Ordo-Liberalism as Tradition, Ideology, and Model of Citizenship: Memorializing, Reinventing, Forgetting

This chapter examines the complex processes of memorialization, reinvention, and forgetting that have characterized the Ordo-liberal tradition; the role of the Freiburg School; the selection of certain aspects of political economy and of certain thinkers and texts; and the distinctive focusing illusions that have followed. It also looks at how its identity has been shaped by its ideological makeup and its model of citizenship. The picture that emerges is of a tradition whose core characteristics can be defined but whose boundaries are difficult to fix. Part of the problem is its ideological hybridity as both conservative and liberal. The chapter looks at the dual nature of the Ordo-liberal tradition as explicit and formalized knowledge and as tacit and common-sense knowledge (William Sorley). In the first sense it is characterized by academic power structures, notably in economics and law, and canonical texts, and by the effects of generational change on these structures. In the second sense, Ordo-liberalism is bound up with administrative cultures and the extent to which they are rule-bound and receptive. The chapter then considers two other aspects of the Ordo-liberal tradition: as ideal type (Eucken) and more loosely as family resemblance (Ludwig Wittgenstein); and as authentic and invented tradition (Eric Hobsbawm), distinguishing Freiburg 1, 2, and 3. Finally, the chapter identifies the Ordo-liberal model of citizenship as based on safeguarding the morally responsible individual: the wise consumer, the thrifty saver, and the responsible creditor. It condemns feckless and profligate behaviour, notably of debtors. This model is subjected to critique.

Conservative Liberalism as a Disciplinary Revolution

This chapter examines economic and monetary discipline. It notes that conservative liberals accorded great importance to law as the source of discipline, as exemplified by Franz Böhm, Louis Brandeis, and Maurice Hauriou. The chapter considers discipline in the history of liberalism, noting that it is not the exclusive property of conservative liberalism—though it is its predominant characteristic. It considers the social, economic, and political functions of rules, notably the work of Friedrich Hayek; the Currency and Banking Schools; the difficulties that arise in the choice, design, and use of rules; the reinforcement provided by credibility and time-consistency literature since the 1970s; the legitimacy and accountability problems of unelected power; the question of when discipline becomes the enemy of democracy and liberty; and the respective roles of the state and the market as sources of destabilizing shocks. The chapter stresses the rich and revealing use of metaphor by conservative liberals: their rejection of engineering metaphors for those of gardening, architecture, health and medicine, and religion. Ordo-liberalism is characterized as an open-ended tradition, with internal fragmentation and porous boundaries, its membership including migrants as well as natives. The notion of a mainstream is defined by a social process of selecting key texts as essential references and citations.

The Historical Significance and Contemporary Relevance of Conservative Liberalism and Ordo-Liberalism: A Hollow Promise?

This chapter attempts to assess the significance of conservative liberalism and Ordo-liberalism in the larger context of liberalism by examining five questions. Why have they been marginalized? How have their ideas fared in Germany, the epicentre of Ordo-liberalism? What is the position of conservative liberalism and Ordo-liberalism in the intellectual history of political economy? What are their prospects in a new transformational crisis of liberalism? Are they likely to prove no more than a ghostly shadow in liberal political economy? Or can they act as a source of liberal rejuvenation? Finally, do conservative liberalism and Ordo-liberalism offer no more than a hollow promise of disciplining capitalism and democracy? Do the gaps in their thinking—their focusing illusion—disable them as a source of intellectual insight and as a relevant influence on debate, institutions, and policies? Or do they contribute to the overall strength and resilience of liberalism by complementing the contributions of social liberalism and laissez-faire liberalism? The chapter examines conservative liberalism and Ordo-liberalism using the insights from the Austrian School, the new Chicago School, and libertarian thought; from Karl Polanyi and Michel Foucault; from critics of authoritarian liberalism and of the long shadow of Carl Schmitt; and from writers on the moral economy, including John Rawls and Amartya Sen. It concludes by offering a balanced assessment of the strengths and weaknesses of this liberal tradition and its place in wider liberalism.

Just a Germanic Tradition? The Cross-National Significance of Conservative Liberalism

This chapter examines the various factors that have shaped the cross-national significance of conservative liberalism and Ordo-liberalism in public debate, in institutions and how they operate, and in policies, across space and over time. It argues that these factors have interacted in a way that gives this type of liberalism a historically contingent character. The chapter looks at self-assessment by conservative liberals and Ordo-liberals of Ludwig Erhard in Germany, Reinhard Kamitz in Austria, Jacques Rueff in France, and Paul van Zeeland in Belgium and the sense of beleaguerment that affects them. It also considers the cross-national reception of Ordo-liberalism and the process of cross-national convergence in conservative liberalism through networks, conferences, and institutions and through the emergence of family resemblance. The chapter pays close attention to the factors driving differences in significance: founding myths and aristocratic liberalism; mainstream philosophy of political economy; religion; state tradition; state- and nation-building; parties and party systems; events and crises; net creditors and net debtors; international structure of power and Americanization; and networking though university patronage, think tanks, and media dissemination. The chapter closes with reflections on the potential for conservative liberalism.

Patron Saints: (2) Continental European Ethical Philosophy

This chapter examines the ways in which the distinctive conception of the moral order in conservative liberalism and Ordo-liberalism bears testament to the metaphysical and epistemological imprints of continental European ethical philosophy as it evolved in the period from the 1880s to the 1930s. Ethical philosophy helped to give flesh to their conception of liberalism as about human flourishing. The chapter begins by reflecting on the complex relationship with Adam Smith as political economist and moral philosopher and on the enormous importance of Immanuel Kant in shaping the broad parameters of the way in which conservative liberals and Ordo-liberals engaged with the ethical basis of liberalism. The founding thinkers of this tradition rejected Sigmund Freud, Karl Marx, Friedrich Nietzsche, and Jean-Jacques Rousseau. The chapter investigates in depth the complex connections—far from neat causal relationships—between conservative liberals and Ordo-liberals and a range of philosophers with whom they had often studied or knew as family friends: Rudolf Eucken, Edmund Husserl, Max Scheler, Nicolai Hartmann, William James, and G. E. Moore, as well as the special case of Louis Rougier and of French positivism in the work of Rougier and Jacques Rueff. Attention is also paid to the Euckenbund (Eucken Association). This context is important in understanding the hostility of the founding thinkers to determinism, subjectivism, utilitarianism, naturalism, empiricist Realism, and moral relativism. A contrast is drawn between the differing philosophical roots of the early Austrian tradition and Ordo-liberalism. The chapter closes with an examination of the implications of developments in philosophy for the reception of conservative liberalism and Ordo-liberalism and of the problematic relationship between truth and relevance as it arises in economic and financial crisis.

Conservative Liberalism in French and Italian Political Economy

This chapter seeks to offer a balanced and nuanced view of conservative liberalism in French and Italian political economy by examining its key figures, the context of their work, what they thought and wrote, and how their thinking evolved. It also compares the significance of conservative liberalism in the discourses, policies, and politics of French and Italian political economy. In the case of France, the chapter examines the ideas and roles of Louis Rougier, Jacques Rueff, Maurice Allais, and Raymond Barre. It also discusses the Lippmann Colloquium in 1938; Rueff’s relations with Raymond Poincaré and Charles de Gaulle, especially in the period 1958–61; and the hard franc (franc fort) policy. The key texts of Rougier and Rueff are examined in detail. In the case of Italy, close attention is paid to the ideas and roles of Luigi Einaudi (including his connections to Wilhelm Röpke), Costantino Bresciani-Turroni, Luigi Sturzo, Guido Carli, and Francesco Forte; to the early post-war reconstruction; to Carli’s concept of the good and bad souls of Italy; and to external discipline (vincolo esterno) as a tool of economic policy. The chapter examines the stabilization traditions of France and Italy; the challenge posed by European economic and monetary union; and the deep hostility that emerged towards Ordo-liberalism in the wake of the euro area crisis after 2009.

Patron Saints: (1) The European Tradition of Aristocratic Liberalism

This chapter examines the key authors and texts that provided conservative liberalism and Ordo-liberalism with a distinctive aristocratic character: its paternalism, its scepticism about democracy, its discomfort with the commercial aspects of capitalism, and its belief in a hierarchy of ability. From their interwar origins, conservative liberalism and Ordo-liberalism were about more than the economic order. They were fundamentally about the kind of social and cultural order that was appropriate to a sustainable liberal society and that would stem the crisis of moral and intellectual values. Referencing of canonical texts with which the cultivated bourgeois intelligentsia was familiar had the additional value of endowing conservative liberals and Ordo-liberals with prestige. This chapter examines the most cited authors and texts in this literature: Lord John Acton, Julien Benda, Jacob Burckhardt, Johann Wolfgang Goethe, Gustave Le Bon, Frédéric Le Play, José Ortega y Gasset, Bertrand Russell, George Santayana, and Alexis de Tocqueville. It also looks at Friedrich Hayek’s attempt to establish the Acton-Tocqueville Society. These authors embodied a faith in an aristocracy of knowledge, a distrust of plebeian culture, and a belief in the quality of the inner life and in character as the foundation of a liberal society. Aristocratic liberalism rested on two fears: of unbridled democracy and of the despotic state; of anarchy and servitude. The chapter closes with reflections on the changing fortunes of aristocratic liberalism and their implication for conservative liberalism and Ordo-liberalism.

Conservative Liberalism and Ordo-Liberalism: From Child to Midwife of Crisis in Capitalism and Democracy

This chapter reveals the extent of demise of economics with the Third Reich; the experience of academic isolation, harassment, and fear; the private comments of founding Ordo-liberals in this dark period and the literature they read (like Friedrich Schiller); the misjudgements many of them made and their attempts to draw lessons; and the stimulus to retreat into philosophy and history in the search for meaning. They sought an alternative to ‘vulgar’ liberalism, the failures in the market economy, and the deficiencies in democracy. Character, culture, principles, and rules formed the axes of their thought about a rejuvenated liberalism. The chapter locates the founding thinkers in the beleaguered cultivated bourgeois intelligentsia and its sense of a civilizational crisis of modernity that went back into the nineteenth century; in the disorder that was generated by the First World War and its aftermath, notably fears of communism and fascism; in the hyperinflation of 1923; in the Great Depression; and in brutal anti-Semitism. Prominence is given to Walter Eucken’s remarkable public lecture in 1936 on the struggle of science and his public debate in 1937 with a Nazi economist. The chapter examines how founding Ordo-liberals like Walter Eucken and Wilhelm Röpke were viewed by fellow liberals like Friedrich Hayek, notably the emphasis placed on their strength of character and conviction. Finally, the chapter plots both the extraordinary growth of citations of Ordo-liberalism since the 1950s and its correlation with events; the shift towards seeing it as a cause of crises especially after 2009; and Ordo-liberalism in the context of post-1945 structural changes and debates about patriarchy and the role of women.

Introduction

This chapter stresses the recurrent sense of the fragility and contingent character of liberalism not just in relation to external challenges but also its capacity for self-harm. Liberalism’s ideals are prey to erosion through self-regarding practices of crony capitalism and competitive party politics. This diagnosis of liberalism’s ills forms the background to the cross-national attempt to rejuvenate liberalism as conservative liberalism and Ordo-liberalism. The chapter stresses the value of history in examining Ordo-liberalism as a tradition with its own roots and canon, rather than more narrowly as a school or theory; in setting it in its larger context of cross-national family resemblances; in using original archival evidence to go behind published texts; and in clearing up misconceptions of Ordo-liberalism, above all in the English-speaking world. History is also valuable in rescuing thinkers from the neglect and silence that accompanies processes of memorialization. It helps to bring out the nature and significance of stabilization traditions in France and Italy as well as in Germany. It also highlights the imperfect correspondence between Ordo-liberalism and economic policy practice in Germany as well as in the European Union and the euro area. The chapter concludes by asking why Ordo-liberalism is so important; by outlining what is distinctive about the book; and by explaining the book’s structure.

How Ordo-Liberal Is Germany? Ordo-Liberalism in Post-War National Unifying Mythology

This chapter examines the myth and reality of Ordo-liberal intellectual capture of Germany and the role of Ordo-liberalism in efforts to construct a new post-war national unifying myth. It focuses on the genesis of the concept of the social market economy and its relationship to Ordo-liberalism; on the distinction between fundamentalists and realists in Ordo-liberalism; and on the differences between philosopher-economists and statesmen-economists. Close attention is paid to the ideas and role of Ludwig Erhard and his network of support; the institutional appropriation of Ordo-liberalism by the Bundesbank, the federal cartel office, and the federal economic ministry’s economic policy division; and the role of Ordo-liberalism in competition policy, in European economic and monetary union, and in German policy during the euro area crisis. At the same time, stress is placed on the gaps in Ordo-liberal thinking and counter-national unifying myths, drawing on social Catholicism, social partnership, and civilian power. The chapter has three main case studies: of Ordo-liberalism in the Great Depression, focusing on the Brauns Commission, the Lautenbach Plan, and the role of Wilhelm Röpke; central bank independence, monetary policy reform in the early 1970s, and the ‘monetarist revolution’; and Alfred Müller-Armack’s proposal for a European Stabilization Board. These case studies use archival evidence. The chapter closes with reflections on the significance of Ordo-liberalism in Germany.