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Democracy, Liberalism, and Moral Order in Wilhelm Röpke: A Comparison with James M. Buchanan

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Abstract

By analyzing how excessive state intervention leads to the bureaucratization of the economy and primarily benefits a class of politicians and bureaucrats, Wilhelm Röpke anticipated core elements of Public Choice Theory. In Ciampini’s account, Röpke described the behavior of special interest groups who exploited the dynamics of the welfare state’s growth, pressuring politicians and bureaucrats to extract additional privileges. According to Ciampini, Röpke conceived a series of public choice arguments before key concepts like “rent-seeking” were formulated by Public Choice theorists James M. Buchanan and Gordon Tullock. In this analysis, Röpke’s understanding of the political process comes close to Buchanan’s research programs of Public Choice and of Constitutional Political Economy.

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El presente artículo está centrado en las causas de la concentración y del “rentismo” como fenómenos distorsivos de la economía de mercado, así como las orientaciones para limitarlas, según el economista ordoliberal W. Röpke (1899-1966). Asimismo, se desarrollan algunas de las consecuencias de estos fenómenos, en particular sobre la estructura del estado, y su impacto sobre la distribución del ingreso y de la riqueza. Para ello se recorren cinco apartados: el primero dedicado a la concentración socio-económica y su origen; el siguiente, referido a las consecuencias de la concentración sobre la estructura y funcionamiento del estado; luego nos ocuparemos de la competencia leal y su degeneración; para desarrollar, a continuación, el concepto de “rentismo” y las consecuencias sobre la distribución; finalmente, en las prescripciones para la reforma propuestas por Röpke, nos centraremos en la defensa de la competencia y el tipo de estado requerido para su aplicación.
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Market failures, which are usually viewed as a consequence of self-interest, are also supposed to be a major justification for coercive state interventions. This was the view of, among others, Richard Musgrave and Paul Samuelson, but not of James Buchanan. The latter certainly admitted that individuals are self-interested, that markets fail to allocate resources efficiently, but did not believe in the need for coercion. In this paper, we show that, to Buchanan, coercion can be unnecessary if certain post-constitutional conditions are satisfied. We show that he believed that self-interested individuals voluntarily adopt pro-social behavior in small groups. Small groups or small numbers represent a post-constitutional alternative to the veil of ignorance.
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What has become known as the Freiburg School or the Ordo-liberal School was founded in the 1930s at the University of Freiburg in Germany by economist Walter Eucken (1891-1950) and two jurists, Franz Böhm (1895-1977) and Hans Großmann-Doerth (1894-1944). Freiburg University's "Fakultät für Rechts- und Staatswissenschaften" that included law as well as economics provided a conducive framework for the combination of legal and economic perspectives that is characteristic of the Freiburg School and of the Ordo-liberal tradition. As Böhm later said in retrospect, the founders of the school were united in their common concern for the question of the constitutional foundations of a free economy and society. In the first volume (Böhm 1937) of their jointly edited publication series Ordnung der Wirtschaft, the three editors included a co-authored programmatic introduction, entitled "Our Task" (Böhm, Eucken and Großmann-Doerth 1989), in which they emphasized their opposition to the, then still influential, heritage of Gustav von Schmoller's Historical School, and to the unprincipled relativism that, in their view, this heritage had brought about in German jurisprudence and political economy. By contrast, they stated as their guiding principle that the "treatment of all practical politico-legal and politico-economic questions must be keyed to the idea of the economic constitution" (ibid.: 23), a task for which, they said, the collaboration of law and economics "is clearly essential" (ibid.: 25).
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A political economist whose numerous and influential writings explore the no-man's-land that separates the social science disciplines. The founder of the constitutional economics paradigm, Buchanan was awarded the 1986 Nobel Prize in economic science for his contributions to a theory of constitutional political economy as well as his leadership of the public choice movement. In this volume, David Reisman seeks to explain and analyze the important insights of this difficult but stimulating multidisciplinary figure. Buchanan's recommendation of constitutional precommitment will appeal to all economists who share his conviction that politicians and bureaucrats, where not preconstrained by rules that they cannot alter at will, tend rapidly to become not servants but the masters of the electorate. His determination to define and defend the middle ground, neither anarchy nor Leviathan, will have a wider appeal still.
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'We are extremely grateful then to the brilliant researcher and scholar, Samuel Gregg of the Acton Institute, for a concise, penetrating, and thorough analysis of Röpke's contribution to intellectual life. It breaks new ground, is highly readable, and adds considerably to the economic literature. It should become mandatory reading for every student of political economy... The purpose of Gregg's masterful book is to provide a descriptive and critical introduction to Röpke's understanding of political economy... This brilliant, analytical intellectual history will hopefully bring back interest in both Röpke and his "Humane Economy". We would all be the beneficiaries.'
Article
The views generally held about the rise of the factory system in Britain derive from highly distorted accounts of the social consequences of that system—so say the distinguished economic historians whose papers make up this book. The authors offer documentary evidence to support their conclusion that under capitalism the workers, despite long hours and other hardships of factory life, were better off financially, had more opportunities, and led a better life than had been the case before the Industrial Revolution.
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Reprinted in: Wünsche H (ed) (1982) Standard texts on the Social Market Economy
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