Chapter XVII OUTLOOK: CONFIDENCE AND ANXIETIES

SINCE THIS BOOK makes no claim to be theoretically systematic, but is meant rather to give to the German people some sort of account of progress so far, it seems a good moment to look into the future. This is not a matter of economic prophecy, but rather an evaluation of the present forms of our economic and political life, and finally an attempt to outline clearly the various possible alternative courses for our social and national existence.

Here, therefore, I speak as the Minister for Economic Affairs, whose daily experience is that his work does not involve ‘pure economics’ alone but the whole sector of ‘political economy’. Thus he has constantly to aim at conciliation and at finding a happy compromise between sound economic sense and scientific knowledge on the one hand and political and even party political demands on the other.

Even the title of this book, Prosperity Through Competition, presents a problem, for I am not convinced that even with the achievement of this aim the German people will live happily and will be satisfied, and that prosperity by itself can suffice in guaranteeing social harmony and order.

It is too much to expect of the Minister for Economic Affairs that he should be made responsible for the spiritual well-being of a whole people. After eight years of successful German reconstruction it is certainly true, in spite of some poverty here and there, that we no longer suffer greatly from material pressures, and that in this field lies the real and final solution to secure a happy future for our people. Yet we are enveloped in uncertainty, and not only our minds, but our hearts and souls are puzzled. Perhaps—I should like to say certainly—many of us in concentrating all our human energies in regaining and securing the material basis of our life may have gone wrong, and in so doing the sense of a true and proper scale of values has been lost. Whether we shall be able to answer this urgent question in a satisfactory manner will decide our fate.

Not by Bread Alone

If in spite of all efforts to awaken the dynamic forces in our national economy, I have repeatedly pointed to the fact that though the purpose of the economy can only be to serve consumption, this must not also become at one and the same time the only reason for our economic activity, I have to thank my old teacher, Wilhelm Vershofen, for this understanding. The sense of the economy flows from the all-embracing life of a people, with its ultimate roots in values which cannot be rationally grasped. This means, in other words, that at least the members of Western civilization are not at this time experiencing the benefit of a united and common attitude to life. If we succumb to an attempt to reduce the values of our surroundings to a formula, and aim at marketing it, we shall find that happiness cannot be bought.

However, is our present situation without hope and without a way out? Here, too, I find sufficient courage to deny it, since I believe and sense that doubt begins to gnaw in the minds of many, and an inner unrest presses towards greater reflection. I believe that this demand is overlaid, even sometimes suffocated, by collective statements which know nothing of such feelings and which often do not wish to recognize them, so as not to upset the much-famed common fronts. Clearly the human conscience cannot be harmonized with collective demands of organizations for power. That is why in public we hear only language which complains and demands, but lacks every inner truth. But this reflection leads us back to the practice of politics.

To be sure, the Minister for Economic Affairs would be wrong if he did not examine and take seriously the troubles of economic men. He will gladly admit, for example, that the demands for greater flexibility, for more economic security, for the easing of the excessive tax burden, for a just division of the national income, or for security of employment, each have some justification. Yet he has continuously to warn against demanding too much. Those who put forward these demands must be made conscious of the fact that so soon after the collapse not all the fruits can be ripe today, but that there is a tomorrow to wait for.

But it is just this wisdom and modesty, which could strengthen us, that are not among the German virtues; quite on the contrary, for with every improvement in our material existence we are ever more strongly affected by hubris, thus losing all sense of what is possible and becoming. Although no one can deny to his conscience that in eight years of reconstruction we have almost achieved the impossible, and that the Federal Government is honestly trying to let all sections of the population participate in progress and prosperity, sounds of dissatisfaction can be heard everywhere. To avoid all possible misunderstanding I should especially like to stress that these expressions of hubris do not come from those who earn their living only with difficulty to meet the bare necessities of life. Naturally there is no occasion here for rejoicing. To improve further the economic position of just these sections of the population, which still number millions, the continuation of our economic policy is essential. That is why it is particularly important to take a stand against threats to block this path, which amongst other things also provoke the hubris of which I have just spoken.

Freedom Means Sacrifices

This is my first and greatest anxiety for our German destiny. Things can be mastered if only the spirit can be tamed. And do not let us forget here that we do not live alone in the world, but that our well-being depends both on the fitting of our country into the free world without tensions, and on friendship and confidence between the peoples. It seems to me that those looking at us from outside no longer understand us, and that perhaps we even give the impression of a people which in its complacency appears to be losing the feeling for a common responsibility and for a true solidarity of the free world.

So far we are not guilty, and this judgment may even be wrong. But false and shrill voices are heard everywhere, assuming in their delusion that the rest of the world must grant a reunited Germany protection and security without our making our own sacrifices. Also other countries carry material burdens for the sake of preserving freedom, which but for the external threat they would certainly prefer to devote to purposes of social welfare. But in Germany we hear sounds as if the Government were working against the welfare of the people, because in order to secure this welfare it wishes to collaborate with the free world in defence of our freedom. Whoever has remained unmoved by the events in Poland and Hungary, and who in spite of this show of brutal lust for power still believes in right and law from that side, is beyond help. He must, however, also be denied the demand to frame German destiny.

That, then, is my second anxiety, that we all too easily delude ourselves, and that thus we not only gamble with our prosperity but also with our historical existence and our very life. A people who for the sake of freedom no longer wishes to make any material sacrifices will in the long run be condemned to extinction in history.

The European Community is Essential

In what I have just said it has been implied that we are as little in a position to find fruitful solutions by ourselves as any other nation. I do not want here to view the problem from political aspects, even though these before all others deserve to be taken seriously. The free peoples of Europe will only be able to preserve their influence in the world if, supported by the friendship of and in close community with the United States, they become conscious of an indissoluble political community. But how shall we achieve this aim, and to what extent are the forms of existing economic co-operation to be regarded as suitable and sufficient to develop their own political force?

Because I am looking to the future, I will not reminisce about the Messina Powers, the O.E.E.C., the E.P.U., G.A.T.T. and the International Monetary Fund, but instead deal immediately with the plan put forward by the six Messina Powers to create a Common Market and a Customs Union. I should like to state here, too, that there can hardly be a firmer defender of European integration and even of a European confederation than myself; from this position I claim the right to be critical where I seem to recognize dangers confronting this aim.

It is just because I know how much the principles of an economic order may determine the form and the spirit of a social or political community that I should like to see some guarantee that the Common Market will not result in European dirigisme, and there tie and paralyse progressive and expanding forces. On the contrary I should like to see in this larger European entity the flame kindled which will grant to all men and peoples participating in the Community the security of a happy political, social and economic future. Whoever chooses to believe that institutional ties alone would suffice, disregarding the spirit of economic collaboration, out of the natural forces of progressive development through mistakes and errors would probably delude himself completely.

We can see how decisive the economic principles of order are for the life and spirit of a nation, and also how far the different fates of the people in the wider sense become a disturbing element in collaboration between Governments. But I do not wish to imply that the rules concerning the Common Market—as I have described them here—are wrong in principle. Yet I cannot hide my belief that the various compromises so far reached do not in every particular correspond to my ideas of a free inter-governmental order. Even though in the area of the free world a common market must, of course, be based on the principles of competition, in reading the Treaty one senses in several places the fear of the consequences which might arise from it, and simultaneously one tries to insist on possibilities of escape from this principle. Since the tight spiritual link is lacking, the practical application of the Treaty will be decisively important, and not least the filling of the decisive positions, in order to arrive at a clear and decisive course.

Even if, as a result of my objections to the so-called ‘social harmonization’, a looser but no clearer version were achieved, I am afraid that with it a highly dangerous principle would be made legitimate and legalized. Not that I should not want every country to render maximum social support according to its productivity. But how does it look in practice? The tendency to inflation in individual countries (with fixed exchange rates) can largely be traced back to granting social benefits which put too great a strain on the abilities of the national economies. But since politically the adjustment of benefit payments never takes place downwards but always upwards, even those national economies which hitherto had managed to preserve a balanced order will either be pushed into this disastrous trend, or else will have to pay for the fault of others by suffering the use of protective clauses applied by their partners.

No Return to the Ideology of Big Blocs

If the ‘Common Market’ does not adopt a clearly liberal trade policy towards other economic areas, we are threatened with a return to other ideological conceptions of a truly unhappy past, viz., the splitting of the world into so-called big blocs which breathe the selfish spirit of economic inbreeding and which will sharpen the conflicts within the free world. Those who realize the dangers must not remain silent, and they cannot comfort themselves with the political pretext that everything will be well once the form has been cast which will force the partners together. Nothing has manifested itself more strongly in the past 30 or 40 years than the spirit of national selfishness and protectionism, and I would have wished that this evil could have been countered more decisively. Thus it is in the future form of European collaboration that my third anxiety lies.

Though my idea of the urgent need to return to freely convertible currencies has already been made sufficiently clear in these pages, I must yet once more mention the unhappy situation arising from a renunciation of good inter-governmental order. It is an illusion to believe that this form of freedom could automatically be realized of its own accord. On the contrary, it presupposes a conscious desire, and even more a definite attitude by national governments, and above all the evil idea that it can be left to the individual economies to pursue this or that economic or financial policy must be ended. Though the application of the best means can and, even perhaps must, be different from country to country, yet the main aim should be the responsibility of preserving a balanced order.

In view of this it still today seems at times as if individual countries held the magic belief that it was only necessary to abandon the basis of a good order to achieve better deeds. These mistaken ideas have brought us to the point where ideological political conceptions contrast with a responsible economic policy and even more with theoretical knowledge, and that falsely understood ideas of national sovereignty and of the primacy of politics come more and more to paralyse the energies and the will for order.

If knowledge forces us to move out of national isolation to progress to further integration, if governmental life in the narrow economic confines can only be pursued at the price of progress and social security, then above all the conclusion must be drawn that in the future national economies must be prevented from pursuing economic and trade policies which might disturb or disrupt relations between Governments. I should have liked therefore to have seen this special obligation put more clearly in the Treaty of the Common Market.

The picture presented today of extreme debtor and creditor positions in the European Payments Union should be sufficient warning against allowing the economic contradiction expressed by the completely different price trends with fixed exchange rates to continue. When further developments might lead to an even greater gap between national price levels, then in the long run no politician can disregard the theoretical knowledge that at that stage increasingly far-reaching measures will undermine freedom, and will necessarily lead to a return of the horrible forms of dirigisme of the past. So long as the people wish to remain on a basis of relations of free economic exchanges, every individual country is concerned with the behaviour of his partners. In particular it would in the long run prove impossible to integrate national economies if these cannot decide on uniform actions and attitudes.

So the good and the bad are closely linked in the Common Market. Either the spirit of freedom will triumph, and we shall then experience a happy, progressive and strong Europe, or else we shall try to link different systems by manipulations, when we shall miss the big chance of a true integration. A Europe which is dirigistically manipulated will itself paralyse the powers of resistance against the spirit of collectivism and allow the feeling for the benefits of freedom to perish.

Convertibility on the Widest Plane

Since the usefulness and fruitfulness of freely convertible currencies increase with the size of the area and the number of the participating economies, this problem, in the first place, cannot be solved on the plane of a Common Market; rather it will be necessary to act in concert and on the broadest possible terms with the United States, Great Britain and other European countries. It must be stated again and again that opposition from the sector of the national economy is almost invariably based on the use of the current economic factors as a yardstick to judge the venture, without allowing some imagination or intuition to point out that simply with changes in the currency system completely new factors will be brought into play.

This touches on my fourth anxiety, which is based on the conviction that the best national order and discipline no longer suffice to secure inner stability.

Freedom and Responsibility

I wrote above of the disastrous tendency towards planned economic dirigisme and the fear of competition: the same applies to some tendencies in the Federal Republic itself. Here I should like to point to earlier chapters of this book. The pressure for organizations, for collective plans and order can only succeed if the individual is prepared to cease speaking for himself and to forgo personal responsibility. It cannot be doubted that this serious development receives encouragement from politicians and even more from party politics. I do not allow myself any speculative reflections on whether it would be possible to arrive at a more balanced synthesis. To me only one thing seems to be certain: that in individual man the feeling for freedom cannot be separated from the consciousness of responsibility, while by agglomerating social-economic decisions less and less can be sensed of this link.

If, for example, I point to the demand for rendering a ‘national income account’,¹⁰ I do not wish to deny that no useful ideas or valuable knowledge can be gained from it. Naturally economic policy has always taken suchdata into account. But the idea of a national economic account smacks of the unfailing fulfilment of a plan, and thus all too easily becomes not just a piece of knowledge but the basis of calculation for a fixed economic plan. For the rest we must not base ourselves on the belief that the economic power groups in their political role would tend to recognize results which would be uncomfortable for them.

Is the Second Industrial Revolution Coming?

My fifth anxiety, that we are being pushed from the right path by political forces, has a very real background in the way in which the socialist Opposition speculates about the increase in automation in industrial techniques. Even if I leave on one side the Jules Verne-like fantasies, it does not seem proper to speak of a ‘second industrial revolution’. For one thing we are dealing here not with a definite event, but with a process without time-limit, and for another the social-political situation which favours this development is not marked by a surplus but on the contrary by a shortage of labour which will become even more acute. Though in some sectors a revolution of a technical kind is taking place, which will confine human performance to adjusting and supervising machinery, certainly no industrial revolution, which clearly awakens tragic memories of the social difficulties connected with the first establishment of machinery, will take place.

Nevertheless, far-reaching consequences will follow from the increasing demand for a technically skilled labour force. But this does not inevitably lead to revolutionary change; on the contrary in using modern techniques at least an enrichment of material human existence is to be expected. In theory the concepts of automation and mechanization should not be thrown indiscriminately into one pot. Automation (in so far as anything exact can be understood by it) will one day complete the progressive process of mechanization. Certainly this will bring difficult problems in its train as the chances and possibilities of automation vary for the different parts of any national economy. The differences in potential increases in productivity will thus become greater than they are today, and correspondingly the social problem of the working man’s wages will gain in political importance.

Nor must it be forgotten that in the course of their industrial progress the less developed countries will jump certain stages of industrial techniques and will want to use modern machinery. But finally all will depend—if the countries of the Western world avail themselves of the opportunity—on the fact that their intellectual level provides them not only with the chance of using automatic machinery but also with the ability to invent it. We may have confidence that even in future not electronic brains but simply brains will determine the fate of man and peoples. If then automation favours a progressive integration of the national economies, since the use of this modern technique presupposes large areas with large masses of consumers, then this can greatly help towards satisfaction throughout the world.

The decisive question, however, is the use that can be made of this trend. The socialists who speak in one breath of atom technology, mechanization and automation, believe that the private sector of our economic order is unsuited or even useless for mastering the new problems on the technical as well as on the financial front. Already there reappears, according to the individual point of view, the patent nostrum, or the rattling skeleton of a State-directed economy. It cannot be disputed that the increasing amount of mechanization in the direction of automation will need an appreciable amount of capital. But the acceptance of this truth can rarely be seen in a political discussion about the sensible division of national income into consumption or capital investment.

Here the need for the State to take a hand, or for the State to take over, cannot be argued, for when neither the income of the private economy nor the private savings of all citizens prove sufficient to finance those investments regarded as necessary, the State also cannot find a way—unless, of course, it goes in for inflationary creation of credit, or uses taxation for the purposes of State investment and capital creation. But both these forms of capital creation mean dispossessing the citizen without compensation, and must therefore be firmly opposed. On this question, too, I have come to the conclusion that human freedom, initiative and enterprise promise more than State dirigisme.

Though at the beginning of these final reflections I have written of confidence and anxiety, I have given more space to the latter. This, however, does not mean that the anxieties which threaten our future can extinguish my confidence. This confidence can certainly not be pinned down as concrete plans or objectives, but is rooted in a spiritual attitude. Just as I could not pre-calculate the transition from the State-controlled economy to the social market economy, or predict what would happen in all its stages, and yet was immovably convinced of the propriety of this path, so too I have confidence that freedom, as the strongest human force and as its highest value, will conquer and triumph. Perhaps we should once again become conscious of the danger of losing it, in order to awaken new forces to save our most precious possession. It is my hope that those who realize the dangers that I have emphasized in this, the last chapter of my book, will be encouraged to think and act according to their convictions. They may then fight and resist, when it becomes a question of defending the market economic order which, against all attempts to undermine it, we regained in 1948. If so, this book will have served its purpose.