there had been no ideological split. Rothbard had objected to Cato's hiring a non-Austrian economist, David Henderson; but he left Cato after a short time. (As I recall, he threw a party to celebrate his own ouster.) Rothbard also objected to the anti-nuclear energy position of Roy Childs and some of his associates at Libertarian Review; but after Rothbard left, little was heard of this strange view. Was the separation between Cato and Rothbard, then, reducible to a dispute between Ed Crane and Rothbard over the best political strategy for the Libertarian Party?

Rothbard did not think so. Cato had been founded to promote Rothbardian ideas. Indeed, Charles Koch's support for Rothbard long antedated the founding of Cato in 1977. Koch had given money to Rothbard's Center for Libertarian Studies. Could the ideas remain the same when Rothbard had departed? He predicted that the Kochtopus would, without his guidance, depart from its original program. He joked about "Pabloism without Pablo," referring to a Trostkyist group, once headed by Michel Pablo (the pseudonym of the Greek revolutionary Michalis Raptis), which had dispensed with its founder. Time was soon to prove him right.

Rothbard deemed it of prime importance to advance Austrian economics, of which he was of course a leading exponent. Here, at any rate, the Kochtopus seemed at one with him. Walter Grinder, working from the Koch-dominated Institute for Humane Studies, promised a "Rothbardianism with manners." In his view, Rothbard had been too acerbic; through a policy of suaviter in modo, Austrian views could better gain access to the mainstream. But he did not deviate at all from Rothbardian orthodoxy in his own economic views. At the Eugene, Oregon, Cato conference in June 1979, mentioned in Part I, he gave excellent lectures on Austrian business cycle theory.

His new policy took over an idea from Friedrich Hayek's famous essay, "The Intellectuals and Socialism," though I doubt that Hayek would have endorsed the IHS application of his ideas. Hayek stressed that new social movements first gain adherents among top-ranking theorists. The majority of intellectuals, the "second-hand dealers in ideas," then popularize and simplify what they have learned from these thinkers, passing the product on to the general public. Grinder and others in leadership posts at IHS concluded that they should concentrate on elite universities such as Harvard, Yale, and Princeton in the United States, and Oxford and Cambridge in England. If students could be recruited from these universities or, if already sympathetic, admitted to their programs, success was at hand.

Grinder placed particular emphasis on Tyler Cowen, a brilliant student who had been interested in Austrian economics since his high school days. Cowen enrolled in an Austrian economics program at Rutgers, where he impressed both Joe Salerno and Richard Fink with his extraordinary erudition. When Fink moved to George Mason University, Cowen moved with him; and he completed his undergraduate degree there in 1983. Grinder considered him the next Hayek, the hope of Austrian economics.

In accord with the elite universities policy, Cowen went to Harvard for his graduate degree. There he came under the influence of Thomas Schelling and gave up his belief in Austrian economics.

After he finished his PhD in 1987, Cowen was for a time a professor at the University of California at Irvine, and he used to visit me sometimes in Los Angeles. I was impressed with his remarkable intelligence and enjoyed talking with him. But I remember how surprised I was one day when he told me that he did not regard Ludwig von Mises very highly. Here he fitted in all-too-well with another policy of Richard Fink and the Kochtopus leadership. They regarded Mises as a controversial figure: his "extremism" would interfere with the mission of arousing mainstream interest in the Austrian School. Accordingly, Hayek should be stressed and Mises downplayed. (After the collapse of the Soviet Union, which led to new interest in Mises's socialist calculation argument, this policy changed. The mainstream, though of course continuing to reject Mises, now recognized him as a great economist.) The policy was strategic, but Cowen went further � he really didn't rate Mises highly.

Cowen eventually returned to George Mason University as a Professor of Economics. He is said to be the dominant figure in the department. Because of his close friendship with Richard Fink, who left academic work to become a major executive with Koch Industries and the principal disburser of Koch Foundation funding, Cowen exerts a major influence on grants to his department.

Although he is largely favorable to the free market and believes that the Austrian school has contributed insights, Cowen remains a strong critic of Austrian and Rothbardian views. He has published a book that sharply attacks Austrian business cycle theory, Risk and Business Cycles: New and Old Austrian Perspectives (Routledge, 1997); and in an article written with Fink, "Inconsistent Equilibrium Constructs: The Evenly Rotating Economy of Mises and Rothbard" (American Economic Review, Volume 75, Number 4, September 1985), he argued that a key feature in the economic theory of Mises and Rothbard, the evenly rotating economy, is fundamentally flawed. It was ironic that the hope of Austrian economics, according to Grinder, and the prime ornament of his stress on elite universities, wrote an article for the most prestigious economic journal in the United States critical of the theory Grinder wished to propagate. Cowen has also criticized libertarian anarchism, another fundamental plank in Rothbard's thought. He has defended government funding of the space program and limited government subsidies for the arts.

One might object to what I have said so far. Although the heavy Koch support for Cowen did not advance Austrian economics, was not a flourishing Austrian program established at George Mason? If so, did not the generous fellowships offered by Koch organizations, such as the Claude Lambe Foundation, play a major role in this happy development? Fellowships were also given to those studying in the Austrian program at NYU.

There is indeed an Austrian program at George Mason, but Rothbard was proved correct. Absent his guidance, the program veered from his ideas. Many of the Austrian sympathizers at George Mason stressed the views of Ludwig Lachmann, in a way that aroused Rothbard's misgivings. These included Karen Vaughn, who became the department chair. She was very influential in the department, in part owing to her friendship with James Buchanan, a Nobel Laureate who had brought his Center for Public Choice to George Mason. She did not like Rothbard. A few years after receiving her PhD, she had attended the famous South Royalton Conference in 1974 on Austrian economics. Rothbard responded to one of her comments in what she deemed a dismissive fashion, and apparently she never forgave him. I understand that she blocked the tenure of George Selgin, an excellent economist and hardline Austrian.

Rothbard admired Lachmann's early work in capital theory but believed that his later thought carried to an extreme the valid Austrian point that the future is uncertain. Lachmann used this point, Rothbard contended, to eliminate economic theory altogether. He termed this deviation "Lachmannia."

Rothbard and the George Mason Austrians clashed over another issue. Don Lavoie, a popular teacher and an authority on the socialist calculation debate, became interested in hermeneutics, principally as developed by the German philosopher Hans-Georg Gadamer. The details of this philosophical view are singularly difficult to grasp, but fortunately it is not necessary for our purposes to explain it. Suffice it to say that Lavoie thought that Gadamer's philosophy would lend support to the Austrian criticism of the scientistic procedures of neoclassical economics.

Rothbard emphatically disagreed. He denounced Gadamer's philosophy as anti-theoretical. No doubt Gadamer opposed scientism; but, Rothbard claimed, he advanced in its place a relativistic historicism that subverted Mises's praxeology. (In this battle I played a minor role on Rothbard's side.) After a few years, interest in hermeneutics subsided. Lavoie fell out of favor with Fink � according to one account, he refused to support the appointment of someone Fink wanted on the faculty � and as a result of the discord this caused, he transferred to another department, the Program on Social and Organizational Learning. He died at the early age of fifty in 2001.

Grinder did not support the interest in hermeneutics displayed by some of the younger Austrians to whom he had served as a mentor. He too aroused Fink's displeasure, and he lost his influential position.

The current Austrian program at George Mason, headed by Peter Boettke, stresses a combination of Austrian theory with other approaches, especially game theory, public choice, and institutional economics. Since Rothbard was critical of all of these movements, it is safe to say he would not have completely approved of this program.

The activities of the IHS under Walter Grinder and his successors have by no means been confined to support for economics students. Quite the contrary, fellowships and other support have been made available to those in a number of other disciplines. Again, the pseudo-Hayekian policy discussed previously has had results out of keeping with the promotion of classical liberalism, let alone a strict Rothbardian program.

Stephen Macedo perfectly fit that policy. He did graduate work at Princeton, Oxford, and the London School of Economics. It is hardly surprising, then, that he received extensive funding. He now serves as Laurance S. Rockefeller Professor of Politics and Director of the Center for Human Values at Princeton University.

One might at first think that Macedo's career is a triumph for the elite universities policy. A student who attended some of these schools is now a professor at one of them: what could be better? There is unfortunately one small catch. Macedo does not support classical liberalism. Quite the contrary, in his major work Liberal Virtues (Oxford University Press, 1990), he defends compulsory indoctrination in politically correct values in a way entirely alien to libertarianism. Values he deems to be liberal, such as diversity, must shape the private lives of citizens, as well as their public activities. The principal result of the Koch funding he received was a pamphlet published in 1987 by Cato, The New Right versus the Constitution, an attack on strict construction of the Constitution. John Gray, an Oxford don who later taught at the London School of Economics, was another IHS favorite who abandoned classical liberalism. Gray has made a career of moving from one ideology to another, often at six-month intervals. His current views call to mind a phrase of the "Gloomy Dean," William Ralph Inge: "a rather soppy socialism."

The oddities of IHS were not confined to its funding policy. Roderick Long, a leading libertarian philosopher who for a time worked at IHS, has noted that Charles Koch, who, appropriately enough, wanted results for the money he spent, had a peculiar way of measuring them. After Walter Grinder's departure, Koch decided to emphasize policy studies over academic work. The size of student seminars increased, and students were given questionnaires at the beginning and end of a week's program to determine the extent of their political progress. Applications for IHS scholarships were run through a computer to determine how many times the "right" names, e.g., Mises, Hayek, and Bastiat, appeared.

Incidentally, despite his immense wealth, Koch was often ungenerous in his subventions. In her last years, the centenarian Margit von Mises was in failing health, and it was suggested that she move to a rest home. Koch was approached for a contribution, and he responded that he would pay half the cost, if the remainder were raised through a public subscription. Paying for the full cost would have been for him the equivalent of an ordinary person's spending a cent or two, but evidently this was asking too much of him. Much better, apparently, to turn the whole matter into a public spectacle. In any event, nothing came of the proposal.

Let us return to the Cato Institute, the main part of the Kochtopus with which Rothbard was associated. Rothbard's prediction that Cato would depart from his views has been eminently fulfilled. He is mentioned in the Cato Home Study Course, but his thought is little more than a sideline. When, in Part I, I claimed that people at Cato often refer to him with hostility and contempt, a former employee wrote to correct me. Rothbard is hardly mentioned at all, he said; and I think he is very largely right. I have been able to turn up only one strongly critical assessment by a leading figure at Cato. This writer, among other things, dismissed Rothbard's writings on money as those of a crank. (Friedrich Hayek once told me how much he admired the account of the business cycle in Rothbard's America's Great Depression, an account that rests on Rothbard's understanding of monetary theory; and the Nobel laureate Maurice Allais has also praised the book. But what do they know?) For the rest, he is ignored.

Austrian economics, once the mainstay of Cato, is now at best a tolerated minority position. The 24th Annual Monetary Conference of Cato, held in 2006, on the theme "Federal Reserve Policy in the Face of Crises," featured only one Austrian speaker, Larry White. Establishment worthies such as Robert Barro and Anna Schwartz, among many others, dominated the proceedings. The keynote address was, however, delivered by a onetime recipient of Koch funding to study Austrian economics, Randall Kroszner. Far from defending Austrian economics, though, he spoke in his capacity as a member of the Board of Governors of the Federal Reserve System. Kroszner, who attended Brown as an undergraduate and Harvard as a graduate student, has been another "triumph" of the elite universities policy. Like Cowen, he was a favorite of Grinder and IHS and received extensive funding, but he no longer manifests any interest in Austrian economics.

The 25th Annual Conference included a few more Austrians, on the panel "Remembering Milton Friedman"; this time Fed Chairman Ben Bernanke delivered the keynote address. Ron Paul, despite his expert knowledge of monetary issues and his fame as the leading Congressional spokesman for a free society, has never in twenty-five years been invited to these conferences. He was the subject of Koch and Fink's displeasure when he refused to convert to a pro-central-banking position.

In foreign policy, Cato no longer adheres strictly to Rothbard's resolute non-interventionist views. In an article that appeared in The Wall Street Journal, January 28, 2008, Roger Pilon, who holds the B. Kenneth Simon Chair in Constitutional Studies at Cato, opposed Congressional efforts to enact mild restraints on President Bush's warrantless wiretapping. Such attempts to "micromanage" the president, he averred, were unconstitutional and threatened America's security. Others at Cato differed with him, but his grossly anti-libertarian stance was a permissible option for a principal Cato figure. Brink Lindsey, Vice President for Research, is another Cato official who supports the Iraq war.

As mentioned in Part I, the Kochtopus strongly opposes the Mises Institute, which aims to continue the Rothbardian policy of Austrian economics, laissez-faire, and peace that Cato was established to promote. The opposition continues to the present day. Reason, now under Koch patronage, did not react to Ron Paul's The Revolution: A Manifesto with the praise one would expect for this best-selling libertarian book. David Weigel, in a post of April 30, 2008 on the Reason website, took the occasion to attack Lew Rockwell and other so-called "paleos." The Kochtopus cannot forgive those who continue to champion Murray Rothbard.

To Be Continued

May 12, 2008

David Gordon [send him mail] is a senior fellow at the Ludwig von Mises Institute and editor of its Mises Review. He is also the author of The Essential Rothbard. See also his Books on Liberty.

Copyright � 2008 LewRockwell.com