Ordoliberal Lessons for Economic Stability: Different Kinds of Regulation, Not More Regulation

Abstract

Since the Global Financial Crisis of 2008 the term “ordoliberalism” has experienced a marked revival. This discussion tends to focus on the need for more state intervention. Yet this misrepresents the core ideas of ordoliberalism because its main concern is not with “how much” but with “what kind of” intervention is needed. Thus, this article seeks to clarify the ordoliberal position, in particular its key distinction between market conforming and nonconforming state intervention. Discussing the current financial crisis, it also evaluates the potential benefits and drawbacks of ordoliberalism. The article rebukes rhetorical shortcuts that equate every economic policy coming out of Germany with ordoliberalism. It also suggests that while the ordoliberal conception does not necessarily provide a solution to the current problems in the short run, in the long run it may form the basis for a sounder conception of economic regulation than more libertarian views can offer.

‘There's a Brand New Talk, but it's Not Very Clear’: Can the Contemporary EU Really be Characterized as Ordoliberal?

“…In distilling the varieties of ordoliberal thought, we distinguish the coexistence of two possible broad readings: one specifying a minimalist form of economic constitutionalism (prescribing the least law possible to guarantee macroeconomic stability), and the other a more maximalist form, entailing a particular type of socio-economic policy (typically enforcing market competition and monetary discipline). We suggest that conflict between these two readings is responsible for the disagreements amongst observers of ordoliberalism, for example, if initiatives such as the European Banking Union (Siems and Schnyder 2014;Young 2014) are ordo or not. In determining whether the contemporary EU is ordo, we therefore seek evidence of both a general system of law structuring economic competition (for which we look towards the legal order(s) of the EU) and more specific economic policies aimed at fostering competition.…”

“…For many the 'German consensus' finds itself uploaded through the ideological culture of the Bundesbank (Dyson 2009) to European institutions (Young 2014) and thus constitutes an 'ordoliberalization of Europe' (Biebricher 2014, p. 17). Others however argue that we ought to be sceptical about the extent to which recent EU policy-making has really fitted this bill, and about whether even Germany itself is so ordoliberal in practice (Siems and Schnyder 2014). We agree with this scepticism, insofar as we look beyond the (economic) fields in which the culture of the Bundesbank might be uploaded.…”

“…Ordoliberalism has come back into fashion as a means of characterizing the EU and European integration. Recent commentary revisits their assumed strong connection as inextricably linked since the beginning of the integration process (Siems and Schnyder 2014). Somma (2013, p. 105), for example, claims that the EU was conceived as an ordoliberal construct from the outset.…”

Rethinking the European Social Market Economy: Introduction to the Special Issue

“…Hien, forthcoming; Joerges and Rödl, ; Young, ). Nonetheless, during the first stages of European integration, leading German ordoliberals were highly sceptical about the regionally oriented institutional form of European co‐operation, as shaped by the European Coal and Steel Community (ECSC) in 1951 and the European Economic Community (EEC) in 1957 (Siems and Schnyder, , p. 384). Neither had they been fans of the Marshall‐plan.…”

“…Purely redistributive social transfers were not part of this conception. In terms of social policy, ordoliberals rather focused on the creation of equal opportunities within a stable and predictable economic framework; social improvements would then follow more or less automatically (Hien, forthcoming, p. 6; Siems and Schnyder, , pp. 381–382; Young, , pp.…”