Economics of the Free Society

The reader is referred to the following additional publications of the author: W. Röpke, Crises and Cycles (London, 1936); W. Röpke, Civitas Humana (London, 1948). See also: G. Haberler, Prosperity and Depression (3rd ed.; Geneva, 1941); Hans Gestrich, Kredit und Sparen (2nd ed.; Godesberg, 1948); J. Schumpeter, Business Cycles (New York, 1939); League of Nations (report), Economic Stability in the Post-War World (Geneva, 1945); G. Haberler (ed.), Readings in Business Cycle Theory (Philadelphia, 1944); W.A. Jöhr, Die Konjunkturschwankungen (Tübingen-Zürich, 1952); G. Schmölders, “Konjunkturen und Krisen,” Rowohlts Deutsche Enzyklopädie, Vol. 3.

Under the influence of Keynes (The General Theory of Employment, Interest and Money [London, 1936]) and of the American economist Alvin H. Hansen (Full Recovery or Stagnation? [New York, 1938]), widespread currency was given to the notion that the rich industrial countries have entered the phase of relative investment saturation (“mature economy”) and that consequently a permanent tendency for savings to outstrip investment will develop unless appropriate measures are taken to forestall this. This theory of latent chronic stagnation must, however, be abandoned as unproven. See W. Röpke, Civitas Humana (op. cit., pp. 218-220); Howard S. Ellis, “Monetary Policy and Investment,” American Economic Review, Supplement, March 1940; Henry C. Simons, “Hansen on Fiscal Policy” in Economy Policy for a Free Society (Chicago, 1948); Willford I. King, “Are We Suffering from Economic Maturity?” Journal of Political Economy, October 1939; George Terborgh, The Bogey of Economic Maturity (Chicago, 1945). The above-mentioned League of Nations report also rejects the mature economy thesis; in the interim it has long since been disproved by events, and its place taken by the concern as to how rapid rates of growth can be achieved without inflation.

See W. Röpke, Crises and Cycles, op. cit.; W. Röpke, “Die sekundäre Krise und ihre Ueberwindung,” Economic Essays in Honour of Gustav Cassel (London, 1933).

For criticism of the “full employment” school see: G. Haberler, op. cit.; Howard S. Ellis, op. cit.; Hans Gestrich, op. cit.; W. Röpke, The Social Crisis of Our Time (Chicago, 1950); W. Röpke, Civitas Humana, op. cit.; Allan G.B. Fisher, Economic Progress and Social Security (London, 1945); Henry C. Simons, op. cit., especially Chapter XIII, “The Beveridge Program: An Unsympathetic Interpretation”; L.A. Hahn, The Economics of Illusion (New York, 1949); W. Röpke, “ ‘Vollbeschäftigung’—eine trügerische Lösung,” Zeitschrift für das gesamte Kreditwesen, 1950, No. 6 (discussion on the same in No. 11). For the practical application of these thoughts to the case of German economic policy since 1948 see W. Röpke, Ist die deutsche Wirtschaftspolitik richtig? (Stuttgart, 1950), a monograph prepared at the behest of the German government, the essentials of which have been reprinted in Wilhelm Röpke, Gegen die Brandung (Erlenbach-Zurich, 1959). An extreme example of the “full employment” ideology and one in which its principal errors may be particularly well studied is the United Nations report by five economic experts entitled National and International Measures for Full Employment (Lake Success, New York, 1949). For criticism of this document see: Jacob Viner, “Full Employment at Whatever Cost,” The Quarterly Journal of Economics, August, 1950; W. Röpke, The Economics of Full Employment (New York, 1952).

In addition to the above-mentioned League of Nations study, Economic Stability in the Post-War World, see my own book Crises and Cycles and also: Charles La Roche, Beschäftigungspolitik in der Demokratie (Zurich, 1947); B. Ohlin, The Problem of Employment Stabilisation (London, 1950); Paul Binder, Die Stabilisierung der Wirtschaftskonjunktur (1956).

This extremely important theme has been the subject of investigation by: H.L. Keus, De ondernemer en zijn social-economische Problemen (Haarlem, 1942); Allan G.B. Fisher, op. cit.; League of Nations, Economic Stability in the Post-War World, op. cit.; Madeleine Jaccard, La mobilité de la main d’oeuvre et Ics problèmes du chômage et de la pénurie de travailleurs (Lausanne, 1945); W.H. Hutt, Plan for Reconstruction (London, 1943). For discussion of current problems in this area see also my book A Humane Economy, op. cit.

The theories of Keynes (“Keynesianism”) which long dominated economic debate and policy with respect to economic fluctuations, and which produced many uncritical analyses of the problem of “full employment,” have been subjected to increasingly sharp, even devastating criticism. See L.A. Hahn, Common Sense Economics (New York, 1956); L.A. Hahn, Geld und Kredit (Frankfurt am Main, 1960); Henry Hazlitt, The Failure of the “New Economics,” An Analysis of the Keynesian Fallacies (New York, 1959); Henry Hazlitt (ed.), The Critics of Keynesian Economics (New York, 1960); W. Röpke, A Humane Economy (Chicago, 1960); W. Röpke, “Was lehrt Keynes?” in Gegen die Brandung, op. cit.; David McCord Wright, The Keynesian System (New York, 1962).