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 (Mises’s Nationalökonomie was still three years away). 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. Fortunately, arrangements had already been made for a French publisher, who turned out to be more politically strategic than the Austrian publisher.
The French edition received approval of the French authorities just before publication, and continued to sell throughout the war. The ruling regime had apparently assumed it was just another economics text!
As Röpke wrote, “The probably explanation of this miracle is that the German censors were too uneducated to understand the book, while those Germans who understood it were civilized enough to rejoice at such a discovery and not to betray it.”
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 1963, 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.
At last Libertarian Press has made The Economics of the Free Society.
