Wilhelm Röpke’s Political Economy

Wilhelm Röpke’s Political Economy

Samuel Gregg

Wilhelm Röpke is best known for his decisive intellectual contributions to the economic reforms that took post-war West Germany from ruin to riches within a decade. In this informative book, Samuel Gregg presents Röpke as a sophisticated économiste-philosophe in the tradition of Adam Smith, who was as much concerned with exploring and reforming the moral, social and intellectual foundations of the market economy, as he was in examining subjects such as business-cycles, trade-policy, inflation, employment, and the welfare state. By situating Röpke’s ideas in the history of modern Western economic thought, Samuel Gregg illustrates that while Röpke’s ‘neoliberalism’ departed from much nineteenth-century classical liberal thought, it was also profoundly anti-Keynesian and contested key aspects of the post-war Keynesian economic consensus.

Chapter 6: After Keynes: Full Employment, Inflation and the Welfare State

Samuel Gregg

Subjects: economics and finance, history of economic thought, political economy, politics and public policy, political economy

Extract

Many economists hope indeed that the ultimate remedy may be found in the field of monetary policy, which would involve nothing incompatible even with nineteenth century liberalism. Others . . . believe that real success can be expected only from the skilful timing of public works undertaken on a very large scale. This might lead to much more serious restrictions on the competitive sphere, and in experimenting in this direction we shall have to carefully watch this step if we are to avoid making all economic activity progressively more dependent on the direction and volume of government expenditure. Friedrich Hayek (1944, pp. 90–91) Sometimes a book’s importance lies not in its content but in its timing. The reception accorded to Hayek’s Road to Serfdom in 1944 owed much to Europeans’ and Americans’ growing alarm about extensive economic planning becoming a post-war norm.1 While concerned about Communism, they also worried about the post-war dirigiste policies of the non-Communist left and much of the right. On his first visit to Germany after World War II, Röpke noted that many Germans yearned for socialist solutions to their economic problems ([1947f] 1964, p. 158). He was also disturbed that the occupying powers were effectively continuing the same economic policies of the defunct National Socialist regime ([1945b] 1946, p. 237). Prominent among such policies was a commitment to ‘full employment’. This had been given particular impetus in Europe by the 1942 Beveridge Plan, of which Röpke was an early and vocal critic (1943a, 1943e). Six...

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