Europe on the Road to Serfdom

The Mont Pelerin Society (MPS),  an international organisation of classical-liberal academics, politicians, journalists, think tank people and businessmen, is currently holding a Regional Meeting in Reykjavik, the capital of Iceland. The Society was founded after the Second World War by the later Nobel Prize winner Friedrich Hayek and friends such as Karl Popper, Milton Friedman, Ludwig von Mises and others. From its modest beginnings with a small group consisting of Hayek and 35 “friends of Hayek” who convened in the Swiss resort of Mont Pelerin in 1947, the MPS today has over 500 members who convene every two years for a General Meeting (the last one was held in 2004 in Salt Lake City) and once or twice a year at Regional Meetings. The Reykjavik meeting, attended by 109 participants, started last Sunday and ends tomorrow evening.

The theme of the Reykjavik meeting is “Liberty and Property in the 21st Century.” In her opening speech on Sunday, MPS President Victoria Curzon-Price, professor of Economics at the University of Geneva, warned that, despite the fall of Marxism, “we are still on the road to serfdom.” Marxism, she said, has today been replaced by a nihilist cynicism which is propagating beliefs and misconceptions that still intend to make man a servant of the state.

In an impressive speech, Vaclav Klaus, the President of the Czech Republic, told the conference yesterday that Europe is in danger of becoming a “post-democratic” society. Socialism has been discredited since the collapse of Communism in 1989, but “substitutes for Socialism,” such as environmentalism, multiculturalism, Europeanism and “NGO-ism” act as “alternative ideologies” that are used to legitimise ever more government interference in people’s everyday lives, restricting their freedom. According to Klaus, Europe is under greater threat in this regard than America because Europeans, to a larger extent than Americans, tend to regard the state as a well-meaning benefactor to the people.

Another important contribution to the conference was made by Andrei Illarionov. Despite being the Chief Economic Adviser to Russian President Putin, Illarionov pointed out how state interference has been growing in Russia since 2002. Until that date taxation levels were lowered, the oil industry was privatised, economic competition was stimulated and foreign investment attracted, but since 2002 taxes have gone up, bureaucracy has started to grow again, the oil industry has effectively been nationalised and government has begun to intervene in other sectors of the economy as well. This has prompted ambitious young Russians, who until a couple of years ago were looking for jobs in the private sector, to seek government jobs. Apparently in Russia politicians are not in a position to introduce sound economic policies.

This is the information age, and other MPS members have also been posting from the MPS. Madsen Pirie of the Adam Smith Institute in Londen has commented on both the speeches of Vaclav Klaus and of former Estonian Prime Minister Mart Laar.  I interviewed Mart Laar for The Brussels Journal and will post the audio-file when I return to Brussels later this week. Johan Norberg of the Swedish think tank Timbro has been posting MPS reports as well.

All MPS attendees in Reykjavik grumble about the high prices in Iceland. No wonder. Iceland is doing extremely well economically (a growth of 6% in 2005), with a strong Icelandic Króna as a result. The country has wisely kept out of the European Union and has introduced liberal economic policies, including tax reductions – which, as former Prime Minister and present Minister of Foreign Affairs David Oddsson told the MPS members, have led to increased tax revenues. “We do not want to join the EU,” Oddsson said, “because our influence on decision making in Brussels would be minimal while the costs would be high. Moreover, we do not like the EU’s attempts at fiscal harmonisation.” At least this is one nation in Europe that will escape the road to serfdom.