ordoliberalism

Ordoliberalism is the German variant of economic liberalism that emphasizes the need for government to ensure that the free market produces results close to its theoretical potential.{{cite book |first=Ralf |last=Ptak |chapter=Neoliberalism in Germany: Revisiting the Ordoliberal Foundations of the Social Market Economy |editor1-first=Philip |editor1-last=Mirowski |editor2-first=Dieter |editor2-last=Plehwe |title=The Road From Mont Pèlerin: The Making of The Neoliberal Thought Collective |url=https://archive.org/details/roadfrommontpele00miro_520 |url-access=limited |location=Cambridge, MA|publisher=Harvard University Press |year=2009 |isbn=978-0-674-03318-4 |pages=[https://archive.org/details/roadfrommontpele00miro_520/page/n132 124]–125}}

Ordoliberal ideals became the foundation of the creation of the post-World War II German social market economy and its attendant {{lang|de|Wirtschaftswunder}}. The term "ordoliberalism" ({{langx|de|Ordoliberalismus}}) was coined in 1950 by {{ill|Hero Moeller|de}} and refers to the academic journal ORDO.{{cite book |first=Ralf |last=Ptak |title=Vom Ordoliberalismus zur Sozialen Marktwirtschaft: Stationen des Neoliberalismus in Deutschland |publisher=VS Verlag |year=2004 |isbn=978-3-8100-4111-1 |page=23 |language=de}}

Linguistic differentiation

Ordoliberals separate themselves from classical liberals. Notably, {{lang|de|Walter Eucken|italic=no}}, with {{lang|de|Franz Böhm|italic=no}}, founder of ordoliberalism and the Freiburg School,{{cite book |first=Nils |last=Goldschmidt |title=Wirtschaft, Politik und Freiheit: Freiburger Wirtschaftswissenschaftler und der Widerstand |language=de |trans-title=Economy, politics and freedom: Freiburg economists and the resistance |url=https://books.google.com/books?id=SvNEWSk_HFQC |access-date=21 July 2013 |year=2005 |publisher=Mohr Siebeck |isbn=978-3-16-148520-6 |page=315 |via=Google Books}} rejected neoliberalism.{{cite book |first=Lüder |last=Gerken |title=Walter Eucken und sein Werk: Rückblick auf den Vordenker der sozialen Marktwirtschaft |language=de |trans-title=Walter Eucken and his work: looking back at the mastermind of the social market economy |url=https://books.google.com/books?id=xx8lxh7PZKMC |access-date=21 July 2013 |year=2000 |publisher=Mohr Siebeck |isbn=978-3-16-147503-0 |page=37 |via=Google Books}}

Ordoliberals promote the concept of the social market economy, which favors a strong role for the state with respect to the market and which is in many ways different from the ideas connected to the term "neoliberalism". The term "neoliberalism" was originally coined in 1938 at the {{lang|fr|Colloque Walter Lippmann}} by {{lang|de|Alexander Rüstow|italic=no}}, who is regarded as an ordoliberal today.{{cite journal |first1=Taylor C. |last1=Boas |first2=Jordan |last2=Gans-Morse |title=Neoliberalism: From New Liberal Philosophy to Anti-Liberal Slogan |journal=Studies in Comparative International Development |volume=44 |issue=2 |year=2009 |issn=0039-3606 |pages=137–61 |doi=10.1007/s12116-009-9040-5|doi-access=free}}

Because of the connected history, ordoliberalism is sometimes referred to as "German neoliberalism". This has led to frequent confusion and mix-ups of terms and ideas in the discourse, debate and criticism of both economic schools. In 1991 political economist {{lang|fr|Michel Albert|italic=no}} published Capitalisme Contre Capitalisme, and in 2001 Peter A. Hall and David Soskice published Varieties of Capitalism, and both separated the concepts and developed the new terms "liberal market economy" and "coordinated market economy" to distinguish neoliberalism and ordoliberalism.

Development

The theory was developed from about 1930 to 1950 by German economists and legal scholars from the Freiburg School, such as Walter Eucken, {{lang|de|Franz Böhm|italic=no}}, Hans Grossmann-Doerth, and Leonhard Miksch.{{Cite book |last=Fèvre |first=Raphaël |url=https://books.google.com/books?id=hfhQEAAAQBAJ |title=A Political Economy of Power: Ordoliberalism in Context, 1932–1950 |date=2021 |publisher=Oxford University Press |isbn=978-0-19-760780-0 |language=en}}

Ordoliberal ideals (with modifications) drove the creation of the post-World War II German social market economy. They were especially influential on forming a firm competition law in Germany. However the social market economy was implemented in economies where corporatism was already well established, so ordoliberal ideals were not as far reaching as the theory's economic founders had intended.{{cite book |last1=Abelshauser |first1=Werner |title=The Dynamics of German Industry: Germany's Path toward the New Economy and the American Challenge |date=2005 |publisher=Berghahn Books |isbn=9781782387992 |pages=146–148 |url=https://books.google.com/books?id=hkbkBgAAQBAJ |access-date=9 October 2018 |language=en}}

Since the 1960s, ordoliberal influence on economics and jurisprudence has significantly diminished;Gabler Verlag (ed.), Gabler Wirtschaftslexikon, Stichwort: Freiburger Schule ([http://wirtschaftslexikon.gabler.de/Archiv/7246/freiburger-schule-v8.html online] {{Webarchive|url=https://web.archive.org/web/20121025052143/http://wirtschaftslexikon.gabler.de/Archiv/7246/freiburger-schule-v8.html |date=2012-10-25 }}) however, many German economists define themselves as Ordoliberals through the present day, the ORDO is still published, and the Faculty of Economics at the University of Freiburg is still teaching ordoliberalism. Additionally, some institutes and foundations such as the {{lang|de|Walter Eucken Institut|italic=no}} and the {{lang|de|Stiftung Ordnungspolitik|italic=no}} are engaged in the ordoliberal tradition.

Germany's Free Democratic Party (FDP) is a traditional and committed supporter of ordoliberalism,{{cite book|author=Charlotte Galpin|title=The Euro Crisis and European Identities: Political and Media Discourse in Germany, Ireland and Poland|year=2017|publisher=Springer|isbn=978-33-1951611-0|url=https://books.google.com/books?id=G2gpDwAAQBAJ&pg=PA83|page=83}} the party having been influenced by the economic theories of Wilhelm Röpke and Alexander Rüstow.{{cite book|author=William Callison|chapter=The Historical Context of Ordoliberalism's Theoretical Development|editor1=Thomas Biebricher|editor2=Werner Bonefeld|editor3=Peter Nedergaard|title=The Oxford Handbook of Ordoliberalism|year=2022|publisher=Oxford University Press|isbn=978-01-9260543-6|chapter-url=https://books.google.com/books?id=WWiLEAAAQBAJ&pg=PA50|page=50}} Historical FDP party grandee Otto Graf Lambsdorff, who served as Federal Minister of Economics, was a particular proponent of ordoliberalism.{{cite book|author=Aurélie Dianara Andry|title=Social Europe, the Road Not Taken: The Left and European Integration in the Long 1970s|year=2022|publisher=Oxford University Press|isbn=9780192867094|url=https://books.google.com/books?id=0iyWEAAAQBAJ&pg=PA223|page=223}}

Implementation

File:Bundesarchiv B 145 Bild-F004214-0033, Konrad Adenauer und Ludwig Erhard.jpg|italic=no}} with {{lang|de|Konrad Adenauer|italic=no}} in 1956, while Erhard was Minister of Economics]]

Ordoliberalism was a major influence on the economic model developed in post-war West Germany. Ordoliberalism in Germany became known as the social market economy.

The Ordoliberal model implemented in Germany was started under the government administration of {{lang|de|Konrad Adenauer|italic=no}}. His government's Minister of Economics, {{lang|de|Ludwig Erhard|italic=no}}, was a known Ordoliberal and adherent of the Freiburg School. Under {{lang|de|Adenauer|italic=no}}, some, but not all, price controls were lifted, and taxes on small businesses and corporations were lowered. Furthermore, social security and pensions were increased to provide a social base income. Ordoliberals have stated that these policies led to the {{lang|de|Wirtschaftswunder}}, or economic miracle.{{cite web |title=Ordoliberals |url=https://www.pbs.org/wgbh/commandingheights/shared/minitext/ess_ordoliberals.html |website=Commanding Heights: The Battle for the World Economy |publisher=PBS |date=2002 |access-date=2017-09-07 |archive-date=2018-07-28 |archive-url=https://web.archive.org/web/20180728191254/https://www.pbs.org/wgbh/commandingheights/shared/minitext/ess_ordoliberals.html |url-status=live }}

Theory

Ordoliberal theory holds that the state must create a proper legal environment for the economy and maintain a healthy level of competition through measures that adhere to market principles. This is the foundation of its legitimacy.{{cite journal |last=Megay |first=Edward N. |year=1970 |title=Anti-Pluralist Liberalism: The German Neoliberals |journal=Political Science Quarterly |volume=85 |issue=3 |pages=422–442 [424]|doi=10.2307/2147878 |jstor=2147878}} The concern is that, if the state does not take active measures to foster competition, firms with monopoly (or oligopoly) power will emerge, which will not only subvert the advantages offered by the market economy, but also possibly undermine good government, since strong economic power can be transformed into political power.{{cite journal |first=Vatiero |last=Massimiliano |year=2010 |title=The Ordoliberal notion of market power: an institutionalist reassessment |journal=European Competition Journal |volume=6 |issue=3 |pages=689–707 |doi=10.5235/ecj.v6n3.689 |s2cid=154973650}}

According to Stephen Padgett, "a central tenet of ordo-liberalism is a clearly defined division of labor in economic management, with specific responsibilities assigned to particular institutions. Monetary policy should be the responsibility of a central bank committed to monetary stability and low inflation, and insulated from political pressure by independent status. Fiscal policy—balancing tax revenue against government expenditure—is the domain of the government, whilst macro-economic policy is the preserve of employers and trade unions."{{cite book |chapter-url=https://books.google.com/books?id=Bo-C2uExHw8C&q=A+central+tenet+of+ordo-liberalism+is+a+clearly+defined+division+of+labor+in+economic+management&pg=PA126 |first=Stephen |last=Padgett |chapter=Political Economy: The German Model under Stress |editor1-first=Stephen |editor1-last=Padgett |editor2-first=William E. |editor2-last=Paterson |editor3-first=Gordon |editor3-last=Smith |title=Developments in German Politics 3 |pages=[https://archive.org/details/developmentsinge00smit/page/126 126–127] |publisher=Duke University Press |year=2003 |isbn=978-0822332664 |url=https://archive.org/details/developmentsinge00smit/page/126 |via=Google Books}} The state should form an economic order instead of directing economic processes, and three negative examples ordoliberals used to back their theories were Nazism, Keynesianism, and Soviet socialism.{{cite book |last=Foucault |first=Michel |title=The Birth of Biopolitics: Lectures at the College de France (1978–9) |translator-first=Graham |translator-last=Burchell |editor-first=Michael |editor-last=Senellart |edition=1st Picador Paperback |location=New York |publisher=Palgrave MacMillan |year=2010 |pages=107–110 |title-link=The Birth of Biopolitics}} It is also seen as a third way between collectivism and laissez-faire liberalism.{{cite journal |last=Bonefeld |first=Werner |url=https://eprints.whiterose.ac.uk/67263/1/s1_ln11019519_896202810_1939656818Hwf15952 |date=2012 |title=Freedom and the Strong State: On German Ordoliberalism |journal=New Political Economy |volume=17 |issue=5 |pages=633–656 |issn=1469-9923 |doi=10.1080/13563467.2012.656082 |s2cid=154374055 |access-date=2022-12-15 |archive-date=2022-12-15 |archive-url=https://web.archive.org/web/20221215114459/https://eprints.whiterose.ac.uk/67263/1/s1_ln11019519_896202810_1939656818Hwf15952 |url-status=live }}

While the ordoliberal idea of a social market is similar to that of the third-way social democracy advocated since the 1990s by the likes of the New Labour government (especially during the premiership of Tony Blair), there are a few key differences. Whilst they both adhere to the idea of providing a moderate stance between socialism and capitalism, the ordoliberal social market model often combines private enterprise with government regulation to establish fair competition (although German network industries are known to have been deregulated),{{citation |contribution=Germany's Social Market Economy: How Sustainable is the Welfare State? |contribution-url=http://www.ifw-kiel.de/das-ifw/organisation/siebert/siebert-pdf/Washington2003.pdf |first=Horst |last=Siebert |author-link=Horst Siebert |title=Paper presented at the American Institute for Contemporary German Studies, Johns Hopkins University |date=28 May 2003 |title-link=Johns Hopkins University |access-date=9 November 2012 |archive-date=9 March 2013 |archive-url=https://web.archive.org/web/20130309010513/http://www.ifw-kiel.de/das-ifw/organisation/siebert/siebert-pdf/Washington2003.pdf |url-status=dead }} whereas advocates of the third-way social democracy model have been known to oversee multiple economic deregulations. The third way social democracy model has also foreseen a clash of ideas regarding the establishment of the welfare state, in comparison to the ordoliberal's idea of a social market model being open to the benefits of social welfare.{{cite web |url=http://wirtschaftslexikon.gabler.de/Definition/soziale-marktwirtschaft.html |title=Soziale Marktwirtschaft |trans-title=Social market economy |website=Gabler Wirtschaftslexikon |language=de |access-date=2013-08-01 |archive-date=2018-03-16 |archive-url=https://web.archive.org/web/20180316161403/http://wirtschaftslexikon.gabler.de/Definition/soziale-marktwirtschaft.html |url-status=live }}

Ordoliberals are also known for pursuing a minimum configuration of vital resources and progressive taxation.{{cite web |url=http://toulouse-justice-2011.fr/fullpapers/b4woersdorfer.pdf |title=Archived copy |access-date=2012-11-09 |url-status=dead |archive-url=https://web.archive.org/web/20131203004642/http://toulouse-justice-2011.fr/fullpapers/b4woersdorfer.pdf |archive-date=2013-12-03}} The ordoliberal emphasis on the privatization of public services and other public firms such as telecommunication services; wealth redistribution and minimum wage laws as regulative principles makes clear the links between this economic model and the social market economy.{{cite book |url=https://books.google.com/books?id=e2UIjKCfRosC&pg=PA13 |title=Greening EU Competition Law and Policy |first=Suzanne |last=Kingston |publisher=Cambridge University Press |year=2011 |access-date=1 August 2013 |isbn=9781139502788 |via=Google Books}}

Wilhelm Röpke considered ordoliberalism to be "liberal conservatism", against capitalism in his work {{lang|la|Civitas Humana}} ("A Humane Order of Society", 1944). {{lang|de|Alexander Rüstow|italics=no}} also criticized laissez-faire capitalism in his work {{lang|de|Das Versagen des Wirtschaftsliberalismus|italic=yes}} ("The Failure of Economic Liberalism", 1950). The ordoliberals thus separated themselves from classical liberals{{cite journal |last=Friedrich |first=Carl J. |year=1955|title=The Political Thought of Neo-Liberalism |journal=American Political Science Review |volume=49 |issue=2 |pages=509–525 |doi=10.2307/1951819 |jstor=1951819 |s2cid=145643424}} and valued the idea of social justice.{{cite book |first=Walter |last=Oswalt |chapter=Zur Einführung: Walter Eucken (1891–1950) |trans-chapter=Introduction: Walter Eucken (1891–1950) |editor1-first=Nils |editor1-last=Goldschmidt |editor2-first=Michael |editor2-last=Wohlgemuth |title=Grundtexte zur Freiburger Tradition der Ordnungsökonomik |trans-title=Basic texts on the Freiburg tradition of order economics |isbn=978-3-16-148297-7 |page=128 |language=de |year=2008|publisher=Mohr Siebeck }} "Social security and social justice", wrote {{lang|de|Eucken|italic=no}}, "are the greatest concerns of our time".{{Cite book |author=OSO |title=Ordoliberalism: A New Intellectual Framework for Competition Law |publisher=Oxfordscholarship.com |date=1999 |doi=10.1093/acprof:oso/9780199244010.001.0001 |isbn=9780199244010}}

{{lang|fr|Michel Foucault|italic=no}} also notes the similarity (beyond just historical contemporaneity) between the Ordo/Freiburg school and the Frankfurt School of critical theory, due to their inheritance from {{lang|de|Max Weber|italic=no}}. That is, both recognise the "irrational rationality" of the capitalist system, but not the "logic of contradiction" that Marx posited. Both groups took up the same problem, but in vastly different directions.{{cite book |last=Foucault |first=Michel |title=The Birth of Biopolitics: Lectures at the College de France (1978–9) |translator-first=Graham |translator-last=Burchell |editor-first=Michael |editor-last=Senellart |edition=1st Picador Paperback |location=New York |publisher=Palgrave MacMillan |year=2010 |title-link=The Birth of Biopolitics |page=105}} The political philosophy of Ordoliberals was influenced by Aristotle, {{lang|fr|de Tocqueville|italic=no}}, {{lang|de|Hegel|italic=no}}, {{lang|de|Spengler|italic=no}}, {{lang|de|Mannheim|italic=no}}, {{lang|de|Weber|italic=no}}, and {{lang|de|Husserl|italic=no}}.{{cite book |last=Foucault |first=Michel |title=The Birth of Biopolitics: Lectures at the College de France (1978–9) |translator-first=Graham |translator-last=Burchell |editor-first=Michael |editor-last=Senellart |edition=1st Picador Paperback |location=New York |publisher=Palgrave MacMillan |year=2010 |title-link=The Birth of Biopolitics |pages=103–105}}

Criticism

According to {{lang|de|Sebastian Dullien|italic=no}} and {{lang|de|Ulrike Guérot|italic=no}}, ordoliberalism is central to the German approach to the European sovereign-debt crisis, which has often led to conflicts with other European countries.{{cite book |first1=Sebastian |last1=Dullien |first2=Ulrike |last2=Guérot |author2-link=Ulrike Guérot |title=The Long Shadow of Ordoliberalism: Germany's Approach to the Euro Crisis |url=http://www.ecfr.eu/page/-/ECFR49_GERMANY_BRIEF_AW.pdf |isbn=978-1-906538-49-1 |location=London |publisher=European Council on Foreign Relations |year=2012 |access-date=2012-04-10 |archive-date=2016-10-24 |archive-url=https://web.archive.org/web/20161024092417/http://www.ecfr.eu/page/-/ECFR49_GERMANY_BRIEF_AW.pdf |url-status=live }}

References

External links

{{lang|de|[http://www.asm-ev.de/ Aktionsgemeinschaft Soziale Marktwirtschaft]|italic=no}}, German Ordoliberal association.
{{lang|de|Walter Eucken Institut|italic=no}}, German research institute in the tradition of ordoliberalism.
{{lang|it|[http://www.tocqueville-acton.org Centro Studi Tocqueville-Acton]|italic=no}}, Italian Centre Studies on Social Market Economy and liberal tradition in the light of Catholic social thought.
[https://www.degruyter.com/view/j/ordo ORDO official website]
[https://www.jstor.org/journal/ordojahrordnwirt Back issues of ORDO Yearbook Vol. 1, Vol. 65 (1948–2014)]

Category:Economic liberalism

Category:Economic policy in Europe

Category:Economy of Germany

Category:Freiburg School

Category:Ideologies of capitalism

Category:Liberalism

Category:Political ideologies