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Profile

WILHELM ROPKE:
APOSTLE OFA
HUMANE ECONOMY

Patrick M. Boarman

ilhelm ROpke was a German with a singular choice. It became clear that a consciously con-
history. He was born at Schwarmstedt near structed economic order is not only necessarily ty-
Hanover in 1899, the son of a country doctor and rannical—the designers and implementers of such
the descendant of a long line of Lutheran pastors. an order are the rulers of those being ordered—but
The year of his birth, marking a transition not only is also exclusively national (and nationalistic), since
between two centuries, but between two pro- only one national economy at a time can be planned.
foundly different worlds, had a special significance And with that kind of nationalism (which the War
for Ropke who, as he pointed out to me at a later was allegedly fought to eradicate), “my generation,”
time, felt himself to be a true child of the 19th cen- declared Ropke, “wanted nothing to do.”
tury, though with one foot in the 20th. The Great In pursuit of his self-prescribed mission, he took
War, in which Répke served and was decorated for his doctorate in economics at the University of
valor, was a shattering experience for the teenaged Marburg in 1921. Subsequently, he taught econom-
recruit, collapsing the world of his youth while of- ics at the Universities of Jena and Graz, and, at the
fering nothing to replace it.The insanity of that frat- age of 29, received an appointment as full professor
ricidal conflict and the barbarities he witnessed in at Marburg. The galloping inflation which beset the
the trenches of Picardy came to stand, for ROpke, as Republic in 1921-23 and the havoc it wreaked
symbols of the modern condition at its worst: the amongst the German middle class left an indelible
physical and moral degradation of “mass existence, impression on the young economist and provoked him
mass feeding, mass sleep.” His anguish and indigna- to the battle with inflation which was to continue all
tion over the war were ultimately transmuted into his life. In 1931, nevertheless, in a gesture characteris-
anger at the “unlimited powers of the state” which tic of his realism and balance, Ropke, then serving as
had inflicted this horror on mankind. an advisor to the Briining government, vigorously op-
It was the experience of the war, ironically, that posed its deflationary policies to which he attributed
was to furnish Ropke with his life’s mission: to dis- the rising unemployment in Germany. In this sense,
cover and proclaim the economic, social and moral Ropke was espousing Keynesianism five years be-
truths that would prevent war, preserve freedom Jore Keynes did so in his monumental treatise, The
and salvage what was left of human dignity. The General Theory of Employment, Interest, and
search led initially to socialism. For was it not a capi- Money [1936]. Had Ropke’s urgent pleas to the
talistic society that had spawned the War? But then, German government to enact “Keynesian” policies
for ROpke and a handful of like-minded contempo- been taken seriously, the unemployment crisis con-
raries, there were second thoughts and intensive ceivably could have been mitigated which, in turn,
reflection on the ultimate consequences of such a might have averted the assumption of power by

WILHELM ROPKE: APOSTLE OF A HUMANE ECONOMY 57



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Hitler. In the event, the advice of the young econo- exchange student, ROpke’s name, other than his gen-

mist, unfortunately for the world, was rejected. eral political orientation, meant little to me—his
In later years, Ropke gave full credit to Keynes major works were not yet available in English. Also,
for his contribution to the advancement of theory, economics was not yet my discipline.l had come to
but also warned against making temporary remedies Geneva fresh from Columbia University where I had
for depression permanent policy prescriptions. He received a master’s degree from the School of Jour-
charged Keynes with doing psychological damage nalism; my undergraduate work was in languages,
to the propensity to save—a crucial pre-requisite history, and philosophy. But here I was, anyhow,
to capital formation and thus to progress—and with pursuing a degree in political science and in R6pke’s
accustoming a new generation to a kind of economic classroom at the suggestion of a friend, i.e., more or
logic which revolves solely about the question of less by accident, sampling his course entitled “Euro-
how “effective demand” can be most securely main- pean Economic Reconstruction” —a highly pertinent
tained at the highest possible level. This error was label, given that Europe, in 1946, was still very much
to prove fateful, he maintained, given that the real a basket case economically, and with the defeated
problem of the postwar era was how an inflation- enemy, Germany, still knee-deep in rubble.
ary boom can be braked in time. As I think back on that first encounter, I was not
Those were the years not only of economic tu- prepared to be put under a spell as was the case
mult but of real political danger to the young pro- when Ropke strode into the classroom: a man in his
fessor and his family. Anti-totalitarian to the core, middle forties, of medium height and build, with a
Ropke came into early conflict with the tribunes of handsome leonine head and sandy hair, ruddy com-
the Third Reich. Even before the elections to the plexion, blue eyes that burned with some inner fire,
Reichstag in 1930, he had delivered a warning to but free of any hint of fanaticism, a voice of heavy
the farmers of Lower Saxony which was unmistak- timbre and somewhat louder than normal due to a
ably directed against the Nazis.“No one” he declared, chronic condition of deafness, and finally, Roépke’s
“who votes National Socialist on September 14, can signature trait, craggy brows shading the intent eyes.
later say he had not known what the result would His lecture was in English which he used with sen-
be. He should know now that he voted for chaos sitivity and precision. His text was rich with literary
instead of order, destruction instead of reconstruc- and historical allusion: a verse from Goethe, a maxim
tion. He should know that he voted for war within from Montaigne, a quip from Shakespeare, or apt quo-
and for mindless destruction without. Vote, but vote tations from de Tocqueville, Jacob Burckhardt, Edmund
so that you will not share the guilt for the disaster Burke, Benjamin Constant or Adam Smith. Even after
that is likely to befall us!” In an address delivered at all these years, I feel still the intensity and the power
Frankfurt on February 8, 1933, one week after of his thought and of his presentation which combined
Hitler's assumption of the chancellorship, he de- passion with a wit that was sometime playful, some-
scribed the new regime as a “new form of barbar- times mordant, never wounding of another person,
ism” A threatening visit to his family by representa- but always precisely on point. The finely honed hu-
tives of the SS soon followed. mor was infectious, keeping his hearer’s lips slightly
Rather than knuckle under to the Nazis, Ropke curled in anticipatory merriment.
quit his post at Marburg and chose exile, one of the It was clear in Ropke’s classes that his consum-
first German professors to do so following Hitler's mate rhetorical and pedagogical skills were but means

takeover. It was the beginning of a tumultuous and to overriding ends. Thus, his lectures, of which I kept
perilous odyssey for him and his family, first to Hol- faithful, if sketchy notes, while they were minor mas-
land and Switzerland, then to Turkey where the Kemal terpieces of economic wisdom, were more than just
Ataturk government entrusted him with the reorgani- exercises in economic analysis. They were infused with

zation of the department of economics of Istanbul Ropke’s own deep humanity and his burning devo-
University, and finally, in 1937, to the Institute in tion to the grand principles of liberalism in the best
Geneva (a division of the University of Geneva), sense, i.e., to the causes of human freedom and hu-
whose chair of economics he occupied with éclat man dignity. At Ropke’s feet, the student was the re-
and growing renown for the next three decades. cipient not only of his acute insights into the economic
issues of the day; he learned that the things which lie
Beyond Supply and Demand beyond supply and demand are the most important
However, in 1946 I was not privy to all of this things, and that an economist who understands only
information. Indeed, as a recently arrived American economics doesn’t even understand that.

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Ropke’s students learned quickly as well that al- economists of that time seemed to reduce. In this
though he was an extraordinarily accomplished textbook and in his great trilogy The Social Crisis

economist with a worldwide reputation for the of Our Time [1942], Civitas Humana [1944], and
depth and rigor of his scholarship, he was no ivory International Order and Economic Integration
tower academician. He was a fighter and contender [1945], Ropke argued for the rejection of socialism
from the beginning—the quintessential public in- and the reconstitution of the market economy as
tellectual. In an unending stream of scholarly trea- the only economic system compatible with human
tises and articles in the popular press, he, figuratively freedom. The market economy for which he pleaded,
speaking, went into the street and onto the barri- however, differed fundamentally from the system
cades and there defended, as few before him, the which, under the vague and emotion-charged label
ideals in which he so fervently believed. It was our of “capitalism,” had persisted in Europe until the
impression in his classroom that he was un homme 1930s and then perished of its own degeneracies.
engagé in every sense. He was a “clerc” to use Julien Capitalism for Ropke was a highly imprecise noun,

Benda’s word, who kept the faith. In discharging this freighted with the ideological ballast of the nine-
mission, he had the advantage of a singular literary teenth century which gave birth to the term, and even
gift. His prose style—in German-——was so transpar- today carrying the value tags, positive or negative, of

ent, so lucid, so incisive and rich in compelling allu- whomever happens to be defining it. In contrast, the
sion, so far removed from scientific jargon that it market economy, at its core and unencumbered with
commanded the attention not just of an elite but of labels from the right or the left, was for him an ideo-
numberless readers who would otherwise have logically neutral term embracing those universal hu-
been immune to his message. man behaviors associated with acquiring and using
Ropke’s scholarly output was even then phenom- economic resources and famously codified in the laws
enal but given the academic demands a graduate of supply and demand. Indiscriminate mixing of the
student was under, it was possible to sample only a concept of a market economy with “capitalism” re-
few of his books. There was one in which I, as a sults in the attribution of qualities to the market
neophyte economist, was particularly interested, his mechanism that properly are only ascribable to some
basic economics textbook, Die Lebre von der specific capitalist societies of the past, notably those
Wirtschaft, first published in Austria in 1937. Great of the 19th and early 20th centuries.
was my rejoicing when I found in the Institute's li- Thus, the market economy that was installed in
brary a French version of that book, Explication West Germany after World War II—and which the
Economique du Monde Moderne.] read it virtually ‘Germans chose to call a “social market economy” —
at one sitting, finding it to be not only a splendid represented a deliberate attempt to divorce the
layman’s introduction to the arcane science of eco- market idea from historical capitalism. The lasting
nomics but an eloquent anti-totalitarian tract as well. achievement of Ropke’s friend, Ludwig Erhard (post-
I promised myself at once to translate the book into war Germany's first economics minister and later,
English [subsequently rendered from the German successor to Konrad Adenauer as chancellor), was
as Economics of the Free Society, 1963].The circum- his abstraction of the powerful concept of the market
stances of the publication of the French translation from the institutional matrix of nineteenth-century
were in any event remarkable. It appeared in Paris capitalism in which it was embedded and his dem-
in 1940 under the noses of the Nazi censors. “The onstration that the market can yield a quite differ-
probable explanation of this miracle,” Ropke wrote ent result within a different institutional framework.

later, “is that the German censors were too unedu-
cated to understand the book, while those Germans The “Third Road”

who understood it were civilized enough to rejoice The social market economy itself, in turn, ech-
at such a discovery and not to betray it. There were, oed one of Ropke’s conceptions of a much earlier
indeed, many Germans who reported in later years date, that of the “third road.” In his numerous elabo-
of how happy they were during their Paris sojourn rations of this idea, he showed how the old antith-
to come upon the book. Habent sua fata libelli.” eses of laissez-faire and planned economy could be

Economics of the Free Society showed a way transcended in a new synthesis of the “third road,”
around or through the frozen dialogue between the later rebaptized as a “humane economy.” In such an
adherents of old-style capitalism on the one hand economy, the laws of supply and demand, while al-
and of a goverament-run economy on the other, to lowed full play to maximize the wealth of the na-
which much of the discourse among academic tion, were yet constrained within a framework of

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(market-conforming) rules including, importantly, famed “middle way” of Sweden? Virtually nothing.

those intended to preserve competition. The con- Thus, Sweden's overall public spending today is 63%
cept envisaged, as well, the continuous influencing of gross national product (GNP), compared to about
of economic behavior by extra-economic institu- 36% for the United States and 46% for Germany.The
tions rooted in moral and spiritual values (law, Swedish government spends 46% of Sweden’s GNP
tradition, religion, etc.). For in the absence of such on welfare alone, more than any other country, and
rules and institutions, the benevolent social outcomes the income taxes required to support this gargan-

of the pursuit by each individual of his self-interest, tuan public generosity take 59% of the pay of people
posited by the classical economists, are extinguished; earning as little as $30,000 a year. This is a middle
the market becomes an arena for a dog-eat-dog struggle. way, or a third way if you wish, which, until very
It is a thesis for which Russia today furnishes the un- recently, had pushed Sweden’s output per person
happy proof. In effect, the Russians have sought to from the third highest in the world (in 1970) to 18th
have the fruits of a free market and democracy but in 1998. It is true that growth in Sweden picked up
without being able or willing to put in place the in 1999 due to explosive growth in the information
infrastructure of civic and personal virtues that de- technology industry and to large infusions of capital

mocracy and economic freedom require. from such as Ford and Microsoft. Still, a recent pledge
For all the many years that the concept of the by Prime Minister Goran Persson to create another
“third way” has been imprinting itself on policy, es- entitlement, namely, the right of every person over 65
pecially in Germany, but in other places in Europe as to have a personal assistant, is startling. It suggests
well, thanks to Ropke, influential circles in the United that Sweden’s enormous expenditures for social
States and Britain have only recently discovered it. programs, which risk perpetuating its hitherto er-
In The New Yorker [of July 6, 1998], we are told that ratic swings from feast to famine, will continue.
Larry Summers, Clinton's then potent deputy secre- This has nothing to do with Ropke’s third way.

tary of the Treasury [and as of july 1999, secretary] is Indeed, he was a fierce opponent of the welfare state
“the leading intellectual exponent of the ‘third way; a in the form it had taken in his last years (the mid-
nascent, and occasionally derided political philosophy 1960s) precisely in such places as Sweden and in

associated with the names of both Bill Clinton and Great Britain, the United States, and especially in
Tony Blair [its central notion being] how to reconcile his native Germany. He believed every effort should
the free market with a social conscience.” be made to secure to those unequipped to play the

Even the First Lady was reported by The New market game a minimum standard of material wel-
York Times [September 22, 1998] as being engaged fare without, however, jeopardizing the voluntary
with scholars and bankers in “mapping a ‘third way’ arrangements made by individuals to provide secu-
between laissez-faire capitalism and the welfare rity for themselves and their families against the
state.” Amazingly, we are told in this same report that contingencies of age and sickness. The quest for se-
Mr. Clinton “was the man who could break the ideo- curity through “welfarism” and through a continu-
logical deadlock of left and right, for no one,” the ous expansion of the public sector in which the

report solemnly intones, “had yet coined the phrase state is looked upon as a kind of “fourth dimension”
‘third way’... ”! Some suspected that the “third way” able to satisfy the demands of any class for help,

in which the president was more urgently interested RoOpke held to be an illusion.
at the time was the one that might offer safe pas- In keeping with his commitment to “Mass und
sage between his imminent impeachment on the Mitte,” to the avoidance of extremes, ROpke wrote
one hand and a resignation in disgrace on the other. censoriously of the delusions of an unrestrained
Still, the President's difficulties may have foreclosed capitalism, of an obsessive “economism” in which
an historic opportunity to formally embrace the human society was led ineluctably towards a soul-
“new” thinking. One can only imagine Wilhelm less mechanization and standardization and he
Roépke’s consternation at all this, were he to know pleaded incessantly for the adoption of measures
of it—and perhaps he does. aimed at reducing the crowdedness and hothouse at-
The “third way” —understood as a path between mosphere of modern life. In this context, he was a
the extremes of a paleo-capitalism based on laissez- strong proponent of population controls, of decentrali-
faire on the one hand and a socialist economy on zation of industry, and of the securing of the remnants
the other—is, as noted, a ROpkean construct going of a rural way of life against urban erosion.
back to his earliest days as 4 publicist. One may ask: ROpke saw the unrestrained growth of popula-

what has this third way to do with, for example, the tion as helping to spawn the psychic and spiritual

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toxins afflicting the contemporary culture. He con- tomorrow. He took a dim view of much of modern

ceded that the power of modern technology has architecture, painting and music, and Le Corbusier’s
enabled living standards to increase along with well-known dictum, “Jl faut recommencer a zero,
growth of population. But he argued that living stan- provoked in him an explosion of scorn. In this con-
dards in the broadest sense, including many non- nection, he was fond of quoting Goethe’s verse:
material dimensions of the good life, would have
risen even faster if population growth had slowed. He who of three thousand years
And in his Economics of the Free Society he posed Knows not account to give
the plaintive question: “Why is it necessary that ev- Unknowingly through the darkness peers
ery enlargement of economic room which is From day to day to live.
achieved by the labors and the ingenuity of the ex-
isting population, be immediately filled by millions In this, he anticipated the excesses of “political
of new individuals instead of serving to increase the correctness” —whether from the left or the right—
well-being of those now on earth?” In this sense, and were he alive would be in the forefront of those
ROpke was an environmentalist before the term had exposing and denouncing it.
been invented. In today’s lexicon he would appear Exile though he was, ROpke remained deeply at-
as a slow growther. For him it was not a matter of tached to the nobler parts of his German patrimony.
turning back the clock—a fatuous romanticism As a German, he could write an incisive analysis of
which he repudiated—but of refusing to continue what he called the dark regions of the German
heedlessly along the path that had brought us to soul—Die deutsche Frage (The German Ques-
our present vexations. tion)—which attracted international attention when
it appeared at the end of the war and in which the
Spiritual Roots of a Humane Economy concatenation of events, movements, ideas, and na-
Ropke’s influence is hardly to be explained tional characteristics that made Nazism possible were
merely in terms of the contribution of Ropke the ruthlessly laid bare. Notwithstanding, it was for this
economist. Its deeper sources lie beyond economic German patriot with his unforgettable memories of
. science and are to be found in a comprehensive his Liineburger Heimat (homeland), a source of deep
understanding of human happiness, in philosophy personal disappointment and even anguish that no
and in religion. These aspects of his ceuvre were, in great German university thought it fitting after the
turn, decisively influenced by life in the small Ger- war to recall him, perhaps the most widely known
man village on the edge of the Lineburger Moors of German economists, to a chair of economics.
in which he grew up. The simplicity and natural- Nevertheless, his post in Geneva—the interna-
ness of this village existence left the sensitive youth tional center of a neutral state—served him well. It
with a host of memories which were to influence enabled him to take a more detached, a more Eu-
the whole cast and direction of his professional work rope-wide view, unencumbered by what might have
in economics and social theory. In later years, he proved to be awkward local allegiances. And if
remarked on how rare this experience of growing Geneva was not exactly Heimat, it was home.There
up in a village was becoming in the wake of an ever- he, his wife and companion-in-arms Eva, and their
advancing industrialism. son and twin daughters sent down roots. Indeed,
The failure to satisfy men’s souls while filling their Switzerland, a country in which the apparently old-
bodies to satiety, and the consequences of this spiri- fashioned bourgeois virtues of industriousness,
tual starvation, became in later years major themes morality, and self-reliance were not yet laughed at,
in Ropke’s programs for economic and social reform. came close to satisfying Ropke’s conception of an
As a young man, he was formed in the great classi ordered and organic community which still retained
cal traditions of the West and learned to see in Latin, the dimensions of the human. He was strongly at-
Greek, history, and literature, the indispensable keys tached to that small country. But his affection for
to the legacy of the past and thereby to the under- his own country nevertheless remained primary and
standing of the present. He never failed to be ap- he retained his German nationality to the end. This
palled by and to denounce the arrogance of the fu- attachment was acknowledged and reciprocated by,
turists and modernists for whom history, traditions, among others, his compatriot, Chancellor Ludwig
experience, and the moral and spiritual legacy of Erhard. Upon the news of Ropke’s death, Erhard sent
Western civilization were merely so much burden- his widow a telegram in which he praised Ropke as
some baggage holding back the advent of a better one of the strongest, most courageous fighters for a

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free society and an indomitable defender of the he would “stand up for the working men and women

rights and dignity of man.“I have lost a true friend, whose jobs are threatened by unfair trade deals done
he said, “who was unfailing in offering me guidance for the benefit of huge corporations.”
and strength. The German Government thanks him Where did Pat Buchanan claim to get his eco-
for his enormous contribution to the building of the nomic ideas? When Time magazine (in its issue of
scientific foundations of the social market economy.” February 26, 1996) posed this question to him, he
When Wilhelm Ropke died on February 12,1966, answered: Wilhelm ROopke, whom Time then de-
in his 67th year, at his home in Geneva, in the scribed as “an obscure German economist who died
floodtide of his powers, full of honors, and with a in 1966.” It is to Buchanan’s credit that he displayed
veritable mountain of achievement behind him—his a more accurate awareness of Ropke’s real stature

bibliography then comprised almost 900 works, includ- than the Time reporter. Doubtless too, Buchanan saw
ing some 30 books—this calamitous event was noted in Ropke’s philosophy of “the third road” a worthy

on the front pages of virtually every major newspa- exemplar for the United States. More wrong facts,
per in Western Europe. And for many days thereafter in any case, appeared in 1998 in Buchanan’s book,
Ropke’s life and works were the subject of extensive The Great Betrayal, in which, and apart from mis-
comment and analysis, not alone in professional eco- spelling Ropke’s name, he again claims intellectual
nomic circles, but in the popular media. kinship with Ropke, though his book is an aggres-
In the United States Ropke’s passing went prac- sively protectionist tract at odds with everything
tically unnoticed, though The New York Times did Ropke believed and taught concerning the interna-
manage to squeeze in a reference to it in four lines tional economy. Compounding the misinformation
in the back of the paper as follows: “Prof. Wilhelm was a lengthy review of Buchanan’s book in The
Roépke, a German economist and sociologist, died New York Review of Books [October 8,1998] which
suddenly in Geneva yesterday, following a heart at- misidentifies ROpke as an Austrian economist!
tack, his family said. He was a former advisor to the If Buchanan could find much in Ropke to sup-
German Government and author of many books on port his American-style “conservatism of the heart,’
economic subjects.” Worse, in another report of the it is also clear that the two would have parted com-
death,a conservative columnist in a Midwestern news- pany on a number of basic issues, though this is not
paper, otherwise admiring of Ropke and his work, re- the place to explore these. It suffices to note here
ferred to him as“this relatively obscure man”! And else- that unlike Buchanan, Ropke is an unequivocal sup-
where there was silence as well. The wire services porter of an international economy in which goods
carried no account of his passing. But this was sim- and capital and labor move freely across borders,
ply reflecting an unfortunate fact: though famous in holding that if the maximization of the welfare of
Europe, and well-known in Latin America and in Ja- the whole population is the legitimate goal of a
pan for that matter, R6pke was and is still not known market economy, protectionist policies collide di-
in United States by any but a few specialists. rectly with that objective by enforcing a lower level
of economic efficiency, both at home and abroad,
Roépke and American Economists than otherwise would be possible. A large part of
As late as 1996, this situation had not changed. his published work is devoted to this theme. To
But in that presidential election year,Americans were Ropke, Buchananite xenophobia and economic
about to encounter Ropke in a guise with which he autarky would have been simply anathema. Still,
probably would not have been altogether comfort- thanks to Buchanan, Ropke is today somewhat less
able. Audiences were startled to hear from one of “obscure” than he was.
the Republican candidates impassioned denuncia- As for mainstream economists, whose primary
tions of heartless employers and greedy corporations interests lay in the technical and mechanical details
that exported American jobs overseas in search of of economic processes and in their presentation in
profit. Such rhetoric had more commonly emanated mathematical form, R6pke entered their arena, if at
from ultra-liberal Democrats. The candidate in this all, as a quixotic figure to be endured rather than
case was Pat Buchanan.“Executioners” was the term taken seriously. For while he recognized the value
he applied to such as AT&T that lay off thousands of mathematics in clarifying complicated economic
of employees. “These companies are like the crea- interrelationships, he took a jaundiced view of what
tures in Jurassic Park, he told reporters. Were he he regarded as an obsessive preoccupation with it
to be elected president, he promised a crowd of and a corresponding neglect of the economics of
lustily applauding supporters in New Hampshire, the real world. The clairvoyance of Ropke’s rumina-

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tions on this subject is strikingly confirmed in the ingly in the ascendant, Ropke chose, at consider-

emerging consensus among leading economists— able risk to his standing in the profession, to stress
fifty years later—that abstract economics, the ex- those dimensions of the economic process that lie
cursion into the building of ever more arcane math- beyond the purely mechanical and quantitative.
ematical models, i.e., intellectual game-playing for Behind supply and demand curves, Ropke saw men
its own sake, with virtually no connection to reality, and women— passionate, weak, virtuous or flawed,
has failed dismally in the practical advancement of powerful or powerless as the case might be—but
human welfare. This was, after all, the raison d’étre all uniquely formed and imbued with dignity and
of the discipline proclaimed by its most eminent deserving therefore of being protected from those
founders, including, notably, Adam Smith and, at a who would order, plan, collectivize, or engineer
later date, the great Alfred Marshall. them in the pursuit of an “eternal Saint-Simonism,”

In a cogent summary of the parlous contempo- as he put it.
rary state of economics, John Cassidy wrote in The

New Yorker [December 2, 1996]: Ropke’s Conservatism

More significant, in accounting for the American
In the fifty years since [the death of Keynes], ignorance of and/or disinterest in Ropke, is that his
economics has been transformed into an ab- Weltanschauung—his total conception of economy,
struse discipline that often appears to re- society, and human destiny—has found relatively
semble a branch of mathematics.... Even those little-echo among those in this country who could
economists who do concern themselves with be presumed to be his closest ideological
practical subjects often tackle them on a level confreres the conservative economists, academic
so abstract that their work has few policy im- or other. Among these latter, a few of them giants
plications and, in the end, sometimes appears in their own right, will be found those who are
to be part of a giant academic game.... Conse- straightforward, unapologetic supporters of a laissez-
quently, politicians increasingly tend to ignore faire economy. But, as noted, one of Ropke’s major con-
academic economists and turn elsewhere for tributions has been to show the threat posed to the
guidance—to non-economists, bureaucrats, very survival of a free economy by a policy of laissez-
and self-styled public-policy experts.... “Aca- faire. Also, there is room for doubt whether Ropke’s
demic economics has taken a very bad turn in frequent denunciations of industrial gigantism, of the
the road,” Mark Dadd, the senior economist at cult of the colossal and of the super-colossal, in short,
AT&T, who is also chairman of the National of monopolism in all its forms, has earned him many
Association of Business Economists, told me. points with another segment of the American pub-
“It’s very academic, very mathematical, and it lic that might logically be expected to support his
really doesn’t—I want to choose my words ideas—the business community.
carefully here: it is nothing like as useful to Ropke drew a decisive line between his concep-
the business community as it could be”... It tion of a humane economic order and nineteenth-
is gradually becoming clear that the attempt century liberal [i.e., conservative] utilitarianism and
to convert economics into an exact science its echoes in contemporary economic discourse.
has failed. Thus he wrote:

Ropke’s rebellion against the growing dominance There is a school today which we can hardly
of the mathematical and engineering approach to call by any other name than liberal anarchism,
economics amounted to an effort to reestablish eco- if we reflect that its adherents seem to think
nomics as an ethical discipline. It was primarily as a that market, competition, and economic ratio-
moral philosopher in the tradition of Adam Smith nality provide a sufficient answer to the ethi-
that he entered the lists against what he deemed to cal imperatives of an economic system.
be the most corrosive evils of his generation: the What is the truth? The truth is that eco-
cult of scientism, i.e., the attempt to reduce all hu- nomic life does not go on in a moral vacuum.
man phenomena to assemblages of statistics and to It is in constant danger of straying from its in-
mathematical equations; the pursuit, in the social dispensable ethical moorings unless but-
sciences especially, of intellectualism for tressed by strong moral supports. These must
intellectualism’s shke; and moral indifference. At a simply be there and, what is more, must con-
time when mathematical economics was increas- stantly be impregnated against rot. Otherwise,

WILHELM ROPKE: APOSTLE OF A HUMANE ECONOMY 63


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our free economic system and, with it, any free admiring of the entrepreneurial spirit of Bill Gates,

state and society must ultimately collapse. would also have been solidly in the corner of the
The market, competition, and the play of U.S. government in its effort to rein in Gates and his
supply and demand do not create these ethi- behemoth Microsoft Corporation. Parenthetically,
cal reserves; they presuppose them and con- Germany’s own antitrust law enacted in 1958, a first
sume them.These reserves have to come from of its kind, was modeled after the U.S. law and be-
outside the market and no textbook on .eco- came known as the “little Sherman Act.”
nomics can replace them. Ropke’s teaching concerning the role of govern- B
ment was straightforward and unambiguous. In The
The Role of Government Social Crisis of Our Time he avers: .
American conservative economists whose es- )
cutcheons bear the maxim “government is the prob- A strong state is by no means one that meddles
lem, not the solution,” will not be enthused by in everything and tries to monopolize all func-
Ropke’s approach to the market economy. In the tions. On the contrary, not busyness but inde-
real world, he contended, a viable market economy pendence from group interests and the inflex-
requires an effective and energetic government com- ible will to exercise its authority and preserve
mitted to providing essential physical infrastructures its dignity as a representative of the commu-
and establishing and maintaining a stable monetary nity, mark the really strong state, whereas the
and fiscal system as well as securing competition state that acts as a maid of all work, finally
and restraining monopoly, whether of capital or la- degenerates into a miserable weakling and falls
bor. victim to the vested interests.
In his view of the functions of government, Ropke A market economy and our economic pro-
had much in common with his great predecessor, gram presuppose the following type of state:
Adam Smith. If The Wealth of Nations is read with a state which knows exactly where to draw
care, it is clear that Smith was not the unconditional the line between what does and what does
champion of a limitless laissez-faire policy as he is not concern it, which prevails in the sphere
often portrayed. Even in 1776, it was evident that if assigned to it with the whole force of its au-
the maximizing of one’s own interests were pur- thority, but refrains from all interference out-
sued in an inappropriate or conflicted context of- side this sphere—an energetic umpire whose
the larger society, e.g., under the threat of war, or task it is neither to take part in the game nor
where competition is enfeebled or absent, or where to prescribe their movements to the players,
other necessary elements of the meta-economic who is, rather, completely impartial and incor-
structure are missing, the postulated benevolent ruptible and who sees to it that the rules of >
social outcomes of the market will be frustrated. the game and of sportsmanship are strictly CC
Like Ropke, Smith was an exceptionally harsh observed. |
critic of individuals and groups whose interests col- |
lided with the general welfare and argued in conse- For Ropke, with his pragmatic understanding of
quence for a decisive and purposeful state—not and acceptance of flawed human nature, of man as
necessarily a Leviathan—to ensure that the two a being who is, in Pascal's words, “ni ange, ni béte”—
converged. In particular, he worried about the fra neither angel nor beast—laissez-faire was always an
gility of competition, noting in a famous line that illusion. Like Adam Smith before him, Ropke thor-
“People of the same trade seldom meet together, oughly rejected the notion that the good society
even for merriment and diversion, but the conver- could be best served by a government armed only
sation ends in a conspiracy against the public, or in with the power to protect against external attack and
some contrivance to raise prices.” internal civil disorder— “the night watchman state,” in
Would Smith have approved such governmental Ferdinand Lassalle’s sarcastic terminology. Hence the
interventions as the antitrust laws? On the testimony positive role he assigns to government, and not only
presented in The Wealth of Nations and in his other to government but to the institutions of law, poli-
writings, it is a good bet that he assuredly would tics, history, culture (broadly understood), science, and

have. Certainly Répke did approve of the U.S. anti- religion—all of which sustain the market economy and
trust laws, citing the Sherman and Clayton Acts as help it to work efficiently and equitably.

examples for all market economies to follow. I ven- What in the last analysis complicates the issue of =
ture to say that ROpke, while he would have been where ROpke stands among certain American con-

64 SOCIETY « SEPTEMBER / OCTOBER 2000



===== PAGE 9 =====

ve

servatives is that his interests, as noted above, ex- “Enough of the nanny state!” Certainly he would

tend far beyond the merely economic, the merely have cheered Germany’s tentative measures, on the
sociological, the merely political, to the very bed- eve of the third millennium, to transform a culture
rock of the human condition, to the moral and spiri- of bureaucrats which pays little or no heed to cus-
tual, and yes the religious foundations of human tomers, to an American-style climate in which cus
existence. With much of this effort to view and to tomers come first. Were he here today, I dare say he
understand man, not only in the exercise of his eco- would be urging his countrymen to heed the les-
nomic and social functions, but in the totality of his sons of Silicon Valley and to adopt the start-up men-
being, Ropke’s colleagues in the economics profes- tality in which agility in adapting to the market is
sion, both in the United States and elsewhere, are favored over the entrenched domination of super-
undoubtedly uncomfortable. Especially is this likely large firms. His inveterate castigation of monopoly
to be the case for those for whom Répke’s value and concentration—of bigness and bureaucracy in
judgments are either a matter of complete indiffer- all their forms—was directed towards the attaining
ence or are grounds for active dislike of his work. of precisely this kind of competitive economy.

This, and the fact that Ropke’s purely economic pro- - Ropke would not, in my opinion, have endorsed
gram says in effect to the laissez-fairists on the one the American model in all of its aspects and propen-
side, to the liberal interventionists on the other, and sities. On the contrary, at a deeper level, he would
to the totalitarians of whatever hue, a plague on all have been preoccupied by certain cultural and so-
your houses, helps to explain why his work is a so ciological elements that differentiate German, and
little appreciated in the United States. He simply more generally, European, capitalism from the Ameri-
does not fit into the defined and accepted ideologi- can variant. In his conception of the social market

cal categories. But this is our fault, not his. economy, while the autonomy of the individual is ac-

corded first place, attention is also paid to the factors

German and American Economic Models that make for success of the organism, of the group as
The striking current success of the American a whole, as opposed to an exclusive preoccupation
economy—the unprecedented coexistence of high with the success of discrete individuals. Thus, com-
employment, low inflation, and substantial real panies are seen as organic institutions, deserving of
growth over an extended period which has charac- and contributing to continuity and stability.
terized it—would have been applauded by Ropke. I In this vein, he would have been critical of a busi-
believe he would have been especially heartened ness ethos in the United States in which an enter-
by these critical components of the U.S. perfor- prise is seen as a commodity and its assets as ac-

mance: the unwavering anti-inflationary posture of ceptable targets for raiders and for friendly or hostile
the American central bank, the Federal Reserve; the takeovers. The concept of a company as a cash-flow

trimming back of the overblown American welfare machine in which employees and customers are seen
state; and the elevation of fiscal integrity, i.e., the as disposable, expendable quantities, he would have
holding of government spending within the limits viewed as offensive. As he had in the past, so too, I
of its revenues, as a top national priority. At the same believe, would Ropke today deplore and abjure this
time, he would have pointed out that in economics, kind of capitalism. And he would point to the supreme
as with the weather, the future remains uncertain irony in which obsession with the short run and the
and that the battle for sanity in matters economic is elevation of “the bottom line” to the first place in the
never-ending. In this context, Germany’s economic scale of values, i.e., the pursuit of profit in a moral
policy blunders and its repeated deviations in re- vacuum, can also weaken capitalism in the long run.
cent years from the prescriptions of the social mar-
ket economy would have earned his scorn. Patrick M. Boarman is professor emeritus of eco-
In his last years Ropke excoriated the practices nomics at National University in San Diego. He is
and the attitudes that even then betokened an over- a translator of numerous works by the late Wilbelm
regulated German society, become complacent and Ropke. Boarman bas also authored several books
sclerotic from success. He would have vigorously including, Germany's Economic Dilemma, World
seconded the opinion of the present economics Monetary Disorder, Multinational Corporations and
minister, Werner Miiller, who declared recently, Governments, and Trade with China.

WILHELM ROPKE: APOSTLE OF A HUMANE ECONOMY 65