of Charles and David Koch on the Tea Party Movement and their
connections with the Governor of Wisconsin have been much in the
news lately. The efforts of the Kochs to gain political influence
began long ago; and students of what Sam Konkin aptly called the
Kochtopus will inevitably be reminded of the Koch brothers’ involvement
in Ed Clark’s campaign for President on the Libertarian Party
ticket in 1980. Indeed, David Koch was Clark’s running mate; his
being on the ticket freed him from the monetary limits normally
imposed on donors. Differences of opinion on the campaign, among
other matters, led to a breach between the Kochs and Murray Rothbard.
For understanding that breach, we have an invaluable tool. Rothbard
wrote about the conflict numerous times in Libertarian
Forum, a newsletter that he edited from 1969 to 1984.
articles, read in the order of their composition, reveal his growing
sense that the Koch-dominated Cato Institute had cast aside libertarian
principle. The ideological betrayal, for him, was made all the
worse by the attempt of Charles Koch and Ed Crane, the President
of Cato, to suppress his dissent.
revealed the basic standpoint behind his criticism of the Koch
forces before the split occurred. He praised a 1977 strategy resolution
of the LP’s National Committee, saying of it: "With this
statement, the LP now sets itself firmly against all forms of
preferential or obligatory gradualism, against the sort of surrender
of principle that says we should not cut Tax A by more than X%,
or that we should not repeal statist measure B until we can repeal
C." Precisely his criticism of the Clark campaign was that
it embraced the gradualism Rothbard here rejected.
A first sign
of impending trouble can be found in the May-June 1978 issue.
This announced the formation of the Radical Caucus, with a basic
set of principles that called for the LP "to avoid the quagmire
of self-imposed, obligatory gradualism." Not only was Rothbard
a member of the Radical Caucus’s Central Committee, so also was
Bill Evers, at the time Rothbard’s principal ally in LP politics
and the editor of the Cato-sponsored Inquiry magazine.
There was as yet no claim that Koch, Crane, or anyone else connected
with them had violated these principles; but the formation of
the Radical Caucus cannot have been to Crane’s liking. He wanted
to have all issues connected to LP politics under his control,
and he deplored the public disclosure of dissent.
quarrel with the Koch forces, though, did not first manifest itself
in the Clark campaign. In the July-August 1979 issue, Rothbard
called to account two influential libertarians funded by Koch:
Roy Childs, the editor of Libertarian Review and Milton
Mueller, the head of Students for a Libertarian Society. Both
Childs and Mueller had, under the influence of Berkeley medical
physicist Dr. John Gofman, called for shutting down the nuclear
power industry. Why, Rothbard asked, had they abandoned the proper
libertarian policy of privatizing the industry? "The answer
is all too clear. It is because, in seeking allies and recruits
from leftists and liberals on college campuses, SLS has found
that a free market position, a stance that is neither for nor
against nuclear power, is not ‘politically potent,’ as one SLS
leader admitted." The same issue carried a letter signed
by nineteen libertarians, including Rothbard and Evers, protesting
the anti-nuclear policy.
soon extended his charges of undue compromise. Faced with the
conflict over nuclear power between Rothbard and Evers, on the
one hand, and Childs and Mueller, on the other, Crane and Koch
wanted to stifle the dispute. One wonders, further, whether the
fact that ending nuclear power would benefit the oil industry
had altogether escaped their notice. Rothbard in the November-December
1979 issue directly addressed this policy. Though he did not mention
Crane by name, he unmistakably accused him of Stalinist tactics.
"The temptation is to hide, blur over, and compromise on
principle in order to attain: media respectability, votes, business
support, support on campus, or whatever…. There are two basic
ways to push one’s ideological ‘line’ within a party. One is by
open airing of differences, and through persuasion and conviction,
to build up a cadre of people within the party dedicated to one’s
own viewpoint. The other is to operate in secret and behind closed
doors, to paper over differences, and to build up a bureaucratic
political machine dedicated to the achievement and perpetuation
of one’s political power…. And, if the first method, that of cadre
building, can be smeared as ‘Leninist,’ then the second may far
more justly be termed ‘Stalinist.’" As if the reference to
Crane were not clear enough, Rothbard later in his article said
that only the Radical Caucus could defeat the "Crane-Koch
pro-[political] professional forces."
had by now made manifest that he thought the issues between him
and the Crane-Koch forces of vital significance, but he hesitated
before an outright declaration of war. Although Rothbard and his
allies had not fared well at the 1979 LP Convention held at the
Bonaventure Hotel in Los Angeles, he still had suggestions for
Ed Clark’s presidential campaign. The gist of his advice will
occasion no surprise: compromise on principles must at all costs
the March-April 1980 issue, he argued that Clark’s strategy must
be "to stick to and be proud of libertarian principle: to
hold aloft and then to select the most vital issues of the campaign,
and then to deliver the message with all the drama and excitement
that these issues deserve." In particular, the campaign ought
to stress opposition to war and to Reaganite conservatism. Instead
of asking that taxes be reduced, why not propose their outright
abolition? Clark should promise that, if elected, he would pardon
anyone convicted of failure to pay taxes.
By the next
issue, (May-June 1980), the break had become total. The Clark
campaign, under Crane’s direction, espoused exactly the compromising
approach that Rothbard rejected. Rothbard found especially galling
that Clark supported the Childs-Mueller view of the nuclear power
industry. An anti-nuclear brochure issued by the campaign had
not been approved by the campaign publications review committee,
of which Rothbard was a member. Proceeding in this way broke an
explicit promise that publications had to be approved by the committee:
"But now the Clark campaign has violated all of these solemnly
pledged guidelines, in procedure and in content. The brochure
glorifies Gofman, quotes his antinuclear views (with pictures
yet), and then these views are seconded at length by Clark himself."
Rothbard called the antinuclear power views of the pamphlet "a
betrayal of libertarian and free-market principles in a transparent
and cynical attempt to suck in liberals (especially in the media)
and leftists (especially on the campus) to support the LP and
the Clark ticket." Rothbard’s temper was not improved by
Childs’s suspension of his column in Libertarian Review.
Rothbard sharply responded that he did not regret this: "LR
has, in recent months, become windy, flatulent, and boring."
presidential campaign had concluded, Rothbard advanced a detailed
and comprehensive criticism of it. In the September-December 1980
issue, he concluded: "The Clark/Koch campaign was a fourfold
disaster, on the following counts: betrayal of principle; failure
to educate or build cadre; fiscal irresponsibility; and lack of
votes." Instead of a forthright defense of libertarianism,
Clark offered a "Back to Camelot" program. "Ed
Clark reiterated the theme. ‘We want to get back to the kind of
government that President Kennedy had in the early 1960s.…’ And
here I had thought for two decades that Kennedy was one of the
Bad Guys! Live and learn!" Rothbard found the Kennedy theme
"arguably the single most odious aspect of the Clark campaign."
Clark, amazingly, supported only a "gradual dismantling of
the draft," and called for a mere 30% tax cut. Clark’s waffling,
furthermore, resulted from pressure by Crane. Clark had early
in the campaign acknowledged that libertarians wish to eliminate
the state. This disclosure made Crane "livid at this disclosure
of truth to the media and to the public; how can they be conned
into liking us if they know our real views? And because of Crane’s
pressure, Clark was never allowed – or perhaps never even felt
tempted – to stand up for basic libertarian principles ever again."
He concluded that "Never Again" must the LP abandon
principle in a futile quest for acceptability to the mainstream.
Crane had no adequate answer to Rothbard’s devastating indictment.
They responded instead by attempting to remove him from the Cato
Institute Board of Directors. The Board was completely under Charles
Koch’s sway; if it did not do his bidding, he could call a stockholders’
meeting and replace the Board. Naturally, this state of affairs
was not publicized. Koch and Crane demanded that Rothbard surrender
his own shares of stock in Cato; when he refused, they illegally
took them from him.
recounted the story in the January-April 1981 issue, Crane informed
him by letter that his personal antagonism toward Crane required
him to leave the Cato Board. "Crane concluded that, because
of the alleged antagonism, ‘we believe it would be difficult,
if not impossible, for you to objectively evaluate ongoing and
future Cato projects as a Board member.’ In other words, disagreement
with Crane robs one of ‘objectivity’; unfailing agreement and
lickspittle fawning upon Crane is the only way to make sure that
you are superbly and consistently ‘objective’." Not only was Rothbard
a founding member of the Cato Board and an original stockholder:
he had suggested the name "Cato" for the Institute. But none of
this mattered to Crane and Koch.
nevertheless appeared at the Cato Board meeting held on "Black
Friday," March 27, 1981, in San Francisco. He argued that
his disputes with Crane over LP policy should not affect his standing
on the Board. "So since the Cato Institute, as a tax-exempt
institution…is not supposed to have anything to do with partisan
politics, how dare Crane make my stand within the LP a criterion
for my continued shareholder or board membership at Cato?"
Crane, of course, rejected Rothbard’s claim. "Crane, aided
and abetted by Koch, ordered me [Rothbard] to leave Cato’s regular
quarterly board meeting…. The Crane/Koch action was not only iniquitous
and high-handed, but also illegal, as my attorneys informed them
before and during the meeting. They didn’t care. What’s more...,
in order to accomplish this foul deed to their own satisfaction,
Crane/Koch literally appropriated and confiscated the shares which
I had naively left in Koch's Wichita office for ‘safekeeping,’
an act clearly in violation of our agreement as well as contrary
to every tenet of libertarian principle."
naturally took the opportunity to reflect on the causes of the
crisis. The crisis stemmed, he thought, from two principal factors.
First, Crane conducted business in a secretive, not to say paranoid
fashion. His management of Cato was little short of disastrous.
"It became all too clear that the dominant spirit at the
Cato Institute was one of paranoia, intense hatred, back-stabbing,
and endless crises. At first the crises, all revolving around
relations between Crane and the other Cato executives, occurred
only once every few months. But soon the frequency accelerated,
until crises occurred every week, then every day or two.... What
neither Crane nor his mentors seem to understand is that if you
treat everyone as if they are eternally plotting against
you, pretty soon by God they will start such plotting….
When I first got to Cato in 1977, I was told by a top Cato officer
and Crane crony that Crane despised intellectuals and libertarian
theorists and that he read practically nothing, whether books,
magazines, or newspapers. At first I resisted the charge, but
it turned out to be all too true."
factor was more fundamental; we have discussed it already but
now Rothbard elaborated on it in more detail. Crane and Koch,
in a quest for political power, wished to compromise with libertarian
principle. This process did not begin with the Childs-Mueller
view of nuclear policy. Rather, the first deviation came about
when David Henderson, a supporter of the Chicago School rather
than Austrian economics, received an appointment to Cato, over
Rothbard’s strong opposition. "The Sarajevo of the Cato Institute
was a seemingly simple act: the hiring of Dr. David Henderson
as his policy analyst and economist."
Koch planned to remove Rothbard from any decision-making role
and to fire his ally Bill Evers. "That, said our intrepid
defector [from Cato], was the plan, and it was being carried out.
Evers would eventually be kicked out, and I [Rothbard] would be
quietly shifted from any decision-making role to being exploited
as a resource person and general totem."
Rothbard did not go quietly but responded with continual criticism
of Crane for mixing Cato business with LP politics. It was this
that led to the decision to oust him. "Though my own rift
with Crane began in the spring of 1979, no effort was made to
oust me from the Cato Board until this spring [of 1981]. To me
it is clear that the real cause of the ouster was not the Lib
Forum article [criticizing the Clark campaign] but the success
which I and others had at the November  board meeting in
beginning to call Crane to account."
expulsion from the Cato Board, Rothbard counterattacked. "An
Open Letter to the Crane Machine" in the June-July 1981 issue
urged employees of Cato to abandon Crane. "Consider for a
moment: surely you must know in your heart that your Boss [Crane]
has contempt for you just as he has for the entire human race….
I don’t care if your Boss is backed by a billion dollars. The
libertarian movement and the Libertarian party are not a corporation
or a military machine. They are not for sale…. Crane is not smart
enough to even try to mask his contempt for his fellow libertarians
and LP members, so people cotton to him very quickly. How can
a person like that succeed in politics?"
In view of
the importance of the Childs-Mueller deviation on nuclear power
in causing Rothbard’s break with Cato, it was ironic that, as
noted in the August 1981-January 1982 issue, both Childs and Mueller
were relegated to lesser positions in the Kochtopus hierarchy.
"Libertarian Review, the star movement jewel in the
Koch/Crane diadem, has been killed…. Roy A. Childs, Jr., editor
of LR, has been ‘warehoused’ to become a ‘foreign policy analyst’
for Crane’s Cato Institute…. Students for a Libertarian Society,
the Koch/ Crane youth arm, has been cast adrift, its budget cut
back from luxurious munificence to near nothing…. [F]ormer SLS
youth leader Milton Mueller has been warehoused with a Kochian
grant for an alleged book on something or other."
heat of battle had subsided, Rothbard offered in the last published
issue of Libertarian Forum a retrospective analysis of
the Kochtopus and its problems. Koch had established the Cato
Institute to promote an ideologically consistent libertarianism.
"The idea was that C.K. [Charles Koch] would (and indeed
did) pour in millions in promoting institutions that would find
and gather the best and the brightest of the libertarian movement,
mobilized by the so-called organizing ability of Eddie Crane.
The object was to promote a consistent ideology of hard-core and
uncompromising radical libertarianism, of which Misesianism was
the economic arm."
Rothbard thought that the "heady excitement" of the
founding of Cato led people to be blind to two problems: "(1)
A monopoly of any movement lacks the essential feedback and checks
and balances that competition always brings…; (2) Almost comparably
to government action, throwing lots of money at a problem doesn’t
always solve it. C. K. threw enormous amounts of money too fast
at people (many who turned out to be turkeys) to people who scarcely
again drew attention to the "paradigm shift" of 1979
– the abandonment of libertarian principle. He now raised a deeper
question: what accounted for this drastic change? "The key
to the puzzle is not the inept, blundering Crane but the motivations
of the Donor, C.K…. Charles’s goals in all this have been unique
and twofold….What Charles demands above-all is absolute, unquestioning
loyalty; and that is something that Crane, above all others, was
equipped to give him…. Those few…who placed libertarian principle
above going along with the latest twist and turn of the Kochtopusian
program, have all been ruthlessly cast aside.... Control for C.
K. also means the willingness of his top managers to speak to
him an hour every day, to go over and clear with the Donor every
aspect, no matter how minor, of the day’s decisions."
desire for control, though, how does this explain the paradigm
shift? Rothbard argued that despite his immense wealth, Koch wanted
the funding of libertarian groups to be undertaken by others.
His initial grants were intended as seed money, and he hoped that
others would take up the cause. Roy Childs persuaded Koch that
abandoning principle for the paradigm shift would attract new
money. "And so 1979 saw the beginning of the radical paradigm
shift within the mighty Kochtopus, i.e., the accelerating abandonment
of hard-core principle in order to attract outside funding."
concluded his analysis with an account of the supplanting of Crane
as Koch’s chief political agent. Richie Fink proved even more
able than Crane to attract outside funding. "The path was
now cleared for young Richie, and the Great Kochtopusian Revolution
now occurred, during the spring and summer of 1984. The baby Finktopus,
son of the Kochtopus, was born…. Fink now heads up the lobbying-activist
program, luring the masses into supporting the new activism. But
to get the masses you can’t be hard-core, at least so runs the
Kochtopusian conventional wisdom…. Richie Fink is now in charge,
not only of most scholarship... but also in charge of most Kochtopusian
activism…. Crane is left in charge only of Cato." It only
remains to add that Fink remains the key figure in the Kochtopus
to this day.