A Reviewer's Notebook - 1960/7

In Europe, Wilhelm Roepke, a German who teaches at the Grad­uate Institute of International Studies in Geneva, is a famous figure. It was his economic teach­ing that fired the creators of the West German Republic to go for­ward under a traditional free market economy at a time when the current in England, France, and Scandinavia, was still flow­ing strongly in the direction of State Welfarism, dirigisme, and Social Democracy. In the United States, however, Roepke is not very well known. His doctrine, as set forth most recently in A Humane Economy: The Social Framework of the Free Market (Henry Regnery Company, 312 pages, $5.00), does not square with that of any of the more vocal contemporary American social theorists who compete for the white space of our publications. Yet his voice should be particu­larly welcome in the land of James Madison, whose political theory is close to Roepke’s own.

Roepke believes passionately in the free market. But he does not believe in it for the reasons that are usually advanced to support it. It is true enough, as he says, that the free market is more effi­cient than socialism or "plan­ning"; it is true that it offers the consumer a wider variety of goods and services and leads to a higher standard of living. But Roepke, though he is no enemy of affluence as such, would be for the free market even if it could not com­pete with socialism in bringing economic benefits to the many. He would be for it because, without it, the human being would lose his noneconomic freedoms. And it is these freedoms, says Roepke, that are the really interesting ones.

Having set out to defend the market for nonmarket reasons, Professor Roepke finds himself enmeshed in the wider subjects of sociology, psychology, ethics, and religion. The State-directed econ­omy is bad, he says, because it treats man as a statistic in a mass. In any society where Welfarism or socialism or dirigisme domi­nates, the human "statistic" is to be made happy by underwriting his total life situation, from cradle to grave. Exercising no individual responsibility for his choices, the "statistic" finds himself an enfeebled integer in a society that runs to mass slogans, to "social religions," and to mechanized "en­tertainment" via cheap radio and television shows.

Freedom Rests on Private Property

Roepke obviously believes there is no escape from what he calls "enmassment" in any of the vari­ous types of "planned" State. When a State begins ordering an economy, it kills the property sense. Without inalienable prop­erty, people lose their defenses against the genus politician. They begin by letting the State pre­scribe a hierarchy of goods and services. They end by letting the State prescribe the very order of life itself. And when they have signed away their inalienable rights, they have nothing to fall back on if they wish to criticize the powers that be.

Unfortunately, as Roepke sees it, the free market does not in itself guarantee anybody against "enmassment." All that one can expect from the free market is a neutrality that will respect the individual’s will. The virtue of the free market is that it is supple; it can be bent by free men to any pattern that is desired.

At this point Roepke confesses that he doesn’t like the way free men have been behaving in those areas of the world that have so far managed to escape the wider ravages of socialism, state wel­farism, and dirigisme. In passages that might have been written by John Kenneth Galbraith or Arthur Schlesinger, Jr., he chastises Americans for preferring tailfins to a more unadorned type of car, for going overboard on install­ment buying, for preferring gadgets to concerts. Communism, he says, is bad because it sets people chasing after ideology; but it is not much of an improvement when people "chase after… motor scooters, television sets… and quickly acquired but unpaid-for dresses."

The difference between Roepke and Galbraith is that Roepke doesn’t believe that it is the State’s business to make up for the esthet­ic deficiencies and the lazy habits of the people. As an esthetic and moral critic Roepke addresses him­self to the individual directly, urging upon each and every one of us "a reasonable plan of life, saving, and provision for the fu­ture." In other words, it is up to the individual to provide his own setting for the free market. The individual doesn’t have to take tailfins, motor scooters, or televi­sion sets—or, if he does take them, he can do so in a modera­tion that allows for the exercise of other tastes and for adequate in­surance against the needs of the future.

Misleading "Statistical Aggregates"

If Roepke doesn’t like some of the manifestations of the Ameri­can mass market, he does have many good things to say about the possibilities of "decentrism" in the United States, where fed­eralism still exists to provide a framework for the decentraliza­tion of political decisions. To Roepke, "centrism" is the enemy. As an economist, Roepke doesn’t like what his own "science" has recently been doing in its "cen­trist" preoccupation with statis­tical "aggregates." When one begins to worry about the Gross National Product, one forgets the individual, who might, indeed, pre­fer leisure to "product." Any con­ception which reduces the eco­nomic process to a "functional re­lationship of aggregates suscepti­ble of being defined in terms of mechanics and calculated by mathematical methods," says Roepke, is "bound to end up in the claim that these same methods permit forecasts which are more than the weighing of probabili­ties." "Econometrism" encourages government in the idea that it can play God by manipulating the "aggregates" in order to increase the GNP. But nobody, says Roepke, can guess the needs of tomorrow merely by consulting a "functional relationship of aggre­gates."

The proof? Roepke recalls the economists who "abused the Key­nesian theory" in order to "deny that our economic system had any natural growth potential." These economists have left behind them "only the theory of the ‘mature economy’—an intellectual fossil of the Great Depression." Other economists, consulting the "rela­tionship of aggregates," predicted a "permanent dollar gap." By pre­dicting an American depression in 1948, Swedish economists misled their government and central bank into making disastrous policy de­cisions. Roepke doesn’t go so far as to advocate the muzzling of "centrist" economists, but he does think people should remember that economics is a "moral" science. As such it should be concerned less with "aggregates" and "multi­pliers" and "accelerators" than with "relations dependent upon the unpredictable behavior of men." The extrapolation of past f acts, while interesting, cannot be used to foretell the future, for "the unforeseeable forces which move human history as a whole may at any moment modify supply and demand in a manner which defies econometric treatment."

Inflationary Consequences of Intervention

Roepke’s case against socialism extends to the "fiscal socialism" of the Welfare State in any form. When the State takes it upon it­self to give "all-encompassing security," it becomes "an income pump, working day and night, with tubes and valves, with suction and pressure flows…." Since the money to pay for welfare is "con­jured from the people’s right pocket into their left," it could, theoretically, be put through the "income pump" without inflation. But as a practical matter the "in­come pump" won’t work without chronic inflation. If people are unemployed, inflation is necessary to keep the "tubes and valves" filled in default of tax money; if there is full—or overfull—employment, the "wage push" is inflationary in and by itself.

Roepke’s book is pessimistic to a degree that barely stops short of "paralyzing despondency." While it admits there are "encour­aging symptoms on both sides of the Atlantic," it does not do much to enumerate them. Roepke might take heart from the recent be­havior of the American buying public which has shown encourag­ing signs of an awakening in­dividualism. For example, the car market has changed considerably since Roepke wrote A Humane Economy; no longer is chrome a "status symbol," and if one chooses to drive a "compact" it merely indicates that one has many uses for one’s money.

Roepke writes as if "keeping up with the Joneses" were still a preoccupation with Americans. But since he was last on these shores, a counter movement has been under way. Now one can bowl or go in for skin diving or figure skating without worrying about being declassed merely be­cause one doesn’t belong to an ex­pensive country club which spe­cializes in golf. Americans are more and more coming to take their leisure as they please. And, since this entails spending money as they please, they may eventu­ally revolt against the "fiscal socialism" of the centralized Wel­fare State on the ground that it doesn’t leave them enough cash for their own choices.

 

Further Reading

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