The Moral Foundations of Society and Technological Progress of the Economy in the Work of Wilhelm Röpke

The distinction positive-normative assumes its full meaning in a positivistic framework. Ethical theories presuppose a sense of what ought to be at the epistemological level, so that such a distinction falls away and they do not allow for a pure instrumental rationality.

“Markets and competition are far from generating their moral prerequisites autonomously. This is the error of liberal immanentism. These prerequisites must be furnished from outside, and it is, on the contrary, the market and competition which constantly strain them, draw upon them, and consume them” (Röpke 1958, p. 126). See also Resico (2008) who discusses the consequences of this distinction throughout Röpke’s economic thought.

For the concept of “uprootedness,” as used by Simone Weil, see Gambarotto and Solari (2015).

Röpke used the terms “technology”/“technique” and “technological”/“technical” interchangeably. For the sake of consistency, the terms “technology” and “technological” are uniformly used in this paper.

“The market, competition, and the play of supply and demand do not create these ethical reserves; they presuppose them and consume them. These reserves have to come from outside the market, and no textbook on economics can replace them. J.B. Say was mistaken in his youthful work Olbie ou Essai sur les moyens de réformer les moeurs d’une nation, a liberal utopian fantasy published in 1800, when he naïvely proposed to hand the citizens of his paradise ‘un bon traité d’économie politique’ as a ‘premier livre de morale.’ That valiant utilitarian Cobden also seems to have thought in all seriousness that free-trade theory was the best way to peace” (Röpke 1958, p. 125).

Frank H. Knight’s “The Ethics of Competition” (Knight 1935) is referenced in Röpke (1942a, p. 71, fn. 6).

He shared with Leopold Kohr the concern for what is too big (Kohr 1962). The two scholars, however, never referred to each other’s publications. Röpke had always had this concern, as he reported in 1963: “As a young law student, I made my debut in an economics seminar with a thesis on the Taylor system, which I described as reprehensible and pernicious, if it brings in its train the danger of a possible increase in productivity having to be bought at the price of humiliating man in his work, of reducing him to a robot for whom fundamentally the only remaining link with his work is a more or less well filled pay packet” (Röpke 1963, p. 21).

“If such a vital problem as that of industrial labour should be insolvable, if it seems impossible to ensure that under the modern conditions of highly mechanized production industrial labour will retain its dignity, meaning, formative influence and attraction, that would be basically a death sentence for our modern industrial society, whether it be capitalist or communist” (Röpke 1963, p. 21).

The problem is that if new products appear so quickly that human demand cannot absorb them, there is an economic failure in the innovative products and marketing: “the negative dynamics is produced when the causality between finance and investment is reversed. When the capital markets are centred merely in short run economic return and in immediate utility, the ideas and applications for the real economy tend to fall to the background. The end of finance becomes immanent, without references to concrete benefits for the real economy where true applications are developed. We can argue that finance capital tries to become the generator of growth on its own virtue. When everything is focused on short turn utility, the innovations itself become artificial and unproductive. This becomes a reality when the ideas are turned into mere expediencies to apply for funding. Productivity and entrepreneur spirit fall to the background. At this moment the risk of disconnection between ideas and real economic needs become apparent. Then, when the investments, without real basis fail, the contagion effect begins. This herd behaviour is what finally produces the stock market panic. In the explanation of this phenomenon we find a strong endogenous element that involves a vicious circle effect” (Resico 2002, pp. 7–15).

Again he reaffirmed his method of analysis, arguing that the problems raised by the large firm, towns, industrial areas, and technology should not be studied in isolation (Röpke 1950, p. 220).

Röpke did not supply any reference, but this position could be inspired by Clarence Edwin Ayres (Ayres 1944) or the earlier writings of Thorstein Veblen. It is not clear, however, if Röpke would advocate a social control on business, as did John Maurice Clark (1926).

“the enterprise is one of the structures that hold people, the environment for a typical human group of our times. For these people the enterprise helps, for instance, to satisfy what is one of man´s most important needs—the need for a sound measure of integration, the need for community […] The most important thing of all is that the enterprise must really integrate and not disintegrate. It must bring people together, not separate them” (Röpke 1963, p. 2, emphasis in the original).