Good Fences and Free Markets

you read nothing but the  Wall Street Journal,
you might think that partisans of the free market all

open borders
. Happily, things are more complicated
than that.


publicists of the

Wall Street Journal

The Economist
, and other business publications
are less principled but more influential than the
followers of

Ludwig von Mises
who have moved to a position which
they candidly call “anarcho-capitalism”. These
pro-business publicists favor open borders because of
cheap labor—and for a deeper, more insidious reason.
Having rightly rejected socialism, with its injection of
politics into economics, they now seek to completely
commercialize and commoditize politics
. What else
does it mean to call oneself “socially liberal and
fiscally conservative” but that one rejects any
non-economic incentives in public life?

National cohesiveness, cultural continuity, regional
diversity—all values once cherished by
conservatives—such publicists typically dismiss with
slogans and political swearwords such as “xenophobia.”
(Notice the reception of

Pat Buchanan`s brilliant new book

by supposedly conservative journals.) There`s no real
reason to group these pro-business flacks on the Right,
since they share virtually nothing with the heritage of
Western civilization. Their ideology, created for export
during the Cold War as a mirror-image competitor to
international Communism, deserves to be set off in a
corner by itself, marked “Globalism.”
[ note: Or


But there`s a worthy school of
free-market thought that defends the existence of the
nation-state, that regards a strong, ethically-bound,
limited government as the necessary basis for market
freedom and prosperity, that recognizes non-economic
civilizational and even religious factors are essential
to the survival of free markets and personal liberty.

This economic philosophy developed in Germany rather
than Austria. It is known as “Ordo liberalism” or
“neo-liberalism.” Its proponents include Walter Eucken,
Alexander Rüstow, Franz Böhm, Ludwig Erhard, and

Wilhelm Röpke
. The name Ordo derives from the
group`s journal, which emphasized the critical role of
social and political order as the basis for
liberty—the classical conservative position that
underlies the American Founding.

Less well-known in America than anti-state
libertarianism, less fashionable than Globalism
Ordo liberalism nevertheless has much to recommend
it. For one thing, it was the intellectual underpinning
of the

European economic “miracle”
after World War II. The
arguments of these thinkers, especially Röpke, inspired
statesmen like Konrad Adenauer and Ludwig Erhard to
convince a battered, ideologically compromised continent
to walk away from socialism and planning.

Wilhelm Röpke
, the most comprehensive and
influential thinker of the Ordo school, was also
one of the very first professors
fired by the Nazis
for his ideas. Having spent much
of the 1920s fighting fascism—using his modest
professor`s salary to print up anti-Nazi campaign
leaflets which he handed out personally at the polls—Röpke
would make no compromise with the victorious National
Socialists. He went into exile in Turkey and, finally,
in Switzerland.

From Switzerland Röpke penned fervent defenses of
individual liberties and the market economy. He turned
aside from his important work on technical
economics—he`d decoded the business cycle before
Keynes—to examine the cultural problems that arose with
the modernization and industrialization of life in the
West. In his most important works,

The Social Crisis Of Our Time

The Moral Foundations Of Civil Society
Röpke analyzed in detail the origin of free societies
and economies, finding again and again that it is
institutions, rather than ideologies, that make the
difference between ordered liberty and tyranny, or

Röpke followed

in believing that specific historic
for the exercise of political and
economic power by local governments and private
individuals permitted individual freedom to arise in the
first place—and were the best guarantee of freedom`s

prime example of such an institution that Röpke liked to
cite was the Landesgemeinde, the gathering of all
voting citizens in the smaller Swiss Cantons, at which
laws are hashed out by the “whole” of the citizenry—or
at any rate, all those who cared to participate. This
thoroughly Teutonic, localist institution had served to
preserve an intimate fondness for democracy, liberalism,
and decentralism in

, despite a flood of Anschluss
propaganda flowing from Hitler`s Germany.

I`ve argued

such institutions are much more fragile
than ideological formulations. They are easily
undermined, if not destroyed outright, by mass
immigration – above all from countries that lack
localist and democratic institutions. The

of bureaucratic centralism in America under the

New Deal
was made possible by a largely immigrant

Democratic coalition
(which included my own family).

Röpke, true patriotism must be compatible with the
liberty of regions (such as the Swiss Cantons
whose example had so influenced his intellectual

“This program of the
decentralization of power derives from a deep insight
into the nature of man, confirmed in the course of
thousands of years, which teaches us that there is no
concentration of power which is not abused. We know that
every accumulation deserves to be regarded with extreme
distrust and considered as a menace. This political
wisdom applies to conditions inside a country, but also
to the relations between one state and another.” (International
Order and Economic Integration
, p. 23)

Röpke argued resolutely in favor of free trade,
internationalism, and a cosmopolitanization of culture,
deploring to the end of his life the ultra-nationalism,
which had driven him from Germany. Because he was
opposed to protectionism and purely materialist
motivations for public policy, Röpke rejected the
rationale that labor unions used to offer for limiting
immigration as a form of “labor protectionism.”

Nevertheless, Röpke understood the social side-effects
of large-scale demographic change. He rejected

calls for

open borders
. Since markets are neither sovereign
nor supreme, but instead depend for their freedom on the
stable liberty of the societies which host them, Röpke
never promoted policies that would threaten those
societies simply for the sake of economic efficiency.
Röpke propounded the position which John O` Sullivan
lucidly defends: that limits must be put on the free
movement of peoples, but those peoples should be able to
send their labor abroad through international free
trade. In fact, Röpke argued, free trade ought to make
mass immigration, with its attendant political and
social disruptions, entirely unnecessary.

Röpke was deeply suspicious of attempts to create
supranational bodies, particularly those such as the
infant EEC, which seemed likely simply to proliferate
bureaucracy, protectionism, and regulation on a grander

“Europe, rightly understood, cannot
be primarily defined as a vast machine designed for
maximum production, and the goal of integration cannot
be determined by the output of automobiles or cement.
What holds Europe together in the widest sense is
something of a spiritual nature: the common patrimony of
Humanism and Christianity. Nothing can be more ludicrous
than the belief that this bond can be replaced by the
bureaucracy of the European Commission and high
authorities, by planners, economocrats and technical
visionaries. The danger, however, is very real that the
true order of values and aims may be reversed and that
economic integration may be carried through in such a
way that it endangers the real meaning of Europe. (Modern
, Summer 1964, p. 234.)

Röpke thought it impossible to bridge the gaps of
understanding dividing European peoples with centralized
economic integration. He pointed out that even within
existing nation-states, such as Germany and Switzerland,
internal economic barriers such as tolls and customs
duties had never been dismantled except as a result
of a pre-existing moral and intellectual union among
those regions.

Likewise, he argued, the German Zollverein, or
customs union, which predated the unification of German
territories under Prussian leadership, was only made
possible by centuries of common culture, the long
experience of the Holy Roman Empire, and the spiritual
unity forged by the struggle against Napoleon.

Röpke called attempts to forge a common state from the
many nations of Europe “spiritually empty.” He pointed
to the danger of a


Europe, which might steamroll out of
existence everything that is individual in the realm of
political, cultural and social order.”

Unlike many free-market advocates, Röpke also was
sympathetic to the

argument against mass immigration.
Throughout his work, he showed concern for the dangers
to human society and the earth`s environment posed by
rapid growth and

urban sprawl
—fueled, he believed, by rapid
population expansion. Röpke looked skeptically at the
ideologies of unlimited growth that were popular among
anticommunist libertarians even in his time. While
respecting the moral objections raised by the Catholic
Church (and others) to artificial contraception, he
warned repeatedly that unbounded population growth would
worsen and make irreversible the urbanization,
centralization and

alienation from nature
that had marked the
Industrial Revolution and that had vitiated attempts to
preserve older, economically less “efficient”
institutions—the extended family, the small farm, and
the one-income household.

support an ever-growing human population, Röpke argued

Economics of the Free Society
(1937), nations
must continually expand their economic
efficiency—primarily by increasing specialization and
the division of labor. Yet it was precisely these
(immensely fruitful) developments, he asserted, which
had robbed human life of so much of its traditional

Unlike most current
commentary on population issues, which divides between
alarmist extremism and unbridled natalism, Röpke`s
position shows nuance and complexity. It is worth
quoting from him at greater length:

“This tremendous and
historically unique increase of population during the
last hundred years [1844-1944] has surely been no
blessing, and a stabilization of population will sooner
or later not only be necessary but will represent an
indispensable prerequisite of the restoration to health
of our society from the evil effects of congestion. In
recognizing this one must not be misled by that fact
that the present decrease in the birthrate is doubtless
a particularly striking symptom of the present
spiritual, moral and social crisis both in its causes
and motives. One has only to reflect
that this decrease in the birth rate is, as
is well known, taking place very unevenly in the various
classes, and that the number of three children is wholly
sufficient for a healthy and normal family life and in
no way opposes the stabilization of the population.”
(The Moral Foundations of Civil Society, p. 136).

Röpke could not have foreseen the virtual collapse of
birthrates throughout Europe, which has driven many to

call for mass immigration
to augment the native
workforce and provide tax revenues to support millions
of elderly retirees with few progeny. Given his deep
reverence for tradition and cultural continuity, it is
easy to tell what Röpke would have thought of replacing
the entire population of Europe with foreign economic
refugees. Citing

Edmund Burke
, and anticipating Pat Buchanan, Röpke
liked to warn that “those who never reflect on their
ancestors will pay small heed to their descendants.”

Dr. Zmirak is
author of

Wilhelm Röpke: Swiss Localist, Global Economist
. He writes
frequently on economics, politics, popular culture and

May 08, 2002