Wilhelm Roepke (1899-1966) is one of the most original, yet least recognized, economic thinkers of the 20th century. One of the reasons for his relative obscurity is that he does not fit well into the prevailing capitalist/socialist dichotomy. Roepke borrows from both capitalism and socialism, yet he goes beyond defining economics in abstract terms and brings it down to the human level. Thus Roepke, along with E.F. Schumacher, is the chief architect of what can broadly be termed the humane, or social, market economy. This Third Way defends basic market principles while grounding economic practices in the moral framework established by family, community, and religion. For Roepke, this formulation most closely approximates the free-market ideal, as the market flourishes best when it is protected by tradition and local prejudice against the predations of the state and big business.
John Zmirak’s book chronicles the intellectual development of Roepke, who started out as an Enlightenment liberal who believed in social progress and ended up a critic of the damage wrought by the excesses of modernization. Roepke spent most of his career in Geneva, where he fled to escape Nazi persecution in his native Germany in the 1930’s. This long exile profoundly influenced Roepke’s thinking. He admired the Swiss for their fierce political independence, which was founded upon a tradition of political decentralization and a vigorous agrarian economy. Moreover, this tiny nation had enough political and economic strength to support (and control) the many international corporations headquartered there. In this cultural environment, Roepke began to recognize an alternative to the totalizing political economies of capitalism and socialism.
To Roepke, mass democracy and totalitarianism, characterized alike by the centralization of power and the loss of freedom, were one and the same thing. Against these ideologies, he took up the cause of bourgeois localism. As one who stood outside the ideological status quo, he labored to develop theories that could defend the importance of political autonomy, economic decentralization, and social solidarity. But he wanted theories that could also yield results. Roepke saw in all of the ideologies of his time, whether of the right or of the left, a reliance on abstract ideals at the expense of principles derived from experience. Thus, he focused on the most enduring and tangible human institutions: the intermediary bodies of families, civic groups, and churches, which he considered the only structures that could effectively restrain the centripetal forces of modern economic and political power. Roepke believed that the failure to sustain these entities and their social influence paved the way for atomistic individualism, on the one hand, and centralized political and economic power, on the other.
As his thought matured, Roepke moved closer to the views of Robert Nisbet and other postwar cultural conservatives. Ever more critical of Enlightenment liberalism, he began to embrace an older European tradition based on Christian respect for the person, the Greek love of reason, and the Germanic tradition of decentralized power. Zmirak refers to what he calls Roepke’s belief in the “politics of prudence”—one of the great legacies of Western civilization, since prudence keeps the human appetite in check and thus maintains the subtle balance between social order and individual freedom. By contrast, modern ideologies undermine the older prudential perspective and replace it with an aggressive ideology of final solutions and the perfectibility of man. Amid this welter of exaggeration and its forceful imposition, the more fragile and cultivated tradition of modesty and measure breaks down, and the proletarianization of society becomes inevit-able.
Roepke held modern feminism, which strives to create the independent and autonomous woman, in contempt. To him, the removal of women from the household represented a tremendous social upheaval, since such traditional female activities as education, crafts, sewing, cooking, and gardening help maintain economic autonomy and social solidarity. Once women become independent, the household disintegrates, and its members become vulnerable to the predations of economic and political bureaucracies. Already in the 1950’s, Roepke foresaw household fragmentation and the subsequent rise of suburbanization—a separation from community and nature that only exacerbates feelings of alienation among men, driving them into the hands of the state and big business. He also foresaw the processes of economic and political centralization at work at the global level. Roepke was highly critical of the growing power of the EEC, GATT, and most U.N. organizations, which he regarded as manifestations of a false internationalism that could only further undermine any chance for political and economic autonomy at the local level.
Roepke was a reverent man from a long Lutheran lineage who stressed in his writings the social importance of organized religion. He was also influenced by Catholic social teaching and its emphasis on the principle of subsidiarity, as well as by the Anglo-American political tradition of constitutional government and the rule of law. On this score, Roepke differed from many of his libertarian friends in perceiving the need for a strong government with clearly delineated powers. (The state has to be effective in dealing with such collective matters as transportation, defense, pollution control, etc.) He also distanced himself from the libertarians’ neutral positions on individual morality and social responsibility. Although Roepke helped found the libertarian Mont Pelerin Society after the war, many disagreements over the limits of individual freedom and the role of government finally led to his resignation. The break so upset him that it may, in fact, have contributed to his early death.
Although Roepke spent much of his life toiling in intellectual isolation, his ideas finally gained currency after World War II by influencing key German government officials who developed economic policies according to his prescriptions. Roepke also took an active role in drafting a monetary-reform policy that helped guide Germany to future prosperity. Wilhelm Roepke will most likely be remembered, however, for his ability to steer clear of the ideological propaganda that so permeated the 20th century and to remain faithful to the noblest ideals of Western civilization. As Zmirak notes in his Introduction, Roepke was really a man for the 21st century, since it is in this century that the ideals of political autonomy, economic decentralization, and social solidarity may finally have a chance at taking root again in a landscape wracked by the conflicts and injustices inflicted by modern ideologies.
An important concept that Zmirak unfortunately does not discuss is Roepke’s idea of “wage inflation.” Wage inflation may be explained as the disparity in wages that occurs between industrial production and agrarian and artisanal production. Because of its greater productivity, industry creates higher profits and wages. The surplus, however, is distributed unevenly between industrial workers and investors. Roepke believed that this disparity in wealth is the root cause of a number of modern maladies, including explosive urbanization, mass immigration, consumerism, and widespread environmental degradation. In rural areas, the differential underlies the movement toward massive agribusiness, as producers try to achieve economies of scale to match returns compatible with those of industry. For most economists, the rise of industry and the decline of an agrarian economy are signs of progress and, in any event, inevitable; for Roepke, they were another symptom of the excesses of modernization. Rural life is essential to civilization. (Roepke was an avid gardener.) And although industrial production is highly remunerative, it does not follow that all of humanity must be sucked into its vortex. (On this score, Roepke echoes many of the sentiments of the British Distributists and Southern Agrarians.) Critical of industrialism’s centralizing tendencies rather than of the phenomenon itself, he understood that the concentration of wealth and people in cities paves the way for the centralization of political and economic power and the ultimate proletarianization of society.
Overcoming the negative social consequences of wage inflation requires not only political will and foresight but a firm reliance on, and respect for, traditional intermediary institutions that can militate against the seductive material forces that have been unleashed since the Industrial Revolution.
Roepke’s intellectual heirs must now discover these political means to protect nations, communities, and families from the savage onslaught of materialism.
[Wilhelm Roepke: Swiss Localist, Global Economist, by John Zmirak (Wilmington, Delaware: ISI Books) 241 pp., $24.95]