http://www.wvwnews.net/story.php?id=4938
by Kyle Bristow
Economist Wilhelm Röpke lived during the 20th century in Europe, so he saw the horrors of state-enforced collectivism, but also understood the dangers of radical individualism. He recognized the errors of capitalism and the immorality of socialism, and would eventually develop an economic theory that strove to cure both the scourge of socialism and the plague of capitalism. To some people, the economic theory Röpke devised was known as “neoliberal,” “social market,” or “humane economy,” but it became best-known as the “Third Way.”
Röpke felt that social and economic order were achieved only through tradition and religious faith, so he promoted the idea of a “market-friendly, socially responsible economic policy—one that aims at encouraging the widespread ownership of property, capital, real estate, and small businesses throughout the population.”[ii Individual economic freedom would serve “prosperity and justice, freedom and progress” so long as it was done within “the limits of social order and the common good.”[iii Röpke believed that for the economy to prosper, liberties would be permitted so long as they did not conflict with the necessary constraints of societal order.
Röpke thought that a third economic theory was needed, because the other two—capitalism and socialism—had failed. Socialism was futile, because it is a system that erodes freedom to achieve a morally reprehensible “equality.” When government takes from one to bestow on another, it diminishes the incentive of the first, the integrity of the second, and the moral autonomy of both. Socialism, collectivism, and communism are nothing more than economic systems which advocate state-sanctioned theft.Röpke understood the failures of capitalism as well: the formation of monopolies, the rise of unemployment, the tendency to centralize private and governmental wealth, the eroding of culture by the elimination and degradation of institutions, and a barbaric individualism that naturally ensues. To temper the negative effects of laissez-faire capitalism, Röpke thought that limited government is sometimes needed to intervene. To Röpke, “the economic power of colossal corporations [is almost as dangerous as the political might of collectivist governments” and needed to be dealt with.[iv
The erosion of traditional values and culture is naturally encouraged through unfettered capitalism, because nihilism, Machiavellianism, and what Röpke called “Proletarianisation” are palpable. Machiavellianism naturally exists within the free-market economy, because competition is at the crux of it. Unlike the laissez-fairies, Röpke understood human nature: man works to live, not lives to work. When “vulgar Machiavellianism” occurs, solidarity between citizens dissipates and without a strong moral code from religion, business ethics and culture decline.[v Also, the extreme faith in the individual is an affront to religious observance to God, because self-idolatry is established. Nihilism, the disbelief in a moral or religious code, takes root like a weed. This is the cyanide pill of culture.
“Proletarianisation” occurs when people become consumers of mass-produced products, which readily infects culture with poison; “mass-produced ‘popular’ music on the radio and expensively produced films replace folk and classical music, regional theater and even reading—leveling out and homogenizing cultural life, reducing the average man to a consumer of prepackaged, frequently nihilistic entertainment products.”[vi
When people are unanchored from a unique culture, religion, family and other nongovernmental institutions, they turn to the only institution left to fix perceived societal problems—government and mass political movements. When this travesty happens, people no longer know what liberty means, why it is important, or how to defend it.[vii This is why Röpke believes that economic freedom cannot exist without tradition and religious faith. The health of these institutions determines the future of liberty in that land.
Because liberty is only safe if culture is secure, Röpke felt that limited government is needed to preserve the social and political framework that makes freedom possible. Röpke’s “Third Way” economic theory avoids collectivism extremes on one hand and laissez-faire capitalism on the other.[viii “The essence of the market economy,” according to Röpke, “lay not in the absolute independence of business from government intervention—as laissez-faire advocates insisted—but in the free functioning of the price system.”[ix The role of the government is to maintain that integrity, whether it is by preventing inflation or preventing the formation of cartels and monopolies. Röpke strongly believed that inflation must be dealt with by government, because it undermines thrift by “devaluing savings and diluting debts.”[x
The implementation of “Third Way” brings about success. When Ludwig Erhard introduced the Deutsche Mark in Germany after World War II to create a functioning price system, productivity leapt by roughly thirty percent in the following three months—six times its increase a year before.[xi Within a year of its introduction, unemployment in Germany was diminishing.[xii
Röpke understood the importance of culture, and how it allowed for societal order and economic progress. Above all else, Röpke knew that civilization was at stake when institutions—economic and noneconomic—began to collapse. Röpke’s understanding of human nature, the value of noneconomic institutions, the importance of culture, and the need for morals dictated by religion, allowed him to devise an economic theory that brings success to fruition when it is utilized. Röpke’s “Third Way” shows how “the market can be harnessed and guided—with a light hand, with the most gentle, paternal touch—to promote [the common good.”[xiii
Notes
Zmirak, John, Wilhelm Röpke, (Wilmington, DE: ISI Books, 2001), pg. 13.
[ii Zmirak, John, Wilhelm Röpke, pg. 8.
[iii Zmirak, John, Wilhelm Röpke, pg. 13.
[iv Zmirak, John, Wilhelm Röpke, pg. 9.
[v Zmirak, John, Wilhelm Röpke, pg. 169.
[vi Zmirak, John, Wilhelm Röpke, pg. 171.
[vii Zmirak, John, Wilhelm Röpke, pg. 172.
[viii Zmirak, John, Wilhelm Röpke, pg. 46.
[ix Zmirak, John, Wilhelm Röpke, pg. 159.
[x Zmirak, John, Wilhelm Röpke, pg. 197.
[xi Zmirak, John, Wilhelm Röpke, pg. 154.
[xii Zmirak, John, Wilhelm Röpke, pg. 156.
[xiii Zmirak, John, Wilhelm Röpke, pg. 205.
http://spartanspectator.blogspot.com/2007/10/essay-contest.html