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«ECON JOURNAL WATCH 12(3) September 2015: 400–431 Classical Liberalism and Modern Political Economy in Denmark Peter Kurrild-Klitgaard1 LINK TO ...»

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The Austrian school One of the most important strands in the international renaissance of liberal thinking since the 1970s has been the Austrian school of economics, associated with such economists as Mises, Hayek, Rothbard, and Israel Kirzner. The Austrian school has inspired at least two generations of Danish liberal students, but on the academic side the impact has been marginal.

The only major name in Danish economics to give serious, detailed, and predominantly positive attention to the Austrians, both methodologically and theoretically, has been the previously mentioned Nicolai Juul Foss, one of the youngest-ever full professors of economics in Denmark (at the Copenhagen Business School) and among the most internationally prominent and most frequently cited Danish economists.

Foss, who has been involved with Libertas and later with CEPOS, has served for decades on the editorial boards of the Review of Austrian Economics, the Quarterly Journal of Austrian Economics, and the Journal des Économistes et des Études Humaines, as well as on (much more prominent) mainstream and field journals. Early on he wrote extensively on Hayek’s thought (e.g., Foss 1992) and authored the first VOLUME 12, NUMBER 3, SEPTEMBER 2015 414


Danish book on the Austrian school (Foss 1994b), and he made attempts at incorporating semi-Austrian insights into more mainstream economic thinking in areas of entrepreneurship, management, and organization. Foss’s more important works with a distinct liberal perspective have been on socialist calculation (Foss 1990; Brøns-Petersen and Foss 1990), Austrian capital theory (e.g., Foss 2012), entrepreneurship (e.g., Foss and Klein 2002; Bjørnskov and Foss 2008), and classical liberalism (Foss 1992; Foss 1994a), as well as contributions to the Danish National Encyclopedia on Austrians such as Carl Menger, Mises, Hayek, Kirzner, and Ludwig Lachmann.

Another high-profile scholar influenced by ‘Austrian’ thinking is the previously mentioned economist Otto Brøns-Petersen, one of the founders of Libertas. He began as a writer at Finanstidende before pursuing a successful career in the civil service (including as deputy permanent secretary of the Treasury), and in 2013 he was hired as research director of CEPOS. Over the years Brøns-Petersen has maintained part-time teaching positions in economics and political science at the University of Copenhagen, and he was elected to the Mont Pèlerin Society in

1994. His primary academic contributions outside the technical field of tax policy have been in the intersections between Austrian economics, public choice analysis, and political theory, and have included works on the socialist calculation debate (Brøns-Petersen and Foss 1990), radical libertarianism in the United States (BrønsPetersen 1992), classical liberalism and “neo-liberalism” (Brøns-Petersen 2003;

2009; 2013).18 Public choice While the Danish academic interest in the Austrian school has been negligible—aside from Hayek’s political thought—the same cannot be said about the other prominent branch of modern liberal political economy: public choice analysis, as developed by such economists as Buchanan, Gordon Tullock, Mancur Olson, William Niskanen, and to some extent George Stigler and Gary Becker, as well political scientists such as William H. Riker, Elinor Ostrom, and Vincent Ostrom.

Even before public choice analysis really became a well-developed discipline, the longtime socialist Jørgen S. Dich (1901–1975), professor of economics at the University of Aarhus and one of the architects of the Danish welfare state, wrote a scathing public choice-style analysis of interest group politics and the public sector.

18. Together with the present author, Foss and Brøns-Petersen organized three Danish conferences on Austrian economics in the years 1989–1991. The proceedings were collected in three modest publications (Kurrild-Klitgaard, Brøns-Petersen, and Foss 1989; 1990; 1991).



In Den herskende klasse (“The Ruling Class,” with the subtitle “A Critical Analysis of Social Exploitation and the Means to Combat It”), Dich (1973) combined semiMarxist metaphors with reasoning very close to that of Tullock and Niskanen. He argued that the modern state had been taken over by a new ruling class: experts, in charge of bureaucracies, with vested, personal interests in the constant expansion of their domains. Using concepts from economic analysis, Dich demonstrated that there is an oversupply of government, and that the losers are small businessmen, the working class, and eventually society as a whole.

While Dich’s analysis was original, it was perhaps too colorful and controversial to make any lasting impression on the academic mainstream. However, at around the same time a group of, first, economists and then collaborators in political science began taking an interest in the thoughts developed by the Virginia, Chicago, Rochester, and Bloomington schools. Since the 1980s ‘rational choice’ analysis of politics has become very prominent in Danish academia (Nannestad 1993). Not all of its proponents have been classical liberals, but they have all adopted a methodologically individualist approach to politics, an understanding of ‘government failure,’ and an implicit skepticism of expansion of public activities.

The first to do so were two economists, Kjeld Møller Pedersen (b. 1949) and Jørn-Henrik Petersen (b. 1944) of the University of Odense (later renamed the University of Southern Denmark). Neither of them can be seen as classical liberals; in fact, the latter is widely viewed as one of the modern ‘engineers’ of the social-democratic welfare state and continues to call himself a socialist. However, in their book Hvorfor kan den offentlige sektor ikke styres? (“Why Is the Public Sector Uncontrollable?”), Pedersen and Petersen (1980) basically presented in Danish most of the major points of Virginia public choice. In subsequent academic works Petersen has continued to push the basic analytical points made by the Virginia School (Petersen 1987; 1988; 1996). Partly due to Petersen’s influential works, the basic tenets are today well-known by many economists educated since the 1980s.

Belonging to the same ‘first wave’ of Danish academic interest in public choice analysis were a number of political scientists and economists located at the University of Aarhus and typically born in the 1940s or 1950s. Among the most prominent is public administration professor Jørgen Grønnegaard Christensen (b.

1944); he has applied public choice-style analysis to regulation, showing that vested interests prevent genuine reform of superfluous and sometimes even harmful legislation (Christensen 1991).

Probably the most influential Danish scholar of public choice with a fairly liberal orientation has been Ole P. Kristensen (b. 1946), formely political science professor at the University of Aarhus, who in articles and a book demonstrated how in practice it is not the median voter that determines the outcomes of the policy processes but rather the asymmetric nature of costs and benefits, possibly VOLUME 12, NUMBER 3, SEPTEMBER 2015 416


leading to an oversupply of government (Kristensen 1980; 1982). The point was earlier made in the works of, e.g., James Q. Wilson, Mancur Olson, and James Buchanan, but Kristensen applied it empirically in a highly influential treatise on Danish public spending (Kristensen 1987). Kristensen later left academia for senior positions in the private and public sector and is now affiliated with CEPOS and an editorial writer of the daily Børsen. He has continued to write and publish, often including public choice insights such as the possibility of constitutional reform (Kristensen 2004).

Other prominent public choice scholars from the same generation include professors Martin Paldam (b. 1942, economics, Aarhus), Peter Nannestad (b. 1945, political science, Aarhus), and Poul Erik Mouritzen (b. 1952, political science, Odense). While these cannot be labeled as ideological classical liberals, all have made significant academic contributions to the explanation of public expenditures, voter and interest group behavior, and the dynamics of the welfare state inspired by public choice theory (see, e.g., Borner and Paldam 1998; Mouritzen 2001; Winter and Mouritzen 2001; Christoffersen and Paldam 2003; Nannestad 2004; Christoffersen et al. 2014; Paldam 2015).

A ‘third wave’ of Danish public choice scholars consists mostly of economists and political scientists born in the 1960s and 1970s who grew up as ‘students’ or junior colleagues of Christensen, Kristensen, Paldam, Nannestad, Mouritzen, et al., and who since 1999 have organized an annual Danish Public Choice Workshop.

Not all of them are liberals, but many of them come close and have produced works of relevance to a free society. Among these are Gert Tinggaard Svendsen (b. 1963, professor of political science, Aarhus), a student of Paldam and Nannestad, who also was a visiting doctoral student with Mancur Olson (Svendsen 2012). Another is Christian Bjørnskov (b. 1970, professor of economics, Aarhus), also a student of Paldam, while a third is the present author, Peter Kurrild-Klitgaard (b. 1966, professor of political science, Copenhagen), once writer at Finanstidende, later an academic and colleague of Nannestad and Mouritzen. To the same group may added Kurrild-Klitgaard’s former student, Mogens K. Justesen (b. 1977, associate professor, Copenhagen Business School).

While far from a monolithic group, the aforementioned have all been interested in issues of comparative political economy. A particular theme for Svendsen and Bjørnskov has been the social and institutional determinants of economic growth, including the importance of trust and social capital, economic freedom and entrepreneurship (e.g., Bjørnskov and Foss 2008; 2012; 2013;

Berggren, Bergh, and Bjørnskov 2012; Bjørnskov and Svendsen 2013; Bjørnskov and Kurrild-Klitgaard 2014; Bergh and Bjørnskov 2014). Bjørnskov has also been the leading scholar internationally looking at ‘life satisfaction’ in a political economy perspective, including considering how government size may affect life 417 VOLUME 12, NUMBER 3, SEPTEMBER 2015


satisfaction and suggesting that market economic societies achieve it better (Bjørnskov, Dreher, and Fischer 2007; Bjørnskov 2014).

Justesen and Kurrild-Klitgaard have focused on constitutional arrangements, including how property rights, separation of powers, and other freedomsupporting institutions tend to sustain economic growth and long term prosperity (e.g., Kurrild-Klitgaard 2003; Kurrild-Klitgaard and Berggren 2004; Justesen 2008;

Justesen and Kurrild-Klitgaard 2013). They have also applied social choice analysis to empirical data derived from Danish politics (e.g., Kurrild-Klitgaard 2001a;

Justesen 2004; Kurrild-Klitgaard 2008; 2013).

Although not a rational choice or public choice scholar, one might with this group also mention the political scientist Jørgen Møller (b. 1979, professor of political science, Aarhus), a self-described “comparativist” with a strong and explicit interest in liberal ideas. His works on constitutional arrangements in a comparative perspective have focused, inter alia, on the causes and consequences of different degrees of democracy and authoritarianism (e.g., Møller 2008; 2009;

Møller and Skaaning 2011).

Liberal scholars outside academia Outside the universities, a number of academically trained classical liberals and free-market conservatives have contributed significantly to Danish discourse generally and also to discussion in academic circles.

For many years the only Danish thinker who wrote at length about liberal and conservative ideas and made original contributions beyond essayist commentaries was Henning Fonsmark (1926–2006). Fonsmark, originally educated as a literary scholar, was for many years a prominent voice in the Danish non-socialist newspapers, as editor of the cultural magazine Perspektiv, then of the conservative daily Berlingske Tidende, and finally as of the daily financial newspaper Børsen. Fonsmark had for years been known as a vocal critic of socialism, but his legacy as a thinker really stems from two books from the beginning of the 1990s. The first of these, Historien om den danske utopi (“The History of the Danish Utopia”), is a tour-deforce history of the growth of the Danish welfare state and the ideas justifying it (Fonsmark 1990). The book does not outline Fonsmark’s own convictions (although these generally shine through); rather, it traces the constructivist enthusiasm for planning among Danish intellectuals and politicians since the 1920s and the corresponding decline of the center-right. Characteristic of the book is Fonsmark’s analysis of how the Liberal and Conservative parties went from being vocal critics of taxes, socialization, and the welfare state in the 1950s, to embracing and promoting all of these policies, at least in practice, by the late 1960s. Fonsmark VOLUME 12, NUMBER 3, SEPTEMBER 2015 418


saw a major fault in the tendency of Danish politicians to pursue consensus. That led to a split between the Liberals and the Conservatives in the mid-1960s and to those parties competing for voters by appealing to the Social Democrats. His last book, Den suveræne dansker (“The Sovereign Dane,” Fonsmark 1991), was more of a philosophical critique of the thinking underlying the Danish welfare state.19 The most widely known Danish proponent of liberal ideology since the 1970s is probably the political scientist and politician Bertel Haarder (b. 1944).

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