Part 2 Preliminary Research on the 2-Stage Hypothesis of Foundation Funding of Libertarians

When a funding relationship is discovered to exist between a libertarian researcher and a Foundation--usually perceived of as an "evil" Foundation with malevolent intentions--the standard explanation seems to be what I will call the 2-Stage Hypothesis of Foundation Funding.  Let me illustrate what I mean with two cogent examples from libertarian history.

In the Mises Institute forum post entitled Lyndon Larouche's Mises-Hayek conspiracy theories, a poster named Aragon notes, in part, that one of the accusations against the Austrian School of Economics is that the Austrian School is a "front" for the Central Intelligence Agency or CIA. "The National Review is considered the most influential CIA publication. It consistently puffs Jean Kirkpatrick, Milton Friedman, and other cognoscenti of the intelligence community and the Viennese School of Economics" (emphasis mine). What this argument is trying to say is simply that Murray N. Rothbard was a "puppet" for the Central Intelligence Agency.

Did Murray N. Rothbard work for the CIA-publication called the National Review? The answer is unequivocally yes. Was the National Review really a CIA-publication in the first place?

According to Dr. Hans-Hermann Hoppe, the CIA did fund the National Review. Hoppe writes in his book Democracy: The God That Failed (p. 190, footnote 3, paragraph 2) that

a second, somewhat older but nowadays almost indistinguishable branch of contemporary American conservatism is represented by the new (post World War II) conservatism launched and promoted, with the assistance of the CIA, by William Buckley and his National Review. Whereas the old (pre-World War II) American conservatism had been characterized by decidedly anti-interventionist (isolationist) foreign policy views, the trademark of Buckley's new conservatism has been its rabid militarism and interventionist foreign policy. (bold emphasis mine; italics in the original)

There is also no question that Murray N. Rothbard did, in fact, work for the National Review and for William or Bill Buckley. We know that Rothbard worked for the National Review because he speaks quite candidly about his role in the organization. Rothbard himself was quite aware of the fact that he was working for the CIA. Rothbard writes in his book The Betrayal of the American Right that the CIA was pulling pretty much all the strings at the National Review:

We should now ask whether or not a major objective of National Review from its inception was to transform the right wing from an isolationist to global warmongering anti-Communist movement; and, particularly, whether or not the entire effort was in essence a CIA operation. We now know that Bill Buckley, for the two years prior to establishing National Review, was admittedly a CIA agent in Mexico City, and that the sinister E. Howard Hunt was his control. His sister Priscilla, who became managing editor of National Review, was also in the CIA; and other editors James Burnham and Willmoore Kendall had at least been recipients of CIA largesse in the anti-Communist Congress for Cultural Freedom. In addition, Burnham has been identified by two reliable sources as a consultant for the CIA in the years after World War II. (168)

 Rothbard also speaks quite openly about the role he played at the National Review. Rothbard, writing about himself, observes that

National Review's image of me was that of a lovable though Utopian libertarian purist who, however, must be kept strictly confined to propounding laissez-faire economics, to which National Review had a kind of residual rhetorical attachment....But above all I was supposed to stay out of political matters and leave to the warmongering ideologues of National Review the gutsy real-world task of defending me from the depredations of world Communism, and allowing me the luxury of spinning Utopias about private fire-fighting services. I was increasingly unwilling to play that kind of a castrate role. (177)

Common sense tells me that something is rotten here in our metaphorical State of Denmark. The issue of "shared confession" plays a predominant role in this type of "conspiracy theory" research. As serious historical researchers, we must look for "a shared world view" and for "shared ideas." In fact, Gary North explains, in his article Writing Conspiracy History: Lists Are Not Enough, the correct procedure for doing historical research in a "conspiracy theory" type setting:

There are many levels of association, dependence, and interaction among political groups and activist organizations. What matters most is shared confessions, not shared money. Shared ideas, not a long list of names on the yellowing letterhead stationery of a short-lived, peripheral, one-man organization like the Religious Roundtable, are what matters.

Serious historical research involves more than collecting membership lists and letterhead lists from old archives or Web-based data bases.  The researcher must ask himself: "So what?" He must show that the connections have to do with a shared worldview and shared sources of funding, especially funding by an organization or a family with an identifiable agenda that stretches across two generations or more. (bold emphasis mine)

So, is there a "shared worldview" or "shared ideas" between the National Review and Rothbard? From Rothbard's own discussion above, the National Review saw him as "lovable though Utopian libertarian purist" who was "strictly confined" to "safe topics." But on the core issue--i.e., on foreign policy--ROTHBARD AND THE NATIONAL REVIEW STRONGLY DISAGREE. The National Review became an advocate of "rabid militarism and interventionist foreign policy." The obvious question to ask is: did Rothbard support militarism or an interventionist foreign policy? The simple answer is NO, he did not. Some evidence to support this conclusion can be found in David Gordon's article entitled Rothbard against War.  Gordon writes of a Rothbard who not only intellectually disagrees with the National Review but also openly opposes their policies. Gordon writes of Rothbard's strong stand against the National Review and the Cold War:

Although Rothbard was an early contributor to William Buckley's National Review, he rejected the aggressive pursuit of the Cold War advocated by Buckley and such members of his editorial staff as James Burnham and Frank S. Meyer. He broke with these self-styled conservatives and thereafter became one of their strongest opponents. (bold emphasis mine)

One attempt to explain this "bizarre" relationship between the pro-militarist and statist National Review and the anti-militarist and anarchist Rothbard is to use what I am calling the 2-Stage Hypothesis of Foundation Funding mentioned by Daniel McCarthy in his National Review Isn't Right.  McCarthy writes explicitly about this 2-Stage Hypothesis when he describes the history of Rothbard's relationship with the National Review. The basic sequence of events for a NEW Foundation is (1)Stage 1: hire big names in order to build credibility for the new foundation, (2)purge the undesirables in order to transition into Stage 2; (3)Stage 2: now launch the "real" politically motivated agenda:

 Was there ever a time when National Review was conservative? Certainly conservatives were once published in its pages, especially in the early years when National Review was seeking to establish itself as the voice of the American Right and American conservatives were in desperate need of a journal. But once National Review had counterfeited its credentials it soon began to purge anyone on the Right who disagreed with its line, from the John Birch Society to Murray Rothbard, and later Joseph Sobran.... Having slandered most of its rivals on the Right as kooks or anti-Semites, National Review can now afford to be more open about its imperial agenda. (bold emphasis mine in order to highlight the process: first credibility building, then purging of heretics, and finally real agenda launching, i.e., coming out of the closet in favor of American imperialism)

To summarize, the 2-Stage Hypothesis of Foundation Funding is:

1. Hire famous names in order to build credibility for the new Foundation
2. After purging the heretics (who were hired in Stage 1), launch the "real" political agenda 

Recently, on August 31, 2012, the 2-Stage Hypothesis of Foundation Funding was applied by Tom Woods in his Circle Bastiat article entitled Was Mises Bankrolled by the Financial Elite? In this article, Woods is addressing another Lyndon LaRoche inspired conspiracy theory leveled against the Austrian School of Economics. In this conspiracy theory, the claim is made that Austrian School Economics is a front for the power elites. The rich, powerful, and famous apparently want to adopt the policies advocated for by Mises. In Woods's explanation of what he thinks happened between Mises and the Rockefeller Foundation, Woods follows the same 2-Stage Hypothesis that Daniel McCarthy followed earlier. I will, once again, add emphases in order to make it explicit that Woods is following the 2-Stage Hypothesis:

 The RF [Rockefeller Foundation] started funding Mises because he was already a major representative of Viennese intellectual life. Mises was part of the European intellectual establishment before he received financial support from US financial aristocracy. Like all new private research institutions, the RF first tried to hop into bed with the already existing scientific establishment to prop up its own reputation [or get the credibility it needs as the new kid on the block]. Only in a second step did the RF (and similar organizations) try to steer the scientific agenda according to its own political and philosophical prejudices. When they proceeded from Step One to Step Two, there was no more place for Mises precisely because his views were unacceptable to RF. (bold emphasis mine)

Summarizing Woods's discussion:

1. The Rockefeller Foundation as the new foundation (just as the National Review was the new voice of conservatives back during the Cold War) hires a famous name, Mises, in order to build up the Foundation's credibility and reputation.
2. Mises gets purged (fired) when the Foundation proceeds from Step One to Step Two. Mises is the heretic who got purged. Then the real "steered scientific agenda" comes out into the open.

I am going to stop this blog at this point. For my next blog, Part 3, I plan to carry on where this blog ends. The plan for Part 3 is to attempt to answer the following research question: Does the 2-Stage Hypothesis fit the historical facts pertaining to the history of Mises being funded by the Rockefeller Foundation? To be frank, I am not sure at this point. From Part 1, I think that Mises's liberalism might have been of value to the Rockefeller Foundation because liberalism enables foreign imperialism and the Rockefellers might favor more American imperialism. I am also unsure about whether this Stage 1 and Stage 2 type setup actually existed. I kind of think that the Rockefeller Foundation was "steering the political agenda" from day one, that is, the Foundation did not wait for a Stage 2 in order to finally launch its manipulations. But I still have to do a lot more research before coming to any definitive conclusions.    

Part 1 Some Preliminary Research on the Mises-Rockefeller Foundation Funding

On the Ludwig von Mises webpage, one can find a few posts discussing the historical fact that Ludwig von Mises did, in fact, receive funding from the Rockefeller Foundation. My curiosity regarding the funding of Mises was aroused when I stumbled across the post entitled WTF Rockefeller funded Mises? I have been thinking about this for some time because this funding arrangement seems really odd to me. Why on earth would the Rockefeller Foundation show any interest in Mises? In the introduction to Murray N. Rothbard's A History of Money and Banking in the United States: The Colonial Era to World War II, Joseph T. Salerno raises an important point. He notes that "the question of 'Cui bono?'--or 'Who benefits?'--from changes in policies and institutions receives very little attention." This has been precisely the question I have been asking myself for some time: how did the Rockefeller Foundation benefit (if at all) from funding Ludwig von Mises? What were their motives for funding him? Moreover, how does Mises benefit (if at all) from receiving Rockefeller Foundation support? Actually I have a number of unanswered questions such as the following:

1. Could the motive for funding Mises be to advance an imperialist agenda, which would probably be beneficial to the Rockefellers? The reason I put this forward as a possibility is because of three fascinating (at least to me) quotations. One is by Hans-Hermann Hoppe in his article The Paradox of Imperialism, and another is by Samuel Edward Konkin III who is quoted by Wally Conger in the essay entitled Agorist Class Theory: A Left Libertarian Approach to Class Conflict Analysis.  The third is by Gary North in his article EUthanasia. 
1. Hoppe mentions that internal or domestic liberalism in states such as the United States of America--remember Mises was a strong advocate for classical liberalism--is the breeding ground for external imperalism.  Conversely, the internal or domestic repression of states such as the former Soviet Union is the breeding ground of just the opposite foreign policy, namely, a peaceful foreign policy. Let me quote Hoppe at length because it seems to suggest that a motive for funding domestic liberalism is to advance foreign imperalism.
1. "Other things being equal, the lower the tax and regulation burden imposed on the domestic economy, the larger the population will tend to grow and the larger the amount of domestically produced wealth on which the state can draw in its conflicts with neighboring competitors. That is, states which tax and regulate their economies comparatively little--liberal states--tend to defeat and expand their territories or their range of hegemonic control at the expense of less-liberal ones. This explains, for instance, why Western Europe came to dominate the rest of the world rather than the other way around. More specifically, it explains why it was first the Dutch, then the British and finally, in the 20th century, the United States, that became the dominant imperial power, and why the United States, internally one of the most liberal states, has conducted the most aggressive foreign policy, while the former Soviet Union, for instance, with its illiberal (repressive) domestic policies has engaged in a comparatively peaceful and cautious foreign policy.
2. Konkin also comes out, more directly than Hoppe did, and says that liberalism is a trick of the ruling class. Konkin basically sees liberalism in the same way that Hoppe does, namely, that liberalism is just a more efficient way of feeding the state apparatus. I want to also cite Konkin at length because he seems this internal "skimming" process going on with classical liberalism. Konkin is effectively saying that the classical liberalism advocated for by Mises is purely statism. From Roderick T Long, the State is the cause of the ruling class. Long writes in his article Can We Escape the Ruling Class? that "economic analysis suggests that the ruling class is primarily a creation of the state and not vice sersa." Hence, the ruling class is inherently statist; the ruling class has a motive to keep the state in existence. Since Mises's liberalism is statist as well, then Mises poses no threat to the ruling class when he advocates for classical liberalism.
1. "Remember, the liberal statists want to restrain the State to increase the production of the host to maximize eventual parasitism. They 'control their appetites' but continue the system of plunder. The recent political example of supply-side economics starkly illustrates the basic statist nature of such ideas: the tax rate is lowered in order to encourage greater economic production and thus a greater total tax collection in the long run."
3. North mentions in his article, EUthanasia, that Raymond Fosdick, who wrote the important book The Story of the Rockefeller Foundation and who was definitely a long-time Rockefeller "insider," approached Mises supposedly for the purpose of advancing the cause of "free trade." I suspect that "free trade" is being used euphemistically to mean "mercantilism." This is the same problem with modern "free trade" agreements such as NAFTA. They pretend to be about "free trade" when, in fact, they are really about its opposite. This is what I like to think of as the "bait-and-switch" problem with these alleged "free trade" agreements. Moreover, maybe by "free trade" they are really talking about some sort of "imperialism" in the sense of using the United States government to "open up" foreign markets. This was the argument used to justify imperialism in the 19th century and reported upon by Murray N. Rothbard in his book The Origins of the Federal Reserve. Rothbard notes that the imperialists of the late 19th century dressed up imperialism as "free trade" or as "opening up new markets." Rothbard writes that "By the late 1890s, groups of theoreticians in the United States were working on what would later be called the 'Leninist' theory of capitalist imperialism....To save advanced capitalism, it was necessary for Western governments to engage in outright imperialist or neo-imperialist ventures, which would force other countries to open their markets for American products and would force open investment opportunities abroad" (emphasis added). Gary North's important quotation is as follows.
1. "Raymond Fosdick was a long-term strategist. In the 1940s, he financed the best free market economists he could locate to promote the ideal of free trade. Ludwig von Mises and his disciple Wilhelm Roepke each published a book that had been financed by the Rockefeller Foundation. [Given the 1940s date and the Rockefeller funding, my best guess is that Gary North is alluding to Mises's Omnipotent Government: The Rise of the Total State and Total War, published in 1944 originally and admittedly funded by "the Rockefeller Foundation and...the National Bureau of Economic Research."] Yet neither of them believed in setting up a world government. This did not bother Fosdick. He and [Jean] Monnet adopted the same strategy: first free trade [or maybe bait and switch by telling the public you want free trade but then implementing "managed" or "rigged" trade, but that is my guess], then the creation of a regional government that possess judicial sovereignty. This plan has been systematically promoted by the Trilateral Commission, created in 1973 by John D. Rockefeller, Jr.'s son, David.

Some evidence from the historical record suggests that it was Mises who approached the Rockefeller Foundation initially for funding, and not the other way around. "In Vienna, one of the first to seize the Rockefeller opportunity was actually von Mises, who, in 1930, although he viewed social planning and control as antithetical to contemporary civilization, approached Van Sickle for support," writes Robert Leonard in his essay entitled From Austroliberalism to Anschluss: Oskar Morgenstern and the Viennese Economists in the 1930's.  However,  in Jörg Guido Hülsmann's biography of Mises's life entitled Mises: The Last Knight of Liberalism, Mises seemed to be somewhat delighted or maybe even flattered that the Rockefeller Foundation had begun to hang out with him around 1926. [I think, but I can't remember for sure at the moment, that Mises says somewhere that the Rockefeller Foundation had been "following his work" for some time prior to this.] Writing about Mises's 1926 journey to America, Hülsmann observed that Mises was interacting with the movers and shakers in the Rockefeller world. He wrote that "In New York City, he [Mises] also met the leadership of the Rockefeller Foundation and seems to have made an excellent impression....He later recalled that the Rockefeller Foundation had 'taken a kind interest in my teaching and research work.'"

Hülsmann's book also provides another possible motive for the Rockefeller Foundation's funding of Mises. It might be that the Rockefeller Foundation needed to keep Mises around as opposition to one of their other stated objectives of this time period, namely, the objective of turning economics into applied statistics. Maybe they wanted to create the illusion of "intellectual choice" even though they were funding the positivist side of this debate very heavily. Hülsmann writes that

[Allyn] Young was known as a diehard positivist, and he was expected to make the economics department [at the London School of Economics] a center for the transformation of economic science into applied mathematics. This had been a longstanding plan of the socialist founders of the school, and of the New York-based Laura Spelman Memorial [i.e., the Laura Spelman Rockefeller Memorial], which donated large sums to LSE for research on the "natural bases" of economics.