Here’s how Wikipedia describes the Kabouters:
Kabouters were a Dutch anarchist group in the 1970s. It was founded by Roel van Duyn and one of its objectives was to set up an alternative society based on Van Duyn’s ideas as stated in his book,“De boodschap van een wijze Kabouter” (The Message of a Wise Kabouter). Van Duyn for some time worked at an organic farm and asked the farmer if they were going to get a harvester. “No,” the farmer responded “Noisy machines chase away the kabouters [Dutch gnomes, elves or leprechauns], and we need them to keep our plants healthy.” That is why Van Duyn used this image.
While once again wading through the Discordian Archives the other day, I stumbled upon this startling document produced by the Ancient Illuminated Seers of Bavaria which demonstrates that Greg Hill at least had a clue as to who the Kabouters were.