Ludwig Lachmann’s Review of Theoretische Grundlagen der Wirtschaftspolitik, Band I (1945)

Ludwig Lachmann’s journal book review assesses the first volume of Walter Adolf Jöhr’s proposed theoretical system of economic policy. Jöhr examines arguments for economic freedom and the relationship between perfect competition and actual economic conditions. Lachmann’s central judgment is that diagnosing departures from the competitive model does not yet provide a foundation for policy: the volume identifies difficulties without explaining how economic freedom and competition might be preserved under them.

Jöhr contrasts the theoretical market economy, which he calls “Katallaktik,” with the actual world. Lachmann summarizes the sources of divergence:

He enumerates four factors as being mainly responsible for this contrast: monopoly, frictions, paralysis of the profit impulse, and power.

The list makes the problem broader than monopoly alone: obstacles to competition include impediments to adjustment, weakened profit motivation, and power. Jöhr concludes that these departures count against economic liberalism, but not against every form of economic freedom or a competitive market economy. Lachmann tentatively interprets “economic Liberalism” here as laissez faire. This distinction leaves room for competition without an unconditional commitment to nonintervention, but does not establish what policy should follow.

Unfortunately, Dr. Jöhr rests content with this negative conclusion and fails to tell us how he proposes to protect economic freedom and a competitive market economy against the effects of the four disturbing factors mentioned.

Lachmann adds that protecting these institutions may not even be Jöhr’s ultimate aim. A promised second volume, including dynamic problems, leaves the project open; nevertheless, he judges the present result meagre for a substantial book.

The review closes with qualified encouragement. Lachmann recalls Jöhr’s earlier advocacy of a corporative economy and welcomes his subsequent recognition of benefits of competitive markets. His final question—whether this change is a sign of the times—places the book within a wider intellectual shift without claiming to establish that shift. The review’s enduring point is the gap between criticizing an ideal market model and articulating a constructive policy for an imperfect economy.