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Austrian School of Economics

II. ECAEF/CEPROM Conference, Monaco

November 23, 2017

A Case for Europe’s Small States
in the third Millennium

An academic Cooperation of CEPROM and ECAEF

The II. ECAEF/CEPROM Conference (International Jacques Rueff Conference) was an academic one-day co-operation of CEPROM (Center of Economic Research for Monaco) and ECAEF (European Center of Austrian Economics Foundation, Liechtenstein). It took place at the Musee Oceanographique de Monaco, Principality of Monaco, on November 23, 2017.

Introduction by Kurt Leube | Defined in broad terms the small states of Europe are countries that have little territories and small populations – usually both – but enjoy sovereignty, international recognition and share all or at least most of the features of larger states. This differentiates them from other small political entities such as overseas territories or special administrative regions.

Europe is home to the five smallest continental states in the world that have been autonomous or independent for most of their centuries long history and were rarely invaded: Vatican City, Monaco, San Marino, Liechtenstein and Andorra. The majority of them ranks among the most prosperous states in the world. Though, more often than not these small states were situated in places, unattractive to larger surrounding nations and repeatedly military powers left them more or less alone, sometimes for centuries. However, geography alone was not enough to allow small states to survive for centuries on a tumultuous continent. Their development and endurance are mostly due to at least four major factors: Political genius, legal systems that serve the people, accountability and trade.

ecaef ceprom conference monaco
Jacques Rueff (1896-1973) 7th Minister of State of Monaco

Due to the fact that small states are more flexible, more able to weather economic storms, and less capable of waging serious wars, they are more accountable to their people and more creative. It seems to be no coincidence that on the whole there is more entrepreneurial spirit, individual freedom or trustworthiness to be found among the people living in small states. These virtues can only be discovered and self-responsibility practiced in matters with which most residents are familiar and where the consciousness of one’s neighbor rather than some distant knowledge of the need of other people, guides their actions. Citizens will typically take an actual part in public affairs only when they concern their own social and physical environment. However, the faster these feelings of social cohesion between individuals or groups dry up the resolution of social problems will increasingly be assigned to an omnipotent and thus inevitably intrusive bureaucracy. Where the range of political measures expands beyond an endurable size and swell so large that the necessary knowledge to cope with them is more or less under the control of a huge administration, the commitment and creative ideas of private persons must necessarily fade away.

However, the recent quelling of secessionist movements reveals Europe’s different course. Europe (i.e. the EU) seems to be bound to spread out even more of the toxic effects of centralization, synchronization or redistribution. The thinly veiled duplicity of routinely used words makes it easier for policy makers of large political unions to ever expand the role of an all-powerful government. By ways of progressively pushing for more harmonization and centralization of tax issues and welfare or of forcing people to abandon their local customs, rights and traditions, Europe not only surrenders her classical liberal heritage. In its current course, the EU is also bound to destroy Europe’s vital remnants of individual freedom, competing markets and her entrepreneurial spirit.

To understand the prophetic power of Friedrich A. von Hayek’s (1899-1992) vision, we need to ponder about his statement that serves as subtitle for the conference. To his quotation “We shall all be the gainers if we can create a world fit for small states to live in”, we should not only add that minimizing the aggregation of power would also make us safer. We should also oppose the making of ever-larger political alliances, in the belief that this will bring peace and security.

At the recent II. International ECAEF/CEPROM Conference in Monaco, some of the internationally most renowned scholars and experts in the field have analyzed and discussed the philosophical underpinnings, the current condition and the future of the European Small States. The following papers for download are in the original version and have not been edited.

Kurt Leube
Academic Director of the conference

You can download the conference papers:

Dinner Speech
by Detmar Doering

Small, Sovereign and Resilient: Lessons from the not-so wild Wild West
by Terry L. Anderson

Decentralization, Subsidiarity, Secession: States in Knowledge-Based Societies
by Karl Peter Schwarz

Is Small Still Beautiful? A Swiss Perspective
by Henrique Schneider

Limited Places offer Unlimited Thoughts
by Carlos Gebauer

Small States
by Michel Hunault

Reflections on Smallness
by Antonio Martino

Limits on posting workers create Europe’s high-cost cartels

GIS statement by Prince Michael of Liechtenstein

Markets work efficiently when they are based on competition. Cartels are damaging, and rightly are not allowed, because they eliminate competition. A successful internal market needs regional and regulatory competition, something that some countries – mostly those with excessive cost structures – frown upon. They use the terms “race to the bottom” and “unfair competition” to discriminate against less regulated or lower-cost regions.

GIS statement, ECAEF
GIS statement by Prince Michael of Liechtenstein. Photo: dpa.

At a meeting in Luxembourg on October 23, European Union labor ministers decided to put limits on “posting workers” – a system by which companies bring workers from one EU member state to another and remunerate them according to the laws in their country of origin. This is not to be confused with “wage dumping” and is perfectly in line with the EU’s principles of free exchange. Posting workers enhances competition and has mainly been used by companies based in Central Europe, such as Hungary, Slovakia and Poland.

French President Emmanuel Macron pushed hard for this change. He faces resistance from trade unions against his mild deregulation of labor laws in France. According to the agreement, wages and social security benefits should be paid according to the regulations of the country where the work is done. It is surprising that Mr. Macron, who claims to be a proponent of European values, has worked so hard to weaken liberal EU principles. Unsurprisingly, several Western European countries are following along for similar reasons, including Germany and the Benelux countries.

These countries complain that posting workers gives EU member states with lower labor costs an “unfair” competitive advantage, but they ignore that they are protecting a high-cost cartel. Imposing such rules is protectionist and limits competition.

The ministers of labor reached a compromise that would introduce a cap of 12 months during which employers can “post” workers to another member state, with a transition period of four years. This change will be proposed to the European Commission and the European Parliament.
Astonishingly, President Macron posted a triumphant tweet on this subject, saying that Europe is “moving forward” and adding “more protections, less fraud.” This suggests that he considers a legitimate competitive labor market practice as “fraud.” It is disappointing that this comes from a politician who calls himself liberal.

In August of this year, President Macron embarked on a tour of Central and Southeastern Europe. It seems he had two interlinked agendas. The first was to divide the Visegrad Group by conspicuously only meeting in Vienna with the Czech and Slovakian prime ministers, purposely snubbing Hungary and Poland. The other was to lobby for the limits on posting workers. It has been reported that in exchange for Slovakia’s support, he suggested he would help the country reduce its refugee allocation.

This is a case where under the pretext of “fair” competition, real competition is being limited and protectionism is applied inside the internal market.

Read the full GIS statement here ->
Limits on posting workers …

*GIS is a global intelligence service providing independent, analytical, fact-based reports from a team of experts around the world. We also provide bespoke geopolitical consultancy services to businesses to support their international investment decisions. Our clients have access to expert insights in the fields of geopolitics, economics, defense, security and energy. Our experts provide scenarios on significant geopolitical events and trends. They use their knowledge to analyze the big picture and provide valuable recommendations of what is likely to happen next, in a way which informs long-term decision-making. Our experts play active roles in top universities, think-tanks, intelligence services, business and as government advisors. They have a unique blend of backgrounds and experience to deliver the narrative and understanding of global developments. They will help you develop a complete understanding of international affairs because they identify the key players, their motivations and what really matters in a changing world. Our experts examine the challenges and opportunities in economies old and new, identify emerging politicians and analyze and appraise new threats in a fast-changing world. They offer new ideas, fresh perspectives and rigorous study.

Newspaper Articles by Boehm-Bawerk and Mises re-discovered

ecaef boehm-bawerk mises
Newspaper articles by Eugen Boehm von Bawerk and Ludwig von Mises. Found at Österreichische Nationalbibliothek digital service.

by Federico Salazar (Mises Institute, Peru)

Eugen Böhm v. Bawerk “Der Zweck der Volkswirtschaft” | This last book commentary was published in Neue Freie Presse, on Feb 2, 1910. I was very lucky to find it during my research for another topic in the Österreichische Nationalbibliothek digital service. Reading Böhm-Bawerk the theorist, the polemicist and the politician on interventionism and its flawed groundings is not only pleasant but also, specially at this moment, enlightening.

Eugen Böhm von Bawerk’s “Macht oder ökonomisches Gesetz?” (english: Power or Economic Law?”), was one of his works published posthumously, in 1914. His epistemological insights converge with his view of public policy based on economic science. There he quarrels with historicism. To justify political interventionism this school of thought denied the methodology of economics based on logic and deduction. Predecessors of this text are the reviews Böhm-Bawerk dedicated to Rudolf Stolzmann’s “Die sociale Kategorie in der Volkswirtschaftslehre” (1896), and “Der Zweck in der Volkswirtschaft” (1909).

Download PDF here ->
Eugen Böhm v. Bawerk “Der Zweck der Volkswirtschaft”

Ludwig v. Mises “Wiederaufbau und Währungsreform” | Only a radical change in the politics of destructionism and decadency, the politics of collectivism and socialism, said Mises in 1921, would allow the take-off of reconstruction in Austria. Not foreign aid or credit but the deficit clean-up is the first step in order to build up the country. As Mises said at the end of his piece, “to construct, at any rate, goes slower than destruction.” (German: “Aufbauen geht allerdings langsamer vonstatten als zerstören”). Mises’ article on “Reconstruction and Currency Reform”, was published on  June 3, 1921 in Neues Wiener Tagblatt. It’s based on a speech in the Political Society, throwing light on Austrian political and economic problems of that time, problems that are not too different than those we face now in western societies.

Download PDF here ->
Ludwig v. Mises “Wiederaufbau und Währungsreform”

Mark your Calendar: Haberler Conference 2018

Gottfried-von-Haberler Conference 2018
“If anything is certain, it is that I myself am not a Marxist.”  Karl Marx

Karl Marx:
Born 1818 and Still Going Strong?

(Karl Marx: Mythos und Realität)

The XIV. International Gottfried von Haberler Conference will take place on May 25, 2018 in Vaduz, at University of Liechtenstein. Topic: “Karl Marx: Born 1818 and Still Going Strong?” – German: “Karl Marx: Mythos und Realität”. The event will be organized and hosted by ECAEF – European Center of Austrian Economics Foundation. Support of the University of Liechtenstein and multiple local and international sponsors is gratefully acknowledged.

By invitation only

General: CHF 100 / 100 Euro; Students: CHF 50 / 50 Euro

Academic Director:
Kurt R. Leube
Tel.: +1 650 248 4955 and +43 676 9428980; email: krleube at gmail com

Administration and Media Contacts:
Rosmarie Lutziger
Tel. +423 235 1570, email: rosmarie.lutziger at lgt com

Media Matters:
Karin Brigl
Tel. +423 235 2344, email: karin.brigl lgt com

Conference Schedule on May 25, 2018
9:00-9:30 Registration/Fee
9:30-9:45 Welcome and Opening by H.S.H. Prince Michael of Liechtenstein

Session I: 
On the Origin and the Development of Karl Marx’ Ideas.
9:45-10:00 Chair: Karl-Peter Schwarz (A)
10:00-10:30 “Freiheit durch Sozialismus? Der Mythos Karl Marx”
Hardy Bouillon (D)
10:30-10:45 Discussion
10:45-11:15 Coffee break
11:15-11:45 “A Spectre haunts Europe …”: The ‘Communist Manifesto’ after 170 Years”
Pedro Schwartz (ES)
11:45-12:00 Discussion

12:00-13:45 Buffet Luncheon for all participants at conference site

Session II: 
On Marx’ Economics: “… a most ingeniously conceived structure, … but – a House of Cards.”
13:45-14:00 Chair: Henrique Schneider (CH)
14:00-14:30 “Der moderne Sozialismus und die Kritik der österr. Schule” Michael Wohlgemuth (D)
14:30-14:45 Discussion
14:45-15:15 “Die rote Verführung: Mit zündenden Phrasen ins Paradies?” Philipp Batthyany (CH)
15:15-15:30 Discussion
15:30- 16:00 Coffee break

Session III: 
Marxism as a Dogma: Complete with Prophet, Sacred Texts and Promises shrouded in Mystery.
16:00-16:15 Chair: Peter Fischer (CH)
16:15-16:45 “A not-so ‘Shining Path’: Just one Case in Point of a Failed Idea ending in Terror”
Enrique Ghersi (Peru)
16:45-17:00 Discussion
17:00-17:30 “Is a Spectre Still Haunting Central Europe? Reflections of an Eyewitness.”
Timothy Garton Ash (UK)
17:30-18:00 Discussion (topical and general)
18:00-18:10 Farewell address: H.S.H Prince Michael of Liechtenstein.
18:20-18:30 Transportation by bus to Vaduz Castle
18:30-19:45 Cocktail Reception at Vaduz Castle.

Relevant literature will be offered for sale by

Vernon Smith Prize 2017 – Call for Papers!

Vernon Smith Prize 2016 Call for Papers
Does Tolerance become a crime when applied to evil? Vernon Smith Prize 2017.

Call for Papers!

The 10th International Vernon Smith Prize for the Advancement of Austrian Economics is an essay competition sponsored and organized by ECAEF European Center of Austrian Economics Foundation, Vaduz (Principality of Liechtenstein). This years’ topic:

Does Tolerance become a Crime when applied to Evil?

|- First Prize EUR 4,000 -|

|- Second Prize EUR 3,000 -|

|- Third Prize EUR 2,000 -|

Advanced by the ‘ends-independent’ market process, free pluralistic societies developed without a shared hierarchy of particular ends. Once we agree on the rules, we need not agree on the goals as markets enable us to disagree peacefully while we pursue our own way. However, to sustain this kind of ’means- but not ‘ends-connected’ society, we must be willing to tolerate differences with others and we have to recognize that our freedom to achieve our ends comes at the cost of allowing others the same, even if we find those ends distasteful.

Does Tolerance become a Crime when applied to Evil?

ECAEF invites papers on this topic which meet the following requirements:

1: Entries may be submitted by individuals of up to 30 years (in 2017).

2: Entries may not exceed 12 pages; 1.5 spacing; left/right margins no less then 1 inch; full bibliography and a 1/2 page summary (abstract) must be included.

3: Entries must be submitted in English in electronic form (PDF) to and must include an abbreviated CV, featuring DoB, education, and current position.

4: Entries must be received on or before November 11, 2017.

5. It is mandatory that all prize winners participate in the award ceremony in Vaduz Prizes are not transferable and will be awarded on the basis of originality, grasp of subject, and the logical consistence of the argument.

Essays will be judged by an international jury and the winners will be invited to present their papers at a special event in Vaduz, Principality of Liechtenstein, in February, 2018. First Prize €4,000 – Second Prize €3,000 – Third Prize €2,000.