Democracy in Chains: The Deep History of the Radical Right's Stealth Plan for America

by Nancy MacLean

Lawsuits waged on behalf of property owners: it was that sense of possibility that had led Henry Manne to launch an annual Summer Economics Institute for Law Professors, in which some of Buchanan’s colleagues served as lecturers.28

He looked to transform the legal profession “wholesale” rather than “retail.” Instead of turning out individual mentees, Manne planned to alter the way the law was understood and taught by luring existing leaders in the legal academy, from institutions including Harvard and Columbia—eventually more than six hundred of them—to his two-week summer institutes. As the guests went back to their institutions (and he always made sure to take a minimum of two from any given law school so they could back each other and not give in), they would push their skeptical colleagues to be more open to hiring faculty in the field of law and economics, particularly when the new colleagues came at little or no cost because the funds for them were provided by the Olin Foundation or its imitators.

As one young legal scholar so drawn, who went on to an Olin position at Yale Law School, recalled of what came to be called Henry Manne camp, “getting a thousand-dollar honorarium to write a paper then was a lot. I drooled over it.”29

“We were not asking for charity,” he made clear. “Corporations had a long-range interest in what went on in universities, and if they didn’t begin tending to it, it was going to jump up and bite them.”32

In The Attack on Corporate America, he claimed that since the 1960s there had been “an outpouring of corporate and business criticism as venomous as anything seen since Nazi ‘scholars’ placed responsibility for the ills of an earlier epoch on the Jewish community.” Manne warned that if it was allowed to continue, the “free enterprise” system was “in the greatest danger ever of being destroyed.”

Within one generation, his plan “could turn the American legal system back into a productive and desirable channel,” the kind that had contained it before the Great Depression.34

Powell Memorandum

The “campaign for the courts,” as a critical organization dubbed it, sought “to mold a new jurisprudence” that would radically change “the way justice is dispensed in our society.” In particular, those waging the campaign sought “to make the protection and enhancement of corporate profits and private wealth the cornerstones of our legal system.”

Among the investors in Henry Manne’s vision, alongside the blue-chip corporations and the Earhart Foundation, a long-standing libertarian funder, was a relative novice: Charles G. Koch.39

Universal Oil Products engaged in what Buchanan’s coauthor Gordon Tullock would later define as (and an adult Charles Koch would revile as) “rent-seeking behavior.”

Of course, what happened to Fred Koch wasn’t rent-seeking behavior; it was criminal behavior.

If Universal’s lawyers felt confident that the courts would have sustained their claims, then Universal would not have resorted to bribery.

Fred was a passionate advocate of so-called right-to-work laws. But what he is most remembered for is his cofounding of the John Birch Society earlier the same year, declaring that he was “thoroughly disgusted with the Eisenhower variety of Republicanism.”

He restricted his study in only one way: to thinkers who believed as he did that the foundation upon which prosperity and social progress had to be built was unhampered capitalism. One work particularly influenced him: F. A. Harper’s Why Wages Rise, a free-market primer published in 1957.

In a true, undistorted market society, wages should rise only with increases in productivity.

Baldy Harper also hated the idea of “government schools.” He fulminated against “financial need” as a criterion for college scholarships as a “Marxian concept,” warning, “‘Need’ grows without bounds whenever it is severed from a responsibility for acquiring satisfaction through one’s own endeavors.”13

Harper also worried about moral deterioration in modern society. He claimed to have evidence in his files showing “that the shorter work week is an important source of crime,” and that “compulsory unemployment devices, such as child labor laws,” and mandatory schooling “during teen-age years, are important causes of juvenile delinquency.” By the same token, he argued that so-called government “help” in times of economic depression, such as the 1930s, was “dangerous.”

Such true freedom, with relations between individual employees and employers undistorted by group power or government action, Harper rhapsodized, “would be as near a utopia as can be hoped for in economic affairs this side of heaven.”14

Harper’s thought moved Charles Koch deeply.

“Government in the United States is now taking from persons’ incomes an amount equivalent to the complete enslavement of 42 million persons,” Harper wrote in another work. “Compare that figure, and the concern about it, with the figure of 4 million privately-owned slaves in the United States at the outbreak of the War Between the States!” Why did so few see the outrage of it?

only if one were totally free of coercion and fully self-responsible could one make truly ethical choices.

Freedom School

LeFevre’s vision, notes one inside history of the libertarian movement, “was like catnip to a certain class of businessmen.” Charles Koch was among them.

“Prove Yourself Worthy”—that

Institute for Humane Studies

In Koch’s view of the world, that is what a lifelong wage earner was: the less able or the one sentenced to a form of serfdom by his or her own failures.26

That sense of intellectual and even ethical superiority to others may help explain why Charles Koch bypassed Milton Friedman to make common cause with the more uncompromising James Buchanan.

And when Charles Koch set up his own eponymous foundation in 1974, Buchanan was invited to be the featured dinner speaker for “our first formal activity.”

Indeed, more than anything else, it was Buchanan’s and Koch’s shared commitment to school privatization at every level that started a collaboration that deepened over the next two decades.36

Which explains his interest in Murray Rothbard, one of the intellectuals Koch first subsidized. It was Rothbard who explained to him how small numbers could effect big changes. Rothbard suggested that Koch study Lenin.39

The new urgency called for a think tank to be created to serve as a training and reinforcement institution for the cadre. To lead it, both men had their eyes on a steely fellow already in the ranks: Edward Crane III.45 Crane had served as a precinct captain for Barry Goldwater in 1964, but he was disgusted by “how quickly Goldwater ran away from the issue of privatizing Social Security.”

“The Establishment” had to be overthrown—its conservative wing along with its liberal wing. Both suffered “intellectual bankruptcy,” the conservatives for their “militarism” and the liberals for their “false goals of equality.”

Once Crane agreed to lead the training institute, all that was lacking was a name, which Rothbard eventually supplied: it would be called the Cato Institute.

“Carthage must be destroyed!” For this new Cato’s mission was also one of demolition: it sought nothing less than the annihilation of statism in America.48

Training was crucial so that the cadre’s members could “make strong and fruitful alliances” with partners who might at the time of the alliance be stronger than the cadre without fear of the cadre’s going over to the temporary ally.51

Koch, meanwhile, provided new resources as the cadre brought in recruits with ideas for new ways to advance the cause. They would then be indoctrinated in the core ideas to assure their radical rigor, all of this held together with the gravy train opportunities Koch’s money made available as they pushed their case into the media and public life. The libertarian vanguard, Rothbard taught, could “guide the peoples to the proper path.”53

In that early purity, Cato often shocked the nation’s conservatives, as when it criticized American military intervention in other countries and called for legalizing drugs, prostitution, and other consensual sex. That unique stance, its first president said, made it “the think tank for yuppies”—those who liked social freedom with their economic liberty, and never caught on to where all this was headed.54

“Employees of single-donor nonprofits,” said a disenchanted one who left, “follow the moods and movements of their benefactor like flowers in the field, their faces turned toward the sun.”56

James Buchanan published an article called “The Samaritan’s Dilemma,”

The trick, though, was to figure out how to bind the foolish Samaritan, qua government, from giving out perverse incentives—how to shackle the Samaritan, so to speak.

another Koch-supported think tank, the Reason Foundation,

concentrated on making the case for selling off public property and outsourcing public services to private corporations.

Cut Local Taxes—Without Reducing Essential Services. It took dead aim at the growth of public sector employment as a cause of increasing taxes and spending, and called for contracting out to private companies to contain costs.62

“I figured that if you could gradually build up to socialism, you could probably undo it, dismantling the state step by step,” he later told an interviewer.

You could hack away at government, that is, “by 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.”64

The Reason Foundation was emerging as the nation’s premier voice for privatization, not only of public education, through voucher plans like Virginia’s, but also for every conceivable public service, from sanitation to toll roads.67

Meanwhile, as the Cato Institute and the Reason Foundation set to work, Buchanan was hired by yet another Koch-backed organization, the Liberty Fund, to run what became annual summer conferences for the recruitment and training of young talent (defined as under age thirty-five, later upped to forty) in the social sciences.

Like Koch, Buchanan was not squeamish about throwing flotsam overboard. Anyone unsound in doctrine or lacking in promise was unlikely to be invited back.

Clark had also pledged to Koch that he would highlight “the need for and benefits of private education,” so as to capitalize on the spreading “discontent with public schools.”73

Sequestering himself in the mountains of southwestern Virginia, he produced The Limits of Liberty, the book he would later describe as the single best statement of his intellectual vision.