Working Papers

The Religious Foundations of the European Crisis Josef Hien

WORKING PAPERS

Abstract1

There has been much talk about ordoliberalism recently. Scholars and the press identify it as the dominant economic instruction sheet for Germany’s European crisis politics. However, by analyzing ordoliberalism only as an economic theory, the debate downplays that ordoliberalism is also an ethical theory, with strong roots in Protestant social thought. It is this rooting in

Protestant social thought that makes Ordoliberalism incompatible with the socioeconomic ethics of most of the European crisis countries, whose ethics originate in Catholic and Orthodox social thought. This divergence is the source of a crisis of understanding between European nations and hinders a collective response to the crisis.

1 This article has been written in the context of the REScEU project (Reconciling Economic and Social Europe, www.resceu.eu), funded by the European Research Council (grant no 340534).

The ordoliberalization of Europe

Blyth assessed that ‘Germany’s response to the crisis, and the crisis itself both spring from the same ordoliberal instruction sheet’ (Blyth 2013, 141). Many side with him. Hillebrand comments that ‘Germany’s crisis policy [...] appears rational from an ordoliberal perspective’ (Hillebrand

2015, 6). Nedergard and Snaith argue that ‘one crucial consequence has been a strengthening of the ordoliberal governance in the European Union’ (Nedergaard and Snaith 2015) and Bulmer concludes that ‘ordo-liberalism has trumped pro-europeanism’ in Germany (Bulmer 2014,

1244). The list could be continued with similar citations from many others (Dullien and Guérot

2012; Berghahn and Young 2013; Bulmer and Paterson 2013; Dardot and Laval 2014; Cesaratto and Stirati 2010; Jones 2013). Some even speak of an ‘Ordoliberalization’ (Biebricher 2014) of

Europe. Prominent international media outlets like the Guardian (Kundnani 2012; Guérot and

Dullien 2012), The Financial Times (Münchau 2014) and the Economist (The Economist 2015) have picked up the ball.

However, contributions that link ordoliberalism and German Euro-politics share one important downside: they perceive ordoliberalism solely as an economic theory neglecting that is also a theory of society with strong ethical provisions.

The paper asks about the origins of these provisions and argues that they are rooted in

Protestant social thought. These ethics surfaced in the heated debates about solidarity during the European debt crisis. They create frictions with the social ethics of the European South rooted in Catholicism and Orthodoxy.

The paper uses a morphological approach to first, show how religious values have been infused into ordoliberal ideology between the 1930s and 1950s. Second, trace how these values have, throughout time, lost their direct Protestant labelling but not their stealthy Protestant content.

Third, highlight how these ordo-ethics surfaced during the European sovereign debt crisis between 2010 and 2015.

The argument is not meant to replace economic interest based (export vs import: Armingeon and Baccaro 2015; creditor vs debtor countries: Dyson 2014) or functional-economic (Höpner and Lutter 2014) explanations of the Euro crisis but should complement them. A major problem of the Eurozone are the diverging political economies within it (Höpner and Schäfer 2012). Neo-

Rokkanian literature has pointed out that this divergence was caused partly by the different socio-economic doctrines of European Christianity (Kahl 2005; Manow and Van Kersbergen

2009; Manow 2004; Van Kersbergen 1995). Like the institutions of the political economies of

Europe the religious underpinning of the diversity of European socio-economic thought have proven to be resilient even in a secularizing Europe. In the crisis both have become a stumbling block for transnational understanding.

Ordoliberalism as an Ideology, Methods and Empirics

Anglo-Saxon Economists describe ordoliberalism as ‘ideology’ (Kirchgässner 2009) and some even call it a ‘religion’ (The Economist 2015). Ordoliberals themselves concur that ordoliberalism shares few of the main features of present day economic theory (Lucke 2006).

Ordoliberal contributions rarely use formal modeling, do not rely exessively on mathematics, or quantitative empirics (Fuest 2006). The multidisciplinary origins of ordoliberal thinkers (Böhm

was a lawyer, Eucken an economist, Rüstow a sociologist) is at odds with the highly specialized field of present day economics.

However, ordoliberalism is an ideology, not in the ascriptions that Anglo-Saxon economists throw at it but in the way political theorists classify ideologies. Ideologies ‘are clusters of ideas, beliefs, opinions, values, and attitudes usually held by identifiable groups, that provide directives, even plans, of action for public policy-making it an endeavour to uphold, justify, change or criticise the social and political arrangements of a state or other political community’

(Freeden 2004, 6). The involvement of ordoliberals in the economic policies of the 1950s in

West-Germany, the fighting against economic governance in Europe in the 1960s and the attempts to influence Euro politics during the recent European crisis are examples (Abelshauser

1996a; Young 2014; Nützenadel 2005). Ordoliberalism is not complex and coherent enough to be a philosophy but it is more encompassing and has more real world aspirations than economic theory (Foucault 2010). Like philosophers, ordoliberals developed positions about the good life but their provisions do not exclusively target epistemic communities but were made to be used in politics. One could say that ordoliberal’s ‘theoretical weakness ensures its political survival’

(Joerges and Rödl 2005: 14). During the European debt crisis, ordoliberals engaged in ‘de- contestation’, presenting value judgements as if they were not potentially controversial but truth statements, another trademark of ideologists (Freeden 2013).

Political theorists study ideology through the tool of morphology. The researcher’s task is to unveil ‘an ideology’s internal architecture’ (Freeden 2013, 5) by focusing on the core, adjacent and the peripheral concepts of an ideology and document how these change through time. The

core of ordoliberalism has three components: an institutional economic component, a law component and an ethical component.

The study focuses on the first generation of ordoliberal thinkers, Eucken, Böhm, Röpke, Rüstow and Müller-Armack between 1930s and 1950s. I use the religious sociology of Weber and

Troeltsch and rely on (auto)-biographical works to highlight the ordoliberal’s Protestant connections. The analysis of contemporary ordoliberalism starts with the Neue Methodenstreit in

2009 and ends with the European sovereign debt crisis in 2015. I focus on three contemporary ordoliberal key figures: central bank president Weidmann, finance minister Schäuble and Fuest, the head of the most important economic research institute in Germany. I analyse 41 speeches and interviews of Schäuble, 20 speeches of Weidmann and all scientific contributions of Fuest between 2010 and 2015.

Economy, law and ethics: three core components of ordoliberalism

Ordoliberalism is a German invention. It emerged during the 1930s as a conservative response to the Great Depression and the political and economic turmoil in the Weimar republic.

Ordoliberals were shocked by the economic, political and social havoc of Weimar. The influence of politics and organized interests, the rise of cartels, the clientelism of Weimar’s welfare state,

‘the ruthless exploitation of the state by the interest mob’ as Röpke put it, lies at the heart of their analysis (Röpke 1948b, 310). Ordoliberals deducted that the functioning of liberal market economies could only be guaranteed if they were protected from social and political influence.

‘The economic system has to be like a un-destroyable toy’ Röpke wrote and added that it had to be “’fool-proof’ in the drastic English expression” (Röpke 1948b, 309).

Eucken postulated two principle tasks for the ordoliberal state: “First principle: the policy of the state should be focused on dissolving economic power groups or at limiting their functioning.

Second principle: the politico-economic activity of the state should focus on the regulation of the economy, not on the guidance of the economic process” (Eucken 1952, 334,336). Instead of the classic liberal night watch state ordoliberals wanted a strong state that guarantees free market competition (Biebricher 2011). For liberals in the Anglo-Saxon tradition the state is the spoiler for ordoliberals it is the safeguard.

The ordoliberal state should be a ‘robust’, ‘impartial’ and ‘incorruptible’ arbitrator (Röpke

1948b, 310). Governed not by parties or interest groups but by, ‘highly educated civil servants’, with strong ‘vocational ethos’ (Röpke 1948b, 310). Central institutions of economic statecraft, have to be made impermeable for political influence. This made law the second core feature of ordoliberal thinking. Economic policy had to be ‘justiciable economic policy’ (Röpke 1948b, 312) arbitrated in courts, ‘the last fortress of state authority and of trust in the state’ (Röpke 1948b,

312). Economy and law fuse in the economic constitution. A strong state should make this economic constitution, this machinery of law based, technocratic, de-politicized competitive economy, work flawlessly.

This conception of the ordoliberal economic constitution is where commentators see the overlap between ordoliberal principles and the Eurozone. The independence of the European central bank, the deficit criteria in the stability and growth pact, the absence of economic government, all seem to match with the ordoliberal calls for an economic constitution (Bulmer 2014; Bulmer and Paterson 2013; Blyth 2013; Hillebrand 2015). Some even speak of an ‘ordoliberal monetary zone’ (Nedergaard and Snaith 2015) and Streeck is convinced that ‘European money, as

conceived in the treaties that created it, is Austrian, ordoliberal and neoliberal money’ (Streeck

2015, 365).

Ordoliberalism had since its very beginnings the claim not to be only an economic theory but a theory of society. As a theory of society it needed ethics. In one of the rare comments on the ethical content of ordo liberalism Hillebrandt states that ‘[e]ven the ideal principle-based economic order, however, is not the ultimate goal of economic policy. In fact, ordo liberals perceive of the market economy as a means to an end rather than an end in itself, which allows people to conduct their lives self-dependently and with dignity.’ (Hillebrand 2015, 11).

Ordoliberals did not buy the idea of ‘the self-regulation of society through the self-interest of the individual’ (Müller-Armack 1947). The ‘spiritualization’ of the invisible hand would lead to an

‘atomized’ society (Rüstow 1950, 111). ‘[S]ociological liberalism’ should replace ‘sociologically blind’ classic liberalism and help to ‘embed’ the market economy into a ‘higher total order’

(Röpke cited in Haselbach 1991, 172). Ultimately this sould lead to a ‘moralization of economic life’ (Müller-Armack 1947, 147). This is why ordoliberals paid much attention to social cohesion, economic traditions, values, culture, nature, religion, kinship, and other social formations that they saw threatened by modernity (Röpke 1948b; Röpke 1949; Müller-Armack 1947; Müller-

Armack 1948; Rüstow 1950).

For ordoliberal thinkers the churches played a major role for their social project. The post war economic order had to start with a ‘re-rooting in faith’ (Müller-Armack 1981, 171). Eucken identified the churches as one of the ‘three regulating powers’ of the new economic order

(Eucken cited in Rieter and Schmolz 1993, 105).

However, ordoliberals did not share the same affinity to all churches. In his book Civitas

Humana, Röpke discusses the pros and cons of different branches of Christianity with a preference for ascetic Protestantism (Röpke 1949, 210). During the heated debate between ordoliberals and social Catholics in German post war reconstruction politics ordoliberals displayed affinity to Protestant social ethics and fiercly opposed corporatist Catholic welfare politics (Abelshauser 1996b; Manow 2002).

The normative opposition to the welfare state became an ordoliberal trademark. Ordoliberals argue that traditional social policy creates moral hazard, by setting wrong incentives which undermine personal responsibility, the ‘mainspring’ of society (Röpke 1948b, 364). Social insurance and the welfare state would ultimately lead to the ‘total catastrophy of state and society’ (Röpke 1949, 258) and degrade citizens to ‘slaves of the state’ (Röpke 1949, 257).

Instead the state should limit itself to establish a framework that creates ‘equality of opportunity’ and fosters help to self-help (Röpke 1948b, 264). This ordo-solidarity is a conditional solidarity that has strong parallels with the social ethic of ascetic Protestantism.

The religious canvas behind ordoliberalism

Contemporary theologians see a connection between ordoliberal and Protestant ethics (Emunds

2010). The ordoliberal obsession with strong rules and institutions stems from the Protestant conception of humans as “saints and sinners at the same time, and that’s why they need to be under an institutional order that disciplines the sinner” (Reuter 2010).

Weber observed that for Protestants, in contrast to Catholics, not almsgiving, altruism or praying is essential for ascendance but fulfilling ones vocation and obeying the Bible (Weber

1988, 100–101; Troeltsch 1906). The ascetic Christian sects, took this ascendance model to the extreme. Ascetic Christian leaders like Calvin rejected the sacramental tools that the Catholic and Lutheran churches had developed to relieve their followers from sin. Ascetic Protestants cannot repent, cannot free their souls through good works or escape damnation by buying indulgences (Weber 1988, 97). This puts permanent salvation-stress on ascetic Protestants which can only be eased through an upright Christian lifestyle, hard-working and ascetic. A successful life, under these premises (a successful professional life), becomes a sign of predestination - poverty became associated with damnation.

Weber sees a ‘deep suspicion towards the best friend’ embedded in ascetic Protestantism because ‘only God should be the man of confidence’ (Weber 1988, 96). For the ascetic Protestant

‘God helps whom helps himself’ (Weber 1988, 111). This mirrors the ordoliberal social ethic of help to foster self help. In a debate on the first German sociology congress in 1910 between

Troeltsch, Tönnies, and Weber, Weber sums up that this new ethos of ascetic Protestantism stands in sharp contrast to the ‘Communism of the ancestral Christianity and its derivatives’ which was primarily occupied with brother-love and altruism (Weber 1910; for the accuracy of

Weber’s theological insights: Marshall 1980; Zaret 1992; for a critique: MacKinnon 1988).

Ordoliberalism, as a contemporary ideology seems to be a transposition vehicle that transports religious values into the present, even in times of ever stronger secularization. This has strong repercussions for solidarity in Europe during the crisis. On the one side we find ordo-solidarity,

inspired by Ascetic Protestant social thought on the other side we find catholic and orthodox concepts of familialist and brother-loving solidarity.

A continuum evolves in which Orthodox Christianity forms one pole and Ascetic Protestantism the other. Orthodox Christianity is the most solidarity oriented, collectivist, brother loving and mystic branch of Christianity, ascetic Protestantism is the most individualistic, de-mystified and rationalist branch. Catholicism and Lutheranism fall somewhere in the middle (Weber 1988;

Weber 1910).

As figure one shows, this squares well with the current split that runs through Europe between debtors and creditors between countries that insist on conditional solidarity and those that want unconditional solidarity.

[Figure One Here]

This interpretation is shared by central figures in the European monetary architecture like

Wieser the chairman of the Economic and Financial Committee of the European Union. He argues that ‘[p]olicy makers from Protestant countries tend to think that sins can never be forgiven, whereas policy makers from Catholic countries tend to think that sins can always be forgiven if sinners repent’ (cited from Chadi and Krapf 2015, 17). The Orthodox religion, according to Wieser, is so loose that sinners will not even have to repent to be forgiven.

Weidmann, the head of the Bundesbank and a devoted ordoliberal, said in a recent speech that he admired Prussia for its early reforms of the state because those started with an amnesty for prisoners but this amnesty excluded ‘blasphemers, murderers, persons guilt of high treason and

– debtors’ (Weidmann 2014a). All early Prussian reformers were influenced by Pietism a special blend of reformed Protestantism (Gorski 2003).

The early ordoliberal thinkers had strong ties to Protestantism (Rieter and Schmolz 1993;

Reuter 2010; Manow 2001b; Goldschmidt 1998) . Haselbach comments on Müller-Armack that his “[p]rotestant confession was not without impact on his scientific work” (Haselbach 1991,

119). Röpke was a descendent of “Protestant-rural notability” (Haselbach 1991, 162) and

Rüstow had a Pietist mother and published during his early communist period preferably in the

Bätter für Religiösen Sozialismus. Writing a letter to Rüstow in 1942, Eucken claimed that “I could neither live nor work if I did not believe that God existed.” (Eucken cited in Rieter and

Schmolz 1993, 105). Eucken was also the chairman of the Euckenbund, a club based on

“fragments from Luther, Kant, Hegel, Fichte and Goethe” (Dathe 2009, 9). Streeck remarks that the concept of the ordoliberal state “represents how deist theology, in its Leibnitzian version, imagined God, as an all-powerful clockmaker limiting himself to watching the operation of the perfect clock he has made, without intervening in it” because “[a]fter all, if he had to intervene, the clock would not be perfect” (Streeck 2015, 362).

Eucken, Lampe and Böhm, who did not go into exile during the Nazi period like Röpke and

Rüstow, developed their new socio-economic concepts within a dense network of Protestant socio-economic thinkers and theologians during the 1930s. Ordoliberalism developed within the influence zone of the Bonnhöfer Kreis and the Bekennende Kirche, a Protestant Nazi resistance movement. Within the Bonnhöfer Kreis, ordoliberals developed the Freiburger Denkschrift, a blueprint for Germany’s post war economy (Goldschmidt 1998). It argues that the institutions of

Germany’s post war economy should enable the “strongest resistance against the forces of sin” and enable everyone “to live a life as evangelic Christians” (Freiburger Denkschrift 1943).

In the Weimar Republic the influence of ordoliberalism on politics and the epistemic community of economists was minuscule (Sala 2011; Dathe 2009). Too strong was political Catholicism and

Social Democracy in Weimar politics and the influence of the historic school amongst German economists. The Nazis drove parts of the movement into exile. How come that ordoliberals could seize a hegemonic ideological position in the European crisis in 2010?

Post-war ordoliberalism

In the immediate post war years the ordoliberals found a political home in the Christian

Democratic Union (CDU) a party formed out of the reminders of the Catholic center party. For the first time in German history, political Protestantism and Catholicism joined together in one party (Bösch 2001). The tensions between the social doctrines and the economic ideas of both erupted immediately (Manow 2002; Abelshauser 1996a). Social Catholics wanted more welfare, more coordination of the economy and more interventionism. The ordoliberals wanted to cut back the Bismarckian welfare institutions, restrain the state form interference in the economy, smash cartels and corporatism and get an independent central bank to guarantee hard money

(Abelshauser 1987).

The formation of a new West-German political system after WWII curbed the influence of political Protestantism. In Imperial and Weimar Germany Catholics had been a third of the population. Protestants dominated state, politics and society (Smith 2008a). German partition

remodeled the West German confessional landscape. Now the population was half Catholic and half Protestant. The German post war socio-economic compromise of “Modell Deutschland” had to emerge as an “interdenominational compromise” (Manow 2001a).

The Catholic Adenauer could only reestablish the Bismarckian welfare state because he allowed the ordoliberals around the Protestant Erhard to establish the independent central bank and the cartel agency (Manow 2002).

In the 1960s and 1970s the CDU lost elections and with them ordoliberalism lost political influence. Keynesianism became en-vogue and dominated the economic politics of West-

Germany during the 1960s and 1970s under the social democratic and liberal coalitions

(Nützenadel 2005). The failure of keynesianism to give a solution to the stagflation crisis of the

1970s led to its abandoning by the Social Democrats (Scharpf 1987). The Catholic subculture had eroded significantly during the 1970s and had made political Catholicism weak. The resistance to ordoliberalism was crumbling. Helped by the international turn towards neo- conservatism, ordoliberalism became the German pendant to Reagonomics and Thatcherism

(Feld and Köhler 2011). With Christian Democracy in power after the 1981 it could unfold its politics influence again.

However, Anglo-Saxon economics started to make inroads in Germany during the roaring 1990s

(Caspari and Schefold 2011). The crumbling of soviet planning at the End of History and the seemingly unlimited growth phase of the globalized dot-com economy made the constraining and ethically loaded ordoliberalism seem to be an outdated Teutonic artefact. A first sign of the demise of ordoliberalism in the 1990s were German reunification and the Maastricht

negotiations. Both had been done against ordoliberal advice. 2 The erosion of ordoliberalism cumulated in the new Methodenstreit hitting the German economics profession in 2009.

The ordoliberal core in contemporary Germany

The Methodenstreit was a reaction to a series of new appointments at the economics department of the university of Cologne. Traditional ordoliberal economists protested against the up-and- coming generation of Anglo-Saxon trained German economists.

Central to the dispute were two letters published in the Frankfurter Allgemeine Zeitung and the

Handelsblatt where 83 ordoliberals and 188 newcomers positioned themselves (reprinted in

Caspari and Schefold 2011). The controversy received ample coverage in the press (Plickert

2009). The Frankfurter Allgemeine Zeitung was used as a platform for debate.

For the ordoliberals the new appointments in Cologne “have only been the straw to break the camel’s back” (Vaubel in discussion: Bachmann et al. 2011) that would lead the German economist profession away from its ordoliberal traditions. The newcomers accused traditional

German ordoliberals as being German-centric, inward looking and methodologically not competitive. The ordoliberals replied that Anglo-Saxon economics was marked by a ‘great discrepancy between formal models and real world problems’ (Vanberg 2009). Anglo-Saxon economists would ‘live in artificial, pseudo-accurate worlds’ (Vanberg 2009). Their fetish for

2 While some ordoliberals thought that the Maastricht criteria would do the trick for a stability union (L. Feld 2011), others had their reservations (Streit and Mussler 1995; Streit 2011; Kerber

2014; Dyson and Featherstone 1999).

econometric analysis would lead to wrong conclusions because ‘often economic insight only evolves after the study of the effects of legal mechanisms, which can be described comprehensively with words but escape pure numeric analysis’ (Sinn 2009). The economy was a

‘cultural’ phenomenon not a ‘natural’ science phenomenon (Goldschmidt in discussion:

Bachmann et al. 2011).

The reply was that ordoliberals would not obey to value free judgment criteria (Kirchgässner

2009). Traditional German ordoliberalism was accused of normativity and ideology. Some saw

German economics on a ‘Sonderweg’ (Kirchgässner 2009) a concept used in the historical debate of the 1960s to describe Germany’s slide into totalitarianism (Smith 2008b).

Despite the hardened fronts between both camps the controversy led to a partial rethinking of ordoliberal positions. Feld came forward with new theoretical agendas moving classic ordoliberalism further into the direction of constitutional economics (Feld and Köhler 2011).

Others updated ordo liberal core tenets with modern methodology (Dolls, Fuest, and Peichl

2012). Another group wanted to update the study of the state in ordoliberalism (Sinn 2009).

Krieger developed a conflict approach aiming at a stronger reintegration of law (Krieger 2016).

Vanberg engineered a fusion with the public choice approach of Buchanan (Vanberg 2011).

Another group around Goldschmidt, Wegner, Wohlegumt and Zweynert emphazised that ordoliberalism should focus on its societal program, reinventing Rüstow and Röpke with synergies from Östrom, North and Sen (Goldschmidt in discussion: Bachmann et al. 2011, 294;

Goldschmidt et al. 2009).

The controversy with Anglo-Saxon inspired economists during the Neue Methodenstreit had led to a return to the normative core for many ordoliberals, preparing them well for their comeback following the World Financial crisis.

Ordoliberals and the European crisis

The first crisis of German capitalism in 1873 had led to a long-term weakening of political and socio-economic liberalism in Germany by delegitimizing classic Anglo-Saxon liberal positions

(Rosenberg 1976; Wehler 1995). The world financial crisis of 2008 did the same. The pinnacle was that the party that had embraced Anglo-Saxon liberalism the most, the liberal Freie

Demokraten (FDP), did not make it into parliament in 2013 for the first time since 1949. German

Ordoliberalism that had cultivated a positive historic immage as the guardian of stability, prosperity, growth and ethic capitalism of the post war Wirtschaftswunder, became the perfect fallback position for German politicians and top bureaucrats.

Ordoliberalism was helped by a specific historic circumstance: German reunification altered the confessional composition of Germany making it simultaneously more secular and Protestant.

Angela Merkel not only grew up in East Germany as daughter of a Protestant priest but she also caters to a conservative electorate that is much more Protestant than her predecessors the

Catholic Adenauer, the Catholic Kiesinger or the Catholic Kohl had ever done (Wiliarty 2008; Elff and Rossteutscher 2011). The CDU transformed from a party dominated by Catholics into a party where Protestants held the levers of power.

Ordoliberalism is a product of Protestant minds. It resonates well with Protestant ethics, also in their secularized, deist, forms. The de-legitimization of Anglo-Saxon liberalism through the

crisis, the abandoning of Keynesianism by Social Democracy and the shift of the CDU from

Catholicism to Protestantism created the perfect starting conditions for a resurgence of ordoliberalism once the World financial crisis spilled over into a European sovereign debt crisis.

Three ordoliberal voices became especially important during the economic crisis: Weidmann, the head of the German central bank, Schäuble, German finance minister, and Fuest the designated head of the Ifo Institute. All three positioned themselves against a series of possible solutions to the Euro crisis voiced in the South of Europe and in the Anglo-Saxon world. First, against any type of sovereign debt pooling. Second, against the creation of a fiscal union with an

European economic government. Third, they argued for a tightening instead of a relaxing of the

Maastricht criteria. The three connect their arguments to three classic principles from the economic core of ordoliberalism: the favoring of rules over discretion, the shielding of economic decision making from democratic politics and the dissolution of economic power.

The principle of rules over discretion came most to the fore in the controversy over Draghi’s

“whatever it takes”. Weidmann considered the purchase of bonds undertaken by the ECB to be a

‘gambit [that] betrayed its founding principles, which were rooted in the traditions of the

Bundesbank’ (Walker 2012; Weidmann 2015a). To avoid another “whatever it takes” Fuest drafted a blueprint for a European Insolvency-order3 (Fuest, Heinemann, and Schröder 2015; similar Weidmann 2015b; Weidmann 2015a) and Schäuble believed that the ‘hardened’ rules

3 A European insolvency order is a “mechanism to restructure the debt of an insolvent country”

(Fuest, Heinemann, and Schröder 2015) which should help to avoid contagion effects and moral hazard in future crisis.

have to stay ‘hard’ rather than become ‘softened’ because ‘the problem of Europe is not its rules but the disobedience of these rules’ (Schäuble 2014).

All three argued in line with the ordoliberal principle of shielding economic and fiscal state craft from democratic decision-making. Fuest criticized the failure to introduce automatic sanctions because “this is probably the only way to make sure that sanctions will ever happen” (Fuest and

Peichl 2012). Weidmann was in favor of removing the budgetary oversight over memberstates from the commission allocating it to a new independent agency (Weidmann 2015a; Weidmann

2015c). Schäuble created a public outcry with a similar proposal earlier in 2015 (Höpner 2015).

Weidmann argued in favor of an automatization of the parliamentary budgetary process of member states by introducing constitutional debt breaks that would ‘curtail the room for maneuver on budgetary politics […] because on monetary politics discretionary politics need to meet absolute borders’ (Weidmann 2014c).

The ordoliberal principle to dissolve economic power came to the fore in the ‘too big to fail’ discussion. Fuest, Weidmann and Schäuble emphasized the importance of a banking union and to increase equity of banks (Weidmann 2014b). Schäuble said repeatedly that we should further rely on ‘ordopolitical fundamentals’ in order to curb ‘wrong incentives’ and avoid ‘moral hazard’

(Schäuble 2014).

The institutional economics and law core of ordoliberalism surfaced here. What, however, about the third component of the ordoliberal core – ordo-ethics?

Ordo-Ethics during the European crisis

During the negotiations of the third Greek bailout Schäuble claimed that ‘ [h]elp needs to foster self-help’ (Schäuble 2013) , ‘solidarity has to be coupled with solidity’ (Schäuble 2015c; Schäuble

2015b) and “[h]elp to self-help is the principle” (Schäuble 2015a). To the Spiegel he said “[m]y grandmother, who comes from the Swabian mountains, used to say: benevolence comes close to dissoluteness. There exists a type of catholicity, which very quickly has the opposite effects of what had been intended” (Schäuble 2015f). In so far “Greece has lived for a long time beyond its means” (Schäuble 2015a) and accordingly, help has to be limited and coupled with rigid conditionality.

These positions do not only echo Luther’s “[n]o one should live idle on the work of others” (Kahl

2005, 111); but the more individualistic lay responsibility principles of reformed Protestantism where “God helps who helps himself” (Weber 1988, 96). As Kahl analyzed, “[t]he Calvinist creation of the Protestant work ethos and the strict systematic requirements about what constitutes a life that increases the glory of God (e.g. personal responsibility, individualism, discipline, and asceticism) made poverty appear to be the punishment for laziness and sinful behavior.” Therefore, “[b]oth predestination and its marks – the ethics of worldly life – have in common the fact that the poor are sinners and the rich are not. Predestination implied that the community has no positive responsibility for the poor, Calvinist moralism implicated that the poor needed to be punished and corrected. Beggars were to be whipped and forced to work”

(Kahl 2005, 107). For the original ordoliberals with their Protestant connection, personal responsibility is the “mainspring” of society. Help can only be granted if it induces self-help. The same goes for contemporary ordoliberalism. Alms giving and transfers from one social group to the other is detrimental because it induces moral hazard. When Weidmann was awarded the

Wolfram-Engels price, by the ordo liberal Kronenberger Kreis in 2014, he insisted that ‘personal

responsibility’ should be the ‘second fundamental principle of the currency union’ (Weidmann

2014b).

Schäuble publicly connects his ordo-ethic position to his Protestant beliefs. Giving a talk about values in Hamburg, Schäuble argued that the ‘West’ was a ‘normative project’, a ‘bundle of political ideas, that are for me, foremost a principle of order (Ordnungsprinzip)’. To talk about

Western values does not work without reference to ‘Christianity and the Reformation’ (Schäuble

2015d). In 2015 he held a speech on the yearly German Protestant church rally. In light of his hard line during the Greek debt crisis he was asked to discuss a special Biblical parable in Lukas

V. The parable suggests that one should allow for debt cuts under specific circumstances. In a passage of his speech Schäuble contests Luther’s bible translation and claims that as a Christian, he ‘cannot think that Jesus could recommend such action’ (Schäuble 2015e). In reference to his own reformed interpretation of Protestantism he mentions help to self-help, the danger of wrong (un-conditional) social incentives, the benefits of frugality and sustainability of finances.

He closes the speech by emphasizing the foundational connection between ordoliberalism and

Protestantism, dedicating a long passage to Dietrich Bonnhoefer, Protestant Theologian, Priest and, one of the key Protestant initiators of the ordoliberal circles in Freiburg during the 1930s.

Schäuble Ethics vs Varoufakis Ethics

The ordoliberal concept of ethics and of solidarity clashed during the euro crisis with Southern

European concepts of solidarity. German finance minister Schäuble and his Greek counterpart

Varoufakis repeatedly said that solidarity is central but the term meant very different things to both of them. While Schäuble employs an ordoliberal concept of conditional solidarity derived from reformed Protestant social ethics, Varoufakis called the conditional solidarity of Schäuble

‘fiscal waterboarding’ (Addley 2015) and uses an unconditional solidarity concept as to be found in ancient Christian socialism to which Greek orthodoxy is close (Weber 1910).

Both are not very religious. Varoufakis as a ‘erratic Marxist’ (Varoufakis 2015) would outright deny any religious influence on his thinking.4 However, the mindset of both is informed through religious transposition processes. Ordoliberalism stands against Neo-Marxism but behind them loom solidarity concepts influenced through religious derivatives.5

The tensions between North and South in Europe reached an unprecedented level with the proposal of a temporary Grexit by Schäuble during the negotiations of the third Greek bailout package in the summer of 2015. All of a sudden Germany saw itself pinned against France, Italy and Austria. While Germany (at least Schäuble) wanted to have Greece out of the Eurozone,

France, Italy and Austria wanted to keep them in (Schäuble 2015f; Schäuble 2015a). Pascal

Lamy (former EU trade Commissioner) commented that ‘Germans’ ‘were exulting little solidarity and much discipline’ (Der Spiegel 2015). Italian Prime Minister Matteo Renzi said that ‘[t]o

Germany I say, enough is enough’ (Der Spiegel 2015). French President Hollande blocked the

German plans of a temporary Grexit.

4 Varoufakis is explicit about the influence of classic Greek Philosophy on his thinking, does however not say much about the impact of religion. The philosophers he cites oppose the philosophies connected to ascetic Protestantism (Varoufakis 2013).

5 Within German Protestantism the reformed Protestant sects are in a minority, but played influential roles among German administrative elites. Pietism, a special brand of ascetic

Protestantism, has influenced Schäuble’s mind set.

Two years before, Giorgio Agamben, an Italian philosopher, had picked up the idea of an ‘Empire latin’ to halt the ‘Germanization’ of Europe. Agamben relied on an idea originally developed by the French Philosopher Kojève in 1945. Kojève argued that the biggest threat to Catholic France in post war Europe was the restoration of Protestant German power. To hinder this, France should work towards the formation of a Latin empire including at least ‘France, Spain and Italy’.

Romanic language and Catholicism should form a spiritual bond. Agamben’s essay was first published in Italy (La Repubblica 15.3.2013) but very soon translated and reprinted under the title Que l’Empire latin contre-attaque (Liberation 24.3.2013) in France where it caused a massive whirl. The essay claims that the European unification project under German leadership has become one solely based on the primacy of economics threatening to eradicate all culture in the union. For the continent to survive, the economic unification should be replaced by a cultural unification based on the primacy of lifestyle and religion. German conservative newspapers like the Frankfurter Allgemeine Zeitung replied furiously and at the borderline of good journalistic conduct. Brand-marking Agambe as Berlusconi’s court philosopher was only one of their crazier accusations (Kaube 2013; FAZ 2016; Agamben 2015) .

The cultural aspect of the European crisis has received rather little attention in the scholarly debate which concentrates heavily on economic interest and economic functionality. Scholars are quick in dismissing a divided Europe on a religious base as a misinterpretation of the Weber thesis (Hutter 2015). An ideological element belonging to a specific elite group in Germany has become hegemonic through specific historic constellations. This ideological element resonates better in the cultural sphere of the North, than in the South. That is why the recent crisis seems to be a cultural clash.

Conclusion

German discourse about rescue policy is still heavily informed by ordoliberal and therefore

Protestant Ethics. However, these ethics are presented not as ethics of a specific group but as truth statements, de-contesting other social ethics and possible solutions to the European crisis.

The crux is that these values do not resonate well with the socio-economic ethics of the South, influenced by Catholic and Orthodox Christian thought and their solidarity concepts.

For Ordoliberals, the guaranteeing of free economic competition reigns supreme to any social politics, even to any politics in general. It is the economy that guarantees the good society. In

Catholic and Orthodox social doctrine it is the other way round. The economic system exists to cater for the people and society. It is subordinated to politics and society (Kaufmann 2012;

Solari 2007; von Nell-Breuning 1932; Weber 1910; Kaehne 2007).

Ordoliberalism and Social Catholicism and the social thought of Orthodox Christianity are incompatible from a philosophical perspective. However, historically they have found practical compromises. After WWII. “Modell Deutschland” emerged as an “interdenominational” (Manow

2001a) compromise a highly successful socio-economic construct that allowed for a high amount of social protection and market competition. What Europe needs is a similar compromise between the diverging socio-economic ethics of its elites. Such a compromise is however not possible if the North tries to enforce Ordoliberal ethics in the South.

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Fig 1: The continuum of Christian Ethics during the European Debt crisis: