Peter Bauer: A Dissenter on Development
One of the chilling facts about the
20th century West is how poorly champions of individual
liberty have fared in free societies. They seldom
receive state honors. Rarely are they celebrated in
academia or the media.
One of the 20th century`s great
economists, Ludwig von Mises, a refugee from Hitler, could
not get a university appointment in America. Mises said
that government was the problem, not the solution, and
outraged progressives, who were committed to the welfare
state, ostracized him.
F.A. Hayek was disparaged for many years for his
warnings against big government, as was
In the 1960s, the University of
Virginia had the most innovative economics department in
the world. Scholars there created two new fields of
economics, public choice and
law and economics. In both cases the innovators
ended up with
Nobel Prizes. But the university cut itself out of
the glory. To appease liberals, who were embarrassed
that their economics faculty were advising presidential
Barry Goldwater, another
nonbeliever in big government, the university
ran off the future Nobel Laureates.
It was the same in Great Britain.
Just try to find Adam Smith`s grave or any sign of him.
It can be done, but it is a research project.
There have been no prizes for those
whose work advances liberty. Neither are there Ford,
Rockefeller, or Carnegie Foundation grants nor
MacArthur Foundation “genius” grants. Progressive
prejudice has been such that no one who advances liberty
could possibly be seen as a genius. The
liberal-socialist establishment has worked to shut such
Seeing the void, a young successful
investor, who chooses to remain unnamed, approached Cato
Institute president Ed Crane with the proposal to
Milton Friedman Prize for Advancing Liberty. The
prize, to be given every two years, brings with it a
check for $500,000.
Bauer arrived in England from
Hungary in the 1930s. On ability alone he rose to
Cambridge don, London professor, and peer of the realm.
He was without doubt the greatest development economist
of our time.
For decades Lord Bauer stood alone
in opposition to the view that only planning and foreign
aid could produce
economic development in poor third world countries.
He watched marketing boards destroy
a flourishing peasant agriculture keyed to exports,
forcing the peasants back into subsistence farming.
In theory, the marketing boards
were set up to stabilize prices. In practice, the boards
were used to confiscate the farmers` profits. The main
result of development planning, said Bauer, was to
destroy individual initiative, which is the most
important factor of production.
Bauer`s dissent on development was
based on his realization of the importance of traders in
moving an economy from subsistence to exchange. This
critical activity of traders was curtailed by the
regulations imposed by development planning.
With planning and aid came poverty
and war. Foreign aid, Bauer noted, made control of the
government a life-and-death matter, causing
genocidal warfare between tribes. He did not spare
his muddle-headed colleagues, who fervently believed
they were doing good by socializing poor lands when
any fool could see that not even England could
on development economics are the only ones worth
reading. The rest are evidence of a pathology of
delusion that wrecked the lives of millions of innocent
Lord Bauer, 85, passed away
peacefully at home in London on May 2, the eve of his
departure for the United States to receive the Milton
When the Cato Institute gathers to celebrate its 25th
anniversary on May 9, the event will celebrate Peter
Bauer, liberty`s friend and the champion of the victims
of development planning. His work lives on.
Paul Craig Roberts is the author of
The Tyranny of Good Intentions : How Prosecutors and
Bureaucrats Are Trampling the Constitution in the Name