Hans Bayer, Wirtschaftsfreiheit in Österreich (1953)

Hans Bayer’s journal article presents economic freedom as a problem of institutional reconstruction in postwar Austria. Its organizing distinction is between “mechanistic” freedom, identified with the neoliberal Kamitz programme, and freedom achieved through deliberate economic shaping. Bayer argues that deregulation alone would produce stagnation and renewed social conflict rather than stability within an expanding economy. He does not offer a detailed examination of the Kamitz programme here; his principal task is to outline the alternative.

Demgegenüber steht die Auffassung, daß Wirtschaftsfreiheit nicht durch bloße Aufhebung obrigkeitlicher Bindungen, sondern nur durch Wirtschaftsgestaltung erreicht werden kann.

English translation: Opposed to this stands the view that economic freedom cannot be achieved merely by abolishing restrictions imposed by the authorities, but only through the deliberate shaping of the economy.

Freedom therefore requires positive economic capacities, not simply the removal of restraints. Although occupation limits Austria’s autonomy, Bayer insists that domestic action can secure considerable relative freedom. A medical analogy supplies the article’s structure: the national economy is a patient whose symptoms, constitution, organs, circulation, unsuccessful treatments, and environment must be examined. Economic health and strength are the foundations of freedom.

The diagnosis distinguishes adequate natural resources from defective organization. Austria’s trade deficit and low living standard signal illness, but its underlying constitution is sound. Fragmented agricultural holdings raise transport costs and obstruct efficient mechanization; small industrial establishments lack sufficient specialization, standardization, and collective export representation; parts of commerce are overcrowded and insufficiently rationalized. “Circulatory” disturbances connect these sectoral problems: disproportionate development and entrenched market power prevent adjustment. Bayer’s distinction between static and dynamic economic power is consequential. Static power protects existing prices in the short run, whereas dynamic power plans over longer periods. His criticism targets monopolistic rigidity, not merely the existence of large enterprises.

The central historical section interprets five wage–price agreements as repeated treatments of symptoms. Beginning with the July 1947 agreement, Bayer follows increases in agricultural prices, wages, allowances, and tariffs, together with the withdrawal of subsidies. These settlements provided temporary relief but were not followed by comprehensive measures to increase productivity and output. Successive attempts to “normalize” prices consequently renewed the same distributive struggle. Stronger groups initially captured a larger share of a substantially unchanged social product; subsequent price increases eroded their apparent gains. Credit restriction repeats this failure when it suppresses demand without directing credit toward structural improvement.

Man übersieht hiebei, daß die wirtschaftlichen Schwierigkeiten Österreichs nicht infolge einer Inflation, sondern die Inflationsgefahr infolge der wirtschaftlichen Schwierigkeiten entstanden ist.

English translation: In this, it is overlooked that Austria’s economic difficulties did not arise as a result of inflation, but that the danger of inflation arose as a result of its economic difficulties.

This reversal of causality is the hinge between diagnosis and prescription. Bayer treats inflationary pressure as a consequence of unresolved productive and organizational weaknesses. Economic policy must therefore reconcile individual and group interests with those of the whole economy in both production and income formation.

His remedies combine administrative action, cooperation, and selective competition. Agricultural consolidation, compulsory under certain conditions, would precede more effective mechanization; cooperative cultivation, purchasing, advice, and education could reduce costs. Cheaper imports should benefit consumers rather than be largely excluded. Industrial exports require market research, advertising, organizations capable of receiving large foreign orders, and sectoral commissions promoting standardization and specialization. These proposals reject the assumption that prices or exchange rates alone can repair institutional deficiencies.

Coordination must also address relationships across sectors. Bayer distinguishes technical productivity gains from economy-wide gains: the former can conflict with the latter unless productivity increases accompany expanding production. Investment planning and credit direction should correct disproportions and connect anticipated supply with anticipated demand. The resulting expansion would make income adjustment easier and enlarge the material scope for social policy and individual development.

The institutional centre of this programme is Gemeinwirtschaft, encompassing cooperatives, municipal enterprises, and enterprises of the state and provinces.

Gemeinwirtschaftliche Unternehmungen sind jene, deren Führung an der Rentabilität orientiert, aber unmittelbar und dauernd durch Gesichtspunkte des Gemeinwohls entschieden wird.

English translation: Common-interest enterprises are those whose management is oriented toward profitability but is directly and continually determined by considerations of the common good.

Bayer wants their existing evolutionary and functional connections transformed into organizational and instrumental unity. Coordinated in the public interest, this sector could anchor investment policy, sustain expansion, and counter private monopoly power. Profitability remains relevant, but it does not determine the enterprise’s ultimate purpose.

Fiscal policy completes rather than replaces this institutional programme. Budget balance should be considered over an appropriate economic period, not rigidly demanded within each calendar year. Revenue and expenditure must serve national income, production, and employment. Bayer invokes Arthur Smithies against accusations that such policy necessarily leads to authoritarian systems, while explicitly denying that fiscal measures alone can secure stabilization.

The conclusion extends the medical analogy to Austria’s European environment. National coordination is a prerequisite for integration, not an alternative to it. Austria’s direct material contribution would be small, but research and practical achievement in planning and coordination could give it intellectual significance. The article’s central conceptual move is thus to redefine freedom as an achievement of coordinated economic development: public-interest institutions, expanding production, and resistance to rigid market power provide the conditions under which individual freedom becomes materially possible.