By the early sixties, LeFevre had found a receptive audience at the top tier of the John Birch Society by way of Wisconsin steel magnate William Grede, who became an early financial backer of the Freedom School. Grede was a founding member of the Birch Society who, along with Fred Koch, had been present at the organization’s birth in Indianapolis.
Bob Love, the Koch family friend with whom Charles had opened a Birch Society bookstore, became deeply involved with LeFevre’s school. So did Charles, who was so taken with LeFevre that he roped David into enrolling with him in a two-week Freedom School session.
Charles was an ideal pupil for LeFevre’s teachings, which played an important role in shaping the businessman’s political views. Not long after he returned home to Wichita from Boston, while browsing his father’s wood-paneled library, its shelves crowded with tomes on history and free enterprise, he discovered Austrian economics. He had grown up with his father’s dinner-table disquisitions about the depredations of government, the serpentine creep of socialism and communism into American society, so Charles was well primed to receive the wisdom of the Austrians. This school of thought, which formed one of the intellectual pillars of libertarianism, held that economics could be understood only through the prism of human behavior, and its adherents opposed government efforts to meddle with the “spontaneous order” of the markets.
A voracious reader like his father, Charles was driven by a burning curiosity to understand the mechanics of society, the hidden order of things that caused some cultures to founder where others flourished. In his free time, Charles often sequestered himself in his North Woodlawn Street apartment among precarious stacks of books, living a “hermit”-like existence, he has said. With classical music playing faintly in the background, Charles devoured the works of Austrian economists Friedrich Hayek and Ludwig von Mises, read classical liberal thinkers such as Milton Friedman and Joseph Schumpeter, and he studied the theories of Hungarian polymath Michael Polanyi, who pioneered the concept of spontaneous order.
While Charles read widely across an array of disciplines—from political theory to psychology—he credited two works in particular with launching his intellectual odyssey. The first was the bible of the Austrian school, Mises’s Human Action, in which the economist wrote that “economics is not about goods and services; it is about human choice and action.” Mises, whose controversial views were often condemned by his economic contemporaries, stated in this treatise that “a society that chooses between capitalism and socialism does not choose between two social systems; it chooses between social cooperation and the disintegration of society.”
The second, and perhaps more formative tract when it came to Charles’s worldview, was F. A. “Baldy” Harper’s Why Wages Rise. In this slim volume, first published in 1957, the Cornell-trained economist made the case that unions and government intervention do not lead to wage increases, which come solely through “increased output per hour of work.” Harper argued that the “greatest opportunity… for a quick increase in wages is to reduce the cost of governing ourselves,” and suggested that “compulsory employment devices, such as child labor laws” cause societal ills such as “juvenile delinquency.” Harper’s book provoked a realization in Charles that he likened to a “peak experience,” the term coined by psychologist Abraham Maslow (another thinker Charles admired) for a near religious state of harmony and understanding. Imbued with this euphoric clarity, he later said, “I’ve never looked back.”
His scholarship reinforced his belief, instilled during his boyhood, that “societal well being was only possible in a system of economic freedom.” By his late twenties, Charles had become a full-throated libertarian evangelist. It was an extreme ideology, in which the role of government was nearly nonexistent, and one that fell well outside the traditional left-right poles of political thought.
His appearance in December 1965 at Kansas University’s “minority opinions forum” typified his thinking. At a moment when The Byrds’ “Turn, Turn, Turn” was topping the charts, this young, square-jawed businessman, who wore thick Buddy Holly–style glasses, blasted the federal government for nurturing a welfare state through “interventionist” policies. The government’s sole role in the capitalist system, he told the two-dozen audience members, should be “only to keep a check on those who might attempt to interfere with the laws of supply and demand.”
His belief in the cold logic of capitalism was absolute and unforgiving, without room for equivocation or shades of gray. For those businessmen who did not adhere to the laws of the market—who did not create value—he had not a shred of pity. “Every time I hear of an entrepreneur going out of business I cheer,” Charles said. “He did not serve the consumer and for that he should be a janitor or a worker.”
LeFevre encouraged attendees of his libertarian retreats to pack Western wear and “sturdy shoes.” Students bunked in austere wood-paneled rooms, and an outdoor “barbecue breakfast” was held on Sundays. During these two-week sessions, students had mornings to themselves to ride horseback on the mountain trails, pitch horseshoes, play volleyball or badminton, or peruse the school’s 3,000-volume library. Classes began after lunch and ran until 9:00 p.m., with a two-hour break for dinner.
Courses delved into the “banalities of socialism” and the “philosophy of freedom,” and workshops explored topics including “Education in a Free Society” and “Explorations on Freedom.” LeFevre held a special seminar, “Explorations in Human Action,” for business executives that focused on “management and labor relations problems.” The school invited participants to bring their wives, but warned that “they would be excluded from class discussions, though they may sit in as observers.” (They weren’t the only ones excluded from participation. In 1965, LeFevre told The New York Times that his school had yet to admit a black person; finding accommodations for them, he said, might prove challenging because of the segregationists among the student body.) LeFevre awarded his students a “certificate of proficiency” at the completion of their courses.
After attending Freedom School classes, Charles joined the school’s board of trustees, along with fellow Birchers Bob Love and William Grede. In 1964, Charles became one of six officers at the school, and he personally donated nearly $7,000 to LeFevre’s institution—among the largest contributions the Freedom School received that year. Later, he became a trustee of Rampart College, an unaccredited four-year school LeFevre founded on the Freedom School campus.
By the late 1960s, there was no longer room to be both a Bircher and a LeFevre acolyte. Birch Society founder Robert Welch, who demanded absolute loyalty from his followers, disapproved of LeFevre’s offbeat teachings and his approach—which focused on steering clear of government, not engaging it via a quasi-political movement.
The two spheres coexisted uneasily for a time, but Vietnam forced a schism, which was part of a larger split between conservatives and antiwar libertarians. Welch had taken a tortuous position on the war. He at first opposed U.S. involvement, believing America was being lured into a communist trap. But faced with alienating the flag-waving conservatives within the society’s fraying ranks, he adopted a more nuanced stance. “Victory, Then Peace” became the society’s slogan.
Charles and Bob Love, steeped in LeFevre’s pacifist teachings, took a different view, thoroughly opposing the war. In May 1968, they took out a full-page antiwar ad that ran in The Wichita Eagle. “Let’s Get Out of Vietnam Now,” it demanded. Coming from two high-profile John Birch Society members, this was no minor act of defiance. In a May 31, 1968, letter to Charles, William Grede called the advertisement “almost sabotage from within the Society.” Charles and Love ultimately parted ways with the Birch Society over Vietnam. Later, in a letter Welch asked Grede to personally deliver to Charles, the Birch Society founder begged him to return to the society: “You belong with us in this fight, Charles, and we need you.” But the young CEO was now on a different path.
Many years later, Koch Industries sought to
distance Charles and David from Freedom School founder Robert LeFevre, a controversial figure even within his own movement. After The New Yorker ran a 2010 article critical of the brothers, describing them as “devotees” of LeFevre, the company responded with an extensive rebuttal. It noted that “while Charles and David Koch both have met LeFevre, they were never ‘devotees’ of LeFevre…”
Perhaps this was true of David, who followed his brother down the libertarian path and never became the ardent believer Charles was. But it seriously obscured the true nature of Charles’s association with LeFevre and the Freedom School, of which he was not just a graduate but a donor and board member. Under LeFevre’s tutelage, Charles drifted farther from his conservative roots into new, radical ideological terrain.
By the late 1960s, antiwar protests raged in the streets, schools across the South were being desegregated, and President Richard Nixon was paving the way for closer relations between the United States and Communist China and expanding the federal bureaucracy to include the Environmental Protection Agency, the Occupational Health and Safety Administration, and a government-led War on Drugs. Meanwhile, members of the embryonic libertarian movement, composed of a small, unruly cadre of radical thinkers from Left and Right, were doing what they did best: disagreeing about almost everything other than their mutual disdain for government.
Charles increasingly immersed himself in this volatile stew of anarchists, Ayn Rand disciples, laissez-faire economists, disaffected Students for a Democratic Society members, and others on the political fringe. In 1969, Charles hired the first of a series of political adjutants—George Pearson, who joined Koch Industries to oversee Charles’s political and philanthropic endeavors. Pearson, who grew up in the small city of Beaver Falls, outside of Pittsburgh, had been a student of Hans Sennholz (a protégé of Austrian economist Ludwig von Mises) at Pennsylvania’s Grove City College. Pearson called the economist’s class “a defining moment in my life,” and he devoted his career to promoting the libertarian ideas Sennholz had awoken him to.
Together Charles and Pearson, then in his late twenties, formed a libertarian supper club in Wichita, where they invited notable speakers to lecture. These events featured the Freedom School’s LeFevre on at least one occasion; one attendee recalled that the libertarian guru “converted” his wife “to anarchy in about 30 minutes.”
His eyes opened, Charles was not content that the precepts of the libertarian philosophy stay confined to supper clubs, or discussion groups, or Rampart Mountain redoubts. “I was looking for ways to develop, apply, and spread the ideas I was learning,” he recalled. The problem was that “no one was familiar with these ideas.”
Charles took every opportunity he could to groom like-minded thinkers and identify libertarian converts. Gus diZerega recalled meeting Charles in the mid-1960s at his Bircher bookstore. A politically precocious high school student, diZerega had attended Birch Society meetings with his mother and he had started a local chapter of Young Americans for Freedom. Spotting diZerega and a friend browsing in the store, Charles led them away from the anticommunist broadsides and over to the special section that he had filled with tracts on Austrian economics and classical liberalism. “Charles said, ‘You should start reading this kind of thing,’ and then he bought us some books that we could never have afforded,” diZerega remembered.
Charles later invited diZerega and his fellow YAF members over to his parents’ mansion for long, philosophical talks in the basement. “At that time,” diZerega said, “Charles was a very committed libertarian, possibly even what we call an anarcho-capitalist”—that is, someone who believes that virtually every function of society can be privately funded, eliminating the need for government. “He was very interested in ideas, very interested in talking about ideas, the implications of ideas, where they would lead, not just interested in power or money.” DiZerega—whose Freedom School education was also bankrolled by Charles—went on to get his Ph.D. in political science from Berkeley and credits the industrialist with setting him on the path to his career in academia. “I would never have gotten into serious academic work, I think, absent his influence.”
At the time when diZerega met Charles, there existed little infrastructure to incubate, let alone broadcast, libertarian dogma. Charles assessed the libertarian movement as if sizing up a failing business. In the marketplace of ideas, libertarianism was a product that few Americans wanted to buy, let alone finance, and its intellectuals were held at arm’s length by academia. Enraptured by the libertarian philosophy, Charles decided that advancing its precepts would form the backbone of his philanthropic legacy: He became libertarianism’s primary sugar daddy.
In 1974, Charles’s ideological aide-de-camp George Pearson offered a rare glimpse into the strategic thinking behind his boss’s philanthropy at a gathering of nonprofit directors. Pearson was now running the newly formed Charles Koch Foundation, a nonprofit created to finance Charles’s libertarian projects.
“We did not see politicians as setting the prevalent ideology but as reflecting it,” he noted, explaining that “[Friedrich] Hayek contends that the prevalent ideology is set by the intellectuals.… They are the teachers, preachers, journalists, lecturers, publicists, news writers and commentators, writers of fiction, cartoonists, artists, and all others who disseminate ideas.”
Charles’s strategy focused on grooming the intellectual class—through education, research funding, and other efforts—who would, in turn, shape public opinion and influence lawmakers. The “intellectual war,” Pearson said, would not be won overnight. “It took years to bring this country around to believing that government could solve problems better than the market, and it will take years to get rid of that destructive notion. Belief that government participation is necessary or helpful and that governments are beneficial needs [to be] challenged.”
Charles began to invest in institution building. Myriad libertarian and free-market organizations would later thrive because of his largesse. “None of these free market and policy institutions would have survived and prospered without Charles Koch,” said libertarian economist Dominick Armentano, an emeritus professor at the University of Hartford, who worked closely over the years with institutions that Charles funded.
In addition to his involvement with the Freedom School in the 1960s, Charles became a board member and key benefactor of the Institute for Humane Studies, which Baldy Harper had initially run out of his Menlo Park, California, garage. Its goal, then as now, was to mentor libertarian scholars, nurture the next generation of thought leaders, and “further the science of a free society.”
When Harper died suddenly of a heart attack in 1973, Charles stepped in briefly to helm the organization, vowing to continue Harper’s work and keep alive his vision. At the funeral, he tenderly eulogized his friend. “He taught us about liberty which was, in his words, ‘the absence of coercion of a human being by any other human being.’… Of all the teachers of liberty, none was as well beloved as Baldy, for it was he who taught the teachers and, in teaching, taught them humility and gentleness.”
Just as Charles focused intently, methodically, obsessively on growth at Koch Industries, he had similarly grand aspirations for libertarianism. He often grappled with the question of how to expand libertarianism beyond its ragtag confines. By its very nature, this philosophy had attracted a combustible mix of free thinkers, from sober-minded academics to black-flag-waving anarchists, and from buttoned-down executives to survivalists, sci-fi geeks, and eccentrics seeking to establish a floating libertarian utopia on the high seas.
Charles sought a coherent strategy, not the ad hoc approach that had characterized the movement up until then. There was plenty of informal parlor talk about how to elevate libertarianism to a genuine mass movement, but it was Murray Rothbard, another student of Mises’s, who wrote the manifesto that distilled the movement’s guiding principles and showed a path forward to greater acceptance. Part of the debate among libertarian thinkers centered on whethe
r to advance the cause through an intellectual or an activist approach. To Rothbard, the Bronx-born son of Eastern European Jews who had received his Ph.D. in economics from Columbia University, the answer was both. Rothbard, known for his fiery, stem-winding diatribes against “statism,” captured Charles’s imagination.
During the winter of 1976, Charles invited the Brillo-haired and bespectacled economist, who was then forty-nine, to spend the weekend strategizing at a ski lodge in Vail, one of the businessman’s favorite vacation destinations. A fire crackled in a stone fireplace as the two men bantered for hours about how to coalesce their fellow believers and attract new recruits to their freedom-fighting ranks. Prior to this retreat, Charles and Rothbard had outlined a strategy modeled closely on the John Birch Society. (For all its flaws, Welch’s group had managed to grow into a bona fide movement with an estimated 100,000 members at its peak.)
Their plan called for the formation of a Libertarian Society, replete with Bircheresque bookstores around the country. As they strategized in Vail, Charles and Rothbard came up with a handful of candidates to lead this new organization. Edward Crane III, a San Francisco–based financial advisor who, at thirty, had become the national chairman of the fledgling Libertarian Party, topped the list. Crane, the son of a Republican doctor, grew up in the suburbs of Los Angeles and he enjoyed going against the grain. Attending Berkeley during the turbulent 1960s, Crane ran for student government on a pledge to abolish it. During Barry Goldwater’s 1964 presidential campaign, he stumped for the conservative Arizona senator as precinct captain in this predominately left-wing enclave. Disillusioned by the Goldwater campaign, Crane drifted toward libertarianism. He was tough and opinionated, a contrarian who spoke his mind freely—even, and perhaps especially, to powerful business titans.
Sons of Wichita: How the Koch Brothers Became America's Most Powerful and Private Dynasty Page 10
