ACROSS the cobbles of Vienna’s Michaelerplatz the world of empires, waltzes and mutton-chop whiskers glowers at the modern age of psychoanalysis, atonal music and clean shaves. In one corner, the monumental, neo-baroque entrance to the Hofburg palace, seat of the Habsburgs; in the other, the Looshaus, all straight lines and smooth façades, one of the first buildings in the international style. This outcrop of modernism, designed by Adolf Loos, was completed in 1911, less than 20 years after the dome-topped palace entrance it faces. But the building embodied such a different aesthetic, such a contrary world view, that some wondered whether a society that produced such opposites in quick succession could survive. The emperor Franz Joseph is said to have kept the curtains drawn so he would not have to look at the new world across the square.

The sceptics were right. Imperial Viennese society could not survive. But the ideas and art brought forth during the fecund period of Viennese history from the late 1880s to the 1920s endured—from Loos’s modernist architecture to Gustav Klimt’s symbolist canvasses, from Schoenberg’s atonal music and Mahler’s Sturm und Drang to Ludwig Wittgenstein’s philosophy. Those Viennese who escaped Nazism went on to sustain the West during the cold war, and to restore the traditions of empiricism and liberal democracy.

This ferment was part of a generational revolution that swept Europe at the end of the 19th century, from Berlin to London. But the Viennese rebellion was more intense, and more wide-ranging. And it provoked a more extreme reaction. Hitler arrived in Vienna from the Austrian provinces in 1908 and developed his theories of race and power there. Vienna was thus the cradle of modernism and fascism, liberalism and totalitarianism: the currents that have shaped much of Western thought and politics since Vienna itself started to implode in 1916 until the present day. It has been the Viennese century.

What distinguished pre-1914 Vienna from most other European capitals, and what gave the Viennese school its particular intellectual tang, was that it was an imperial city rather than a national capital. Vienna was the heart of an Austro-Hungarian empire of about 53m people that stretched from Innsbruck in the west almost as far as the Black Sea in the east. After 1867 the empire was divided into two: a Magyar-dominated Hungary, ruled from Budapest, and a heterogeneous, multi-ethnic, multilingual other half, ruled from Vienna. In deference to its multinational character, this half was not called Austria but was often referred to as Cisleithania, named after a tributary of the Danube.

In the second half of the 19th century Franz Joseph’s subjects poured into the city: Italians, Slovaks, Poles, Slovenians, Moravians, Germans and, especially, Czechs. By 1910 Vienna had a population of 2m, the sixth-biggest city in the world. Fortunes made in the fast-industrialising empire, many by Jewish and assimilated Jewish families such as the Wittgensteins and Ephrussi, changed the urban landscape. Their enormous palaces adorned the Ringstrasse, the city’s most elegant boulevard. By 1914 Jews made up about 5% of Cisleithania’s population. They did not enjoy rights as a nationality or language group, but benefited from full civil rights as individuals. As Carl Schorske, the greatest historian of the period has written, they “became the supranational people of the multinational state, the one folk which, in effect, stepped into the shoes of the earlier aristocracy. Their fortunes rose and fell with those of the liberal, cosmopolitan state.”

Vienna was a mixture of classes and nationalities, faiths and worldviews. Order a Wiener melange in a Viennese coffee-house today, suggests Steven Beller, a historian of Austria, stir the hot milk into your bitter coffee, and imperial Viennese culture emerges, a dissolving of differences to produce something fresh. The Viennese cultural elite encouraged intellectual collisions to give birth to the new. “There was sperm in the air,” as the writer Stefan Zweig somewhat off-puttingly put it.

Amid a babble of peoples and languages—one in which, as elsewhere at the time, gender roles were being redefined—Viennese thinking was driven by an urge to find universal forms of communication. It aimed to discover what people had in common behind the façade of social convention, “to show modern man his true face”, in the words of Otto Wagner, an architect. Out of this came some of the most important intellectual schools of the 20th century, as well as the influential, and often highly eccentric, characters who went with it. These included one Sigmund Freud, who developed psychoanalysis in Vienna, in order to expose the common archetypes of the unconscious.

Ludwig Wittgenstein’s “Tractatus Logico-Philosophicus” remains the most famous text of Viennese philosophy. The pioneering logical positivism of the Vienna Circle, dominated by Moritz Schlick and Rudolf Carnap (both originally from Germany) was probably of greater influence, setting the scene for modern analytical philosophy with its strong affinity for the sciences. The most accomplished of the circle was Otto Neurath. On top of his philosophy, he revolutionised the transmission of knowledge with new ways of translating complex information into simple, graphic pictograms: to make knowledge accessible was to make it democratic. All sorts of formats for data visualisation in use today can be traced back to these “Isotypes” (example on next page).

The Viennese school also pushed into new fields, such as, famously, sex. Before Freud, there was Richard Krafft-Ebbing, who studied in Graz before coming to Vienna and in 1886 published “Psychopathia Sexualis,” the first attempt to apply some rigorous methodology to the study of sexuality. He drew on court cases to analyse homosexuality and bisexuality (albeit often in Latin). His work popularised the terms sadism and masochism. (Leopold von Sacher-Masoch, eponym to the latter and author of “Venus in Furs,” though a subject of the emperor, was not Viennese.)

It was partly the emperor himself who opened the way to modern sensibilities. Ultra-conservative in taste he may have been, but Franz Joseph’s duty was to all the peoples of his empire, and he tried to guarantee the freedoms—of movement, of religion, of the press and of equal rights—that the liberal constitution of 1867 enshrined. So Europe’s crustiest old monarchy often supported some of the most avant-garde artistic projects of the day, such as the Vienna Secession movement of 1897, in the interests of strengthening the universal language of art and architecture that might unite the empire. Secession artists were engaged to design the empire’s postage stamps and currency. The emperor might have drawn his curtains against the Looshaus, but he let it be built.

Anschluss and after

The tensions and collisions so fruitful to the cultural life of its capital were less salutary for the empire as a whole. Assailed by the rising forces of nationalism, particularly pan-Germanism, the cosmopolitan state began to crumble. The influx of peoples to Vienna provoked increasing resentment among the German working class; immigrant Czechs in particular proved willing to work for less money in worse conditions. At the same time Czech, Serbian and other nationalists increasingly agitated for independence.

Jews, as the supranational people of the multi-ethnic state, readily became the target of every nationalist enemy of the empire. Georg Schoenerer, son of a successful Viennese industrialist, was the first to turn anti-Semitism into a political programme, denouncing the “sucking vampires” who knocked at the “narrow-windowed house of the German farmer and craftsmen”. Unemployment, rising prices and a lack of housing in Vienna fuelled the anger of many Germans after 1900, leading to frequent riots and violent attacks on other nationalities. Karl Lueger channelled Schoenerer’s anti-Semitism into a political movement, campaigning to be mayor on the slogan “Vienna is German and must remain German”. His explicit rejection of the multi-ethnic character of Vienna brought him into direct conflict with the emperor. Lueger won a majority on the city council to elect him mayor in 1895, but for two years Franz Joseph nobly refused to appoint him because of his anti-Semitism. Eventually, in 1897, Franz Joseph bowed to popular pressure, and Lueger ruled the city until 1910.

Portrait of Adele Bloch-Bauer I: Gustav Klimt That, essentially, was the beginning of the end of liberal Vienna. After the war and the end of the monarchy there was a brief flourishing of progressive social democracy in the city, the era of “Red Vienna”. But all the time, in the new, truncated republic of Austria the more conservative provinces slowly tightened their grip on the country. In 1933 Engelbert Dolfuss seized power in the name of Austrofascism, which gave way to Nazi fascism in 1938 with the Anschluss. Hitler, who moved to Vienna from Linz in upper Austria, had been transfixed by Schoenerer and, particularly, Lueger. He hungrily absorbed all his hero’s complaints about the Jews and the mixing of “races”; he called the Viennese a “repulsive bunch”. Thus liberal Vienna had produced its exact opposite: militant nationalism and anti-Semitism. During the interwar years these forces gradually took hold of the new Austria and from the 1920s onwards many began to flee abroad. One of the last out, in 1938, was Freud. Most of the exiles went to Britain and America, where they were often gratefully received. The most valuable aspect of Viennese thinking for the West at the time was the application of up-to-date “scientific” methods to fields that had previously been left to amateur theorising, or that had been altogether neglected. This transformed many aspects of life.

The Viennese tended to be more persuasive than the intellectual competition

Take the work of Charlotte Buehler, a pioneer in child psychology. She was born in Berlin to Jewish parents, but moved to Vienna, together with her husband Karl, in 1922. At the University of Vienna, through painstaking direct observation, the Buehlers worked out their influential response-testing techniques: ways to calibrate a child’s development, through the accomplishment of gradually more complex tasks. These tests are, in effect, still in use today. By six months, an infant should be able to distinguish between a bottle and a rubber doll. At 18 months, he or she was expected to respond to the order “No”.

Often the Viennese intellectuals leapt ahead by transferring knowledge gained in one discipline to others, gloriously indifferent to the mind-forged manacles that have come to stifle modern academia and research. In America, several Viennese-trained devotees of Freud used the tools of psychoanalysis to revolutionise business. Ernest Dichter, author of “The Strategy of Desire,” transformed the fortunes of companies through marketing that purposely tapped into consumers’ subliminal desires.

Another example was Paul Lazarsfeld, the founder of modern American sociology. Born of Jewish parents, he studied maths in Vienna, completing his doctorate on Einstein’s gravitational theory, and thereafter applied his expertise in data and quantitative methods to what became known as opinion, or market research—finding out what people really feel about anything from television programmes to presidential candidates. In Vienna in 1931 he conducted the first scientific survey of radio listeners, and also co-wrote a revolutionary study of the devastating social and psychological impacts of unemployment. His team of investigators conducted what is now called “field research”, meticulously recording the results of face-to-face interviews with laid-off factory workers in the town of Marienthal.

Moving to America in 1933, Lazarsfeld went on to found the Columbia University Bureau for Social Research. His team was the first to use focus groups, developed with Dichter, his one-time student, and statistical analysis to delve into the mysteries of voter and consumer preferences or the impact of the emerging mass media. Lazarsfeld and others thus helped revivify moribund, antiquarian modes of inquiry, and re-equip them with the latest Viennese techniques, often saving entire Western intellectual traditions from decrepitude, or possibly extinction.

Pilgrims on the mountain

Of no field was this truer than political economy, where the “Austrian school” of men like Joseph Schumpeter, Ludwig von Mises and Friedrich Hayek strongly influenced the revival of liberalism and conservatism in the West after the second world war. These three were all quintessential products of late Habsburg Vienna. They were born in very different parts of the empire: von Mises of Jewish parents in Galicia (now Ukraine); Schumpeter of Catholic German-speaking parents in Moravia, now part of the Czech Republic; and Hayek in Vienna itself. Yet they were all schooled in the same liberal intellectual discipline.

Von Mises and Hayek, one of his students, saw earlier than most that by the interwar years the liberal era in Europe was being overwhelmed by the collectivism and totalitarianism of the right and the left. They subsequently devoted their lives to reversing the tide. Hayek, like the best of Vienna’s intellectuals, combined technical expertise in economics with a wide breadth of inquiry; as well as economics, he published on law, sociology and more. His greatest contribution was to restore intellectual rigour to the free-market school, expositing in detail the “price mechanism” to show that socialist economics could not possibly work in theory, let alone practice.

But Hayek was not just a dry theorist. He was also a relentless circus-master for the liberal cause. Emigrating to Britain in 1931, he was the author of the first call to arms for the liberal fightback, “The Road to Serfdom,” published in 1944. This was provocatively dedicated to the “Socialists of all Parties”, implying that at the end of the second world war all Britain’s political parties, including Winston Churchill’s Conservatives, had drifted into collectivism by advocating the welfare state.

To organise the fightback he founded the Mont Pelerin Society (MPS) in 1947. Named after the Swiss mountain where the first meeting was held (simply because the founding members couldn’t agree on a more appropriate alternative), the MPS was Hayek’s own Circle for liberalism. It fused the Viennese liberals in exile, including Karl Popper, who had just published The Open Society and its Enemies, with their embattled fellow-travellers from Germany, France, Britain and America, most notably Milton Friedman. Over the next decades the MPS spawned scores of think-tanks around the world dedicated to spreading the word of the Austrian school. Politicians often attended their meetings. The “Chicago school” of economists was made up largely of MPS members. After decades of quiet campaigning, Hayek’s ideas were taken up again by a subsequent generation of politicians in the mid-1970s, including Margaret Thatcher and Ronald Reagan.

The consensus on free markets and democracy won in the 1980s remained intact for decades—a tribute, in part, to the intellectual efforts of Franz Joseph’s Viennese. It also provides a clue as to why they have been so influential in the West. The Viennese school placed the lived experience of individuals—rather than the abstractions of class, race and nationalism favoured by their opponents—at the heart of their intellectual enterprises. Thus the empirical research of a Buehler or a Lazarsfeld tended to work with “the crooked timber of humanity”, as Immanuel Kant put it, rather than trying to straighten it out, as Marxists, fascists and all systematisers try to do. After a lecture by John Maynard Keynes, always the systematiser, Vienna-born Peter Drucker, the founder of modern management theory, saw the distinction in clear relief: “I suddenly realised that Keynes and all the brilliant economic students in the room were interested in the behaviour of commodities, while I was interested in the behaviour of people.”