Emil Lederer, Neuer Liberalismus? (1928)

Emil Lederer’s economic-policy article examines the general arguments of the Darmstädter und Nationalbank’s report for 1927. Its subject is the discrepancy between the bank’s professed liberalism and the economic arrangements it supports. Lederer argues that appeals to the free play of market forces conceal a selective opposition to public intervention: protection and assistance benefiting business remain acceptable, while wage regulation and democratic economic authority become objectionable. His critique proceeds from the report’s ideological inconsistencies through an analysis of investment and wages to a defence of particular regulatory institutions. The question in the title concerns whether this “new” liberalism offers a coherent economic position or merely a vocabulary for shifting power toward employers.

The opening treats a major bank’s annual report as an intervention in public debate, not simply an account of business performance. Its principles deserve scrutiny precisely because successful financial institutions possess public authority, although their declarations may impose little constraint on actual negotiations. Lederer stresses the growing importance of economic public opinion:

Diese öffentliche Meinung wird in wirtschaftspolitischen Fragen immer mehr entscheidend sein.

English translation: This public opinion will increasingly be decisive in questions of economic policy.

The bank acknowledges that public arena even while resisting its influence. Its endorsement of separation between state and economy conflicts with its own support for autarky and agricultural intervention. Equally revealing is its silence about protective tariffs, which Lederer describes as a vast system of national subsidies to powerful industries. Opposition to socialism and democratic state capitalism, rather than consistent rejection of intervention, explains the attraction of liberal formulas.

Lederer next turns the report’s favourable account of 1927 against its diagnosis of inadequate accumulation. Substantial domestically financed investment and visibly increased consumption demonstrate that the expansion produced real assets, not merely higher quantities without substantive gains. The report’s call for a pause itself recognizes that rapid expansion can misdirect investment. Against the assumption that easy profitability necessarily promotes sound development, Lederer invokes the inflation years, when low wages, minimal taxation, and favourable credit conditions accompanied serious economic errors:

Immer wird die Inflationszeit ein warnendes Beispiel dafür sein, in welchem Maße schwerstwiegende Fehler fast unvermeidlich sind, wenn Gewinne zu leicht erzielt werden können.

English translation: The inflation period will always be a warning example of the extent to which extremely serious errors are almost unavoidable when profits can be obtained too easily.

This comparison separates profitability from economic rationality. Technical expansion can outrun economic judgment; the conditions most attractive to individual businesses need not generate the healthiest allocation of productive resources.

The article’s central analytical move is to define capital formation materially rather than identify it with entrepreneurs’ disposable income:

Ausbau des Produktionsapparats kann nur durch Erzeugnisse derjenigen Unternehmungen erfolgen, die Produktionsmittel herstellen.

English translation: Expansion of the productive apparatus can take place only through the products of those enterprises that manufacture means of production.

In 1927, Lederer argues, the relevant industries were already operating at their capacity limits; iron production was exceptionally strong, and iron and crude-steel imports sometimes exceeded exports. Further substantial investment therefore required imported production goods. Lower wages and reduced entrepreneurial consumption could diminish domestic consumer demand, but could not by themselves increase the available output of basic industrial materials. Additional accumulation would require exports of finished goods to finance imports of productive equipment and materials. The decisive difficulty consequently becomes whether German goods could compete abroad at prevailing domestic prices.

This reasoning also challenges the report’s treatment of wages. Expanding production requires additional workers, so rising demand for labour should raise wages under the very market logic the bank professes. Moreover, long-running collective agreements restricted wage increases during the boom. Higher aggregate wage payments partly reflected increased employment, not simply higher rates. Lederer qualifies the consumption argument: within the relevant range, changes in wages would chiefly affect purchases of industrial goods, since food consumption was comparatively inelastic. Low dividends likewise do not establish weak accumulation, because substantial investment could already have been financed from operating results; rapid technical change also blurs the boundary between replacement and new investment.

The later sections test the report’s sweeping indictment of state activity against particular institutions. Immediate rent deregulation would redistribute income toward rentiers and provoke wage movements without necessarily increasing accumulation. Retaining rent controls entails organizing housing construction, for which Vienna supplies an example. Public price policy, meanwhile, largely seeks to approximate competitive prices, whereas the bank overlooks a more consequential intervention:

Die wichtigsten Eingriffe in die Preisbildung erfolgen durch die Zollgesetzgebung, deren der Bericht mit keinem Wort Erwähnung tut.

English translation: The most important interventions in price formation occur through tariff legislation, which the report does not mention at all.

Lederer similarly rejects the claim that wages and working hours are dictated centrally. Arbitration grew from wartime arrangements and postwar institutions originally supported by employers as protection against more threatening developments. Demands to dismantle them now suggest a changed balance of organizational power. Collective agreements constrain adjustment during unpredictable business cycles, but that constraint also benefited employers during the expansion.

Finally, Lederer contrasts state “manipulation” with economic control by cartels, trusts, and international associations. The relevant alternative is not simply regulation versus freedom, but competing forms of organized authority. The report’s endorsement of continued foreign borrowing further undermines its depiction of German policy as intolerable: taken literally, that diagnosis should deter the capital inflows it welcomes. Lederer does not expect such a withdrawal. The contradiction exposes the distance between the report’s polemical language and its practical assessment. The article’s significance lies in connecting this ideological critique to production bottlenecks, distribution, and institutional history, rather than answering laissez-faire rhetoric with an equally abstract defence of the state.