Book Reviews

Wattenberg says this is a nice scenario. But the birth dearth would provide fewer buyers. There would be little call for new housing. What would happen to the jobs of people who make furnaces, air conditioners, stoves, refrig erators, electronic garage doors, and all the other things that now go into new houses? And what about the real estate brokers, the mort gage bankers, and the termite inspectors? With Yuppies growing older, they might want to buy up-scale houses. But who, asks Wattenberg, would buy their old houses? With dead people leaving empty houses, the whole problem would be compounded. TumultuousTimes? Wattenberg hasn't worked it out industry by industry to reach any final conclusions about the loss of markets due to a declining popula tion. But he is sure the disappearance of markets would lead to tumultuous times. He has some remedies to offer. One would be to subsidize young couples to have more than 2.1 children per family. A $2,000 family allowance per third and fourth child might be a good lure.

But the money would have to come from higher taxation or from inflation. Wattenberg has nothing to offer that would avoid these undesir ables. As an economist, Wattenberg might have considered that it is the high-tax philosophy coupled with the "safety net" provision of ,'entitlements" that has made it necessary for women to go into the labor market in order to keep family living standards from dropping disastrously. The average family today needs 39 two incomes. If this could be changed, families could go back to rearing and educating more children. Is there any likelihood that the western world is about to abandon the Welfare State philos ophy? The world does learn. It might even learn how to live with a birth dearth without any great discombobulation. What happened in England after the Black Death is instructive. The need for workers in the towns in the post Black Death years killed the feudal system and set capitalism on its course. The human race is adaptable. It is strange that Wattenberg does not mention the Black Death. He might have made something of it. D TWO ESSAYS BY WILHELM ROPKE: THE PROBLEM OF ECONOMIC ORDER, AND WELFARE, FREEDOM AND INFLATION ed. by Johannes Overbeek University Press of America, 4720 Boston Way, Lanham, MD 20706 1987. 103 pages. $19.25 hardback, $8.50 paperback Reviewed by Richard M. Ebeling W ilhelm Ropke was one of the most respected and influential German economists in Europe, both before and after the Second World War. In 1933 he delivered a blistering lecture right after Adolf Hitler became Chancellor of Germany; he warned that National Socialism meant the death of culture and humanity in his German home land. He was given the honor of being one of the first university professors expelled by Hitler. After several years in Turkey, he finally settled in Geneva at the Graduate Institute for International Studies, where he taught until his death in the early 1960s.

During the war he wrote several books, The Social Crisis of Our Time, Civitas Humana, and International Order and Economic Inte gration, in which he set out the moral ideal and economic principles of the free society. These and other works of Ropke' s bore fruit through their influence on those who implemented the market-oriented policies which led to the "German miracle" of the postwar era.

40 Two Essays by Wilhelm Ropke reprints two of the best of Ropke's shorter works. "The Problem of Economic Order" is the text of four lectures delivered at the National Bank of Egypt in 1951. In a brief space, Ropke bril liantly analyzes the alternative meanings of so cialism, discusses the nature of the "economic problem, " contrasts the market economy with socialism, and criticizes the premises and con sequences of Keynesian inflationary policies. But what is crucial in this essay is how Ropke views the nature of the problem. What he is interested in looking at are not the spe cifics of particular policy proposals. Rather, the task is to look at the economy in "fundamental terms." Those fundamental terms revolve around the question, "How shall the activities of a vast number of people in a diverse system of division of labor be coordinated so the eco nomic prosperity of the community is as sured?" The alternatives, Ropke explains, are market competition or political command. And since socialism is unworkable there is no alter native to the market economy, in which com petitive prices serve two functions: to dissemi nate information so individuals are guided into the correct production activities, and, as in come incentives, to harness self-interest to the public interest.

The essay "Welfare, Freedom and Infla tion" is the text of a monograph written by Ropke in the mid-1950s. Ropke saw the estab lishment of the Welfare State as an historical paradox. Prescribed as a remedy to the sup posed hardships and traumas of the Industrial Revolution, its implementation in the 20th century occurred at the time when the market economy had overcome its initial 19th century birth pangs. Just when the market was devel oping the financial wherewithal and economic situations to enable individuals to plan and fi nance their own welfare requirements, the State interfered and prevented the market solution. The Welfare State was emerging as a moral and financial monstrosity, according to Ropke. Rather than fostering self-reliance and self-re sponsibility, society was degenerating into a circular process in which everyone tried to live at the expense of everyone else, through the agency of the State. And as this monetary merry-go-round speeded up, the burden of gov ernment expenditures multiplied.

This process always leads to inflation, said Ropke. As government spending exceeds what the populace will tolerate in the form of taxa tion, the State resorts to the printing press. But in the process, inflation distorts production, de stroys the value of existing savings and the in centive for future saving, weakens the eco nomic and moral link between work and re ward, and opens the economy to the pressures of special interest groups as each tries to win from the inflationary environment at the ex pense of others. The first decade after the Second WorId War was one of great pessimism for proponents of the market economy, and that pessimism is vis ible in Ropke's essays. But besides the clarity and soundness of Ropke' s arguments, these essays stand as examples of integrity to prin ciple and truth regardless of the apparent intel lectual and political odds. 0 THEFREE IDEAS ON LIBERTY 44 Among the Barlows Victor Bobb Lessons learned among itinerant farm workers.