Von Neumann and the Struggles of the 1930s

The political tumult after 1933 was as important for von Neumann as it was for the Viennese. Indeed, the evidence suggests that it was his observation of the social upheaval and shifting political alliances of the period that brought him back to game theory, after a 10-year hiatus.

In Germany, in April 1933, the Restoration of Civil Service Act marked the begin­ning of the “purification” of the universities, and the end of the academic world von Neumann had known. From then on, his correspondence shows him to have been greatly preoccupied with events, worried about the European political “balance”, and soon predicting a catastrophic conflict. In early 1935, in response to Nazi mathematician Ludwig Bieberbach’s campaign for a properly German, non-Jewish mathematics, von Neumann cut the ropes further with that country, resigning in protest from the German Deutsche Mathematiker Vereinigung. He was never to set foot in Germany again.

As of late 1937, when his wife left him, and he found himself going through a divorce and remarriage in Hungary, he spent increasing amounts of time back in his own country. One effect of this was to bring him in direct contact with Hungarian politics, and with its contamination of national life. May 1938 saw the passage of Hungary’s infa­mous “Balance Law”, which sought to reduce to 20 per cent the proportion of Jews in the professions and in financial, commercial and industrial enterprises of 10 employees or more. Von Neumann was struck forcefully by the emergence of the radical Right, and the turning of Hungarians against the Jews - the “internal Nazification” of the country, as he called it. By late 1938, he and his fiancee, Klara Dan, were preparing to get out of the country and beginning to think of persuading their families to do the same. The follow­ing year, Hungary was preparing further anti-Semitic legislation, and von Neumann’s letters continued to dwell on questions of rationality, politics and social equilibrium.

It was in early 1940 that von Neumann got to know Morgenstern, and they began what would eventually become a sustained discussion on economics, knowledge and games. In mid-May 1940, amid continued correspondence with Hungarian friends, von Neumann and his wife sought respite by driving across to the University of Washington, where he was to deliver a series of lectures on games. While these appear to have been mainly on chess and his 1928 paper, the sojourn was clearly pivotal for, immediately upon returning to Princeton that August, he threw himself into the development of a new theory of coalition-formation and stability. Discussing everything with Morgenstern, he produced “Theory of Games I (General Foundations)” (Morgenstern Papers, File: John von Neumann, 1940-1948). A key feature of the solution concept developed therein, the stable set, is the role played by arbitrary forms of discrimination, between players - or between social groups, with each acting as one player - with such discrimination having no justification other than its being accepted for reasons of history or tradition. To a Hungarian Jew, observing European political unrest, the social motif of arbitrary, historically contingent discrimination was an essential one.

By mid-1941, on the foot of continued discussions, and the study of von Neumann’s early draft, Morgenstern could report that he and “Johnny” had started working on a treatise together. Energized by this, and particularly by von Neumann’s scathing criticism of mathematical economics, Morgenstern wrote a corrosive review of Hicks’s 1939 Value and Capital, and produced a draft paper titled “Quantitative implications of maxims of behavior” (see Morgenstern 1941a, 1941b).

It is important to note that while they were writing the book, von Neumann’s atten­tion to the project on games was already facing great competition from other uses of his time. He had by then become a very active, indeed peripatetic, mathematical adviser to various military organizations, on matters that included the use of game theory in certain conflict situations. In early 1943, he departed to England for a long stint as advisor to the Navy. By 1945, he was playing a central role at Los Alamos, in the development of the atomic bomb.