The Economist, August 23rd 2018

AS THE second world war raged, Western intellectuals wondered if civilisation could recover. George Orwell, the most brilliant of the pessimists, wrote “Animal Farm” and began work on “1984”, which saw the future as “a boot stamping on a human face—forever”. Among the optimists were three Viennese exiles who launched a fightback against totalitarianism. Instead of centralisation, they advocated diffuse power, competition and spontaneity. In Massachusetts Joseph Schumpeter wrote “Capitalism, Socialism and Democracy”, published in 1942. In New Zealand Karl Popper wrote “The Open Society and its Enemies” (1945). Friedrich Hayek wrote “The Road to Serfdom” (1944) in Britain.

Vienna, their original home, had been devastated. In 1900 it was the capital of the Habsburg monarchy, a polyglot, fairly liberal empire. In short order it faced two world wars, the empire’s collapse, political extremism, annexation by the Nazis and Allied occupation. Graham Greene visited in 1948 and described the former jewel of the Danube as a “smashed, dreary city”.

War and violence “destroyed the world in which I had grown up,” said Popper. Schumpeter viewed Austria as just a “little wreck of a state”. “All that is dead now,” said Hayek, of Vienna’s heyday.

Yet the city shaped them. Between 1890 and the 1930s it was one of the brainiest places in the world. Sigmund Freud pioneered psychoanalysis. The Vienna Circle of philosophers debated logic. The Austrian school of economics grappled with markets; Ludwig von Mises made breakthroughs on the role of speculation and the price mechanism. Von Mises mentored Hayek, who was a cousin of the philosopher Ludwig Wittgenstein, who went to school with Adolf Hitler, who stood at the Heldenplatz in 1938 to welcome “the entry of my homeland into the German Reich”.

The three wartime thinkers had different backgrounds. Schumpeter was a flamboyant adventurer born into a provincial Catholic family. Popper’s family was intellectual and had Jewish roots; Hayek was the son of a doctor. But they had common experiences. All three attended the University of Vienna. Each had been tempted, and then repelled, by socialism; Schumpeter was finance minister in a socialist government. He also lost his fortune in a bank collapse in 1924. He then left for Germany, and, after his wife died, emigrated to America in 1932. Hayek left Vienna for the London School of Economics in 1931. Popper fled Austria just in time, in 1937.

Each was troubled by the Anglo-Saxon countries’ complacency that totalitarianism could never happen to them. Yet warning signs abounded. The Depression in the 1930s had made government intervention seem desirable to most economists. Now the Soviet Union was a wartime ally, and criticism of its terror-based regime was frowned upon. Perhaps most worryingly, in Britain and America war had brought centralised authority and a single collective purpose: victory. Who could be sure that this command-and-control machine would be switched off?

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