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Freedom and the Strong State : on German Ordoliberalism This is a repository copy of Freedom and the Strong State : On German Ordoliberalism. White Rose Research Online URL for this paper: https://eprints.whiterose.ac.uk/67263/ Version: Submitted Version Article: Bonefeld, Werner orcid.org/0000-0001-6709-5313 (2012) Freedom and the Strong State : On German Ordoliberalism. New Political Economy. pp. 633-656. ISSN 1469-9923 https://doi.org/10.1080/13563467.2012.656082 Reuse Items deposited in White Rose Research Online are protected by copyright, with all rights reserved unless indicated otherwise. They may be downloaded and/or printed for private study, or other acts as permitted by national copyright laws. The publisher or other rights holders may allow further reproduction and re-use of the full text version. This is indicated by the licence information on the White Rose Research Online record for the item. Takedown If you consider content in White Rose Research Online to be in breach of UK law, please notify us by emailing [email protected] including the URL of the record and the reason for the withdrawal request. [email protected] https://eprints.whiterose.ac.uk/ New Political Economy For Peer Review Only Freedom and the Strong State: On German Ordoliberalism Journal: New Political Economy Manuscript ID: CNPE-2011-0039.R2 Manuscript Typ : Original Articl URL: http:/mc.manuscriptcentral.com/cnpe Page 1 of 22 New Political Economy 1 2 3 4 Abstract 5 Ordo-liberalism is the theory behind the German social market economy. Its theoretical 6 stance developed in the context of the economic crisis and political turmoil of the Weimar 7 Republic in the late 1920s. It is premised on the strong state as the locus of liberal 8 governance, and holds that economic freedom derives from political authority. In the context 9 of the crisis of neoliberal political economy and austerity, and debates about the resurgence of 10 11 the state vis-à-vis the economy, the article introduces the ordoliberal argument that the free 12 economy presupposes the exercise of strong state authority, and that economic liberty is a 13 practice of liberal governance. This practice is fundamentally one of social policy to secure 14 the sociological and ethical preconditions of free markets. The study of ordo-liberalism brings 15 to the fore a tradition of a state-centric neo-liberalism, one that says that economic freedom is 16 ordered freedom,For one thatPeer argues that theReview strong state is the polit Onlyical form of free markets, and 17 one that conceives of competition and enterprise as a political task. 18 19 20 Keywords 21 Ordo-liberalism, Neoliberalism, Strong State, Free Economy, Economic Crisis, Freedom and 22 Authority, Liberal Interventionism, Class, Enterprise, Social Market Economy 23 24 25 26 27 Title 28 Freedom and the Strong State: On German Ordo-liberalism 29 30 31 Werner Bonefeld1 32 33 34 Introduction 35 The German ordoliberal tradition is better known in the Anglo-Saxon world as the Freiburg 36 School, or German neo-liberalism, or indeed as the theoretical foundation of the postwar 37 38 German social market economy. It originated in the late 1920s / early 1930s in a context of 39 financial crisis and economic depression, political violence and austerity, conditions of 40 ungovernability, and entrenched class positions. The founding thinkers of ordo-liberalism 41 were Walter Eucken, Franz Böhm, Alexander Rüstow, Wilhelm Röpke and Alfred Müller- 42 Armack. In the context of the Weimar crisis, they developed a particular account on how to 43 make capitalism work as a liberal economy, or as Foucault (2008) saw it, on how to define or 44 redefine, or rediscover the economic rationality of capitalist social relations. The ordoliberals 45 did not identify neoliberalism with a weak state that is at the mercy of economic forces. They 46 identified it with a strong state – a state that restrains competition and secures the social and 47 ideological preconditions of economic liberty. For these thinkers, the weak state is tantamount 48 to disaster. 49 50 51 The ordoliberal idea of a social market economy has been seen as a progressive alternative 52 beyond left and right (see for example, Giddens, 1998). Indeed, Maurice Glasman (1996: 54- 53 54 1 55 I researched the Ordoliberal tradition with the support of an ESRC grant entitled ‘Ordoliberalism and the Crisis 56 of Neoliberal Political Economy’, RES-000-22-4006. The support of the ESRC is gratefully acknowledged. Earlier 57 versions were presented to the staff/student research seminar at Ruskin College, Oxford (March 2011), BISA at 58 Manchester (April 2011), and a workshop on State Power, New School, New York (May 2011). I want to thank 59 Neal Lawson who was most generous with his time, allowing me to verbalise my account about the ordoliberals, 60 which proved most helpful. Peter Burnham, Paul Langley, John Roberts, Rudi Schmitt, Eric Sheppard, Tim Stanton and Hugo Radice provided generous advice, helpful comments, and encouragement, for which I am most grateful. I wish to express my thanks to the three anonymous referees whose comments helped to sharpen the argument. Finally, I thank Colin Hay for his careful handling of the editorial process. 1 URL: http:/mc.manuscriptcentral.com/cnpe New Political Economy Page 2 of 22 1 2 3 56) conceives of it as a socially responsible political economy that in contrast to neoliberal 4 5 ideas of free markets, is not a market economy at all. In his view, it amounts to a socially 6 responsible form of government that protects individuals from the sort of homogenisation and 7 strife that markets bring about. However, closer inspection reveals ‘a rather different 8 orientation from that usually attributed to the term’ social market economy (Tribe 1995: 205). 9 In the British context, Thomas Balogh (1950) who was a Keynesian economist and advisor to 10 the Labour Party, rejected the idea of the social market economy as an attempt at planning by 11 the free price mechanism. For the political right, this was precisely what made it so 12 interesting. Terence Hutchinson (1981) agreed with the ordoliberal critique of laissez faire 13 liberalism, saying that it concedes too much power to economic agents, whose greed, though 14 required to oil the wheels of competition, is all consuming to the extent that it destroys its 15 own foundation, the prevention of which he says, is a political task. As Director of the Centre 16 For Peer Review Only 17 for Policy Studies, Sir Keith Joseph had shown lively interest in German ordo-liberalism. It 18 provided, he said (1975: 3) for ’responsible policies, which work with and through the market 19 to achieve [the] wider social aims’ of an integrated society. Andrew Gamble (1979) focused 20 the ‘revival’ of neoliberalism in the 1970s as a political practice of ‘free economy and strong 21 state’. With this conception Gamble traced the political stance of the incoming Thatcher 22 government back to this defining ordoliberal idea. At the same time, Foucault’s (2008) 23 lectures at the College de France, 1978-1979, argued that the neo-liberalism usually 24 associated with the free market deregulation of the Chicago school derives from the German 25 ordoliberal tradition, and he discussed the ordoliberal stance as an original contribution to the 26 bio-political practices of liberal governance.2 In the language of the ordoliberals, bio-politics 27 is called Vitalpolitik – a politics of life. They conceive of social market economy as a project 28 of Vitalpolitik – which they describe as a social policy that undercuts demands for collective 29 30 forms of welfare provision in favour of a human economy of self-responsible social 31 enterprise. The designated purpose of ordoliberal social policy is to ingrain entrepreneurship, 32 private property and the free price mechanism into the fabric of society to prevent the 33 proletarianisation of social structures. 34 35 For the ordoliberals, the experience of capitalist crisis of the late 1920s was proof that the 36 economic cannot be left to organise itself. They accepted that capitalism had brought about 37 miserable social conditions, which they conceived of as proletarianisation. They recognised 38 collectivist responses to capitalism as understandable reactions to this misery but argued that 39 they reinforce that same misery. They thus saw their neo-liberalism as a third way in 40 distinction to laissez faire liberalism and collective forms of political economy, the latter 41 ranging from Bismarckian paternalism to social-democratic ideas of social justice, 42 3 43 Keynesianism and Bolshevism. Against laissez faire liberalism, they argued that it is blind to 44 the social consequences of capitalism, which, they argued, liberals need to address to sustain 45 market freedom. Against collectivist forms of political economy they argued that they 46 compounded that same proletarian condition which they ostensibly sought to overcome, and 4 47 that their attempts at organising the economy will eventually lead to tyranny. 48 49 The fundamental question at the heart of ordoliberal thought is how to sustain market-liberal 50 governance in the face of mass-democratic challenges, class conflicts, and political strife: 51 how, in other words, to promote enterprise and secure the role of the entrepreneur in the face 52 53 54 2 Peck (2010) doubts Foucault’s claim that Chicago neo-liberalism derives from German ordoliberalism. In his 55 defence, Foucault did not argue that Chicago neo-liberalism is a German derivative, but that it developed core 56 ordoliberal ideas in its own distinctive deregulatory manner. Friedman’s support of, and indeed advisory role in, 57 the Pinochet dictatorship is well known, and does not contradict his market-liberal stance.
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