Apostle of a Humane Economy: Remembering Wilhelm Ropke.

• Author: Boarman, Patrick M.

Wilhelm Ropke entered my life, with immense effect, more than fifty years ago. That was a time in which the political and intellectual climate was rather different from today. The world was just beginning to rise from the ashes of the greatest war, World War II. Socialism was everywhere in the ascendant. The Soviet colossus bestrode half the planet. China was soon to become a monolithic Communist state. And the United States stood virtually alone, if we except Switzerland, as guardian of the market economy. Who could then have foreseen that in the year 2000 the Soviet empire would be no more, that a united Germany would have arisen like a phoenix to become the economic powerhouse of Europe, that "socialism" and "planned economy" would become derisory, even pejorative terms (except maybe in Cuba), and that expressions such as "social market economy," "third way," and "a humane economy would become the fashionable slogans of the moment?

Ropke in China?

Consider the case of China. Who could have imagined that China, of all places, the mysterious, impenetrable, isolated land of a billion people, tyrannized for forty-five years by the monstrous Mao Tse-tung--that China would go capitalist, or at least partway capitalist? So what did Wilhelm Ropke have to do with these momentous happenings, with those in China in particular? A great deal, albeit the connection is circuitous and may not involve his having a major direct influence.

Chinese interested in market economy as part of unique institutional framework.

Two years ago, my wife Shane, a native Shanghaiese, and I, an American professor emeritus of economics, spent a month traveling through central China. Among the highlights of the trip was a three-day visit to a Chinese university, where, at the invitation of the university's president, I lectured on market economics. His very first comment to me was startling: "There are two things," he opined, "that account for America's great success: first, democracy, and second, high technology." Equally eye-opening were my exchanges with senior and junior faculty members. One heard nothing of Marxism-Leninism or of central planning, but many references to and searching questions about the price system, profits, incentives, and entrepreneurship, especially as they function in the United States. These faculty members expressed particular interest in the differences they claimed to see in the approaches of Western economists to economic analysis: on the one hand, the school that emphasizes abstract theorizing and mathemati cal model-building, that is, a preoccupation with the market economy viewed as a self-contained machine; and the other approach, which they felt to be less influential in the West, and in which they were greatly interested, which stresses the role of the unique institutional framework--of cultural traditions, of historical forces, of government itself--within which each national economy is embedded.

I found these insights to be quite astonishing since the model of a socio-economic system that emphasizes the primacy of the institutional framework--viz., the decisive influence of tradition, of law, of culture in the broadest sense, of philosophy even, and the subsidiary, if still crucial role of the market per se--was precisely the design Wilhelm Ropke had spent a lifetime devising, refining and elucidating. So I was not totally unprepared, I think, though I did experience a small shock of recognition, when after one of my lectures to a large group of undergraduates, a student came up to show me proudly a very dog-eared, very battered copy of Ropke's Economics of the Free Society. [1]

Whether any other students beyond this one had ever heard of Ropke, I was unable to find out. But I felt nevertheless emboldened in a subsequent lecture to pass along to these students some of the Ropkean wisdom I had myself received so long ago. While emphasizing the awesome power of a market economy to generate wealth, which the Chinese are happily discovering, I reminded my audience of the limits of the market, of its inability, for example, to address collective needs, such as that for national defense, or for a clean environment, or for a financial system which is proof against the ravages of inflation. It is upon these limits, I argued, that the economic role of government is predicated. And it is also because of them that an array of other institutions and virtues is required, without which the free market tends to degenerate into the kind of "wild capitalism" that has made Russia's transition from Communism to a market economy so precarious. Among these I cited the rule of law, vigorous competition, a sound currency, an efficient central bank and, on the part of individual participants in the market economy, a modicum of honesty, self-discipline, and civic-mindedness.

Man does not live by supply and demand alone.

I further reminded these Chinese students that some of the most important elements of our lives, the values we cherish most highly in both of our countries, lie beyond supply and demand. These sentiments were greeted with prolonged applause.

One can only speculate as to how these Chinese young people, who are being trained for top jobs in the Chinese Ministry of Finance in Beijing, came to have their fairly sophisticated understandings of the modern market economy. It is hardly credible that one dog-eared old textbook could have triggered such transformative thinking. The simple truth is the easier answer. It was the overwhelming success of the market economy over the past fifty years wherever on our planet it has been installed--with the appropriate institutional safeguards in place--that enormously impressed the Chinese, beginning with Deng Xiaoping. And however one labels this socio-economic design, it is Wilhelm Ropke who can lay claim to having been one of its principal architects. While he was certainly not alone in the struggle to rehabilitate the market economy in the post-World War II era, the uniqueness of his contribution lay in his unrelenting insistence that such an economy would be viable only by severing its ties to laissez-faire or, as he and his friends termed it, to paleo-liberalism. Furthermore, while the "social market economy" which he advocated was not to be confused with what was vulgarly termed "capitalism," neither was it to be misidentified with a welfare state, if that term were understood to include the shackling, or even displacement, of the market by comprehensive government interventionism.

Freedom is indivisible.

Were Ropke alive today, I believe he would be greatly encouraged by China's turn towards economic freedom, although reserving judgment, of course, as to whether this will lead to political freedom. In that regard he would argue, as he did untiringly throughout his life, that freedom is indivisible, that true economic freedom requires intellectual and political freedom, and vice versa. The ignominious collapse in recent years of several of the national economies based on the vaunted Asian model--one in which economic freedom is combined with political authoritarianism--has shown how prescient Ropke was on this point.

To expose the full weight of the relevance and influence of this seer, in China and the world generally, permit me here to vault over geography to another place, Geneva, and to another time- appalling thought-some fifty-four years ago.

Revelation in Geneva

It was in October 1946 that I first encountered Wilhelm Ropke. The setting of that encounter has remained with me: a crisp fall day, in a handsome chateau housing the Graduate Institute of International Studies, [2] on the shores of Lake Geneva; and, in the distance, across the Lake, the majestic white cone of Mont Blanc, faintly visible through the morning haze.

In the classroom, a group of some thirty students waited expectantly. As I recall, they included a half dozen young ladies from Smith College, all lined up in the front row and all but one, remarkably, writing, as do I, with the left hand, a circumstance that confounded the non-Americans in the room. Even in free Switzerland, I discovered, left-handedness is regarded as an affliction, best extirpated in a child's earliest years. "Do you mean that in America they actually let you write the wrong way when you were a child?" was the inveterate refrain. But if my handedness was left and genetic, my ideological sympathies were moderately rightward and self-chosen. I was ready for Ropke of whom it was bruited about, "He is the most conservative member of the faculty!" The class included, as well, students from France, Italy, Lebanon, England, and Switzerland. Since it was 1946, and the war hardly over, there was no student from Germany. There was to be only one German in the classroom that day, and for some years thereafter, and that was Professor Ropke.

As it turned out, Ropke was a German with a singular history. He was born at Schwarmstedt near Hanover in 1899, the son of a country doctor and the descendant of a long line of Lutheran pastors. The year of his birth, marking a transition not only between two centuries, but between two profoundly different worlds, had a special significance for Ropke who, as he pointed out to me at a later time, felt himself to be a true child of the nineteenth century, though with one foot in the twentieth. The Great War, in which Ropke served and was decorated for valor, was a shattering experience for the teenaged recruit, collapsing the world of his youth while offering nothing to replace it. The insanity of that fratricidal conflict and the barbarities he witnessed in the trenches of Picardy came to stand, for Ropke, as symbols of the modern condition at its worst: the physical and moral degradation of "mass existence, mass feeding, mass sleep." His anguish and indignation over the war were ultimately transmuted into an ger at the "unlimited powers of the state" which had inflicted this horror on...