In July 1949, all the ordoliberals took part in the second meeting of the Mont Pèlerin Society in Seelisberg, Switzerland. Miksch reported in his diary a conversation he had with the economist L. Albert Hahn, a German émigré who had been teaching at the New School for Social Research in New York. On the sidelines of the conference, Hahn had tried to convince the ordoliberals of the gigantic gap that would separate their analysis from Anglo-Saxon economics—a gap widened by the isolation caused by the Nazi regime and the war. Thus, Hahn urged the ordoliberals to concentrate exclusively on reading the international literature for a while and stop writing altogether.
A few days after this discussion, and as the Seelisberg conference was coming to an end, Miksch recognized that there was indeed a huge gap, but in the opposite sense to what Hahn had meant:
Just as myself, Eucken had the impression that we could not learn as much from abroad as Hahn thought. The reasoning in morphological order elements developed by the Freiburg School is missing elsewhere. This morphological system is greatly superior. It was a good thing we did not speak better English, otherwise we would have reasoned them into the ground. (from Miksch’s 1949 diary, translated and reproduced in Kolev et al. 2020, 459)
In retrospect, the ordoliberals’ sheer overconfidence may seem almost ludicrous. But from their viewpoint, did not they have good reasons to be satisfied? Had they not offered the arguments that convinced Erhard to embark on the price liberalization reform less than a year earlier, thus initiating among Western countries the fastest transition from war planning to (free) market economy? In any case, the Seelisberg episode illustrates the confidence and sense of superiority the ordoliberals derived from their own views and concepts, as well as their relative lack of interest in the then flourishing US economic literature.
What piques our historical curiosity about the ordoliberal agenda that would continue to prevail in the Northern countries of Europe until our own days can perhaps best be captured in the following paradox: it was at the very moment when the ordoliberals were moving toward an irrevocable divorce from the scientific canons of postwar economics that they were imposing their domination over the praxis of economic policy in West Germany. The historical analysis presented in this book may suggest some elements accounting for this apparent contradiction.
When the term “ordoliberalismus” was coined in 1950, the project drawn up by Eucken, Röpke, and others stood at a tipping point. Ordoliberal political economy emerged as a questioning of the capitalist system in the years of interwar crisis, eventually shaping the economic policy decisions of the newly born German Federal state in the aftermath of the Second World War. Being to some extent absorbed within Ludwig Erhard’s political discourse and partly applied in the name of the “Social Market Economy” (Soziale Marktwirtschaft), the seminal ideas of the ordoliberal political economy of power lost their specificity.
This book has retraced the constitution of German ordoliberalism from the perspective of this tipping point. To this end, it has shed light on the intellectual foundations of the ordoliberal political economy in all its dimensions—historical, epistemological, theoretical, and, indeed, political.
The book’s emphasis on the unity of ordoliberalism may have left some readers dissatisfied. One might argue, for instance, that Walter Eucken and Wilhelm Röpke differed on several issues, or that Franz Böhm’s legal approach belonged to a rather different field of inquiry than that of economics; it is also possible to object that some of the younger ordoliberals, like Fredrich Lutz, were inspired by Anglo-Saxon methods and approaches to economics. These are, indeed, all points worthy of consideration. Yet over and above the particular characteristics that distinguish each and every single author, ordoliberalism was perceived by its exponents as a coherent doctrine and was generally received as such. Therefore, rather than trying to establish distinctions, in this book we have tried to reconstruct the set of ideas, problems, and solution emerging from what remained basically a shared project.
What endowed the ordoliberal agenda with a singularity all of its own was the central importance it attributed to the issue of power. Obviously, there had been some precedents: a number of authors—such as Marx, Weber, or Keynes—had brilliantly recognized that power relations were an essential dimension of the functioning of modern capitalist society. However, the ordoliberals made of the manifestations of power in the social sphere the central issue that bridged the entire scope of their reflections, underpinning the common elements and relative coherence in the four dimensions of their political economy. In short, the ordoliberals’ preoccupation with power issues worked as a strong binding element for their common project.
Showing that ordoliberalism can be interpreted as a political economy of power, however, does not mean that it did actually deal with the issue of power in a comprehensive and exhaustive way. Indeed, the ordoliberals paid little attention to some issues that seem indispensable to anyone wishing to analyze the social impact of economic and political power, such as (among other) the wealth–power nexus or the role of the financial market in the power relations of the real economy. Despite these puzzling omissions, the political economy of power forged by the ordoliberals proved a central resource for the model of society adopted by West Germany—a project that contemporary Germany continues to claim as the distinctive basis of its economic discourse. However, the persisting relevance of ordoliberalism on the political scene has not been accompanied by a capacity to take deep roots in the postwar academic milieu. In short, it proved a political hit but an academic flop—a curious imbalance that might to some extent be explained by the definition of ordoliberalism that this book has provided.
At the center of the ordoliberal discourse stood this—simply formulated but immense—challenge: How was the modern industrialized economy to be endowed with an efficient and yet humane order? This crucial issue dominated ordoliberal deliberations throughout the nearly twenty years of major disorders examined in this book. On the basis of historical and epistemological, as well as theoretical considerations, the ordoliberals constructed their model of a competitive order secured by strong public authorities in order to control unrest and abuses of power within civil society. In doing so, the ordoliberals addressed an issue which is at the heart of political theory; namely, the complex relation between power and social order.
Eventually, ordoliberalism contributed to the development of a form of economic rationale for the (West German) state, presenting itself as architect of an overall vision of society from the perspective of its economic performance. Yet in many respects, the way the ordoliberals framed their main questions and answers was no longer within the recognized arena of mid-twentieth century economics. Indeed, the scope of the ordoliberal political economy broke away from later developments of economics as a technique, as a discipline oriented toward the construction of formalized micro- and macroeconomic models that use statistical estimates to (in)validate their hypotheses. In other words, in developing a political economy of power, the ordoliberals adopted an approach that clashed with the scientific canons then taking shape in the postwar period.
As economics entered the second half of the twentieth century, the gap between ordoliberalism and mainstream economics grew increasingly wider. The international shift in the way of conceiving economics—and no longer political economy—was probably the main reason for the decline of the ordoliberal scientific agenda. Indeed, while power considerations were constitutive of the early discourse of modern political economy (Kurz 2018; Schabas 2009), power had been increasingly relegated to the margins of the legitimate arena of economic analysis throughout the twentieth century. And indeed mainstream economics would be characterized by “a strange lack of power considerations” (Rothschild 1971, 7), applying a very narrow conception of economic power and reflecting its lack of interest in the multidimensionality of this plural concept (Klein 1980; Monvoisin and Rochon 2007; Ozanne 2016).
Nevertheless, this process was neither uniform nor absolute, as has been argued throughout this book. Indeed, looking back to the interwar period one can see how central the issue of economic power was to ordoliberal economic thought—ironically enough Keynes, on the opposite front, to some extent shared the same agenda (Fèvre 2018a). The combined effect of the interwar crisis of liberalism and the rise of authoritarian regimes caused the ordoliberals to enlarge their conception of economic power by taking in the overall political and juridical structure of the economy. Power is by definition an issue which goes beyond the scope of disciplinary fields; consequently, the ordoliberals were bound to extend political economy to history, law, philosophy of science, political philosophy, and sociology. What was later termed “economics imperialism” (Radnitzky and Bernholz 1987; Mäki et al. 2018) from the 1960s onward took shape against the disciplinary openness to other disciplines that was part of the ordoliberals’ original identity.
Fundamentally, the ordoliberal contributions were deeply alien from the disciplinary tools and canons of the “formalist” turn economics went through in the mid-twentieth century (Ward 1972; Rutherford and Morgan 1998; Blaug 2003). And, indeed, the ordoliberal attempt to forge a realistic approach to economic theory could not be easily reconciled with the implicit methodology—positivist and falsificationist—of the profession epitomized by Milton Friedman’s influential Essay in Positive Economics (1953), to mention just one crucial example. This new form of economic theory embraced the unrealism of hypotheses, building its central structure around the behavior of self-interested but clairvoyant individuals engaged in instantaneous trade on perfectly competitive markets tending toward equilibrium. Once again, economic theory relegated power issues to the background of accessory situations, just as the first marginalists had at the turn of the last century (Dockès 1999, 2). Soon enough, most West German economists embraced econometrics and the tools of the neoclassical synthesis. If the University of Freiburg remained an ordoliberal citadel, as did a few other places, by the 1960s, mainstream economics had become largely dominant in federal Germany, both in empirically oriented economics departments and in research institutes (Hesse 2012, 87–88; Grimmer-Solem 2014, 91–92; Düppe 2020, 320–326).
As the years went by, the economic discipline went through a series of major changes which extend far beyond the scope of this book. One transformation that is highly relevant to the story narrated here is the so-called counter-revolution that took place between the late seventies and the early eighties. Monetarism and the New Classical Macroeconomics—championed respectively by Milton Friedman and Robert L. Lucas—undertook a crusade against any remaining form of Keynesianism (Johnson 1971; Tobin 1981; Leeson 2001; Laidler 2015; Wren-Lewis 2016). Thus, these years marked a “remarkable and dramatic change in attitudes toward the role of the state in economic activity” (Backhouse 2005, 355). Through new concepts and theories (e.g., the natural rate of unemployment, rational choice theory, adaptive and rational expectations, real cycles), mainstream economics renewed the prescriptions of laissez-faire liberalism by other means. Politically speaking, it drove the authorities to reduce income taxes and cut public spending, to privatize industries and public services, and to deregulate the legal framework of the commercial and financial sectors.
Voices were periodically raised against the narrow technical development of mainstream economics combined with its overt anti-state agenda. The controversy waxed strong again during the recent period of crisis (2007–2012), though without apparently leading to the refoundation of economics that some wished to see.1 Yet one unexpected outcome of the crisis was the revival of the Keynesian–ordoliberal divide at the forefront of European public debate (Esch 2014; Young 2014b; Ojala and Harjuniemi 2016). By definition, times of economic crisis help to promote positive, active visions of the role of the state. However, it is somewhat surprising to see post-2007 political discourses echoing programs born in the interwar period and developed for the postwar era some fifty years ago. There is perhaps some irony in the vision of ordoliberalism resurfacing as an ossified model resting on austerity measures, in a form that is a far cry from the first ordoliberals’ “third way,” the purpose of which was to free market economy from the deleterious exercise of illegitimate powers.
1. See, among many others, Geoffrey Hodgson (2009) and Colander et al. (2009).