"We are brought face to face with the intricate relationships of the innermost heart of our economic system when we remember that a political catastrophe like the Great War or a natural catastrophe like the Japanese earthquake of 1923, instead of retarding economic life, generally enlivens it, and thus tends to bring about not a crisis but a boom. Certainly catastrophes lead to an impoverishment of the economic system, but we must guard against confusing impoverishment with a crisis, all the more so as this confusion is an extremely common one. If we agree to understand by an economic crisis a temporary paralysis of the economic process which leads to a disturbance of the exchange apparatus with its consequences of over-production, surplus stocks, and insolvencies, we realize that it is characterized not by a scarcity but by a superfluity of goods, while the hall-mark of impoverishment is a deficiency of goods. This deficiency of goods generally spurs on the economic machine to make the highest number of revolutions it is capable, as was very markedly the case during the war. An economic crisis is therefore not an expression of shortage but of abundance or - to put it better - of what seems to us 'abundance' because of the temporary paralysis of the process of exchange and of the economic process in general. That it leads in the long run to an impoverishment of the economic system is self-evident, but this does not affect the question of the origin of crises, which is the question we are discussing here."
I'm a big fan of the broken window fallacy - I'm afraid that a lot of the people who talk about it most don't really understand it.
Speaking of German ordoliberals like Ropke, the Mises Institute recently came out with Ludwig Erhard's Prosperity through Competition.
I have a question to readers - does anybody know of an Ordoliberal that thought highly of Keynesianism or even considered himself Keynesian? Generally speaking, the relationship between Ordoliberals and Keynesians was chilly. I'm guessing this is mostly due to the central European experience with inflation at the time that the Anglo-American world suffered under deflation, as well as a lack of acceptance of Keynesian theory itself (Keynesian policy does look awfully suspicious if you don't operate with a Keynesian theoretical framework). And yet, even in that piece above (which has nothing to do with Keynesianism), the potential common ground between Keynesianism and Ordoliberalism is crystal clear. Ropke practically announces an aggregate demand based theory of the business cycle, for God's sake! But was the gulf between the two schools ever explicitly bridged? Not that I'm aware of, but I'm curious if anyone else is.