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Man at the center of a free economy: 50 years after the death of Wilhelm Röpke

Fifty years ago, the German economist Wilhelm Röpke (October 10, 1899 to February 12, 1966) died. He was a leading figure of classical-liberal Christian humanism which contributed to the development of the so-called Social market economy in the aftermath of the tragedy of the Second World War. Indeed, the “Great War” (World War I) had already directed his studies towards an integrated consideration of the economy and socio-political phenomena. He had become convinced that the rejection of war and nationalism would bring scholars in economics to reject the conservative and imperialist order of that time and take a stand oriented to free markets and the rule of law.

After some success with the publication of Kredit und Konjunktur (1932) and with the rise of Hitler in 1933, he left Germany to teach economics at the University of Istanbul. In 1936, he published the book Crises and Cycles in English, followed a year later by Die Lebre von der Wirtschaft. Also in 1937, he moved to Geneva to head the Institut des Haute Etudes Internationales. Here he met intellectuals such as Ludwig von Mises, Hans Kelsen, Guglielmo Ferrero, and Luigi Einaudi. From these years come masterpieces such as The Social Crisis of Our Time (1942), Civitas humana, a humane order of society (German subtitle: The Fundamental Problems of Social and Economic Reform) (1944) and The International Order (1945). In 1947, along with Ludwig von Mises and Friedrich August von Hayek, he brought to life the Mont Pelerin Society, an international association of liberal social scientists, whose presidency he assumed in 1961. In 1958, he published his perhaps best known book, widely regarded as his spiritual testament, Beyond Supply and Demand.

There are at least three reasons the work of Röpke commands our interest. First, his anthropological perspective, “modeled on the spiritual heritage of ancient and Christian tradition” that considers it a “horrible sin to degrade man to a mere instrument.” Second, the way he considered the marvelous mechanism of supply and demand as a prerequisite and as limit of the market at the same time; and, finally, the social function of competition in preventing the concentration of economic power and “getting you to play fair.” All these milestones may find a renewed consideration now that the search for a new social order is on the agenda of Pope Francis, as demonstrated in his most recent address to the World Economic Forum in Davos. He called for the strengthening of the inclusiveness of political institutions and the very culture of market participants. In other words, Röpke provides us with tools to break the deadlock of the “technocratic paradigm” and “consumerism,” which Francis recently denounced in the encyclical letter Laudato Si’. For example, the idea of ??competition as a process of discovery and mutual collaboration (cum-petere) can undermine the old interventionist and dirigiste Keynesian neoliberalism. In addition to focusing on consumption as the engine of the market process, it continually ignores, in the name of the centralizing state, the reality of constant motion of the market in its plurality (prices, wages, interest, etc.), and replaces it with “a kind of economic engineering, increasingly excised by mathematical equations.” In the same vein, consider also the Pope’s condemnation of “consumerism,” already denounced as alien to a “free economy,” described by John Paul II in paragraph 42 of Centesimus Annus. In short, in the conjunction of the Röpke’s work and Francis’ social teaching, we understand that social inclusion can occur only on the terrain of the formal recognition of equal opportunities to participate in the different but converging moments that transform a social aggregate into an active civil society, polyarchical, and subsidiary, which can be termed the strategic moment, the decision-making moment, and the operative moment. For this reason, it is necessary to free the poor from the “chains of poverty,” that is, from that jungle of impediments of a juridical, political, economic, and cultural nature that oblige a part of society (the majority) to be relegated to the margins of the civil context and to end up playing a role as residual and humiliating as it is essential to the functioning of an extractive and excluding system; that is, they play the role of clients as occasional electors and undeterred consumers.

Social inclusion means, in the first place, not allowing any presumptive claim, much less a monopolistic one, on any source of income and to work so that no presumptive claim on income can in any way be satisfied. Social inclusion means educating individuals for a culture of sharing and also setting up, starting from an appeal to norms on the constitutional level, a rigorous institutional system that impedes and punishes the many or the few – in either case, the too many – earners of income from monopolies, whether it involves political, economic, or cultural income.

Source: New AEI Feed
Man at the center of a free economy: 50 years after the death of Wilhelm Röpke



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Man at the center of a free economy: 50 years after the death of Wilhelm Röpke

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