One year before the Nazi takeover of Austria, and after Mises had already accepted a research position in Geneva, a remarkable book began to circulate in what remained of Vienna’s intellectual circles. It was Die Lehre von der Wirtschaft, The Economics of the Free Society by Wilhelm Röpke.
If the Austrian economists had a textbook on economic theory and policy in these years, Röpke had written it. It was a summary of the present state of opinion on monetary theory, price theory, the business cycle, and method. Röpke emerges here as thoroughgoing Misesian, a stalwart advocate of capitalism and free trade, and a fierce critic of protectionism and every manner of government interference with the economy.
The book made a huge impression in Austria, and one that the Gestapo did not like. In 1939, the book was declared contraband, the offices of the publisher broken into, and all copies destroyed. After the war, the book was a huge success in Germany, and went through nine editions, serving, in many ways, as the guidebook to the German economic miracle. Far from watering down the book with successive editions, Röpke improved it by refuting fallacies that cropped up in economics: positivism, Keynesian planning, unionism, and much more. It was also translated into Italian, Finnish, and Swedish.
The English edition finally appeared in 1962, but it has been out of print for many years. In the meantime, it has become something of an urban myth that Wilhelm Röpke was an advocate of a “third way” between capitalism and socialism, and that he favored a wide range of interventionist measures.
This view is impossible to sustain in light of this sweeping defense of economic freedom.
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Wilhelm Röpke (1899-1966) was schooled in the tradition of the Austrians and made enormous contributions to the study of political institutions. His powerful anti-Keynesian writings in particular underscore what an outstanding economist he was and the extent to which he was influenced by Mises. Röpke defended sound money and free trade, and attacked welfare. He was a passionate advocate of laissez-faire.
Henry Regnery Company, Chicago, 1963
