Monday, August 10, 2015

Ludwig Erhard

In postwar Germany, one great statesman led the fight for freedom: Ludwig Erhard. He was deeply influenced by Wilhelm Röpke, and drew heavily on the case for free markets made by Ludwig von Mises. He received his PhD from Franz Oppenheimer, the great anti-state theorist and libertarian, in 1925.

As minister of economics after 1949, he had inherited a disaster made by Hitler, wartime controls, and allied bombings. His steadfast advocacy of freedom led directly to the so-called German economic miracle. He smashed monopolies, repealed price controls, and dismantled statist controls of all sorts. Thus did he make a singular contribution to world history, one directly influenced by both the Austrian and libertarian traditions.

In 1957, he wrote a fantastic book, Prosperity Through Competition, that explains his rationale. Until now, this book has been nearly impossible to find. This new edition by the Mises Institute allows us to look again at his thinking and methods. What stands out most compellingly here is the group to whom he pitched his work. It is written not for politicians, consumers, bureaucrats, or intellectuals. The group he knew that he had to pursued was the business class. It was business that had clung to the old controls and cartels, pushed inflation, and wanted mercantile policies.

Erhard makes a passionate plead to business to embrace free enterprise and competition, in its long-term self interest. His arguments are fresh and energetic. But what this book illustrates is that free markets, by no means, are not just an excuse for the triumph of the business classes. In fact, in Germany, they were a force for statism and reaction.

"In my opinion," he writes, "the historic task of the Federal Republic in the second half of the 20th century that we have just entered upon is to underpin, to strengthen and to defend the free economic order of Europe with the full weight of German trade. The successful rehabilitation of my country must serve as clear documentary evidence to put before the still vacillating and doubting peoples, of the fact that only by firmly rejecting socialist dogmas, of whatever complexion, and by affirming a free economic order can mounting prosperity and genuine security be achieved."--The Mises Institute