The maturing of a humane economist

Modern Age, Summer, 2003 by John Attarian

Wilhelm Ropke: Swiss Localist, Global Economist, by John Zmirak, Wilmington: ISI Books, 2001. 241 pp.

IN GLARING CONTRAST TO the mainstream minds of his profession, free-market economist Wilhelm Ropke (1899-1966) viewed man as an embodied soul and not as the reductive utilitarian stick figure of Homo economicus. Ropke expounded his ideas in such books as The Social Crisis of Our Time (1942), Civitas Humana (1944), and A Humane Economy (1957), and numerous pieces in periodicals including Modern Age. In this compact and deftly written book, screenwriter and free lance journalist John Zmirak, seeking to illuminate "the intimate relationship that binds free markets, social order, and the search for the common good," provides an informative and helpful, if seriously uneven, introduction to Ropke's thought.

Born in Schwarmstadt, Germany, Ropke acquired a classical education and became extraordinarily well read. In his youth he flirted with socialism, but was soon disabused of this by reading the Austrian economist Ludwig von Mises (1881-1972). For the rest of his life, Ropke consistently repudiated socialism, indeed all forms of statism, and consistently and strongly endorsed the free market.

In addition to these consistencies, Ropke's thought also displayed a crucial evolution. Zmirak's emphasis on this facet of Ropke is one of his book's greatest virtues. In the early 1930s Ropke was a rationalist classical liberal and a devotee of the Enlightenment and economic determinism, highly critical of pre-Enlightenment "illiberalism," advocating "liberation from old authority." At that point, he saw economic liberalism as a natural consequence of liberal rationalism.

Ropke's intellectual evolution, Zmirak demonstrates, owed much to the political philosopher Alexander Rustow (1885-1963). Laissez faire economists argued that a natural harmony of interests would enable egotistical economic action to serve the common good. Rustow traced this viewpoint to deism and beyond it to a mystical pre-Socratic Greek belief in a harmonious universe. This belief prevented development of a strong system of social institutions such as the family and the rule of law that actually support free markets. Moreover, Rustow pointed out, in capitalism's early years there existed an abundance of ethical capital from a previous Christian society that greatly enhanced the beneficial effects of the free market. Having absorbed Rustow's arguments, Ropke developed a growing respect for religion, traditions, and institutions intermediate between the individual and the state.

But another major factor in Ropke's intellectual odyssey, which Zmirak rightly stresses, was his own personal experiences. The German village of his childhood had a rich, intimate, small-scale community life. His military service in World War I left a lasting distaste for regimentation and depersonalization, prompting his rejection of collectivism. Even more decisive was his relocation to Switzerland. Faithful to free markets and democracy despite the unhappy Weimar Republic experience, Ropke fearlessly denounced the new Nazi government in February 1933. Shorn of his tenured professorship, his family threatened by the SS, Ropke fled to Amsterdam, then to Turkey. In 1937 he moved to Switzerland, his home for the rest of his life. Here he found a society enjoying the blessings of a free economy, federalist government, and direct democracy. His writings repeatedly pointed to Switzerland as the model of an ideal society.

Zmirak presents Ropke's economics in language as accessible as Ropke's own. Ropke began with the idea of the dignity of the human person--a being who is not an isolated individual but part of a family and community, whose well-being is dependent on theirs. His thought owed much to the Austrian free-market school; like Mises and Friedrich Hayek (1899-1992), he grasped the modern market economy's incredible capacity to synchronize the activities of multitudes of persons and its need for reason, peace, and freedom if it is to operate effectively. Like them, he endorsed free trade and the gold standard.

But unlike the laissez-faire Austrians, Ropke conceded that capitalism can be disruptive and inhumane, and that its vaunted efficiency and affluence can exact social and spiritual forfeits. In consequence, he envisioned a more positive and extensive role for the state, as rule-maker, enforcer of competition, and provider of temporary relief from the hardships and dislocations inflicted by a dynamic, competitive economy. He saw competition and a freely-operating price system as the "core" of a free economy; provided state interventions did not disrupt these, Ropke deemed them "compatible" with capitalism. Such interventions included antitrust measures, progressive estate taxes, modest loans for small business and farmers, and temporary transfer payments to displaced workers. In time, however, Ropke became a scathing critic of the welfare state on both economic and ethical grounds.

Rejecting corporate capitalism with its tendency to a concentration of ownership, Ropke endorsed a "humane-scale" economy of ownership of productive property widely distributed among multitudes of small family farms and businesses. He opposed private monopolies, Zmirak observes, because only economic decentralization could "guarantee a continuation of economic liberty." Ropke called his version of capitalism the "Third Way," or "social market economy," because it combined free markets with a concern for the common good. Aware that socialism's appeal was its seeming moral superiority over capitalism, he also admitted that capitalism has its faults, such as the corrosive effect of competition on human solidarity.