David Koch (Reuters/Carlo Allegri)

Libertarians learn a hard lesson: Murray Rothbard's spat with Koch brothers

The movement's all about liberty and freedom. But when money intervenes, you never know who the next victim will be


Heather Digby Parton
June 6, 2014 8:51PM (UTC)

It may seem to many people that the Koch Brothers just burst on the scene in the last few years as big time Republican Power brokers. But they've actually been around a very long time and their history, as related in the fascinating new book "Sons of Wichita: How the Koch Brothers Became America's Most Powerful and Private Dynasty" by Daniel Schulman, is particularly interesting in light of their current overwhelming influence on conservative politics. They may be leaders of the right wing today, but unlike so many of the luminaries and entrepreneurs that came together in the wake of Barry Goldwater's loss so many years ago to create the institutions that comprise the modern conservative movement, the Kochs operated on a separate path. They too were building a mass movement but they also wanted to build a third party, the Libertarian Party.

The brothers were true believers even then following the precepts of libertarian Godfather Murray Rothbard, who preached that they should build both academic and activist strains in the movement and Rothbard and the Kochs built the Cato Institute toward that end. Schulman colorfully describes this time as "a high point for libertarianism, when a busy hive of libertarian organizing buzzed on San Francisco's Montgomery Street, home to Cato and a handful of other ideological operations bankrolled by Charles Koch." But, sadly, as happens so often in ideological marriages that start out with so much fire and chemistry, it was not to last: by the time David Koch ran for Vice President in 1980 on the Libertarian ticket, the former intellectual soulmates split the proverbial sheets.

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The ostensible issue was over the alleged wimpiness of the Libertarian ticket. Sure, the platform pledged to abolish Social Security, Medicare, Medicaid, the EPA and the Department of Energy but Rothbard thought the candidates were wobbly on eliminating all federal income taxes. And once David Koch committed heresy and described himself as a "low-tax liberal" on TV. He might as well have declared himself an alien from another planet.

And what a messy break up it was. There were public recrimination that ended up with Rothbard being kicked out of the Cato Institute. (A couple of years laterhe and Lew Rockwell --- of Ron Paul racist letters fame --- created their own fringey think tank, the Ludwig Von Mises Institute in Alabama. And the Kochs gave up on the idea of a third party and joined with the rest of the conservative movement to take over the Republican Party. They have been very successful, to say the least.

This is all well known wingnut history, but Schulman uncovers some additional dirt that sheds important light on how the Kochs operate. In the late 80s the four Koch brothers got into a very messy legal battle over control of the family foundation. As is so often the case with family fights, it was a bloody fight. Rothbard was called upon by the two obscure brothers, Bill and Frederick, to be deposed on their behalf. Schulman writes that in a summary of that deposition old Murray makes some rather interesting claims about Charles Koch:

[He]involves himself in the minutest details related to the non-profit foundations with which he is associated…. He insists on personally approving even the minutest matters, such as $100 grants, stationery design and color of offices." Rothbard contended that Charles would go "to any end to acquire/retain control over the nonprofit foundations with which he is associated" and "considers himself above the law." And the economist further alleged:

Charles Koch has a practice of misusing nonprofit foundations for his own personal ends. Charles Koch wants absolute control of the non-profit foundations, but wants to be able to spend other people's money not his own. He wants to spend that money on things that will enhance his personal image and goals, even it these expenditures are not consistent with the publicly stated goals of the foundation. Amongst other things, Charles Koch uses his involvement with non-profit foundations to aquire access to, and respect from, influential people in government and elsewhere.

So Charles Koch was someone who "considers himself above the law." One cannot be too surprised by that, although traditionally even libertarians do pretend to respect contracts and property law. But perhaps Koch doesn't consider a non-profit foundation to be subject to government interference which, in this case, is simply a requirement that he follow the rules governing such an institution.

But you have to laugh at the clear upshot of this feud. You have the Grand Poobah of libertarianism -- a man who fetishises property rights and money -- whining that the industrialist financier of the Libertarian Party is a control freak. Why it's almost as if he thought he had a right to behave that way simply because he had more money. Where do you suppose Koch ever got such an idea?  And Charles Koch, the great libertarian avatar of personal freedom and individual rights insists on controlling everyone and everything around him. Imagine that.

Libertarians love to talk about liberty and freedom. But even Murray Rothbard found out the hard way that in the end it's completely relative to how much of it money can buy.

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Heather Digby Parton

Heather Digby Parton, also known as "Digby," is a contributing writer to Salon. She was the winner of the 2014 Hillman Prize for Opinion and Analysis Journalism.

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