They triumphed over the interventionist and collectivist economic policies that had been endemic in Germany since before the First World War.
Sixty years ago, a German free market economist teaching at Geneva’s Graduate Institute of International Studies published a widely read book whose greatest effects were not to be upon its intended European audience. Instead, Wilhelm Röpke’s 1958 work Jenseits von Angebot und Nachfrage (“Beyond Supply and Demand”) turned out to have its most significant impact across the Atlantic.
Röpke is primarily remembered as a key intellectual force behind the program of economic liberalization implemented in 1948 in the British and American zones of occupied postwar Germany. These reforms took a war-ravaged and highly collectivized West Germany and turned it into Europe’s economic superpower. Written a decade after what he called “an act of liberation,” Röpke’s Jenseits von Angebot und Nachfrage warned European audiences that the success of “the Great Reform” was predicated on certain moral and cultural commitments, and that these commitments were, by the late 1950s, being undermined by a newly emboldened Left.
But perhaps the book’s most important contribution was its influence upon American politics. Published in English as A Humane Economy in 1960, the text not only provided American free marketers and social conservatives with strong philosophical arguments for their positions. It also showed how their respective emphases could reinforce and correct each other. To that extent, A Humane Economy intellectually shaped the conservative movement that eventually propelled Ronald Reagan into the White House in 1980.
Antecedents in Switzerland
A Humane Economy’s roots may be found in the the first Röpke book to garner international attention: the one he wrote during the war, his bestselling The Social Crisis of Our Time (Die Gesellschaftskrisis der Gegenwart). Published in Switzerland in spring 1942, the first edition sold out within days. Its swift republication even during wartime paper-rationing testified to the book’s immense popularity.
The Social Crisis laid out Röpke’s economic and philosophical case for restoring market economies in a world increasingly dominated by soft and hard versions of collectivism. Though quickly banned in Nazi Germany and occupied Europe more generally, The Social Crisis circulated underground outside Switzerland. Somehow the future West German economics minister, Ludwig Erhard, obtained a copy. Erhard later related that it decisively shaped his ideas about the economic system needed by postwar Germany.
Yet as Jean Solchany illustrated in his intellectual biography Wilhelm Röpke, l’autre Hayek (2015), The Social Crisis was especially noteworthy for garnering high praise in Switzerland across the spectrum of non-left-wing and non-fascist opinion. It wasn’t a matter of Röpke’s providing these people with policy prescriptions that appealed to them. Instead, he gave them a compelling look into the past, demonstrating how particular movements such as aggressive ethno-nationalism had contributed to the growth of economically interventionist states, and how the trend away from free markets after 1914 helped facilitate the assault of communist and fascist parties upon civil society, religion, and freedom in general.
While Röpke wasn’t the first to make these connections, no one before him had made this type of integrated argument in such a systematic and informed way. In a Switzerland fractured along linguistic and religious lines, Röpke—a practicing Protestant—was suddenly in high demand to speak to political gatherings ranging from Francophone Catholic conservatives to German-speaking secular liberals.
No doubt, each group had a different take on Röpke’s analysis. Nevertheless all were fascinated by how tightly he wove together the political, cultural, and economic aspects of his diagnosis of the crisis engulfing a Europe enduring its second world war in less than 20 years.
Many market liberals found themselves acknowledging that economic collectivism’s growth resulted from more than bad economics and socialist ideology. Likewise some cultural conservatives began questioning their commitment to corporatism. A return to market economies, they began arguing, needed to be part of a broader agenda to rebuild societies in which liberty and order were taken seriously. These developments foreshadowed some of the ways in which Röpke’s A Humane Economy would influence American conservatism from the 1960s on.
Röpke in America
Röpke first visited the United States on a Rockefeller scholarship in the late 1920s. Just over a decade later, as the Wehrmacht crushed France in May 1940, Röpke considered leaving his Swiss exile to accept one of several offers to teach at an American university. An outspoken critic of the Nazi regime that had driven him into exile in 1933, Röpke had no illusions about his fate if Hitler had decided to invade Switzerland.
By the 1950s, America had again moved to the forefront of Röpke’s mind. This was partly because he regarded America as central to the struggle against communist totalitarianism. At the same time, Röpke had developed strong relationships with American conservative intellectuals, most notably William Buckley and Russell Kirk. It was the latter who suggested “A Humane Economy” as the English title for Jenseits von Angebot und Nachfrage. Röpke was also an early and frequent contributor to Buckley’s National Review.
Part of Röpke’s attraction for many American conservatives was his prestige as someone whose ideas had helped shift an entire society toward greater economic freedom. But some Americans also admired his talent for associating his arguments in favor of markets and against Keynesianism, socialism, and command economies with insights from other disciplines. It was hard to find other prominent free marketers willing and able to effect this integration. But Röpke could, being deeply erudite in areas of inquiry outside economics. Aided by his formidable linguistic gifts, Röpke could more than hold his own among groups ranging from legal scholars to theologians.
Röpke’s willingness to refer explicitly to Western civilization, at a time when the Left’s aggressive attack on its achievements was heating up, also made a deep impression upon American conservatives. For those trying to establish a political force in America capable of bringing together foreign policy hawks, anticommunists, cultural conservatives, and advocates of economic freedom in defense of a West under external and internal assault, Röpke’s 1958 book was a godsend. They immediately recognized the need to have it appear in English.
Economist as Philosopher
A Humane Economy was about as far removed from a dry economics textbook as one could have imagined. It was also unapologetically normative in its content, combining the conservative’s emphasis upon order with the classical liberal’s attention to liberty. The damage inflicted by socialism and Keynesianism upon such values is central to Röpke’s censure of these models of political economy.
Röpke’s critique of welfare states, for instance, didn’t only concern the ways in which they compromised the ability of markets, businesses, and entrepreneurs to create wealth. Equally problematic, Röpke insisted, was how welfare states facilitated dependency on government in ways resembling the “soft despotism” foreshadowed in the early 19th century by Alexis de Tocqueville’s Democracy in America. While that’s a commonplace observation today, Röpke was one of the first market economists to identify expansive welfare programs as having dysfunctional effects upon culture and democratic politics.
There was, however, another axis at work throughout A Humane Economy. On the one hand, Röpke explained in detail why neither socialism nor mixed economies could resolve basic economic problems like scarcity in ways that markets can and do. But Röpke also maintained that the logic of market economies can’t and shouldn’t be applied to resolving non-economic problems. He thus concluded:
We need a combination of supreme moral sensitivity and economic knowledge. Economically ignorant moralism is as objectionable as morally callous economism. Ethics and economics are two equally difficult subjects, and while the former needs discerning and expert reason, the latter cannot do without humane values.
Röpke plainly had little time for public figures who expostulate loudly about economic policy, but who refuse to inform themselves of some basic economic truths. By the same token he admonished those who thought economics explained everything. “Adam Smith,” he said, “whose fame rests not only on his Wealth of Nations but also on his Theory of Moral Sentiments, would have known better.”
So where do we find the values which Röpke considered so important for a truly human life? On one level, he located them in the realist strain of Enlightenment thought. From Röpke’s standpoint, this was personified by individuals like Smith, the Baron de Montesquieu, Alexander Hamilton, and James Madison. Another source was what Röpke called “the spiritual heritage of classical and Christian tradition.” Spelling out his most fundamental convictions on such matters, Röpke wrote:
I see in man the likeness of God; I am profoundly convinced that it is an appalling sin to reduce man to a means . . . and that each man’s soul is something unique, irreplaceable, priceless, in comparison with which all other things are as naught. I am attached to a humanism which is rooted in these convictions and which regards man as the child and image of God, but not as God himself . . .
While this Jewish and Christian conception of man was, Röpke said, decisive for his championing of “an economic order ruled by free prices and markets,” it was also key to his opposition to economistic mindsets as well as “all forms of collectivism.”
It wasn’t therefore just the catastrophic consequences of command economies which explained the depth of Röpke’s opposition to communism. He regarded Marxism’s atheism and materialism as antithetical to what it means to be human. To Röpke’s mind, the evil of communist systems was so pervasive that, A Humane Economy maintained, free societies ought to avoid any substantive political or economic contact with Marxist regimes. In this regard, Röpke was the coldest of Cold Warriors.
Above All, a Westerner
Röpke died in 1966, but not before his ideas had started entering American thought on the Right. Beginning in the mid-1950s, conservative and classical liberal publications such as the Wall Street Journal, National Review, and the Foundation for Economic Freedom’s The Freeman printed Röpke’s reflections on topics ranging from monetary policy to foreign affairs.
In 1963, for example, the Journal devoted an entire half-page to an opinion piece by Röpke in which he argued that the United States was about to lurch, New Deal-like, again in the direction of social democracy. One year later, Lyndon Johnson launched his Great Society programs.
Similarly Modern Age published a long article by Röpke in 1964 in which Americans heard a prominent German intellectual describe the European integration project launched by the 1957 Treaty of Rome as hopelessly utopian in its aspirations. In the same piece, Röpke predicted that it would result in power being steadily concentrated in the hands of an unaccountable bureaucratic class in Brussels. Again, he was prophetic.
That’s not to say that Röpke proved right about everything. The fears he expressed about population growth in A Humane Economy were not borne out. Likewise, the book’s romanticization of agricultural life will strike many contemporary readers as anachronistic.
But above all, Röpke’s perception that those who would oppose political and economic collectivism needed to present their positions as a defense of Western civilization helped underscore to American conservatives what was at stake. This was what Röpke ultimately had in mind when he urged his readers to understand—but also to look beyond—the world of supply and demand.
At a time when the Left seems hell-bent upon stigmatizing that civilization’s philosophical and religious roots, and even eradicating them in the name of “respect-tolerance-diversity-equality,” the deepest messages of Röpke’s A Humane Economy seem more relevant than ever.