Anyone embarking on reading Richard Cockett’s Vienna: How the City of Ideas Created the Modern World, would be advised to take heed of ecologist William Rees’s warning about the nature of ideas. Rees cautions that human beings do not experience or act on reality. Instead, we tell stories that may or may not correspond to reality. The more often we tell a story, the more the connections in our brains solidify and screen out anything contrary to that story. We then come to believe that our story corresponds to reality. In Cockett’s erudite and masterful telling, Vienna itself becomes a story, or rather multiple stories, enlightened and humane, pernicious and destructive, that have shaped not only that beautiful city but the world.

The book comprises two metanarratives. In the first of these, Cockett describes Vienna’s Golden Age before the first World War, a city in which Freud, Mahler and Klimt were only the most visible stars in an incredibly vibrant culture of learning, art and music. He describes how the war brought this Golden Age crashing down, as the end of the Austro-Hungarian Empire left a new country, Austria, starving, isolated and impoverished. From the ashes of the war, the Social Democrats of Red Vienna embarked on the most radical democratic social experiment in the world at that time, only for that experiment to be brutally demolished with the rise of fascism, the Nazi takeover of Austria, and the second World War.

Cockett’s description of the ecosystem that characterised Red Vienna’s astonishing creativity is stimulating. The city was imbued with a rich intellectual and artistic culture. Central to this was the philosophy of bildung – the conviction that the highest calling in life was the pursuit of intellectual self-improvement, valuing the personal growth of mind and spirit over the acquisition of wealth and status.

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This conviction, which could be pursued regardless of ethnicity, religion or gender, found its physical manifestation in multiple ways. It was manifest in Vienna’s hundreds of cafes, which were forums for countless informal classes and discussion groups, in the amateur zoos, herbariums and laboratories in the bedrooms and bathrooms of Vienna’s middle class, and in the city’s famous Circles – informal gatherings of botanists, psychoanalysts, economists and many more.

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A Viennese education, Cockett writes, was as much informal as formal, where the coffee house could provide as rigorous an education as the classroom, and private classes or the family home could offer as stimulating an environment as any university course. This rich melee ignored boundaries between disciplines and encouraged thinking beyond the confines of existing knowledge. The vital element in the mix were Vienna’s Jewish intellectuals. A persecuted minority, they enthusiastically embraced the philosophy of bildung and became the core of Red Vienna’s intellectual ecosystem.

The Jewish intellectuals who formed the thinking heart of Red Vienna either fled or were murdered

Innovation and discovery in music, architecture, philosophy, physics, biology, psychology, economics and mathematics were all part of the remarkable fruits of Red Vienna’s open and transgressive culture. Innovations included the music of Arnold Schoenberg and Anton Weber, the logical positivism of the Vienna Circle of philosophers, the architecture of Otto Wagner, Joseph Frank and Adolf Loos, the mathematical breakthroughs of Kurt Godel, the pioneering work of Marietta Blau in particle physics and Lise Meitner in nuclear fission, and Eugen Steinach’s breakthrough research in the field of endocrinology, not to mention world-changing ideas in psychology and psychoanalysis, and the beginnings of the Austrian School of free market economics.

The remarkable intellectual and social experimentation of Red Vienna came to an abrupt halt, however, when the Social Democrats lost power in 1934. It was subsequently annihilated with the German annexation of Austria in 1938. Germany’s race laws were applied to Austria within a single day of the Nazi takeover and Jewish intellectuals were immediately purged from their posts. An orgy of unrestrained violence followed. The Jewish intellectuals who formed the thinking heart of Red Vienna either fled or were murdered. Before the Anschluss, about 200,000 Jews lived in Austria, the overwhelming majority in Vienna. Only about 11,000 survived to the end of the war.

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In proportion to their numbers, Austrians played an outsized role in the Holocaust. It is estimated that Austrians comprised 40 per cent of the staff at the death camps. The Nazi-hunter Simon Wiesenthal calculated that Austrians were responsible for about half of the deaths in the Holocaust. According to historian Bertrand Perz, “There is not one known case in which an Austrian quit his office because he or she rejected the idea of exterminating humans.” Many, many Viennese had come to mistake pernicious ideas for reality.

In an abrupt change of focus and tone, the book’s second metanarrative sets out the influence of Vienna’s emigres and exiles cast across the world. In particular, Cockett charts the long gestation of the Austrian School of Economics from its origins in Red Vienna to its global influence in shaping the current free market economic and political order.

The Viennese economists of the 1920s had a shared goal with the Social Democrats in that both were searching for a means to combat the totalitarianism, not only of fascism, but also communism. These economists, however, also opposed social democracy and became the principal critics of Red Vienna.

Two ideas were central in their thinking. The first idea, attributed to Friedrich Hayek, is that knowledge is too dispersed and partial in a modern society for even the most well-informed experts to plan an economy. The Vienna economists criticised Red Vienna’s centralised planning as unworkable, arguing instead that only free markets could allocate scarce economic resources efficiently. Their second idea concerned the definition of what constitutes “value” in a capitalist economy.

The city was imbued with a rich intellectual and artistic culture. Central to this was the philosophy of bildung – the conviction that the highest calling in life was the pursuit of intellectual self-improvement

The then prevailing “labour theory of value” held that the value of any product was the sum of the inputs needed to make it, primarily the cost of labour. Carl Menger, the founder of the Austrian School, argued instead that it was the worth that buyers attach to a product in the marketplace that determines its value. Value, Menger insisted, is not inherent in goods, value is a judgment made by consumers. This new theory of value marked a transformation in economics – a transformation that Oscar Wilde might have characterised as one in which people came to know the price of everything and the value of nothing.

In 1947, Hayek founded the Mont Pelerin Society to roll back the collectivist Keynesian-style planning that was being adopted across Europe in the aftermath of the war. The Mont Pelerin Society came to act as the centre of hundreds of other free market-oriented think tanks around the world founded from the 1950s onwards. Though international, it was the Anglo-American contingent of the society that was to prove most influential. British politicians who would become central to the Thatcherite revolution of the 1980s began to attend meetings, including Enoch Powell, Geoffrey Howe and Keith Joseph. In the US, billionaire Charles Koch embraced the Austrian School’s ideas and set up the Cato Institute and the Centre for the Study of Market Processes, which were to prove highly influential during the Reagan administrations.

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The 50 years since then have seen a transformation of the global economy along free market lines. In that time the world economy has changed from a system based on manufacturing to a predominantly financialised economy based on consumerism; corporations have grown as a result of deregulation to global scale and power; and the “knowledge economy” – a concept not surprisingly created by intellectuals – has come to valorise “highly skilled knowledge workers” whose “value” in the marketplace far outstrips that of essential workers, including those working in healthcare and essential services.

Towards the end of the book, Cockett tells the bizarre story of the psychoanalyst Wilheim Reich and his Orgone Energy Accumulator. Before he moved to America, Reich had “invented” a device the size of a telephone box which, he claimed, amplified orgone, a previously undiscovered energy composed of vital atoms of the life force. It was complete nonsense, of course, but the Energy Accumulator found a sizable market in the 1960s counterculture in America.

Parodied as the Orgasmatron in Woody Allen’s 1973 movie Sleeper, Reich’s bizarre device provides an apt, if disturbing, metaphor for the global economic order we all now inhabit. In the world which the Viennese have bequeathed us, we are living in an orgasmatron of consumerist materialism that is destroying both society through inequality and the planet through the production of waste and greenhouse gases.

This always-on, desire-stimulating machine is what political systems have come to serve, and no one has yet figured how to turn “it” off – “it” being the culture we all accept as unchangeable reality. Once again, we have come to believe the story corresponds to reality. Or as Woody Allen, again, has written, “More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness. The other, to total extinction. Let us pray we have the wisdom to choose correctly.”

For anyone interested in how we got here and how ideas shape our minds and our world, for good and for ill, Vienna is essential reading.

Ian Hughes is author of Disordered Minds: How Dangerous Personalities are Destroying Democracy, and a senior research fellow at the MaREI Centre at UCC.

Further Reading

Four wartime books by Viennese authors continue to define western political and economic debate.

Friedrich Hayek’s The Road to Serfdom (Routledge, 1944), an eviscerating critique of the Keynesian planned economy, is a foundational text of free market economics.

Karl Popper’s The Open Society and Its Enemies (Routledge, 1945) argues that only “open societies”, in which governments are open to being proved wrong, can defend against totalitarianism.

Joseph Schumpeter’s Capitalism, Socialism and Democracy (Harper & Brothers, 1942), with its concept of creative destruction, is among the best descriptions of capitalism ever produced.

Karl Polanyi’s The Great Transformation (Farrar & Rinehart, 1944), a radical critique of mass consumption and materialism, is seen by many as prophetic in our age of cascading crises.

A more recent book, Stuart Jeffries’s Grand Hotel Abyss: The Lives of the Frankfurt School (Verso, 2016) provides an entertaining account of the leading left-wing critics of Austrian School economics.