Samuel Gregg’s indispensable study of one of the most important economists of the 20th century.
Wilhelm Röpke’s Political Economy
by Samuel Gregg
(Edward Elgar Publishing Inc., 216 pages, $125)
Many people, particularly on this side of the Atlantic, have never heard of Wilhelm Röpke. That is a shame since he is one of the most important economists of the 20th century, a true Renaissance man, a polymath, and a father of the German “economic miracle.” He displayed unique moral courage, was often politically incorrect, and was perhaps the sharpest critic of Keynesianism. Ludwig Erhard claimed he “illegally obtained Röpke’s books… which I absorbed as the desert drinks life-giving water.”
Röpke, a full professor at the age of 24, was also the first German professor to lose his job in 1933 when the Nazis came to power. As an exile who would not cave in to Hitler and the SS, he never returned to his native land. Less well known to the English-speaking world than Hayek, Mises, or Friedman, there has been no book length treatment of his economic thinking before this, although numerous biographies exist.
We are extremely grateful then to the brilliant researcher and scholar, Samuel Gregg of the Acton Institute, for a concise, penetrating, and thorough analysis of Röpke’s contribution to intellectual life. It breaks new ground, is highly readable, and adds considerably to the economic literature. It should become mandatory reading for every student of political economy.
As the intellectual author of Germany’s post-World War II economic resurrection, Röpke is an under-appreciated thinker who informed policymaking. Gregg rightly calls him a Smithian, as he was against the unlimited power of the state. Put positively, he was much more. Röpke was an “economic humanist” of the first order. He historically showed how the Great Depression came to limit economics as a science and how collectivism is incompatible with authentic human freedom.
The purpose of Gregg’s masterful book is to provide a descriptive and critical introduction to Röpke’s understanding of political economy. This is unquestioningly an exercise in historical recovery. The focus is on four subjects that concerned Röpke up until his early death in 1966. They are: the challenge of business cycles, the unending growth of the welfare state, full employment and inflation, and international economic relations.
Röpke’s political economy was attuned to “interdependence,” where empirical analysis is not separated from normative judgment. With a profound focus on “human flourishing,” Ropke was enlightened beyond today’s narrowly trained economists and econometricians because of his scope and vast intellectual and multidisciplinary horizons. By returning modern economics to the Aristotelian realm of ethics from which it originally emerged, Röpke achieved a new synthesis. For him the market economy allowed people to exercise their “natural liberty” — rooted in the Christian realism of St. Augustine.
As part of the Austrian School, as opposed to the Historical School, Röpke can be best placed in the context of other major modern economic thinkers such as Eucken, Rustow, Böhm, and Miller-Armack. Breaking with the dirigiste past together they sought to articulate an economy rightly framed on order. For them economics was a normative social science. They discerned values beyond utility. This is a style of political economy that needs to find a revival as it is sorely lacking in today’s boring mathematized journals and small gauge discussions about trends in data.
For Röpke, as presented by Gregg, economics has unfortunately occupied a “restricted vision.” This view parallels the better-known thoughts of Hayek, who likewise warned about the scientism of economics and was an equally harsh critic of Lord Keynes and his overly ardent followers. Both witnessed what they called “the failure of intellectuals” and their near total surrender to the evils of socialism portrayed as a “road to serfdom” inhabited, if not dictated, by government bureaucrats.
With liberty constantly under attack, this timely treatment of Röpke’s “Christian Humanism” is a perfect antidote or remedy to the crisis that abounds and surrounds us on every front. It appears even in our most recent economic collapse and massive government interventions cum bailouts we are plagued with an incessant belief in what Röpke termed, “the folly of human perfectibility.” Our newly anointed political ones have an unflinching belief in the state to solve all our problems and cure all our ills. If only they knew. If only they had read Röpke.
Gregg is absolutely correct to make the connections to the Scottish Enlightenment thinking in Röpke’s opus. It is an insight worth exploring further. Röpke sought to avert welfare statism but held a conservative attachment to tradition, especially to the mediating structures of civilized life. This is critically noted by Gregg and could be amplified since the space between the Individual and the all-powerful State is where life is actually lived.
This conflict with what could be called classical liberalism and the priority of freedom in the economic realm continues today. Ordoliberalism owes a great debt to the Scottish Enlightenment. But the tension between social conservatism on one side, and economic liberalism, even in Republican politics, on the other, continues into our present era. Until it is resolved — perhaps by reemploying the likes of Röpke or his seminal ideas, we will be one handed and fail to see the full dimensions of ordered liberty. Such division also undercuts potential conservative political power — dividing it into two warring camps, of social vs. economic conservatism. A cohesive model of the social market economy offers a viable alternative.
This brilliant, analytical intellectual history will hopefully bring back interest in both Röpke and his “Humane Economy.” We would all be the beneficiaries.
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H/T to National Review Online