Wilhelm Röpke was a man whose life and work we all should be familiar with during these days of economic turmoil. With the recent bank interventions and bailouts, government controlled bankruptcies of automotive companies and calls for energy independence, his voice needs to be heard again. Fifty years ago Röpke penned a short memoir, entitled “The Economic Necessity of Freedom”, which outlined the development of his thought over the years. Even fifty years removed, his observations still ring true and he provides wisdom for the challenges of the day.
Born in 1899 in Schwarmstedt, Germany, and a descendant of a long line of devout Lutherans, Röpke came into a world on the brink of disastrous global change. He once described his childhood as an idyllic existence of “confident ease…unimaginable freedom and almost cloudless optimism” and viewed himself as a “…true child of the 19th century, though with one foot in the 20th”. It would all come to an end though during his teens. Serving in the German army during World War I, Röpke received the Iron Cross for bravery. After the war he became an economist and spoke against the economic policies of postwar Germany. Similar to today, “[i]t was a struggle against economic nationalism, the groups that supported it, or the particular strategies it employed – a struggle against monopolies, heavy industry, and large-scale farming interests, against the inexcusable inflation, whose engineers obscured what they were doing with fantastic monetary theories, against the aberrations of the policy of protective tariffs, against the final madness of autarky.” In 1933, he characterized the Nazi rise to power as a “new form of barbarism” which resulted in a self-imposed exile to Turkey and eventually Switzerland. From Switzerland he helped provide the intellectual foundation and encouragement upon which Germany could be rebuilt after World War II.
As with many of his era, Röpke marked 1914 as a turning point globally and personally. Globally, the First World War was the “cataclysm” that shaped the first half of the 20th century. On a personal level, it was the horrors of the war which conceived his life’s mission and directed the studies and labors of his adult life.
The war had a deep and enduring impact on Röpke. His young introduction to the brutality of war gave him a “…violent hatred of war [which he] came to see as the expression of a brutal and stupid national pride that fostered the craving for domination and set its approval on collective immorality.” But the war also gave him a purpose in life. He committed himself to “…the task of preventing the recurrence of [war]…”, and was willing to cooperate with anyone, anywhere, even across national borders to do so. As an economist, he applied himself to the task of understanding the reasons of the international crisis that precipitated the war.
Röpke’s experience in the trenches of Picardy formed his early thinking. This experience led him and many of his contemporaries to the conclusion “…that a society capable of such monstrous depravity [as the war] must be thoroughly rotten. We had been educated just enough to call this society ‘capitalism.’ Dumping everything into this concept that seemed to us rightly damnable, we became socialists.”
Eventually though, he was confronted with the realization that he had gone astray in his thinking; for along with his rejection of war and nationalism, which led to his adoption of socialism, it had also led to a commitment to international free trade. The two, socialism and free trade, were incompatible however, as socialism would be so controlling of economic life as to restrict the freedom needed to engage in foreign trade.
Röpke also developed a wariness of the state’s power and the power of interest groups which were rooted in the state’s ability to wage war. These powers would be multiplied in a socialist state. Power would be consolidated in both the government planning the economy and also in the interest groups seeking to influence the government’s plans.
Ultimately, Röpke came to realize that more than a protest against war, his protest was “…against the unlimited power of the state.” And that “[c]ollectivism and war were, in essence, one and the same thing; they both gave endless and irresponsible power to the few and degraded the many.”
And it was this degradation that became the fundamental basis for his rejection of socialism. From an economic point of view he had rejected socialism because the immoral means required to implement it – “…lying, propaganda, economic coercion, and naked force…” – were incompatible with freedom. On this more fundamental level, he was concerned with man’s nature. To the socialist, man was a means to a Utopian end, arrived at under the direction of the state. It made civilian life similar to his military life, characterized by “… the total debasement of human dignity in mass existence, mass feeding, [and] mass sleep…”
Röpke came to the point where he realized he had rejected not only the “…imperialism, militarism, and nationalism…” of his day but also the socialism it had driven him to. So if not nationalism and not socialism, what did Röpke affirm?
He affirmed what he called “economic humanism”; a minimalist state that ensured a moral framework within which sound economic laws would be free to operate. Such a moral framework would allow for man’s natural inclination to provide for his family and serve his community. It would allow for “the spontaneous co-operation of all individuals through a free market, unregulated prices, and open competition.” Without such freedom, Röpke saw little hope for the ongoing existence of Western man.
He also warned of a mass society and its centralization as two fatal trends for an economically free society. He offered decentralization as the remedy. This decentralization would be based on private property and involve finding ways to work the mass-ness out of life. And how would this occur? He points to the individual. He calls the individual to recognize his true nature as a moral and spiritual being and to make adjustments based on this nature. And despite his vision for a more humane economy and society, so different from what it is today, he doesn’t call for state intervention to bring his vision about. He calls only for the moral framework necessary to allow man to live in the freedom his nature requires to bring it about himself.
Unlike so many today, Röpke was a man of principle not pragmatics. He had not only studied the principles of sound economics and freedom, but had lived them or, as it often was, lived their opposites. And he not only lived them but he tested them in fire. The fire of the trenches of World War I; the hyperinflation of post World War I Germany; tested again in confrontation with the Nazi regime, both from within Germany and from without while in exile. Following the Second World War came the test of rebuilding Germany, then the move to unify Europe and the warning of an inhumane economy. All of his adult life Röpke was studying, teaching and living the principles of sound economics and proclaiming – “The Economic Necessity of Freedom”.