The Present Relevance of Ordnungstheorie for the Politics and the Economics of the Social Order

Abstract

Are Ordnungstheorie and Ordnungspolitik together with their German trademark — the Soziale Marktwirtschaft — still relevant today? The year 1998 saw a number of solemn celebrations of the 50th birthday of the Soziale Marktwirtschaft. Politicians from all major parties will come to praise Ludwig Erhard and the enactment of Ordnungspolitik which is today regarded as a major cause of the so-called German Wirtschaftswunder of the 1950s. Some may even remember that social scientists like Walter Eucken, Franz Böhm or Alfred Müller-Armack have made their contributions. Thus, for an outside observer the answer to the initial question seems evident: yes, the basic tenets of Ordnungstheorie and Ordnungspolitik “made in Germany” must be highly effective today; they seem to have become a sturdy German standard. And indeed, there is no longer any serious political opposition to the basic idea of a social market economy — especially in Germany. The only serious opponent, however, is the political and social reality — especially in Germany. Several indicators can support this account of what has become of ordoliberalism in its country of origin:

• The German national accounts show an almost uninterrupted rise in the government expenditure share of GDP at the expense of the market economy share. Between 1950 and 1962 less than 35% of national income was in one way or another directed by agencies of the state and of social security, but since 1975 it has remained at about 50% (see Graph 7.1 in the appendix). The increase is mainly due to a sharp increase in the “social budget” which in 1960 accounted for 21.7% of GDP and in 1995 amounted to more than 34%. These figures could be summarized to the effect that the “social market economy” is becoming synonymous with what might be called a “social state economy”.

I wish to thank Thoralf Erb, Thráinn Eggertsson, Werner Mussler, Pavel Pelikan, Axel D. Schulz and Stefan Voigt for valuable criticism and suggestions including some diverging views. I also want to thank Thomas Welsch for compiling the data and producing the figures.