How Free Economics and Catholic Social Teaching Created an Economic Miracle

by David Clayton on March 8, 2013

Wilhelm Röpke: Swiss Localist, Global Economist Cover

Wilhelm Ropke: Swiss Localist, Global Economist by John Zmirak

I have been carrying out a little journey of investigation into the free economy and its compatibility with Catholic social teaching. I have concluded that the two are wholly compatible and despite the strongly held objections from some readers (this seems to be a subject that provokes strong reaction). The next question one might ask is how well does it work? In seeking and answer to this I looked to John Zmirak’s excellent book about the Swiss economist Wilhelm Ropke ‘perhaps one of the most unjustly neglected economists of the 20th century’.

Wilhelm Ropke was advisor to Ludwig Erhard the West Germany finance minister who engineered the ‘economic miracle’ after the Second World War. What Erhard introduced through a series of reforms enacted in 1948 was a free market system infused with the social values of Catholic social teaching. Most of the allies and economic experts assumed that free markets and capitalism had had their day and were advocating government controlled economic systems that owed much, still, to Marx. Politically there was no natural free market constituency so in a stroke of political genius, Erhard developed the phrase ‘social market economy’ to sell what he was doing to the German people.

Nevertheless, the conventional wisdom was convinced that this wouldn’t succeed. As Zmirak reports: ‘The eminent John Kenneth Galbraith wrote in 1948 (just after Erhard made his reforms) “There has never been the slightest possibility of getting German recovery by this wholesale repeal and it is quite possible that its reiteration has delayed German recovery. The question is not whether there must be planning, but whether that planning has been forthright and effective.” ‘  Galbraith couldn’t have been more wrong (and if ever we have evidence that in economics is a field in which reputations have nothing to do with the accuracy of predictions, this is it). The result of Erhard’s reforms was as dramatic and economic resurgence as one could imagine is possible. While the population of one of the victors in the war elected a socialist government and was still living under wartime rationing of basic foodstuffs, Germany rose from the ashes. Within two years everything had changed dramatically.

As Zmirak tells us: ‘Later Erhard praised Ropke for providing “to those trapped in socialist-collectivist thought…words of transformation, offering them once more firm ground under their feet and an inner faith in the value and blessings of freedom, justice and morality.” By the end of his life in 1966, Ropke had become  a celebrity in his adopted Swiss homeland and a major figure within the American conservative intellectual revival.’

Some may be aware of Zmirak’s other books – the ‘Bad Catholic’ series, light hearted and very funny examinations of Catholic culture. This book is very different. He describes everything in clear, precise and very readible prose that reinforces just how good a writer he is.

Buy the book here.

His website www.badcatholics.com is like not other I have ever seen. It includes several short video features that arise from the Zmirak imagination. Here is one entitled The Vatican Space Program…watch it yourself, I can’t describe it.

 

 

 

 

 

 

 

 

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