Abstract
The paper argues that there are certain parallels between the ideas of ordoliberalism and the framework of limited and open access order (LAO/OAO) as developed by North, Wallis, Webb and Weingast (NWWW): Both approaches focus on the “interdependence of orders”, and both share an emphasis on state capacity in processes of social transition. I also argue that the ideas of the ordoliberals might give impulses for the further development of the LAO/OAO research agenda. Firstly, whereas NWWW mainly deal with the transition process from LAO to OAO, the members of the Freiburg school intensely dealt with the danger that an OAO might revert into an LAO. Accordingly, they spent much effort on developing policy proposals that aimed at preventing such a ‘re-feudalisation’ (Franz Böhm) of society. Secondly, especially when it came to the issue of accomplishing reforms, they also considered the role of informal institutions and beliefs, a topic somewhat neglected in the LAO/OAO-framework in its present form.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Notes
‘Natural order’ is here used synonymously with ‘limited access order’.
More precisely, between 1807 and 1830. For an alternative interpretation, see the contribution of Gerhard Wegner.
See the contribution of Alfred Reckendrees in this special issue.
Eucken’s article does not contain a clear definition of the term ‘economic state’, but it is clear from the context that to him the ‘liberal state of the nineteenth century’ is characterized by (a) the clear separation of polity and economy and (b) by private entrepreneurship (c) high degree of competition whereas the Wirtschaftsstaat is marked (a) by a far-reaching conflation of polity and economy and (b) by far-reaching state interference into entrepreneurial decision-making (c) a high degree of cartelization and monopolization.
This distinction can also be found in the writings of Wilhelm Röpke, one of the most important German contemporary neo-liberal thinkers, who was closely related to, but did not belong to the Freiburg School.
More precisely, the second generation of the Chicago school. As Ekkehard Köhler and Stefan Kolev (2011) have shown, there are interesting parallels between ‘old’ Chicago and the Freiburg school.
There obviously is a strong parallel between the ordoliberals’ considerations on mature OAOs and their possible decline and Mancur Olson’s warning against increasing rent-seeking in stable, developed societies as outlined in “The Rise and Decline of Nations” (Olson 1982).
On the influence of the historical school on ordoliberalism, see e.g. Peukert (2000).
That is, the interplay between the economy and all other spheres of society, including the Zeitgeist.
This is even more obvious if one also looks at the works of Wilhelm Röpke and Alexander Rüstow.
In his 2005 book North noted that ‘the cultural heritage [of a society, J.Z.] will, in many instances, determine success or lack of success of the actors’ (18). For a critique of North’s account of the influence of culture on institutional change as developed in his 2005 book, see Khalil 2006 and Zweynert 2009. However, it should not go without notice that in his 2005 book North himself mentioned the decisive point that cultural heritages might be ‘”malleable” via deliberate modification’ (North 2005, 156). This is exactly the point highlighted by Böhm, Erhard, and Müller-Armack, as we will see in the conclusion.
Keynesian ideas had gained a lot of credit by their ability to explain the collective trauma of the Great Depression and to have offered convincing policy advice. And it certainly did not promote the standing of the Freiburg school that Eucken ([1940] 1992, 244) had in his theoretical main work of 1940 still explicitly denied the scientific value of business cycle theory due to the individual features of each concrete cycle.
However, in the second half of the nineteenthcentury, historical economics and similar approaches existed in many European countries (see e.g. Grimmer-Solem and Romani 1999). What was special about Germany was only the dominance of historicist economics.
See also Zweynert (2006, 470).
After the failed attempt to kill Hitler on 20th of July 1944 parts of the memorandum fell into the hands of the Gestapo which led to the temporary imprisonment of, among others, Dietze, Eucken, and Lampe. Lampe later died of the health problems that were caused by the imprisonment (see Goldschmidt 2002, 128).
Müller-Armack was a student of the economic sociologist Leopold von Wiese and in the 1930s and 1940s had been a representative of Wirtschaftsstilforschung, a variation of neo-historicist thought, see e.g. Müller-Armack (1941).
The issue of currency reform had had a top priority in the discussions of the Arbeitsgemeinschaft Erwin von Beckerath, and the title of a paper written by Adolf Lampe for the Gouvernement Militaire de Bade in early 1946 “Währungsordnung = Wirtschaftsordnung” (in Blumenberg-Lampe 1986, 507–534) shows how tightly these two issues were connected in their view.
For a critique of Eucken’s narrow data chain which I basically agree to, see Goldschmidt 2002, 69–70.
References
Alexander, J. (Ed.). (1990). Differentiation theory and social change. Comparative and historical perspectives. New York: Columbia University Press.
Ambrosisus, G. (1977). Die Durchsetzung der Sozialen Marktwirtschaft in Westdeutschland. 1945–1949. Stuttgart: Deutsche Verlags-Anstalt.
Blum, U. (1969). Soziale Marktwirtschaft. Wirtschaftspolitik zwischen Neoliberalismus und Ordoliberalismus. Mohr: Tübingen.
Blumenberg-Lampe, C. (1973). Das wirtschaftspolitische Programm der ‘Freiburger Kreise’: Entwurf einer freiheitlich-sozialen Nachkriegswirtschaft. Nationalökonomen gegen den Nationalsozialismus. Berlin: Duncker & Humblot.
Blumenberg-Lampe, C. (1986). Der Weg in die soziale Marktwirtschaft. Referate, Protokolle, Gutachten der Arbeitsgemeinschaft Erwin von Beckerath 1943–1947, Stuttgart: Klett-Cotta.
Böhm, F. (1961). Demokratie und ökonomische Macht. In: Kartelle und Monopole im modernen Recht: Beiträge zum übernationalen und nationalen europäischen und amerikanischen Recht, erstattet für die Internationale Kartellrechts-Konferenz in Frankfurt am Main, Juni 1960 (pp. 1–45). Karlsruhe: C.F. Müller.
Böhm, F. ([1928] 1960). Das Problem der privaten Macht. In Franz Böhm. Reden und Schriften (pp. 25–45). Karlsruhe: C.F. Müller.
Böhm, F. ([1957] 1960). Die Forschungs- und Lehrgemeinschaft zwischen Juristen und Volkswirten an der Universität Freiburg in den dreißiger und vierziger Jahren des 20. Jahrhunderts. In: Mestmäcker, E.-J. (Ed.). Franz Böhm. Reden und Schriften über die Ordnung einer freien Gesellschaft, einer freien Wirtschaft und über die Wiedergutmachung (pp. 158–175). Karlsruhe: C. F. Müller.
Bratishchev, I. M. (2003). Sotsial naya rynochnaya ekonomika i mekhanizm ee stanovleniya v Rossii. Moscow: Ekonomika.
Dembitskii, S. G. (2003). Sotsial′noe rynochnoe khozjajstvo kak model′ ekonomicheskogo razvitija Rossii: monografija. Moscow: Sputnik.
Erhard, L. ([1942/43] 1977). Kriegsfinanzierung und Schuldenkonsolidierung. Frankfurt/Main: Propylaeen.
Eucken, W. (1932). Staatliche Strukturwandlungen und die Krisis des Kapitalismus. Welt-wirtschaftliches Archiv, 36, 297–321.
Eucken, W. ([1940] 1992). Foundations of economics (T. W. Hutchison, Trans.). Berlin: Springer.
Goldschmidt, N. (2002). Entstehung und Vermächtnis ordoliberalen Denkens. Walter Eucken und die Notwendigkeit einer kulturellen Oekonomik. Muenster: LIT.
Grimmer-Solem, E., & Romani, R. (1999). In search of full empirical reality: Historical political economy, 1870–1900. The European Journal of the History of Economic Thought, 6(3), 333–364.
Haggard, S., & Tiede, L. (2011). The rule of law and economic growth. Where are we? World Development, 39(5), 673–685.
Haselbach, D. (1991). Autoritärer Liberalismus und Soziale Marktwirtschaft. Gesellschaft und Politik im Ordoliberalismus. Baden-Baden: Nomos.
Hesse, J.-O. (2010). Wirtschaft als Wissenschaft. Die Volkswirtschaftslehre in der frühen Bundesrepublik. Frankfurt am Main: Campus Verlag.
Horn, K. I. (1996). Moral und Wirtschaft. Zur Synthese von Ethik und Ökonomik in der modernen Wirtschaftsethik und zur Moral in der Wirtschaftstheorie und im Ordnungskonzept der sozialen Marktwirtschaft. Tübingen: Mohr.
Hutchison, T. (1979). Notes on the effects of economic ideas on policy: The example of the german social market economy. Zeitschrift für die gesamte Staatswissenschaft, 135(3), 426–441.
Khalil, E. (2006). The Roadblock to Culturalist Economics: Economic Change á la Douglass, North, MPRA Paper No. 1045.
Klump, R. (1996). Wege zur Sozialen Marktwirtschaft - Die Entwicklung ordnungspolitischer Konzeptionen in Deutschland vor der Währungsreform. In E.W. Streissler (ed), Die Umsetzung wirtschaftspolitischer Grundkonzeptionen in die kontinentaleuropäische Praxis des 19. und 20. Jahrhunderts (pp. 129–160), Berlin: Duncker & Humblot.
Klump, R. (2005). Der Beitrag der Freiburger Kreise zum Konzept der Sozialen Marktwirtschaft. In: N. Goldschmidt (ed.), Wirtschaft, Politik und Freiheit. Freiburger Wirtschaftswissenschaftler und der Widerstand (pp. 383–401). Tübingen: Mohr Siebeck.
Köhler, E., & Kolev, S. (2011). The conjoint quest for a liberal positive program: “Old Chicago”, Freiburg and Hayek (p. 109). Hamburg: HWWI Institute of International Economics, HWWI Research Paper No.
Kordonskii, S. G. (2000). Rynki vlasti: Administrativnye rynki SSSR i Rossii, Moscow: OGI.
Luhmann, N. (1972). Knappheit, Geld und die bürgerliche Gesellschaft. Jahrbuch für Sozialwissenschaft, 23(2), 186–210.
Müller-Armack, A. (1933). Staatsidee und Wirtschaftsordnung im neuen Reich. Berlin: Juncker & Duennhaupt.
Müller-Armack, A. ([1941] 1944). Genealogie der Wirtschaftsstile. Die geistesgeschichtlichen Urspruenge der Staats- und Wirtschaftsformen bis zum Ausgang des 18. Jahrhunderts. Stuttgart: Kohlhammer.
Müller-Armack, A. ([1948] 1974). Vorschläge zur Verwirklichung der Sozialen Marktwirtschaft. In A. Mueller-Armack, Genealogie der Sozialen Marktwirtschaft (pp. 90–107). Bern/Stuttgart: Haupt.
Müller-Armack A. ([1973] 1974). Die wissenschaftlichen Urspruenge der Sozialen Marktwirtschaft. In: Mueller-Armack, A.: Genealogie der Sozialen Marktwirtschaft, Bern/Stuttgart: Haupt, pp 244–251.
Murach-Brand, L. (2004). Antitrust auf deutsch. Der Einfluss der amerikanischen Aliierten auf das Gesetz gegen Wettbewerbsbeschränkungen (GWB) nach 1945. Tübingen: Mohr Siebeck.
Nesterenko, A. (1998). Sotsial′naja rynochnaya ekonomika. Kontseptual′nye osnovy, istoricheskij opyt, uroki dlya Rossii. Voprosy ekonomiki, 70(8), 71–84.
Nevskii, S. I. (2008). Social′no-ekonomicheskie reformy v poslevoennoj Zapadnoi Germanii, 1945–1949. Moscow: TEIS.
Nolte, P. (1990). Staatsbildung als Gesellschaftsreform. Frankfurt: Campus Verlag.
North, D. C. (2005). Understanding the process of economic change. Princeton, NJ: University Press.
North, D. C., Wallis, J. J., Webb, S.B., & Weingast, B. R. (2007). Limited access orders in the developing world: A new approach to the problems of development, World Bank Policy Research Working Paper, WPS4359.
North, D. C., Wallis, J. J., Webb, S. B., & Weingast, B. R. (Eds). (2013). In the shadow of vioelence. Politics, economics, and the problems of development. New York: Cambridge University Press.
North, D. C., Wallis, J. J., & Weingast, B. R. (2009). Violence and social orders. A conceptual framework for interpreting recorded human history. Cambridge: Cambridge University Press.
Olson, M. (1982). The rise and decline of nations. Economic growth, stagflation and social rigidities. New Haven: Yale University Press.
Paganelli, M. P. (2008). The Adam Smith problem in reverse. Self-Interest in “The Wealth of Nations” and “The Theory of Moral Sentiments”. History of Political Economy, 40(2), 365–382.
Peukert, H. (2000). Walter Eucken (1891–1950) and the Historical School. In Peter Koslowski (Ed.), The theory of capitalism in the german economic tradition: Historism, ordo-liberalism, critical theory, solidarism (pp. 93–145). Berlin: Springer.
Rieter, H., & Schmolz, M. (1993). The ideas of German ordoliberalism 1938–45: Pointing the way to a new economic order. The European Journal of the History of Economic thought, 1(1), 87–114.
Sally, R. (1996). Ordoliberalism and the social market. Classical Political Economy from Germany. New Political Economy, 1(2), 233–257.
Wallis, J. J. (2011). Institutions, organizations, impersonality, and interests. The dynamics of institutions. Journal of Economic Behavior & Organization, 79(1/2), 48–64.
Weber, M. (1972). Wirtschaft und Gesellschaft. Grundriß der verstehenden Soziologie (4th ed.). Tübingen: Mohr.
Zweynert, J. (2006). Shared mental models, catch-up development and economic policy-making: the case of Germany after world-war II and its significance für contemporary Russia. Eastern Economic Journal, 32(3), 457–478.
Zweynert, J. (2009). Culture versus interests in the theory of institutional change? Journal of Institutional Economics, 5(3), 339–360.
Zweynert, J. (2011). Shock therapy and the transfer of institutions: The new debate and some lessons from the post-1806 reforms in Prussia and in southwestern Germany. Constitutional Political Economy, 22(2), 122–140.
Zweynert, J. (2012). Money and the extension of morals. The case of the soviet union. Critical Review, 24(1), 115–129.
Zweynert, J. (2013). How German is German ordo-liberalism? Review of Austrian Economics, 26(2), 109–125.
Acknowledgments
I would like to thank the Reinhold-Maier-Foundation (2013) and the Fritz-Thyssen-Foundation (2014) for their generous funding of the two workshops this paper and the other papers in this special issue result from. I would also like to express my gratitude to the discussants of my paper and an anonymous referee for their very helpful comments. I am especially indebted to Nils Goldschmidt (University of Siegen), who has drawn my attention to Franz Böhm’s warnings against “re-feudalisation”.
