Abstract
In the last ten years the economic and political consensus that characterised the Western world has disintegrated. This consensus, holding that economic growth, full employment and a more or less stable price level could be achieved by macro-economic management of the economy without any fundamental damage being done to the micro-structure of a basically private enterprise system or to that impersonal rule of law on which free economic transactions depend, seemed to signal the end of ideological disputes between advocates of collectivist and individualist forms of social and economic organisation. Indeed, the famous ‘calculation debate’, which divided the two schools in the 1930s and 1940s, seemed to have receded into the textbooks on the history of economic thought.1
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Notes and References
For details of this debate, which is highly relevant to German classical liberalism, see The Journal of Libertarian Studies, Oxford and Frankfurt, Vol. V, 1981. The Winter issue was devoted entirely to socialist calculation.
Edwin Dolan (ed.), The Foundations of Austrian Economics (Kansas: Sheed & Ward, 1976)
or Milton Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 1962). Milton Friedman’s book is still the best simple introduction.
Hans Willgerodt, ‘Planning in West Germany: the Social Market Economy’, in Lawrence Chickering (ed.), The Politics of Planning (San Francisco: Institute for Contempoary Studies, 1976) p. 64.
Norman P. Barry, ‘Ideas Versus Interests, the Classical Liberal Dilemma’, in Barry et al., Hayek’s ‘Serfdom’ Revisited (London: Institute of Economic Affairs, 1984) pp. 45–64;
Barry, ‘Agreement, Unanimity and Liberalism’, Political Theory, Beverly Hills, London and New Delhi, Vol. 12, 1984, pp. 579–96.
John Gray, Hayek on Liberty (Oxford: Blackwell, 1984) p. 70.
See Walter Eucken, ‘On the Theory of the Centrally Administered Economy: an Analysis of the German Experience’, Economica, London, Vol. 15, 1948, Part I, pp. 79–100 and Part II, pp. 173–93.
For an account of the introduction of neo-liberal policies in West Germany see Ludwig Erhard, Prosperity Through Competition (London: Thames & Hudson, 1959).
For the intellectual background see Henry M. Oliver, ‘German Neo-Liberalism’, Quarterly Journal of Economics, Forge Village, Cambridge, Massachusetts, Vol. 74, 1960, pp. 117–49
and Christian Watrin, ‘The Principles of the Social Market Economy’, Zeitschrift für die gesamte Staatswissenschaft, Tübingen, Vol. 135, 1979, pp. 405–25.
See Walter Eucken, The Foundations of Economics (Edinburgh: William Hodge, 1950) p. 314.
Terence W. Hutchison, ‘Institutionalist Economics Old and New’, in Zeitschrift für die gesamte Staatswissenschaft, Vol. 140, 1984, pp. 20–29.
Erhard, op. cit.
Alfred Müller-Armack, ‘Soziale Martwirtschaft’, Handwörterbuch der Sozialwissenschaften, Vol. 9 (Stuttgart, Tübingen and Göttingen: Gustav Fischer, J. C. B. Mohr [Paul Siebeck] and Vandenhoeck & Ruprecht, 1956) pp. 390–92. For a translation, see the companion volume, Germany’s Social Market Economy: Origins and Evolution (London: Macmillan for the Trade Policy Research Centre, 1989).
Quoted in Konrad Zweig, The Origins of the German Social Market Economy (London: Adam Smith Institute, 1980).
See also Müller-Armack: ‘The market is incapable of integrating society as a whole and of producing common attitudes and value norms without which society cannot exist’. ‘The Social Market Economy as an Economic and Social Order’, Review of Social Economy, Milwaukee, Wisconsin, Vol. 3, 1978, pp. 325–31.
Eucken, The Foundations of Economics, op. cit., p. 32.
Müller-Armack, ‘The Principles of the Social Market Economy’, German Economic Review, Stuttgart, Vol. 3, 1965, p. 94.
Friedrich A. von Hayek, Law, Legislation and Liberty (London: Routledge & Kegan Paul, 1973).
Eucken, This Unsuccessful Age (Edinburgh: William Hodge, 1951).
Wilhelm Röpke, The Social Crisis of Our Time (Edinburgh: William Hodge, 1950) p. 119.
Erhard, op. cit., p. 182.
‘Neither the initial social data entering the market process nor the distribution of income issuing from it need be in harmony with our social standards and our concepts of justice.’ Müller-Armack, ‘The Social Market Economy as an Economic and Social Order’, loc. cit., pp. 325–31.
Röpke, op. cit., p. 177.
Eucken, This Unsuccessful Age, op. cit., p. 31.
Erhard, op. cit., p. 126.
Ludwig von Mises, Human Action, 3rd edn (New Haven: Yale University Press, 1963) p. 723.
Von Mises, The Anti-capitalistic Mentality (New Jersey: van Nostrand, 1956). The Ordo writers, however, would deny that the social market economy constituted any kind of a ‘middle way’.
Von Hayek, ‘What is “Social”? What does it Mean?’, in Studies in Philosophy, Politics and Economics (London: Routledge & Kegan Paul, 1967).
Barry, ‘Ideas versus Interests, the Classical Liberal Dilemma’, loc. cit.
James Buchanan, The Limits of Liberty: Between Anarchy and Leviathan (Chicago: University of Chicago Press, 1975).
For example, social justice is an end-state doctrine that stresses the intrinsic desirability of income and wealth distribution based on need and desert rather than market allocation.
Charles K. Rowley and Alan T. Peacock, Welfare Economics: a Liberal Restatement (London: Martin Robertson, 1975) p. 79.
Franz Böhm, ‘Left-wing and Right-wing Approaches to the Market Economy’, Zeitschrift für die gesamte Staatswissenschaft, Vol. 135, 1979, p. 447.
Wirtschaftsordnungspolitik may be translated as ‘economic policy towards the organisation of the market’. See note 27 in ch. 4.
See Eucken, The Foundations of Economics, op. cit., and his posthumous Grundsätze der Wirtschaftspolitik (Bern and Tübingen: Francke, J. C. B. Möhr [Paul Siebeck], 1952).
For an informative discussion of Eucken’s political economy, see Dieter Schmidtchen, ‘German “Ordnungspolitik” as Institutional Choice’, Zeitschrift für die gesamte Staatswissenschaft, Vol. 140, 1984, pp. 54–70.
See Eucken, The Foundation of Economics, op. cit., pp. 85–6.
Ibid, p. 83.
Eucken, ‘On the Theory of the Centrally Administered Economy’, loc. cit.
For an excellent discussion of these see Schmidtchen loc. cit., and Zweig, The Origins of the German Social Market Economy, op. cit.
Schmidtchen, loc. cit., p. 59.
L. N. White, ‘Bankruptcy as an Economie Intervention’, Journal of Libertarian Studies, Vol. 1, 1977, p. 281.
See also Bohm’s concise description of a market process: ‘The competitive order is an arrangement of coordination. This order must establish a broadly based freedom for the individual and a widely dispersed economic power structure. The market structures for demand and supply are distributed over many hands and the arbitrariness of collectivism is excluded’. ‘Freiheit und Ordnung in der Marktwirtschaft’, Ordo, Vol. 22, 1971, pp. 11–27.
Eucken, This Unsuccessful Age, op. cit., p. 66.
Ibid., p. 35.
Israel Kirzner, Competition and Entrepreneurship (Chicago and London: University of Chicago Press, 1973).
Henry C. Wallich, Mainsprings of the German Revival (New Haven: Yale University Press, 1955). It should be pointed out that prior to 1957 an Allied decartelisation law operated efficiently.
Eucken, This Unsuccessful Age, op. cit., p. 349.
Eucken, The Foundations of Economics, op. cit., p. 29.
For a short introduction to Alexander Rüstow’s political philosophy see Carl J. Friedrich, ‘Political Thought of Neo-liberalism’, American Political Science Review, Washington, Vol. 49, 1955, pp. 509–25.
Peter Bernholz, ‘Freedom and Constitutional Order’, in Zeitschrift für die gesamte Staatswissenschaft, Vol. 135, 1979, pp. 510–32.
Röpke, op. cit., p. 4.
Ibid., p. 86.
Ibid., p. 118.
Röpke, A Humane Economy: The Social Framework of the Free Market (London: Wolf, 1960) p. 78.
Christian Watrin, ‘Gesellschaftliches Eigentum und Arbeiterselbstverwaltung-ein Weg zur Humanisierung der Gesellschaft?’, in Ordo, Vol. 26, 1975. Translated in the companion volume of translations, Germany’s Social Market Economy: Origins and Evolution, op. cit., ch. 8.
Röpke, The Social Crisis of Our Time, op. cit., pp. 201–13.
Müller-Armack, ‘The Principles of the Social Market Economy’, loc. cit., p. 97.
See Wallich, op. cit., p. 2 and Egon Sohmen, ‘Competition and Growth: the Lesson of West Germany’, American Economic Review, Evanston, Vol. 49, 1959, pp. 54–70.
See especially Wallich, op. cit. and Wolfgang Stolper and Karl W. Roskamp, ‘Planning a Free Economy: Germany 1945–60’, in Zeitschrift für die gesamte Staatswissenschaft, Vol. 135, 1979, pp. 374–403.
Walter Hamm, ‘An den Grenzen des Wohlfahrtsstaates’, Ordo, Vol. 32, 1981, pp. 117–39; also reprinted in the companion volume of translations, Germany’s Social Market Economy: Origins and Evolution, op. cit., ch. 12.
Editor information
Editors and Affiliations
Copyright information
© 1989 Trade Policy Research Centre
About this chapter
Cite this chapter
Barry, N.P. (1989). Political and Economic Thought of German Neo-Liberals. In: Peacock, A., Willgerodt, H. (eds) German Neo-Liberals and the Social Market Economy. Trade Policy Research Centre. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-20148-8_5
Download citation
DOI: https://doi.org/10.1007/978-1-349-20148-8_5
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-20150-1
Online ISBN: 978-1-349-20148-8
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)