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ideal economy

We are often told that among the great benefits of our modern capitalist economy are our expanded choice, free­dom, and power to get what we want. And yet at the same time it is evident that there is still a deep and pervasive sense of dissatisfaction among us, as though the more we get what we want, the less happy we are. Such a paradox sug­gests that, as many have observed before, we are perhaps not getting what we really want, and further, the fact that expanded choice and meaningful freedom are not always the same thing. After a point, a fallacy of composition takes over: as each individual strives to get more, we may all get less. The official propaganda of more choice and freedom may actually, then, mask an under­lying unfree­dom and so, by confusing and blind­ing us to alter­native policies, we tread the same old paths and our frustration is reinforced.

While this sense of unfreedom has been ex­pressed by many thoughtful writers, including Richard Weaver, John Ruskin, and G.K. Chester­ton, it is perhaps most thoughtfully described in a pas­sage of Boris Paster­nak’s famous novel, Doctor Zhivago, when the hero is captured by Red partisans:

The limits of his freedom were very ill defined. The place of his captivity was not surrounded by walls; he was not under guard, and no one watched his move­ments….On the surface, this captivity, this dependence, seemed to be non-existent, as though the doctor were free and merely failed to take advantage of his freedom. His captivity, his depen­dence, were not different from other forms of compulsion in life, which are often equally invisible and intangible, and seem to be nonexistent and merely a figment of the imagina­tion, a chimera. But although he was not fettered, chained, or watched, the doctor had to submit to his unfreedom, imagi­nary though it appeared.

Our unfreedom today is similar because the choices of individ­uals within the present political and eco­nom­ic system are limited to a range in which most or all are in some measure significantly unsatisfying.

In the volumi­nous writings of Wilhelm Roep­ke, we find an effort to come to grips with this dilem­ma of unfreedom and to outline a way of getting what we want in a deeper and fuller sense. Rather than perpetuate the feeling of dependence and unfreedom by restricting choice to the usual alternatives in political economy (socialism or liber­tari­anism), Roepke envi­sions a “Third Way” that would in a properly under­stood sense be truly “liberat­ing.” It is not the Roepke as Austrian econo­mist that is here considered, or the Roepke as anti-communist, but rather the essential Roepke, Roepke as radical reform­er, as idealist.

Definition of “Ideal”

In his writings Roepke frequently uses the word “ideal.” One finds a pointed use of it, for exam­ple, in The Social Crisis of Our Time, and in the article “Das Kul­turideal des Liberalis­mus” (“The Cultural Ideal of Liberalism”). While he doesn’t explicitly unpack the meaning of this term in Social Crisis, he does not normally use it to refer to something utopian, or unrealistic but as some­thing achievable and participat­ing in the eternally good. His use of the term, along with others (e.g., “es­sence”, “substance” and “form”), and his knowledgeable refer­enc­es to philoso­phers (e.g., Plato, Aristot­le and Kant) show he isn’t being casual. (He also expresses the concept of the ideal at times as “optimum,” “balance,” and “proportion.”) Most impor­tant­ly, under­standing his use of such terms is vital to grasping his analysis. One cannot, for instance, under­stand his treatment of the history of capital­ism, without keeping in mind his distinc­tions between the “essen­tials” of a market econo­my (e.g., freedom, property and competition) and its various historical manifesta­tions (e.g., 19th-century British capitalism). The ideal economy, however, includes the essentials in the form best suited to human nature and adjusted, within limits, to concrete historical circ­umstances and differ­ences.

In a simple, traditional definition, an ideal is a perfect exemplar or transcendent pattern that inspires efforts to embod­y it in some earthly form. Due to an imperfect world and flawed human nature, however, the ideal is at best only approximated, some­thing in the manner of Aristotle’s ­doc­trine of forms imper­fectly real­ized. In Roepke’s view, the ideal economy has been closely approxi­mated a number of times in history but has been more often deflected from a fuller realization by corrupting laws, policies and institutions.

Because an econo­my depends on a broader com­munity, it’s first neces­sary to outline Roepke’s view of the ideal society and govern­ment. (Refer­ences to Roepke below are from The Social Crisis of Our Time.)

Ideals of Society and Government

Though Roepke’s writings on society assume a traditional Christian worldview, he broadens his inter­pretation of the process of disinte­gration and decay by adding evidences from the social sciences, includ­ing the science of econom­ics, that must be kept in any picture of society that aims at completeness.

In Roepke’s vision the ideal society is “liber­al” in a more or less classical sense. This means it is federated, functional, hierarchical and with intermediary levels of authority and institutions. It also means that a prominent place is given to the local community, to personal relationships, and to the socially respon­sible individual. He wanted a society that was something of the Europe of the 18th century: enjoying joie de vivre, centered around personal relationships, small community, fellowship, a traditional patriarchal family and home, and even an older middle class which practiced home­schooling. As he puts it:

A healthy society, firmly resting on its own founda­tion, possesses a genuine `structure’ with many interme­diate stages; it exhibits a necessarily `hierarchi­cal’ composition…where each individual has the good fortune of knowing his position. Whereas such a society is based on the grouping functions of genuine communi­ties filled with the spirit of human fellowship (such as the neighbourhood, the family, the parish, the Church, the occupation), society has during the last hundred years moved further and further away from such an ideal and has disintegrated into a mass of abstract individuals who are solitary and isolated as human beings, but packed tightly like termites in their role of social functionaries. (p. 10)

Roepke cites several historical examples to support his view ranging from positive aspects of societies in France, Germany, and Denmark. But he specifically singles out Switzerland as the best overall paradigm in his vision of the good society, the best incarnation of the ideal.

Roepke stresses government’s contribution to the extra-economic framework without which the economy could not function properly. The nature of govern­ment (like the economy) is flawed, however, and tends always to want to expand its own power. Power, therefore, must be widely distributed, diffused. Roepke speaks of a limited democracy, that is, the classical understanding of “republic,” as the preferred form of government. In his “metaphys­ical dream” (Richard Weaver) of the ideal government, he sees a republican form similar to the early American under­standing. And like many early Americans, Cincinnatus would likely have had a strong appeal to him as the personification of republican virtue.

A republican government requires a highly civilized people, with a unified vision of how life should be lived. As he writes: “An ideal democracy therefore presupposes that the people are in almost complete agreement on questions of government. However unattainable this ideal may appear, the prob­lem as such must be clearly discerned and the nearer a country approaches the solution [i.e., the ideal], the better for its democracy” (p. 89). Further, the ideal government is limited to its proper sphere but within that sphere it is vigorous and depends on men with a proper esprit de corps.

Let us not mistake what is meant by being limited to a “proper sphere.” Roepke acknowledges that because the pursuit of self-interest does not always lead to harmony government intervention in the econo­my is sometimes needed. Here Roepke makes the important contribution of distinguishing between “compatible” and “incompatible” interventions. The former intervenes in the market in such a way as not to freeze the price mechanism and thus allows the forces of the market to adjust to the intervention. A protective tariff would be one example of such an intervention. Incompatible intervention chokes off the natural flow of market forces causing such disruption that still more government intervention is required. His example here is rent control.

But Roepke is not a “dogmatic democratist,” recog­nizing not only that democracies have their weaknesses but can sometimes be the most despotic form of govern­ment. More important than the particu­lar form of government and narrow consideration of political rules is the (meta-governmental) spirit which informs and controls it. That spirit must be liberal in the properly understood sense. There is a distinction between a liberal order and its opposite, “collectivism.” The latter is the tendency to destroy those healthy forms of society and government identified above. It must recognize the proper spheres and limits of government, of the economy, and other institutions. It is entirely possible, and there are historical examples of this, for a government to be “democratic” but not “liberal.” While on the other hand, certain dictatorships can be liberal. The government of Kemal Ataturk is one such example Roepke cites. The opposite of collectivism is not democracy – “which is merely one of many possible vehicles of public authority, but rather the liberal principle which erects a bar against the power of the state … a bar consisting of non-political spheres, of tolerance and civil liberties; and this principle is, therefore, compatible with democratic as well as non-democratic political systems” (p. 85). Democracy must, then, be limited and balanced by non-political spheres, “corps intermediaires” (Montesquieu), liberal­ism, federalism, self-administration and aristocratism (p. 85). He explains further:

There is no denying it: the collectivist state is rooted in the masses (to which professors can belong as well as workers) and it can only exist under conditions which, sociologically speaking, we term spiritual collectivization, that is, conditions of society for which precisely the extreme democratic development is an excellent preparation but which is the direct opposite of the liberal as well as the conservative-aristocratic ideal. (p. 86, emphasis added)

Approximation of the ideal government presupposes that of an ideal society.

The Ideal Econo­my

Necessarily related to the above is the nature and character of the economy which operates within the context of a broader com­mu­nity. Today, if we were to ask what is the nature and purpose of an economy, most answers would involve references to complex systems of production and consumption, prices and leading macroeconomic policies aimed at fulfilling—and increasing—the subjec­tive desires of consumers. Concerns about material productivity is the major part of many policies and dominate the major, and some minor, political parties. In Roep­ke’s view, however, this tends to make too much of material need, an attitude he de­scribes as “`economism’…be­cause it judges every­thing in relation to the economy and in terms of materi­al productivity, making material and economic interests the center of things by deducing everything from them and subordi­nating everything to them as mere means to an end” (p. 53).

Hardly the ideal attitude. It obscures the purpose and nature of the market economy, which is not only to alleviate want but to provide a measure of security and to fit amicably into the rest of society. Like govern­ment which by its nature needs limits and extra-govern­mental support, the compet­i­tive market economy depends on an extra-market frame­work.

The Na­ture of the Market. Roepke firmly believes in free markets as the only legitimate way to harness self-inter­est in the service of others. Markets coordinate resourc­es and enlist pro­ducers’ power in the service of the consumer. Lest anyone misunderstand him to be advocating something he is not, some form of corporativism, or guildism or some strand of social­ism, he stresses that competitive markets are as much a part of the natural order of things as community. The totalitarian regimes of his day proved even then to be economic as well as politi­cal failures. More important­ly than mere material benefits, Roepke emphasizes the now commonly cited non-material advantages of freedom and the dignity of the individual. This places Roepke in the same ranks as Hayek and Mises.

However, Roepke also understood the need to place markets and the entire economy in proper per­spective. Unlike a number of his colleagues, Roepke knew that one cannot place it at the top. Agreeing with his friend, Alexander Rues­tow, he understood that the very force which makes com­petitive markets efficient, the harnessing of self-interest, is also destructive of community in certain ways. Outside the market these destructive forces are especially evident. Selfishness cannot be a basis of community.

Therefore, we must say the economy is not a sociologically autonomous sphere which can be granted unrestricted rights over the rest of society. It is not to be absolutized or allowed unconditional, thus irresponsi­ble, influence over the pattern of life. The economy depends upon a legal, social and moral framework. A modern competitive economy is a highly fragile aspect of society and requires, like a free republic, a highly civilized people to practice it well. It is not for every­one; not for the barbarian and the moral degenerate any more than is a free government. But there must be a minimum of decency that underlies and is presupposed by all economic participants before they enter the market. As he describes it:

…a free market and performance competition do not just occur—as the laissez-faire philosophers of historical liberalism have asserted—because the state remains completely passive; they are by no means the surpris­ingly positive product of a negative economic policy. They are, rather, extremely fragile artificial products which depend on many other circumstances and presup­pose not only a high degree of business ethics but also a state constantly concerned to maintain the freedom of the market and competition in its legislation, admin­is­tration, law courts, financial policy and spiritual and moral leader­ship, by creating the necessary framework of laws and institutions, by laying down the rules for competi­tion and watching over their obser­vance with relentless but just severity. (pp. 227-228)

Technology. Many see in the free market an essentially dynamic, technology-driven system that requires “growth,” indeed, rapid growth and expansion, to exist. Roepke denies this. He predicted that after World War II, the “impetuous dynamism” of capitalism would once more be used to rebuild Europe, a process that would rather hinder our understanding of the nature of free markets. He looked forward to a beneficial slowing down that would come after this, to a “more mea­sured pace” with a reduc­tion in exag­gerat­ed indus­trialization and interna­tional­ization (p. 139). Today, that process has long been complet­ed and we face again fundamen­tal ques­tions of economic structure.

Is uncritical acceptance of modern technology part of the essentials of the free market? Roepke’s answer is “no.” We need to have a fair but critical view of technology. That means we must be discrimi­nating in our choice of technologies and not slavishly sub­mit to whimsical “megatrends,” allowing our entire pattern of life to be determined by “technodules,” the troglodytes of technology, those who, when given a hammer, see all the world as a nail. Nor did he believe that all the technical chan­ges that have al­ready oc­curred, primarily we may say since the in­dustrial revolution, constitute true “progress.” As he states:

…today we are aware of the high price that had to be paid for it [material progress] and that we will contin­ue to have to pay, and we are by no means still certain that the price is not too high. We distrust the optimistic assertion that technology and the machine are complete­ly innocent of all this and that the blame rests squarely on man alone who is using them in the wrong way and will just have to learn the right one…The problem of the machine – which happens to be something else than just a highly developed tool – is not merely one of its use, but also one of the machine itself, which, follow­ing its own laws and imposing them on man, extracts its tribute from him. (p. 47)

He further insists that we can and should take a firm and conscientious social control over our technological destinies:

…we are not the helpless slaves of technology, but as before – if only we wish to be – captains of our fate…. this argument of technological inevitability is also misleading because it depends entirely on extra-techni­cal factors whether a certain technological process which, for example, favors mass production, is in actual fact really superior from the economic point of view or not. (pp. 136, 137)

Roepke is not opposed to all forms of technical innovation. What he bemoans, however, is the indis­criminate application of these same tech­niques where they are inappropriate (as in agriculture) or where the social costs outweigh the immediate econom­ic benefits. Thus, he writes that our lives would be far healthier and happier and more natural if certain technical achievements were reversed (p. 112).

Competition. Within what limits is competi­tion a socially beneficent activity? Or is it a panacea for social ills as held by those with an unqualified view of privatiza­tion? Unlike a George Gilder today and his 19th centu­ry forerun­ners, the practice of business in a com­petitive market drains and weakens our moral resourc­es by plac­ing us all too much in the paths of tempta­tion; it does not replenish or streng­then them. Com­petition is the economic acid that eats away moral reserves. It is an explosive that requires contain­ment. Competitive markets are like gasoline: we want it kept strictly within the combus­tion chamber of our economic engines as the vehicle of a neces­sary activity but we don’t want it strewn over the soil of community to befoul all the other goods of human fellowship and communion. Therefore, other social supports must be in place to counteract the degenerative ef­fects of life in a modern competi­tive economy.

Toward Ideal Markets. As with government and the economy in general so also with competition in particular: it needs to be balanced with extra-competi­tive supports and containment if it is to function in a wholesome manner. Roepke gives three characteristics of the ideal competi­tive economy. Firstly, it is one of freedom from those distortions of economic power such as various forms of monopolies, that are either the remains of feudalism or have been acquired by inappro­priate leverage on the government for economic advan­tages. These are the basis for the just cries of 19th century socialists. It was a social sin for the advocates of capitalism not to admit the justice of these demands, to be blind to them and thus to defend nearly everything in the system to such a degree as to place us again on the horns of that false either/or dilemma (either laissez-faire capitalism or socialism) with its tendency to push us toward collectiv­ism.

Secondly, an ideal economy is characterized by a socially stabilizing, wide distribution of property with much smaller differences in wealth than is seen today. The es­sence of that stabil­ity and the justice behind it is the ancient Aristotelian ideal of proportion­ality. In the just as well as free market, competi­tion ensures that rewards are pro­portioned to effort and the wide distri­bution of property ensures that oppor­tunities are simi­larly proportioned so that vast differ­ences of economic power will not appear or if they do, will not long remain. The failure of our present system to provide for this has reduced most of us to what has come to be called a “proletarian” sta­tus. Proletarians are those who have nothing but their labor to sell. They own no productive assets, especially land, and so are forced to live in excessively large cities and participate in patterns of life that contribute to collectivism.

Thirdly, competition is balanced with a degree of economic self-sufficiency. Here Roepke sees a correspondence between the com­petitive market and self-sufficiency of the older peasant farms. In the latter case, too, rewards are pro­portioned to the efforts and the property was tradi­tionally distributed to what was fitting for one family plus perhaps some additional workers who were absorbed into the household. This view allows Roepke to see competition in modern markets as complementary to a program of limited economic self-sufficiency. He states:

Suffice it to say that competition, and competition alone, can solve the task of directing production based on the division of labor in a manner which corresponds to the autonomous system of production existing on the self-sufficient farm of a free and independent peasant. There is no other solution, and there can be none. The self-sufficiency of the free individual (in the undifferentiated economy) and competition (in the differentiated economy) therefore correspond exactly to each other: together both secure, in the economic sphere, that autonomy of which, in the field of politics, democ­racy is the counterpart. (p. 104)

Yeomanry: The Ideal of Limited Self-Suf­fi­ciency

When presenting his alternative model of the economy, his ideal economy, Roep­ke’s arguments depend strongly on an essentialist rhetoric and philos­o­phy. He insists that we must dis­tinguish between the “es­sence” of the free market system and its “exchange­able accessories”; be­tween essence and appendage; be­tween foundation and superstructure; between the endur­ing substance and the variable histori­cal forms and between form and content (pp. 113, 114). And because both the political left and right con­fuse these two, they both arrive at a false dilemma: either some form of socialism or liber­tarianism (histori­cally re­ceived capital­ism). Roep­ke rejects both in favor of a “Third Way” that ap­proaches the ideal economy (pp. 114, 153, 176ff).

Again, in distinguishing essentials from histori­cal inciden­tals, he speaks of competition: “There is a world of difference be­tween the competi­tive principle and the frequently perverted form of competi­tion as it is practiced today” (p. 180). Within this framework of essential distinc­tions, Roepke is able to argue for a form of the competi­tive market economy that is still significantly different from that of historical liberalism. He is conservative in the sense that its essentials (free­dom, competition, private property) are retained but radical in his willing­ness to dispense with deforming accretions of history (pp. 21-22). He states:

One must further note that the economic order of a free society presupposes competition only in as far as that economy is a market economy dependent on the division of labor. Competition, therefore, is only one of the pillars on which such an order rests, while the other is self-sufficiency. We are, therefore, free to modify the competitive character of the economy in full harmony with the principles of our economic order, by enlarging the sphere of marketless self-sufficiency…­This is a new and important point illustrating the inestimable importance of sustenance farming and the `rurification’ of the industrial proletariat. (p. 180)

And later he states we need:

…a simultaneous change of our whole economic and social system in favor of drastic decentralization of cities and indus­tries, of the resto­ration of some more `natural order’, more rural, but less urbanized, mecha­nized, indus­trialized, proleta­rized and commer­cialized. People will not like to face competition unless they have some firm stand. They must not feel lost in this present dehumanized world. Competition is a necessary social arrangement not a social gospel likely to make us enthusi­astic. It is a nega­tive concept which derives its strength from the fact that we like the alterna­tives, i.e., monop­oly and collectiv­ism, even less. It must be supple­mented by some­thing which is humanly positive. (p. 235)

The hu­manly positive includes a broad self-sufficient class of men who pro­vide the basis of society. In tradi­tional European terms these are the “peasants.” To English ears the term “yeomanry” may communicate better the concept of (landed) freeholders, independent men who have a measure of that self-sufficiency which is the basis of a free republic as well as of a free economy. A peasant (yeoman) is the opposite of a proletarian. Freedom, in other words, means being less dependent on the highly unstable modern economy as much as it does being less dependent on government. This is the point missed by many conservatives: they fail to see that decentralizing the economy is as vital as decentralizing the govern­ment. Dependency is indivisi­ble: dependency on an unstable market naturally leads to dependency on government when market difficulties arise (e.g., from the downside of the business cycle). Government is sought as a substitute, not simply for the market but more specifically for stability.

If the purpose of the economy is to provide such security and stability, then yeomanry (traditional freeholders) provides us with that combination of elements that fulfills that purpose. How? Roepke answers by giving us “a return to economically bal­anced forms of life and production which are natural and satisfying to men” (p. 201). The nature of the economy is rooted in human nature. We need again to “become conscious of the economic, social and commu­nal foundation of the primary organic production process…” But he does not want agriculture per se but only that form of agriculture constituting a free peasant­ry with its “very special economic and sociological structure.” This he esteems because it is “the last mighty refuge in the face of the collectivization, mecha­nization and urbanization of our time…” (p. 201). Sensitive to the criticism that this view is an artificial distinction, Roepke remains adamant: “…we neverthe­less insist on considering all forms of feudal, capitalist or collectivist large-scale agriculture a calamitous aberration and a destruction of that well­spring of society which peasantry and peasant agricul­ture repre­sent” (p. 202). Peasantry is the “very corner stone of every healthy social structure” and the failure to preserve peasant agriculture is a “refusal to oppose spiritual collectivization” (p. 202).

Agriculture by its very nature cannot be treated like any other firm or business. Those who restrict their views here to issues of maxi­mum yield, rational and technical factors, and fertilizers miss the immense sociological significance of this form of life with its “subtle economic, social and spiritual struc­ture” (p. 202). Roepke describes such a life in this way:

A peasant who is unburdened by debt and has an adequate holding is the freest and most independent man among us; neither food problems nor the threat of unemployment need worry him and the subjection to the moods of nature which he exchanges for that of the market and the business cycle, usually ennobles a man instead of embittering him. His life, from whatever angle we view it, is the most satisfying, the richest and the most complete in terms of human needs. (p. 203)

The application of indus­trial large-scale methods to agriculture is economically inappropriate and socially unhealthy. In other words, the “flight from the land” should be greatly lamented and reversed. After review­ing some of the technical, social and economic prob­lems in a modern economy, Roepke concludes that yeoman agriculture is the “optimum agrarian structure of the industrial countries” (p. 210). It is the keystone of his humane econo­my.

Craftsmen and Small Traders. Following up on the critical view of modern technology, Roepke con­cludes that the benefits of mass production techniques have been often highly over-rated. He refers to the superior quality and durability of the artisans’ and craftsmen’s products.

But Roepke also saw that behind mass produc­tion techniques [like the concerns behind protectionism] lies a problem with demand. Consumers are often ignorant about the quality of products and their long-run costs and the choice between these goods is “usually left to thoughtless and ignorant consumption habits” which are due to the “collectivization of consumption habits which first makes mass production possible” (p. 215). “Only too often do we thoughtlessly follow a fashion which favors mass produced commodities, and only slowly do we come to realize that these also have great disadvantages” (p. 216). This problem goes hand in hand with “the disappearance of the traditional ways of life” (p. 215). This makes it another symptom of the general crisis of society.

Far from assuming that the market would correct itself, Roepke proposes a policy of consumer information that begins in the schools with “an intensive education and publicity program” (p. 215). The “appropriate direction and schooling of demand” will have to be complemented with keeping the advertising of rich enterprises within bounds or counterbalanced with advertising by artisans’ associations (pp. 216-217). In some cases consumers may need help to purchase handicraft products through installment buying (p. 216).

Small traders and the small capitalist are to be favored. “They afford a form of life and work which permits a high degree of self-determination, the enjoy­ment of purposeful work, the warmth of social contact and a well integrated family life” (p. 218). Still, this is problematic because the trader is absorbed completely in buying and selling and not in the elevating activity of creative work “which protects men against the bare struggle of interests” (p. 218). The solid shopkeeper, though, exists in this sphere as well as the commercial adventurer.

Optimum Size. As Roepke argues that (land­ed) freeholders, the honest yeomanry of the country, are the optimum in agriculture (p. 213), so also he argues there must be an optimum in the sizes of cities and industries and a restoration of handicrafts. We must rid ourselves of the ideology that worships “big­ness” and power which he calls the “cult of the colos­sal.”

The same commitment to the technical colossus that requires tribute-extracting economies of scale naturally contributes to the extraordinary size of facto­ries and cities. Unlimited size in firms tends toward monopoly, the hypertrophic growth of which is promot­ed further by the self-financing of large businesses and by inadequate corporation laws which are badly in need of reform. To keep the working and living relation­ships wholesome and humanized, then, neither the factory plants nor towns can afford to become too big. There is a point where the social costs and in some cases the economic ones also exceed the benefits of size and must be accordingly scaled back. As he explains:

However, even if certain sacrifices have to be made as regards immediate and measurable profit­ableness and technical practicability, it must neverthe­less be stressed that this sacrifice will be repaid in a wider, social sense and may in the long run even redound to the advantage of the enterprise itself. If we take into consideration all the sociological consequences of proletarization, we are…entitled to the conclusion that in certain circum­stances the mechanical organiza­tion of industrial plants which permits the cheapest form of production on the basis of measurable costs, may in the end prove to be the most expensive for society as a whole. (p. 221)

In other words a humane economy will recognize the need for optimum sizes in plants and in towns.

Several policy options were envisioned to help bring about these needed changes. These included the use of taxation to pro­mote optimum size, the use of model firms or meth­ods which may need a demon­stra­tion project at public expense, and policies that help meet the credit needs of small busi­nesses. At the time of Roepke’s writing, policies of countries like Switzer­land, Italy and France illustrated the success with which “big business” could be countered.

“Deproletarizing” industry and restoring its optimum size go together. Big industries must be dis­persed in the open country and in small towns, not to the point where the distinction between town and country disappears as Marx wanted, but where the size is reduced and the manner of living conformed to human scale. Finally, regional planning will be needed to combat the tendency to concentrate in cities.

Summary and Conclusions

Roepke’s vision of economic and social order while offering us a “third way” also forces us to choose between the path of pragmatism and pluralism on the one side and that of loyalty to ideals that transcend the material and the utilitarian on the other side, between a capitalistic economy of fragmented special interests, technologism and exces­sive urbanization and a humane economy that seeks balance. Roepke stands squarely in the ancient tradition which holds that liberty and right reason go together. Right reasoning about the objective reality of values is the basis of a genuine freedom, including that of a free market.

The distinction Roepke makes between the essentials of the free market system and its historical accidents, allows him to penetrate the stalemate of the false either/or discussion of socialism or libertari­anism. He is conservative in keeping the essentials and radical in jettisoning the historical deformities. At the same time, it makes his analysis more complex and harder to grasp. It’s easy to pick out a favorite part and forget the rest, a problem he himself well foresaw. But the result of that penetration is the much needed vision of the ideal economy, not an abstract deduc­tion based on ivory tower philosophizing but rooted in the facts of history and human nature. And this vision has been inspirational. It was Roepke’s writings pub­lished and read surrepti­tiously in Nazi Europe, that led men like Ludwig Erhard to place the new Germany squarely on a free market path in spite of the strong pressure brought to bear by Allied Keynesian economists to the contrary. Its inspiration also spread to French and Italian leaders in a similar vein. So inspir­ing was his work that when the Nazi’s took over Hungary in 1944, they declared the “time of Roepkeism is now over” – involuntarily paying tribute to his vision as the incarnation of resistance to National Socialism. In the present climate of moral decay and political deadlock, of special-interest conservatism and a growing welfare state, we need inspired direction more than ever for humane policies. And this is exactly what Wil­helm Roepke gives us in his legacy of the ideal economy.

Books referenced in this essay may be found in The Imaginative Conservative Bookstore

[This essay appeared in The Legacy of Wilhelm Roepke: Essays in Political Economy by Ralph Ancil, originally published in 1998 by the Wilhelm Roepke Institute. Read the series introductory essay here.]

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