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Wilhelm RöpkeSome writers link the names of Ludwig von Mises and Wilhelm Roepke as if there were no important differences between them. Roepke is co-opted into the camp of more or less libertarian thinkers whose position is further enhanced by whatever weight or prestige his name may give. Since Roepke was an Austrian economist and former student of Mises, it appears to be assumed that, aside from small differences arising from individuality, they are in agreement on all important matters.

Nothing could be more incorrect. To be sure, Roepke admired and appreciated the technical writings of Mises and his position as staunch defender of freedom and free markets. But there is more to life and the economy than technical economics comprehends. Beyond this lies the whole world of how one envisions life should be lived, what Richard Weaver called one’s “metaphysical dream.” In Roepke’s metaphysical dream a genuine alternative political economy is outlined. It is not a mixture, a half-way house between capitalism and socialism, but is precisely what Roepke called it: a Third Way, resting on its own set of principles.

Although there is some agreement here, too, these thinkers are dominated rather by their differences than their similarities. To understand fully these differences, one should read Roepke’s The Social Crisis of Our Time with Mises’ Human Action. For our purposes here, however, a comparison can be made based in part on Mises’ 1950 speech “Middle-of-the-Road Policy Leads to Socialism” (as reprinted in H.F. Langenberg’s Notes 1992…1993, pp. 59-70) and appropriate selections of Social Crisis.

Ludwig von Mises

Ludwig von Mises

Mises begins his speech by giving a broad definition of socialism and communism to include virtually anyone who had something critical to say against 19th century capitalism. He claims socialism is a view characterizing capitalism as “a system that hurts the vital interests of the immense majority” of people for the benefit of a few. Further, these criticisms were propagated long before Marx by such men as Carlyle and Ruskin.

The practical political result of such criticism, says Mises, is to advocate what he calls a “third system” which is midway between socialism and capitalism though it is really a system of growing interventionism. Ultimately, this approach fails: there is no true alternative or third way.

Speaking in his usual dogmatic manner, Mises simply cannot admit that anything went wrong in the development of 19th century capitalism which cannot be exclusively blamed on government interference. No other social or ideological forces were at work. For example, he writes: “The recurrence of periods of depression and mass unemployment has discredited capitalism in the opinion of injudicious people. Yet these events are not the outcome of the operation of the free market. They are on the contrary the result of well-intentioned but ill-advised government interference with the market.”

This is precisely the mulish attitude Roepke had in mind when he spoke in Social Crisis of the “historical blindness of liberalism,” a blindness that created the false dilemma of “either socialism or capitalism.” The evidence indicates that businessmen and consumers have not been saints, any more than politicians and voters, and that mere self-interest is not a sufficient basis for the economy any more than it is for the larger community. The “laissez-fairist” seems to assume it’s all right for businessmen to be selfish but politicians must be saints, resisting the temptations to yield to business demands for special treatment. Yet it is clear from past and present experience that demands for government intervention originate often in the economic sector, not with the government—which makes this perhaps not only historical capitalism’s biggest blindness but also its biggest “market failure.” From a Christian point of view, no institution is flawless, not even the capitalistic economy. From a philosophical view, Mises would have done better to recognize the Aristotelian doctrine of forms imperfectly realized: the pure market system is perfect but in this fallen world conditioned by circumstances and history ultimately stemming from a flawed human nature, its ideal form can only be imperfectly realized.

Another difference is seen in their respective views of the nature of market intervention. For Mises all intervention is bad and there is never a justifiable case for it. “The conflict of the two principles [socialism and capitalism] is irreconcilable and does not allow of any compromise. Control is indivisible…There is nothing that could mitigate the opposition between these two contradictory principles.” He concludes: “Interventionism cannot be considered as an economic system destined to stay. It is a method for the transformation of capitalism into socialism by a series of successive steps.” When Mises gives his specific example of government intervention (price ceilings) he refers only to the kind that requires continuous, additional interventions and so persuasively carries his point that this tends to become socialism by installments.

Roepke, however, distinguishes between those interventions that are “compatible” and those that are “incompatible” with a market economy. He agrees that price ceilings are of the incompatible kind. But other policies, such as tariffs, are compatible because they work with the price system and don’t require more and more controls farther upstream (i.e., on factor prices in addition to product prices). It is not an intervention which by its nature breeds still more interventions to catch up with its unintended consequences. This does not mean that Roepke encourages such policies systematically or that they are always prudent. But it does make a significant difference in defining the legitimate sphere of potential government action.

Mises’ view of legitimate government action is rather short-sighted. He rightly criticizes government credit expansion policies as an “artificial hot-house” prosperity which has unintended bad consequences. But his analogy with “hot-houses” is pregnant with suggestions. One might well ask: If we can’t respect nature enough to allow it to operate according to its own ways (i.e., without hot-house techniques), how can we respect the economy and allow markets to operate according to their own ways? Surely, the practice of impiety in one area weakens our ability to practice piety in another. One may say of piety what Mises said of government control: it is indivisible.

Mises elsewhere argues for growth in capital through scientific and technological manipulation – let us call it the “hot-house” policy—to make room for an increasing population. Such a view has been encouraged or allowed through public policy generally in modern times and especially by many conservative economists. Yet it is reminiscent of the Nazi policies which also first encouraged population growth and then demanded more “lebensraum.” Like price ceilings and government credit expansion policies, this (“hot-house”) process generates its own problems, unintended consequences, which later it must catch up with and “cure.” A sense of piety for a providential nature would be the wiser course. Here, one might extend Roepke’s thinking—implicit in his writings—to articulate a sphere of compatible and incompatible interventions in certain operations of nature. This also involves our understanding of “human nature” and the overall effects of such policy interventions on patterns of living. Unless a broad and balanced view is taken, one ends up on the horns of another false dilemma: either live in a cave, or goose-step over nature (as well as over political neighbors).

Finally, Mises and Roepke differ in their judgments on the sufficiency and character of the competitive system when dealing with the needs for successful opposition to collectivism and totalitarianism. Mises insists mere anti-socialism is not enough; a positive endorsement of the competitive economy is needed, a change in ideologies which is, apparently for him, a sufficiently inspiring and positive social gospel. Roepke, though, judges that competition, and with it the competitive market economy, is not a socially positive gospel that makes us enthusiastic but a negative concept adhered to because we like the alternatives even less. We still need something humanly positive to help us endure the strain that market competition imposes on us and we need something more than the sterile either/or choice of laissez-faire capitalism or socialism. That positive vision is Roepke’s humane economy, the Third Way. This requires a spiritual and moral reorientation as Roepke understood and recommended, not simply a switch in economic ideologies as Mises wanted.

The world of the mind, like that of nature, is one of distinctions. Failure to recognize distinctions is one of the mental diseases of today. The recognition of objective differences reflects the traditional, conservative philosophy. In this respect Mises is to political economy what Ockham was to theology while Roepke is the Thomas Aquinas of a robust economics. Thus, he was open to thinkers like Ruskin and able to distinguish between the wheat and chaff in his thinking without dismissing him as a pre-Marxian socialist or communist.

There is no doubt that Mises’ works have their value to the social conservative. No one writes with greater clarity, precision and forcefulness on technical economics from the Austrian view than he does. But let us not confuse Roepke’s agreement with Mises in these matters with the important differences in the broader field of political economy and the important questions of how man should live.

Books by Wilhelm Roepke and Ludwig von Mises 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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2 replies to this post
  1. This is outstanding. And such a shrewd, and broadly applicable insight here:

    “We still need something humanly positive to help us endure…”

    This important truth applies to all efforts at criticism, and liberalism as a political doctrine is really only a negative idea (pointing out what’s bad about state intervention). Any criticism that doesn’t offer a positive solution, a positive path forward…which means both continuity and innovation…any such criticism fails in its fundamental purpose. Alas, we conservatives have often been very Mises-like in how we think and talk about culture. We can point out the bad, but we think the conversation ends there….

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