Hans Bayer’s journal article examines whether economic freedom can be secured by the “free economy” advocated by neoliberalism. Presented as a self-contained contribution to a projected series, it moves from a conceptual distinction between two meanings of freedom to a critique of market concentration, then answers arguments concerning share ownership, capitalist productivity, and classical economic adjustment. Its central claim is that freedom from public intervention does not necessarily produce freedom for individuals: an economic order must be judged by the opportunities it actually provides for personal development.
Bayer distinguishes “mechanical” economic freedom from actively shaped, positive freedom. The former means the absence of restrictions imposed by the state or other public bodies; the latter requires institutions that secure self-determination and personal responsibility.
Der Grundgedanke einer gestaltenden Wirtschaftsfreiheit ist, daß jedem die Entfaltungsmöglichkeit seiner Persönlichkeit in Selbstbestimmung und Selbstverantwortung gesichert sein muß.
English translation: The fundamental idea of a formative economic freedom is that everyone must be assured the opportunity to develop their personality through self-determination and personal responsibility.
This definition establishes two requirements: individual freedom must accord with the common good, and institutions must positively promote its realization. Drawing on Johannes Meßner’s natural-law account, Bayer treats limits on freedom as constitutive of social order, rather than necessarily hostile to liberty. Equal starting conditions matter because nominal permission to act is insufficient without the power to exercise it. He juxtaposes Laski’s connection between liberty and power with a neoliberal acknowledgement that only the strong can be free. The disagreement concerns whether economic arrangements distribute that strength or reserve it for a shrinking minority.
Die mechanisierte Wirtschaftsfreiheit führt zur Freiheit weniger, die gestaltete Freiheit ermöglicht weitgehende Entfaltungsmöglichkeit der Persönlichkeit für alle.
English translation: Mechanized economic freedom leads to freedom for the few; formative freedom makes extensive opportunities for personal development possible for everyone.
Bayer then portrays the appeal to freedom as neoliberalism’s third defensive position against planning. In his reconstruction, claims that planning was theoretically impossible gave way to claims of practical impossibility, followed by a political objection grounded in liberty. He invokes econometrics against the practical objection and Hayek’s characterization of The Road to Serfdom as a political book against the final position. These are polemical claims rather than a demonstrated account of planning’s feasibility, but they establish his argumentative reversal: opponents of planning must answer for the private power sustained by their own preferred order.
The second section, headed “Neoliberalism: Gravedigger of Economic Freedom,” groups classical liberals, neoliberals, and some liberal socialists by their reliance on market mechanics as the basic ordering principle. Meade’s confidence in competition and free enterprise becomes evidence that ideological labels can obscure a shared institutional premise. Bayer’s decisive question is whether such arrangements reconcile individual freedom with the common good in production and income formation.
He asserts that perfect competition’s assumptions cannot be realized and that internal disturbances generate crises and depressions. Economic concentration intensifies the problem by undermining the market mechanism itself. Income increasingly reflects economic power rather than actual contribution, while public restrictions are replaced by private restraints imposed through cartels and corporate groups. Bayer does not condemn business combinations simply because they coordinate activity:
Diese Zusammenschlüsse der Unternehmungen sind an sich nicht im Widerspruch mit dem Gemeinwohl, sondern bloß deswegen, weil sie die Wirtschaft nicht vom Gesichtspunkt der Gesamtheit, sondern von dem des Profits einzelner Gruppen zu planen versuchen.
English translation: These combinations of enterprises are not in themselves contrary to the common good, but are so only because they attempt to plan the economy not from the standpoint of the whole, but from that of the profit of individual groups.
The distinction shifts the issue from planning versus non-planning to whose interests planning serves. Concentrated private enterprise already directs economic activity, but without responsibility for the whole. Bayer connects this concentration to diminished social mobility. Against the older image of entrepreneurial fortunes rising and falling across generations, he cites American millionaire-origin statistics and German investigations showing substantial reproduction of economic elites. Monopoly reduces risk, stabilizes inherited ownership, and weakens the link between wealth and entrepreneurial ability. The separation of ownership from management further challenges the justification of economic power through the achievement of the individual entrepreneur.
The final subsection tests three counterarguments. First, wider share ownership does not necessarily democratize control: dispersed small holdings may coexist with decisive concentrated voting power. Bayer uses the Brookings Institution’s 1952 study to distinguish participation in ownership from equality of wealth and effective authority.
It remains true, of course, that this widespread ownership of corporate enterprise does not imply that the wealth of the nation is now more or less equally divided.
Second, rising production and productivity do not, for Bayer, vindicate capitalism as an institutional system. He attributes these advances to discoveries and inventions and sets them against unemployment, capital losses, and persistent world hunger. His claim that better economic organization might also have prevented world wars extends the criticism from productive efficiency to the wider social costs of economic disorder.
Third, Bayer grants that classical adjustment mechanisms can remain effective while rejecting effectiveness as a sufficient criterion. Through a substantial quotation from T. Ballogh, he argues that deflation can restore external balance by reducing employment, living standards, and imports, yet simultaneously undermine allegiance to Western society. “Social dynamics” therefore changes the assessment of an apparently successful economic cure.
The article closes by asking whether economic freedom must remain a utopia. It establishes the criteria for an alternative without developing its institutional machinery. Its significance lies in making substantive freedom the measure of economic organization: neither unrestricted markets nor technical adjustment can justify themselves if their operation concentrates power and denies most people the conditions of self-directed development.
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