A Humane Economy

Summary

A Humane Economy is the German economist Wilhelm Röpke's argument that a free market economy depends on moral, social and cultural foundations that the market itself does not create. It was published in German in 1958 as Jenseits von Angebot und Nachfrage, literally 'Beyond Supply and Demand', and in English in 1960 in a translation by Elizabeth Henderson, under the subtitle The Social Framework of the Free Market. Röpke writes as a firm defender of the market against socialism and central planning. Competition and free prices, he argues, are the only system compatible with freedom and with a high standard of living. But the market is only one part of social life, and it uses up moral capital it cannot replace: honesty, self-discipline, respect for law, family loyalty, a sense of proportion and community. These must be supplied by religion, tradition, the family and the many small institutions that lie, as his German title says, beyond supply and demand. A society that forgets this will find its markets degenerating into a struggle of interests. Much of the book is a critique of what Röpke calls mass society. He criticizes the concentration of people in giant cities and giant firms, the 'cult of the colossal', and the loss of rootedness that follows when people no longer own property, work independently or belong to stable communities. He warns against the expanding welfare state, which he believes encourages dependence and centralization, and against chronic inflation, which he regards as a moral as well as an economic danger because it erodes saving and trust. He praises decentralization, small and medium-sized enterprises, family farms, and the independent middle class, and he holds up Switzerland as a model of a decentralized, self-governing society. Röpke's position, sometimes called economic humanism, places him between laissez-faire liberals and collectivists. He was close to the German ordoliberals, who argued that the state must set and enforce a framework of competition, and his ideas helped shape the West German social market economy under Ludwig Erhard. The book has been reissued in English and is read today by economists and social thinkers interested in the moral foundations of markets, including many in the Catholic social tradition.

Top Lessons

• Markets and morals

  Röpke argues that markets depend on virtues they do not produce. Students can ask where honesty and trust come from in economic life.

• Scale and community

  Röpke prefers small firms, family farms and local government to giant organizations. The argument invites reflection on size and human flourishing.

• Inflation as a moral question

  Röpke treats inflation as a threat to saving, trust and justice, not only as a technical problem.

Verified Quotes