Dermot Quinn: The Wilhelm Roepke solution to our economic woes





[Dermot Quinn is professor of history at Seton Hall University and a fellow of the James Madison Program at Princeton University.]

... Fecklessness and stupidity are nothing new, but even by American standards of giantism this latest iteration of boom and bust takes some beating. Yet none of it need have happened had we listened to Wilhelm Roepke. Two generations ago, when postwar Germany lay in ruins, Roepke helped to lay the foundation of its extraordinary renewal. To be sure, that postwar “miracle” owed something to American generosity, even to the very statism (in the form of the Marshall Plan) that Roepke otherwise distrusted. But in the Age of Obama, when all our calculations have gone cock-eyed, an economist who seems to know what he is doing is worth a second look. Better than that, he knew the limits of economics itself as the means and measure of human happiness.

Roepke was born in Hanover in 1899 and died in Geneva in 1966. In between, he fought in World War I, studied and taught economics in Marburg, Istanbul, and Geneva, befriended Ludwig von Mises and Friedrich Hayek, helped establish the Mont Pelerin Society, and advised Konrad Adenauer on social and monetary policy. Such a life mixed the conventional and the bizarre. No one who had known the world before 1914, he said, could fail to be horrified by how it collapsed. Where once there was “confident ease, an almost unimaginable freedom and optimism” now came a World War, crushing inflation, the Great Depression, an even more terrible war, a mushroom cloud in the east, Communism on the march. The funeral pyre of Western civilization was lit by Western man himself.

Initially, Roepke’s inclinations were socialist. If the Great War was the result of capitalist imperialism, he reckoned, the way to prevent another war was to embrace a bigger state, more planning, and loftier ambitions descending from on high. It was the standard dream of the interwar years. For the New Deal read the Five Year Plan: conceptually there was little to choose between the two.

But Roepke abandoned the dream faster than most, convinced by Mises’s 1919 book Nation, State and Economy that most statist thinking was simply inept and crass, economically and humanly illiterate. In books such as Economics of the Free Society, The Moral Foundations of Civil Society, and A Humane Economy, Roepke outlined an alternative vision, attacking the “bloated colossus” of the state, the “pocket-money” world of welfare, the vanity of the clipboard crowd telling us what to do. After World War II, when everyone was a planner of one sort or another—from little Clement Attlee to ludicrous LBJ—it took courage to go against the crowd. But Roepke had plenty of courage, and besides, he never much cared for crowds anyway. Given a choice between conventional wisdom and a village reputation, he would have taken the village any day.

The key to Roepke’s thinking is freedom, which he experienced before the catastrophe of 1914, thought all human beings desired and deserved, and felt sure could be recovered if certain principles of political economy were understood by those entrusted with the guardianship of the state. But his notion of freedom was profoundly communitarian, rooted as it was in certain moral understandings of man and the good life, of human beings living together in honorable interdependence, of families being free because obliged to each other. Roepke was no libertarian any more than the Adam Smith of The Wealth of Nations and The Theory of Moral Sentiments was a libertarian. Liberty, both men knew, comes with limits, and it imposes those limits on itself. Roepke delighted in boundaries—the fence, the front door—recognizing that they make us free. Without a playpen there is no play. Without scales and minims there is no music. Roepke thus understood economics in deeply religious terms, as a kind of magnificent participation in creation itself:

"What I reject in socialism is a philosophy which … places too little emphasis on man, his nature and his personality. … I see in man the likeness of God. I am profoundly convinced that it is an appalling sin to reduce man to a means (even in the name of high-sounding phrases) and that each man’s soul is something unique, 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, to be idolized by a false and atheist humanism. These are the reasons why I so greatly distrust all forms of collectivism."

Notice that easily missed word: he distrusted all forms of collectivism....

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