Saturday, May 31, 2014

Proposal for a Conference Presentation

Why the Worst Get on Top: The Case of Higher Education
Proposal for a Paper for the Manhattanville Hayek Conference
Mitchell Langbert
May 30, 2014

In “Why the Worst Get on Top,” Hayek argues that, because of the unpredictability of social phenomena, the contradictory demands of interest groups, and the need to adopt a comprehensive plan, socialism requires a coalition of the worst. To lead the coalition, individuals rise to the top if they are willing to sacrifice moral duty to what they interpret to be expedient, social-welfare-maximizing decisions; assumption of leadership positions in a socialist state is of interest only to those who lack a moral compass. 

My claim is that American universities, both as propagandists and as independent economic interests, play a part in this process.  The evolution of universities in the United States has made them dependent on donations from large industrial and financial organizations as well as from the state.   American universities therefore take on characteristics that are similar to public German universities, but they also take on characteristics of allies to and beneficiaries of corporate interests.

I can trace the flow of donations to universities in two ways: through a listing of large donations since 1967 that the Chronicle of Higher Education (2014) publishes and through an examination of the names of buildings at top-tier universities. Universities often name buildings after large donors, and the business careers of at least some of them can be traced.  Then, I can content analyze quotations during the 2008-2009 bailouts from academics working at the same institutions.  I would look at quotations in the second-largest-circulation newspaper, the New York Times and quotations in one of the largest-circulation magazines, such as eleventh-ranked Time or first-ranked AARP The Magazine.   

Universities and Propaganda

In the chapter that follows “Why the Worst Get to the Top,”  “The End of Truth,” Hayek discusses the importance of propaganda.  Hayek argues that totalitarian propaganda destroys morals because it undermines “respect for truth,” (Hayek, 172).  Universities play a role in the production of propaganda. Readings (1996) points out that Wilhelm von Humboldt, the inventor of the modern university, saw the German university as bonded to the state: “The state protects the action of the University; the University safeguards the thought of the state.”  Academic freedom, in Humboldt’s view, correlated with universities’ commitment to sustaining the state.  Readings adds (Readings, p. 82), “The capacity of the [German] University structure [during the Nazi era] to adapt itself to Nazism should give us pause.”  Hayek points out that the symbiosis went further than Readings admits and that the Nazi minister of justice said that all scientific theories must serve National Socialism.

The Humboldtian university served as a model for the American university in terms of the integration of research and teaching and the claim of academic freedom, but the economic foundations of the American university were different from those of the German university.  America’s economy had not proceeded along the syndicalist lines that had earlier proceeded in Germany and gave Germany, in Hayek’s view, a militaristic culture.  Rather, universities in the United States grew out of free-standing religious colleges.  Their transformation and growth was financed by leaders of business and finance.  For instance, the first American university designed along Humboldtian lines, Johns Hopkins, was endowed by a wealthy Baltimore merchant, Johns Hopkins, who consulted about the university’s structure with fellow Baltimorean George Peabody, one of the first important American investment bankers. Their strategy meeting about the founding of Johns Hopkins University occurred during one of Peabody’s rare trips home to Baltimore from his firm’s London headquarters (Parker, 1995).  By then, Peabody had made significant gifts to Harvard and Yale, and he had endowed a Baltimore research library, the Peabody Library, on which Johns Hopkins relied for the first several decades of its existence.
On June 27, 1901 the New York Times wrote that JP Morgan, Peabody’s partner’s son, had made a one million dollar gift to Harvard Medical School for the construction of three buildings. In accordance with the recommendation of Carnegie Foundation-funded Abraham Flexner, Harvard modeled itself along the same lines as Johns Hopkins Medical School--as an allopathic, Humboldtian research institution.

Not to be outdone, the following year John D. Rockefeller also donated one million dollars to Harvard Medical School. Carroll (2009) notes:

In 1903, Rockefeller founded the General Education Board (GEB). In the succeeding decades, the GEB would become the dominant philanthropic enterprise in early-twentieth-century American medical education. It contributed over $94 million to American medical schools by the time of the organization’s termination in 1960.

As well, Rockefeller endowed the University of Chicago and appointed its first president. William Rainey Harper. 

Joseph Wharton, an executive at Bethlehem Steel and a mining entrepreneur, funded Wharton’s endowment so that there would be a basis for dissemination of knowledge about the advantages of protectionism.  There is no shortage of examples; virtually all private major research universities have depended on donations from corporate or financial donors, and they have been intimately integrated with the Progressive model since its inception.  Walter Weyl, for example, one of the three founders, along with Walter Lippmann and Herbert Croly, of the New Republic Magazine, was one of the first Ph.D. graduates of the Wharton School.

Scholars have pointed out that Progressivism reflected specific industrial and financial interests.  Expertise in fields like economics was necessary to justify to the public the formation of the Federal Reserve Bank (Kolko, 1963), while expertise in psychology was necessary to facilitate control in large-scale corporations that Progressivism encouraged (Baritz, 1974).  Croly (1915), in Progressive Democracy, advocates scientific management, and in 1910 Harvard Business School appointed Frederick Winslow Taylor, the founder of scientific management, to its faculty.

My claim, then, is that American universities did not develop according to a pure symbiosis between state and university characteristic of the German university—a symbiosis that is consistent with Hayek’s claims—nor did they develop along the lines of a countervailing model whereby universities speak truth to corporate power in accordance with the claims of critics of the post-modern university (D’souza, 1992).  Rather, the development of American universities has been consistent with the history of Progressivism described by Kolko (1963), Sklar (1988), and Radosh and Rothbard (1972), who see the development of Progressivism as a case of Olsonian (1984) special interest pressure or capture.   The American university’s symbiosis with the American state is less direct than the German university’s symbiosis with the German state, and one of its characteristics is its left-wing opposition to right-wing conservatism, but it remains a defender of sensitive corporate interests, such as banking and Wall Street.   

To illustrate my claims, I will review three sources of information about American universities.  The Chronicle of Higher Education (2014) publishes a list of major donations to universities since 1967.  These are donations in excess of $25 million.  I will tabulate the industry in which each donor has worked.  A large share of the donors will be in finance.  Second, I will review the names of the buildings of 25 major universities.  I predict that a significant percentage will bear the names of financial and business leaders.  Third, I will analyze comments in the media from 2008 and 2009 from academics.  I predict that finance-and-industry donations to universities will correlate with the tone and temper of academics ‘opinions about the desirability of subsidization of industry.


Baritz, L. 1974. The Servants of Power: A History of the Use of Social Science in American Industry. Westport, CT: Greenwood Press.

Carroll, Katherine L. 2009. “Moderning the American Medical School,” Internet file accessed on May 31, 2014 at
Chronicle of Higher Education. 2014. “Major Private Gifts to Higher Education.”

D’Souza, Dinesh. 1992.  Illiberal Education: The Politics of Race and Sex on Campus. Vintage Reprint Edition,

Hayek, FA. 2007.  The Road to Serfdom: The Definitive Edition. Edited by Bruce Caldwell. London: The University of Chicago Press.

Kolko, G. 1963. The Triumph of Conservatism.  New York: The Free Press.
New York Times, June 27, 1901. “JP Morgan Gives over $1,000,000 to Harvard: Offers to Pay for Three Buildings to be Erected in Boston,”

Olson, M.  1984. The Rise and Decline of Nations.  New Haven, Ct: Yale University Press

Parker, Franklin.  George Peabody: A Biography.  Nashville, Tenn.: Vanderbilt University Press

Radosh, R. and Rothbard, M.A. 1972. A New History of Leviathan. New York: EP Dutton.

Readings, Bill. 1996. The University in Ruins. Cambridge, Mass: Harvard University Press.

Sklar, MJ. 1988.  The Corporate Reconstruction of American Capitalism, 1890-1916: The Market, the Law, and Politics. New York: Cambridge University Press

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