Still, he told his Richmond audience hopefully, many Americans seemed to be turning against “bureaucratic, governmental solutions”—from George Wallace voters on the right to the “counterculture” on the left. But older means of resolving political grievances would no longer work, he warned. Public choice analysis showed that “a flaw in our basic constitutional structure” made controlling public spending an almost insuperable challenge. Elected officials responded to voters, and most voters were now, in one way or another, dependent on “the federal gravy train.” Yet—and here was a good sign—“two broad-based coalitions” seemed to be congealing. One was regionally concentrated in the South, the Midwest, and the West, yet it also included “ethnic [that is, white] blue collar workers in the Northeast.” The other consisted of those who benefited most directly from federal spending programs, including the employees of government with a stake “in continued exploitation of the taxpayer” and their allies among the “Eastern Establishment, the media and the intellectuals.” The collective enemy he was constructing included nearly everyone in education, it would seem, except academic economists.12
His listeners in Richmond could be part of the solution. “Carefully and constructively, a counter-intelligentsia can be mobilized,” he assured them. “Large things can start from small beginnings.”13
Indeed, they can. And in this case, they would. For by decade’s end his plan would help guide a major corporate push to transform the nation’s courts.
The idea of convening a tight cluster of kindred economists began taking shape first in Buchanan’s conversations with Richard Larry of the Scaife Family Charitable Trusts, in early 1972. “Such an effort might have a handsome payoff if carefully planned,” the two agreed. Larry had already arranged for Buchanan’s new center at Virginia Tech to have a big multi-year grant from the Scaife Trust that included funds for “outreach,” after Buchanan pointed out that “many [on the right] have noted the need to have a ‘counter-Brookings’ [Institution]” to negate the authority of the “alleged economists” who worked for liberal think tanks that backed political intervention in the economy.14
In a series of confidential documents, Buchanan spelled out to Larry what he envisioned doing with this money to shape “the way people think about government” with “a ‘sound’ perspective.” Some of it would be used for the “training of teachers for the community colleges” throughout the South. That was a clever way to reach much larger numbers than attended universities—and influence ambitious students of modest means, uncontaminated by the hated eastern establishment, who would likely go on to work for regional corporations or even become entrepreneurs themselves.15
As for the national project, Buchanan planned it with meticulous care. To be effective, he projected, his counterforce could “only be staffed by members of the intelligentsia in the highest standing.” Such people existed in decent numbers but often lacked authority in their own institutions. His program would identify these individuals and give them the resources they needed to push back credibly on the other side’s ideas.16
Also key to his plan was the creation of a small Founders Group of about ten; these men would generate what he called the Blue Book to reach another two hundred people through their own personal contacts. The centerpiece of the operation would be a Society of Fellows that would include political leaders and possible donors, along with scholars. (His notes to himself read: “use quasi-academic jargon with formalities, but not academic criteria for selection.”) As a student of incentive structures, Buchanan looked to create a big monetary prize—one to rival the Nobel Prize in Economic Sciences, then just a few years old and without any Mont Pelerin Society winners—to enhance the allure of working for “individual freedom.” (“Get Nixon commitment here,” read his notes. Remaining were such strategic questions as “How is respectability to be established and maintained? How much hypocrisy is necessary? How much internal criticism is to be allowed?”)17 The key thing moving forward was to maintain secrecy, with outsiders kept in the dark.18
Soon after the Richmond address, Buchanan and his trusted team organized a larger gathering in Los Angeles that included members of Governor Reagan’s inside circle, hoping to build relationships that would carry forward the grand strategy over the next forty years and more. The gathering included, alongside Buchanan’s scholarly allies and Richard Larry of Scaife, four members of Reagan’s team, among them his most trusted adviser and chief of staff, Edwin Meese III. “We are living on borrowed time,” the Virginia economist informed the assembled men, because America was “changing rapidly.” Strenuous behind-the-scenes organizing was the only hope.19
In designing strategy to build the needed counterintelligentsia, Buchanan advised, “money talks.” Creating a “gravy train” would help “bring men into the fold” and get them “committed to a set of values” so they would do the work that needed doing. (Remember, to him, venal self-interest was at the core of human motivation; the trick was to establish new providers.) Buchanan doubted that business leaders could be approached directly to fund the cause, because few were likely to see value in a long-term intellectual project. The best way to reach them was “through political leaders” who saw the need and could persuade them. The “Reagan connections” to corporate donors illustrated the potential—and Ed Meese’s presence at the event augured well for the future.20
• • •
Did Buchanan’s Third Century project succeed? Some parts did, some didn’t. Those that worked set the model for others. Some early achievements came from an organization Buchanan set up with Meese in the first of many collaborations between them; another had enormous long-term impact on the courts.
The California-based Institute for Contemporary Studies (ICS) connected scholars with right-wing political actors in the state and businessmen recruited by them. Relying for start-up funding on the Scaife Family Charitable Trusts, its staff stayed in regular contact with the governor’s office. Among those recruited were the future Supreme Court Justice Anthony M. Kennedy, then a Sacramento attorney, as vice president, and a board of directors that mingled “sound” economists with agents of corporate interests such as the California Farm Bureau Federation and Shell Oil. ICS set out to remedy “misunderstanding” about how “our free institutions” ought to work by targeting “opinion-making institutions, especially the mass media.” One project drafted PBS to let Governor Reagan speak directly to youth in the state’s eleven hundred school districts. Another aimed to learn what was being taught in precollegiate economics education and propose new curricula.21
The Institute for Contemporary Studies also planned various ways to get its version of economics into the public debate. Its staff trained businessmen, for example, to offer “a persuasive libertarian analysis of social problems” to “the mass media.” They also hired journalists and other professionals for “rewriting technical research material [by the economists] into a form usable by the media.” As an ICS fund-raising brochure noted, “Economics is an underlying concern if not the primary element of practically every social issue.” It was time to teach opinion-makers and decision-makers to understand the field as the ICS economists did.22 Corporate donors concurred. By 1980, their ranks included Exxon, Mobil, Shell, Texaco, Ford, IBM, Chase Manhattan Bank, U.S. Steel, and General Motors, backed by the Olin, Scaife, and Smith Richardson Foundations.23
Another highly influential initiative came about partly as a result of Buchanan’s concern, expressed to one of his funders in 1970, that “we are witnessing genuine subversion in our law schools.” He was likely referring to the role public interest attorneys had been playing in the War on Poverty and in suing government bodies to make them more accountable to minority citizens and other impoverished Americans, and to the new reliance on class action lawsuits by social justice litigators. Law school faculty fostered both developments. Meese, an attorney by training, shared Buchanan’s concern, and ICS devised an effort to train
antitrust lawyers and “selected newspaper journalists” in its brand of economics.24 ICS worked on this effort with the Law and Economics Center at the University of Miami.25
That center was run by Professor Henry G. Manne, a leader in the emerging field of “law and economics,” a field dedicated to shaping the understanding and practice of law in a manner that CEOs and CFOs could—and did—appreciate. Bringing a corporate-oriented cost-benefit analysis to regulation and legal liberalism more generally, the field sought to do to midcentury legal thought what public choice was doing to social science thought about government: in the words of one history of the effort, to “undermine the intellectual foundations on which its arguments, and its claim to represent the public interest, were based.” Manne’s own work of the 1960s had argued, for example, that insider trading was good for the economy and that hostile takeovers offered an ideal way for investors to control managers.26
Manne had been among the handful of scholars Buchanan first thought of for his Third Century project in 1973—and no wonder, for he, too, saw the need for an organizing strategy and had the talent to convene the right players. “I think we are not too far away from a period when there will be conservative counterparts to the ACLU,” Manne consoled Buchanan during the campus upheaval, and when “there will be ‘public interest’ lawsuits brought on behalf of property owners.”27 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
Manne, too, was playing a long game. 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. Some entire law schools became bastions of Manne’s approach to the law. The University of Virginia became the first big “adopter,” enticed by Olin money and encouraged by the economics faculty Buchanan had put in place. As his Thomas Jefferson Center had, so Manne’s Law and Economics Center now also created a new set of lures to build a counterintelligentsia. 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
Like Buchanan, and with his guidance early on, Manne transformed a weakness into a strategic asset. Unable to secure a post in a top law school in his early years, he instead persuaded the aspiring presidents of a string of lesser schools to let him re-create their programs in his image. It was easy to transform new or low-ranked law schools: with their shallow institutional roots, they had no encrusted traditions or committed alumni to block the way, and any improved ranking would appear exponential to administrators itching to ascend the ladder. Because the law schools depended entirely on tuition, without cushioning endowments, they were also especially susceptible to outside funders. Moreover, graduates of his kind of program were sure to appeal to corporate personnel departments and donors in a way that ordinary law school alumni would not.30
Indeed, also like the economist, the law professor was a canny solicitor of corporate contributors. When he tapped companies for support, Manne avoided their public relations departments, the usual source of gifts, which were often stocked by employees interested in social responsibility, and instead approached their general counsels, defenders of the core enterprise, who tended to be ensconced in the top executive suites and more likely to see the world as he did. General counsels were only too aware of how corporations were faring in court battles with public interest plaintiffs. As Manne recounted in one interview, “a law school especially designed to serve the needs with which these men are familiar could strike a responsive chord that many other law schools do not.” His own approach, he said, was “really like sales work, calling on people face to face, offering your product and seeing if you could interest them.”31
Manne’s training programs needed cash flow—and he got it from big business. At the opening of the new decade, for example, he wanted $100,000 for his program, so he asked eleven major corporations for $10,000 each, emphasizing the fight his program would wage against antitrust law. “I said it was a way to get these ideas across to a large number of law professors who create the lawyers and the government officials,” he told his contacts. “Within a few weeks I had $10,000 from ten of them,” he recalled. U.S. Steel, the eleventh, came in late and begged to have its funds included, even as Manne told the company he had all he needed. “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
Henry Manne was not averse to gross exaggeration to scare corporate officers into opening their safes. 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.” Law and economics scholarship, however, “would be on their side,” he pledged to his corporate contacts privately. “We were doing something that they ought to buy.” Swayed, they wrote checks. To use an analogy from another law-and-economics figure, such fund-raising was “like knocking over Coke bottles with a baseball bat.”33 Easy exercise, once you got the swing of it.
As Jim Buchanan was assembling his Third Century organizing team in late 1972, Henry Manne outlined his overarching vision for the law profession to Pierre Goodrich, the Indiana entrepreneur who had created and generously endowed the Liberty Fund in 1960. A Mont Pelerin Society member who revered the Austrian economist Ludwig von Mises, Goodrich had determined to use his wealth to promote the cause by investing in scholars he trusted. Even “one law school dedicated” to a libertarian approach, Manne wrote Goodrich, “would do more to discipline all the other law schools (and conceivably other segments of the university) than anything I can think of.” 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 This pitch, too, worked. Like Georges Danton, the French revolutionary famous for his motto “De l’audace, encore de l’audace, toujours de l’audace!” (“audacity, more audacity, always audacity!”), Henry Manne set in motion the transformation he promised his donors he could deliver.
One year earlier, Eugene B. Sydnor Jr., the Richmond businessman who, back in the late 1950s, had the vision for the Virginia Commission on Constitutional Government (VCCG) to fight “the ever-quickening pace of Federal intrusion,” solicited the so-called Powell Memorandum in his new role as education director of the U.S. Chamber of Commerce. Today it is widely cited as the beginning of the corporate mobilization to transform American law and politics. Lewis F. Powell Jr., its author, was his Richmond neighbor and friend, a leading corporate attorney who went on to serve as president of the American Bar Foundation. Powell’s memorandum, said Sydnor, offered “an excellent presentation of the vitally important case for American Business to go on the offensive.” Powell warned that “the American economic system is under broad attack,” pointing to signs as disparate as the campus revolt, environm
entalism, and the rise of pro-consumer litigation, led by Ralph Nader. “Strength lies in organization” and “consistency of action over an indefinite period of years,” Powell advised. He urged corporate investment in scholars who “believe in the system,” “constant surveillance” of the nation’s television networks for “criticism of the enterprise system,” the buildup of corporate political power to “be used aggressively,” and a new focus on the courts, perhaps “the most important instrument for social, economic and political change.” Powell found appreciative ears.35
Over the ensuing decade, many American corporations heeded Powell’s call to alter the courts. (His authority grew when President Nixon appointed him to the Supreme Court the following year.) “In no other area,” observes one scholar, “was the process of strategic investment [by right-wing funders] as prolonged, ambitious, complicated and successful as the law.”36
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.” Toward that end, the investors helped fund law-and-economics programs like Henry Manne’s and property rights “public interest” law firms such as the Pacific Legal Foundation, which had a close relationship with both the Chamber of Commerce and the Institute for Contemporary Studies.37 Knowing both the new corporate urgency and Manne’s aptitude, as Buchanan did, it was logical for ICS to enlist him to train journalists in an approach to law that was sympathetic to corporations that found themselves in court.38
Democracy in Chains Page 17