Boarman – Apostle of a Humane Economy

Apostle of a Humane Economy

Remembering Wilhelm Roepke (1899 -1966)

by

Patrick M. Boarman

Professor Emeritus of Economics,

National University, San Diego, California

(Footnotes were deleted from this edition)

 

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Wilhelm Roepke entered my life, with immense effect on me, more than 50
years ago. That was a time in which the political and intellectual climate was
rather different from today. The world was just beginning to rise from the ashes
of the greatest war, World War II. Socialism was everywhere in the ascendant.
The Soviet colossus bestrode half the planet. China was soon to become a
monolithic Communist state. And the United States stood virtually alone, if we
except Switzerland, as guardian of the market economy. Who could then have
foreseen that in 1998 the Soviet empire would be no more, that a united
Germany would have arisen like a phoenix to become the economic
powerhouse of Europe, that "socialism" and "planned economy" would
become derisory, even pejorative terms (except maybe in Cuba), and that
expressions such as "social market economy," "third way," and "a humane
economy" would become the fashionable slogans of the moment?

1. Roepke in China?

Consider the case of China. Who could have imagined that China, of all places,
the mysterious, impenetrable, isolated land of a billion people, tyrannized for 45
years by the monstrous Mao Tse-tung—that China would go capitalist, or at
least partway capitalist? The question of interest, of course, to this meeting is:
what did Wilhelm Roepke have to do with these momentous happenings, with
those in China in particular? A very great deal, indeed, as it turns out.

Last year, my wife, a native Shanghaiese, and I, an American professor emeritus
of economics, spent a month traveling through central China. Among the
highlights of the trip was a three-day visit to a Chinese university, where, at the
invitation of the university’s president, I lectured on market economics. His very
first comment to me was startling: "There are two things," he opined, "that
account for America’s great success: first, democracy, and second, high
technology." Equally eye-opening were my exchanges with senior and junior
faculty members. One heard nothing of Marxism-Leninism or of central
planning, but many references to and searching questions about the price
system, profits, incentives, and entrepreneurship, especially as they function in
the U.S. These faculty members expressed particular interest in the differences
they claimed to see in the approaches of Western economists to economic
analysis: on the one hand, the school that emphasizes abstract theorizing and
mathematical model-building, that is, a preoccupation with the market economy
viewed as a self-contained machine; and the other approach, which they felt to
be less influential in the West, and in which they were greatly interested, which
stresses the role of the unique institutional framework—of cultural traditions, of
historical forces, of government itself—within which each national economy is
embedded.

I found these insights to be quite astonishing since the model of a
socio-economic system that emphasizes the primacy of the institutional
framework—viz., the decisive influence of tradition, of law, of culture in the
broadest sense, of philosophy even, and the subsidiary, if still crucial role of the
market per se—was precisely the design Wilhelm Roepke had spent a lifetime
devising, refining and elucidating. So I was not totally unprepared, I think,
though I did experience a small shock of recognition, when after one of my
lectures to a large group of under-graduates, a student came up to show me
proudly a very dog-eared, very battered copy of Roepke’s Economics of The
Free Society. Whether any other students beyond this one had ever heard of
Roepke, I was unable to find out. But I felt nevertheless emboldened in a
subsequent lecture to pass along to these students some of the Roepkean
wisdom I had myself received so long ago. While emphasizing the awesome
power of a market economy to generate wealth, which the Chinese are happily
discovering, I reminded my audience of the limits of the market, of its inability,
for example, to address collective needs, such as that for national defense, or
for a clean environment, or for a financial system which is proof against the
ravages of inflation. It is upon these limits, I argued, that the economic role of
government is predicated. And it is also because of them that an array of other
institutions and virtues is required, without which the free market tends to
degenerate into the kind of "wild capitalism" that has made Russia’s transition
from Communism to a market economy so precarious. Among these I cited the
rule of law, vigorous competition, a sound currency, an efficient central bank
and, on the part of individual participants in the market economy, a modicum of
honesty, self-discipline, and civic-mindedness.

I further reminded these Chinese students that some of the most important
elements of our lives, the values we cherish most highly in both of our
countries, lie beyond supply and demand. These sentiments were greeted with
prolonged applause.

One can only speculate as to how these Chinese young people, who are being
trained for top jobs in the Chinese Ministry of Finance in Beijing, came to have
their fairly sophisticated understandings of the modern market economy. It is
hardly credible that one dog-eared old textbook could have triggered such
transformative thinking. The simple truth is the easier answer. It was the
overwhelming success of the market economy over the past 50 years wherever
on our planet it has been installed—with the appropriate institutional safeguards
in place—that enormously impressed the Chinese, beginning with Deng
Xiaoping. And however one labels this socio-economic design, it is Wilhelm
Roepke who can lay claim to being its spiritual father. Were he alive today, I
believe he would be greatly encouraged by China’s turn towards economic
freedom, although reserving judgment, of course, as to whether this will lead to
political freedom. In that regard he would argue, as he did untiringly throughout
his life, that freedom is indivisible, that true economic freedom requires
intellectual and political freedom, and vice versa. The ignominious collapse of
the so-called Asian model—economic freedom combined with political
despotism—has shown how prescient Roepke was on this point.

China is eternal but my time at this podium is not, so this is the point at which to
vault over geography to another place, Geneva, and to another time—appalling
thought—exactly fifty-two years ago.

2. Revelation in Geneva

t was in October, 1946 that I first encountered Wilhelm Roepke. The setting of
that encounter has remained with me: a crisp Fall day, in a handsome chateau
housing the Graduate Institute of International Studies, on the shores of Lake
Geneva; and, in the distance, across the Lake, the majestic white cone of Mont
Blanc, faintly visible through the morning haze.

In the classroom, a group of some 30 students waited expectantly. As I recall,
they included a half dozen young ladies from Smith College, all lined up in the
front row and all but one, remarkably, writing, as do I, with the left hand, a
circumstance that confounded the non-Americans in the room. Even in free
Switzerland, I discovered, left-handedness is regarded as an affliction, best
extirpated in a child’s earliest years. "Do you mean that in America they actually
let you write the wrong way when you were a child?" was the inveterate refrain
that was heard. But if my handedness was left and genetic, my ideological
sympathies were moderately rightward and self-chosen. I was ready for Roepke
of whom it was bruited about, "He is the most conservative member of the
faculty!" The class included, as well, students from France, Italy, Lebanon,
England, and Switzerland. Since it was 1946, and the war hardly over, there was
no student from Germany. There was to be only one German in the classroom
that day, and for some years thereafter, and that was Professor Roepke.

As it turned out, Roepke was a German with a difference. He was born at
Schwarmstedt near Hanover in 1899, the son of a country doctor and the
descendant of a long line of Lutheran pastors. The year of his birth, marking a
transition not only between two centuries, but between two profoundly different
worlds, had a special significance for Roepke who, as he pointed out to me at a
later time, felt himself to be a true child of the 19th century, though with one
foot in the 20th. The Great War, in which Rõpke served and was decorated for
valor, was a shattering experience for the teenaged recruit, collapsing the world
of his youth while offering nothing to replace it. The insanity of that fratricidal
conflict and the barbarities he witnessed in the trenches of Picardy came to
stand, for Roepke, as symbols of the modern condition at its worst: the
physical and moral degradation of "mass existence, mass feeding, mass sleep."
His anguish and indignation over the war were ultimately transmuted into anger
at the "unlimited powers of the state" which had inflicted this horror on
mankind.

It was the experience of the war, ironically, that was to furnish Roepke with his
life’s mission: to discover and proclaim the economic, social and moral truths
that would prevent war, preserve freedom and salvage what was left of human
dignity. The search led initially to socialism. For was it not a capitalistic society
that had spawned the War? But then, for Roepke and a handful of like-minded
contemporaries, there were second thoughts and intensive reflection on the
ultimate consequences of such a choice. It became clear that a consciously
constructed economic order is not only necessarily tyrannical—the designers
and implementers of such an order are the rulers of those being ordered—but is
also exclusively national (and nationalistic), since only one national economy at
a time can be planned. And with that kind of nationalism (which the War was
allegedly fought to eradicate), "my generation," declared Roepke, "wanted
nothing to do."

In pursuit of his self-prescribed mission, he took his doctorate in political
science at the University of Marburg in 1921. Subsequently, he taught
economics at the Universities of Jena and Graz, and, at the age of 29, received
an appointment as full professor at Marburg. The galloping inflation which beset
the Republic in 1921-23 and the havoc it wreaked amongst the German middle
class left an indelible impression on the young economist and provoked him to
the battle with inflation which was to continue all his life. In 1931, nevertheless,
in a gesture characteristic of his realism and balance, Roepke, then serving as an
advisor to the Bruening government, vigorously opposed its deflationary
policies to which he attributed the rising unemployment in Germany. In this
sense, Roepke was espousing Keynesianism five years before Keynes did so in
his monumental treatise, The General Theory of Employment, Interest, and
Money (1936). Had Roepke’s urgent pleas to the German government to enact
"Keynesian" policies been taken seriously, the unemployment crisis conceivably
could have been mitigated which, in turn, might have averted the assumption of
power by Hitler. In the event, the advice of the young economist, unfortunately
for the world, was rejected.

It is of significance that Roepke also favored a rapid expansion of credit and
thus of demand in the United States to counter the depression that had just
begun there (1931) and was subsequently critical of the Roosevelt
Administration for not moving more aggressively in this direction. Thus he
wrote in 1942: "Immediately before the new President assumed office [March,
1933], deflation in the United States had reached such proportions that there
was no alternative but to adopt a vigorous and bold policy of expanding
domestic purchasing power … instead … an effective expansion policy was
introduced much too late and with too much hesitancy."

In later years, he (Roepke) was wont to give full credit to Keynes for his
contribution to the advancement of theory, but also to warn against making
temporary remedies for depression permanent policy prescriptions. He charged
Keynes with doing psychological damage to the propensity to save—a crucial
pre-requisite to capital formation and thus to progress—and with accustoming a
new generation to a kind of economic logic which revolves solely about the
question of how "effective demand" can be most securely maintained at the
highest possible level. This error was to prove fateful, he maintained, given that
the real problem of the postwar era was how an inflationary boom can be
braked in time.

Those were the years not only of economic tumult but of real political danger to
the young professor and his family. Anti-totalitarian to the core, Roepke early
came into conflict with the tribunes of the Third Reich. Even before the
elections to the Reichstag in 1930, he had delivered a warning to the farmers of
Lower Saxony which was unmistakably directed against the Nazis. "No one," he
declared, "who votes National Socialist on September 14, can later say he had
not known what the result would be. He should know now that he voted for
chaos instead of order, destruction instead of reconstruction. He should know
that he voted for war within and for mindless destruction without. Vote, but
vote so that you will not share the guilt for the disaster that is likely to befall us!"
In an address delivered at Frankfurt on February 8, 1933, one week after
Hitler’s assumption of the Chancellorship, he described the new regime as a
"new form of barbarism." A threatening visit to his family by representatives of
the SS soon followed. Rather than knuckle under to the Nazis, Roepke quit his
post at Marburg and chose exile, the first German professor to do so following
Hitler’s takeover. It was the beginning of a tumultuous and perilous odyssey for
him and his family, first to Holland and Switzerland, then to Turkey where the
Kemal Ataturk government entrusted him with the reorganization of the
department of economics of Istanbul University, and finally, in 1937, to the
Institute in Geneva, whose chair of economics he occupied with éclat and
growing renown for the next three decades.  

3. Beyond Supply and Demand

However, in 1946 I was not privy to all of this information. Indeed, as a recently
arrived American exchange student, Roepke’s name, other than his general
political orientation, meant little to me—his major works were not yet available
in English. Also, economics was not yet my discipline. I had come to Geneva
fresh from Columbia University where I had received a master’s degree from
the School of Journalism. My prior academic work was at a Jesuit university in
languages, the arts, history, and philosophy. Economics and business were
subjects of which I knew little, and that little I didn’t really care for very much.
However, at Columbia I had acquired a taste for political science, political
science of a conservative cast, I should add, and this partly in self-defense since
many of my fellow students at the Journalism School were considerably to the
left of center. Possibly my classmates were merely exhibiting a youthful
exuberance for the dominant Zeitgeist in which the Soviet Union was idolized as
a Utopia and in which the West, with the United States in the lead, was in the
process of turning over eastern Europe and half of conquered Germany almost
casually to the Communists. But here I was, anyhow, pursuing a degree in
political science and in Roepke’s classroom at the suggestion of a friend, i.e.,
more or less by accident, sampling his course entitled "European Economic
Reconstruction"—a highly pertinent label, given that Europe, in 1946, was still
very much a basket case economically, and with the defeated enemy, Germany,
still knee-deep in rubble.

As I think back on that first encounter, on what became for me a life-altering
event, I was prepared to be informed, possibly entertained, perhaps bored. I
was not prepared to be put under a spell as was the case when Roepke strode
into the classroom: a man in his middle forties, of medium height and build, with
a handsome leonine head and sandy hair, ruddy complexion, blue eyes that
burned with some inner fire, but free of any hint of fanaticism, a voice of heavy
timbre and somewhat louder than normal due to a chronic condition of
deafness, and finally, Roepke’s signature trait, craggy brows shading the intent
eyes. His lecture was in English which he used with sensitivity and precision.
His text was rich with literary and historical allusion: a verse from Goethe, a
maxim from Montaigne, a quip from Shakespeare, or apt quotations from de
Tocqueville, Jacob Burckhardt, Edmund Burke, Benjamin Constant or Adam
Smith. Even after all these years, I feel still the intensity and the pwower of his
thought and of his presentation which combined passion with a wit that was
sometime playful, sometimes mordant, never wounding of another person, but
always precisely on point. The finely honed humor was infectious, keeping his
hearer’s lips slightly curled in anticipatory merriment.

Particularly amusing was the manner in which Roepke employed his hearing
handicap to manage the discussion. In those years, his seminars, conducted
around a long table, occasionally drew a couple of socialists who came not so
much to learn as to heckle him. For the most part these nay-sayers were
silenced by rapier thrusts of Roepkean wit which, though gracefully delivered
and shedding little or no blood, left the antagonists squirming and red-faced.
Rarely did things turn obnoxious, but when they did, Roepke resorted to his
secret weapon—a volume control on his hearing aid concealed on his belt.
When the hostile voices reached a certain level of stridency, a slight movement
of Roepke’s left shoulder indicated to me that he was tuning them out and that it
was time for me to raise my hand to pose a question. "Yes, Mr. Boarman," he
would say brightly, the slight movement of his shoulder indicating that he was
now turning the volume control back up. Notwithstanding such occasional
divertissements, learning from Roepke in the seminar format was like taking part
in a totally absorbing interactive mystery play, with us students hanging on every
word.

More importantly, it was clear in Roepke’s classes that his consummate
rhetorical and pedagogical skills were but means to overriding ends. Thus, his
lectures, of which I kept faithful, if sketchy notes, while they were minor
master-pieces of economic wisdom, were more than just exercises in economic
analysis. They were infused with Roepke’s own deep humanity and his burning
devotion to the grand principles of liberalism in the best sense, i.e., to the
causes of human freedom and human dignity. At Roepke’s feet, the student was
the recipient not only of his acute insights into the economic issues of the day;
he learned that the things which lie beyond supply and demand are the most
important things, and that an economist who understands only economics
doesn’t even understand that.

Roepke’s students learned quickly as well that although he was an
extraordinarily accomplished economist with a world-wide reputation for the
depth and rigor of his scholarship, he was no ivory tower academician. He was
a fighter and contender from the beginning—the quintessential public
intellectual. In an unending stream of scholarly treatises and articles in the
popular press, he, figuratively speaking, went into the street and onto the
barricades and there defended, as few before him, the ideals in which he so
fervently believed. It was our impression in his classroom that he was un
homme engage in every sense. He was a "clerc" to use Julien Benda’s word,
who kept the faith. In discharging this mission, he had the advantage of a
singular literary gift. His prose style—in German—was so transparent, so lucid,
so incisive and rich in compelling allusion, so far removed from scientific jargon
that it commanded the attention not just of an elite but of numberless readers
who would otherwise have been immune to his message.

4. Roepke at Home

In short, in those lectures and seminars long ago, Wilhelm Roepke snared my
soul, so to speak. I determined then and there to change my focus and to
become an economist. Though Roepke was probably the most distinguished
professor at the University of Geneva at that time, he was always accessible, or
at least I found him so. In those first years after the War, automobiles were
rarities in Geneva. Bicycles filled the streets and often Roepke and I would ride
our bikes home together from the Institute. I was a frequent visitor to his home,
then and some years later when, as a married man with three children (and, of
course, a wife), I returned to Geneva to finish my doctoral dissertation.
Evenings at the Roepkes, where his wife, Eva, presided as hostess and which
might include prominent personages temporarily in the City—a Ludwig Erhard,
a Friedrich Hayek, a Walter Eucken—were a genuine delight.

Incidentally, as many of you may know, Hayek and Roepke were co-founders
with some three dozen others, of the Mt. Pélérin Society, of which Roepke was
later President. Roepke subsequently resigned from the Society in a dispute
with some members over the direction it should take. Though Hayek’s and
Roepke’s views were not always congruent on all issues, I recall hearing
Roepke in class lavishly praise Hayek’s ideological bombshell of 1945, The
Road to Serfdom. It was subsequently translated into German by Roepke’s
wife, Eva.

At these evening gatherings, Roepke showed himself to be a gifted raconteur
who could appreciate and tell a good joke. Pompous personages, academic and
other, were nicely deflated with barbed, but good-humored comment as the
wine flowed, after which the talk turned solemn and sometimes portentous. To
this young and impressionable would-be economist, participating in a Roepke
soirée was, in the language that my children now use, a totally awesome
experience.

Roepke’s scholarly output was even then phenomenal but given the academic
demands a graduate student was sunder, it was possible only to sample only a
few of his books. There was one in which I, as a neophyte economist, was
particularly interested, his basic economics textbook, not yet translated into
English. Great was my rejoicing when I found in the Institute’s library a French
version of that book, Explication Economique du Monde Moderne. I read it
virtually at one sitting, finding it to be not only a splendid layman’s introduction
to the arcane science of economics but an eloquent anti-totalitarian tract as well.
I determined then and there to translate the book into English, an ambition which
was eventually realized. The circumstances of the publication of this French
translation were remarkable. It appeared in Paris in 1940 under the noses of the
Nazi censors. "The probable explanation of this miracle," Roepke wrote later,
"is that the German censors were too uneducated to understand the book, while
those Germans who understood it were civilized enough to rejoice at such a
discovery and not to betray it. There were, indeed, many Germans who
reported in later years of how happy they were during their Paris sojourn to
come upon the book. Habent sua fata libelli." In Brooklynese this says: "little
books have their fates." How Roepke would have delighted in knowing that his
little book had made it all the way to China in 1998!

5. The "Third Road"

There was another reason for my gratification at having come upon this book.
The reading of it was a liberating experience. For it showed a way around or
through the frozen dialogue between the adherents of old-style capitalism on the
one hand and of a government-run economy on the other, to which much of the
discourse among academic economists of that time seemed to reduce. In this
textbook, in his great trilogy The Social Crisis of Our Time, Civitas Humana,
and International Order and Economic Integration,, and in innumerable
publications in the years that followed, Roepke argued for the rejection of
socialism and the reconstitution of the market economy as the only economic
system compatible with human freedom. The market economy for which he
pleaded, however, differed fundamentally from the system which, under the
vague and emotion-charged label of "capitalism," had persisted in Europe until
the 1930s and then perished of its own degeneracies. Capitalism for Roepke
was a highly imprecise noun, freighted with the ideological ballast of the
nineteenth century which gave birth to the term, and even today carrying the
value tags, positive or negative, of whomever happens to be defining it. In
contrast, the market economy, at its core and unencumbered with labels from
the right or the left, was for him a term embracing those universal human
behaviors associated with acquiring and using economic resources and
famously codified in the laws of supply and demand. Indiscriminate mixing of
the concept of a market economy with "capitalism" results in the attribution of
qualities to the market mechanism that properly are only ascribable to some
specific capitalist societies of the past, notably those of the 19th and early 20th
centuries. Thus, the market economy that was installed in West Germany after
World War II—and which the Germans chose to call a "social market
economy"—represented a deliberate attempt to divorce the market idea from
historical capitalism. The lasting achievement of Roepke’s friend, Erhard, was
his abstraction of the powerful concept of the market from the institutional
matrix of nineteenth century capitalism in which it was embedded and his
demonstration that the market can yield a quite different result within a different
institutional framework.

The social market economy itself, in turn, echoed one of Roepke’s conceptions
of a much earlier date, that of the "third road." In his numerous elaborations of
this idea, he showed how the old antitheses of laissez-faire and planned
economy could be transcended in a new synthesis of the "third road," later
rebaptized as a "humane economy." In such an economy, the laws of supply
and demand, while allowed full play to maximize the wealth of the nation, were
yet constrained within a framework of (market-conforming) rules, including,
importantly those intended to preserve competition. The concept envisaged, as
well, the continuous influencing of economic behavior by extra-economic
institutions rooted in moral and spiritual values (law, tradition, religion, etc.).
For in the absence of such rules and institutions, the benevolent social
outcomes of the pursuit by each individual of his self-interest, posited by the
classical economists, are extinguished; the market becomes an arena for a
dog-eat-dog struggle. It is a thesis for which Russia today furnishes the
unhappy proof. In effect, the Russians desired to have the fruits of a free
market and democracy but without being able or willing to put in place the
infrastructure of civic and personal virtues that democracy and economic
freedom require.

It is striking that for all the many years that the concept of the "third road" or
the "third way" has been imprinting itself on policy, especially in Germany, but
in other places in Europe as well, thanks to Roepke—we are just now hearing
about it in this country in the most influential circles. In The New Yorker of July
6 of this year, we are told that Larry Summers, Clinton’s potent Deputy
Treasury Secretary is "the leading intellectual exponent of the ‘third way,’ a
nascent, and occasionally derided political philosophy associated with the
names of both Bill Clinton and Tony Blair [its central notion being] how to
reconcile the free market with a social conscience."

Even the First Lady has been reported by The New York Times as being
engaged with scholars and bankers in "mapping a ‘third way’ between
laissez-faire capitalism and the welfare state." Amazingly, we are told in this
same report that Mr. Clinton "was the man who could break the ideological
deadlock of left and right, for no one," we are breathlessly informed, "had yet
coined the phrase ‘third way’… "! Some suspected that the "third way" in
which the President was more urgently interested was the one that might offer
safe passage between dishonorable impeachment on the one hand and a
disgraceful resignation on the other. One can only imagine Wilhelm Roepke’s
consternation at all this, were he to know of it—and perhaps he does.

With all the brouhaha about the concept, it is time to nail it down more
precisely. "The third way"—understood as a path between the extremes of a
paleo-capitalism based on laissez-faire and a socialist planned economy—is, as
noted above, a Roepkean construct, going back to his earliest days as a
publicist. I had occasion to comment on it at some length more than 20 years
ago in Russell Kirk’s The University Bookman. There I remarked that
Roepke’s thought moves unerringly towards the vital center and away from
extremes, an inclination expressed in the title of one of his most characteristic
works, Mass und Mitte, freely translated as "measure and moderation." On the
other hand, Roepke did not achieve his legendary status as a fighter for freedom
by diluting his principles or by yielding to compromise for the sake of harmony.
The harmony he sought was not in the area of polemics or ideology. The
harmony he espoused was an organic phenomenon, the natural harmony of both
man and nature that results from a right order of things, not only in the
economic sphere, but in all the multitudinous and intersecting
frameworks—historical, cultural, political, environmental, moral, even
religious—that make up the totality of human life.

One may ask: what has this third way to do with, for example, the famed
"middle way" of Sweden? Virtually nothing. Thus, Sweden’s overall public
spending today is 63% of gross national product, compared to about 36% for
the U.S. and 46% for Germany.. The Swedish government spends 46% of
Sweden’s GNP on welfare alone, more than any other country, and the income
taxes required to support this gargantuan public generosity take 59% of the pay
of people earning as little as $30,000 a year. This is a middle way, or a third way
if you wish, which has led Sweden into a swamp of rising unemployment, social
spending on a megalomanical scale, and precipitate falls in its competitiveness
and standard of living. In the OECD’s current review of its members’ economic
performance, Sweden fell from 4^th to 15^th place in per capita income.

All of this, of course, has nothing to do with Roepke’s third way. Indeed, he
was a fierce opponent of the welfare state in the form it had taken in his last
years (the mid-1960s) precisely in such places as Sweden and in Great Britain,
the United States, and especially in his native Germany. He believed every effort
should be made to secure to those unequipped to play the market game a
minimum standard of material welfare without, however, jeopardizing the
voluntary arrangements made by individuals to provide security for themselves
and their families against the contingencies of age and sickness. The quest for
security through "welfarism" and through a continuous expansion of the public
sector in which the state is looked upon as a kind of "fourth dimension" able to
satisfy the demands of any class for help, Roepke held to be an illusion.

But again, in keeping with his commitment to "Mass und Mitte," to the
avoidance of extremes, Roepke wrote censoriously of the delusions of an
unrestrained capitalism, of an obsessive "economism" in which human society
was led ineluctably towards a soulless mechanization and standardization and he
pleaded incessantly for the adoption of measures aimed at reducing the
crowdedness and hothouse atmosphere of modern life. In this context, he was a
strong proponent of population controls, of decentralization of industry, and of
the securing of the remnants of a rural way of life against urban erosion.

In particular, Roepke saw the unrestrained growth of population as helping to
spawn the psychic and spiritual toxins afflicting the contemporary culture. He
conceded that the power of modern technology has enabled living standards to
increase along with growth of population. But he argued that living standards in
the broadest sense, including many non-material dimensions of the good life,
would have risen even faster if population growth had slowed. And he posed
the plaintive question: "Why is it necessary that every enlargement of economic
room which is achieved by the labors and the ingenuity of the existing
population, be immediately filled by millions of new individuals instead of
serving to increase the well-being of those now on earth?" In this sense, Roepke
was an environmentalist before the term had been invented. In today’s lexicon
he would appear as a slow growther. For him it was not a matter of turning back
the clock—a fatuous romanticism which he repudiated—but of refusing to
continue heedlessly along the path that had brought us to our present vexations.

6. Spiritual Roots of a Humane Economy

Roepke’s influence is hardly to be explained merely in terms of the contribution
of Roepke the economist. Its deeper sources lie beyond economic science and
are to be found in a comprehensive understanding of human happiness, in
philosophy and in religion. These aspects of his œuvre were, in turn, decisively
influenced by life in the small German village on the edge of the Lueneburger
Moors in which he grew up. The simplicity and naturalness of this village
existence left the sensitive youth with a host of memories which were to
influence the whole cast and direction of his professional work in economics
and social theory. The warmth, the love, the stability, the small joys and
sorrows of this rural childhood, in which family, church, school, parents,
friends, and nature were melded into an organic whole—an existence made to
the measure of man, as he was wont to express it—became for him an ideal to
which he frequently referred. In later years, he remarked on how rare this
experience of growing up in a village was becoming in the wake of an
ever-advancing industrialism.

Of this existence, Roepke wrote:

"People helped each other with labor and with tools, wherever and however the opportunity arose,
whether in the fields, at slaughtering time in the Winter, or on other occasions and each was
generous with what at the moment he happened to have a surplus of. It would have occurred to no
one in this giving and taking to make a precise calculation of how he would come out in the deal.
Everybody knew when or where a birth had occurred, or was imminent. We all took part in
weddings, at least to the extent that, with the help of a scarf spread in front of the marriage coach,
we kids exacted the tribute of a few pennies from the groom. When the funeral bell sounded from
the old church tower, everyone knew for whom it tolled this time, and whoever could manage it,
walked the last mile with him."

And Roepke added:

"This colorful, variegated, and nevertheless closely integrated village community was, so my
memory goes, embedded in the rhythms of the changing seasons and in the natural order that
determines this rhythm. It is surely this union of community and closeness to nature which explains
the secret of how life in our village, in spite of its narrowness and apparent uniformity, was so
vibrant and lively and soul-satisfying."

The satisfying of men’s souls, and the consequences of the spiritual starvation
of modern life, became in later years major themes in Roepke’s programs for
economic and social reform. As a young man, he was formed in the great
classical traditions of the West and learned to see in Latin, Greek, history, and
literature, the indispensable keys to the legacy of the past and thereby to the
understanding of the present. He never failed to be appalled by and to denounce
the arrogance of the futurists and modernists for whom history, traditions,
experience, and the moral and spiritual legacy of Western civilization were
merely so much burdensome baggage holding back the advent of a better
tomorrow. In this, he anticipated the excesses of "political correctness" and
were he alive would be in the forefront of those exposing and denouncing it.

The progressive cutting back of attention to classical studies, including Greek
and Latin, he viewed as a work of desecration and destruction than which there
could be none more dangerous. In this context, he cited an incident in the
German Parliament—the Bundestag—in which a Social Democratic member
angrily responded to the use of a three word Latin phrase, "Vigilia praetium
libertatis," as follows: "Reden Sie deutsch im deutschen Bundestag!" ("Speak
German in the German Parliament!"). It was against this grotesque putting down
of the cultural legacy of the West that Roepke fought an unending, if often
discouraging battle. He took a dim view of much of modern architecture,
painting and music, and Le Corbusier’s well-known dictum, "Il faut
recommencer à zero," provoked in him an explosion of scorn. In this
connection, he was fond of quoting Goethe’s verse:

"He who of three thousand years

Knows not account to give

Unknowingly through the darkness peers

From day to day to live."

Exile though he was, Roepke remained deeply attached to the nobler parts of
his German patrimony. As a German, he could write an incisive analysis of what
he called the dark regions of the German soul—Die deutsche Frage (The
German Question) —which attracted international attention when it appeared
during the war and in which the concatenation of events, movements, ideas, and
national characteristics that made Nazism possible were pitilessly laid bare.
Notwith-standing, it was for this German patriot with his unforgettable memories
of his Lueneburger Heimat, a source of deep personal disappointment and even
anguish that no great German university thought it fitting after the war to recall
him, perhaps the most widely known of German economists, to a chair of
economics.

Nevertheless, his post in Geneva—the international center of a neutral
state—served him well. It enabled him to take a more detached, a more
Europe-wide view, unencumbered by what might have proved to be awkward
local allegiances. And if Geneva was not exactly Heimat, it was home. There he,
his wife and companion-in-arms Eva, and their son and twin daughters sent
down roots. Indeed, Switzerland, a country in which the apparently
old-fashioned bourgeois virtues of industriousness, morality, and self-reliance
were not yet laughed at, came close to satisfying Roepke’s conception of an
ordered and organic community which still retained the dimensions of the
human. He was strongly attached to that small country. But his affection for his
own country nevertheless remained primary and he retained his German
nationality to the end.

7. Adieu

Thus the years passed, in the course of which my relationship with Roepke
deepened. We communicated often and at length about the issues that
tormented the world of the 1960s: the welfare state and its handmaiden,
inflation, and their attendant miseries; the pursuit of what he saw as a baleful
new bureaucratic order in Europe under the rubric of a "Common Market"; the
enduring power of the Communist myth and the danger of an open conflict with
the Soviet Union. In the United States, he appeared with some frequency, in my
and others’ translations, in The Wall Street Journal, Modern Age, Social
Order, National Review, and other newspapers and journals, with essays and
books all the while continuing to stream from his pen in German, with
translations into French, Italian, Japanese, Swedish, Finnish, etc., quickly
following.

Came the year 1965, a red letter year for me, for in that year Roepke extended
to me an urgent invitation to come to Geneva as a Visiting Professor at the
Graduate Institute of International Studies with the intention that I should
succeed him in his Chair there. This was a compliment than which I could think
of none higher. Also, in that year, my doctoral dissertation, a study of the
German economy done under Roepke’s guidance, was published. I accepted
Roepke’s invitation with the understanding that it would be an experimental
undertaking, initially for one year—I had my fully Americanized family to
consider—and transplanted myself, with wife, four small children, and books,
to Geneva. What a joy and privilege it was to work alongside my great teacher,
now my colleague, a man whom I had always addressed as "Professor" and
who now beseeched me to skip this formality and to call him simply "Roepke."
We visited often with Roepke and his wife—they were fond of my children.
This close acquaintance emphatically confirmed my previous impression of him
as a true gentleman: generous to a fault to his rivals and opponents (of whom
there were many), with never a hint of the odium academicum that infects so
much of university life, at Geneva and elsewhere. And I greatly enjoyed my
teaching duties at the Institute.

Then came that Saturday morning in February, 1966, when, for a reason I have
now forgotten, I drove to the Institute. It was a crisp wintry day. The
refurbished chateau on the shores of Lake Geneva housing the Institute was
open for students who wanted to use the library. The trees on the grounds were
bare of leaves, imparting to the place a mournful aspect, as I recall. There was a
thin haze on the Lake but one could see the glistening peak of Mont Blanc in the
distance. I mounted the steps and saw that some students had gathered at the
door. There were murmurs and I heard the name "Roepke." They looked at me,
their faces were ashen, some tear-stained, and I knew that Wilhelm Roepke,
doughty champion of liberty and human dignity, colleague, and beloved friend,
was dead.

His obsequies were attended by leading scholars and high officials from half a
dozen European nations. Condolences came to Eva Roepke from the President
of Germany, Heinrich Luebke, from Chancellor Ludwig Erhard, from former
Chancellor Konrad Adenauer, from President Saragat of Italy, and from scores
of other distinguished persons in Europe and beyond. In his telegram
Chancellor Erhard praised Roepke as one of the strongest, most courageous
fighters for a free society and an indomitable defender of the rights and dignity
of man. "I have lost a true friend," he said, "who was unfailing in offering me
guidance and strength. The German Government thanks him for his enormous
contribution to the building of the scientific foundations of the social market
economy." From the little church in Cologny, not far from his beautiful home
on the shores of Lake Geneva, where the funeral services were held, we, several
hundred of us, students, friends, and colleagues, followed his bier, banked high
with flowers, through the narrow village streets to the cemetery where he was
laid to rest. Requiescat in pace.

It is important to note that when Wilhelm Roepke died on February 12, 1966, in
his 67th year, at his home in Geneva, in the floodtide of his powers, full of
honors, and with a veritable mountain of achievement behind him—his
bibliography then comprised over 900 items, including some 20 books—this
calamitous event was noted on the front pages of virtually every major
newspaper in Western Europe. Had there been a Nobel prize for economics
during his lifetime—it was first awarded in 1969—he surely would have been a
strong contender for it. And for many days thereafter Roepke’s life and works
were the subject of extensive comment and analysis, not alone in professional
economic circles, but in the popular media.

8. Roepke and American Economists

In contrast, in the United States his passing went practically unnoticed, though
The New York Times did manage to squeeze in a reference to it in four lines in
the back of the paper as follows: "Prof. Wilhelm Roepke, a German economist
and sociologist, died suddenly in Geneva yesterday, following a heart attack, his
family said. He was a former advisor to the German Government and author of
many books on economic subjects." Worse, in another report of the death, a
conservative columnist in a Midwestern newspaper, otherwise admiring of
Roepke and his work, referred to him as "this relatively obscure man"! And
elsewhere there was silence as well. The wire services carried no account of his
passing. But this was simply reflecting an unfortunate fact: though famous in
Europe, and in Japan for that matter, and with his name now being heard even in
China, Roepke was and is still not known in United States by any but a few
specialists, including those attending this meeting, and the more’s the pity.

As late as 1996, this situation had not changed. During the Presidential
campaign of that year, audiences were startled to hear from one of the
Republican candidates impassioned denunciations of heartless employers and
greedy corporations that exported American jobs overseas in search of profit.
Such rhetoric had more commonly emanated from ultra-liberal Democrats. The
candidate in this case was Pat Buchanan. "Executioners" was the term he
applied to such as A.T. & T. that lay off thousands of employees. "These
companies are like the creatures in Jurassic Park," he told reporters. Were he to
be elected President, he promised a crowd of lustily applauding supporters in
New Hampshire, he would "stand up for the working men and women whose
jobs are threatened by unfair trade deals done for the benefit of huge
corporations."

Where did Pat Buchanan claim to get his economic ideas? When Time
Magazine posed this question to him, he answered: Wilhelm Roepke, whom
Time then described as "an obscure German economist who died in 1966." It is
to Buchanan’s credit that he displayed a more accurate awareness of Roepke’s
real stature than the Time reporter. Doubtless too, Buchanan saw in Roepke’s
philosophy of "the third road" a worthy exemplar for the United States. More
wrong facts, in any case, appeared just this year in Buchanan’s book, The
Great Betrayal, in which, and apart from misspelling Roepke’s name, he again
claims intellectual kinship with Roepke, though his book is an aggressively
protectionist tract at odds with everything Roepke believed and taught
concerning the international economy. Compounding the misinformation was a
lengthy review of Buchanan’s book in The New York Review of Books which
misidentifies Roepke as an Austrian economist!

If Buchanan could find much in Roepke to support his American-style
"conservatism of the heart," it is also clear that the two would have parted
company on a number of basic issues, though this is not the place to explore
these. It suffices to note here that unlike Buchanan, Roepke is an unequivocal
supporter of an international economy in which goods and capital and labor
move freely across borders, holding that if the maximization of the welfare of
the whole population is the legitimate goal of a market economy, protectionist
policies collide directly with that objective by enforcing a lower level of
economic efficiency, both at home and abroad, than otherwise would be
possible. A large part of his published work is devoted to this theme. To
Roepke, Buchananite xenophobia and economic autarky would have been
simply anathema.

Still, thanks to Buchanan, Roepke is today somewhat less "obscure" than he
was. It is clearly a puzzle that a man of his immense stature in Europe and who
exercised such profound influence on the shape and direction of postwar
economic policy there, should have merited so little attention here. It is also
paradoxical in that one would have thought it would be precisely in the United
States, viewed as a kind of paradigm of capitalism, where Roepke, the eloquent
apostle of the market economy, would be an honored prophet. The paradox is
only seeming, however—there are explanations. There is first and most
obviously the fact that the greater portion of his polemical work—the hundreds
of articles on controversial questions of economic policy scattered through the
newspapers and journals of Europe—remains as yet unavailable in English. And
not all of the English translations, even of Roepke’s major works, have been of
a quality to ensure a wide readership.

9. Roepke’s Conservatism

More significant, in my judgment, in accounting for the American ignorance of
and/or disinterest in Roepke, is that his "Weltanschauung"—his total
conception of economy, society, and human destiny—has found relatively little
echo among those in this country who could be presumed to be his closest
ideological confreres, the conservative economists. Among these latter, a few of
them giants in their own right, will be found those who are straightforward,
unapologetic supporters of a laissez-faire economy. But, as noted, one of
Roepke’s major contributions has been to show the threat posed to the very
survival of a free economy by a policy of laissez-faire. Also, there is room for
doubt whether Roepke’s frequent denunciations of industrial giantism, of the
cult of the colossal and of the super-colossal, in short, of monopolism in all its
forms, has earned him many points with another segment of the American public
that might logically be expected to support his ideas—the business community.
Consider, for instance, this statement from Economics of the Free Society:

"Our economic system stands or falls with competition, since only competition can tame the torrent
of private interest and transform them into a force for good… the conclusion can no longer be
avoided that the growth of monopoly represents an extremely serious disfigurement of our
economic system. To effectively fight monopoly … it is necessary to have a strong state (italics
added)—impartial and powerful—standing above the mêlée of economic interests, quite contrary
to the widely held opinion that "capitalism’ can thrive only where there is a weak government. The
state, unmoved by ideologies of whatever brand, must clearly recognize its task: to defend
"capitalism" against ‘the capitalists’ as often as they try to travel a more comfortable road to profit
than the one indicated by the sign ‘principle of service’ and to shift their losses onto the shoulders of
the community."

Further, those who espouse "rugged individualism" and the enthronement of the
market economy as the final arbiter in human affairs will not find much to
support them in Roepke’s work. He was, after all, the author of a book with the
title Jenseits von Angebot und Nachfrage, i.e., "Beyond Supply and Demand."
And in a foreword to an early edition of Economics of the Free Society, he had
written: "It would be a profound misapprehension to imagine that a slogan
embodying a mere return to old-style rugged individualism is the battle-cry that
will help us win the spiritual victory over collectivism. For we cannot ignore the
fact that the debacle of economic liberalism [read conservatism—PMB] is due
in great part to its own insufficiencies, to its abortive endeavors, to its
degeneration."

At a later point, he drew a decisive line between his conception of a humane
economic order and nineteenth century liberal [i.e., conservative] utilitarianism
and its echoes in contemporary economic discourse. Thus he wrote:

"There is a school today which we can hardly call by any other name than liberal anarchism, if we
reflect that its adherents seem to think that market, competition, and economic rationality provide a
sufficient answer to the ethical imperatives of an economic system.

What is the truth? The truth is that economic life does not go on in a moral vacuum. It is in constant
danger of straying from its indispensable ethical moorings unless buttressed by strong moral
supports. These must simply be there and, what is more, must constantly be impregnated against
rot. Otherwise, our free economic system and, with it, any free state and society must ultimately
collapse.

The market, competition, and the play of supply and demand do not create these ethical reserves;
they presuppose them and consume them. These reserves have to come from outside the market
and no textbook on economics can replace them."

Were Roepke alive today, I believe he would have been appalled by some
aspects of what a capitalist culture in the closing years of the twentieth century
seems to produce: an obsessive cult of the self, coupled with a lust to have it all
now; the rise of the "raiders" and leveraged buyout artists and merchants of
junk bonds assiduously dismembering established companies in pursuit of a fast
buck, all the while taking on the status of folk-heroes; a chronic blight of
homelessness; and the emergence of a seemingly permanent underclass of the
poor and uneducated, nourished by crime and drugs. Considering these
phenomena and their extension to most parts of the industrialized world, I
suspect Roepke would have been moved to ask: Has the market economy lost
its soul?

10. The Role of Government

Those American conservative economists whose escutcheons bear the maxim
"government is the problem, not the solution," will not be enthused by
Roepke’s approach to the market economy. In the real world, he contended, a
viable market economy requires an effective and energetic government
committed to providing essential physical infrastructures and establishing and
maintaining a stable monetary and fiscal system as well as securing competition
and restraining monopoly, whether of capital or labor.

In his view of the functions of government, Roepke had much in common with
his great predecessor, Adam Smith. When we read The Wealth of Nations with
care, we note, some of us, I presume, with great surprise, that Smith was not
the unconditional champion of a limitless laissez-faire policy as he is often
portrayed. Even in 1776, it was evident that if the maximizing of one’s own
interests were pursued in an inappropriate or conflicting context of the larger
society, e.g., under the threat of war, or where competition is enfeebled or
absent, or where other necessary elements of the meta-economic structure are
missing, the postulated benevolent social outcomes of the market will be
frustrated.

Like Roepke, Smith was an exceptionally harsh critic of individuals and groups
whose interests collided with the general welfare and argued in consequence for
a strong state to ensure that the two converged. In particular, he worried about
the fragility of competition, noting in a famous line that "People of the same
trade seldom meet together, even for merriment and diversion, but the
conversation ends in a conspiracy against the public, or in some contrivance to
raise prices." How contemporary that sounds! Would Smith have approved
such governmental interventions as the antitrust laws? I believe he assuredly
would have. Certainly Roepke did, approvingly citing the American Sherman
and Clayton Acts as examples for all market economies to follow. I venture to
say that Roepke, while he would have been admiring of the entrepreneurial spirit
of Bill Gates, would also have been solidly in the corner of the U.S. government
in its current effort to rein in Gates and his behemoth Microsoft Corporation.
Parenthetically, Germany’s own antitrust law enacted in 1958, a first of its kind,
was modeled after the U.S. law and became known as the "little Sherman Act."

Roepke’s teaching concerning the role of government was straightforward and
unambiguous. In The Social Crisis of Our Time he avers:

"By renouncing this interventionism and the ruthless exploitation of the state by the mob of vested
interests, we can create the prerequisites for a trustworthy state and clean public life. But on the
other hand, this same renunciation presupposes a really strong state (italics added), a government
with the courage to govern. A strong state is by no means one that meddles in everything and tries
to monopolize all functions. On the contrary, not busyness but inde-pendence from group interests
and the inflexible will to exercise its authority and preserve its dignity as a representative of the
community, mark the really strong state, whereas the state that acts as a maid of all work, finally
degenerates into a miserable weakling and falls victim to the vested interests.

A market economy and our economic program presuppose the following type of state: a state
which knows exactly where to draw the line between what does and what does not concern it,
which prevails in the sphere assigned to it with the whole force of its authority, but refrains from all
interference outside this sphere—an energetic umpire whose task it is neither to take part in the
game nor to prescribe their movements to the players, who is, rather completely impartial and
incorruptible and sees to it that the rules of the game and of sportsmanship are strictly observed.
That is the state without which a genuine and real market economy cannot exist. Benjamin Constant
envisaged it when he wrote the words ‘Le gouvernment en dehors de sa sphère ne doit avoir aucun
pouvoir; dans sa sphère, il ne saurait en avoir trop.’ [‘Outside of its proper sphere, the government
should have no power; within its sphere, it cannot have too much.’]"

For Roepke, with his pragmatic understanding of and acceptance of flawed
human nature, of man as a being who is, in Pascal’s words, "ni ange, ni
bête"—neither angel nor beast—laissez-faire was always an illusion. Like Adam
Smith before him, Roepke thoroughly rejected the notion that the good society
could be best served by a government armed only with the power to protect
against external attack and internal civil disorder—the "nightwatchman state, in
Lassalle’s sarcastic terminology. Hence the positive role he assigns to
government, and not only to government but to the institutions of law, politics,
history, culture (broadly understood), science, and religion—all of which
sustain the market economy and help it to work efficiently and equitably.
Collectively, these institutions have the ability to shape and modify the
environment within which market processes occur, to the end that inequities and
inefficiencies are minimized.

11. Public Goods

Over the years, I’ve endeavored to codify Roepke’s teaching with respect to
the role of government in a couple of simple propositions. His teachings have,
of course, been transmuted through the mysterious lucubrations of the mind of
Patrick Boarman, so I hope that Roepke’s spirit doesn’t suddenly appear to
smack me upside the head for distorting or otherwise inaccurately conveying his
intentions. But for what it’s worth, here is what I’ve distilled. Government
exercises its necessary functions in three major ways: (1) quantitatively, as a
supplier of public goods (national defense, fire departments, etc.) and of
essential infrastructures (roads, courts, prisons, sewage systems, etc.) which the
market cannot or will not supply on its own; (2) qualitatively, as a gyroscope
holding the economy to a non-inflationary growth path, to the extent possible,
through an uncertain and often turbulent environment, using monetary and fiscal
policies for that purpose; and (3) again, qualitatively, as a rule-maker and
enforcer.

In the matter of public goods, the essential point is that since the benefits of
such goods, as in the case of a lighthouse, for example, will be available to all,
there is no incentive for the supplying of it on the part of any private person or
group. The lighthouse, in short, qualifies as a "public good" because its benefits
are indivisible: if one fisherman receives the good, all do. By analogy, if today
one American citizen has a credible national defense, all do. Such a good will
not be supplied on a quid pro quo, one-on-one basis, like a loaf of bread or a
pair of shoes. This is not due to any inherent defect in the market economy but
because it is simply an inappropriate device for the supplying of public goods.
This is how it came about that in Philadelphia in 1787 it was agreed that we
would all coerce ourselves voluntarily (nice irony) to collectively ante-up the
resources needed to supply (or purchase) the required public goods.

Consider: you can’t get a bag of national defense at the local supermarket, nor a
bag of protection against fraudulent securities dealers or falsely labeled drugs,
nor a bag of clean air, for that matter. The same holds true for price stability
(absence of inflation), vigorous competition (absence of monopoly), and high
levels of employment. None of these desirable things are automatically supplied
by an unaided market mechanism. In short, we agreed voluntarily to tax
ourselves (forget for the moment about the form of the tax) to provide the
wherewithal for the political arm to supply these things, refusers to be subject to
fines and/or imprisonment.

In the matter of rules: I now cite Roepke directly in noting that there is a critical
distinction between government interventions which are constructive and
intended to make the markets work better, such as antitrust laws, and those
which are harmful, such as price controls. The latter constitute non-conformable
interventions which vitiate the supply–demand mechanism. In other words,
market-conforming interventions simply add data to the decision-making
process. They alter the rules of the game or add new rules, but they do not
intrude into the internal mechanics of the market. On the other hand, government
interventions may be counterproductive, even if they are "conformable," where
they are excessive in number or obsolete or simply unnecessary. Here Roepke
offers a useful analogy with alcohol. Methyl alcohol (non-conformable
intervention) is poison and should never be consumed. But even ethyl alcohol
(conformable intervention), which is potable, and the source of the great gift to
humankind which is a fine wine, can be abused, leading ultimately to sickness or
even death.

It is of vital importance to note that the Roepkean model allows for and expects
evolutionary change over time in the economy and in the social institutions that
surround it. The possibility and desirability of reform, as circumstances change,
is the underlying premise of his model. It is at once dynamic, accepting of
change and prepared to adapt to it, but also in this process holding to what is
permanent in economic science, namely, to those constants in human behavior,
embodied in the laws of supply and demand, which, when frustrated or
opposed, produce social and economic disorder.

What in the last analysis complicates the issue of where Roepke stands among
certain American conservatives is that his interests, as noted above, extend far
beyond the merely economic, the merely sociological, the merely political, to the
very bedrock of the human condition, to the moral and spiritual, and yes the
religious foundations of human existence. With much of this effort to view and
to understand man, not only in the exercise of his economic and social
functions, but in the totality of his being, Roepke’s colleagues in the economics
profession, both here and elsewhere, are undoubtedly uncomfortable. Especially
is this likely to be the case for those for whom Roepke’s value judgments are
either a matter of complete indifference or are grounds for active dislike of his
work. This, and the fact that Roepke’s purely economic program says in effect
to the laissez-faireists on the one side, to the liberal interventionists on the other,
and to the totalitarians of whatever hue, a plague on all your houses, helps to
explain why his work is a so little appreciated here. He simply does not fit into
the defined and accepted ideological categories. But this is our fault, not his.

12. Economic Models: the German and the American

The striking current success of the American economy—the unprecedented
coexistence of high employment, low inflation, and substantial real growth over
an extended period which has characterized it—would have been applauded by
Roepke. He would, however, have pointed out that in economics, as with the
weather, the future remains uncertain and that the United States, no more than
any other nation, is not immune to what is happening in the international
economy. Similarly, Germany’s economic policy blunders and its repeated
deviations in recent years from the prescriptions of the social market economy
would have earned his scorn, as indeed they did during his lifetime. He would
have been especially heartened by these critical components of the U.S.
performance: the unwavering anti-inflationary posture of the American central
bank, the Federal Reserve; the trimming back of the overblown American
welfare state; and the elevation of fiscal integrity, i.e., the holding of government
spending within the limits of its revenues, as a top national priority.

Certainly, too, the current budget surplus of the United States he would have
found especially worthy of congratulation, much as had looked back with
nostalgia to similar such surpluses in the early years of the German social
market economy. He would, I believe, also have cautioned against reading too
much into Germany’s current economic problems. After all, it remains the
strongest economic power in Europe by far; its currency, though soon to be
eclipsed by the euro, is the bellwether of all others in Europe; and while
unemployment remains too high, per capita income is at an historically high level
and rising. Presumably these indicators would be even more favorable but for
the enormous additional burdens on the economy attendant on the reunification
with East Germany. One may add that precisely because Gerhard Schroeder,
the new Chancellor, is to the left of Helmut Kohl, he may be more successful
than the latter could be in trimming back Germany’s welfare state to a more
sustainable level, much as Clinton managed to do following two Republican
Administrations with their legacy of budget deficits. In the German case, that is,
of course, a hope rather than a firm conviction.

At a deeper level, Roepke would have been preoccupied by certain cultural and
sociological elements that differentiate German, and more generally, European
capitalism from the American variant. In his conception of the social market
economy, while the autonomy of the individual is accorded first place, attention
is also paid to the factors that make for success of the organism, of the group
as a whole, as opposed to an exclusive preoccupation with the success of
discrete individuals. Thus, companies are seen as organic institutions, deserving
of and contributing to continuity and stability. Long-term market success is
preferred to short-term gain. Investment in human capital via a universal
apprenticeship system assures a relatively frictionless transition of
school-leavers into jobs and professions (assuming other key elements of the
original German formula are in place). Also, in the German model, businesses
rely to a much greater extent on bank credit than on funds procured in the stock
market. This allows for long-term investment strategies to be pursued versus the
short-term focus of stock financing in which quarterly earnings reports drive
decision-making.

The American model, in contrast, lays greatest stress on promoting
opportunities for the success of individuals in isolation from group
considerations. Further, in this model, in the matter of raising capital there is
heavy reliance on stock markets and the short-term calculations that stem from
it. A business is seen as a commodity and its assets as acceptable targets for
raiders and for friendly or hostile takeovers. Companies are vulnerable to
dismemberment, their assets to piecemeal dispersion, with the goal of the
arbitrageurs being to make enormous profits quickly. The profits in turn
become a magnet attracting the best and brightest young Americans into finance
where they become adept in the manipulations and machinations of the "casino
economy." Maurice Allais, recipient of the 1988 Nobel Prize for Economics,
has noted that the American economy "seems to have given itself over to a kind
of frenzy of speculative finance which produces enormous incomes based on
nothing really solid, and whose demoralizing consequences have been seriously
underestimated." In contrast, in the uncorrupted German model, such mergers
as occur are normally pursued in the context of long-term benefits to the fused
entities and a commit-ment to make something and sell it, not just engage in a
complex game of exchanging pieces of paper.

In the American model, defending against raiders and predators tends to
preclude the elaboration of any kind of rational industrial strategy. Rather, the
efforts of managers and workers alike are directed to channeling energy and
resources into maximizing of short-term profitability to keep the stock price
high and placate shareholders. The organic concept of a company in which
managers, employees, shareholders and directors are joined in a community of
mutually shared interests is replaced by a concept of a company as a cash-flow
machine. Companies, their employees and their customers, are seen as
disposable, expend-able quantities. As he had in the past, so too, I believe,
would Roepke today deplore and abjure this kind of capitalism. And he would
point to the supreme irony in which the elevation of "the bottom line" to the first
place in the scale of values, i.e., the pursuit of profit in a moral vacuum, can
also weaken capitalism.

13. Homo Economicus vs. Homo Religiosus

The concerns expressed in the foregoing section are arrayed in a more general,
partly philosophical context in Roepke’s partly autobiographical essay, "The
Economic Necessity of Freedom":

"The defender of a ‘liberal’ economy must make plain that the realm of economy in which
self-interest develops, constrained by legislation and competition, is not set against but enclosed
within the realm in which is developed man’s capacity for devotion, his ability to serve ends that do
not look to his own immediate betterment. Society as a whole cannot be based on the law of
supply and demand, and it is a good conservative conviction that the state is more than a
joint-stock company. Men have to be united by a common ethic; otherwise competition
degenerates into an internecine struggle. Market economy is not in itself a sufficient basis of society.
And man is more than a mere economic animal. The desideratum of orderly freedom requires that
man voluntarily accept the community’s prior rights as against certain short-term satisfactions of his
own, and he must feel that in serving the community, he ennobles his own life with the philia by
which, according to Aristotle, men are united in political society. Without this, he leads a miserable
existence, and he knows it."

In this same essay, Roepke exposes to us the core value around which his life
and work revolved:

"This brings me to the very center of my convictions, which, I hope, I share with many others. I
have always been reluctant to talk about it because I am not one to air my religious views in public,
but let me say it here quite plainly: the ultimate source of our civilization’s disease is the spiritual and
religious crisis which has over-taken all of us and which each must master for himself. Above all,
man is Homo religiosus, and yet we have, for the past century, made the desperate attempt to get
along without God, and in the place of God we have set up the cult of man, his profane or even
ungodly science and art, his technical achievements, and his State. We may be certain that some
day the whole world will come to see, in a blinding flash, what is now clear only to a few, namely,
that this self-idolatry has created a situation in which man can have no spiritual and moral life, and
this means that he cannot truly exist as man for any length of time, in spite of television, motor
speedways, pleasure cruises, and air-conditioned modern architecture. It is as though we have
wanted to add to the already existing proofs of God’s existence, a new and ultimately convincing
one: the destructive consequences of His assumed non-existence."

So spake the Sage of Geneva.

14. Il faut cultiver notre jardin.

I close with a passage from one of Roepke’s last letters to his sister, Grete
Willgerodt, dated April 1, 1965, that displays, among other things, his passion
for gardening.

"My dear Grete,

When I rest, I feel exceptionally well and recently I’ve been sleeping quite soundly. Rest is what my
two doctors have prescribed as the most important medicine: no physical exertion and no psychic
stress. Conclusion: no more trips, neither to Rome, nor, as we were hoping to manage as a
substitute, to southern Germany, or even to Zurich.

The business of being confined to Cologny is not at all cause for disappointment. We have
discovered a new formula for happiness: to plan a trip and then to stay home, where it’s so
beautiful. At this very moment, there’s all kinds of things to be taken care of in the garden.
Hyacinth, tulips, narcissus, scilla, arabis, crocuses of course, anemone—everything is already
blooming; and ribes sanguinea and forsythia will soon be sprouting buds. The lawn awaits its first
mowing; in that massacre will be caught up, regretfully, dandelion and similar inferior species! It’s
time for the first seeding, and so on. I must clean out the pond, drain it to the bottom, and in the
process speak nicely to the fishes so that they understand that I only mean them well. Watching
them dart about in the clear water so merrily, I have the feeling that they’ve understood that a
guardian angel has watched over them. Are we not really like these fishes?"

That is the end of the letter. In tandem with it, it is worth noting that Voltaire’s
famous aphorism, "Il faut cultiver notre jardin," was one of Roepke’s favorites.
It appears often in his writings and illumines his two deepest attachments: on the
one hand to home and hearth, to all that is made to the measure of man, and
beyond that, to liberty. Thus his fierce determination to battle tyranny from
wherever and whomsoever it might come.

15. Honors

Wilhelm Roepke was the recipient of innumerable honors and decorations,
among them the Cremisini prize for literature in translation (Italy), the doctorate
honoris causa from Columbia University, the University of Geneva, and the
Technical University of Munich, and the Grand Cross of Merit with Star of the
Federal Republic of Germany. The citation which accompanied the presentation
to him of the Pirkheimer Medal in 1962 expresses tersely but accurately the
essential orientation of his whole system of thought: "The measure of the
economy is man. The measure of man is his relation to God."

Major Works of Wilhelm Roepke in English or English Translation

German Commercial Policy, William Hodge & Co., London, 1934.

Crises and Cycles (tr. of Krise und Konjunktur),William Hodge & Co.,
London, 1936.

International Economic Disintegration, William Hodge & Co., London,
1942.

The German Question (tr. of Die deutsche Frage), William Hodge & Co.,
London, 1946; American edition, The Solution of the German Problem,
Putnam, New York, 1947.

Civitas Humana (tr. of Civitas Humana), William Hodge & Co., London,
1949; reissued as Moral Foundations of Civil Society, Library of
Conservative Thought, Transaction Publishers, Rutgers University, Brunswick,
NJ, 1995.

The Social Crisis of Our Time (tr. of Die Gesellschaftskrisis der
Gegenwart), University of Chicago Press, Chicago, 1950; reissued, with an
introduction by William F. Campbell, Library of Conservative Thought,
Transaction Publishers, Rutgers University, New Brunswick, NJ, 1994.

Welfare, Freedom, and Inflation, William Hodge & Co., London, 1957;
reissued, with a foreword by Roger A. Freeman and an introduction by Graham
Hutton, University of Alabama Press, University, Alabama, 1964.

International Order and Economic Integration (tr. of Internationale
Ordnung), Reidel, Dordrecht, 1959.

A Humane Economy (tr. of Jenseits von Angebot und Nachfrage), Henry
Regnery Co., Chicago, 1960; reissued, with an introduction by Dermot Quinn,
Intercollegiate Studies Institute, Wilmington, Delaware, 1998.

Economics of the Free Society (tr. by Patrick M. Boarman of Die Lehre von
der Wirtschaft), Henry Regnery Co., Chicago, 1963. Currently available from
Libertarian Press, paper, 1994, and from Intercollegiate Studies Institute.

Against the Tide (translations of selected essays by Roepke, most of which
appeared in the anthology in German entitled Gegen die Brandung), Henry
Regnery Co., Chicago, 1969. Currently available from Intercollegiate Studies
Institute, 3901 Centerville Road, Wilmington, DE 19807-0431.