Against the Tide by Wilhelm Röpke

Author:Wilhelm Röpke [röpke, wilhelm]
Language: eng
Format: epub
ISBN: 978-1-6101-6098-8
Publisher: Henry Regnery Company Chicago
Published: 1969-01-14T16:00:00+00:00

FRANCE AS AN EXAMPLE OF MISSED OPPORTUNITIES

All these considerations prove that under a system of repressed inflation time works against the government. In returning once more to the example of France, we see that on this road there is one particularly critical moment that it is fatal to miss. The above-mentioned April issue of Lloyds Bank Review contains another very interesting article called “The Economic Regeneration of France,” in which the author, Paul Bareau, rightly points out that France had at the time of the liberation a unique opportunity of getting rid of repressed inflation. If at that time, when the control mechanism was still effective in holding back the inflationary pressure, and when the psychological climate was as favorable as could be for an energetic “monetary purge,” repressed inflation had been stopped by getting rid in one sweep both of inflation and controls, France would have been spared much suffering and disorder. As soon as the provisional French government announced a general wage increase of forty per cent, immediately after the liberation of Paris, it was a foregone conclusion that a vicious spiral would now set in, by which repressed inflation was bound to turn into open inflation to the accompaniment of all the well-known phenomena of economic disintegration and paralysis. The French have always argued so far that things could not be put right from the monetary side, but only from the side of production. But this is just a convenient excuse, the faulty economic foundation of which we have demonstrated with the help of the German example. In France, as elsewhere, everything of course depends on producing more and on supplying the market with the additional output, but one of the principal conditions for that is the liberation of the economy from the shackles imposed upon it by repressed inflation. The removal of repressed inflation implies two things: the end of the restrictive measures and the end of inflation. It is misleading, therefore, of the French prime minister to raise the bogey of more-than-ever runaway inflation in order to frighten those who call for the removal of controls, for no one can reasonably desire the end of controls without at the same time demanding the end of inflation. And the latter must be the aim of the prime minister. How is he going to achieve it if he makes no effort to break out of the vicious circle of repressed inflation? Nothing is more dangerous than socialism’s becoming an end in itself at a moment when the most elementary considerations and unequivocal evidence prove that there is only one choice left, namely, to continue on the socialist course or to overcome the economic calamity.

The lessons that other countries can learn from the French case are plain. Think of Belgium as the example of a country that patently took advantage of the right moment for getting rid of repressed inflation and that is now reaping the fruits of its clear-sightedness. Or think of the Netherlands, which made earnest

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