Explain the current alliance between government and intellectuals

0:00The intellectuals were ripe for it, at this point. Ideology had been classical liberal or libertarian from about the 17th century on. There was a whole movement of laissez-faire, free market intellectuals who were leading, helping to lead the free market movement. For various reasons, these were being overshadowed by new intellectuals coming out. First place, the PhD was coming in. In the old days, there were no PhDs. In fact, very few people went to college in the old days. I mean, somehow they made it. I mean, they started working at the age of 14 or something and became millionaires often. They didn't waste all that time, 10 years or so, getting a PhD. So, most people would not go to college and the colleges were not specialized. There was no economics department. There was a moral philosophy department before the Civil War.

0:46The moral philosopher taught ethics, economics, politics, whatever. That was it. It was usually pretty good, by the way. Specialization comes in after the Civil War in the 1870s and 80s, and colleges, graduate schools, and the first PhDs were given in Germany. Germany was the home of the PhD. It's something we can either thank or condemn it for. And so bright young American graduate students had to go to Germany to get their doctorates. And so what you had is a whole generation of people coming out of Germany imbued with a new spirit. The new spirit was the church-state, so to speak, or the intellectual-state alliance. This has been achieved already by Bismarck and others in Germany, where the idea was that the government should not, there shouldn't be any free market, the government should cartelize the system compulsorily through trade associations, etc.

1:36All decisions should be made, production and price decisions, etc., by big government in alliance with big business monopolists and unions of sort of like junior partners to this, with intellectuals taking their honored place as professors. The famous phrase of the head of the German Historical School, my mentor, Mises, we'll call him anti-economists, Gustav Schmuller, from the University of Berlin, said, we at the art function of the University of Berlin is to be the intellectual bodyguard of the House of Hohenzollern. In other words, the intellectuals and professors were the intellectual bodyguard, the court intellectuals, court professors for the state.