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Ordoliberalism is a school of liberalism that emphasises the need for the state to ensure that the free market produces results close to its theoretical potential (see allocative efficiency). The theory was developed by German economists and legal scholars such as Walter Eucken, Franz Böhm, Hans Grossmann-Doerth and Leonhard Miksch from about 1930-1950. Alexander Rüstow and Wilhelm Röpke (who spent the Nazi period in exile in Turkey) and Friedrich Hayek are associated with this theory. Ordoliberal ideals (with modifications) drove the creation of the post-World War II German social market economy and its attendant Wirtschaftswunder. The term was coined 1950 by Hero Moeller referring to the academic journal ORDO. The term is used in German language as synonym for the term neoliberalism or as concretization to label the neoliberalism of the Freiburg School.

Ordoliberal theory holds that the state must create a proper legal environment for the economy and maintain a healthy level of competition through measures that adhere to market principles.[1] The concern is that, if the state does not take active measures to foster competition, firms with monopoly (or oligopoly) power will emerge, which will not only subvert the advantages offered by the market economy, but also possibly undermine good government, since strong economic power can be transformed into political power. Quoting Stephen Padgett: "A central tenet of ordo-liberalism is a clearly defined division of labor in economic management, with specific responsibilities assigned to particular institutions. Monetary policy should be the responsibility of a central bank committed to monetary stability and low inflation, and insulated from political pressure by independent status. Fiscal policy—balancing tax revenue against government expenditure—is the domain of the government, whilst macro-economic policy is the preserve of employers and trade unions." The state should form an economical order instead of directing economical processes.

Ordoliberalism is centered around the academic journal ORDO. Among the contributors to the journal were Franz Böhm, Walter Eucken, Ludwig Erhard, Friedrich Hayek, Alexander Rüstow, Karl Popper, Peter Bauer, Milton Friedman, James M. Buchanan, and Thomas C. Schelling.

Wilhelm Röpke considered Ordoliberalism to be "liberal conservatism," against capitalism in his work Civitas Humana (A Humane Order of Society, 1944). Alexander Rüstow also has criticized laissez-faire capitalism in his work Das Versagen des Wirtschaftsliberalismus (The Failure of Economic Liberalism, 1950). The Ordoliberals thus separated themselves from classical liberalism.[1][2]

For their political philosophy, Ordoliberals were influenced by Aristotle, Tocqueville, Hegel, Spengler and Karl Mannheim.

See also


  1. ^ a b Megay, Edward N. (1970). "Anti-Pluralist Liberalism: The German Neoliberals". Political Science Quarterly 85 (3): 422. doi:10.2307/2147878.  
  2. ^ Friedrich, Carl J. (1955). "The Political Thought of Neo-Liberalism". American Political Science Review 49 (2): 509–525. doi:10.2307/1951819.  
  • Alan Peacock and Hans Willgerodt (eds): Germany’s Social Market Economy: Origins and Evolution, Macmillan

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