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 but does not advocate for a welfare state (and did not advocate against one either).[1]
Ordoliberal ideals became the foundation of the creation of the post-World War II German social market economy and its attendant Wirtschaftswunder. The term "ordoliberalism" (German: Ordoliberalismus) was coined in 1950 by Hero Moeller, and refers to the academic journal ORDO.[2]
Linguistic differentiation[edit]
Ordoliberals separate themselves from classical liberals. Notably Walter Eucken, with Franz Böhm, founder of ordoliberalism and the Freiburg School,[3] rejected neoliberalism.[4]
Ordoliberals promoted the concept of the social market economy, which calls for 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. Ironically, the term neoliberalism was originally coined in 1938 at the Colloque Walter Lippmann by Alexander Rüstow, who is regarded as an ordoliberal today.[5]
Because of the connected history, ordoliberalism is also sometimes referred to as "German neoliberalism". This 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 Michel Albert 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[edit]
The theory was developed from about 1930 to 1950 by German economists and legal scholars from the Freiburg School, such as Walter Eucken, Franz Böhm, Hans Grossmann-Doerth, and Leonhard Miksch.[6]
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.[7]
Since the 1960s, ordoliberal influence on economics and jurisprudence has significantly diminished;[8] 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 Walter Eucken Institut and the Stiftung Ordnungspolitik are engaged in the ordoliberal tradition.
Germany's Free Democratic Party (FDP) is a traditional and committed supporter of ordoliberalism,[9] the party having been influenced by the economic theories of Wilhelm Röpke and Alexander Rüstow.[10] Historical FDP party grandee Otto Graf Lambsdorff, who served as Federal Minister of Economics, was a particular proponent of ordoliberalism.[11]
Criticism[edit]
According to Sebastian Dullien and Ulrike Guérot, ordoliberalism is central to the German approach to the European sovereign-debt crisis, which has often led to conflicts with other European countries.[27]