Richard Kerschagl, Marktwirtschaft und Zwangswirtschaft (1961)

Richard Kerschagl’s German-language article compares market and command economies through their ideal characteristics, practical mixtures, and shared economic constraints. Its central argument is that institutional arrangements cannot abolish scarcity: lasting welfare gains require productive performance, capital maintenance, and recognition of the costs redistributed by policy.

The opening analysis identifies free price formation, competition, and individual choice as defining features of the market model. Prices coordinate production and consumption, while reproduction costs indicate what is required to maintain productive capital. Competition limits returns as well as costs:

Auch auf der Gewinn-, beziehungsweise Ertragsseite wachsen die Bäume nicht in den Himmel, solange echte Marktwirtschaft herrscht.

English translation: On the profit or earnings side, too, the trees do not grow into the sky so long as a genuine market economy prevails.

Profit is thus conditional on economic performance, not an unlimited entitlement. Kerschagl credits market coordination with protecting freedom and increasing real output, but acknowledges neglected social needs, insufficient development, unemployment, and concentrations of economic power. Employment illustrates why the theoretical model cannot directly prescribe political practice:

Es gibt heute kaum eine Regierung, ja kaum einen Staat, der eine längere Periode größerer Arbeitslosigkeit überleben würde, zumindest nicht bei Anwendung demokratischer Grundsätze bei der Bestimmung der Staatsführung.

English translation: There is hardly a government today, indeed hardly a state, that would survive a longer period of greater unemployment, at least not where democratic principles are applied in determining the leadership of the state.

Full employment has political necessity, yet support for unprofitable enterprises may compromise economic calculation and monetary stability. This tension between social requirements and productive constraints structures the comparison.

Command economies, in Kerschagl’s account, encompass diverse forms of central direction and control over productive resources. Administered prices can conceal costs but cannot eliminate them. Cheap housing or transport requires financing elsewhere, while differentiated prices complicate comparisons of purchasing power and income. Technical productivity alone cannot establish whether production preserves capital or meets needs economically:

Produktionszweigen, die ohne Gewinn oder mit Verlust arbeiten, ist weder eine Abschreibung noch gar eine Neuinvestition nach normalen Grundsätzen möglich.

English translation: For branches of production which operate without profit or at a loss, neither depreciation nor, still less, new investment is possible according to normal principles.

Centralized mobilization can nevertheless concentrate resources and establish industries effectively. Kerschagl weighs these capacities against bureaucratization, restrictions on occupational and consumer freedom, and impaired economic accounting. Technical achievement does not by itself establish human benefit.

Mixed systems qualify the initial opposition. Tariffs, progressive taxation, subsidized credit, public ownership, collective bargaining, and rent controls modify market coordination; freer trading arrangements and world-market prices introduce market elements into directed economies. Kerschagl distinguishes a model’s theoretical purity from a policy compromise’s practical merits. His methodological objection to the social market economy concerns the combination of description and normative aspiration, rather than an unconditional rejection of social intervention.

This distinction also informs his criticism of market advocates seeking protection or subsidies for themselves. Assistance creates financing burdens and dependence, so its value cannot be judged solely from recipients’ immediate gains. Intervention should preserve incentives to perform while limiting dangers to personal and political freedom.

The later discussion applies this reasoning to wages, interest, inflation, equal pay, and working hours. Higher wages and lower prices can coexist sustainably only when supported by productive gains; otherwise, adjustment falls on profits, taxpayers, or consumers. Because individuals occupy several economic roles, benefits received in one capacity may return as burdens in another. Purchasing power therefore matters more than nominal income, particularly where inflation erodes savings and relatively inflexible social benefits.

Investment adds a temporal problem: purchasing power may increase before additional consumer goods become available. Saving helps bridge that interval, while interest rates select among competing uses of capital. Targeted credit assistance may be justified when it improves performance rather than sustains inefficiency. Shorter working hours similarly depend on invention and capital investment, linking welfare to saving, research, education, and training.

Kerschagl’s performance principle also carries restrictive social assumptions. He treats maternity-related costs and protections for disabled workers as welfare responsibilities distinct from equivalent productive contribution. Recognition of social obligations remains tied to identifying who bears their costs. The concluding perspective makes planning necessary within markets and human freedom indispensable within planned systems: responsible policy must coordinate costs, incentives, and social purposes rather than rely on institutional labels.