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Ordoliberalism is the German variant of economic liberalism that emphasizes the need for the state to ensure that the free market produces results close to its theoretical potential.
Ordoliberal ideals became the foundation of the creation of the post-World War II German social market economy and its attendant Wirtschaftswunder .
The term "ordoliberalism" (German : Ordoliberalismus) was coined in 1950 by Hero Moeller , and refers to the academic journal ORDO .
Ordoliberals separate themselves from classical liberals. Notably Walter Eucken , with Franz Böhm , founder of ordoliberalism and the Freiburg School, rejected neoliberalism.
Ordoliberals promoted the concept of the social market economy, and this concept promotes a strong role for the state with respect to the market, which is in many ways different from the ideas connected to the term neoliberalism. Oddly the term neoliberalism was originally coined in 1938, at the Colloque Walter Lippmann , by Alexander Rüstow , who is regarded an ordoliberal today.
Because of the connected history, ordoliberalism is also sometimes referred to as "German neoliberalism". This led to frequent confusion and "mix ups" of terms and ideas in the discourse, debate and criticism of both economic schools of liberalism until in 1991 the political economists Michel Albert with Capitalisme Contre Capitalisme and in 2001 Peter A. Hall and David Soskice with Varieties of Capitalism aimed to separate the concepts and develop the new terms liberal market economy and coordinated market economy to distinguish neoliberalism and ordoliberalism.
The theory was developed from about 1930 to 1950 by German economists and legal scholars from the Freiburg School, such as Walter Eucken, Franz Böhm , Hans Grossmann-Doerth , and Leonhard Miksch .
Ordoliberal ideals (with modifications) drove the creation of the post-World War II German social market economy. They were especially influential on forming a firm competition law in Germany. However the social market economy was implemented in economies where corporatism was already well established, so ordoliberal ideals were not as far reaching as the theory's economic founders had intended.
Since the 1960s, ordoliberal influence on economics and jurisprudence has significantly diminished Walter Eucken Institut and the Stiftung Ordnungspolitik are engaged in the ordoliberal tradition.however many German economists define themselves as Ordoliberals through the present day, the ORDO is still published, and the Faculty of Economics at the University of Freiburg is still teaching ordoliberalism. Additionally, some institutes and foundations such as the
Ordoliberalism was a major influence on the economic model developed in post-war West Germany. Ordoliberalism in Germany became known as the social market economy.
The Ordoliberal model implemented in Germany was started under the government administration of Konrad Adenauer . His government's Minister of Economics, Ludwig Erhard , was a known Ordoliberal and adherent of the Freiburg School. Under Adenauer, some, but not all, price controls were lifted, and taxes on small businesses and corporations were lowered. Furthermore, social security and pensions were increased to provide a social base income. Ordoliberals have stated that these policies led to the Wirtschaftswunder , or economic miracle.
Ordoliberal theory holds that the state must create a proper legal environment for the economy and maintain a healthy level of competition (rather than just "exchange") through measures that adhere to market principles. This is the foundation of its legitimacy.The concern is that, if the state does not take active measures to foster competition, firms with monopoly (or oligopoly) power will emerge, which will not only subvert the advantages offered by the market economy, but also possibly undermine good government, since strong economic power can be transformed into political power.
According to Stephen Padgett "A central tenet of ordo-liberalism is a clearly defined division of labor in economic management, with specific responsibilities assigned to particular institutions. Monetary policy should be the responsibility of a central bank committed to monetary stability and low inflation, and insulated from political pressure by independent status. Fiscal policy—balancing tax revenue against government expenditure—is the domain of the government, whilst macro-economic policy is the preserve of employers and trade unions."The state should form an economic order instead of directing economic processes, and three negative examples ordoliberals used to back their theories were Nazism, Keynesianism, and Russian socialism. The Ordoliberal idea of a social market economy is often seen as a progressive alternative beyond left and right and as a third way between collectivism and laissez-faire liberalism.
While the ordoliberal idea of a social market is similar to that of the third-way social democracy advocated by the likes of the New Labour government (especially during the premiership of Tony Blair), there are a few key differences. Whilst they both adhere to the idea of providing a moderate stance between socialism and capitalism, the ordoliberal social market model often combines private enterprise with government regulation to establish fair competition (although German network industries are known to have been deregulated),whereas advocates of the third-way social democracy model have been known to oversee multiple economic deregulations. The third way social democracy model has also foreseen a clash of ideas regarding the establishment of the welfare state, in comparison to the ordoliberal's idea of a social market model being open to the benefits of social welfare.
Ordoliberals are also known for pursuing a minimum configuration of vital resources and progressive taxation.The ordoliberal emphasis on the privatization of public services and other public firms such as telecommunication services; wealth redistribution and minimum wage laws as regulative principles makes clear the links between this economic model and the social market economy.
Wilhelm Röpke considered ordoliberalism to be "liberal conservatism", against capitalism in his work Civitas Humana ("A Humane Order of Society", 1944). Alexander Rüstow also criticized laissez-faire capitalism in his work Das Versagen des Wirtschaftsliberalismus ("The Failure of Economic Liberalism", 1950). The ordoliberals thus separated themselves from classical liberals and valued the idea of social justice. "Social security and social justice", wrote Eucken, "are the greatest concerns of our time".
Michel Foucault also notes the similarity (beyond just historical contemporaneity) between the Ordo/Freiburg school and the Frankfurt School of critical theory, due to their inheritance from Max Weber . That is, both recognise the "irrational rationality" of the capitalist system, but not the "logic of contradiction" that Marx posited. Both groups took up the same problem, but in vastly different directions. The political philosophy of Ordoliberals was influenced by Aristotle, de Tocqueville , Hegel , Spengler , Mannheim , Weber , and Husserl .
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According to Sebastian Dullien and Ulrike Guérot , ordoliberalism is central to the German approach to the European sovereign-debt crisis, which has often led to conflicts with other European countries.
Nobel laureate Friedrich Hayek commented on the Ordoliberals in his 1951 article, "The Transmission of the Ideals of Freedom".
Liberal may refer to:
A market economy is an economic system in which the decisions regarding investment, production and distribution are guided by the price signals created by the forces of supply and demand. The major characteristic of a market economy is the existence of factor markets that play a dominant role in the allocation of capital and the factors of production.
Neoliberalism or neo-liberalism is the 20th-century resurgence of 19th-century ideas associated with laissez-faire economic liberalism and free market capitalism. It is generally associated with policies of economic liberalization including privatization, deregulation, globalization, free trade, austerity, and reductions in government spending in order to increase the role of the private sector in the economy and society; however, the defining features of neoliberalism in both thought and practice have been the subject of substantial scholarly debate. Neoliberalism constituted a paradigm shift away from the post-war Keynesian consensus which had lasted from 1945 to 1980.
Alexander Rüstow was a German sociologist and economist. In 1938 he originated the term neoliberalism at the Colloque Walter Lippmann. He was one of the fathers of the "Social Market Economy" that shaped the economy of West Germany after World War II. He is the grandnephew of Wilhelm Rüstow, the grandson of Cäsar Rüstow and the father of Dankwart Rustow.
The social market economy, also called Rhine capitalism or social capitalism, is a socioeconomic model combining a free market capitalist economic system alongside social policies that establish both fair competition within the market and a welfare state. It is sometimes classified as a coordinated market economy. The social market economy was originally promoted and implemented in West Germany by the Christian Democratic Union (CDU) under Chancellor Konrad Adenauer in 1949. Its origins can be traced to the interwar Freiburg school of economic thought.
Governmentality is a concept first developed by the French philosopher Michel Foucault in the later years of his life, roughly between 1977 and his death in 1984, particularly in his lectures at the Collège de France during this time.
Wilhelm Röpke was Professor of Economics, first in Jena, then in Graz, Marburg, Istanbul, and finally Geneva, Switzerland, and one of the spiritual fathers of the social market economy, theorising and collaborating to organise the post-World War II economic re-awakening of the war-wrecked German economy, deploying a program sometimes referred to as the sociological neoliberalism.
The Anglo-Saxon model or Anglo-Saxon capitalism is a capitalist model that emerged in the 1970s based on the Chicago school of economics. However, its origins date to the 18th century in the United Kingdom under the ideas of the classical economist Adam Smith.
The Walter Eucken Institut is a German ordo-liberal economic think tank based in Freiburg im Breisgau, Baden-Württemberg, Germany.
Walter Eucken was a German economist of the Freiburg school and father of ordoliberalism. His name is closely linked with the development of the concept of "social market economy".
Franz Böhm was a German politician, lawyer, and economist.
The Freiburg School is a school of economic thought founded in the 1930s at the University of Freiburg.
ORDO — Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft is a peer-reviewed academic journal established in 1948 by the German economists Walter Eucken and Franz Böhm. The journal focuses on the economic and political institutions governing modern society.
The Walter Lippmann Colloquium, was a conference of intellectuals organized in Paris in August 1938 by French philosopher Louis Rougier. After interest in classical liberalism had declined in the 1920s and 1930s, the aim was to construct a new liberalism as a rejection of collectivism, socialism and laissez-faire liberalism. At the meeting, the term neoliberalism was coined by Alexander Rüstow referring to the rejection of the (old) laissez-faire liberalism.
Economic liberalism is a political and economic philosophy based on strong support for a market economy and private property in the means of production. Although economic liberals can also be supportive of government regulation to a certain degree, they tend to oppose government intervention in the free market when it inhibits free trade and open competition. Economic liberalism has been described as representing the economic expression of liberalism.
Stiftung Ordnungspolitik is a nonprofit organization dealing with the ordoliberal tradition of the Freiburg school of economics. It strives to maintain and further develop ordo-economics based on the ideas of Walter Eucken and Friedrich August von Hayek.
The Freiburg Circles were a school of economic thought founded in the 1930s in Germany.
Friedrich August Lutz was a German economist who developed the expectations hypothesis.
The Birth of Biopolitics is a part of a lecture series by French philosopher Michel Foucault at the Collège de France between 1978 and 1979 and published posthumously based on audio recordings. In it, Foucault develops further the notion of biopolitics introduced in a previous lecture series, Security, Territory, Population, by tracing the ways in which the eighteenth-century political economy marked the birth of a new governmental rationality.
Maurizio Lazzarato is an Italian sociologist and philosopher, residing in Paris, France. In the 1970s, he was an activist in the workers' movement in Italy. Lazzarato was a founding member of the editorial board of the journal Multitudes. He is a researcher at Matisse/CNRS, Pantheon-Sorbonne University, and a member of the International College of Philosophy in Paris.