Why have two long-dead Austrian economists become cult figures in Brazil?

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In Brazil, two long-gone and much-denounced Austrian economists are experiencing a curious swell of fame. This newfound popularity makes for an unusually clear case study—of how ideas from the fringe slide into the mainstream through deliberate dispersal but also through the fortunes of timing and political fluctuations.

Friedrich Hayek and Ludwig von Mises were known for their devout advocacy of maximally free markets and minimal government assistance. Mises, who emigrated from Austria to the US in 1940, was a champion of classically liberal economics. His student Hayek won the economics Nobel in 1974 for his arguments against centralized economic planning and government spending.

Both Mises and Hayek have been criticized—and, many would note, discredited—for their simplistic dogmatism. One of Hayek’s biographers called Mises “the archetypal ‘unscientific’ economist.” Hayek himself is frequently described as a market ideologue: “an unashamed elitist and individualist,” another biographer wrote, with a belief that a welfare state posed dangers to personal liberties. Their theories sit particularly awkwardly in the present moment, when countries are combating the pandemic by unrolling popular spending programs. 

But in Brazil, in the midst of Jair Bolsonaro’s conservative presidency, Hayek and Mises are having a moment. Think-tanks like the Instituto Millenium and the Instituto Mises Brasil propagate extreme free-market or libertarian views. There is now a Hayek Global College, which, this year, started publishing the Hayek Business Review. Bolsonaro’s minister for the economy, Paulo Guedes, co-founded the Instituto Millenium and is an ardent free-marketeer. In pro-Bolsonaro demonstrations, people hold up signs saying “Menos Marx, Mais Mises”—”Less Marx, More Mises.” During the pandemic, the Instituto Mises argued that countries and economies ought to stay open, a view shared by several pro-government, anti-lockdown protests.

One Brazilian historian on Twitter described the surging devotion to Hayek and Mises as a “cult.” Camila Rocha, a political scientist at the Brazilian Center of Analysis and Planning, said “There’s an emotional thing to it, almost a religious kind of thing that can propel people…to defend this cause.” Once, in the course of her extensive research on the Brazilian right, Rocha met a young woman who had tattoed the words “Free Market” onto her arm.

When Brazilians took to Mises and Hayek

In a new paper, Rocha dates the emergence of the New Right—as she calls the Hayek-Mises faction—to just over a decade ago. In 2005, a corruption scandal hit the government of Luiz Inácio Lula de Silva, the union leader turned president. Ideological critics of Lula and his Workers’ Party congregated on social media; offline, a businessman named Helio Beltrao co-founded the Instituto Millenium along with Guedes and others, all inspired by the American free-market think-tank of the same name.

These institutions are largely funded, Rocha believes, by wealthy Brazilians like Beltrao. International funding is limited, she said. As an example, she cited the Atlas Network, a US non-profit that raises donations to disburse grants to free-market think-tanks worldwide. (The non-profit is named after Ayn Rand’s Atlas Shrugged.) “Atlas gives less than $1,000 a month to some organizations, so it’s not that big a deal,” Rocha said.

Rumors do circulate that for example, the Koch brothers have funded some of these institutes and their activities; Edson Agatti Lima, the founder and CEO of Hayek Global College, worked previously at the Charles G. Koch Foundation in Washington DC. But there is no evidence as yet of the Kochs’ involvement. Beltrao did not respond to emails from Quartz; neither did Lima at the Hayek Global College, or officials at the Hayek Business Review and the Instituto Millenium.

The financial crisis of 2008 fueled the disaffection of these groups with welfare economics, said Amon Barros, a professor at the Sao Paulo School of Business Administration. “A window opened for this kind of Hayekian thinking to become—well, maybe not mainstream, but you’d see one pundit writing columns in a prominent newspaper, you’d hear some of the most popular radio stations talking about economics.”

Between 2013 and 2016, Brazil witnessed widespread demonstrations against the government. In part, these protests called for better use of public funds, Barros said: “One of the slogans was: ‘We want our hospitals to have the same priority as our stadiums.'” But the economic right “hijacked” the mood of the protests and turned it into a statement against the state itself and public spending in general, he remembered.

Until then, extreme free-market economics held a certain distaste for the Brazilian public, evoking memories of the cruel regimes of Augusto Pinochet and similar pro-market autocrats in other South American countries, said Guilherme Casarões, a political scientist at Fundação Getúlio Vargas, a think-tank in Sao Paulo. “But after 2013, people began to think that these ideas offered a quick fix for the economic crisis,” Casarões said. “They started to see the state and the government as the causes of unemployment and recession.” One publisher, Casarões said, issued books about the virtues of free-market economics, and he translated the titles of a couple loosely as “Maximum Rights and Minimum Duties” and “You Should Stop Believing in the State.” These books, he said, “became something like bestsellers.”

Hayek, Mises, and Bolsonaro

The various think-tanks devoted to the theories of Mises and Hayek nurtured these trends, which coalesced with the rise of Bolsonaro. Bolsonaro is a populist, not an economic ideologue; it was just that politics temporarily threw the free-marketers and their anti-statist philosophies together with Bolsonaro voters. After he won, Bolsonaro picked Guedes to head up the ministry for the economy, partly so that the government would be assured of the backing of wealthy elites who favored free-market reforms.

“In truth,” Bolsonaro once said, “I know nothing about the economy.” The implication was that he deferred to Guedes’ knowledge. Guedes had studied under Milton Friedman at the University of Chicago, and his economic promises—privatizing arms of the Brazilian state, slashing spending—were very much in line with Friedman’s “ultra-liberal, minimum state” approach, Casarões said. But they haven’t been fulfilled. In part, this was because of the pandemic and the funds required to fight it. Brazil is also a complex country with a strong federal structure, which makes sweeping reforms difficult, Casarões pointed out. “And I think even if voters elected Bolsonaro and want more economic liberalism, they did not want to give up welfare.” Being blithe about an extreme free market is easier, Casarões suggested, “if your children still study at public school or go to public day care, or go to a public hospital when they fall ill.”

Guedes’ star in government is somewhat fading now, as Bolsonaro himself increasingly intervenes in Brazil’s economic policy. But the anti-statist movement in civil society is still strong. The spokesperson of the Free Brazil Movement, a libertarian group that helped organize anti-government protests in 2015-16, is a member of the federal Chamber of Deputies. A decade-old political party, called the New Party, aligns itself with the kind of economic liberalism championed by Guedes, and a small handful of its members now occupy elected posts across Brazil.

Hayek and Mises function as symbols of this ideology in Brazil, Barros observed. “Look, these two guys are still fringe-y, in the sense that it isn’t as if all these people are reading their books,” Barros said. “Think about how many people read Marx before going out in a Che Guevara T-shirt. But it’s weird, I admit—I never thought Hayek and Mises would be relevant, but here we are, and people are discussing them.”