Chapter 4: Toward a New Economic Liberalism
4. Toward a new economic liberalism The whole edifice of the Reich will collapse, and much more completely than in 1918, since the whole framework of the national economy, of the monetary and financial system, of communications and administration, which in 1918 had largely remained intact, will now fall into hopeless ruin. Again in contrast with 1918, there will this time no longer be any organized political life, no parties and programmes, no group ready and able to take over the bankrupt estate of the Third Reich, but only prostration and immense longing for peace . . . Wilhelm Röpke, 1945 Memorandum to Allied Diplomats (cited in Röpke [1945b] 1946, p. 186) On 7 May 1945, Colonel-General Alfred Jodl, Chief of the Wehrmacht’s Operations Staff, signed the instruments for Germany’s unconditional surrender. Once dominant over continental Europe, National Socialism was extinguished. Marxism–Leninism, however, was poised to achieve a stranglehold over much of Europe. While many Western Europeans were prepared to resist the political collectivism imposed on most Soviet-occupied nations, opposition to extensive economic planning was weaker. Despite the considerable anti-socialist sentiment in Europe and North America revealed by the publication of Hayek’s Road to Serfdom in 1944, nothing better symbolized the low regard in which capitalism was held than the Labour party’s sweeping victory in Britain’s 1945 general election. With its explicit commitment to nationalizing the British economy’s ‘commanding heights’ and creating a cradle-to-grave welfare state, the Labour government’s efforts to implement key provisions of the 1942 Beveridge report suggested...
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