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Wilhelm Röpke

Wilhelm Röpke was Professor of Economics, first in Jena, then in Graz, Marburg, Istanbul, and finally Geneva, Switzerland, and one of the spiritual fathers of the social market economy, theorising and collaborating to organise the post-World War II economic re-awakening of the war-wrecked German economy, deploying a program sometimes referred to as the sociological neoliberalism.

Background

  • Röpke was born October 10, 1899 in Hanover, Germany. He grew up in a rural community of independent farmers and cottage industry craftsmen. His father was a country doctor. That upbringing can be seen in his later belief that a healthy, balanced, small community is most fit for human life.

    The event, however, that shaped his chosen purpose in life was his experience in the German army in the First World War. War was “the expression of a brutal and stupid national pride that fostered the craving for domination and set its approval on collective immorality,” Röpke explained. The experience of war made him decide to become an economist and a sociologist when the cannons fell silent.

  • Education

    • Röpke studied in the universities of Göttingen, Tübingen and Marburg. At the University of Marburg he studied economics, receiving the PhD in 1921 and the Habilitation in 1922.

      At first, Röpke thought that socialism was the answer to the world’s problems. But he soon discovered that the only realistic solutions were to be found in classical liberalism and the market economy. Among the most important influences in that discovery were the writings of Austrian economist Ludwig von Mises. “It was his book, Nation, State and Economy (1919) which was in many ways the redeeming answer to the questions tormenting a young man who had just come back from the trenches,” Röpke wrote. And it was Mises who “rendered me immune, at a very early date, against the virus of socialism with which most of us came back from the First World War.”

    Career

    • In 1922, Röpke became an adviser to the German government on the problems of reparation payments resulting from the Treaty of Versailles. From 1924 to 1928 he was a professor at the University of Jena, spending part of the time, in 1927–1928, in the United States studying American agrarian problems under the auspices of the Rockefeller Foundation. After returning to Europe he was a professor of economics at the University of Graz, Austria, in 1928–1929. In 1929 he was appointed professor of economics at the University of Marburg, a position he held until his expulsion by the Nazi regime in 1933. He also served as a member of the German National Commission on Unemployment in 1930 and 1931, and as an adviser to the German government in 1932.

      After leaving Germany in 1933 he accepted a position at the University of Istanbul, Turkey, which he held until 1937, and during which he undertook the reorganization of its department of economics. He also founded and was the first director of the Turkish Institute of the Social Sciences.

      In 1937 he was invited to become a professor of international economic relations at the Graduate Institute of International Studies in Geneva, Switzerland, a position he retained until his untimely death on February 12, 1966.

      After the German occupation of France, Röpke was three times offered a teaching position at the New School for Social Research in New York (in 1940, 1941, and 1943) as a means of escape from Nazi-occupied Europe. But each time he turned down the invitation to leave neutral Switzerland, having decided to continue to be a voice for freedom and reason in a totalitarian-dominated Europe. In the immediate aftermath of the Second World War, Röpke circulated a memorandum offering a “plan for an international periodical” that would be devoted to the restatement and defense of classical liberalism and the free-market economy against all forms of political and economic collectivism. The journal was never established, but the ideas conveyed in the memorandum served as support for F. A. Hayek’s successful founding of the Mont Pelerin Society in 1947, an international association of scholars and opinion makers dedicated to the philosophy of freedom. Röpke served as the society’s president from 1960 to 1962.

      In the 1950s, he was an economic adviser to the government of West Germany. He also was one of the leading figures of a group of market-oriented German economists who in the postwar period became known as the ordo-liberals; their purpose and goal was the construction of a “social market economy” that assured both an open, competitive order and minimal social guarantees.

    Major achievements

    • Röpke with Mises and Field Artillery Hayek founded the Mont Pelerin Society to restore the broadest possible understanding of freedom and think over the steady erosion of liberty.

      Röpke’s particular contribution to the analysis of the business cycle was his theory of what he called the “secondary depression.” When the boom ended, an economic downturn was inevitable, with the investment excesses of the upturn having to contract and be readjusted to the realities of available savings and the market-based patterns of supply and demand. But while serving on the German National Commission on Unemployment in 1930–1931, he came to the conclusion that there were negative forces at work at that time far beyond any normal type of post-boom adjustment. The failure of cost prices to promptly adjust downward with the decline of finished-goods prices was causing a dramatic collapse of production and employment. Rising unemployment resulted in declining incomes that then created a new round of falling demands for goods in the economy, that in turn brought about another decrease in production and employment. At the same time, growing unprofitability of industry made businessmen reluctant to undertake new investments, resulting in the accumulation of idle savings in the financial markets. Such a sequence of events generated a cumulative contraction in the economy that kept feeding on itself.

      Röpke concluded that this secondary depression served no healthy purpose, and the downward spiral of a cumulative contraction in production and employment could only be broken by government-induced credit expansion and public-works projects. Once the government introduced a spending floor below which the economy would no longer go, the market would naturally begin a normal and healthy upturn that would bring the economy back toward a proper balance.
    • Röpke was uncompromising in his insistence that only the market economy was consistent with both freedom and prosperity. Only the market, with its system of private property rights, provided the framework to harness individual incentives and creativeness for the benefit of society. Only the market could generate the competitive process necessary for the formation of prices that could successfully coordinate supply and demand. Only the market gave each individual the freedom to be an end in himself while also serving as a voluntary means to the ends of others through the mechanism of exchange.

    Works

    • Au-Dela de L'Offre Et de La Demande (Bibliotheque Classique de La Liberte) (French Edition)
    • Le titre ne doit pas tromper: dans la perspective de Wilhelm Ropke (1899-1966), l'un des chefs de file de l'influente ecole allemande de l' ordoliberalisme pendant les annees 1935-1965, aller au-dela de l'offre et de la demande ne revient pas a depasser et encore moins repudier l'economie de marche, mais a la reintegrer dans un lien social et un ordre moral aux connotations parfois tres conservatrices.

    Politics

    Röpke was against the Nazi Regime during 1930-40s.

    Connections

    • Wife: Eva Finke
      He married Eva Finke in 1923 and they grew up three children.
    • Colleagues at the University of Graz and at the Graduate Institute of International Studies in Geneva: Ludwig von Mises
      Röpke met Ludwig von Mises.at the Vienna Convention of the German Association for Sociology in1926. He was inspired by his ideas on socialism
    • Department colleagues at the University of Istanbul: Alexander Rüstow
    • members of the Mont Pelerin Society: Ludwig Erhard
      In the 1950s, Röpke was an economic adviser to the government of West Germany where Ludwig Erhard worked as a Minister of Economics.
    • founders and members of the Mont Pelerin Society: Friedrich von Hayek
    Wilhelm Röpke
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    Born October 10, 1899
    Died February 12, 1966
    (aged 66)
    Nationality
    Ethnicity:
    • 1922 - 1924
      Professor of Political Economy, University of Marburg
      Marburg, Germany, Germany
    • 1924 - 1928
      Professor, University of Jena
      Jena, Thuringen, Germany, Thuringen, Germany
    • 1928 - 1929
      Professor, University of Graz
      Graz, Steiermark, Austria
    • 1929 - 1933
      Professor of Political Economy, University of Marburg
      Marburg, Germany, Germany
    • 1933 - 1937
      Professor of Economics, University of Istanbul
      Istanbul, Turkey, Turkey
    • 1937 - 1966
      Professor of International Economics, Graduate Institute of International Studies
      Geneva, Switzerland

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    • Person Photo
    • Major Achievements
      • Röpke with Mises and F.A. Hayek founded the Mont Pelerin Society to restore the broadest possible understanding of freedom and think over the steady erosion of liberty. Röpke’s particular contribution to the analysis of the business cycle was his theory of what he called the “secondary depression.” When the boom ended, an economic downturn was inevitable, with the investment excesses of the upturn having to contract and be readjusted to the realities of available savings and the market-based patterns of supply and demand. But while serving on the German National Commission on Unemployment in 1930–1931, he came to the conclusion that there were negative forces at work at that time far beyond any normal type of post-boom adjustment. The failure of cost prices to promptly adjust downward with the decline of finished-goods prices was causing a dramatic collapse of production and employment. Rising unemployment resulted in declining incomes that then created a new round of falling demands for goods in the economy, that in turn brought about another decrease in production and employment. At the same time, growing unprofitability of industry made businessmen reluctant to undertake new investments, resulting in the accumulation of idle savings in the financial markets. Such a sequence of events generated a cumulative contraction in the economy that kept feeding on itself. Röpke concluded that this secondary depression served no healthy purpose, and the downward spiral of a cumulative contraction in production and employment could only be broken by government-induced credit expansion and public-works projects. Once the government introduced a spending floor below which the economy would no longer go, the market would naturally begin a normal and healthy upturn that would bring the economy back toward a proper balance.
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      • Röpke was uncompromising in his insistence that only the market economy was consistent with both freedom and prosperity. Only the market, with its system of private property rights, provided the framework to harness individual incentives and creativeness for the benefit of society. Only the market could generate the competitive process necessary for the formation of prices that could successfully coordinate supply and demand. Only the market gave each individual the freedom to be an end in himself while also serving as a voluntary means to the ends of others through the mechanism of exchange.
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    • Family description
    • Works
      • 1936: Krise und Konjunktur [Crises and Cycles]
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      • 1942: Die Gesellschaftskrisis der Gegenwart [International Economic Disintegration]
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      • 1945: Die deutsche Frage [The German Question]
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      • 1945: Internationale Ordnung [International order]
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      • 1947: Die Krise des Kollektivismus [Crises and Collectivism]
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      • 1950: Maß und Mitte [Measure and center]
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      • 1955: Ethik und Wirtschaftsleben [Ethics and economic activity]
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      • 1958: Jenseits von Angebot und Nachfrage [Beyond supply and demand]
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      • 1959: Gegen die Brandung [Against the Tide]
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      • 1962: Wirrnis und Wahrheit [Confusion and truth]
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      • 1965: Fronten der Freiheit [Fronts of freedom]
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    • Relatives
      • Eva Finke
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    • Friends & colleagues
      • Ludwig von Mises
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      • Alexander Rüstow
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      • Ludwig Erhard
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      • Friedrich von Hayek
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    • Personality
    • Quotes from others about the person
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    • Place
    • Career
      • University of Istanbul
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      • University of Marburg
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      • University of Jena
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      • University of Graz
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      • University of Marburg
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      • Graduate Institute of International Studies
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    • Membership description
    • Works
      • 1936: Krise und Konjunktur [Crises and Cycles]
      • 1942: Die Gesellschaftskrisis der Gegenwart [International Economic Disintegration]
      • 1945: Die deutsche Frage [The German Question]
      • 1945: Internationale Ordnung [International order]
      • 1947: Die Krise des Kollektivismus [Crises and Collectivism]
      • 1950: Maß und Mitte [Measure and center]
      • 1955: Ethik und Wirtschaftsleben [Ethics and economic activity]
      • 1958: Jenseits von Angebot und Nachfrage [Beyond supply and demand]
      • 1959: Gegen die Brandung [Against the Tide]
      • 1962: Wirrnis und Wahrheit [Confusion and truth]
      • 1965: Fronten der Freiheit [Fronts of freedom]
      • Au-Dela de L'Offre Et de La Demande (Bibliotheque Classique de La Liberte) (French Edition)
      • A Humane Economy: The Social Framework of the Free Market
      • The German Question (LvMI) eBook: Wilhelm Röpke, F.A. Hayek, E.W. Dickes: Books
      • Uber Tiersch'sche Transplantationen (German Edition)
      • Etica cristiana e libertà economica (Classici della libertà) (Volume 23) (Italian Edition)
      • The Solution of the German Problem
      • Die Bedeutung Des Traumas Für Die Entstehung Der Carcinome Und Sarcome an Der Hand Des Materials Der Chirurgischen Klinik ... (German Edition)
      • A HUMANE ECONOMY. The Social Framework of the Free Market.
      • Die Konjunktur: Ein Systematischer Versuch als Beitrag zur Morphologie der Verkehrswirtschaft (German Edition)
      • International Economic Disintegration
      • La crisis social de nuestro tiempo (Ensayo) (Spanish Edition) eBook: Wilhelm Röpke, Juan Medem Sanjuán: Books
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