Ordoliberalism

The ordo-liberalism is a concept for a market-based economic system in which a space created by the state regulatory framework should ensure the economic competition and the freedom of citizens in the market.

The concept of ordo-liberalism ' was developed mainly on the so-called Freiburg school of economics, which belonged to Walter Eucken, Franz Böhm, Leonhard Miksch and Hans Grossmann - Doerth. First approaches can already be found in the booklet published in 1937 order of the economy. The term ordo-liberalism was not until 1950 by Hero Moeller based on the journal ORDO - marked Yearbook of the order of business and society. The designation goes to the Ordo - thoughts of scholastic university theology in former demarcation of the closed monastic theology, back ( Ordo Latin for order, ( Knight ) Orders ).

Principle

The theoretical starting point of the ordo-liberalism were the doctrines of Adam Smith and other representatives of classical political economy. The ordo-liberalism is based also on the negative experiences with both the state interventionism of the first half of the 20th century and with the laissez- faire liberalism. A central economic planning as in the Soviet and the Nazi regime refused Walter Eucken, especially because with the suppression of economic freedom would be associated to the oppression of political freedom. The main concern was united for Eucken a " decent and functional order," the political and economic freedom.

To understand the Ordoliberalismus the design of the forms of order of business must be distinguished from the direct management of economic processes on the other hand one hand. The Ordoliberalismus looks in a political framework set order, the Ordo, the basis for competition; could from the business process itself and the state should stay out mostly. Eucken brought the vision of the ordo-liberalism on the formula: State planning forms - yes; government planning and direction of the economic process - no. The aim of the ordo-liberalism is to reconcile social thought and principle of performance, order order and decentralism together.

Eucken developed the basic principles of a competitive order, which is to guarantee efficiency and freedom through the full play of the competitive process. The constituent principles of the Competition Rules are a functioning price system, free access to markets, private ownership of the means of production, freedom of contract, liability principle and consistency of economic policy for Eucken. As Eucken considered it impossible to realize a competitive system without the monetary value is sufficiently stable, he ordered the monetary policy to the primacy. Is geared to the achievement of Competition Rules policy must respect the unity of the constitutive principles of such a competitive system, as well as the interdependence of the economic system with the other areas of life. The individual economic agents for their actions should bear the full responsibility and be liable ( liability principle - by Walter Eucken " who benefits, and the damage must carry "). Therefore parts of the Ordoliberalismus criticize the limited liability company.

According to Eucken, there are areas in which the constituent principles of the competitive system are not sufficient to maintain the competitive system functional. He calls social policy, efficiency -related monopoly, income distribution, labor markets and environmental issues. The last four of these areas coincide with the worked out of Eucken regulative principles. The measures necessary for enforcement of regulative principles may, however, be made by an ad hoc economic policy, but must be guided by the principles of the economic constitution.

Considerable space is devoted to questions Eucken social security and social justice. Properly understood, social policy is for Eucken lifted in a planning policy that allows individuals to help themselves. Efficiency -related monopolies that is, economic concentrations of power by monopolies (including state monopolies ), cartels and other forms of dominance are to be prevented by the state, eg by an independent Cartel. The resulting distribution of income from the competition requires a regulatory correction for low-income households, such as an income tax with a progressive tariff history. On the labor market may arise regulatory action at a fall of wages below the subsistence level and unemployment. These problems were indeed largely be solved by optimal competition on the supply and demand side. Under certain circumstances, however, minimum wages are advocated. Also on the labor markets neither providers nor demanders should have monopolistic positions of power. The difference between tangible goods and labor markets looks Eucken due to the fact that labor is not a commodity. To prevent exploitation, Vermachtung must be counteracted in the labor markets through monopolistic organizations. This requirement Eucken taught to both the employer side as the trade unions. Unions would then be problematic power bodies when they are looking to push wages above the competitive wage addition or impair the mobility of workers. Unions met but there is an important function, where it offsets the inequality of the market positions of the workers and entrepreneurs. In environmental policy, government intervention is considered necessary to limit the external effects.

The largely introduced by Ludwig Erhard in Germany postwar economic policy oriented on the one hand to Müller- Armacks its Social market economy, on the other hand, to set out by Eucken ordoliberalen guidelines.

The ordo-liberalism holds a frame order as necessary, as the completely free market to tend to dissolve itself. Providers join together, form cartels and speak from prices. The provider could so the competition - and thus the functioning of the market - restrict ( dominant position on the market). The damage competition can gain a preponderance over the performance competition. From this analysis, the ordo-liberalism derives tasks of the state and parts of the framework. How should the regulatory framework include antitrust and competition laws, promote market transparency and market access.

Since the ideal of perfect competition ( Polypol ) according to the ordo-liberalism on the supply and demand side is not possible, it was replaced by the idea of workable competition. This calculates, with that innovative entrepreneurs can also gain significant market advantage in a dynamic economy through innovations first. Market imbalances can be taken because of these innovations into account, in the expectation that they are degraded by further competition. The emergence of stable oligopolies or monopolies should be prevented by the ordo-liberal legislative framework; for controlled, gradual abolition of monopolies, caused by earlier regulatory failure, regulatory authorities need to be installed. Market failure is possible anywhere in the ordo-liberal approach, which was neglected in time the right Ordo erect.

The Ordo - thought

The Ordo - thought originates as " one of the highest symbol values ​​[ ... ] of scholastic metaphysics ", as it was especially deployed from Thomas Aquinas. In the literature it is controversial to what extent the Ordo - ideas of the Freiburg School based on these intellectual-historical roots. Nils Goldschmidt from Walter Eucken Institute (2002), considers that Eucken's intention that a "natural, God-given order " was. According to Michael Schramm, the concept of medieval " ordo " as well, although to a religious roots, Eucken does not use the term metaphysical, but economically. Heinz Grossekettler subscribes to the view Schramms that Eucken would have the task to develop a workable and humane economic system, the economic science reserved. Grossekettler also points out that Goldschmidt almost exclusively referring to Eucken quotes from the period prior to its epistemological breakthrough in 1934, he had so far undergone a change.

According Luder Gerken and Joachim Starbatty especially Adam Smith the Ordo - thought has taken in the social and economic history. He saw a natural order in which individual interests and the interests of society in harmony with each other, as dictated to. This idea of a natural order would have taken up the Ordo-liberals, they understand in contrast to the classics but not as an order which is established by itself, but as an order that needed to be made aware of.

After Reinhard Blum, the ordo-liberals have not only related to the scholastic notions of order, but also on their economic theory application by the Physiocrats. In contrast, Eucken was by Ingo Pies not followers, but avowed opponent of the natural law conception of the Physiocrats.

System

Ordo-liberalism and neo-liberalism

The Ordoliberalismus part of a heterogeneous flow economics, which is summarized under the term neoliberalism. The term ordo-liberalism is in the strict sense of the " Freiburg School ", the terms Ordoliberalismus and neo-liberalism are but partly also used interchangeably in the literature. According to Hans Willgerodt the term neoliberalism is but " misunderstood and misused more by the opponents of this concept for misinterpretation ." In the 1980s, neoliberalism was connected with the ideas of Hayek and Friedman in particular, even though both itself is not designated as. Hans -Werner Sinn borders from the "true" neo-liberalism of " radical concepts of the Chicago School of Milton Friedman ." According to Andreas Renner, the term neoliberalism learned from the 1990s, a change of meaning and will regularly since then identified with a " market fundamentalism." Business ethicist Peter Ulrich represents the ordo-liberalism as a position of "civilized market economy" neoliberalism as a position of "total market" over.

Alexander and Wilhelm Röpke Rüstow

The theories of Alexander and Wilhelm Röpke Rüstow be called sociological neo-liberalism (also sociological liberalism or religious or humanist -founded neo-liberalism ). This is also attributed as a special direction of the ordo-liberalism in a broader sense, this classification is controversial. However, are seen by some authors also far-reaching differences. The sociological ( neo) liberalism was " much intervention joyful than the ordo-liberal conception ," they differed " not only in the list of tasks, but also in the deemed admissible means. " Andreas Renner explained that in the reception of the ordo-liberals created a confusion by is that the ordo-liberals defined themselves primarily according to their self- understanding of the subject area economy and do not have the economic incentive analysis method. This was the social dimension and thus the connection line to the socio- more logical work Riistow and Röpke underexposed. The one-sided economic interpretation of the work of Ordoliberalismus get recognized more recently by a number of authors.

Ordo-liberalism and Social Market Economy ( Alfred Müller- Armack )

Based on the concept of ordo-liberalism developed Alfred Müller- Armack his economic policy guiding principle of the social market economy. Karl Georg Zinn writes: " However, there are [ ... ] significant differences between Mueller Armack and the neo-liberal supporters of a free and liberal market economy. In many ways, Mueller Armack is closer than the proper theoretical purists Eucken with his philosophical spread their ideas both emigrants Röpke and Rüstow. Mueller Armack was the social policy and state economic and structural policy, a far greater weight than Eucken, for social policy appeared necessary at best as a minimum program against extreme abuses and economic policy simply unnecessary and considered to be harmful, because an ideal market economy, as he in his theory of order said to have designed, no cyclical booms and crises would have more " the following table shows an attempt at distinguishing the two concepts.:

Ordoliberalismus and Hayek

According to Wouter Devroe and Pieter van Cleynenbreugel Friedrich August von Hayek am often assigned to the ordo-liberalism. So Hayek have significantly developed according Luder Gerken the Freiburg School, founded by Eucken and Böhm ordo-liberalism. Lars Gert Bach sees Hayek in one of the most important representatives of the Freiburg ordo-liberalism. Even Manfred E. Streit, Andreas Renner, Nils Goldschmidt and Michael Wohlgemuth organize Hayek to the ordo-liberalism, these authors Ordoliberalismus not limited to the Freiburg School, but distinguish several different types of ordo-liberalism. Stefan Kolev sees a reference to the ordo-liberalism in terms of Hayek's early work of the 1930s and 1940s. According to David J. Gerber Hayek looked like Eucken competition is important, however, did not believe in later years to a strong state. In most cases, Hayek is associated with the Austrian School.

After Walter Oswalt try Hayek freiburger Chair successor Viktor Vanberg and Manfred E. While constructing dispute a tradition between Eucken and Hayek, he points out, however, that Eucken had already criticized Hayek's Road to Serfdom, that it does not adequately distinguish between competition policy and laissez- fair is different. Eucken's ideas that policy questions are rational and moral will to decide, negated by Hayek's theory of group selection. The " irreconcilable difference " between Hayek and Eucken Ordoliberals to have such early Rüstow already formulated that exists between ordo-liberal economists and " paläoliberalen " economists such as Hayek " the sharpest and most fertile subkonträre contrast ". Kathrin Meier -Rust sees an incompatibility between the " old liberals " Hayek with the neo-liberals ( in the historical sense ) Eucken, Röpke and Rüstow. Sibylle Tönnies sees Hayek as an essential antagonist of a correctly understood Ordoliberalismus. Hayek regarded himself, according to Manfred E. dispute explicitly as the successor of his deceased friend Eucken, as he at the University of Freiburg was appointed in 1962. Ingo Pies comes to the conclusion that, despite the differences in detail the works of Eucken and Hayek would have the same concept, it refers to Hayek's Freiburg inaugural lecture, in this long -standing friendship with Eucken "based on complete agreement in theoretical as well as in political issues, " said. This seems, according to Manfred E. dispute " about a statement of courtesy to be out walking also justified, and not solely on the basis of similarities in their basic value systems, but also because of their shared deep interest in questions of economic order. " However, he has differences on the significant issues out. Elsewhere writes dispute with Michael Wohlgemuth, that this statement was a polite phrase and that it apart would be no concrete evidence for a substantive agreement with the work of Eucken. Also there were in the works of Hayek no explicit references to works of ordo-liberals (as well as vice versa). Ingo Pies contradicts dispute and Wohlgemuth expressly refers to the close personal friendship between Eucken and Hayek. The undisputed finding that Eucken will not cited in the writings of Hayek's is not necessarily evidence of disagreement. Rather, Hayek was not mentioned by name in 1944 in his book The Road to Serfdom out of consideration for Italian and German authors. According to Eucken's death, Hayek had turned to more recent developments, which is why a reference to Eucken was not expected. In this respect, was Hayek's expression in his Freiburg inaugural lecture not pure politeness and flattery. Michael Wohlgemuth has explained elsewhere that Hayek's evolutionary social philosophy proved " in most cases be quite complementary" to Freiburg tradition and have thus given to the ordo-liberal research program decisive new impetus. Hayek's work on the development of a theory of cultural evolution from the 1960s designed Iris loud Karabelas however, suggests that he is just decidedly in his time as a professor at the University of Freiburg away from Euckenschen research program. According to Nils Goldschmidt and Michael Wohlgemuth, a complementarity indicates the fact that Hayek's followers and successors on the Freiburg Chair Hopp man, Manfred E. Streit and Viktor Vanberg had " creative symbiosis " between Hayek's work and the Ordoliberalismus made ​​by by Hayek's theory own ideas have evolved, which would have the older tradition Freiburg multiple references. Eucken and Hayek are sometimes collectively referred to as initiators of order economics, as they have become largely independent of each other is concerned with the problems of economic and social orders. According to Stefan Kolev It existed alongside numerous similarities certainly also important differences both in the proper theoretical as well as in the regulatory requirements. Your social philosophies were not minimal state constructs, they are united in the rejection of Keynesianism in theory and practice. There are differences, for example, in attitude to classical liberalism. While Eucken and the Freiburg School emancipated from classical liberalism and sought a third way, Hayek saw explicitly in the wake of Hume and Smith and their idea of ​​Evolutorik social developments. Hayek called the liberalism of the Freiburg School as " restrained liberalism" ( engl. suppressed liberalism ). Lars Gert Bach regarded Hayek as the convergence point of neoliberalism, since he had only to both the Austrian School, the London School, the Chicago School and the Ordoliberalismus share. But despite this basic agreement, according to Gert Bach existed far-reaching differences. Unlike ordoliberalism to understand Hayek's neoliberalism, especially in political terms rather than moderating and mediating middle path. It also contrary to the ordo-liberal idea of ​​an explicit design of a market-driven control structure and political orientation on the criterion of social justice, Hayek's theory of spontaneous order, since, according to Hayek's view of the test an explicit design rules on a " pretense of knowledge " is based ( epistemological skepticism ). The widespread passivity criticism holds Ingo Pies countered that Hayek's plea to plan the order could not be interpreted not as if he had called for a general political abstinence. Hayek does not use the term "order" as Eucken in terms of a category of rules, but in the sense of a result category. Hayek if it were a spontaneous order, but not a spontaneity of the rules. So be it, according to Hayek quite conceivable that the formation of a spontaneous order is based entirely on rules that were made ​​intentionally. After Stefan Kolev can be determined independently from the fact that Hayek tend to underestimate the resulting from the exercise of power in the market process hazards. According to Philipp Batthyány was for Hayek the principle that (state ) rules only to the types of behavior, but not to the change of market outcomes that the distribution of power and income, may relate. After the ordo-liberal idea Eucken, the resulting distribution of income from the competition of a regulatory correction for low-income households, such as an income tax with a progressive tariff course needs. Hayek rejects an income tax with a progressive tariff history. He argues, however, for a minimum income, " below which nobody need to descend ", this minimum coverage is a self-evident duty of society. After Reinhard Zintl can be of politically deemed necessary in prosperous societies legitimately far above the physical subsistence level for Hayek the scope. However, is important for Hayek that it not go to the correction of alleged injustices of the competitive process, but collective responsibility.

Iris Karabelas locates Hayek in classical liberalism, there is also Hayek sees in later years. According to Iris Karabelas the view is predominantly represented that Hayek's extreme or evolutionary ( Ordo - ) liberalism situate outside of the main strands of the ordo-liberalism, namely, the Freiburg School and the sociological ( Ordo - ) liberalism, in the old economic liberalism of the 19th century.

Ordo-liberalism and political liberalism

The Ordoliberalismus defined, according to Ralf Ptak by " a complete break with the roots of political liberalism, while absolutizes the liberal element and condensed into an authoritarian liberalism. " The ordo-liberalism defines itself from the outset against Marxism and socialism, but especially against the emerging parallel Keynesianism and the macro economics-based welfare state. The assertion of a dedicated opposition to National Socialism is rejected by Ptak than legend. This representation is " seen anti liberal attack " by entities other than, Ptak just go primarily to the " disavowal of liberal Settings". Eucken's political liberalism was 1933/34, so well established " that he could stand up against the Nazi regime consistently. " Political scientist Philip Manow highlights the origins of ordo-liberalism in the Protestant theology forth and justified by the "anti- liberal character ", with the the early Ordoliberalismus 've used for a strong state. In contrast, Michael Schramm out that Eucken was personally although quite influenced by religious beliefs, background, conceptual, however, was not his scientific reasoning have been dependent on it. Thomas Apolte sees the demand for a " strong state " the most thoroughly misunderstood expressions of ordo-liberalism. Eucken strong state drew its strength not just from an authoritarian attitude, but from a liberal restraint. The strength resultiere directly from the fact that the state focused on the more consensual planning issues and leaves the potentially more conflictual interests vote social coordination mechanisms.

To understand the use of this formula in Eucken correctly, must be observed according to Ingo Pies, that the connotation of the term " strong state " had been drastically re-evaluated by the Nazis and now awaken associations with authoritarian politics. In the Weimar Republic, this formula was reported to be widespread across the political spectrum.

Effect story

In the Federal Republic of Germany ordo-liberal ideas have been implemented in particular in the political competition act in the first phase of the social market economy by the first Federal Economics Minister Ludwig Erhard, from ordoliberaler perspective, however, only in part.

In Germany today, especially the Freiburg Walter Eucken Institute concerned with research on the ordo-liberalism.

In economics and law, science, the influence of the Freiburg School has deteriorated significantly since the 1960s. This threatens the Freiburg school science in the field of the history of dogma and political exile in the area of non-binding speeches because of the Freiburg School, the teachings of which are today faced with a gradual displacement or monopolizing trivialization.

Against the backdrop of the financial crisis from 2007 different authors such as Hans -Werner Sinn, or Sahra Wagenknecht appreciated the timeliness of ordo-liberalism.