Saturday, November 29, 2008

Economist Wilhelm Ropke: "It's the Soul, Stupid!"

(reflections upon reading WILHELM ROPKE: SWISS LOCALIST, GLOBAL ECONOMIST by John Zmirak, Library of Modern Thinkers, ISI Books, and P. J. O'Rourke's tongue-in-cheek article, "We Blew It" in THE WEEKLY STANDARD, November 17, 2008).

While I was reading John Zmirak's biography of economist Wilhelm Ropke (1899 - 1966), whose advice behind the scenes lifted Germany out of its post-war starvation to become Europe's economic miracle, I saw this from wise-guy conservative writer P. J. O'Rourke, writing about the failures of the Republicans and his dread of the Democratic regime to come:
What will destroy our country and us is not the financial crisis but the fact that liberals think the free market is some kind of sect or cult, which conservatives have asked Americans to take on faith. That's not what the free market is. The free market is just a measurement, a device to tell us what people are willing to pay for any given thing at any given moment. The free market is a bathroom scale. You may hate what you see when you step on the scale. "Jeeze, 230 pounds!" But you can't pass a law making yourself weigh 185. Liberals think you can. ("We Blew It," in the WEEKLY STANDARD, November 17, 2008, p. 33)
When Ropke advised dropping the price controls that both the new German government and their benevolent American protectors wanted to ensure against "chaos," there was indeed a brief period of outrageously high price jumps and panic. But, before the voices of socialists could prevail, prices righted themselves, and citizens were relieved at last to see products on shelves that had been horded because the prices they could fetch weren't even close to their true values. Up to then, cigarettes had been more acceptable currency than the German marks (140).

But, for Ropke, the value of the free market is not its efficiency, whether as a setter of prices or as a producer of consumer goods. Rather, he sees the free market as one guarantor of individual human freedom and dignity, measured not by the consumer goods one owns, but by the freedom one has to do meaningful work, to make choices for one's own life, and to have a positive impact in one's own small communities - family, church, town.

Smallness is the key, here. He deplored concentration of wealth, no matter whether it was concentrated in the hands of a few corporations, or in the hands of a swarm of government bureaucrats. So, while he was no Galbraith, he wrote his own critique of the affluent society in 1959:
Who can really be at ease in the presence of the growing concentration in economic life, which goes hand in hand with the increasing dependence of the masses? Who can fail to see that our civilization is being destroyed by the progressive commercialization of things that are beyond economics, by the obsessive business spirit that confuses ends and means and forgets that man does not live in order to work, but works in order to live, and thus perverts all human values, by the empty bustle and sterile excitement of our time? ...Who can fail to be shocked by the largely meaningless and uncultured extravagance of the rich, here in Europe as in America? (from Ropke's AGAINST THE TIDE, 1959, quoted in Zmirak, p. 53)
He courageously stood up to ridicule from the Left after the war, and explicit threats from the Right during the ascendancy of the Nazis. In 1933, he "committed career suicide" by speaking out in a forum in Frankfurt against all schemes for state control of the economy to benefit "the worker" or "the fatherland." To his audience of Nazi academics and those merely cowed by the Nazis, he called Hitler's movement "a mass revolt against reason, freedom, humanity, and [rules] that enable a highly differentiated human community to exist without degrading individuals into slaves of the state" -- after which, Ropke and his family had to flee into exile (36).

His opposition to planned economies didn't make him a fan of "laissez-faire" or "libertarian" capitalism, either, because he saw in his own country's history the cozy relationship between capital and government that led to monopolies and government interference on behalf of corporations, resulting in another kind of concentration of wealth in the hands of a few self-serving entities -- just as bad, to his mind, as concentrating it in the hands of a government bureaucracy.

With this goal of human dignity in mind, Ropke made room for occasional government intervention in his free market capitalism, so long as these were temporary and "compatible" with market forces that keep prices at their real value. When the Great Depression hit, Ropke advised government intervention "to preserve the social fabric that made a market economy possible"(p. 33).

He discerned the process by which concentration of wealth in the hands of monopolisitic big businesses "deprived many citizens of the chance to become their own masters, either as artisans, independent merchants, or small farmers." Naturally, they try to regain power through unions or the state. Concentration of the workers in mass production and in cities result in the "proletarianisation" of the masses -- making them easy marks for Marx. Ropke sees mass - produced "nihilistic entertainment products" as a by product of this undesirable collectivisation.

His prescription is something that sounds like John McCain's "ownership society," making sure that the state work to put property and choice in the hands of individuals, not because it's efficient, but because it breaks the process of "centralisation in every connection" (175) and homogeneity. He thinks that stratification, "hierarchy," is a good thing, echoing Edmund Burke's critique of France's egalitarianism. He even hoped, like Jefferson, that every one could own a piece of land, though
He predicted the dangers of "suburbanization" -- the hours spent commuting, the resulting
pollution, the ever-wider physical separation of the work from home, and of rich citizens from poor -- in 1944, decades before urban sprawl would become a political issue (179).

This is what I like: an economist who says, "It's not all about money." Or, to paraphrase the words that Bill Clinton's advisors used to keep him on-message during his first campaign: "It's the Soul, stupid!"

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