Kochonomics: The Racist Roots of Public Choice Theory
Aug 10, 2017
34 Min read time
A controversial new book traces how the anti-democratic projects of the Jim Crow South evolved into an economic theory still championed by the GOP today.
Penguin Random House, $28 (cloth)
The morning of May 4, 2017, was one of celebration for Republican congressmen. Decorum understandably slipped as they prepared to vote on one of their marquee promises: to repeal the Affordable Care Act that had extended health coverage to 20 million Americans. Their pep rally that morning was studded with stale pop-culture references to aggrieved white martial glory: The soundtrack included the theme song from the original Rocky, the one in which a down-and-out white fighter puts a cocky black showman in his place through sheer grit and the love of a nearly catatonic woman. House Majority Leader Kevin McCarthy reportedly posted an image of General George Patton on the wall and read inspirational quotations from the rogue hero who was relieved of command for his laissez-faire attitude to postwar denazification. As one Missouri representative exuberantly reported on camera, “I’d say the line of the day was out of Braveheart—‘Freedom!’” In the Mel Gibson movie, that’s the word that the medieval hero of Scottish independence roars out defiantly at his execution, instead of the plea for mercy that might have stayed the axe. The humiliating tyranny of a limited and largely market-based national health insurance plan, in short, finally faced defeat in the name of courageous liberty—liberty as imagined by a movie that the anti-immigrant Right calls “THE white nationalist masterwork.”
Behind the dated memes and the unseemly glee, behind the straightforward payoff for the funders of the GOP, could the supporters of this bill really conceive of a coherent political philosophy that sanctified a $600 billion wealth redistribution from the sick and aged to the top-earning 1 percent of American households? In her engrossing new book Democracy in Chains, award-winning historian Nancy MacLean argues that there is such an intellectual tradition informing the specific recent wave of assaults on the public sphere. It has been forced to dissemble, she demonstrates, because of its fundamental disdain for democratic majority rule, and its repeated failures to win adherents in the public square—as the premature Republican celebrants found for their “repeal and replace” plans.
At the Virginia school of political economy, an important constellation of libertarian ideas developed in dialogue with antidemocratic projects of the Jim Crow South.
MacLean traces the transit of this school of thought from the academic work of economist James M. Buchanan to political power by way of Charles Koch’s influence. Her meticulous research in forty-two archival collections—including Buchanan’s own papers—is indispensable reading. For historians, it adds a critical storyline to the complex and multi-causal conservative counterrevolution. For anyone disoriented by the unrelenting assaults on political institutions, it illuminates a massively leveraged ideology that embraces this outcome as a positive good.
MacLean’s is the first full-length historical narrative to ground Buchanan’s Virginia School of political economy, which ranks alongside better-known neoliberal schools of thought like the Chicago School—think Milton Friedman—and its cosmopolitan progenitor, the Austrian School grounded by F.A. Hayek and Ludwig von Mises. The Virginia School followed Buchanan—first at the University of Virginia, then Virginia Polytechnic, and finally George Mason University—and MacLean shows how this important constellation of libertarian ideas developed in dialogue with antidemocratic projects of the Jim Crow South. MacLean’s illuminating book therefore belongs on the growing shelf of works that clothe the neoliberal intellectual apparatus in three-dimensional historical specificity, books like S.M. Amadae’s Rationalizing Capitalist Democracy (blurbed by Buchanan himself) and Prisoners of Reason; Melinda Cooper’s Family Values; Donald MacKenzie’s An Engine, Not a Camera; Philip Mirowski’s Machine Dreams and Never Let a Serious Crisis Go to Waste; and Jamie Peck’s Constructions of Neoliberal Reason.
MacLean’s first chapters recontextualize the Virginia School’s signature theories: public choice, which uses economic tools to address political decision-making; and constitutional economics, which applies economic tools to constitutional matters. Later chapters relate the “eventual merger of Koch’s money and managerial talent and the Buchanan team’s decades of work monomaniacally identifying how the populace became more powerful than the propertied.” The recent “shock-and-awe”-style state legislative assaults on everything from education to voting rights, MacLean argues, are not isolated spasms of authentic populist anger against government. This is rather an organized project of “dismantling the state step by step,” as one Koch-backed intellectual explains, “privatizing one function after the other, selling each move as justified for its own sake rather than waiting until the majority of the population is convinced of the case for a libertarian utopia.”
This project is managed most significantly by the Koch brothers’ network of conservative donors and front groups, which rivals the Republican National Committee itself in resources and personnel. Significant projects that it coordinates, funds, and staffs include the model legislation factories at American Legislative Exchange Council and the State Policy Network; the faux-grassroots advocacy groups Citizens for a Sound Economy and Americans for Prosperity; and the Virginia School’s praxis-oriented partner, the Mercatus Center at George Mason University, “the world’s premier university source for market-oriented ideas—bridging the gap between academic ideas and real-world problems.”
By grounding Buchanan’s school of political economy in its historical context, MacLean clarifies the philosophical assumptions baked into it, and the real-world effects that follow. Her new history thus joins a growing field of scholarship that refutes the claim of economic reasoning to represent reality rather than make it. And since, in the case of public choice, these claims have been projected productively into statehouses and the halls of Congress by massive, manifestly self-interested private-sector investment that declines to publicize its contribution, Democracy in Chains is a vitally important act of historical recovery.
“Ideas,” intoned conservative philosopher Richard Weaver at midcentury, “have consequences.” As MacLean shows, they also have contexts—historically contingent circumstances of their birth, development, and propagation outside of which they cannot give a full account of themselves. What follows is that account.
• • •
The Predators and the Prey
To understand how even varied strains of neoliberal theory have led to a stark free-market absolutism, it is instructive to watch over time as its intellectuals have changed the definitions of the problems, as well as the solutions. At the crisis of the 1970s, for instance, when the long postwar boom burned out and “stagflation” confounded conventional wisdom, the neoliberal theorists were ready with policy innovations like deregulation, privatization of public services, and tight control of the money supply. Along with these technical prescriptions, however, the spokesmen for neoliberalism ushered in a Copernican revolution in political theory, one that moved the market to the center of human experience.
To grasp the fundamental reorientation of human values implied by such a shift, consider these two contrasting interpretations of the Good Samaritan parable, one from the Rev. Dr. Martin Luther King, Jr. in the late 1960s and the other, as MacLean shows, from Buchanan, in the early 1970s.
Virginia’s nationally prominent stand against desegregation and voting rights was the inescapable context of the Virginia School's public choice theory.
The night before he was assassinated, King preached on the parable of the Good Samaritan as a call to “dangerous unselfishness.” The Nobel laureate spoke that night on behalf of 1,300 public employees striking for recognition of their collective bargaining rights, their only path to wages that would raise them above food stamps and to safer and less degrading working conditions. Two Memphis sanitation workers had been killed on the job that winter, crushed to death in a trash compacter because that was the only place they were allowed to take shelter from the rain.
In the Gospel of Luke (10:25–37), King reminded his audience, Jesus is prompted to the parable by questions from a learned lawyer: given that the essence of Jewish law is to love God, and to love your neighbor as yourself, how is a devout man supposed to determine just who counts as his neighbor? Jesus responds with the story of a Jewish man on the steep, treacherous road that falls more than a thousand feet in the descent from Jerusalem to Jericho—a prime spot for banditry. The traveler is set upon by thieves, beaten, stripped, robbed, and left to die. As he languishes by the side of the road, two different men of God pass him by, even crossing to the other side of the road to avoid him. But a third, “of a different race,” King recounts, stops to care for the unfortunate victim; this citizen of rival Samaria binds the victim’s wounds, covers him with his own cloak, carries him to an inn on his own animal, and guarantees the full cost of his care until he can recover. Jesus forces his questioner to render the answer: the neighbor you are charged to love by God’s law is the person who needs your help, regardless of kinship or proximity.
The first two men in the parable, King speculates, may have avoided their stricken countryman out of fear, fear that the robbers might reappear and attack them as well, or fear that perhaps the naked, half-dead man by the side of the road was faking his distress in order to lure passersby into a trap. And so, King explains, their first question was
“If I stop to help this man, what will happen to me?” But then the Good Samaritan came by, and he reversed the question: “If I do not stop to help this man, what will happen to him?” That’s the question before you tonight. Not, “If I stop to help the sanitation workers, what will happen to my job?” Not, “If I stop to help the sanitation workers, what will happen to all of the hours that I usually spend in my office every day and every week as a pastor?” The question is not, “If I stop to help this man in need, what will happen to me?” The question is, “If I do not stop to help the sanitation workers, what will happen to them?” That’s the question.
King’s answer to that question was the Poor People’s Campaign, a multiracial drive to put poverty and inequality at the center of the nation’s moral agenda. But in Democracy in Chains, MacLean reconstructs for us a very different political vision, by another eventual Nobel laureate. In this version from the early 1970s, however, the story’s moral has been upended.
Buchanan’s “The Samaritan’s Dilemma” implies that Jesus has missed the real lesson of his own parable. Buchanan’s talk—and subsequent article—used the mathematical language of game theory to reevaluate impulses of generosity and mercy. The arid schemas of Cold War game theory, he explained, allowed him to avoid the “instant emotional reactions that my examples seem to arouse” when rendered as concrete narratives, like parables. Instead, to see what is truly at stake under the smoke-and-mirrors of alleged principles, he proposes a two-player game in which a “Samaritan” is pitted against a “potential parasite.” The Samaritan’s choices in this game are to help or not help; the parasite’s options are to work or not work, which gets us straight to the ideological heart of the matter (and far from empirical reality, in which cash transfers to the poor reduce poverty and poor health, not work).
American constitutional mechanisms for placing property beyond majority rule were crafted in part for the explicit purpose of protecting enslavement.
The harm at the center of this version is not the very concrete physical suffering of the robbers’ victim; rather, Buchanan is concerned with the psychic discomfort of the Samaritan who “may find himself seriously injured by the necessity of watching the parasite starve himself while refusing to work.” The battered man by the side of the road that Buchanan conjures with his title functions in the game not as the victim of malign forces beyond his control, but rather as a predator, out to exploit the gullible Samaritan’s weakness for assuaging the pain of others. As long as the parasite—the predator—can count on that weakness in his prey, he can “win” the game; that is, he can shirk work and yet strategically manipulate his victim into repeatedly extending aid. The hypothesis, Buchanan asserts, is that “modern man has become incapable of making the choices that are required to prevent his exploitation by predators of his own species.”
What King called “dangerous unselfishness” in his interpretation of the parable takes on a perverse cast in Buchanan’s hands: from the economist’s perspective, unselfishness is so dangerous that the only solution is to remove the Samaritan’s temptation to irrational charity by imposing inflexible rules that, by law, foreclose public compassion.
• • •
The Virginia School’s Antidemocratic Roots
In 1987, one of Buchanan’s colleagues, William Breit, lamented that insufficient attention had been paid to the contexts that produced the Virginia School and its game-changing ideas in the field. Specifically, Breit asserted, the social geography of Charlottesville, Virginia, merited careful analysis, because “what transpired there in the period from 1957 to 1968 was a clear-cut paradigmatic shift, the creation of a new school of thought. What was there about the milieu in Charlottesville that brought about this result?”
What indeed? MacLean accepts the invitation to consider how the ideas of public choice developed in dialogue with their environment, though she offers a more capacious definition of that environment: whereas Breit is interested in how the offices were arranged in the economics department, MacLean fills in a larger canvas. Just as Depression-era London helped shape Keynesianism—the example is Breit’s—Virginia’s nationally prominent stand against desegregation and voting rights was the inescapable context of public choice theory.
Jim Crow Virginia’s radical inequality in 1950 depended on deliberate structures originally erected to support slavery. Following the defeat of the chattel-based plantation economy and the domestic slave trade that built Virginia’s great fortunes, the Old Dominion’s propertied elite relied on voting restrictions to insulate their power from democratic pressure.
As in the rest of the former Confederacy, the Reconstruction constitutional amendments that extended equal protections and manhood suffrage were followed by deliberate constriction of the franchise at the state level. Virginia’s 1902 constitutional convention, chaired by a Confederate veteran, openly justified measures like the poll tax as tools for the restoration of white rule. While the official record of Virginia’s convention was forthright about its aim to “cut from the existing electorate four-fifths of the Negro voters,” it did so without making any explicit reference to race in the laws themselves: powerful white Southerners had found that so long as restrictions were rendered in race-neutral language, they could pass muster at the U.S. Supreme Court.
Enslaved people inflated the political power apportioned to Southern states according to population, without being able to claim any share in the fruits of that representation.
And once the ostensibly colorblind hurdles to voting were written into the Jim Crow constitutions across the South, they became effective barriers to electoral democracy generally—nowhere more so than in Virginia. The electorate fell by half in the first presidential election to follow the new constitution’s imposition. For the next half century, Virginia governors were routinely elected by the votes of less than 10 percent of the adult population. U.S. Senator Harry F. Byrd, Sr., leader of congressional opposition to the New Deal, ruled the Commonwealth through a disciplined political machine. Virginia’s profoundly antidemocratic system was enforced not by hooded terrorists with burning crosses, but by malapportioned districts that inflated the electoral impact of the rural whites who ruled the old plantation counties, and by constitutional rules that foreclosed majority rule—“discrimination within the letter of the law,” as one of the 1902 constitution’s authors explained. Virginia achieved the nation’s lowest level of voter participation relative to population, MacLean points out, and one of the lowest rates of taxation relative to wealth.
That was precisely the point, as it had been all along: in contrast to the complex but democratically responsive tax systems of the North, colonial Virginia relied on a regressive flat tax on individuals rather than property. After the Revolution, slaveholders crafted a constitution that protected their property in human beings from differential tax rates, unwilling to see any of the profit from slavery recycled into public goods even for enfranchised white yeomen. (These “uniformity clauses,” which insisted on taxing all kinds of property at the same rate, were then used into the 20th century to block voters from differentiating between corporate tax rates and personal ones.) The three-fifths clause to the new U.S. Constitution expressed the veto that the slaveholding minority held over the new nation: enslaved people inflated the political power apportioned to Southern states according to population, without being able to claim any share in the fruits of that representation. Malapportionment within Congress gave slaveholders effective veto power: no matter how much the majority of free Americans might wish to discourage human trafficking by taxing it aggressively, the South’s rotten boroughs foreclosed that option.
In short, American constitutional mechanisms for placing property beyond majority rule were crafted in part for the explicit purpose of protecting enslavement. It is not necessary to oversimplify the sincere ideological conflicts of the Revolutionary generation to acknowledge that. It is no violence to the complex republicanism of a public choice precursor like John C. Calhoun to recognize that the starting point for his theoretical contributions was the self-serving embrace of slavery as a positive good, or that his concerns for minority rights under majoritarian rule depended on the distinction between minorities who merited protection—like slaveholders—and those who did not, like their captives. Ideas have consequences.
• • •
Public Choice and Public Discrimination
By the time James Buchanan joined the economics faculty of the segregated and almost exclusively male University of Virginia, cracks had begun to appear in the edifice of rule by a Herrenvolk oligarchy. MacLean relates how in 1950 a determined group of African American schoolchildren, relegated to tarpaper shacks, challenged the state’s absurd pretensions to provide “separate but equal” educations to its black and white students. Following a meticulously coordinated strike by hundreds of high schoolers, the NAACP filed suit on their behalf in federal court. Davis v. the County School Board of Prince Edward County became one of the five cases bundled into Brown v. Board of Education of Topeka, Kansas, and in 1954 the U.S. Supreme Court came out for the end of state-enforced segregation of schools.
Virginia’s Senator Byrd turned to journalist James J. Kilpatrick, whose barrage of editorials in the now-defunct Richmond News Leader offered the state’s establishment a way to fight Brown without engaging at the “sometimes sordid level of race,” as Kilpatrick explained. They would refuse the enforcement of Brown by resurrecting the antebellum doctrine of “interposition” with which pro-slavery advocate John C. Calhoun had sought to nullify a national antislavery majority.
Like the technically colorblind Jim Crow constitution, interposition was a notion that allowed the issue at the center of the white elite’s revolt to hide in plain sight. With Byrd’s blessing, the Virginia legislature officially embraced interposition as state doctrine. Any school system that sought to comply with court-ordered desegregation would be stripped of state funding and closed down. To buy off white parents who might prefer integration to no school at all, the state would pay for vouchers to private schools.
If Virginia allowed one black child to access an integrated school, the entire political economy of malapportionment, voter suppression, and evasion of national labor protections might come crashing down.
This staggering mobilization against desegregation—coordinated in statehouses across the former secessionist states—signaled elites’ awareness that schools would be just the first brick to fall from the edifice of undemocratic state governance. The high court’s decision put Southern propertied interests on full alert: federal authorities could no longer be counted on to turn a blind eye to the region’s hyperexploitative economy and the legal rules that maintained it in blatant defiance of equal protection. If Virginia allowed one black child to access an integrated school, the entire political economy of malapportionment, voter suppression, and evasion of national labor protections might come crashing down.
Here Buchanan and his nascent thought collective move to the forefront of MacLean’s narrative. Their school of political economy was no coincidental bystander to the state’s assertion of white supremacy or its class prerogatives to govern without majority consent. Rather, it seemed just the tool that the Old Dominion’s propertied gentlemen needed to decontextualize their stand against democracy within their borders. In 1956, as the newly appointed chair of economics at Virginia’s flagship public campus, Buchanan proposed the creation of an academic center of political economy and social philosophy. It would train “a new line of thinkers” to protect Virginia’s “social order . . . built on individual liberty” and battle the “increasing role of government in economic and social life.” Buchanan would hand-pick participants; the thinkers assembled in this exclusive center would in turn address themselves to such troubling public “problems of equalitarianism” as Social Security, collective bargaining, and the relationship of the states to the federal government.
After the courts finally found that Virginia’s selective closure of integration-minded schools violated the U.S. constitution, Buchanan’s incipient theories got their first real-world test. In 1959, the Virginia legislature created a new commission to study the crisis of desegregation, and two distinct groups of Virginia professors reached out to offer advice and expertise. First, 150 faculty members from various disciplines petitioned the commission to respect the law, consult with “all races,” and remember that public education was the bedrock of democratic self-governance. In contrast, Buchanan and his colleague G. Warren Nutter submitted a private report recommending that Virginia let the cup pass: rather than opting for either involuntary segregation or involuntary integration, the state should embrace constitutional changes that would end the public “monopoly” of education by closing all public schools; selling off their physical assets; and issuing vouchers to unregulated private schools that could accept or reject pupils on any basis they chose. The report’s authors declined to name the basis of blackness as an example, but, as MacLean points out, “To a person, the southerners clamoring for state subsidies for private schooling were whites who wanted to maintain segregation” and who had to be taught to say so in race-neutral terms of constitutional interpretation.
Buchanan and Nutter’s contribution to the massive resistance crisis did not carry the day, even after they took their recommendations public. The General Assembly debated a bill to end the guarantee of public education, but ultimately voted the measure down. Except, that is, in Prince Edward County: there the Board of Supervisors put public choice’s race-neutral constitutional principles into practice and padlocked the schools. For five years, the old plantation county distinguished itself as a domestic laboratory of libertarian prescriptions, “the nation’s first county,” according to the Wall Street Journal, “to go completely out of the public school business” until a 1964 federal court order reopened them.
As MacLean makes explicit, there is no reason to assume that “for a white Southerner of his day, [Buchanan] was uniquely racist or insensitive to the concept of equal treatment,” although her narrative includes many contrasting examples of his white neighbors and colleagues (from outside of economics) who embraced desegregation as simple justice. Certainly Buchanan’s definition of the society of individual liberty, which his center sought to protect, was fully compatible with Jim Crow governance by a tiny voting minority under control of a notorious political machine, in defiance of federal constitutional and legal norms. This fact is not interesting as a window onto his soul, of course, but rather as evidence of the social priorities hardwired into public choice theory, and the political purposes it volunteered to serve. Those who interpreted a citizens’ revolt against de jure white supremacy as a cynical cover for theft by taxation; those who insisted that generations of enslaved and free workers behind Virginian wealth were the takers, not the makers—these are not the historical actors whose concept of liberty most Americans revere today, but they are the ones who immediately embraced public choice as the theory to their practice.
• • •
Public Choice’s International Regime
MacLean’s narrative follows the increasingly interwoven histories of Buchanan’s academic Virginia School and the national libertarian political mobilization. In 1962 Buchanan and his colleague Gordon Tullock crystallized their fundamental theoretical postulates into The Calculus of Consent. Starting from game theory’s models of economic decision-making, the authors assumed that citizens and elected officials approached the public sphere with only the same utility-maximizing motives they brought to market exchange: given the chance, voters and their elected representatives would turn government into a mechanism for victimizing the wealth-holding minority through “discriminatory”—or progressive—taxation. Reviewers noted that their analysis occurred entirely “outside any context of information,” but as long as it was not required to account for real-world phenomena, their “ingenious logic” produced a plethora of useful insights.
While public choice was thus crystallizing as a school of thought in the pages of learned journals, individuals of the Virginia School also lent their expertise to Barry Goldwater’s presidential campaign. Libertarians were at the forefront of the intraparty rebellion that put the insurgent Arizonan at the top of the ticket. But beyond Arizona, his hard-right platform carried only five Deep Southern states with profoundly undemocratic restrictions on the franchise. Even endorsements by celebrity novelist Ayn Rand and GE spokesman Ronald Reagan failed to make race-neutral libertarian principles broadly attractive to any but the states’ rights enthusiasts actively defying desegregation in the former Confederacy.
The key to social control of the young was turning college into a purely individual commodity, steering working-class students away from the liberal arts and channeling them instead to technical job skills, at their own expense.
Goldwater’s resounding defeat meant that libertarian theory would have to wait for a chance to prove itself in practice. But if most of the U.S. in 1964 was still too firmly under the sway of voters to allow the experiment, the same could not be said of Chile a decade later under the military dictatorship of Augusto Pinochet. The 1973 coup against elected socialist President Salvador Allende allowed the neoliberal and monetarist prescriptions for economic restructuring to be enacted under conditions of torture, mass killings, and the brutal suppression of dissent. MacLean, however, draws our attention to a different aspect of the sixteen-year-long experiment, one which by design has outlived even the popular repudiation of “los Chicago Boys” in the economic sphere. Through his publications—translated and distributed to the new government officials—and in personal counsel with the regime and its private-sector supporters, James Buchanan guided the dictator’s team in creating a constitution that explicitly aimed to lock into place their radically antidemocratic transformations.
The fundamental alterations to the political order came straight from libertarian wish lists of three decades: labor unions were effectively dismantled; the social security and health care systems were privatized; federal regulatory power was sharply curtailed; the judiciary was reduced to an agent of pure formalism; universities were forced to become “self-financing;” and a voucher system was launched to shift K-12 education into private hands. All this and more was designed to promote the only liberties that seemed to matter: the “individual freedom to consume, produce, save, and invest,” as a Pinochet supporter was pleased to report to the Mont Pelerin Society in 1980.
To ensure that no other notions of political freedom would ever limit this “alliance of capital and the armed forces,” MacLean explains, the constitution awarded Chile’s wealthy minority an effective veto power through a skewed electoral system. Even after the free-market zealots drove a formerly middle-class economy into the ground and threw over 40 percent of the population below the poverty line; even as school “choice” decimated primary education for the non-elite and raised college tuition to an impossible 40 percent of the median income; even as human-rights investigations exposed the blind eye that a technocrat judiciary turned to repression by torture and clandestine killing—even now, Chilean majorities cannot undo the privatization baked into their constitution by the Virginia School.
As with the desegregation crisis in Virginia, Buchanan left no record of his ultimate verdict on this encounter between his ideas and their application outside the paranoid virtual worlds of game theory. But, MacLean notes, nothing suggests that the stark contradiction of a free market secured only by a ferocious police state shook his faith. Home from his consulting work in Chile, he bent renewed ambition to the challenge of rewriting the social and economic contract without the coercive power of a military junta to speed the goal.
MacLean’s narrative then follows Buchanan as his relationship with UVA soured. In a changing university, the strict ideological controls that Buchanan exercised over his economics department were raising eyebrows, and resistance to his vision triggered his brief but consequential defection to UCLA during the high point of sometimes violent campus protest in 1968–69. Unable to take at face value student commitment to racial equality, voting rights, and a cessation of the Vietnam War, Buchanan’s writings assumed that black students merely sowed chaos as pawns of white radicals who cloaked their own self-interest in the rhetoric of the common good. (Public choice theory, remember, assumes that the “motivations of people in the political process are no different from those of people in the steak, housing, or car market,” and so assigns itself the task of identifying the interests that hide beneath the mask of stated ideals. Because people sometimes do vote their pocketbooks, in other words, any other political priority can only be a hypocritical cover for individual utility, or cynical virtue-signaling—the same nihilistic libertarian logic that reigns online.)
The key to social control of the young, then, was turning college into a purely individual commodity, steering working-class students away from the broad vistas of the liberal arts and channeling them instead to technical job skills, at their own expense. Echoing a theme that Milton and Rose Friedman had articulated in their 1962 Capitalism and Freedom, Buchanan lent his voice in support of California Governor Ronald Reagan’s punitive budget cuts to the UC system: replacing California’s tuition-free system—which primarily benefited working-class families—with private payment would force students into economic dependence on their families, and reassert traditional forms of authority.
Appalled by the dissent of “long-hairs” as well as the genuine violence, Buchanan quickly fled east, to Virginia Polytechnic Institute (now Virginia Tech). With backing from the financial sector, his new Center for the Study of Public Choice connected public choice political economists to clients for their ideas in business and politics. His prescriptions for disciplining students and faculty attracted enthusiastic attention from national funders like the oil and banking fortunes behind the Scaife Family Charitable Trusts. And soon enough, Buchanan was lured to what the Wall Street Journal christened “the Pentagon of conservative academia”: George Mason University, or “Koch U.”
• • •
The Koch Machine Enters Academia
With his brother David, Charles Koch was by the 1970s already on the way to becoming the top funder of right-wing causes in the country. Charles, trained in engineering at MIT, inherited from his John Bircher father a petroleum and manufacturing conglomerate; once he took over in the early 1960s, the son increased its annual revenues more than a thousandfold and turned Koch Industries into the second-largest privately owned company in the country. Forbes estimates the Koch family fortune at $82 billion in 2016, second only to the Walton family of Walmart heirs.
Charles Koch’s attention had been arrested by the advice of conservatives like Lewis Powell and David Packard for quelling campus-based critique: the donor class, they counseled, should refuse to subsidize the enemies of capitalism. (The idea was hardly new: a quarter of a century earlier, William F. Buckley had launched his career by demanding that Yale fire professors who failed at their roles as “intermediaries” for delivering the economic and political views of the alumni to the current students.) Invest in universities strategically, they suggested: only pay for the ideas that directly benefited either the donors’ individual companies or the free enterprise system more generally, and sharply contract public funding to make universities more responsive to their donors than to voters. As Buchanan put it, the time had come to “close off the parasitic option” for the “student class.”
Bonding over shared goals, Buchanan accepted the reorganization of his center under joint direction with Charles Koch. But their accord did not last long.
Thanks to journalists like Jane Mayer and Daniel Schulman, the unprecedented influence of a single family on the American political landscape is now widely known, if only in broad outline: the secretive mechanisms for funneling “dark money” make an exact accounting impossible, but in the twenty-first century, the Koch network has in effect functioned as a private political party. While simultaneously pouring previously unheard-of sums into Republican campaigns and turning the Tea Party faction into a disruptive force at the state and national levels, the Kochs have invested heavily in the network of think tanks and campus programs that would package libertarianism for policymakers.
Other right-wing funders (and yes, they dwarf the progressive ones) have used the university’s old legacy of objectivity and public service to cloak their subsidy of ideological “product” driven by their bottom lines. But as with their impact on the electoral and judicial systems, the Kochs’ audacity in building tax-deductible lobbying centers and incubators for self-interested policy on public campuses has been unrivaled, and George Mason University has distinguished itself as the biggest recipient of their largesse. MacLean’s final chapters cover the fertile, if ultimately unequal, relationship between Buchanan’s ultimate academic home and its Koch base of influence just outside the D.C. beltway.
Cheered by the advent of Ronald Reagan—a head of government who defined government as the problem—the libertarian wing of the GOP and its biggest funder were increasingly focused on getting results for years of investment in think tanks like the Cato Institute. Even so, the public wasn’t having it. Mass outcry met Reagan’s proposed fiscal revolution in 1981. As Reagan’s libertarian budget director recognized, truly gutting Social Security, Medicare, and veterans’ benefits—which together amounted to half of domestic spending—simply could not be achieved “in the world of democratic fact.”
Whether or not they were themselves at any given moment sick, old, or returning from military service, the majority of Americans did not actually want to throw those “special interests” out into the cold world of market competition for survival. No matter how enthusiastically the majority might decry symbolic bogeys of parasitism—most notoriously, the deeply racialized mythical “welfare queen”—fierce dissent halted the administration’s plans to turn broad-based social programs into tax relief for the wealthy.
Under Reagan, the answer was simply to grant the tax cuts anyway without offsetting them, while also massively building up the military. This strategy produced unprecedented deficits, laying the groundwork for a future crisis that might force the state into the single-minded task of property rights enforcement without ever convincing the public of its merit.
Frontal assault on the parasites, the GOP thus learned, did not work in the open public square. Actually unmaking the social contract would require a longer and less forthright investment in ideas, Koch and Buchanan agreed. Building on the experience of Chile, Buchanan devised for the Cato Institute a model for achieving one of the right’s longest held desiderata: the repeal of Social Security. Recognizing that ending the New Deal’s most popular innovation repulsed every constituency in the American polity outside of the financial sector itself—the demonstrated beneficiaries of Chilean-style personal investment accounts—the economist rolled out a divide-and-conquer plan for the wealthy ideologues. It rested on deliberate obfuscation of its long-term goals, mischaracterizing incremental moves toward shutdown as “reforms” to protect the program’s long-term health.
Slowly through the 1980s, the less-than-forthright message gained traction. The “talent pipeline” at the new Buchanan Center for Political Economy at George Mason University churned out staffers for the right-wing think-tanks and sympathetic congressmen. Earlier Buchanan students served in the Reagan administration. Investing in the long game, the Koch brothers consolidated some of their favored projects to the unabashedly corporate-style GMU.
But still clear-cut policy wins eluded them: The “Motor Voter” Act of 1993 removed even more of the barriers to the franchise that had been put in place early in the century to curb democratic participation. The Republicans’ legislative 1994 Contract with America largely failed as legislation, taking down libertarian-friendly proposals like a supermajority requirement for tax increases and a balanced budget amendment. Once again, while eager for the bipartisan will to “end welfare as we know it,” the public was not willing to stomach the complete dismantling of the New Deal order. As Buchanan put it, we remained wedded to our “dependency status.”
Koch, comparing himself to Martin Luther, doubled down on support for GMU’s Buchanan Center and its campus partner in national transformation, the Law and Economics Center under the direction of Henry Manne. In memoranda, Buchanan recommitted to their shared goals for the twenty-first century: cripple the environmentalists who pretended to care about climate change as a cloak for their naked power grab over American industry; dismantle Social Security, Medicare, Medicaid, and workplace insurance and pensions to end their deformation of natural competition in the labor market; replace graduated income tax with a flat tax to prevent discrimination against the wealthy; privatize “the most socialized industry in the world”—education, from kindergarten through grad school. And finally, perhaps the virtually all-male Mont Pelerin Society could figure out what was up with feminism, which was “heavily socialistic for no apparent reason.”
Bonding over these shared goals, Buchanan accepted the reorganization of his center under joint direction with Charles Koch. Perhaps predictably, though, the economist ultimately lost control over the hybrid he helped create. Buchanan found his scholarly project grossly exposed by the naked influence-peddling of Koch’s non-academic operatives, even as they transformed the public sphere into the open-air market he theorized. Wendy Gramm, a director at Enron and the wife of a US senator, lobbied for the “Enron loophole” from her perch at Mercatus in 1998. She successfully convinced the Senate committee chaired by her husband to fend off federal oversight of energy derivatives; the Kochs profited handsomely, and the decision led directly to the induced blackouts in California and the ultimate meltdown of Enron’s fraudulent empire.
Stung, Buchanan demanded a degree of separation between the Koch “outreach” programs and his department, but the university administration was unwilling to offend its colossal donor. Buchanan retreated to a log cabin, and the Koch network leveraged its GMU beachhead into ever-increasing influence. Between 2005 and 2014, reports Greenpeace, Koch donations to universities totaled over 100 million dollars. The majority of it went to three entities at GMU, including the Mercatus Center. In February of this year, GMU students sued for the release of the terms of those gifts after Freedom of Information Act requests were ignored.
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The Moral Philosophy of the 1 Percent
“Though the founders of modern economics, and their followers in political science, might have supposed that they were engaged in a ‘value free’ or ‘scientific’ investigation,” Harvard political scientist Richard Tuck has written, “in fact they were doing moral philosophy.” It is tempting to read the long history of the corporate-funded capture of American political institutions as pure quid pro quo, as one of the few naturally occurring examples of rational actors pursuing private utility in a frictionless marketplace: campaign contributions swapped for policies that enhance the donors’ bottom line. This, after all, was Buchanan’s own description of the public square, though his totalizing vision did not admit any other possibilities. Certainly there is no denying the power of property to thwart democracy. Subtract the influence of corporate money from even the last fifty years of politics, and the present state of affairs is unimaginable.
But the glee with which so many elected representatives have pursued the destruction of the public sphere is not fully explained as the satisfaction of sober middlemen exchanging wealth-enhancing policies for near-bottomless sources of donations. Despite their offstage disdain for the evangelical moral zeal or theocon traditionalism of their fellow Republicans, even the libertarian champions of pure logic paradoxically reveal their need for a creed that makes selfishness not just rational but actually principled. Between 1979 and 2007, the income alone of the highest 1 percent of the nation’s households more than doubled; there is a boutique market, in other words, for interpretive systems that can justify this man-made structural windfall as a coherent natural order. For some, the effort involves doubling down on the alleged discernment of the price mechanism as a straightforward measure of individual value. Income disparity in this scenario is just the messenger, delivering the unwelcome truth that a CEO who brought us the financial crisis objectively contributed more to society each year than 360 elementary school teachers. Ayn Rand’s Benzedrine-fueled potboilers, meanwhile, still appeal to those personally outraged when the world—or high school—does not sufficiently esteem their intellectual superiority. But Atlas Shrugged’s strident glorification of selfishness also guided Alan Greenspan as he ran the Federal Reserve into the financial crisis and Ross Ulbricht as he built the “dark web” into an international opioid market. Ideas have consequences.
Democracy in Chains demands that another critically influential system of alternative morality acknowledge itself as such, and submit its historical record for our evaluation. MacLean equips us with the context that drove its theoretical apparatus, and shows us the consequences that have arisen from applying it to the real world. The Virginia School achieved its formal political power through its utility to propertied defenders of a manifestly unjust and undemocratic status quo. But its influence also depended on asserting the power to define its terms and then assume their reality. It did not describe the world with accuracy, but it has done its best to make the world over to align with its model. As he sketched his plans to leverage donor money with academic respectability and alter fundamentally “the way people think about government,” Buchanan asked himself, “How much hypocrisy is necessary?” MacLean’s scholarship helps us reply, “More than you can muster.”
The author of the book under review and the reviewer are professional colleagues.
August 10, 2017
34 Min read time