Pedro Schwartz


Now an Adjunct Professor at the Cato Institute, which describes Schwartz as a professor of economics at the Universidad Autonoma de Madrid, Spain, and an expert on pensions, monetary policy, and the European Economic Community. He is coauthor of several books and papers for the Cato Institute in cluding Bank Deregulation and Monetary Order and A New Bretton Woods or Monetary Competition?

Schwartz recently joined the board of directors of MTS Spain as chairman (the company provides electronic trading systems for fixed-income securities).  He was an executive member of the advisory board of DMR IT Consulting in Spain, and chairman of the DMR Consulting Foundation.  In 2005 the Instituto de Empresa Business School and DMR Consulting signed an agreement to create the Observatory on Boards of Directors and Information, a research centre to analyse the information flows “received and sent by members of the boards of directors of leading Spanish enterprises, together with their impact on the efficient management of the companies in question” (according to a press release).

Schwartz was previously an economist at the Bank of Spain and a conservative member of the Congreso de Diputados. After leaving politics he was appointed as chief economist of the Madrid Stock Exchange Brokers Iberagentes SGIIC. As a fund manager, he chaired Fincorp Gestión SGC for eight years, he had been a director of Foreign & Colonial Eurotrust since 1993 (most likely because of the introduction of the European Single Market). He has also chaired FUNDESCO of Telefonica de Espana, Servicom and Inderdomain. He was an advisor to the Instituto de Estudios de Libre Comercio, where he served as president for eight years.  He became president of a consultancy called Blueline, established by Spanish venture capital company Najeti Spain SL who invested €4m.  This integrated three Najeti Spain consulting divisions: Lanefour, Vitalia Consulting and BlueCo Partners. They have been working on projects for some 80 clients in the telecommunications, entertainment, health and biotechnology sectors over the past three years (Spanish Business Digest, September 16, 2005). He is also President of Madrid-based IDELCO (Institute of Free-Trade Studies).

Other activities include being a member of the Board of Centre for European Policy Studies, an elite think tank Founded in Brussels in 1983.  The New York Times, September 25, 1983 described the creation of CEPS as the ”European Brookings” and “one of Europe’s latest experiments in American governance — a think tank.”  Indeed its its financial backers, were said to include the European Economic Community, NATO, the Dutch Government and the Ford Foundation, the Economist, December 18, 1982, stated that:

The idea of creating a European version of Washington’s Brookings Institution was first suggested several years ago by Mr McGeorge Bundy, president of the (American) Ford foundation. He wrote to European prime ministers and presidents in 1977 and convened a planning conference at Versailles. Although the inspiration was American, European leaders were enthusiastic about the whole project.

Peter Ludlow, the British historian who was a founding member stated in a 2008 CEPS interview that Mrs Thatcher seems to have hated the organisation, regarding it as just another European expense.  The Economist stated that the main instigator of the project was Jacques van Ypersele (the Belgian prime minister’s chef de cabinet).  In its early days the US seem to have used it to lobby against the Netherlands rejection of 48 cruise nuclear missiles assigned to it under a 1979 plan to install 572 medium-range nuclear missiles in five West European nations (The Associated Press, May 26, 1984). CEPS (1985) report ‘New Approaches to Nonproliferation: A European Approach,” argued that Western Europe had been developing a consensus on the spread of nuclear weapons ever since the 1970 Nuclear Nonproliferation Treaty, and the New York Times, September 9, 1985, quotes CEPS’ Harald Muller as saying that the CEPS was “one of the first attempts to bring together scholars to try to formulate a consistent policy on limiting the spread of nuclear arms for Western Europe.”

The New York Times, April 4, 1986, outlined a joint CEPS and Council on Foreign Relations advocating a Soviet-American test ban treaty, The American group included James R. Schlesinger, former Defense Secretary; Lieut. Gen. Brent Scowcroft, former White House national security adviser; Marshall D. Shulman, a Columbia University specialist on Soviet affairs, and Warren M. Christopher, a former Deputy Secretary of State.  The Times report mentions the involvement of Gerard C. Smith whom David Rockefeller recruited to develop the Trilateral Commission.  Smith led the US negotiating team during the Strategic Arms Limitation Talks (SALT) in the 1970s.  He strongly opposed Reagan’s Strategic Defense Initiative (launched by Reagan on March 23, 1983) which he felt violated the 1970’s Treaties, and together with George Kennan, McGeorge Bundy (President of the Ford Foundation from 1966 to mid-1979 and who seems to have instigated CEPS) and Robert McNamara co-authored an article in a (1984) Foreign Affairs essay ‘Nuclear Weapons and the Atlantic Alliance’, calling upon the US to declare a policy of “no first use” of nuclear weapons (see the Smith Archive).  This group represented Jimmy Carter’s commitment to nonproliferation which also included Joseph Nye, said to be Carter’s proliferation point man (Newsweek, July 11, 1988).

Schwartz joined the Trilateral Commission in 1982 and had previously been pard of the Ford Foundation’s seminar programme in the 1960s. An online biography states that from 1965 – 1967 he was Secretary of the Ford Foundation Seminars at the Sociedad de Estudios y Publicaciones of Banco Urquijo.  This also adds that from 1974 – 1980 Associate Fellow, University College London, the Jeremy Bentham Project and that from 1982 – 2005 .  In 2006 he was part of a Stockholm Network and Fundacion para el Analisis y los Estudios Sociales (FAES) co-hosted seminar on the topic of transatlantic relations.

No biographies, including that presented at his own web site, mention that he was a member of the IEDSS.

Public Choice… private Societies

Schwartz is also a member of the Mont Pèlerin Society and as can be expected has a neo-liberal view on economics. He is the author of (2001) European Union or Not?, with Vaclav Klaus which was published by the Centre for Research into Post-Communist Economies (founded by Ralph Harris of the IEA and the late Sir Antony Fisher).  This was based on talks delivered at the Mont Pelerin Society Meeting, Bratislava 9-12 September 2001.

Together with Jose Casas Pardo he wrote (2007) Public choice and the challenges of democracy, Edward Elgar Publishing.  This presented 19 papers from a December 2005 conference bringing together public choice economic theorists (including a key note address by Gordon Tullock) to discuss the “problems of democracy,” the phrase used in the original conference title.  According to Reference & Research Book News, November 1, 2007:

Opening chapters include an attack on the notion of social justice wealth redistribution, an argument for incorporating a theory of emotions into public choice theory in order to explain phenomena as wide-ranging as tax revolts and suicide bombings, and an argument for Jeremy Bentham as a forerunner of public choice. Six chapters then explore institutional aspects of democracy, including the design of parliamentary democracy in the European Union, the fate of environmental policies in divided government, the alleged dangers of adopting democratic processes in non-governmental arenas, democratic deficit in international organizations, and the economic outcomes of common law versus civil law traditions.

The work on Bentham is Schwartz’s, and the general tone, in the introduction, is a return to Mosca’s ‘iron law’ and “Hayek’s remark that the worst come to the top in centrally planned societies” (p.1).  With Robbins mentioned above, Schwartz was (1974 – 1980)  Associate Fellow, University College London, with the Jeremy Bentham Project.

He is the author of the (1968) The New Political Economy of J. S. Mill, which is within the resurgence of interest in John Stuart Mill which began in the early 1940s stimulated by F. A. Hayek whose efforts and enthusiasm inspired new publications of collections of Mill’s works, his letters, and biographies. Hayek’s own study, The Constitution of Liberty (1960), commemorated the centenary of the publication of Mill’s On Liberty. The description of Schwartz as a “influential thought leaders” can be seen in a Hayakian sense in an (1979) essay Leonard P. Liggio ‘A Review of Contemporary Liberal Thought’, published by the Cato Institute and reproduced at the Library of Liberty; this states: that Hayek was particularly fascinated by J. S. Mill’s views of the influence of intellectuals on public policy. It argues that a:

statesman adopts a policy, not because of objective reality, but because of public opinion. The statesman takes public opinion for his objective reality, and he is successful to the degree that he operates within the accepted framework of thought. On a deeper level, however, the framework of thought which guides human action is derived from those intellectuals whose profession it is to apply abstract ideas.

It quotes Hayek, drawing on Plato perhaps, who stated:

The belief that in the long run it is ideas and therefore the men who give currency to new ideas that govern evolution, and the belief that individual steps in that process should be governed by a set of coherent conceptions, have long formed a fundamental part of the liberal creed. It is impossible to study history without becoming aware of ‘the lesson given to mankind by every age, and always disregarded —that speculative philosophy, which to the superficial appears a thing so remote from the business of life and the outward interest of men, is in reality the thing on earth which most influences them, and in the long run overbears any influences save those it must itself obey.’ Though this fact is perhaps even less understood today than it was when John Stuart Mill wrote, there can be little doubt that it is true at all times, whether men recognize it, or not.

This is the formulation of the active intellectual’s role as a disseminator of ideas, drawing on Mill’s financial support of Herbert Spencer’s periodical and his books, with the intention of beginning a process of influencing public opinion. This also adds that Schwartz regards the charge that Mill changed from “a young noninterventionist to a collectivist” as false and places Mill, in terms of analysis, in the tradition of Ricardo.

Schwartz is also the editor of the (1979) The Iberian Correspondence of Jeremy Bentham, (2004) The Euro as Politics published by the Institute of Economic Affairs, and was quoted as writing an El Pias editorial expressing his “fears the financing of the Iraqi war based on public debt in certain measure financed by Chinese and Japanese banks might eventually be converted into, not only lowering the price of the dollar, but into a worldwide disaster.” He is part of the Academic Advisory Council of the IEA, along with the IEDSS’ Antonio Martino and ‘The Euro as Politics’ is dedicated to Lionel Robbins (‘Teacher and Friend”) head of the economics department at the London School of Economics.  Robbins was something of an importer of the Austrian school of economic thought to counteract the influence of Keynes and brought Friedrich A. Hayek to the LSE and was greatly influenced by Vilfredo Pareto, Ludwig von Mises and Hayek.

In the 1980s Schwartz wrote op-ed pieces for The Wall Street Journal (January 16, 1989) and before moving to Foreign and Colonial Schwartz was an Exeuctive Vice-President of the consultancy firm National Economic Research Associates (Extel Examiner, February 23, 1993), his writing, usually attacking socialism, used the memory of Franco to encourage ‘flexibility’ in the labour market, stating in the Globe and Mail (Canada) December 31, 1993:

“There are deep-seated problems in Spain,” he says. At the top of his list is a rigid labour market where workers with full-time jobs are able to call the tune despite high unemployment because they have almost absolute security of tenure, courtesy of laws passed by the late dictator, Franco. The result: Workers demand and are given wage increases far outpacing inflation, production is inefficient due to overstaffing, and employers are loath to hire new staff who may be impossible to get rid of later. The parlous state of government finances is next on the list. Since winning power in 1982, Gonzalez’s socialists have built a welfare state that Spaniards cannot afford. Social payments such as pensions and health care make up about 60% of budget outlays, with payments on the public debt accounting for another 12% to 13%.

In the early 1990s Schwartz also became chief economist at Fincorp Agencia de Valores, a Madrid brokerage firm (The New York Times, January 14, 1995) and is described as an ‘economist and businessman’, who is also a ‘former Partido Popular member of parliament’, (The Globe and Mail (Canada) March 2, 1996), the theme of getting rid of employment rights is a constant theme here, and the predicament he describes now seems a commonplace after the imposition of the neo-liberal reforms he advocated:

What jobs are offered are only on short-term contracts, with six months being the norm. With a third of the Spanish labour force now on limited contracts, there is mass insecurity about work and the future.

When Schwartz’s party gained power he when, chief economist at Madrid stockbroker Fincorp AV he estimated for the Financial Times that the unemployment “figures may not be bad as they look” (IPS-Inter Press Service, May 7, 1996).  Schwartz was termed a “Spanish Eurosceptic” by the Times, January 11, 1997, encouraging ‘genuinely democratic’ Britain to go it alone outside monetary union. His often quoted reference (to an IEA conference):

“When debating the euro, economic analysis usually counts for nothing. Monetary union is peddled as a political nostrum to cure all ailments. I sometimes think that the Common Market should not have been founded in Rome but in Vienna, on Dr Freud’s couch.

This adds that:

“Senor Schwartz is a member of the smallest and most exotic tribe in a Spain that has grown fat on handouts from Brussels — that of the euro-escepticos.  The President of Fundesco — a think- tank that studies the effects on society of information technology — he is forthright in the manner of a Tory backbencher, although clearly rather more of an intellectual. Detested on the Spanish Left, his weekly column in El Pais seldom fails to raise the hackles of Socialists and communists.”

Faster Cato!

The Cato Institute was named after a series of essays written under the alias “Cato” (after Cato the Younger, an advocate of the Republic under Julius Caesar) of John Trenchard and Thomas Gordon, chapter titles, which still seem to have some relevance to today, although written in the 1720s include:

*The fatal Effects of the South Sea Scheme, and the Necessity of punishing the Directors.

*The Arts of misleading the People by Sounds.

*What Measures are actually taken by wicked and desperate Ministers to ruin and enslave their Country.

*A Letter from John Ketch, Esq. asserting his Right to the Necks of the overgrown Brokers.

The Cato Institute was founded in 1977 by Edward H. Crane, a member of the Mont Pèlerin Society, and Cato defines itself as:

The Jeffersonian philosophy that animates Cato’s work has increasingly come to be called “libertarianism” or “market liberalism.” It combines an appreciation for entrepreneurship, the market process, and lower taxes with strict respect for civil liberties and skepticism about the benefits of both the welfare state and foreign military adventurism.

Crane is also the publisher of Regulation magazine, which, its web site informs us, has passed through the hands of several right-wing institutions:

Published since 1977, Regulation was started by the American Enterprise Institute and acquired by the Cato Institute in 1989. Past editors include Murray Weidenbaum and Supreme Court Justice Antonin Scalia; Walter Olson and Peter Huber, now both senior fellows at the Manhattan Institute; Christopher C. DeMuth, the current president of the American Enterprise Institute; and William Niskanen, chairman of the Cato Institute. Peter Van Doren-a former professor at Princeton and Yale-has edited the magazine since 1999.

Cato’s other founder was Charles Koch, chairman and CEO of Koch Industries, and the charitable foundation that bears his name, and the Hayek Society based at the LSE.

*Back to the The Institute for European Defence and Strategic Studies


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