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1 Introduction

Goetz Anthony Briefs (1889–1974), born in Eschweiler, was an important economist, social ethicist and social philosopher of his time who now has been almost forgotten. Briefs was also an important exponent of Catholic social doctrine. He belonged to the Königswinter circle around Oswald v. Nell-Breuning, in which preliminary work was done on Pope Pius XI’s social encyclical Quadragesimo anno. Briefs was seen as a bridge-builder between Catholic social doctrine on the one hand and ordoliberalism and the social market economy on the other. As early as the 1920s, Briefs developed his idea of “socially tempered capitalism”, which is strongly reminiscent of elements of the social market economy. Even then, but especially in the post-war period, Briefs analysed and criticised the widespread “laissez-faire pluralism”; his ideas in this regard were incorporated into the conception of Ludwig Erhard’s “Formed Society”. Sometimes, Goetz Briefs has been named along with Walter Eucken, Alfred Müller-Armack, Alexander Rüstow and Wilhelm Röpke as the father of the social market economy (e.g. Reichel 1976, 261; Ederer 1969, 28). In the following, central elements from the work of Goetz Briefs will be highlighted that at least suggest such a “co-fatherhood”.

2 Development in the work of Goetz Briefs

At the beginning of his academic career, Briefs dealt with dedicated economic issues: his dissertation is an economic-political study of the spirit cartel (1911); his habilitation was a study on classical economics, with special consideration of the problem of the average profit rate (1913). Both works were supervised by Karl Diehl and Gerhart von Schulze-Gaevernitz at the University of Freiburg. After being exempted from military service due to an eye complaint, Briefs held several administrative positions in Berlin during World War I, and Briefs probably helped initiate the Works Councils Act of February 1920 (Amstad 1985, 16). From 1919 to 1921, Briefs was initially an associate professor of national economics in Freiburg, before moving to Würzburg and returning to Freiburg as a full professor in 1923. In 1921, his discussion of Oswald Spengler’s Der Untergang des Abendlandes (The Decline of the West) was published. Briefs thus leaves the realm of purely economic issues and turns to broader topics of social and political development. During his time in Würzburg and Freiburg, he also wrote Zur Kritik sozialer Grundprinzipien (On the Critique of Basic Social Principles) in the Archiv für Sozialwissenschaft und Sozialpolitik of 1922 (Briefs 1922a), and Das gewerbliche Proletariat in Max Weber’s Grundriß der Sozialökonomik of 1926, which was republished in 1937 in English under the title The Proletariat: A Challenge to Western Civilization.

In the German debate on socialisation, Briefs opposed efforts to nationalise enterprises. He saw a path to social peace rather in social and labour market policy reforms, such as workers’ participation and better social security coverage, aspects which he summarised under the term “economic formation” (Briefs 1922b). At this time, positive assessments of the achievements of trade unions and cooperatives are typical for Goetz Briefs (Briefs 1980[1926], 293–300). He continued to deal with trade unions and social problems within companies after his move to the Technical University Berlin in 1926 where he co-founded the Institute for Industrial Sociology. His chair in Freiburg was taken over by Walter Eucken. In his position in the capital of the Reich, Briefs became aware of the leading role that interest groups and associations had come to play in business and politics, a topic that took up a lot of space in his later work.

In August 1931, the World Socio Economic Planning Congress, under the auspices of the International Industrial Relations Association, took place in Amsterdam, with the aim of exploring the possibilities of socio-economic planning to correct the imbalances and maladjustments that shaped the global economy. During the course of the conference, Briefs emerged as a supporter of cautious social reforms. While maintaining the market economy system in principle, a balance of interests should be achieved through social policy, a view for which he received support at the conference, especially from representatives of the Christian trade unions (Bergen 1995, 18f.). Briefs also emphasised at the conference that every economic system has the potential for conflict and friction and that the idea of complete harmony is illusory (Briefs 1932b, 254).

After Briefs had fled from the Nazis to the USA in 1934, he first became a visiting professor at the Catholic University of America and in 1937 a professor at Georgetown University. Roosevelt’s New Deal, the emergence of Keynesianism and his personal acquaintance with Joseph Schumpeter were particularly formative for Goetz Briefs during this period. He developed a positive attitude towards the dynamic aspects of capitalism and also a positive image of dynamic entrepreneurship (Briefs 1960, 48, 1983[1960], 252f.; Streithofen and Voss 1980, 13–16). In contrast, his attitude towards trade unions and the role of interest groups in general in a pluralist society became much more critical. After the World War II, Briefs became an outspoken advocate of the social market economy. At the instigation of Alexander Rüstow, with whom Briefs had a very friendly relationship, he became a member of the scientific advisory board of the newly founded Aktionsgemeinschaft Soziale Marktwirtschaft. Briefs continued to publish in German, for example, in 1952, Zwischen Kapitalismus und Syndikalismus. Die Gewerkschaften am Scheideweg and, in 1966, Laissez-faire Pluralismus. Demokratie und Wirtschaft des gegenwärtigen Zeitalters. During various visits to Germany, Briefs was involved in many lectures and discussions, especially on the role of trade unions and the social market economy.

In May 1962, representatives of Catholic social doctrine and representatives of the social market economy met in the “Drei Mohren” hotel in Augsburg. Leading personalities from both sides took part, for example, Oswald v. Nell-Breuning and Gustav Gundlach on the Catholic side, and Wilhelm Röpke and Alexander Rüstow, for example, represented the Social Market Economy. The Catholic Goetz Briefs was part of the delegation of the social market economy and proved to be an important mediator between the two camps during the conference (Frickhöffer 1994, 153; Klein-Zirbes 2004, 36).

Briefs supported Ludwig Erhard in the 1965 German parliament election campaign as a scientific advisor (Brintziger 2014, 79). Despite various attempts to persuade him to return to Germany permanently, in which Alexander Rüstow was also involved, Briefs remained loyal to his new homeland in the USA.

3 The Concept of Marginal Ethics

The name Goetz Briefs is often associated with his concept of “marginal ethics”. Briefs first used the term in 1921 in his discussion of Oswald Spengler’s “The Decline of the West”:

By “marginal ethics” I mean the ethos of those economic subjects who are least hindered by moral inhibitions in the competitive struggle, who, on the basis of their minimum ethos, have the strongest chances of success under the same circumstances and thus force the other competing groups, under penalty of exclusion from competition, to gradually adjust their purchase and sale characteristics to correspond to the respective lowest level of business ethics (the “marginal ethics”). (Briefs 1921, 5)

Goetz Briefs’s concept of marginal ethics is still occasionally used today in different contexts. The following table lists some examples (Table 1).

Table 1 Some examples of the use of Briefs’s concept of marginal ethics
Full size table

Briefs chose this term with care, following the neoclassical concept of marginalism (Briefs 1983[1958], 259). “By ‘marginal ethics’ is meant the still tolerated, still bearable behaviour in interpersonal relationships, behaviour that still remains within the norms that apply in a particular area of life” (Briefs 1980[1963], 51). Briefs calls behaviour that takes place within these boundaries intramarginal behaviour; action that violates the boundary is called submarginal. (Briefs 1980[1963], 52f.) If submarginal behaviour offers higher earnings prospects in economic life than would be the case if the given standards were adhered to, this tends to lower the existing rules, because the competitive prospects of those who adhere to the old standards deteriorate. Briefs attributes, for example, the decline of patriarchalism to this effect: In the early days of capitalism, some factory owners still cared for their workers to a certain extent. The competitive pressure in the nineteenth century from entrepreneurs who saw no such obligations and had correspondingly lower costs or higher productivity made this impossible in the long term. Like many other aspects of merchant morality, patriarchalism disappeared because of economic considerations. Briefs continues to cite unfair competition and deterioration in the quality of manufactured products. He illustrates the latter with the German textile industry before World War I. Here, individual companies deviated from long-established, costly standards (the weave density of the fabrics was reduced), and since this loss of quality was not readily apparent to customers, these companies had a competitive advantage. Gradually, competitive pressure led to more and more companies lowering their quality accordingly. Briefs identified five rounds of incremental quality degradation phases before cartelisation created new, binding rules for the quality of cotton products (Briefs 1921, 87; 1983[1958], 263; 1980[1963], 54f).

The marginal ethics mechanism affects not only individual behaviour but also organisations and interest groups, with a corresponding effect on the economy as a whole. For Germany in the 1920s, Briefs sees submarginal pressure from two sides: On the one hand, a small number of “completely unscrupulous” representatives of the working class and, on the other hand, the capitalist “racketeers”, with both groups “forcing down” the level of social morality of their classes and crushing the population in a “terrible pincer” (Briefs 1921, 88).

Especially in the capitalist economic order, the problem of marginal ethics is particularly evident:

[…] the “marginal ethics” forces the aligned interests, which fought against each other in free competition for the benefit of the consumer, together. (Briefs 1921, 5) […] If one wants to see the inherent reprehensibility of capitalism anywhere, then one should see it in the fact that the groups with the lowest social ethos make their ethos standard binding for the entire social class to which they belong. (Briefs 1921, 88)

Institutionally, capitalism has the lowest safeguards for social moralityFootnote 1 (Briefs 1921, 88). These facts alone led Briefs to call for an external regulatory structure for the economyFootnote 2:

In a strictly liberal idea of society, the decline of marginal ethics has a socially destructive effect. The coexistence of people in a society requires a necessary form and structure, especially in the economic sphere. (Briefs 1980 [1925], 106)

Noppeney (1998, 193–195) sees parallels here between Frank H. Knight and the work of Wilhelm Röpke and Goetz Briefs. What these authors had in common was that they identified a tendency towards instability and dysfunctionality in a laissez-faire competitive society and derived from this the need for some form of “domesticating counter-power” to channel competition.

4 Liberalism, Individualism and Capitalism

For Goetz Briefs, economic systems are historical phenomena that by no means occur in any pure form:

… forms that are not completely mutually exclusive, so that one form does not “prevail” so much as it predominates – perhaps “still” predominates or “already” predominates, depending on the transitional character of the time. The dominant form in each case characterises the economy of its time and constitutes the categories in which the consciousness of the time grasps its economic conditions. The prevailing forms are called the “economic constitution” of the time. (Briefs 1980[1926], 213)

At the same time, Briefs emphasises that every social system can only be understood in the context of its preceding one, because every new system orients itself at the latest in the struggle against the old system and thus includes elements of the old within itself:

Thus individualist liberalism carried within itself the formal idea of the mercantilism it fought against: the idea that the “law” governs economic-social life, only no longer the law of the – state, but the natural law of the freely acting economy. So socialism carries the idea of individualism – to the point of self-poisoning – within itself: the “right” of the individual, and indeed first of all of the “disenfranchised”, but furthermore of all individuals, to be realised through socialisation, i.e. practically somehow through coercion. (Briefs 1923, 342)

In this sense, capitalism arose “historically by chance, in individual causality” (Briefs 1980[1926], 234). Its basis was the emergence of liberalism and individualism.

Liberalism first appeared in the form of a “free-from-something” view – freedom from the absolutist state, freedom from state interference in the economy, freedom from religious regulations, etc. With individualism, these thoughts became a positive “liberal philosophy of life”:

The fundamental principles of individualism may be summed up on the following way: first, the individual is the true and only substance of social life, and his natural state is a state of freedom to dispose of his personal gifts, of his property and rights in exactly the way he thinks fit, and to proceed thus by means of contracts freely entered upon. The individual is free to buy and sell, to hire and to fire, to invest or disinvest, to move or to stay, to engage in this business or that, to handle things in this way or some other. He is his own sovereign, as long as his actions in no way curtail the right of others to do likewise. (Briefs 1983[1944], 301)

Individual freedom implies the principle of individual responsibility: if the individual is free to make his own decision, he must also bear the resulting consequences; accordingly, self-interest becomes the maxim for action, and if everyone follows self-interest, the logical consequence is competition as the principle of individualistic society. Self-interest and competition are seen as necessary, beneficial and desired aspects of individualism:

The earliest protagonists of liberal thought believed in a providential arrangement leading to a pre-established harmony; the later masterminds of liberalism, such as Jeremy Bentham and John Stuart Mill, undertook to prove that a rational utilitarian mechanism of necessity would lead to peace and harmony among the individuals and the nations. (Briefs 1983[1944], 302)

But then the liberalistic and individualistic ideas met the “hard and stubborn facts of life”. The property-less working class in particular quickly realised that free choice for their own benefit was only an empty promise for them and that the burden of self-responsibility could hardly be borne in the event of unemployment or incapacity for work (Briefs 1983[1944], 302f.). In this context, Briefs also speaks of the “rules of the game of the economy”, such as individual freedom, self-responsibility and free competition, which form the “constitution” or “guiding norms” of capitalismFootnote 3 (Briefs 1980[1933], 116f., 1932a, 212). The basic problem of capitalism is “the different positional strengths in the playing field”, which ultimately leads to the fact that each individual is not seen as an economic subject, as was actually intended in classical liberalism, but that society is divided into primary and secondary economic subjects, the latter being little more than economic objects whose participation in economic life is limited to the role of a seller on the labour market (Briefs 1932a, 213f., 1980[1933], 117).

In addition to the urgent need of many workers, the lack of perspective was above all problematic: the fact that even with the utmost personal initiative, a worker was hardly in a position to significantly change his economic situation. “The fact is, however, that wage labour in most areas of capitalism is not a transitional stage, but hardened to the ‘class’, i.e., is endowed with the predicates of permanence and heredity, like everything class-related” (Briefs 1980[1926], 217). The reason for this is a wage level that typically just covers current consumption needs, but with which capital accumulation or the education of descendants that would allow the worker or his children to leave wage labour relations is not possible (Briefs 1980[1926], 220f.).

5 Socially Tempered Capitalism

The possibility of social conflict exists in every social constitution. However, whether these conflicts break out openly or are intercepted and mitigated depends decisively on the economic system and the social order. The aim of social policy is the “… preservation and safeguarding of a structure of society based on its own principles” (Briefs 1980[1933], 116). For Briefs, the “pacification of the proletariat” was the central task of the time (Briefs 1980[1926], 227). Briefs assumes that wage workers are generally less interested in revolutionary changes than in social advancement. The severity with which the social conflicts were argued out, especially in Germany, was not only due to the typically cited issues such as wages and property but also to the everyday conflicts and tensions in the factories (Briefs 1980[1926]; Streithofen and Voss 1980, 13).

Briefs did not see a fundamental unity between the proletariat and socialism; the example of the USA, where practically no socialist tendencies were recognisable, was too clear (Briefs 1980[1926], 283). Not so in Germany, where the people had an “… instilled reverence for all that calls itself science, and good faith in promises” (Briefs 1980[1926], 287). Although Briefs shares some of the arguments of socialism and even recognises Christian elements in socialism and Marxism, he vehemently rejects the overall concept. Socialism, he argues, is based on misconceptions:

… to the passion of the class struggle, of the idea of dictatorship, of the proletarian belief in the Messiah and the falsification of all history to the history of class struggles, to the narrowing of the view so that it interprets all the hardships of labour, all the consequences of machine technology, all the frictions of personal and social life in terms of the opposition between capital and labour. (Briefs 1980[1926], 235)

Briefs describes Marx’s thesis that capital accumulation on the one hand always means increased misery on the other hand as inaccurate and untenable (Briefs 1980[1926], 310). Ultimately, the result of socialism is not the improvement of the situation of the proletariat but the equalisation of society as a whole at its low social level:

Society … is the owner of the means of production, the individual “beneficiary of the proceeds” of the economy. When private property disappears as a legal category, a kind of general proletarianism arises; it becomes the normal form of existence of the citizen in the socialist state. (Briefs 1980[1926], 338)

Apart from the communist state, in which the state runs the economy in “collective compulsory associations and collective compulsory organisation”, Briefs actually only sees the fascist norm state as an alternative to capitalism, where the state itself does not run an economy and leaves it to the private sector but sets the norms and rules in such a way that private interests only apply “… in so far as they coincide with what the state defines as its interests” (Briefs 1932a, 223).

Ultimately, capitalism also deserves to be rejected in principle because of the manifold social problems it causes. But since the alternatives have proved useless, “… one must resign oneself to it by mitigating its terrible effects through social policy” (Briefs 1980[1925], 95). This creates socially tempered capitalism (Briefs 1980[1925], 93). Briefs called for social transformations and installations to be carried out in the economic system that lead to more social justice (Briefs 1980 [1948/1949], 161). This included an “order of the economy in which property is socially bound and burdened with social mortgages” (Briefs 1921, 72). On the positive side, Briefs noted that capitalism apparently offers the possibilities for such social measures: “Capitalism itself has, on the whole, demonstrated adaptability that was previously considered completely impossible. It has endured a wealth of social and socio-political interventions that appeared incompatible with the formulas of classical economics” (Briefs 1980 [1948/1949], 158).

As early as 1925, Briefs also saw broad tendencies in Catholic social doctrine that wanted to “socially temper” capitalism in order to reduce the social grievances of laissez-faire capitalism without replacing the capitalist economic system as such (Briefs 1980[1925], 43). Briefs and other representatives of Catholic social doctrine thus left the path that was actually set by Pope Pius XI’s encyclical Quadragesimo anno, which envisaged a class-professional order as an alternative to capitalism. In the end, the view that a reform of capitalism is the only sensible and viable path finally prevailed in Catholic social doctrine.

Here, Briefs outlines the idea of a principle between individualism and socialism; he describes both the absolute society and the absolute individualism as fantasy. Both society and the individual are “reality and entity sui generis” (Briefs 1923, 50–53). “Individual and society are entities of their own kind linked in unity; they are subject to the conditions of their mutual a priori” (Briefs 1923, 325). This also rejects extreme individualism and socialism: while the former violates the sovereignty of the community, socialism violates the individual’s right of self-determination (1980[1925], 82). Elsewhere, Briefs summarises this thought as follows: “Without freedom and self-responsibility there is no economic prosperity … But without community, without mutual responsibility, without love and a sense of duty … there is just as little prospect of avoiding chaos” (Briefs 1921, 80). It must be emphasised that Briefs did not want to describe a “third way”; he was convinced that “the capitalist system is here to stay” (Briefs 1957, 54), which is why he stuck to his view of “socially tempered capitalism”.

There would be possibilities for pacifying the proletariat by integrating it into society as a whole, by improving social standing and the economic situation, ultimately also with the aim of the workers themselves trying to improve their own situation “in a conventional way” (Briefs 1980[1926], 227). In his writings on industrial sociology, Briefs also tries to show ways of improving the situation of the worker in the everyday production process (cf. Amstad 1985, 97–105). Wilhelm Röpke also refers to Briefs when he expresses the hope that it is possible, even under capitalism, to reduce alienation in the production process and to provide the worker with meaningful activity (Röpke 1963[1937], 77f.).

Central to Briefs, however, is the question of the social mobility of the workers and thus the question of a sufficient level of wages to make this possible. Very similar goals can also be found again in the work of Wilhelm Röpke, with explicit reference to Goetz Briefs. Röpke, too, ultimately saw two perspectives for the future: the general proletarianisation of the population through socialism or the gradual convergence of the proletariat with the middle class (Röpke 1948, 147).

A change in the social question took place when trade unions began to accept the rules of the game of capitalism for their own actions. The approach of maximising the price of labour as a quasi “monopoly provider” is, in Briefs’s eyes, a milestone for the solution of the social question. Thus, trade unions became an important regulatory factor in liberalism (Messner 1968, 4).

Briefs initially saw the trade unions as a movement that did not go into the ideological realm, rather one that worked in the economic, social realm, and only partly in the political realm. The trade unions do not only reach the proletarians in the strict sense but wage workers in general (Briefs 1980[1926], 291). The “contradiction … between labour as the factor of all human economy and the individual worker as a thoroughly accidental factor in the competitive system” is resolved by the trade unions, “… since the isolated individual supply of labour is abolished by the creation of a collective worker in the form of the trade unions” (Briefs 1980[1926], 295). The central aim of the trade unions is to improve the economic and social situation of the workers. Efforts to advance to another class and to leave wage-worker status remain a matter for the individual (Briefs 1980[1926], 296). But the equalisation between the classes is certainly a result of trade union efforts; it manifests itself in the better education of the next generation, consumption habits and lifestyles oriented towards the middle class. Briefs sees this process as far advanced in England and the USA, while in Germany in the 1920s, it is typically accompanied by “guilty conscience” and the accusation of switching from the socialist-influenced proletariat to the “petit bourgeois”. In the perspective that one or at least one’s descendants can get out of the precarious conditions of the proletarian existence and work their way up to the “lower middle class”, Briefs sees an important incentive factor but above all a factor for “softening” the proletarian fate and for the pacification of the proletariat. The middle class thus also acquires an essential significance for social policy; social mobility will typically lead the worker into this stratum, and an erosion of the middle class would again destroy the chances of advancement for the worker (Briefs 1980[1926], 315–317; cf. also Klein-Zierbes 2004, 55 f.).

Not only the situation of the middle class but also the general development of the economy is of utmost importance. All these factors, opportunities for advancement, improvement of living conditions and equalisation between the classes are most closely connected with the positive development of the economy as a whole (Briefs 1980[1926], 350). And the bargaining power of the trade unions is also strongly dependent on the general development of the economy; while in times of boom the trade unions can exert intensive influence, in times of crisis and depression, the possibilities are severely limited (Briefs 1980[1933], 119). Even the state is dependent in its social policy on economic development, because in the long run, it cannot exceed the economic possibilities, which its policy presupposes (Briefs 1980[1933], 119).

6 Laissez-Faire Pluralism

However, the trade unions were only the forerunners of a broad development in which the “mass soul” came to light, a “joy of organisation from the special-purpose association to the singing club” (Briefs 1921, 70). Towards the end of the nineteenth century, more and more economically free individuals tried to assert their interests by founding private organisations, a process that gradually accelerated and led to the individual economic struggles developing into a battle of association interests. Even before World War I, one could actually speak of an economy thoroughly organised by associations. During the war, it became clear that the performance of the domestic economy and the production of armaments and supplies were a decisive factor in the war. As a reaction, the state tried to organise and direct the economy for the purpose of its own survival, using the existing organisations and creating a multitude of other special-purpose associations. In many countries, the war economy revealed a high level of flexibility in the economic system in relation to this state control, and the view that the economy can also be managed and directed on a permanent basis and that there were no “natural economic laws” of economic freedom became more and more prevalent. Governments had also recognised that the management of the economy is simplified when economic interests are represented and bundled by organisations such as interest groups and trade unions. “The focus of economic life moved from the purposes of the individual economic subjects to the purposes of association subjects and finally to the state” (Briefs 1921, 4f.; 1957, 56, 1966, 42f.). Briefs now speaks of the second phase of liberalism, in which “[…] individualism […] has been abolished in the immense grouping of individuals” (Briefs 1980[1933], 122). This second phase is characterised by the pluralistic society, which is a market economy characterised by organised interests in which a large number of intermediary organisations, interest groups, associations and societies exist between the levels of the state and the individual.

In the second phase of liberalism, the organisations and groups insist that the liberties related to the individual by classical liberalism are now applied to groups and organisations: they “adopted […] the liberal and individualist principles as the principles of their own attitude and policy, now thus applied to sub-collectives. Thus, liberalism becomes purely pragmatic, a matter of mere expediency for organised interests” (Briefs 1980[1948/1949], 158; 1962, 288).

The groups now adopted the pattern of individualism as a matter of course. They claimed the freedom to define their group interests, to organize and conduct their affairs as they thought fit, to bargain and negotiate by the strength of concerted action. They claimed exclusive self-responsibility, the right to act along the line of their group interest however defined, and they transformed the competitive market struggle into a group struggle. In short, they acted along the pattern originally devised for an individualistic society subject to market laws and market competition (Briefs 1983[1944], 304f.).

Finally, the competition between individuals in some areas seemed almost a marginal phenomenon – the formation of associations had undermined the market process (Briefs 1983[1944], 304, 1983[1958], 266f.).

An additional characteristic of the pluralistic society is that “[…] the pluralistic associations claim and put pressure on the democratic state as a lever for their group purposes. Today’s welfare state arises from this entanglement between the democratic state and pluralistic society” (Briefs 1962, 288).

[…] pluralism shall mean that phase in the evolution of western democracies in which a multitude of uncoordinated (conflicting and bargaining) pressure groups engages legislative and administrative backing and support for the pursuit of particular group ends. Thus, the pluralistic state acquires the quality of a clearing house of conflicting group ends, if not a junior partnership to a dominant group or coalition of groups. (Briefs 1957, 47)

In the second phase of liberalism, the former “… neutrality of the state has turned into a very active cooperation with the pluralist organisations” (Briefs 1980[1948/1949], 159).

“The huge increase in productivity has disenchanted anti-capitalist radicalism […]” and this because it offered interest groups unimagined opportunities to succeed in their demands. But these successes also led to a “tremendous fortification of the interest groups”, which finally “[…] in addition to their original drives, have an institutional interest in ever new demands and continue to exert pressure on the counterpart as well as on the state” so that there is virtually an “inflationary pressure” of new demand (Briefs 1962, 289). In this situation, the character of the interest groups also changes, and the former solidaristic self-help institutions turned into large bureaucratic organisations, some of them semi-state-like. The term “fortified trade unions” is often associated with the name of Goetz Briefs, describing their development from spontaneous, democratic self-help organisations to bureaucratically organised, hierarchical associations under often oligarchic leadership (Briefs 1965, 556–558). In the “fortified phase”, the interest groups tend to restrict the freedom of their members; they place institutional interests above the individual interests of their members (Briefs 1957, 57, 69). The personal responsibility of the members is reduced, and the supposed responsibility of the group takes its place.

If, in a pluralistic society, interest groups compete with each other and their success is not dependent on market mechanisms but on public perception, the press and politics, correspondingly, no economically optimal results can be expected (Briefs 1957, 64–67).

… for the mechanism of wage and price formation, tremendous consequences had to result from this group organisation … The system of the economy lost much of its flexibility, its automatic adaptability … What is called rigidity certainly occurred to a great extent. (Briefs 1980[1948/1949], 158)

Since organised groups have the power to autonomously define and implement their own goals, consolidated group interests pose a threat to the common good. No corrective intervention can be expected from the state either, “[…] if the government is dependent on the same associations for the elections, whose group interests have no or only a limited orientation towards the general interest” (Briefs 1980[1963], 60).

The ethos of self-interest, which formerly regulated the behaviour of the individual, now rules the behaviour of interest groups. It is they who seek to “maximize” their interests as they define them. In place of individual self-determination, we now have that of the interest groups; in place of individual responsibility, the responsibility of the interest group; in place of competition among individuals, competition among groups. In both cases any real concept of the common good is conspicuously absent. Frequently present is the naive or arrogant identification of a group’s interest with that of the entire community. (Briefs 1983[1958], 267)

Briefs answers “No” to the question of whether an orderly state of the economy emerges from the interaction of the different interest groups, i.e. the pluralistic society can be regarded as a functioning economic system. The reason for this is neither a mechanism analogous to the market equilibrium in the individualistic economy nor a comprehensive orientation of interest groups towards the common good nor efficient control by the state to harmonise group interests are foreseeable (Briefs 1961, 223–225): “Pluralism has neither an autonomous economic nor an autonomous social principle, nor an autonomous political ordo” (Briefs 1957, 68).

In the second phase of individualism, in the group-individualistic society, such a clear-cut principle of order was missing; supply and demand as an ordering principle was interfered with by pressure of unions, by State aid for this or that group, and by pressure from public opinion. As this group organization became a complete reality and as the State was enlisted for the interests of each and all groups able to exercise political pressure, the market seemed less and less the only or decisive factor, and distribution became politicized. (Briefs 1983[1944], 310f.)

Furthermore, there is no reason to expect that the goals set by associations will in any way add up to “social justice” (Briefs 1980[1963], 58f.). In a pluralist society “… no all-round social-moral bond is created, rather at best a bond of solidarity between the allied groups” (Briefs 1921, 88).

After all, organisations like to pass the “loose ends” of their policies to governments in the form of responsibilities and obligations. The groups articulate their individual demands without assuming responsibility for their effects themselves, and governments find themselves caught in the tension between chaotic and growing group demands and the actually necessary promotion of the common good (Briefs 1957, 61).

The state is thus overloaded with functions, which also results in responsibility for, and thus power over, the most diverse areas of social and private life, “… which must drive the ‘free’ society close to the totalitarian systems” (Messner 1968, 6). And if the “[…] state largely loses its sovereignty over the social groups in a pluralistically formed society, then the conflict between the substructures precipitates conflict within the structure of state and government itself” (Briefs 1962, 295).

7 Liberalism and Totalism

“Unleashed laissez-faire pluralism is today the core problem of all Western societies and democracies” (Briefs 1966, 286). And not only the market economy but also democracy is thereby called into question. For Goetz Briefs, capitalism and democracy were two closely linked phenomena (Briefs 1983, 219). Democracy, like the liberal economic system, has undergone significant changes over the course of time. The first phase of democracy was strongly influenced by Christian religious ideas still lingering from the Middle Ages. Especially the first democracies in England, Switzerland, Holland and the USA were based to a large extent on these Christian ideas at the beginning. In the second phase, modern democracy, this reference to God was lost and replaced by reason. Democracy is no longer founded on Christian values but rather is supported by the Rousseauian social contract. At this stage, belief in reason and in the purposes governed by the contract is the basis of democracy. A functioning form of order on this basis requires a number of virtues, for example, respect for the rights and freedoms of others, respect for the law and a sense of co-responsibility. With the erosion of these virtues, which Briefs attributes primarily to the weakening of the primary institutions of the community, such as the family and the church, democracy in the twentieth century is transformed into a democracy of “expediency” and “wise adjustment” (Briefs 1957, 67f., Briefs 1980[1954], 164ff.). The “mass” becomes the new form of community – a development that is questionable, especially from a Christian perspective:

… the Christian standpoint toward a mass society albeit of an individualistic or of a totalitarian making. Man should live his life in an “ordo” and in subdivisions of this “ordo”. If he is prevented from doing so, we may assume that a tragic concatenation of destiny and guilt brought it about. (Briefs 1941, 90)

In the development towards “expediency” and “wise adjustment”, Briefs certainly sees a weakening of democracy, which is ultimately based on values: “Thus democracy more than any other type of government needs basic agreement on fundamentals” (Briefs 1940, 176).

In western democracies, the conflict between state and society is determined by the constantly growing weight of the associations … The associations are increasingly taking away more and more areas of self-determination and self-responsibility from their members. The economic power struggle of the associations, which forces the state to intervene, decisively determines political events with the result that the state becomes economised and society, i.e., economic society, becomes politicised. (Briefs 1980[1957], 152f.)

Briefs sees considerable potential for problems in the combination of a pluralistic society shaped by associations and a democracy based solely on utilitarian considerations. Above all, there is the danger that the state, invoking its democratic legitimacy, claims to determine the values, purposes and goals of society and the individual. And in view of the pluralistic structure of society, these factors are then also determined by powerful interest groups that themselves have no democratic legitimacy (Briefs 1966, 245–247).

Briefs recognises here a dialectic of liberalism: in the second phase, liberalism has a tendency to turn into its opposite and to lead to a tertiary stage of liberalism, totalism (Briefs 1980[1948/1949], 161). In the transition to totalism, a similar process takes place as in the replacement of classical liberalism by pluralism:

In the second phase, the organisation claimed for itself those principles, freedoms and responsibilities, those self-interests and that power which, in the old liberalism, belonged to the individuals. In the turn to totalism, the shift of these freedoms, interests and power from the organisations to the authoritarian, totalitarian leadership takes place. (Briefs 1980 [1948/1949], 160)

Briefs sees comprehensive tendencies to break out of the rules of the game of capitalism, which became so strong that an “anti-liberalism” emerged from it, which began “… to condense into a kind of myth, into a myth of planning or whatever one calls the decidedly economically constructive ideas from which public opinion and literature abound” (Briefs 1932a, 212). A complete departure from the concept of the market economy can ultimately only end in two forms:

There is, in the form of Bolshevism, a centralised and collectivist planned economy, an absolutist state economy in which virtually none of the supporting links of the rules of the game are left. There is the case of the fascist norm state, which in principle allows entrepreneurial self-activity to become effective only to the extent of its congruence with the purposes of the state. (Briefs 1932a, 223)

But unlike many of his contemporaries (such as Spengler in 1920, Schumpeter in 1946), Briefs did not see the flight to socialism as the only possible option or inevitable fate, even though he warned of the danger of totalism as a possible third stage of liberalism (Briefs 1983[1944]). In particular, Briefs also noted that not countries with a long and stable liberal tradition, such as England, Holland and the USA, had shown themselves to be particularly susceptible to totalism, but precisely countries such as Germany and Russia. And so, Briefs still saw various possibilities for the future of the state in the 1930s:

The situation forces it to choose between taking over the “masses” and changing from a fiscal and social state to an economic state with a centrally controlled state economy, or giving space back to the social self-regulation of economic matters, while limiting it to its mere norm function. The possibilities of the future for the old capitalist and state-founded, economically narrow and socially overheated area of Europe seem to lie between the state economy and the normative state over a “constitutional” economic society. (Briefs 1932a, 230)

Despite a certain pessimism, Briefs also saw the possibility of successful reforms of laissez-faire pluralism. Central to this is the removal of the entanglement of interest groups with the state and government. On the one hand, the state must return to deciding according to the principles of the common good and, under this aspect, also reject the claims of individual interest groups. On the other hand, the interest groups must once again fulfil their tasks independently and not only become involved in ensuring that the state carries out these tasks. This also goes hand in hand with the demand to restrict the interest groups to their valid functions. But also, on the part of politics, a much stronger focus must be placed on the principle of subsidiarity: the state should not actively try to take over tasks that can be equally solved by associations and groups (Briefs 1966, 138–244).

8 Ludwig Erhard’s Formed Society

With his critical attitude towards pluralistic society, Goetz Briefs became one of the pioneers of the further development of the social market economy in the 1960s. When the economic situation in Germany became more difficult in the mid-1960s, Chancellor Ludwig Erhard wanted to build on the successes of the post-war period and invoked the joint effort of the time. At the CDU party conference in March 1965, Erhard presented his concept of the “formed society”, with which the “social market economy” was to be expanded into a comprehensive social order. The ideas of Goetz Briefs had a significant influence on the concept of the “formed society” (Brintziger 2014, 79; Fischer 2006, 138; Heimann 1974, 570; Stöss 2013, 247f.).

Ludwig Erhard described the meaning of the term “formed society” at the CDU party conference as follows:

So, what does it mean then: “Formed society?” It means that this society no longer consists of classes and groups that want to enforce mutually exclusive goals, but that, far removed from all corporate-state ideas, it is essentially cooperative, that is, it is based on the interaction of all groups and interests. This society, the beginnings of which are already recognisable in the system of the social market economy, is not formed through authoritarian coercion, but out of its own strength, of its own will, out of knowledge and the growing awareness of mutual dependence. (Erhard 1965, 704f.)

Erhard had previously stated in his book Prosperity for All that “…democracy is endangered by playing off and enforcing positions of power… The problem of classifying organised group interests in the overall structure of people and the state is in any case far from being satisfactorily solved” (Erhard 1990[1957], 16). At the party congress, he emphasised: “The big questions … cannot be answered according to the particular interests of the individual groups” (Erhard 1965, 704 f.). For Erhard’s advisor, Rüdiger Altmann, the Formed Society turned against the “functionless proliferation of organised interests”. The “connections, obligations and entanglements” between the state and the interest groups are to be reduced; they merely cause a “gutting” and inability to act on the part of the state, which nevertheless overlays ever more parts of society with its apparatus (Altmann 1968, 30, 49).

As early as 1960, after the success story of the social market economy, Alfred Müller-Armack called for an analogous concept for the development of a social framework, which in his view requires “a kind of social concerted action” (Blum 1980, 160).

The concept of the formed society only found a clearly defined expression in the beginnings of anti-cyclical fiscal policy and a common structural policy of the federal, state and local governments. Overall, however, the formed society failed together with the Erhard government; it “did not survive the next economic slump” (Blum 1980, 160).

9 Conclusion

As early as the 1920s, Briefs’s conception of socially tempered capitalism contained much of what Müller-Armack later formulated for the social market economy: “… on the basis of a competitive economy, to combine free initiative with social progress secured precisely by economic performance” (Müller-Armack 1976, 245). Oswald v. Nell-Breuning later used the term “socially tempered capitalism” as a synonym for the social market economy, although he used it with a negative connotation that Briefs did not use. Above all, it was his critical attitude towards laissez-faire pluralism that went into the conception of Ludwig Erhard’s “Formed Society”. Briefs himself emphasised the compatibility of the social market economy with Catholic social doctrine on the one hand and the contrast between the pluralist society and Catholic social doctrine on the other (Briefs 1983[1960], 255ff., 1966, 12–14).

Looking at Goetz Briefs’s works on pluralism in the light of today, with its countless and powerful lobby and activist groups, non-governmental organisations and associations of all kinds, one automatically gets the impression of utmost topicality. This impression is reinforced by the fact that many of the developments described and criticised by Briefs seem much more advanced today than they were in Briefs’s lifetime. And so, in particular, his works on pluralist society and trade unionism still evoke very contrasting reactions today (Papcke 1993, 770).

Briefs’s description of the era of pluralism, in which the importance of reason and science is repeatedly emphasised but the impression of inefficiency and chaos still arises, is still apt today:

It is the “irony of history,” one of the practical jokes history plays when man tries “to go it alone,” that the era of rationalism ends up in its own dialectical negation. Short run and merely institutional “rationalities” of a multitude of interest groups block over-all and long-run rational decisions and actions. (Briefs 1957, 68)

Briefs critically remarked that these days, with a fundamentally individualistic attitude of the general population, there is at the same time an exaggerated belief in organisation and “regulation from above”, although the idea of organisational individualism represents a contradiction in terms (Briefs 1921, 52 f.). Briefs, on the other hand, argues for personal freedom:

Just as little mere moralising can prevent submarginal behaviour as little and even less can coercion. If it is true that economic life should get by with a minimum of morality, it is even more indisputable that it should get by with a minimum of coercion. In the long run, both go against human nature. Submarginal behaviour is the expression of man’s freedom – his freedom to be a selfish racketeer or a responsible member of society. (Briefs 1980[1963], 61)