CHAPTER 1

From the Ashes of the Western Liberal Order

It might be too bold to claim that ordoliberals’ insights regarding trends in the Western liberal order conveyed a historical philosophy per se, but this expression captures the spirit of ordoliberals’ intentions. However, I suggest that ordoliberals formulated a “historical diagnosis,” or a historical interpretation of the present that aims to reveal its ills and how to cure them.¹ The historical diagnostic shaped by Eucken and Röpke, among others, rested on an institutional dynamic of power because such power was the central factor in ordoliberals’ explaining the transition from a primarily liberal economic order to planned systems in Western societies in general and in Germany in particular.

Ordoliberal literature is rooted in the economic, political, and legal events of the interwar period. The primary factors at this time include the cartelization of the German economy, a crisis involving parliamentary representative systems, and the development of the state’s economic activities during a period of hyperinflation (1921–1924) and the Great Depression (1929–1932). However, the ordoliberal historical diagnosis aimed to encompass the modern era from the late eighteenth century. Ordoliberals perceived these interwar issues as the manifold factors of a generalized social crisis. Overall, this phenomenon would simultaneously affect all Western societies, albeit to varying degrees. Furthermore, it concerned the political, economic, and social spheres—and even the moral and spiritual—in organic relationships of mutual interdependence on domestic and international scales (Röpke 1942b). The generalized social crisis was ultimately considered a crisis of civilization, or a crisis of modernity itself marked by “massification” (Vermassung) and the loss of moral and religious values (nihilism), which exacerbated nationalism and the “will to power.” Although this crisis is thematically and particularly present in works by both Wilhelm Röpke and Alexander Rüstow, it also infused ordoliberal reading altogether (Commun 2014; Fèvre 2015; Wörsdörfer 2014).

Given the scale and originality of the phenomenon described by the ordoliberals, the need for a new analytical framework to inform economic policy seemed imperative:

The fast rise of technological progress, industrialisation, massification, and urbanisation is forcing us to pose economic policy problems differently. Yesterday’s ideas are old and outdated. There is a gap between reality and economic policy ideologies, and appreciating this gap is vital to the success of economic policy. (Eucken 1951, 28)

At this stage, we are less interested in the symptoms of the crisis than in the causal explanations ordoliberals provided. Ordoliberals draw explanatory factors from the analysis of past and present European political and economic systems: particularly the “laissez-faire” liberalism of the nineteenth century and the planned economies of the first part of the twentieth century, whether in their Soviet, fascist, or, especially, national-socialist forms.

Ordoliberals have discussed their predecessors (such as Smith, Marx, and Schmoller) and contemporaries (Sombart, Schumpeter, or Keynes) in a similar perspective to Karl Marx, who sought in the English political economy a reflection of the state of capitalist relations. Eucken clearly evidenced this in his “Digressions on Ideologies,” which closed his 1932 founding article entitled “Structural Transformations of the State and the Crisis of Capitalism.” In this article, Eucken stated the following:

Major historical processes are always accompanied by ideologies that wish to seem good and sensible. So it was with the reconstruction of the international system of states and the domestic state structure, whose decisive impact upon on the current situation of capitalism in the old capitalist countries was wrapped in ideologies that sought to justify and promote it. (Eucken 1932b, 69)

Despite the Marxist-like (materialist) formulation Eucken assumes in this passage, it is the last aspect of promotion or encouragement that takes precedence in an ordoliberal analysis. Thus, and in contradiction to Marxism, economic discourse occurred less as a legitimization of real conditions than as its architect. Accordingly, the ordoliberals considered that they must first and foremost win the “battle of ideas” to change the existing state of affairs. In the first half of the thirties, Röpke wrote many articles to invalidate the assumptions—and therefore, the political recommendations—of the theories of economic imperialism (1933, 1934b), fascist corporate economics (1935), and romantic socialism (1936b, 1936c).

Drawing parallels with Marx is not merely conjecture, as ordoliberals designated him a primary opponent in the context of the interwar period through his modern followers such as Sombart and Schumpeter. Ultimately, the ordoliberals aimed to intellectually resist what they called scholars’ “anti-capitalist attitude,” which found a particularly fruitful relay in the public opinion of the “masses” (Eucken 1932b, 58; see also 1932a, 1933; Röpke 1935, 85). Ordoliberal accusations lay less in the fact that planning would constitute a harmful application of Marxist principles than in the propagation of a mentality that eased its development. This is also what the ordoliberals described as a “relativist” and “fatalistic” intellectual attitude (Böhm et al. 1936, 18).² However, the final analysis indicates that the root causes of the rise of interventionism and economic planning are to be found in the inherent weaknesses of nineteenth-century liberalism and the idea of natural harmony that the Classics would have spread. In line with the central claim of this book, the starting point for the ordoliberal historical diagnosis must be sought in an analysis of power relations. As Eucken (1940b, 263) claimed, “to understand (Verstehen) the actual economic reality of the past, present, and probably throughout the future,” it is necessary to “understand economic power and to perceive the striking uniformities in the processes of groups fighting for economic power.”

1.1 An Anthropology of Power

The economist’s view of individual behavior is typically limited to a utilitarian optimizing calculation. However, ordoliberals’ perceptions of human behavior were also based on an anthropological hypothesis, in that individuals are driven by a compelling lust for power.

1.1.1 The Individual Lust for Power

Ordoliberals posited that the central principle of mankind involved a desire to acquire power. Thus, the struggle for power can be considered a driving force in the historical process. Furthermore, Eucken did not ask the question from a specific economic perspective, but within a global historical outlook:

The pursuit of power is a vital instinct of man. At the same time, it is a larger and more constructive historical force. Sometimes at the service of a higher value. Often, however, the lust for power (Lust an Macht) is itself the origin of the will to power (Willens zur Macht). Frequently, the strongest individual is precisely the one who disregards moral and legal principles. (Eucken 1940c, 479)

Eucken borrowed Nietzsche’s expression and embraced a perspective opened by the ideas of Schopenhauer and Spencer. As the first part of the quotation indicates, the quest for power can also lead to positive social outcomes. Moreover, what Röpke (1942b, 167) called the “natural conflict of interests” between producers and consumers, but also among producers within competitive markets, enables impersonal coordination through market mechanisms, in line with classic liberal views.

However, this “lust for power” for ordoliberals simultaneously involved the condition of possibility and the endogenous degenerative principle of a liberal market economy. In this sense, the search for rent and market power positions was a fundamental feature of the modern period and an instinct that the ordoliberal political economy had to address. Indeed, Eucken (1949, 222) stressed that there was “always” and “wherever possible” an “omnipresent, strong and irrepressible urge to eliminate competition and to acquire a monopolistic position.” Concluding that “everyone espies possibilities of becoming a monopolist” (Eucken 1949, 222; see also Röpke 1942d, 169; Böhm 1947, 134). As individuals focused on their particular interests—and by doing so violated morality, freedom, and justice from an ordoliberal perspective—they undermined the foundations of a competitive order that safeguarded the general interest.

In ordoliberal thought, individuals’ “lust for power” is a primary acting historical force. According to Eucken (1951, 38), “History was full of abuses of power. The possession of power causes arbitrary actions, threatens the freedom of individuals, and destroys mature and good orders.” However, ordoliberals’ perceptions of mankind were not solely reduced to an essentialist quest for power because their humanist (Kantian) and religious values (Protestant, in particular) forbid such radical judgments.³ Since the search for power is the central explanatory factor in the ordoliberal historical diagnosis, the ordoliberals sought to make their contemporaries aware of the fact that political, broadly institutional, and even ideological conditions can lead to particular individual behaviors among manifold potentialities. As Röpke noted, man would be “a crystal, whose feelings, instincts, and passions are the innumerable facets, some positive, some negative, some contributing to social integration and others to social disintegration, and which glitter according to the feeling appealed by the circumstances” (Röpke 1942d, 94, emphasis added).

Therefore, the individual’s “lust for power” less involves an immutable essence of mankind than a normative principle that manifests itself as an adequate, valued, and gradually selected behavior. It emerges from ordoliberal works that the individual has been encouraged to seek his own interests and “abandon himself to the demon of his passion” (Böhm et al. 1936, 23). However, as long as this instinct is confined to the individual level, the compelling force of the competitive economic order prevails: the process of degeneration is initiated when a coalition of interests exists within groups. As Eucken (1951, 33) stressed, “group selfishness” rather than individual selfishness was at the center of the ordoliberals’ interpretation of power relations.

1.1.2 Economic Concentration and Struggles for Power

According to the ordoliberals, the increasing concentration of economic power was a fundamental aspect of German economic history since the beginning of the twentieth century. This trend occurred due to “the increased importance of large companies, giant industries and monopolies of all kinds” (Röpke 1942b, 179; see also Eucken 1951, 31). Therefore, analyzing these “power groups” was an essential scientific task that Eucken believed was often neglected in academic studies. Historians and economists alike “seem always unable to appreciate how much economic history was full of brutal power struggles” (Eucken 1940b, 263–264).

From the economic theory perspective, economic power overlaps the market power resulting from specific supply or demand structures—such as monopolies, duopolies, or oligopolies, among others—which will be further discussed in Chapter 3. Röpke and Rüstow posited that companies’ size was an inherent economic factor in firms’ power, while Eucken perceived this as simply one among several explanatory factors, without any indication of necessity. In the political sphere, economic power groups then constrained and influenced the course of parliamentary or governmental decisions. Lobbying would ipso facto divert political institutions from their missions of general interest.

Politically, it was essential for discourse on the neoliberal anti-monopoly to clearly identify the origin of monopolies’ formation: are they born from state action, or are they rather “spontaneous” structures that resulted from the competitive economic process itself? This question arose during the 1938 Walter Lippmann Colloquium (WLC) held in Paris.⁴ Two contradictory positions were presented in a session entitled “Is the decline of liberalism due to endogenous causes?” that excluded a consensus among neoliberals. On the one hand, the French entrepreneur and essayist Auguste Detœuf argued that the concentration of companies and emergence of monopolies were phenomena intrinsic to the logic of liberalism as it has historically developed. On the other hand, Ludwig von Mises (see also 1949, 385, 716–717) claimed that only exogenous state action promoted the creation of cartels and monopolies. Therefore, the category of power was not analytically relevant without state intervention in Mises’s conceptualization of the market economy, as Kolev (2013) stressed.

Röpke and Rüstow’s positions in this debate were ambiguous. Even within his own books, Röpke mentions the inevitable development of monopolies while simultaneously noting the state’s predominant role in the concentration of companies (1936a, 8; 1942b, 302; 1944a, 272). According to Röpke, concentration did not necessarily follow a logic of efficiency but was instead the result of internal and irrational psychological motives: size, power, and/or external political interference. The latter involved the artificial establishment of certain monopolies and indirectly misguided legislation, such as tariffs, quotas, and anti-bankruptcy laws, or those relative to patent, cartel, and public limited company laws. Similarly, Eucken pointed out that this concentration resulted from a mixture of “the pursuit of power, the tendency towards monopoly formation, and economic and legislative policy” (1950b, 13).

Ordoliberal literature presents two separate types of economic concentration. On the one hand, different firms could be legally and financially centralized under the same principal’s authority, whether a natural or legal person, which gives rise to a monopoly (Röpke 1944a, 272). Therefore, this first type of concentration is characterized by the fact that “many works are carried out under a common direction” (Eucken 1950b, 10) following both a horizontally and vertically concentrated logic. This legal and financial centralization would be less an economic phenomenon than a managerial process of collecting productive forces under the same leadership of vertical and/or horizontal integration. On the other hand, the “internal technical centralisation of an operating unit” involved the question of firms’ size (Röpke 1944a, 273). A technical concentration can follow a logic of efficiency, such as capital and technological progress, but Röpke insisted that firms had excessively grown beyond their optimal size; he posited that this explained why firms widely invested “the company’s savings to self-finance its facilities beyond the limit set by the interest rate that would have been paid if the same capital had to be raised on the market” (Röpke 1942d, 229).

Regardless of whether ordoliberals perceived a company’s monopolistic nature and size as two different phenomena, they are nevertheless linked as both phenomena are rooted in the desire to stabilize and acquire economic power. Furthermore, the surest way to eliminate any competitive threat involved conducting a “monopolistic war strategy,” or absorbing other economic units to form trusts (Böhm 1961, 40–41). Here, Böhm highlighted an important point: it was less the concrete exploitation of a monopolistic power (e.g., through generating excessive profits) than the struggle for economic power (rent-seeking behaviors and their accompanying dynamic processes) that posed the most significant threat to the constitutional order and the democratic system. To an extent, the ordoliberals considered this struggle toward the monopoly as a social cost, or the destruction of value at the expense of efficiency as well as individual freedoms and eventually the democratic system.

The following section will demonstrate that the ordoliberal positioning followed a logic of criticism against deleterious liberal principles, distant from the more sympathetic appreciation of nineteenth-century liberalism that can be found in works by Hayek or Mises, for instance. Rüstow ferociously described the latter as a “paleo-liberal” in the margins of the WLC.⁵ However, the intellectual critique of capitalism was occupied by historicism, close to Marxism. Thus, ordoliberals opposed Marxist views on the process of concentration, in that the emergence of monopolies, cartels, and company mergers originated in the development of production techniques or, specifically, in the rise of technological progress inherent in the growth of capitalism.

1.1.3 Technical Progress as an Antagonistic Factor to Concentration

Eucken’s article “Technique, Concentration, and Order of the Economy” (“Technik, Konzentration und Ordnung der Wirtschaft”) was published in the 1950 issue of the journal Ordo. This article clarified the ordoliberal positioning in terms of a historical interpretation of capitalism’s development relative to the theme of technological progress.⁶ Furthermore, Eucken denied any causal link between the modern technological boom and the deterioration of competitive economic relations; therefore, he opposed the thesis that “the concentration of production and economic power derives from modern technology, and that with it the need for competition in the modern economy disappears” (Eucken 1950b, 4). This law of concentration was formulated in the wake of work by Sismondi, the Saint-Simonians, and Marx and is reflected in Schumpeter’s contemporary writings.⁷ This thesis, Eucken stressed, was also widespread in civil society and led to a political justification for cartel formation, ad hoc interventionism, and, ultimately, central planning. For ordoliberals, a causal relationship existed between concentration and competition, but, unlike Schumpeter’s reading, technological development would drive competitive markets to evolve against monopolistic concentration. For Röpke (1936a, 7), it was clear that “the recent development in the technique of machinery has, in many directions, exerted even a lowering influence on the optimum size” of firms (see also Eucken 1950b, 5–6).

First, technological progress—and particularly in transport and telecommunications—has led to a decrease in the geographical distances between markets and, therefore, to a decrease in the local monopoly’s power. This phenomenon has functioned at the local, national, and even supranational levels by shaping a “virtually” unified global market (Röpke 1942d, 14, emphasis in original). Specifically, the labor market has experienced a thorough change in its structure. As Eucken (1950b, 6) noted, “workers now have the opportunity to choose from a large number of employees” and concluded that “competition, once rare in this field, is alive and well.”

Second, Eucken (1950b) observed an intensification of “substitution competition,” which resulted in a high elasticity of demand to the price of market goods. Consequently, even if a market structure was monopolistic, the possibility of substituting one good for another placed the monopoly in a situation similar to that of competitive markets. This type of substitution competition was chiefly encouraged by the emergence of new raw materials, such as plastics, petrochemicals, and textiles.

Third, technological progress resulted in greater adaptability in production. The faculty to adjust production must be defined, according to Eucken (1950b, 7) as “the ability for a company to transfer its production from one market to another.” Although fixed costs increased in the modern period, this does not mean that it was impossible to reorient capital. On the contrary, for Eucken (1950b, 9), “fixed costs” did not coincide with “fixed production,” and the German experience of rapidly reorienting capital for military purposes has reinforced him in this view.⁸ While “the tension between growing competition and its opponents was a fundamental fact of recent economic history” (Eucken 1950b, 16), it is nevertheless necessary to discover the historical foundations of this tension. Based on the three previously mentioned arguments, the ordoliberals rejected an explanation of technological change in favor of one linked to the industrial dynamics of concentration, which had important effects on forming the political-economic order.

1.2 From Historical Liberalism to Economic Planning: The Other Story of the Great Transformation

The ordoliberal anthropology of power leads one to identify an institutional dynamic with a global explanatory scope, and thus, the following section restores the ordoliberal narrative regarding this historical process. It is marked by a shift from the nineteenth century’s politically and economically liberal attitude to the interventionism and economic planning that developed in the first part of the twentieth century. Ordoliberals discerned three successive periods (Eucken 1932b, 1951; Röpke 1942d). The mercantilist era of the seventeenth and eighteenth centuries was followed by a liberal age from 1815 to 1914, then by a stage of contemporary political experimentation that began in 1919. The following focuses on a two-phase presentation highlighting the transitions from one era to the other in general and the case of Germany in particular.

1.2.1 Historical Liberalism, Laissez-Faire, and the Crisis of Capitalism

The study of liberalism or capitalism particularly resonates in German circles. Following the writings of List, Marx, or the historical schools,⁹ the ordoliberals were part of a long critical tradition, differentiated by their efforts to preserve the spirit of liberalism while radically dissociating themselves from its historical development.

Although Eucken sometimes used the term “capitalism” (Kapitalismus) in his writings, he was incredibly suspicious about this concept because he perceived capitalism as a false concept ideologically masking reality rather than revealing it. The notion of capitalism rested only on “a great historical fact”—the Industrial Revolution—which gradually spread to all economies worldwide (Eucken 1940b, 93). The problem with the term “capitalism” was that scholars hypostatically used it; capitalism essentially became a “personified substance” with its own properties of action, like a true and acting “living being” (Eucken 1940b, 330, n. 23). Again, Eucken found this attitude in certain scientific perspectives, such as those expressed by Marxists, Sombart, and Schumpeter, which were even more problematically infused in public opinion.

However, ordoliberals perceived economics as one of several factors that determine all realities of society, whether religious, social, or political. On the contrary, they believed the economy must be incorporated into a global process as simply one element included in relationships of equivalence and interdependence. In this sense, the rejection of the capitalist concept was tantamount to rejecting Marxist materialism. Ordoliberals aimed at a multifactorial analysis of historical change:

The phenomenon called today the “crisis of capitalism” can only be explained in a historical-universal perspective coupled with the analysis of economic orders (Denken in Wirtschaftsordnungen).¹⁰ The vast revolution in economic forms which we are experiencing cannot be understood simply economically. . . . To enquire about the essence of “capitalism” is to frame the question unhistorically and far too narrowly. It is still more unhistorical to believe in some compelling process of development of the essence of capitalism. (Eucken 1940b, 95–97, emphasis in original)

Therefore, Eucken perceived the concept of capitalism as too reductive insofar as it ignores or refuses the influence of other spheres of society within the overall process. However, the concept is simultaneously too indeterminate as it does not accurately reflect the structures or forms of economic reality (e.g., if the economy is managed by competitive, monopolistic, or state-run processes). Eucken (1940b, 330) concluded that “concepts like ‘capitalism’ or ‘socialism’ are no substitute for the morphological study of the real economic world.” From this perspective, let us now examine how the ordoliberals analyzed the development of the liberal period.

In the same vein as Eucken, Röpke also belittled the term “capitalism,” which he considered too vague. Equally careful not to simplify it, Röpke defined capitalism as the “historical form of the market economy, or rather the overall historical combination in which it occurred in the nineteenth and twentieth centuries, but not to characterise the principle of order of the market economy as such” (Röpke 1944a, 33). Accordingly, Röpke (1942b) spoke of “historische Liberalismus,” or “historical liberalism,” which encompasses a particular experience while going beyond the empirical connotation of the term “capitalism.”

The ordoliberals’ denying of the term “capitalism” must be grasped through their opposition to historicism. Sombart’s book Der moderne Kapitalismus helped to spread the use of the word at the turn of the century, although he did not coin the phrase. In line with all ordoliberals, Röpke understood historical liberalism as the market economy’s material form in the nineteenth century, which for him approximated the laissez-faire approach assimilating the Manchester School’s doctrine and utilitarianism. This also meant first and foremost “economic freedom, i.e. freedom of the market system based upon predominant competition” (Rüstow 1942, 268).

Ordoliberals perceived this laissez-faire liberalism as deviating from the original liberal doctrine formulated by Alexis de Tocqueville and Adam Smith. To some extent, the terms “capitalism,” “historical liberalism,” or “laissez-faire” ultimately tend to merge into ordoliberal writings and therefore are synonymous. These terms refer to different aspects of the same principles of economic organization and functioning that dominated European countries from 1815 to 1914. Thus, how did ordoliberals understand the relationship between the state and the market in the laissez-faire era? In short, what are the characteristics of this liberal period as it has historically developed? Eucken contradicted standard interpretations by insisting on legal support for the economic activities that “laissez-faire” liberalism promoted:

It is usually said to have been a period of economic freedom from state influence . . . but this view is completely wrong. The early twentieth century was, in fact, a period when the state introduced legislation strictly defining and limiting the rights property, contract and association, as well as laws governing patents and copyright. At that time Germany, like other states, possessed a constitution designed to create an efficient machinery of state and to protect individual freedom. . . . The daily workings of every firm and household proceeded within the framework of legal norms laid down by the state, whether it was a question of buying or selling, being granting credit or engaging a worker. (Eucken 1951, 29)

What Eucken does not mention in this excerpt is that defining laissez-faire as a state governed by the rule of law (Rechtsstaat) also highlights this single approach’s inadequacy in the state’s role in a liberal market economy. Therefore, it was appropriate for ordoliberal thinking to determine “the truth and error in the liberal dogma of the automatic harmony of interests” (Röpke 1942b, 169).

While maintaining certain fundamental liberal principles, the ordoliberals sought to update liberalism, which required a distancing from liberalism as it has historically been achieved. Röpke insisted on one aspect that was widely accepted among ordoliberals: that they should not be “dogmatically tied to the economic programme of historical liberalism” as it is “not really possible to ignore the fact that the collapse of the liberal-capitalist world order was to no little extent also caused by its own deficiencies, misdirected developments and perversions” (Röpke 1942b, 142). As such, the ordoliberal project must be analyzed as a “fundamental revision” of liberal principles to inform the “renaissance of liberalism” in its political, ethical, and economic dimensions (Rüstow 1942, 278; see also Röpke 1944a, 33).

1.2.2 Grandeur and Misery of the Liberal Era

1.2.2.1 The Separation of the State and Commercial Spheres

In Eucken’s view, the mercantilist period resulted in the emergence of a dissociation—which induces a specification and rationalization of relations—between the spheres of the modern state and that of society (Gesellschaft). While this distinction was still fragile and imperfect, it developed according to a paradoxical historical trend that Eucken outlined: following the French Revolution, the “democratization” (Demokratisierung) of nation-states strengthened the individual’s power over the state through universal suffrage, from which the state subsequently derived “new possibilities for the extension of its power” (1932b, 55). Nevertheless, the state has remained essentially absent from the economic sphere and from the market economy in its capitalist form, and particularly due to the influence of the precepts of separating—and restricting—powers at the center of the emerging political liberalism.

Nevertheless, some powerful groups in both the mercantilist and liberal eras forced the state to intervene in favor of their partisan interests through parliamentary assemblies. Furthermore, ordoliberals noted that “on a very large scale massive groups of economic power emerged, and these groups shaped the law (Recht) in a completely unilateral way” during the nineteenth century (Böhm et al. 1936, 17). On this point, one can find congruencies between the ordoliberal perspective and Adam Smith’s.¹¹ Moreover, in The Wealth of Nations, Smith focused on the commercial sphere’s deleterious influence on politics, therein increasing the spirit of conquest. Smith (1776, IV.iii.2) also mentioned the “spirit of monopoly,” but this was not at the center of individual behavior as ordoliberals saw it; rather, Smith used it to specifically describe the “mean rapacity [and] the monopolising spirit of merchants and manufacturers,” and especially in the context of the mercantilist period.

Despite economic interests’ influence on politics, the ordoliberals believed that the separation initiated in the mercantilist era between the state and economic spheres, which partially continued in the liberal age, was still firmly sealed. Therefore, this lobbying remained marginal at that time. In the nineteenth century—which was also identified as the “great liberal century”—international trade stability was predominant and ensured by peaceful diplomatic relations and formal and informal institutions prevailing between states through treaties and certain tacit rules. These conditions of cosmopolitan foreign policy in the sense of Kant provided a prosperous framework for the multiplication of trade, capital movements, and international divisions of labor (Eucken 1932b, 63–65; Röpke 1942d, 73–74). For the ordoliberals, it was subsequently England’s international domination—the Pax Britannica (1815–1870)—that considerably contributed to capitalism’s vigorous development in terms of increased wealth and industrial development, although Germany experienced this fallout later, beginning in 1850.¹²

1.2.2.2 The Natural Harmony of the Classics Challenged

Ordoliberals perceived the possibility of a new liberal agenda only through a distancing from historical liberalism. It is worth emphasizing the attention and scope with which ordoliberals have pursued this endeavor throughout their writings, as it is a part of their historical diagnosis. The first liberal authors were concerned with encouraging the dissolution of old feudal social structures to replace them with market relations, which were considered more egalitarian and therefore more just. The ordoliberals’ beliefs highly paralleled the idea that “a free enterprise regime was necessary for a free, prosperous, and equitable society” (Van Horn 2009, 210). However, they noted that some liberal principles have undermined the foundations of the social order on which they were originally built. As such, Röpke replicated the reasoning he considered mistaken:

The competitive market appeared to be a “philosopher’s stone,” which turned the base metal of callous business sentiments into the pure gold of common welfare and solidarity; social wisdom and morality were the surprising products of countless individual actions not primarily commanded by either; and private vices were turned into public virtues. (Röpke 1942d, 67)

Röpke’s last formula clearly referred to the subtitle of Bernard Mandeville’s Fable (1714). From an ordoliberal perspective, the classics and their successors were wrong to consider the competitive market as a sociologically and politically autonomous institution. The market depends on its framework, which consequently influences and modifies it, as Rüstow (1942, 274) emphasized. However, the market could not provide the extra-economic framework of the moral and institutional conditions necessary for its function, nor was it able to spontaneously generate adequate economic regulations and particularly state regulations. Both shortcomings are particularly visible in Germany’s national system as well as in international monetary systems (Miksch 1948, 322).

Therefore, laissez-faire have led to the destruction of economic freedom, in contradiction to its original objectives, due to currency fluctuations, the rationing of a productive supply, and inadequate labor legislation. The ordoliberals unanimously opined that historical liberalism had seminally failed as it did not seize the differences in nature between the internal mechanics of individual interactions (the process) and the “rules of the game” (Spielregeln) that govern this process:

This was the mistake made in the principles and policies of the laissez-faire society or the free economy in the old style: It left both the battle for establishing the rules of the game, the framework of the forms of the economic order, as well as the daily struggle for quantities and prices, up to the individual. (Eucken 1949, 223; see also 1951, 93; Miksch 1948, 317; Röpke 1944a, 99)

No proper and legitimate intervention criteria have discriminated between the state’s missions and private initiatives in historical liberalism: this doctrine opposed individuals to the central state instead of emphasizing what ordoliberals perceived as complementarity. In short, “the economic order and its shaping were not regarded as a special responsibility of the state” by the first liberals (Eucken 1951, 29).

From an internal liberal thought perspective, the originality of the ordoliberals’ critique of laissez-faire was based on an attempt to discredit the private sector (or primarily landowners and captains of industry). As the economic order was “mainly left to private enterprise,” it favored the development of monopolies (Eucken 1951, 30). As we have previously noted, ordoliberals referred to individual instincts—the instinct to seek power in the first place—as corresponding with human nature. Thus, they followed an argumentative line that on this point seems generally closer to Thomas Hobbes¹³ than to the classical liberal tradition, and Smithian in particular, unlike the reading proposed by Helge Peukert (2000, 120). Smith was also criticized for having “largely overestimated the harmony of a self-regulated economy” (Miksch 1937a, 147), notably by postulating that such social harmony tended to merge with economic equilibrium in its contemporary sense (Miksch 1948, 316). For Röpke (1942b, 72), “the natural order”—understood as “the market automatically regulated by competition”—constituted a rationalist and naturalist dogma propagated by historical liberalism, which ultimately proved no different from social Darwinism.

In contrast, ordoliberals argued that the competitive economy was less a factor born from the functioning of markets’ trade relations than the artificial product of civilization and its “advanced” values. Miksch (1948, 338) conveyed the market economy’s fragility even more strongly in the aftermath of the Second World War, as did Böhm:

A competitive economy never arises automatically, but is the fruit of a highly developed social civilisation and of a greater-than-ordinary exercise of political will, love of liberty, and insight. Only free communities can achieve this success. (Böhm 1954, 159, emphasis in original)

By a circular reasoning that places the economy of exchange at the center of the social edifice, the free society was consequently the cause as well as the result of the competitive order as conceived by ordoliberalism, with two consequences. First, this reasoning urges liberals to consider the competitive market as a necessary condition for a free society—but not sufficient and extremely fragile. Second, this circular causality will serve as an argument for defending a certain capitalist market model in the Cold War’s East–West polarization, as discussed in Chapter 5.

1.2.2.3 Germany and Bismarck’s Legacy

From an ordoliberal perspective, Otto von Bismarck’s accession to the post of Chancellor of the Empire in 1871 disrupted the balance between Germany’s state and market spheres. First, from an incredibly feudalist perspective, Bismarck’s protectionist policy would be the result of the “sacred union” between major industrial producers and political decision-makers (Röpke 1934a, 40). Second, and paralleling this economic policy of “national interest” and “reason of state” (Eucken 1932b, 56)—or even “brutal realpolitik” (Rüstow 1942, 277)—in the newly unified Germany, Bismarck in particular enacted protectionist measures and initiated a social policy. Both Eucken and Rüstow pointed to social insurance legislation as a guilty attempt to “reinforce the Reich by creating an interest on the part of the individual worker in its perpetuation,” which led to the weakening of Germany’s Parliament by “raising major economic issues on which there was no agreement within influential parties” (Eucken 1932b, 56). Indeed, Bismarck’s social policy can be interpreted as a stabilization strategy to tame the rise of revolutionary sentiment and undermine some basic tenets of the Social Democratic Party’s Marxist discourse (Abrams 2007, 40–41).

With such policies, Eucken argued that the Bismarckian state did not intervene against the capitalist economy as such, but rather encouraged and supported—though in a contradictory manner—some individual business groups. By doing so, the state itself became an actor in the “capitalist economic struggle” (Eucken 1932b, 57). Furthermore, the state’s political institutions supported and participated in the development of private groups’ interests, and, thus, they embraced an internal logic specific to the commercial sphere. In short, Bismarckian politics initiated a period in which “the relation of state and economy gradually began to alter, and the economy began to take the lead in their relationship” (Eucken 1932b, 56, emphasis in original). Following Eucken’s views, the Bismarckian state was not yet an “economic state” (Wirtschaftsstaat).¹⁴ However, Eucken stressed a process of self-destructing the state’s authority through its economic decisions, which began at the turn of the century:

The transformation of the liberal state into an economic state had great significance for the life of both state and economy. It has often been described how in this process the size of the state apparatus grew so extraordinarily, its budget swelled, interfering much more than hitherto in the provision of an individual’s income through subsidies, duties, import prohibitions, quotas, moratoriums, its mediation and increased demand for tax revenue—state activity underwent a substantial expansion. . . . This process of expansion, a process that in the post-Bismarckian period was initiated and developed by the economy, did not result in the strengthening of the state, but rather by contrast in its weakening; bringing with it, indeed, even the danger of state dissolution. (Eucken 1932b, 59)

According to Eucken, the state would no longer act as a source in the decision-making process but tended to be “simply an instrument” of economic interest groups (Eucken 1932b). As such, it no longer acted according to the principles of state reason but met the anti-competitive requirements of certain private actors. At both the national and international levels, the state tended to merge with the interests of certain companies organized as cartels through a refined interventionist policy. Similarly, the “masses of workers and employees” urged the state to intervene in wage negotiations, in what Eucken called “labour market struggles” (Eucken 1932b, 57). In the facade of political decisions’ primacy over the economic system’s functioning, the emergence of powerful industries subsequently generated positions that threatened economic freedoms. Specifically, dominant industry positions carried political weight and guided (legislative) decisions in their support, which would tend to further strengthen power positions. This vicious circle continued until the rise of state interventionism in favor of particular interests (Eucken 1948a, 34; 1949, 223; Röpke 1942b, 32).

In short, “the democratisation of people and their passions, interest groups, and the chaotic forces of the mass” gained a decisive influence on foreign policy in the nineteenth century (Eucken 1932b, 63). From an ordoliberal perspective, it was not until 1931 and the end of the gold standard that the international political organization’s last benefits were consumed (Eucken 1932b, 66; Lutz 1936; Röpke 1942d, 77–78; Rüstow 1942, 273). Ultimately, the divergence between political conditions and the real needs of capitalism resulted in the rise of economic states in the contemporary era of “experiments” (Eucken 1951, 30–32). This trend led ipso facto to the destruction of the state social organization of the market initiated during the historical liberalist period.

Placing the institution of the free and competitive market at the center of regulating the social process was a mistake that gradually eroded the moral reserves of both individuals and society, so much so that the system in place soon became unbearable. It was precisely the market economy “abandoned on its own” that was “dangerous and even untenable,” leading individuals to reject “this organisation that has become odious to them” (Röpke 1944a, 71–72). Similar to Karl Polanyi’s thesis developed in the same years as The Great Transformation (1944), civil society eventually defended itself against the market sphere’s encroachment into all areas of social life through the phenomena of reappropriation and reinclusion. However, ordoliberals differed from Polanyi in that the latter emphasized these phenomena as a self-defense of society, while ordoliberals saw them as a catastrophe that culminated from a fundamental trend initiated by a faulty historical liberalism.¹⁵ Furthermore, Röpke (1942b, 33) clearly specified that socialism was “essentially only the extremist continuation of a development which has already progressed far under a degenerated capitalist system.”

Leonhard Miksch detailed the logical sequence from liberalism to interventionism—and ultimately, to planning—when he analyzed the decline of confidence in a competitive economy from both sides of the political spectrum. He offered yet another example of reflection that intermingles the state’s effective actions and the struggle for ideas by presenting classical liberals and planners as two sides of the same coin:

Trust in the eternal harmony of an economy free from state interference was gradually replaced by trust in the inevitable evolution towards a certain form of planning. . . . The generic idea of “economic freedom” has been totally reversed to become a war cry against the role of the state. The latter lost all right to impose itself as a regulatory force: it simply intervened randomly to satisfy the wishes of the participants, who were among the anonymous economic forces. Proponents of a planned economy generally share such a vision. They only distinguished themselves from the Liberals, defined in this way, by their opinion that the demolition of the competitive economy was not happening fast enough. (Miksch 1937a, 148)

The following section demonstrates that the type of causality between the two systems found in the ordoliberal diagnosis can be clarified by the power relations that reflect the dynamics between the economic and political spheres.

1.2.3 The Economic State in the Age of Experimentation

According to the ordoliberals, the rise of Germany’s “economic state” (Wirtschaftsstaat) at the beginning of the twentieth century marked a new stage in the relationship between markets and the state. This economic state was characterized by a confusion between private interests and the nation-state’s general interest mission; the term itself covers different government practices, including “new forms” of money, market regulation, economic self-management, corporations, and planning (Eucken 1951, 28).

Specifically, Eucken blamed the economic policy pursued by Walter Rathenau¹⁶ then Hjalmar Schacht¹⁷ in Germany, as Eucken considered these two figures as the essence of the nation’s new class of “experimenters” (Eucken 1951, 30). Furthermore, Röpke pinpointed the former’s “engineer” and “technocrat” mentality (Rathenau), which would truly promote the “planned economy” (Planwirtschaft). According to Röpke (1944a, 144), “the fruits of this current of ideas” were eventually to be found in the type of National Socialist economic management. Thus, the ordoliberals constructed their historical analysis of the dynamics of power by closely observing recent German trends, which the ordoliberal founders experienced first-hand: first, in the twenties through industries’ representative bodies (Rüstow and Eucken) and later by joining ministerial bodies (Rüstow and Böhm) or within circles of expertise as commissioned by executives (Röpke). This direct relationship with the industrial and political scene allowed ordoliberals to forge a common vision of crucial issues at the time, such as the proliferation of cartels, the Parliament’s democratic functioning, and the state’s economic interventionism.

1.2.3.1 Das Kartellproblem (1897–1923)

In the first half of the twentieth century, Germany was considered the land of cartels par excellence, beyond comparison with other European countries. This state of affairs was made possible by a complex combination of the interests of heavy industry, including large agrarian structures, with the hand of the government and the intellectual support of academics in general and economists in particular (Harding and Joshua 2010). To highlight the extent of the cartelization of the German economy, Robert Liefmann ironically noted that there was not only “a cartel for toilet paper, but also a specific cartel for ‘crepe’ toilet paper” (1927, 30).¹⁸

The cartelization of Germany took root at the end of the nineteenth century. The (Austrian) economist Friedrich Kleinwächter (1883, 143) was perhaps the first to document the growing number of cartels during the Long Depression (from 1873 to 1896), stressing that these cartels were the “children of misery” (Kinder der Not)—a term that has remained famous in the German-speaking world until today. The long-run historical trend of cartelization was central to forming the ordoliberal political economy. This helps us to understand why, for instance, Röpke (1942d, 224–225) noted that the growth of monopolies and cartels, as well as the size of firms and organizational costs, were two main factors to be observed if we seek the causes of a national economy’s planning drift.

From 1875 to 1905, Germany passed from none to circa 400 cartels. Since then, the number of cartels increased exponentially to 1,500 cartels in 1923, and nearly 3,000 cartels a couple of years later in 1925.¹⁹ Overall, the First World War was a favorable stage for an economic concentration in general and for cartels in particular. This great increase in the number of cartels took place especially in the heavy industries (iron, coal, steel, chemicals, etc.). Children of the concentration fueled by the war, these cartels not only resisted their necessary downsizing in the transformation process from a wartime to a peacetime economy, but they took advantage of the inherent instability of the early Weimar years. According to Eucken, the Socialisation Act of 1919 (Sozialisierungsgesetz) was the decisive act that brought German politics into the era of experimentation; at that time, syndicates acquired a “mandatory character” (Eucken 1951, 30–33; 1952, 172). These syndicates were larger than cartels, with a regional hierarchy reporting to a central office, and included representatives of employers, employees, and consumers. Syndicates gained a form of socialization of “autonomous organs that are more or less politically controlled,” labeled Gemeinwirtschaft, or “statism,” or a collectively controlled economy (Nörr 2000, 152).

Among these syndicates’ attributes, one finds the management of production (such as its output, quality standard, and boycott) and sales (such as prices, quotas, and distribution locations) on the market. According to Eucken (1951, 32), the 1919 decision consequently resulted in an ever-increasing agglomeration of economic power, in that “the old private power groups became compulsory corporations, thereby increasing their power, but they were in the future to have a socialised character.” What was defended as common management for the benefit of all was perceived by the ordoliberals as the culpable collusion of employers and employees in a common spirit of monopoly, to the detriment of the rest of society and in particular to consumers as a whole.

In the early interwar period, the German economy faced the rise of cartels and a monetary crisis during a hyperinflation period. The Chancellor Gustav Stresemann introduced a 1923 decree aiming to combat “abuses” (Mißbrauch) of economic power positions in the market, or a dominant position in today’s vocabulary.²⁰ To this end, the decree provided for the legal recognition—or compulsory transparency—of cartel agreements under government supervision. It also created a specific court institution (Kartellgericht) to address cartel abuses. From an ordoliberal perspective, the 1923 decree nevertheless confirmed a flaw in the February 4, 1897, judgment of the German Supreme Court (the Reichsgericht). The earlier decree authorized cartel agreements to restrict competition, guaranteeing specific protection vis-à-vis new entrants. In doing so, the Supreme Court embraced the views of industrialists who defended the possibility of lower prices in favor of the general interest, de facto supporting methods of economic struggle through discrimination by means of prices, boycotts, or sanctions. Such competitive impediments, based on a freedom of association, were quite at odds with the ordoliberal notion of better performance within competitive markets (Eucken 1951, 31; Böhm 1948).²¹

If Eucken, Böhm, and others revisited discussions on the 1923 ordinance, it was likely because these discussions were marked by “strong political and economic resistance” (Marburg 1964, 83). In the face of the first decisions of the Cartel Court and the Ministry of Economy, which forced players to behave more favorably toward competitive market forms, the cartel representatives “denounced it as ‘reactionary Manchesterianism’ and, by contrast, praised the cartel principle as a higher form of economic development” (Eucken 1951, 34). In Germany, the “economic freedom” as enshrined in the Weimar Constitution must be understood as “the freedom of businessmen to choose between competition and monopoly,” and indeed, “public opinion has grown used to this state of affairs, in which competition, restraint of competition, and monopoly enjoy equal rights” (Böhm 1954, 152–153).

Industrialists argued that cartels were a way to regulate competition compatible with market mechanisms. Cartels were required to protect small and medium-sized companies from international competition with large groups or for resilience against fluctuations in the economic cycle. Industrialists aimed to convince political and public opinion that private capital interests were ultimately compatible with that of the community (Liefmann 1927, 342–344; Pribram 1935, 5). In that spirit, the largest chemical manufacturers—such as Bayer, Hӕchst, AGFA, and BASF—merged to form I. G. Farben in 1925. From an ordoliberal perspective, the 1923 ordinance was a complete failure.²² Rüstow (1942, 275), who was nevertheless involved in its implementation, indicated his lack of conviction at that time—admittedly in the comfort of retrospective judgment. The 1923 Kartellverordnung was ineffective due to its inability to legally define when “abuse” occurred. The lawyers of Freiburg discussed this aspect in further detail (see Mongouachon 2011). Großmann-Doerth (1933) stressed the asymmetry between contractual parties accompanied by a “self-created law by the economy” (selbstgeschaffene Recht der Wirtschaft). Moreover, Böhm insisted that private law was unable to effectively assess the harm caused by dominant positions.²³ Second, and far from taking drastic control or dissolution measures, the Ministry of the Economy was satisfied with weak control in cartel policy. This (episodic) attempt to frame cartels was ultimately anecdotal in the long-run German tradition. According to Böhm (1954, 144), this history was marked by a persistent tendency in favor of cartelization, in industrial and political circles as well as civil society.

Under these conditions, the cartel community did not experience any opposition to the state supervision and control from which it believed it could benefit. The number of cartels—as with the concentration process in general—continued to experience strong growth. The ordoliberals perceived the economy’s cartelization as not only harmful to the market sphere, but also contaminating the political sphere, including the legislative and executive branches, by taking over “the formation of the volonté générale” (Böhm 1966, 64).

This subsection devoted to the question of cartels in Germany demonstrates that the ordoliberal historical diagnosis particularly underlined how legislative measures proved incapable of stemming the dynamics of power concentration, although they did not provoke it. According to the ordoliberals, this faulty legislation was one cause of global political powerlessness to resist pressure from economic power groups, and particularly relative to the type of democratic representation.

1.2.3.2 Economic Interests in the Parliament (1924–1932)

Following deep tensions in the political life of the Weimar Republic’s formative years (1918–1924), the aftermath of Germany’s 1923 hyperinflation was marked by a relative calm.²⁴ However, as early as 1929, the Great Depression undermined the German Republic’s fragile democratic foundations. In a manner particularly exacerbated since the early thirties, the representative parliamentary system was collectively in a debate between attempts at rehabilitation and categorical rejection (Baume 2006); the ordoliberal discourse belongs to the second class. Ordoliberals’ apprehension of the rise and increasing concentration of economic power in society led them to reject certain political institutions considered too permeable by pressures from the private sphere. It was not exclusively a question of considering power from an economic perspective, but rather of understanding its dynamic relationships with the entire social sphere. Specifically, understanding economic power in all its aspects also required an examination of “the influence of certain groups of economic power on the legal system” (Eucken 1948a, 32). The pluralistic expression of political parties within a representative parliamentary embodied the medium par excellence of this “influence” that ordoliberals condemned.

Without disclosing precisely all the mechanisms of propagation, the ordoliberals argued that the construction of economic power will generate pressure groups. The ordoliberals saw this trend as a “refeudalization” of politics by economics in industrialized states (Böhm 1961, 36), in violation of the democratic principles that had first empowered the market process:

For instance, let us take a country where a parliamentary democracy is in place. Its economic order, . . . whose production process was initially dominated by competitive markets and thus the formation of a system of competitive prices, is being transferred to groups of monopoly powers, or partial monopolies, in different industries. . . . As time goes by, the character of democracy is gradually eroding. Of course, economic interests were already being asserted in Parliament at a time when the competitive market was dominant, for example, those of farmers. . . . But in the new situation, monopolies exert much greater political influence because of their economic power. (Eucken 1948a, 31–32; see also 1940b, 31)

It is conceivable that by strengthening their financial weight or vital nature for certain employment areas, some companies (or sectors) could acquire significant bargaining power over the ruling political/administrative class. Formally, the two dimensions of power—economic and political—were therefore related by a vicious circle, in that monopolies’ and cartels’ emergence was based on internal conditions (individuals’ desire for power) and external conditions (faulty legislation). As they grew (e.g., in capital or market share, among others), pressure from these economic power groups could then impose ordinary or extraordinary legal measures in their sole interest, external conditions then strengthened, and the cycle progressed.²⁵

However, economic interests were exercised well beyond the political sphere to participate in the ideological formation of both scientific and public opinion.²⁶ Support from some experts and intellectuals considerably reinforced the legitimacy of power groups’ demands at the collective societal level. According to Eucken, the “intellectual history of mankind” coincided with demands to “secure and claims to power by means of ideologies” (Eucken 1940b, 29–30; see also Röpke 1936c, 1301). In this sense, economic power was a commanding engine of institutional change in a way that favored monopolistic practices and positions and therefore deleterious to the competitive order. The ordoliberals’ extreme discomfort with parliamentary democratic regimes was undoubtedly rooted in the political and economic experiences within the Weimar Republic.

Such representative institutions as parliaments faced public demands for economic and social intervention on a scale never before achieved in times of peace. This was a recurring issue not only in Germany, but also throughout interwar Europe (Lindseth 2004, 1355; Hobsbawm 2014, 156). For example, if representative parliaments had been associated with the liberal state of the nineteenth century, and particularly in England in the face of increasing administrative power to formulate laws, they were perceived in Germany as a place in which partisan interests were expressed, which led to a decision-making deadlock. In contrast to the Anglo-Saxon liberal political thought, in which a pluralism of opinion promotes the debates necessary for consensus, ordoliberalism shared an anti-pluralist position (Megay 1970). In line with continental European tradition, the concept of the common good was supposed to stem from general will.

Based on the Italian fascist and German National Socialist examples, Rüstow established a causal link between asserted economic power, parliamentarianism synonymous with a politically weak state, and the struggle of parties for power until a single political party’s totalitarian seizure of power:

The democratic parliamentary structure of some economically leading states caused the economic corruption to spread to the internal policy of the state, to political parties, and to the parliamentarism itself. The political parties were slowly transformed into parliamentary agencies of economic pressure-groups and were financed by them. Not a single one of these parties or groups which supported them was at first able to win a parliamentary majority by its own strength alone. . . . A coalition of several parties was therefore necessary. A crisis of parliamentarism, a crisis indeed of the state itself, was the unavoidable consequence. . . . Their parliamentary tactics consisted in abusing the rules of liberal parliamentarism for the purpose of weakening democracy and its organs. . . . The consequence was that in Italy and Germany . . . the game of pluralism ended in a totalitarian one-party dictatorship. (Rüstow 1942, 276–277, emphasis in original)

As previously mentioned, ordoliberals faced economic instability—hyperinflation and an economic crisis—and the political instability of the twenties and thirties, which ultimately gripped the democratic character of the Weimar Republic. From 1930 to 1932, the political regime could still be described as “semi-parliamentary” under Heinrich Brüning’s chancellery. However, with its successor Chancellor Franz von Papen, the executive branch remarkably influenced both positive and negative functions of the Reichstag; von Papen governed by legislative decree to bypass parliamentary procedure. This authoritarian drift paved the way to “unify all executive and legislative power permanently in the hands of the Chancellor-Führer, Adolf Hitler,” synonymous with the final collapse of the Weimar Republic (Lindseth 2004, 1371).

In apparent opposition to the ordoliberal observation, it should be noted that from Brüning to von Papen, the weakening of the Reichstag’s role did not result in a distancing of politics from economic interests; in contrast, Brüning’s and von Papen’s policies reflected the concerns of these interest groups (Petzina 1969, 65–70). Indeed, both Chancellors relied deeply on “expert circles” and informal councils, composed primarily of members of heavy industry and banking, the army (Reichswehr), or the great agrarian nobility (Junkertum).²⁷ Although ordoliberals placed high expectations on the “policy of experts” derived from men of science, they refused to perceive practitioners as potential trusted advisers, as the latter were deemed incapable of divesting themselves of their private interests.

1.2.3.3 Nazi Economic Planning (1933–1938)

In the ordoliberal diagnosis, the strengthening of the economic power of cartels (or large industrial groups) coupled with the pluralistic expression of interests—in Parliament as well as in the sphere of government—led to the multiplication of ad hoc economic and legislative measures. These measures, also called “punctual” interventions by Eucken, achieved certain specific objectives, such as full employment. However, these same measures prevented a coherent, systematic treatment of the economic process and thus led to a disordered price system for ordoliberals.

In the face of growing economic instability, the state had to increase and intensify the scope of its interventions in the economic process. In doing so, it went so far as to profoundly change the economic order in favor of a centrally planned system in which monetary prices were no longer decisive in the resource allocation process. Therefore, this era of experimentation was marked by a transition from an interventionist economic state, which was still part of the “exchange economy” (Verkehrswirtschaft) to a “centrally administrated economy” (Zentralverwaltungswirtschaft), by nature foreign to the competitive order. Eucken’s morphology of the economic order will be considered in Chapter 3.

As Hitler seized power, the National Socialists demonstrated their support for the world of industry, particularly by consolidating the state’s right of control over companies’ entry into and exit from cartelized markets. Simultaneously, the Nazis increased the Ministry of Economy’s power over the cartels as the state empowered itself to “make strategic use” of cartels for political purposes (Hesse and Roelevink 2015, 197). Böhm (1954, 163) noted that, in particular, the Ministry of Economy was “authorised to force independent firms to join a compulsory cartel, or to make outsiders adhere to a private cartel, if he deemed this to be in the public interest.” The National Socialist argument was a part of a broader process of rationalization of the economy that it completed. Although this process was not newly established, it gradually took on new proportions in Germany.²⁸ This coincided with a public debate, conducted through what Röpke (1936c, 1301) described as an “ideology,” intensely mobilizing such terms as “market organization,” “economic stabilization,” and the “managed economy”; protecting against “unfair competition”; or even calling for the “general interest before private interest.” This state of mind was typical in the interwar period of confidence in the capitalist system’s inevitable shift toward state socialism. This was enabled in Germany by the ever-increasing concentration and socialization of economic units.

In National Socialist Germany, purported cartel organizations were still formally in charge of production decisions. However, Eucken drew our attention to the profound underground upheaval that was nevertheless at work, in contrast to the apparent continuity from the Weimar Republic to the Third Reich:

In 1930 cartels were associations of independent undertakings for purposes of excluding competition; this means that they belonged to an exchange economy. In 1940 cartels were mainly instruments of the central economic administration. Although they have retained something of their original purpose, their role had changed regarding the economic order. (Eucken 1940b, 225)

From 1932 to 1933, the economic order still resulted from a combination of the two pure forms. As early as 1936, however, Eucken (1948c, 79–80) considered that the centrally administered economy began to dominate the exchange economy in forming the economic process. This period coincided with the beginnings of large-scale Nazi economic planning, put in place by Hermann Göring in the form of a “quadrennial plan” (Vierjahresplan).

As cartels followed a process of socialization and prioritization, it became increasingly clear that they operated as structures subordinate to the state leadership, to serve objectives set by the government. Therefore, tensions in production or social conflicts—or such exogenous objectives as military expansion—were triggering factors to achieve the final step of complete state socialization. After the cartels had continuously gained political influence for a period of time in the form of accommodating legislation, the state finally took over the direction of the entire economic process within reach. This ultimately resulted in a transfer of the ability to establish economic plans, individual or collective, from such voluntary or mandatory organizations as cartels to the next level: the Ministry of Economy.

In summary, the German economic order transitioned from an exchange economy dominated by monopolistic tendencies to a centrally administered economy. Syndicates, unions, cartels, and major group leaders merged into the core public administration itself, from which they continued to exercise power in a special combination with departmental administration (Eucken 1951, 36; see also Miksch 1948, 321–322). As cartels were deprived of fundamental productive decisions, they abandoned their status as economic units, in the strongest sense of the term, to operate as mere management bodies. As Böhm mentioned:

In October 1936 a price freeze order was issued . . . and this law abolished the price system as a means of economic guidance. The government saw itself therefore obliged to allocate raw materials, semi-manufactured goods, labour, credits, etc., i.e. to go over to a comprehensive compulsory planned economy. The cartel administrations were turned into semi-official public offices, a measure that increased their prestige. (Böhm 1954, 163)

Eucken obviously said nothing about the experience of the National Socialist-planned economy in his 1932 article, “Structural Transformations of the State and the Crisis of Capitalism.” However, as Eucken (1932b, 69) stressed that “the masses exert great influence in Germany over the state and its economic policies, whereas the Russian state is entirely separated from them,” one may wonder whether the problem of private power exercised in society can be solved by the centralized planning state. In other words, does the “pre-eminence of the central government in economic decisions [allow] the balance of power to be maintained” (Eucken 1948a, 32), as it can be in an exchange economy dominated by a competitive order? Such a question by Eucken was purely rhetorical. Eucken (1951, 37) later commented on the disastrous Third Reich economic experiment by noting that “power remains power whoever may exercise it,” and it was in fact “in public rather than private hands that power reaches its zenith.”

To fully understand the meaning of Eucken’s quote, one must consider it through the dynamics of power highlighted thus far in this Chapter. Public power was the most damaging, as it inevitably and logically comes with a concentration of economic power derived from the behavior of private actors. The merger—or rather, the abandonment—of the private economic power exercised by cartels and large industrial groups in favor of public power completed the logic of concentration initiated by individual instinct in a form of deleterious amalgam: the state is economic, and the economy is bureaucratic. The ordoliberals perceived this as a reciprocal weakening of both spheres: a loss of legitimate authority for the state and the market’s inability to satisfy consumers’ needs. Thus, we can now fully understand Eucken’s (1932b, 70) characterization of the “total economic state” as intimately “weak.”

The ordoliberal institutional dynamics of power outlined the transition from the nineteenth-century liberal order to the National Socialist years’ economic planning. In doing so, ordoliberals built a causal sequence rooted in a historical narrative. However, ordoliberals did not consider this narrative as necessary nor as an inescapable process; on the contrary, ordoliberals’ political economy was designed to oppose the laws of development formalized by Marxists and historicists.

1.3 The Ordoliberal Manifesto of 1936: Science Beyond Relativism and Fatalism

Familiar with the politics during the Weimar period, the ordoliberals witnessed the establishment of a centralized (Nazi) economic administration order that completely opposed their competitive ideal. An analysis of the deleterious principles of historical liberalism toward this state of affairs functions as a safeguard against any determinism or defeatism in ordoliberal thought. In contrast, this experience convinced ordoliberals that the battle for societal reform must be won in terms of ideas. Regarding the power of interests and the ideologies that were—knowingly or unknowingly—favorable toward such interests, the ordoliberals opposed the formative capacity of scientific reason.

1.3.1 The Battlefield: The Market of Ideas

In 1936, Franz Böhm, Walter Eucken, and Hans Großmann-Doerth signed a brief programmatic text entitled Our Task (Unsere Aufgabe). The year 1936 coincided with Göring initiating his quadrennial plans, as previously noted, which was likely a factor to be considered in the timetable for drafting the “ordoliberal manifesto.” However, the general purpose of this text remained incredibly abstract and made obscure references to current events. Essentially, this manifesto embodied the leitmotif of the ordoliberal political economy: to transform effective reality following the precepts science has assigned it. Accordingly, Eucken (1951, 83) later called “economic thinking” a “political-economic force,” in the sense that it “determines and orientates economic and political action.”

Indeed, from an ordoliberal perspective, only science is “capable of being a spiritual and moral power” (geistig-sittliche Macht), of being a “guiding potency” of political action rather than subordinate to it (Hensel 1951, 16).²⁹ Hence, the “strong” in the ordoliberal sense were not those who abandoned themselves to the search for power (or the will for power), as he or she would be “intimately weak,” but individuals who call upon reason:

The strong man feels his strength increase whenever he is able to apply reason to illuminate the darkness surrounding the acting agent and to the exercise of his power. Using this conviction as our point of departure, which is based on historical experience, we wish to bring scientific reasoning, as displayed in jurisprudence and political economy, into effect for the purpose of constructing and reorganising the economic constitution (Wirtschaftsverfassung). (Böhm et al. 1936, 23)

The act of faith in favor of scientific reason was all the more essential to the ordoliberals as it remedied the contemporary political rationality conveyed through various ideologies. Ordoliberals argued that their political economy could cure a deeply irrational political reasoning. A year before the publication of Our Task, Röpke (1935, 94) focused on this aspect with an Italian example: “the fascist government is so irrational that it brings different objectives into conflict with each other, thus generating results that are not desired by the government itself” (see also Eucken 1932b, 69–70). The intellectual positioning of ordoliberalism within idealistic philosophy has two primary and related consequences. First, ordoliberals sought to change the economic order through rational discourse, even in defiance of material conditions. Second, this rational discourse would be a prerogative for scientists, who therefore have every authority to discover a certain precedence in the sphere of political decision-making.

1.3.2 The Weapons: Scientists to Guide Policy

The defeat or renunciation of scientific thought in the face of contemporary challenges would leave the field open for the development of interest groups’ ideologies to guide political decisions. Indeed, ordoliberals typically perceived the rise of “conservative radical” intellectual groups such as the Tat-Kreis as a product of this trend (Röpke 1934a, 22–23; Böhm et al. 1936, 19). The members of the Tat-Kreis belonged to the “conservative revolution” movement. Although disparate, this expression referred to authors who shared at least two beliefs (Dupeux 1992; Staudenmaier 2014): first, a confidence in the irreducible specificity of the German being; second, a confidence in the durability of conservative values linked to the state, the nation, the people, and the German “race.” Ordoliberals perceived the temptation of politics’ primacy over economics—der Primat der Politik über die Wirtschaft—as a central conservative component, or of “fascist economics,” as Röpke (1935, 94) phrased it. The thinkers in the conservative revolution assigned to the state a fundamental and leading role of ruling every other sphere, especially the economy. This conservative plea for a planned organization in the hands of a few large industrial groups did not sit well with ordoliberal discourse and was regularly denounced by Lutz (1933), Röpke (1945a), and Eucken (1946b).

Recovering the formative capacity of political economy and legal science—to emerge from the crisis of civilization as portrayed by the ordoliberals—required the awakening of an elite group of scientists, journalists, and magistrates. In short, the ordoliberals advocated the return of the “clerks,” an expression that Röpke (1944a, 200–213) borrowed from a popular essay by Julien Benda (1927), the French intellectual. The ordoliberal manifesto was built around similar considerations and opened with an apology of the figure of the scientist. As ethics would allow scientists to extricate themselves from the daily struggles of partisan interests, scientists would be the only admissible guides to political action. The ordoliberals’ optimism and confidence in science were not supported by a proper demonstration; rather, they noted that

Men of science, by virtue of their profession (Beruf) and position being independent of economic interests, are the only objective, independent advisers capable of providing true insight into the intricate interrelationships of economic activity and therefore also providing the basis upon which economic judgement can be made . . . about economic measures appropriate in particular circumstances. (Böhm et al. 1936, 15)

The ordoliberal manifesto closed with one condition absolutely necessary for a return to grace for the formative capacity of the human sciences, such as the political economy and legal doctrine: “The collaboration of the two sciences, which in this respect still leaves much to be desired, is clearly essential (Böhm et al. 1936, 25). Ordoliberals called for interdisciplinarity in contemporary terms. This was less the division into the disciplinary, specialized knowledge that ordoliberals questioned than the difficulty of conducting a constructive dialogue among scientific results. Indeed, if the “division of the humanities . . . has proved to be untenable,” it was precisely to the extent that “whenever the subject demands the use of both [sciences], then this must be done.” However, each science “must preserve its individuality if it is to achieve anything” (Böhm et al. 1936). Such a declaration, although vague, was thus foreign to economics’ imperialism over other disciplines and must be considered relative to the emergence of scientific specializations in the interwar period.³⁰

It should also be noted that a form of hierarchy between the disciplines of economics and law emerged from ordoliberal writings. For instance, Böhm’s primary ambition involved translating the main principles of political economy into legal semantics. One of the ordoliberals’ main concerns included conveying the Courts of Justice’s decisions through political economy: “The problem of understanding and fashioning the legal instruments for an economic constitution can only be solved if the lawyer avails himself of the findings of economic research” (Böhm et al. 1936, 24).

OurTask was above all a polemical text, concerned to position the ordoliberal discourse within the academic and political fields. As such, the manifesto was centrally a violent charge against the German intellectual milieu. Ordoliberals claimed “historical fatalism” was a “sign of weakness” from some intellectuals, asking: “How can the intellect shape events when it accepts them as inevitable?” (Böhm et al. 1936, 19–20). Ordoliberals pointed to the German Historical School in particular, as Historicism was blamed for having deprived legal science (Rechtswissenschaft) and political economy (Nationalökonomie) of the theoretical tools necessary for these two disciplines to practically contribute to society. Historicist works by Friedrich List, and especially Friedrich von Savigny, were blamed for fostering the development in contemporary times of an “atmosphere” impregnated with “fatalism” and “relativism” regarding historical developments (Böhm et al. 1936, 18).³¹

Endorsing a liberal position in favor of economic competition in Germany between the two world wars was brave, to some extent. Röpke and Rüstow paid the price for their opinions and were forced into exile. However, it should also be noted that by basing their analyses on a rejection of both Anglo-Saxon liberalism and Marxist socialism, Böhm, Eucken, and Großmann-Doerth weighed such risk-taking by attacking two streams of ideas already largely in disgrace under Hitler’s regime. In this sense, a criticism of the intellectual milieu remained incredibly abstract—which was likely a necessity at the time. Ordoliberals’ criticism targeted figures from the past (Savigny) or already under the Nazi regime’s yoke of criticism (Marx). Even when ordoliberals attacked historicism—and specifically Werner Sombart, whose work experienced a brief revival under National Socialism (Hagemann 2016, 228)—it was in the form of a Marxist epigone.

1.3.3 An Alternative to the Marxist-Historicist Diagnosis

Although fatalism and relativism were not synonymous in the ordoliberal manifesto, they specifically interacted in many ways. Sombart’s “relativist and fatalistic attitude” embodied a synthesis of these two trends in contemporary scientific circles (Böhm et al. 1936, 18). Beyond elitism, ordoliberals argued that the combination of relativism and fatalism permeates society as a whole. According to them, German public opinion had to be cured from a Marxist style of thinking.

As the ordoliberals transposed Marx’s legacy into Sombart’s reading, they rejected the idea of a “social, political, and spiritual superstructure” that was only a reflection, with no effect on the economic infrastructure (Böhm et al. 1936, 19–20). Ordoliberals also did not share the existence of laws of development marking the inevitable end of capitalism (Eucken 1932b, 54–55; Röpke 1936a, 13; 1940, 59). Furthermore, Röpke (1934b, 55) opposed supporters of imperialist economic theory, such as Rosa Luxembourg or Rudolf Hilferding, who perceived “modern imperialism as a [necessary] political consequence of the economic structure of capitalism.” Law for ordoliberals was a priori creative, and not only an a posteriori justification. This was not as much because the law sanctions private property—and therefore collective ownership would change something about it—but more fundamentally because legal decisions related to the question of market structures were the most appropriate way to define the economic order:

After the First World War, when many cartels and combines were being formed, the economic order changed its structure. . . . After 1933 new elements of centrally administered economy emerged. But the same law of property was in force the whole time. To conclude that law of property is unimportant for the economic system would certainly be mistaken. But the form of an economic order is not determined by the law of property. If the Supreme Court of the Reich, for example, at the end of the last century had not confirmed the legality of cartel agreements [in its 1987 judgment], the development of cartels in Germany would not have followed the course it did. (Eucken 1940b, 86)

With Sombart’s death in 1941, Schumpeter fueled an ordoliberal criticism of economic and political fatalism. Although important parallels exist between Schumpeter’s historical reading and that of the ordoliberals (Meijer 2005, 147–148), the conclusions mediated by specific relations to determinism proved to be radically antithetical. Indeed, in Capitalism, Socialism and Democracy, Schumpeter (1942) wondered whether socialism would replace capitalism and, with it, economic liberalism. His study presented a clear, radical conclusion: if capitalism can’t survive, Schumpeter believed, socialism certainly can.

The problem of the inexorability of economic socialization, and particularly among firms, was closely linked to the question of forming monopolies and goes beyond Schumpeter’s analysis. The debate about the “necessity” or “desirability” of cartels in Germany and of economic concentration in general was far from specific to the interwar period. When the liberal economist Edgar Salin stood in the early sixties in favor of economic concentration to improve the competitive economy’s performance—and specifically, to resist the pressure of communist planned economies—Ordo’s editors opposed Salin’s argument by making a statement similar to those made by the ordoliberal founders of this journal some thirty years earlier.³²

1.4 Conclusion: An Institutional Dynamics of Power

By stressing the importance of an anthropological hypothesis in the ordoliberal political economy, we emphasized that power relations were key in ordoliberals’ historical interpretation. The extent of industrial cartelization in modern Germany helped to interpret the omnipresent theme of economic power in ordoliberal discussions. If ordoliberals insisted on power groups’ decisive role in the dynamics of the economic order, they also nevertheless rejected the inevitable tendency toward economic concentration. The forces that contributed to developing competitive economic relations, such as increasing technological progress, paved the way for a positive ordoliberal economic policy.

During the Second World War, Eucken (1942b, 37) outlined the impasse that had entrapped the German economic order: “Here the administered economy, whose replacement is necessary, there the group anarchy of the ‘free’ economy, which leads to high tensions and heavy damage.” Based on the historical diagnosis of the economic experiences of the Weimar Republic and subsequently National Socialist Germany and faced with the degeneration of nineteenth-century liberal capitalism that finally paved the way, Eucken rhetorically asked: “Is there a third way (dritter Weg)?”³³

By underlining the causal process between liberalism and planning at the heart of the ordoliberal historical diagnosis, we can understand why a median path—or a mixed economy (or corporatism) between liberalism (or capitalism) and planning (or communism)—cannot represent an adequate solution from the ordoliberal perspective because the question of power as proposed is not then resolved. In following this reading, societies would simply exist in a highly unstable transition period from private economic interests concentrated in the form of a group to public economic power, which combines large conglomerates and a bureaucratic state administration.

The core mechanism of the ordoliberal diagnosis can be described as an institutional dynamics of power that sought to explain the causal sequence from liberalism to planning. Considering power relations as a driving force behind this dynamic makes it possible to both simultaneously and endogenously account for the formation of legislative decisions and the economic process’s direction. By the same explanatory scheme, the ordoliberals designated historical liberalism and modern planning as two irrational tendencies that merely express the same disorder, albeit in various forms. Historical liberalism in the ordoliberal narrative has pushed to the extreme its founding principle of economic freedom and non–state interference. Consequently, planning has carried through its principle of taking charge of the production process and allocating resources. This double tendency presented itself as an ordoliberal, idealist counterpart to dialectical materialism in the historical economy of discourse.

We worked to clarify the ordoliberal conception of scientists’ role in society and in the design of the economic order in particular. It is the awareness of the need for a deliberately constructed order, and not a spontaneous one, that led the ordoliberals to not only formalize an economic constitution, but also recommend certain specific economic policies—first, to promote and defend the competitive order. By affirming political voluntarism, the ordoliberals opposed an idealistic response to the Marxist materialistic reading. Nevertheless, the ordoliberals owed much to Marx and the Historical Schools. More than a neglect of historicists’ research program, ordoliberals “reoriented” its basic tenets.

1. I borrow here the expression that Aurélien Berlan (2012) forged in his study on cultural criticism (Kulturkritik) and the founders of German sociology (Ferdinand Tönnies, Georg Simmel, and Max Weber).

2. The relativist or fatalistic approach was also directly related to the question of economic power since Böhm (1961, 36) considered a form of disciplinary bias: “doctrines that emphasize the study of historical development laws will tend to encourage the concentration of power, whereas the search for structural connections tends to favour a tendency towards greater freedom.”

3. On ordoliberalism as a Kantian ethic, see François Bilger (1964, 126–131), Patricia Commun (2016, 77–78, 297–299), and Manuel Wörsdörfer (2010, 2013a).

4. Eucken was unable to attend the Colloquium to which he had been invited, probably because of the growing closure of the Third Reich’s borders (see Kolev et al. 2020, 436). The proceedings of the WLC are available in English (see Reinhoudt and Audier 2017).

5. This pejorative term was later extended by Rüstow and Röpke to some of the Mont Pèlerin Society’s members (Audier 2013, 19; Burgin 2012, 137). About the relationships between Mises and ordoliberals in general, see Stefan Kolev (2018a).

6. This text was also part of Eucken’s posthumous book Principles of Economic Policy (1952, 225–240).

7. In essence, Marx’s idea was that competition led to accumulation and thus to monopoly (large land ownership)—the completed form of the capitalist market economy—in a dialectical process (1844, 103). In The Poverty of Philosophy (1847), Marx noted that “competition was originally the opposite of monopoly and not monopoly the opposite of competition. So that the modern monopoly is not a simple antithesis, it is on the contrary the true synthesis. . . . Thus modern monopoly, bourgeois monopoly, is synthetic monopoly, the negation of the negation, the unity of opposites. It is the monopoly in the pure, normal, rational state” (206–207).

8. Already in the early thirties, Eucken (1932b) remarked that technological progress, innovation, and the emergence of new goods led to sudden changes in demand patterns as a result of increased competition (particularly in the machine processing, metal, precision engineering, textile, clothing, and food industries).

9. By the end of the nineteen century, German academics widely rejected liberalism and socialism back to back. Contrary to the immediate impression, authors attached to the Socialism of the Chair (Kathedersozialismus), however, did not hesitate to distinguish themselves openly from the two programs, as Schmoller did (Nau 2000, 509).

10. Literally “thinking in economic orders,” i.e., thinking reality through the theory of orders (Böhm 1950).

11. Several papers offer a comparison between Smith’s ideas and that of the ordoliberals (Sally 1996; Klump and Wörsdörfer 2010; Bonefeld 2013a; Horn 2019).

12. The Pax Britannica marked the British international domination in the military, political, and commercial fields. This domination resulted in certain advantages that are characteristic of peace periods, as, for instance, the development of trade, the spread of humanist and Christian values and education, etc. (see Gough 2014, 1–3).

13. In Leviathan, Hobbes (1651, chap. 11) was very clear about the role of power: “I put for a general inclination of all mankind a perpetual and restless desire of power after power, that ceases only in death.” On the centrality of power in Hobbes, this “complex, rational passion, essentially comparative and strategic,” see Pierre Dockès (2008, 127; see also Kurz 2018).

14. Or “capitalist state” (Goldschmidt and Hesse 2013, 134).

15. According to Polanyi, this movement was initiated by the fact that certain goods will be transformed into commodities, in particular through the transformation of elements that are not “produced for sale,” namely labor, land, and currency. As Polanyi (1944, 148) noted, “liberal writers like Spencer and Sumner, Mises and Lippmann offer of an account of the double movement substantially similar to our own, but they put an entirely different interpretation on it”; what Quinn Slobodian (2018, 13) called the “crucial difference” in the “ends to which the market is being re-embedded.”

16. Walter Rathenau (1867–1922), industrial leader, himself director of one of the country’s largest industrial companies Allgemeine Elektricitäts-Gesellschaft (AEG) founded by his father, and politician, organized in particular the economic mobilization of war, relying largely on cartels. He then gained experience as Minister of Reconstruction of the Weimar Republic. A charismatic man of high intellectual, Jewish, and pan-Germanist culture, Rathenau was murdered in 1922 by nationalists (Barjot 2013, 1046–1047; Kitchen 2012, 204).

17. Hjalmar Schacht (1877–1970) was President of the Reichsbank (from 1924 to 1930; then from 1933 to 1939) and Minister of Economy of the Third Reich (from 1934 to 1937), in which posts he tried to promote a form of neo-Mercantilism (see Clavert 2009).

18. Robert Liefmann (1874–1941) completed his doctoral thesis under the supervision of Max Weber on the subject of cartels at the University of Freiburg in 1897 (see Grossein 2005, 923). He taught there as professor of economics from 1914 to 1933. Liefman wrote numerous authoritative works on the cartelization of the German economy. Anita Pelle (2016, 116) insisted on the links and similarities between Liefmann and the ordoliberal authors. During the war, Liefmann was deported; he died in a concentration camp in the French Pyrenees.

19. See Lee McGowan (2010, 47) and Jeffrey R. Fear (2008, 14). Eucken’s writings (1951, 31–35) show he had a comparable scale in mind.

20. A reproduction of the text of the 1923 decree (Kartellverordnung), translated into English, can be found in an appendix to Liefmann’s book (1927, 351–357).

21. Recent literature tends to support the reading provided by the ordoliberals (Guesnerie et al. 2006, 36; Neumann 2001, 37).

22. It should be stressed that this observation of failure was decisive for understanding why ordoliberal economic policy in the field of cartels, or monopolies, favored a categorical refusal of their very formation, rather than a mere supervision, as Chapter 4 will explain in more details.

23. From 1925 to 1933, Franz Böhm worked in the Antitrust Control Department of the Ministry of Economy of the Republic of Weimar (Grossekettler 2005, 489). At the same time, Böhm wrote various articles, including “The Problem of Private Power” (“Das Problem der privaten Macht”) and his PhD thesis on Competition and Monopolistic Struggle (Wettbewerb und Monopolkampf), which earned him a university position in Freiburg (Böhm 1928, 1933).

24. To speak of tensions here is an understatement, given that the situation has regularly come close to civil war. We have only to recall failed coup attempts (including that of Hitler in 1923) and insurrectional strikes, but also the almost four hundred assassinations perpetrated—more than 90 percent by the right—on a political basis, including those of Rosa Luxembourg and Rathenau already mentioned (Mosse and Magyar 1999 chap. 7; Solchany 2003, chap. 1).

25. From an ordoliberal point of view, it was the holders of economic power who have the greatest influence on the behavior of elected officials. Later, constitutional economics extended the analysis of strategic behavior to the study of public choices, particularly through the analysis of electoral cycles.

26. On the involvement and place of economists in the Reichstag from 1867 to 1918, see Harald Hagemann and Matthias Rösch (2005).

27. Röpke participated in the Brauns Commission settled by the Brüning government in 1931 to resorb massive unemployment. Mocked as a “Professor commission,” it was actually mainly composed of senior civil servants, and Röpke’s plea for a proto-Keynesian recovery policy was actually neglected (see Röpke 1931). On this episode and Röpke’s arguments, see Klausinger (1999), Commun (2018), and Fèvre (2018b).

28. The example of the central planning of the Russian socialist system was the driving force behind this line of reasoning and inspired and strengthened the discourse of the German SPD.

29. Hensel took up almost word for word the expression of the ordoliberal manifesto: “eine geistliche und sittliche Macht” (Böhm et al. 1936, 22).

30. The publication of the ordoliberal manifesto came a year after Edmund Husserl’s acclaimed 1935–1936 conferences on The Crisis of European Humanity and Philosophy (1970). Husserl discussed the role of science in society, considering the “necessity” but also the “danger of specialisation” of disciplines.

31. Friedrich Carl von Savigny (1779–1861) had a profound and long-lasting impact on German legal doctrine by insisting on “a historical identity of law linked to the people” (Rabault 2016c, 21; see also Zimmermann 2013, 98–99).

32. See the account by Theodore F. Marburg (1964, 99).

33. Röpke (1940, 24; 1942b, 43; 1944a, 38) used several terms and spoke of “constructive liberalism” or “economic humanism,” but also preferred to speak of a “third way.”