Wilhelm Rpke

ISI Books

Chapter One

Appenzell ber alles?

In the Swiss half-canton of Appenzell Innerrhoden, a tiny republic of dairy farms, creameries, small-sized industry, and rustic churches, each year's spring yields a sea of tiny mountain flowers along the steep roads and in the window boxes of farmhouses, on the tables of well-swept hostels and on the faded wooden altars to the Virgin and Saint Meinrad. The plants are sturdy, inured to thin air and bitter winters, and defiantly diverse in color and shape-one sharp and purple, another roundly red, and then a yellow starburst. You'll see no fields of identical blooms, like the vast sunflower farms that flank the autobahn in Bavaria, or the luxuriant purple iris stands of the Louisiana bayous. You'd be hard-pressed to gather a uniform bouquet from these Swiss gardens, made up of dozens of hardy species, growing together in genial competition as they have for millennia.

Just so, you'd make a poor showing if you tried to shop an ideology in Appenzell. History records no Appenzell-supremacist movements; no mass rallies of uniformed youths in identical haircuts shouting slogans beneath enormous banners proclaiming "Appenzell ber alles"; no secretive terrorist movements for independence; no campaigns to preserve the "purity" of the local "Kultur." Nor is there room for Marx at these inns. The local farmers would rather drive their cows up nearly vertical fields than entail their hard-won property to state or superstate. The one bitter source of conflict in Appenzell's history has been religion, which sparked the devastating Thirty Years' War in neighboring German states. It did not shatter Appenzell; after some serious quarrels over creed, the Protestant and Catholic halves of the canton agreed simply to split. At some places where an agreement could not be reached, the canton lines were drawn (and up to the nineteenth century incessantly redrawn) according to the faith of each family home. When a Catholic obtained a house that had once belonged to Protestants, that little piece of Appenzell Innerrhoden was transferred to Ausserrhoden, and contrariwise if a Protestant gained a formerly Catholic home. The faiths, like species of Alpine flowers, still thrive as cordial, rivalrous neighbors.

Their coexistence is not guaranteed by abstract human rights formulas or transnational institutions-indeed, the wars of religion fought in Switzerland were largely provoked by interfering outside forces with international agendas (such as the Holy Roman Empire, Louis XIV's France, and Metternich's Austria). The finely balanced tolerance and diversity in Appenzell-in Switzerland-does not descend from above, but grows organically from the facts on the ground, from the local institutions that arose to resolve conflict, in ordered liberty, among neighbors thrown together by history and geography.

Each spring, the outburst of mountain blooms greets another hardy perennial-the Landsgemeinde, or communal vote. In what is perhaps the most ancient form of democracy, each year the adult citizens of Appenzell Innerrhoden are invited to gather in the town square to vote by show of hands on new laws, taxes, and terms of office for their local government.

Not all appear, of course. But those who do exercise a privilege their ancestors gained in the thirteenth century (when most of Europe's country folk still labored as serfs): a "sovereign vote." No amendment to the constitution may be made in Switzerland without a referendum; any law may be annulled by popular vote; additions to the constitution typically start with popular initiatives, sparked by ordinary citizens' petitions and ratified by their vote. The federal government and many cantons must submit each proposed new tax to direct vote of the people. In a century where authority has been almost everywhere usurped at one time or another by ideological mass movements, managerial elites, and murderous factions, the quarrelsome but peaceful Swiss have stuck like a bone in the throat of theorists. Each trend that commentators have described as unstoppable has failed to sway these mountainfolk-or their citified cousins in Zrich and Bern. Nationalism, socialism, national socialism, welfare-statism-each has left its high-water mark at the borders of the stubborn, diverse, democratic Swiss.

How fitting it is, then, that Switzerland was the adopted home of Wilhelm Rpke, a German economist and social critic who stood against the tides of his age, profession, and nation. Exiled by Hitler's regime, Rpke spent his career defending tolerance and liberty, and along the way helped lay the groundwork for the postwar German economic miracle.

With the Swiss, Rpke found refuge from Nazi persecution; even more, he saw in their society a model of responsive democracy, personal freedom, and broad prosperity-three goods which eluded most of Europe throughout the twentieth century. By examining Rpke's life, work, and vast postwar influence in Europe, I hope to throw some light on the intimate relationship that binds free markets, social order, and the search for the common good.

While there have been excellent reflections on Rpke in broader studies, no book-length examination of his thought has yet appeared in English. I hope the present volume, a modest attempt to fill that gap, will serve to introduce the general reader to the very great pleasure of reading Rpke.

Architect of a Miracle

Born in 1899 in Schwarmstedt, Germany, Wilhelm Rpke would become one of the most distinguished economists of his age. Acknowledged as a worthy peer by such eminents as Ludwig von Mises and Friedrich A. Hayek, Rpke was a key intellectual architect of postwar prosperity in Europe. Ludwig Erhard, economic director in postwar West Germany (and later chancellor of the Federal Republic), unabashedly credited Rpke as the most formative single influence on his policies.

In the ruined Germany of 1948, when expert opinion, the largest German political parties, most of the Allied Occupation officials, and even a majority of Germans called for socialism and the planned economy, Ludwig Erhard rejected the popular wisdom. His administration halted a disastrous postwar inflation and stagnation by issuing in 1948 a new, sound currency-the deutsche mark-and abolishing at one stroke the wage and price controls which had survived the fall of the Third Reich. This launched the West German polity as a federal, free-market democracy. It sparked a rebirth of that shattered nation which astonished the world-and inspired similar reforms in Italy, France, and other countries.

Erhard's economic reforms are now widely acknowledged as masterstrokes-more important to German prosperity than the aid received through the Marshall Plan. In these decisions, Erhard followed the principles that Rpke had explained in major theoretical works and reinforced in a flurry of articles from the late 1920s through the postwar crisis. In the darkest hours of Hitler's war, Erhard worked as an obscure advisor to a cigarette company and schooled himself in market economics by reading Rpke's works. These books, banned by the Gestapo, had to be smuggled in from Switzerland. Speaking in 1967 at a memorial service for Rpke, Erhard summed up what he had gained from his friend and mentor:

Wilhelm Rpke exhausted himself offering-to...