The Virtues of the Market: Wilhelm Röpke as a Cultural Economist

by Erwin Dekker*

Neoliberalism is often associated with an excessive focus on the market at the expense of both the state and society. A new book Wilhelm Röpke (1899–1966): A Liberal Political Economist and Conservative Social Philosopher, edited by Patricia Commun and Stefan Kolev (Springer, 2018), which is the outcome of a conference in Geneva held to commemorate the fiftieth anniversary of Röpke’s passing, demonstrates that precisely this imbalance was one of the main worries of many ordoliberals, and in particular of Wilhelm Röpke. Röpke who was born in 1899, started out as many economists of his day, as a theorist of the business cycle. But more than some of his liberal friends he was convinced that a crisis as severe as the Great Depression required the state to support the natural correction process, as three chapters in the volume demonstrate, in particular the one by Lachezar Grudev.
Soon after this work on the Great Depression Röpke’s work broadened considerably. While in exile in Istanbul, on the run from the Nazi regime of which he was an early critic, he and his friend Alexander Rüstow started to theorize the far deeper crisis in society and Western culture of the 1930’s. The problem was not economic, it was far deeper, and it touched the organization of the state, the fabric of society and ultimately liberal and humanist culture.
It is here that Röpke’s great relevance lies for today, and to which most of the book is dedicated. It is clear that many of the current discontents of our day are not simply economic, but extend to social issues (immigration and free speech) as well as the state (the future of the EU and the rise of populism on the left and right). The problem is not merely the stability of our financial system or the global economy more broadly, but what in this illuminating book is called “the metastability” of our society and culture. Röpke’s work from the 1940’s onwards is an attempt to provide a unified analysis of the crisis of his times, among other things by figuring out the way in which culture, society, market and state relate to one another. It is a task too big for any one man, including Röpke, as the volume implicitly illustrates. But the strength of his work is precisely to be found in this integrative approach. It seems that none of the nineteen contributors to this book agrees wholeheartedly with his analysis or suggested cures, but it is the questions he raises, and the challenges he presents that make him relevant.
This is best illustrated in the chapter by Nils Goldschmidt and Julian Dörr who make very clear that they disagree at quite fundamental points with Röpke, but they also make clear why this disagreement can be so fruitful. More than other economists Röpke was willing to engage fully with the cultural dimension (and the religious dimension about which this book is curiously silent) of liberalism and markets. He was skeptical that liberal institutions had much of a chance in the absence of bourgeois and Christian culture, or a social order that fostered personal responsibility and autonomy. It was an unpopular argument in a secularizing society looking to free itself from many traditional institutions and norms, and one that does not sit easily with a liberal universalism. After all Christian and bourgeois culture are not global phenomena, and the regionalism favored by Röpke implies significant variation in local customs and freedoms. But it is also a point that is hard to ignore after failed Western attempts to spread democracy and markets both in post-Communist countries and other parts of the world.
This primacy of the social and cultural is also evident in Röpke’s view of the market. What he liked most about the market economy was, surprisingly, not its material effects but instead the bourgeois ethic that was intimately tied up with it, as Alan Kahan shows in his wonderful chapter on Jacob Burckhardt and Röpke. It is the ethic of personal responsibility, of thrift and prudence, of self-discipline supported by the small business family capitalism. This, however, was not the capitalism of the twentieth century with its major hierarchical firms, the technological advancement and its culture of consumerism. This modern form did not allow for the continuum between private and public virtues which Röpke sought. Instead, as his close associate Hayek later would theorize, modern man lives very much in two different worlds: the small world of the family and the open society of the market and politics.
Many of Röpke’s neoliberal friends, when given the choice, gave prominence to the ethics of the open society: tolerance, competition and rationalism. Röpke, on the other hand, sought to protect the ethics of the small closed world. This makes him an interesting critic of his times with a sharp eye for the corrupting influence of mass movements and for the importance of civil society. He had sympathies for both (European) political integration and a high degree of federalism. It makes him an original critic of monopolies: they are bad not only because they harm consumers, but also because they represent an unhealthy degree of concentration in the economy, with harmful social and cultural effects. He favored the small firm, exemplified by the independent farmer and artisan. It was an economic structure which he found in Switzerland, where he lived the latter half of his life, from 1937 to his passing in 1966.
It is not uncommon to treat Röpke and Rüstow, who spent a number of years together in exile in Turkey, as the left-wing of the attendants at the Colloque Walter Lippmann, and the later Mont Pèlerin Society. After all they were far more willing to accept interventions for social purposes, to combat unemployment for example. But this volume demonstrates the extent to which that interpretation relies on a single analytical axis that ranges from radical non-interventionism to centralized control. It is the purely economic lens through which to analyze the state. When analyzing Röpke’s work it is clear how misguided such a single axis is. His social program does not follow primarily from economic arguments, but instead from social ones. Such social reasons could be progressive, i. e. fighting unequal outcomes, but they could equally be conservative, i. e. maintaining existing social structures. Some of the early neoliberals were more progressive and therefore more willing to allow for states to step in to secure individual autonomy, others were more conservative and therefore more willing to allow for states to step in to maintain existing social structures. Röpke certainly belonged to the latter category. For both conservatives and progressives in favor of social policies the idea that some efficiency has to be sacrificed for other goals is a given, not a counter-argument to state intervention. To understand his work therefore, we have to understand what other values were important enough to sacrifice some economic efficiency and possibly economic freedoms.
These are issues that the book grapples with, although occasionally one would have wished they were addressed more directly. Röpke’s ideal image of the economy clearly seeks to protect independent farmers and artisans, because it gives rise to a social structure that is likely to support a liberal culture. Just like in his arguments against monopolies we encountered above, it is the social and cultural that take precedent not the economic. His evaluation of the 1930’s had much in common with that of José Ortega y Gasset who also lamented mass society. And hence Röpke’s resistance to fascism should be sought primarily in that direction, and only after that in the political or economic program of fascism. It was fascism’s embrace of mass society that was its gravest danger for him.
Stefan Kolev in his contribution suggests that Ludwig von Mises was wrong in associating Röpke’s program with the social program of Bismarck. This is true to the extent that Röpke despised the centralist tendencies of the nineteenth-century German statesman, but Röpke’s social vision of order had much in common with that of Bismarck. Both men sought to prevent the advent of socialism, through the revision of the role of the state in society. And, more importantly, both believed that social order required state policies that supported this social order. It opens up the possibility of an extensive role of the state in society, and Röpke never found a clear limit of this role. One might fault him for it, but I think it makes him into a deeper thinker than some of his neoliberal contemporaries. While they were content with outlining an economic program, from which other virtues were supposed to follow, Röpke wondered whether such an economic program would be sufficient for a cultural liberalism.
In the various chapters on Röpke’s relations to other conservative thinkers the fundamental question of the social order which best supports liberalism is brought out. What is the social order that fosters individual responsibility, as well as a strong civil society able to resist centralizing tendencies in the state? If we regard this question as the most fundamental, then we should ask of economic policies to what extent they sustain and foster this particular social order. For Röpke this included not merely issues of culture, but for example also of economic geography. Where the post-war Western world favored an urban home-owning structure, Röpke favored the decentralized economy of independent farmers.
Although the book contains little explicit engagement with contemporary issues, it is not hard to realize that this challenge too is still with us: local, regional and national identities and variations in economic structures have proven incredibly resistant to the homogenizing forces of markets, and often a powerful opponent of them. Current anti-globalist and anti-EU sentiments stem to a considerable extent from the fact that global markets are believed to endanger these identities and structures. This book demonstrates that Röpke’s work is full of attempts to work out these tensions, without making a simple choice in favor of one of them. Both the local identities and markets are “cooperative practices” as Henrique Schneider’s contribution points out. How to best combine these partly rival cooperative practices is a question that breathes life into Röpke’s work, just like this volume breathes life back into his oeuvre. Not because the book manages to resolve the tensions, but because it takes them seriously.
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This review essay was originally published in ORDO – Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft:
Dekker, Erwin. 2019. “The Virtues of the Market: Wilhelm Röpke as a Cultural Economist.” ORDO 69: 496-499.
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* Erwin Dekker is a post-doctoral researcher at the Erasmus School of Economics where he is working on the intellectual biography of Nobel laureate and Dutch economist Jan Tinbergen. He is also assistant professor in cultural economics at the Erasmus School of History, Culture and Communication. He published The Viennese Students of Civilization: The Meaning and Context of Austrian Economics Reconsidered (Cambridge University Press, 2016) and his research focuses on the intersection of art, culture and economics.