Wednesday, April 10, 2019

Ludwig Erhard, the Perpetual Pioneer: An Economic Loner

The economic thoughts which eventually made Ludwig Erhard famous, and which eventually gave birth to Germany’s meteoric rebirth as a free nation after World War II, were shaped in the stressful and dangerous days of the late 1930s and early 1940s.

After the Nazis perpetrated the pogrom of November 1938, it became clear that an organized resistance was necessary. Individuals associated, directly or indirectly, with the University of Freiburg in southwest Germany organized themselves into two groups: the Freiburger Kreis and the Freiburger Schule. The Freiburger Schule was primarily an economic group. Its members advocated a view called Ordoliberalismus. The economist Walter Eucken was a leading theorist in the group. Opposing the Nazi government’s direct intervention into the economy, the Freiburger Schule saw the government’s proper role as ensuring an unbiased neutrality in the marketplace.

Mindful of the fact that ‘Nazi’ means ‘National Socialist,’ Eucken and the others rejected Hitler’s economic practices: the Nazis had raised taxes, rigidly controlled wages and retail prices, and instituted government ownership of businesses.

An enthusiastic proponent of anti-Nazi economic theories, Ludwig Erhard knew and associated with many members of the Freiburger Schule. Yet he declined to become an active member of the group. Alfred Mierzejewski analyzes this somewhat paradoxical aspect of Erhard’s character:

Erhard viewed himself as an independent advocate of a set of ideas, an ideal, that he thought was best both for his homeland and the world. Although he did not develop the major components of these ideas himself, he was not beholden to those who had. One of the key features of his personality was his independence. This shaped his relationship with other economists.

The Freiburger Kreis had several members in common with the Freiburger Schule, Walter Eucken among them. The Freiburger Kreis had a more explicitly spiritual emphasis: it saw opposition to the National Socialists as a Christian duty.

Loosely networked with other anti-Nazi groups like the Bekennende Kirche, the Freiburger Kreis deliberately rejected the inhumanity, pride, hubris, racism, power claims, misuse of power, and leader worship of the National Socialists. It most adamantly rejected the Nazi’s attempts to disguise themselves as Christians.

Such opposition to the National Socialists was dangerous, and members of the group were arrested; some were murdered. Ludwig Erhard placed himself into danger by associating with members of the group and by espousing their views.

Yet Erhard again did not clearly join the group, despite his passionate advocacy of its views. He embraced the group’s ecumenical model, in which Lutherans, Catholics, and other types of Christians united and worked together to oppose the murderous horror of National Socialism.

Although he faced the risks entailed by his anti-Nazi views, Ludwig Erhard did so often alone. Alfred Mierzejewski reflects on Erhard’s autonomous nature:

Erhard was not a member of any economic school, certainly not that in Freiburg which had gathered around Walter Eucken. He admired Eucken’s ideas, but was temperamentally much too individualistic to consider himself a follower of that clearheaded thinker. Erhard was not a joiner, not, in the English tradition, a “party man.” He was not a member of any professional group or of any interest representation. He advocated consumer interests out of conviction, mindful of the fact that everyone is a consumer.

The Freiburger Kreis is often cited in the plural - the Freiburger Kreise - because it had two subgroups: one group worked on a Denkschrift, a document about the organization of postwar German society, replacing the National Socialists strict control with a Gewissensfreiheit and the liberty of each individual to worship and express faith in a variety of ways.

In stirring words, the document described power as a ‘demon’ and explained that the right to oppose and resist governments was both a Christian right and a Christian duty.

The other subgroup worked on a more specifically economic plan for the postwar era. They proceeded from the assumption that Germany would lose the war. This assumption alone would be enough reason for the National Socialists to murder anyone associated with the group.

The economic subgroup wrote of the need to replace the Nazi’s planned economy with a market economy. Again, Ludwig Erhard agreed strongly with the group, yet did not officially become a part of it.

When the war ended in May 1945, the work of the Freiburger Kreis and the Freiburger Schule came into the spotlight. Over the next decade, these thoughts would decisively shape postwar Germany. The economic principles of a market economy, and the spiritual principles of defending the value of each human life by empowering personal political liberty against the government, would transform the nation from a psychologically defeated and physically destroyed country into a world leader.

Ironically, the individual who played the greatest role of transforming the Freiburg principles from thought into action was the same individual who stubbornly refused to join the groups, despite his heartfelt embrace of their principles: Ludwig Erhard.

The Nazis had attacked the Christian ideals of the groups. The Nazis were gone, but those ideals endured: dedication to equality, personal freedom, humaneness, individual political liberty, service to one’s neighbor, and an opposition to government power.

Postwar Germany epitomized both the power of the market economy to repair a devastated land and the power of a spiritual commitment to honor the dignity and value of each human life. Ludwig Erhard and the groups from Freiburg gave the postwar world a chance to regain honor.