Economics of the Free Society

One year before the Nazi takeover of Austria, after Mises had already accepted a research position in Geneva, a remarkable book began to circulate in what remained of Vienna's embattled intellectual circles. It was Die Lehre von der Wirtschaft — The Economics of the Free Society — by Wilhelm Röpke.

If the Austrian economists had a textbook on economic theory and policy in these years, Röpke had written it. Here was a summary of the present state of opinion on monetary theory, price theory, the business cycle, and method. Röpke proved himself to be a thoroughgoing Misesian, a stalwart advocate of capitalism and free trade, and a fierce critic of protectionism and every manner of government interference with the economy.

Making a big splash in Austria, The Economics of the Free Society was declared contraband in 1939, and the offices of its publisher were broken into, and all copies were destroyed.

After the war's end, the book was a huge success in Germany and served as the guidebook to the German economic miracle. From edition to edition, Röpke was constantly improving the book by refuting fallacies that were cropping up in economics: positivism, Keynesian planning, unionism, and much more.

Since the first English translation in 1962, it has become something of an urban myth that Wilhelm Röpke was an advocate of a "third way" between capitalism and socialism, that he favored a wide range of interventionist measures. But this view is utterly impossible to sustain in light of this sweeping defense of economic freedom.