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WILHELM ROEPKE, COMMUNICATION: The Intellectual Collapse of European Socialism - Ralph Raico, New Individualist Review 
New Individualist Review, editor-in-chief Ralph Raico, introduction by Milton Friedman (Indianapolis: Liberty Fund, 1981).
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THERE HAS BEEN occurring recently in Europe something which can hardly be surpassed in significance. For more than a century the idea of socialism and the socialist movement have so shaken the foundations of our civilization that one could well write the history of these hundred years—let us say, from the Communist Manifesto, in 1847, to the challenge directed against the world by the Communist Empire—from the perspective of the intellectual, social and political struggle over socialism.
The intellectual origin of modern socialism lies in the French Revolution of 1789 and its painful consequences. But no country has been more important for the further advance of socialism in Europe, and in the rest of the world, than Germany. It was three German intellectuals—Marx, Engels, and Lassalle—who cast the socialist idea into the form in which it captured the masses, and among these three, Marx quickly became the real leader. It is, then, the socialist party of German, which, in the name and spirit of Karl Marx, but also making use of Prussian discipline and talent for organization, has made this country into a model of the socialist movement. No socialist party was more respected than this one, none had greater power and authority. From the German Social Democrats—this was the new name which the German socialists soon took for themselves—the socialist leaders of other countries derived the spirit and the technique of the modern mass-party, and its program became a model to the others. It is obvious that, without Marx, there would have been no Lenin, and ultimately, no Khrushchev. But it is even questionable whether the triumph of Communism in Russia would have been at all possible without the preliminary work of German Social Democracy and its great leaders from Liebknecht to Bebel.
And, now what is the great event of which I spoke at the beginning? Nothing less than the fact that this German Socialist Party, on November 15, 1959, at Bad Godesberg, adopted a new program which leaves scarcely anything over from its socialist tradition but the name. This tradition meant that the socialists demanded “socialization,” i.e., the expropriation of banks, mines or industrial firms by the state. This demand has now been buried. The tradition further demanded the ordering of economic life through a planned economy, which would replace the market, competition, the free play of supply and demand, and the unhampered initiative of free entrepreneurs by the decree of the state and the administration of the economy by the state’s bureaucracy. This demand, too, has disappeared from the program of German Social Democracy. The party now explicitly confesses to the tried and proven merits of competition, of free prices and of entrepreneurial initiative, thereby appropriating to itself the liberal economic policy of the hitherto so bitterly attacked and derided Economic Minister Erhard. Just a few years ago the socialists—the Germans and those of other countries—were prophesying an ignominous end for this “social market economy”: now they acknowledge it to be incomparably superior to the socialist concept of the planned economy, and the German socialists have taken it up themselves. The name “Marx” appears nowhere in the whole program. Moreover, there is virtually not a trace left of his spirit. Adam Smith, the founder of liberal economic theory, has triumphed over Marx.
The socialist party of Germany, in a word, no longer wishes to bring about that economic order which has hitherto been its principal aim, and which is realized in its purest form throughout the Communist world empire. The socialists confess that they set greater store by free competition, free prices and free entrepreneurial initiative than by a planned economy, state-run enterprises and central direction of production and consumption. This is indeed astounding but will surprise no one who has attentively followed the development of socialism in Germany, as well as in other countries. In Germany, as in Switzerland and Great Britain, it has become especially evident that the old socialists’ program of socialization and the planned economy has not only lost its previous overpowering force, but actually repels the great masses of voters. For these voters fear that the realization of this program might imperil the extraordinary prosperity which the masses in these countries are enjoying. They have been furnished with an object lesson in political economy, such as no previous generation ever experienced. The fiasco that socialist parties have suffered in every case in which they were offered the opportunity to carry out their program of socialization and the planned economy is as gross and palpable as the success of the opposite, liberal course of the market economy and economic freedom. The last great nations in Europe which have once more demonstrated this have been Great Britain and France.
If the socialist parties do not take this development into consideration, they will be in danger of losing more and more political ground. They run the risk of “perishing as sects,” as the Chairman of the German Social Democrat Party, Herr Ollenhauer, exclaimed at Bad Godesberg, in his effort to have the new program adopted.
It is certainly doubtful whether this complete capitulation of the German socialists to the principles of economic liberalism is the expression of an honest conviction. That would be more than one could expect. The fight over the new program was not settled without the supporters of the socialist tradition and the modernists finally coming to terms, and a great deal of compromise between socialism and liberalism was necessary. One can even be of the opinion that these compromises would allow a socialist government much of the “old” socialism, without the government having openly to disavow its program. In short, the capitulation of socialism to liberalism is neither absolute nor free from the suspicion of being, to a certain degree, a political maneuver. But, in the first place, it is that to a certain degree only: in the case of many German socialists, the conversion is genuine and honest. And, in the second place, the new program demonstrates, at any rate, the compelling power that the liberal economy, i.e., the economic system based on the market, competition, free prices, private property and entreprenurial initiative—has gained over the voting masses through its own success and through the failure of the socialist economy. It is important to recognize that this turnabout of German Social Democracy would scarcely have been possible if the Communist Party had not been outlawed as incompatible with the Constitution. It has been only through this that Social Democracy won the freedom of maneuver necessary for the change in program: otherwise, it would have had to fear the defection of its radicals leftwards, to the Communists.
[* ] Wilhelm Roepke is a professor in the graduate school of the University of Geneva and an economic advisor to the German Federal Republic. His most recent book is A Humane Economy.
This essay is translated from the German by Ralph Raico.