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Freedom with ResponsibilityThe Social Market Economy in Germany 1918-1963$
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A. J. Nicholls

Print publication date: 2000

Print ISBN-13: 9780198208525

Published to Oxford Scholarship Online: October 2011

DOI: 10.1093/acprof:oso/9780198208525.001.0001

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The Origins of Neo-liberalism: Depression and Dictatorship

The Origins of Neo-liberalism: Depression and Dictatorship

(p.32) 2 The Origins of Neo-liberalism: Depression and Dictatorship
Freedom with Responsibility

A. J. Nicholls

Oxford University Press

This chapter focuses on the origin of the concepts of neo-liberalism, and it looks at the subsequent economic depression and dictatorship that came to Germany during the early 20th century. Walter Eucken defended the tradition of classical liberal economic theory against nationalist and Marxist heresies. Even though Eucken's proposals to combat inflation were naïve, the Stresemann and Luther governments had to follow Euken's concept to combat inflation after the German currency collapse in 1923. Liberal economists during the 1920s emphasized resisting high taxation and socialist moves towards public ownership. Cartelization, besides taxation and public expenditure, were the prominent threats to an effective market economy. The economic depression of 1923 had traumatic effects on the country's economy and society. The political stability was shattered. Unemployment increased drastically and there was a severe squeeze on commercial undertakings. The social friction was a cause of economic hardship. Wilhelm Röpke and Alexander Rüstow were two economists who made strenuous efforts to stabilize the economy crisis before Hitler's accession to power.

Keywords:   neo-liberalism, economic depression, dictatorship, inflation, unemployment, economic hardship, liberal economists

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