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Law and Competition in Twentieth-Century EuropeProtecting Prometheus$

David Gerber

Print publication date: 2001

Print ISBN-13: 9780199244010

Published to Oxford Scholarship Online: January 2010

DOI: 10.1093/acprof:oso/9780199244010.001.0001

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Ordoliberalism: A New Intellectual Framework for Competition Law

Ordoliberalism: A New Intellectual Framework for Competition Law

Chapter:
(p.232) VII Ordoliberalism: A New Intellectual Framework for Competition Law
Source:
Law and Competition in Twentieth-Century Europe
Author(s):

DAVID J. GERBER

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199244010.003.0007

Abstract and Keywords

This chapter examines the concept of ordoliberalism. It illuminates ordoliberal thought, the factors that influenced its development, and the roles that ordoliberals and their ideas have played in the evolution of German and European competition law.

Keywords:   Europe, Germany, competition law, orodoliberals

One of the ironies of European history in this century is that the intellectual impulses for the extraordinary reversal of direction in social and political development that occurred in the decades after the Second World War came not from a traditional liberal bastion such as England, but from the territory of a recent enemy of liberalism – Germany. As we shall see, competition law was a critical part of this change of direction – as both cause and effect.1

More specifically, the geographical source of this impetus can be located in Freiburg – a small university town in the southwestern corner of Germany. Close to the French and Swiss borders, home to liberal traditions, and far from the centers of German political and economic power, Freiburg provided a haven for a small group of intellectuals who rejected both Nazi totalitarianism and state socialism. The ideas of the so-called ‘Freiburg School’ were the matrix of a new brand of liberal thought that has much influenced the evolution of social and economic policy in Europe since the war and has played a central role in the development of competition law.

The Freiburg School thinkers agreed with earlier conceptions of liberalism in considering a competitive economic system to be necessary for a prosperous, free, and equitable society. They were convinced, however, that such a society could develop only where the market was imbedded in a ‘constitutional’ framework. This framework was necessary to protect the process of competition from distortion, to assure that the benefits of the market were equitably distributed throughout society and to minimize governmental intervention in the economy. This interpenetration of legal and economic ideas was the essence of the Freiburg School and of the ‘ordoliberal’ school of thought into which it developed.

Despite its enormous importance, ordoliberal thought—and German neo-liberal thought generally—has received little attention in the English-speaking world.2 Moreover, except in Germany, awareness of these ideas has (p.233) been confined almost exclusively to economists, while lawyers and political scientists seldom have been exposed to them. Finally, there has been little study of the impact of these ideas outside Germany.

This gap in our understanding of European thought and institutions has obscured the dynamics of the European competition law story, and it is in order to close that gap that we explore ordoliberalism in some depth in this chapter. I seek to illuminate ordoliberal thought, the factors that have influenced its development and the roles that ordoliberals and their ideas have played in the evolution of German and European competition law.

A. The Freiburg School And Its Contexts

German neo-liberal ideas took shape in response to the political and social crises of the Weimar Republic and of Nazi Germany. The failings of the 1920s led to the conquest of political power by the Nazis, and neo-liberal thinkers were dedicated to understanding—and avoiding—a recurrence of that fateful process. For them, the core of that process was the accumulation and misuse of power. Law had been degraded to a tool of political power, which, in turn, had been degraded to a tool of economic power.

1. Appointment in Freiburg

In 1933—just as the National Socialists were taking power—one economist (Walter Eucken) and two lawyers (Franz Böhm and Hans Grossmann-Doerth) met in Freiburg and discovered that they had similar readings of the failings of Weimar and similar views of what to do about it.3 The fortuitous (p.234) occurrence that these three were able to work together for a sustained period of time under conditions that were (for the time) highly favorable made possible the genesis of the ‘Freiburg School’.

The interplay of interests and backgrounds of these scholars shaped Freiburg School ideas. Walter Eucken, Professor of Economics in Freiburg since 1927,4 had been focusing on the theoretical foundations of economic thought.5 Hans Grossmann-Doerth arrived in Freiburg in 1933 to assume a chair in law. Concentrating on the problems created by private economic power, he had published a major study in 1931 of the use by large corporations and cartels of standard contracts to create their own law and thus avoid societal obligations.6 The third member of the group, Franz Böhm, also arrived in Freiburg in 1933 to teach law. From 1925 to 1931 he had worked in the cartel section of the German Ministry of Economics, where he had participated in enforcing the German Cartel Law.7 His pioneering study of the ineffectiveness of legal control over cartels was published in 1933.8

The interaction of these three scholars seems to have led to spontaneous intellectual combustion.9 According to Böhm,’… each had arrived at a point in his own thinking where the spark was ready to jump’.10 They began to work closely together, offering joint seminars, participating in joint scholarly projects, and discussing the interplay of their respective ideas. Böhm considered this close association critical to the development of their thought, pointing, in particular, to the intense cross-fertilization between the disciplines of law and economics.

(p.235) A common theme soon emerged in their discussions. Each had concluded that the lack of an effective, dependable legal framework had led to the economic and political disintegration of Germany. Each believed that the core of the problem had been the inability of the legal system to prevent the creation and misuse of private economic power. According to Bohm, The issue on which we focused together was … the issue of private power in a free society’.11

The initiators were soon joined by other, mainly younger, legal and economic scholars who began to make their own contributions to the central themes being developed by their mentors. By the late 1930s there was a well-defined group that shared a basic set of objectives, methods and attitudes, and many members of this group played leading roles in propagating these ideas after the war. According to one commentator, ‘… what unified all of them was their active temperament, their idealistic philosophy and their unwillingness to witness events with their “arms crossed”’.12

The development of a school of thought espousing views inconsistent with the ideology of a totalitarian regime as powerful and ruthless as that of the Nazis probably could not have occurred in any city in Germany other than Freiburg. Supported by a strong liberal and pluralist tradition in the community and favored by Freiburg’s distance from the centers of population and its lack of strategic importance, the university was able to minimize national socialist influences until almost the end of the war.13 Although members of the Freiburg School were arrested, imprisoned and dismissed from their jobs, local government officials tended to avoid drastic action against them.14

The special circumstances in Freiburg are reflected in the existence and operation of the so-called ‘Freiburg Circles’ (Freiburger Kreise).15 These small cells of resistance to Nazism operated with relatively little interference in Freiburg, often drawing resisting intellectuals from other parts of Germany for meetings there. These groups focused on finding a new basis for German society after the war, emphasizing moral and social issues and frequently relying on religious values for support.

Although the Freiburg School of economic and legal thought must be carefully distinguished from these famous resistance groups, Böhm, Eucken, and (p.236) other members of the Freiburg School also belonged to one or more of these circles.16 Thus the directions and attitudes of the Freiburg School were influenced by these personal contacts, and at the very least the Freiburg scholars found support in the culture of resistance these groups provided.

2. Varieties of neo-liberalism

Before looking more closely at the main core of ordoliberal ideas, it is important to identify several thinkers and schools of thought that did not belong to the ‘Freiburg School’, but were either included within ordoliberalism or related to it.17 In the years following the end of the Second World War there were several groups that could loosely be called ‘neo-hberal’,18 and categorizations of the thinkers and their ideas often vary widely. The Freiburg School was the most influential, however, and other groups either evolved from it or were much influenced by it.

With the end of the war, the isolation of the Freiburg scholars ended, as did the clear identification of their ideas. The term ‘ordoliberalism’ was soon being applied to a somewhat broader stream of thought that featured the basic ideas of the Freiburg School, but also included members who were not directly associated with Freiburg.19 In particular, the ideas of Wilhelm Röpke and his followers now were often included as part of ordoliberalism. Forced by the Nazis to flee Germany in 1935, Röpke eventually moved to Switzerland, where he taught economics and pursued an active journalistic career.20 He was heavily influenced by Walter Eucken and the Freiburg School and shared their basic ideas.

An even broader categorization that was heavily influenced by the ideas of the Freiburg School was that of the social market economy. The economist Alfred Müller-Armack coined the term (in 1946) and was the writer most (p.237) closely associated with it,21 while Ludwig Erhard, economics minister of the Federal Republic from 1949 through 1964 and its chancellor from 1964 to 1966, was its most famous adherent. Social market economy supporters agreed on most points of economic policy with the ordoliberals, but they placed greater emphasis on assuring that the benefits of the market be distributed equitably throughout society. From many perspectives, ordoliberal and social market economy doctrine are closely related, and the terms are often used almost interchangeably.

A third identifiable direction within neo-liberalism is the ‘pure’ economic liberalism of Friedrich von Hayek. Hayek agreed with Eucken about the importance of competition, but, particularly in his later work, he argued that there was no need for the state to play a major role in maintaining the conditions of competition. The market would, he claimed, take care of itself. Although Hayek did not consider himself part of the Freiburg School, he maintained close personal and intellectual ties with it.22

B. Setting The Intellectual Stage

Ordoliberals focused not only on the institutional and political failures of the Weimar and Nazi periods, but on the intellectual failures implicated in them. They saw contemporary economic and legal thought as fundamentally flawed, and a major part of their agenda was to expose those flaws and thereby to avoid them in the future.

According to Walter Eucken, a central problem of economic thought was that it had lost touch with social and political reality.23 Adam Smith and other classical economists had recognized that the economy was imbedded in the legal and political system, but during the nineteenth century economic thought gradually had become isolated, and economists had lost sight of both the political and social contexts of economic issues. One consequence of this isolation was a narrowing of the liberal tradition. ‘Liberal’ came to be identified with the idea of ‘laissez-faire capitalism’.

By the 1920s, however, this conception of liberalism had been discredited throughout much of Europe. The social disruptions caused by industrialization combined with the disaster of the First World War to identify ‘liberalism’ with economic chaos, political corruption and the exploitation of the (p.238) working class. In 1926 John M. Keynes had little doubt that this ‘liberalism’ was dead or very close to it.24

Rejecting a disfigured liberalism and overwhelmed by the consequences of the First World War, economists and policy-makers during the 1920s began to experiment with many varieties of governmental intervention. Governments felt not only justified in intervening in the economy, but obliged by political and economic pressures to do so. Active countercyclical and employment-enhancing intervention seemed an attractive and politically defensible antidote to the economic chaos of the period. Eucken called this the ‘age of experimentation’, and he did not like it.25

In Germany the problem of uncertainty was exacerbated, Freiburg writers claimed, by the dominance of historicism.26 Eucken had himself been trained in the historical school, but by the mid-1920s he had committed himself to ‘overcoming’ historicism.27 He believed that historicism had destroyed the ability of German economists and policy-makers to perceive the fundamental principles and necessary components of a market economy.

Eucken agreed that attention had to be paid to economic history and to the particular circumstances within which economic conduct took place, but he argued that historical study alone could not lead to an adequate understanding of economic phenomena. Historical analysis had to be interwoven with theory in order to organize and understand economic data. Historicism’s ‘helplessness’ in the face of the economic crises of the Weimar years contributed to Eucken’s change of loyalties.28 The historical school had provided no answers to the economic chaos of the period, and it seemed unable to offer intellectual tools that could penetrate the frustrating complexity of economic developments.

The inability of economics to supply answers was matched, according to Franz Bohm, by the ineffectiveness of legal thought. Here the culprit was legal positivism. For him, the late nineteenth century German focus on the words of the statute as the primary, if not sole, source of law had once operated as a bulwark against discretionary power and as an objective—and, therefore, dependable—framework for social relations. Under the circumstances of the 1920s, however, it no longer played that role.29 When the political system from which legislation emanated merely represented those private interests that were strongest at a particular time, legal positivism perverted law into a tool of those interests. According to Eucken, the idea that law was (p.239) whatever the legislature said it was promoted chaos and injustice rather than providing legal security. It had allowed not only courts, but society in general to lose sight of fundamental values and common objectives, and it had helped pave the way for Nazism.

C. Ordoliberal Goals

Responding both to economic and political developments and to the perceived failings of legal and economic thought, the ordoliberals sought a new way of thinking about society. They turned to the basic values of liberalism for guidance, but they added new elements that transformed the liberal tradition.

A reconstructive imperative dominated the development of ordoliberal thought. Ordoliberal thinkers were not concerned with gradual change within existing institutions, but with laying the foundations for a different kind of society.30 Many of the central structures of German society had been destroyed or discredited, and the ordoliberals saw their role as one of restructuring that society. As a result, they tended to think in large terms, to paint their vision of the future with broad strokes, and to seek a new vocabulary of thought.

The ordoliberal vision of society was defined by rejection of the past and by the search for a ‘third way’ between democracy and socialism, between the Soviet ‘East’ and the American ‘West’. As the economist John M. Clark observed in 1948,

The world is in the grip of a mighty struggle. On one side are forces driving toward chaos and anarchy…. On the other side are forces of centralized control. Between them stand the forces and men who are trying desperately to salvage a workable basis for a human and ordered community in which some effective degree of freedom and democracy may be kept alive, without wrecking society by their undisciplined exercise and disruptive excesses.31

The ordoliberals were at the center of this conflict.

It is important to recognize that the wellsprings of ordoliberal thought were humanist values rather than efficiency or other purely economic concerns.32 As his student and associate, Leonhard Miksch, wrote of Eucken, The battle that he waged with his growing group of supporters for a free order for the economy and the society did not emerge from economic theory. It was a battle for the eternal truths of humanity. For him, the economic theory was only (p.240) a means to develop an ‘Ordnung’ that was to liberate those values from their threatened encirclement by chaotic, anarchic, collectivistic and, finally, neo-liberal forces’.33 Against the backdrop of chaos, devastation and amassed power, the ordoliberals set out to create a tolerant and humane society that would protect human dignity and personal freedom.

Drawing on the central values of classical liberalism, the ordoliberals envisioned a society in which individuals were as free as possible from state interference and in which democratic institutions dispersed political power by maximizing participation in public decision-making. Government institutions had the power to eliminate or curb freedoms, and thus the ordoliberals sought to keep that power in check and thereby protect individual freedoms.

The focus of ordoliberal thought was on the role of the economy in this society. They accepted the two basic classical liberal starting points—that competition is necessary for economic well-being and that economic freedom is an essential accompaniment to political freedom. They believed that private rather than governmental decision-making had to direct the flow of economic resources, because this would yield a productive and reliable economic system and simultaneously reduce the power of government. The two effects together would then prevent a repetition of the totalitarian disasters that had befallen Europe.

Yet the ordoliberals also expanded the lens of liberalism. For them, it was not sufficient to protect the individual from the power of government, because governments were not the only threats to individual freedom. Having witnessed the use of private economic power to destroy political and social institutions during the Weimar period, the ordoliberals emphasized the need to protect society from the misuse of such power.34 This meant that the state had to be strong enough to resist the influence of private power groups. In order for government officials to be in a position to create the structures of the new society, the government of which they were a part would have to be able to protect them against private influences.

It also led them to demand the dispersion of not only political power, but economic power as well. For most ordoliberals this meant the elimination of monopolies. For others, such as Wilhelm Ropke, the concentration of economic resources was an evil unto itself, and thus they sought an economy composed to the extent possible of small and medium-sized firms and thus a society with a minimum of ‘big business’.35 Both groups tended to view (p.241) economic concentration with suspicion and sought to protect the existence and the economic freedom of small and medium-sized businesses.

Social goals also played a part in this ordoliberal vision of society. ‘Social security and social justice’, wrote Eucken, ‘are the greatest concerns of our time’.36 Classical liberals had been content to argue that the market, if left to itself, would promote economic growth and thus eventually enhance social welfare. Eucken and Böhm saw justice concerns in a broader context. For them, the economy was the primary means for integrating society around democratic and humane principles, but it could perform this role effectively only if it had certain characteristics. The market had to function in a way that all members of society perceived as fair and that provided equal opportunities for participation to all. Economic power was, therefore, a major obstacle to social justice, because it created the perception that the market was unfair and thus prevented it from operating as an instrument of social integration.37

Finally, the ordoliberals acknowledged that their political, humanist and social justice claims all rested on the assumption that economic competition would generate economic development—and rapidly. They relentlessly argued that the only way of achieving sustained economic performance and stability was through an economic order based on competition. This promise of economic success was critical to the growth of ordoliberal influence. Given the often desperate economic situation in postwar Germany, few would have heeded the ordoliberals if they had not also promised the quick establishment of a sound economy. Although ordoliberal theory is ‘growth-neutral’ on its face, under the circumstances of that time the creation of a sound economic system meant the same thing.38

D. Ordoliberal Thought: Foundations And Basic Principles

The ordoliberal program for achieving these goals centered on a new relationship between law and the economic system. The ordoliberals believed that economic competition would provide the basis for the society they envisioned, but only where law could create and maintain the conditions under which competition could function properly.

(p.242) 1. Methods and philosophical foundations

An important factor in the success of ordoliberal thought was its depth. Walter Eucken and his associates did not merely argue from existing intellectual paradigms, but also developed the epistemological and other philosophical bases necessary to give their policy prescriptions intellectual strength and appeal. Referring to his main economic policy work Grundsatze der Wirtschaftspolitik (Principles of Economic Policy), Eucken claimed that ‘More important than all the details in this book is the method—the economic policy thinking that it calls for and from which the formulation and solution of the problems follows’.39 Eucken was widely considered to be a deep and creative thinker, Friedrich Hayek calling him The most serious thinker in the area of social philosophy that Germany had produced in a century’,40 and he was proposing a new way of thinking about the organization of economic activity and its relation to society.41

In Eucken’s view, the major obstacle to acquiring economic and social knowledge was what he called the ‘great antinomy’. Economic knowledge, he said, had two fundamental, but inconsistent characteristics. It was historical in the sense that all data had a specific temporal locus and could not be fully understood outside that locus. On the other hand, such raw data could be meaningfully interpreted and accessible to scientific analysis only to the extent that a process of abstraction was employed to relate that data to other data through the use of ‘general’ principles. Viewing economic phenomena exclusively from either an historical or a theoretical perspective, Eucken claimed, necessarily distorted reality.

Yet, said Eucken, that is precisely what had happened in economic thought. Theoretical economists had paid little attention to facts, operating almost exclusively within their own intellectual models.42 This tendency was strongest, he believed, in England, which had been providing much of the leadership in theoretical economics. The historical school that had reigned in Germany had gone to the other extreme, focusing on facts and paying little attention to theory. Both, therefore, were missing the point.

Eucken thus saw the integration of the theoretical and historical perspectives as opening a new era in economic thought and policy. He argued that in order to overcome the great antinomy, theory had to be used to abstract patterns from raw historical data and thus organize it and make it meaningful, (p.243) but that theory had to be derived from observation of historical fact and continuously tested against it. Many contemporaries felt that Eucken’s work in these areas was of great significance.43

The need to integrate theoretical and historical perspectives led Eucken and his colleagues to call for another form of intellectual integration—between legal and economic knowledge. Since economic phenomena occurred in an institutional and normative context, economic knowledge for Eucken could not be meaningfully dissociated from legal knowledge. The legal system provided the rules for the economic game, and thus one could not understand economic processes without integrating knowledge of those rules.44

Yet, again, this is what had occurred in Western thought. As Eucken saw it, economists had considered legal knowledge to be irrelevant to their enterprise, while legal scholars had failed to recognize the interaction between the legal and economic systems. The result was that neither lawyers nor economists understood the economic-legal phenomena they purported to be interpreting.

Eucken’s response to the need to integrate facts with theory and economic with legal thought was a method he called ‘thinking in orders’ (Denken in Ordnungen). It may have been his most distinctive and important contribution to postwar European thought.45 As he put it, ‘The perception (Erkenntnis) of economic orders (Ordnungen) is the first step in understanding economic reality’.46 The basic idea was that beneath the complexity of economic data were fundamental ordering patterns (orders) and that only through the recognition of these patterns could one penetrate this complexity and understand the dynamics of economic phenomena.47

Eucken saw two fundamental ‘orders’.48 One he called the ‘transaction economy’ (Verkehrswirtschaft) in which economic conduct was organized through private, transactional decision-making. Here private enterprises generated their own plans on the basis of their evaluation of the incentives and disincentives created by economic competition. The second was the centrally administered economy (Zentralverwaltungswirtschaft) in which governmental (p.244) commands organized economic activity according to criteria external to the economic system.49

Popular versions of this distinction became commonplace during the Cold War, but its contours were far less perceptible before that time. There had long been rather vague talk of differences between capitalism and socialism, but Eucken was the first—at least in Germany and arguably in all of Europe—to analyze systematically and in detail the systemic characteristics of these two economic orders.50

The impact of Eucken’s analysis lay in this systemic focus. His ‘orders’ were constructs through which he sought to demonstrate that certain characteristics of economic systems were related to each other systemically—that is, they fit together such that the density of those characteristics in an actual economic system necessarily increased the capacity of that system to achieve its goals. For example, private property, the protection of economic freedom, and low barriers to entry into markets were individual characteristics of a transaction economy that tended to reinforce each other and thereby increase the effectiveness of the system as a whole.

A corollary to this analysis was that the intermingling of components from these two fundamentally incompatible ‘orders’ in an actual economic system necessarily impaired the functioning of that system. A transaction economy would be harmed, for example, by each instance of governmental intervention, and vice versa! The power of this insight can hardly be imagined from today’s perspective, but at the time it had great impact.

As one observer put it, ‘Morphology gave liberalism a new foundation’.51 The perception of distinct and mutually incompatible ‘orders’ provided a new interpretation of the failures of the economy in the interwar period and a new basis for confidence in the market economy. For Eucken, the problems of the twentieth century were a consequence of failing to recognize these orders and their incompatibility. The introduction of command elements into the German and other economies in the wake of the First World War had gradually destroyed the market economy, he said, but no one had perceived what was happening.

2. The competitive order

For Eucken and his colleagues, the essence of the transaction economy was economic competition, because it allowed the system to function effectively. (p.245) Moreover, the higher the level of competition in the economy, the more effectively the system functioned, thus providing the many economic and non-economic benefits which the ordoliberals expected of such an economy.

Again, the sharpness of the concept is central to its impact. Eucken’s concern was not with competition in the loose sense found in common usage, but with a specific form of competition, namely, ‘complete’ competition—that is, in brief, competition in which no firm in a market has power to coerce conduct by other firms in that market.52 The concept was not new to Eucken, but he gave it a new function. He made it a guide to government policy and developed it as the lodestar of ordoliberal thought.

3. The concept of an economic constitution

The ordoliberals staked out further new territory by imbedding their analysis of economic phenomena in a political-legal context. It was here that the interplay of legal and economic thought had its greatest creative force. Relying on legal discourse, the ordoliberals added a ‘constitutional’ dimension to their analysis of economic problems. A community’s political constitution and its choices in using law to implement that constitution, they said, must ultimately establish the characteristics of its economic system. Economic systems did not just ‘happen’; they were ‘formed’ through political and legal decision-making. These fundamental choices determined a nation’s ‘economic constitution’ (Wirtschaftsverfassung).

This concept of an economic constitution was the means by which the ordoliberals integrated legal and economic thought. As a perceptive French analyst of the Freiburg School has observed, ‘With the concept of an economic constitution, the circle had the ‘idée-force’ that catalyzed all their individual reflections, oriented all their work and made of them a truly new and original school’.53

The Freiburg School did not invent the term ‘economic constitution’. It had been used during the 1920s,54 generally referring loosely to the basic char-acteristics of an economic system. There was discussion during the Weimar (p.246) period, for example, of the relative merits of ‘capitalist’ and ‘socialist’ economic constitutions. As they did with other key terms, however, the ordo-liberals imbued this one with a new analytical precision and a new interpretive framework.

According to the ordoliberals, and here Franz Böhm’s contributions were particularly influential,55 an economic constitution is ‘a comprehensive decision concerning the nature and form of the process of socio-economic cooperation’.56 It is a political decision about the kind of economy a community wants in the same way as the political constitution represents basic decisions about the kind of political system a community wants. According to Bohm, ‘Only a focus on this idea makes it possible to achieve truly dependable and cogent principles for the interpretation of parts of private and public law’.57

This concept of an economic constitution intertwined legal and economic perspectives and discourses. It turned the core idea of classical liberalism—that the economy should be divorced from law and politics—on its head by arguing that the characteristics and the effectiveness of the economy depended on its relationship to the political and legal systems. The ordoliberals recognized that fundamental political choices created the basic structures of an economic system.

4. Ordnungspolitik: the untranslatable soul of ordoliberalism

The choice of an economic constitution could only be effective, the ordoliberals said, where the legal system was structured to implement that constitutional choice. Where a political unit chose a transaction economy in its economic constitution, for example, that choice required that governmental policies be designed to create and maintain that system. This the ordoliberals called ‘Ordnungspolitik’ (order-based policy),58 and it was the soul of their program.

According to the ordoliberal conception of Ordnungspolitik, individual governmental decisions should flow from the principles embodied in the economic constitution and be constrained by those same principles. Where the economic constitution calls for a transaction economy, for example, (p.247) Ordnungspolitik demands that the legal system be configured so as to create and maintain the conditions of complete competition which would allow that type of economic system to function most effectively.

For the ordoliberals, this meant that economic knowledge had to be translated into normative language. In order to establish policy based on the economic constitution, Böhm wrote, The body of doctrine of classical economic philosophy had to be translated from the language of economics into the language of legal science’.59 The idea was that economic science would describe the conditions of complete competition, and this information would provide the standards for legal decision-making.

This was the substantive dimension of Ordnungspolitik, but there was also a process dimension. In order for a transaction economy to achieve its goals, the governmental involvement must itself have certain characteristics and play certain roles. Above all, government could act only to implement the general norms or laws that derived from the economic constitution. Law would provide basic principles of economic conduct, and government officials would not have discretion to intervene in the economy except for the purpose of enforcing those principles.

This conception of the role of law is critical to the entire ordoliberal program. The ordoliberals emphasized that Ordnungspolitik did not permit discretionary governmental intervention in the economy, but required its opposite—legal principles that directed but also constrained government conduct! The constitutional dimension of their thought allowed them to call for law to create and maintain the basic structures of the economic system without authorizing governmental ‘intervention’ in the economy.

From a non-ordo perspective, this distinction between governmental ‘intervention’ and constitutional implementation seems suspect, because governmental action necessarily interferes with the economic system to the extent that it creates incentives and disincentives for economic conduct external to those produced by the market itself. One might assume, therefore, that the ordoliberal scheme inevitably creates a highly regulated economy with all the problems of discretion and uncertainty associated with high levels of regulation.

For the ordoliberals, however, there was no reason why constitutional discourse could not be applied to governmental conduct in the area of economic regulation just as it was to governmental conduct generally. If it is legitimate to ask whether particular governmental conduct conforms to the political constitution, it ought to be similarly legitimate to ask whether such conduct conforms to the economic constitution. Decisions about the legal environment of the market thus would be bound by the economic constitution in the same way as political decisions were subject to the political constitution. They (p.248) could not ‘interfere’ with the operations of the competitive system, because, by definition, they were consistent with that system.

Ordnungspolitik represented a transfer and adaptation of ideas from liberal political theory to economic policy. Its roots are in the theory of the Rechtsstaat or ‘law-based state’.60 Developed in the nineteenth century, this conception of the state focused on the dependability and certainty of the law as a bulwark against abuses of power. It was a means of establishing control over the discretionary power of the sovereign.

Central to this image of law is its neutrality and objectivity: the law has to be outside the discretionary power of those wielding governmental power. The state has to provide a basic level of ‘legal security’ by assuring that law is knowable, dependable and not subject to manipulation. The ordoliberals used these ideas as the basis for their concept of Ordnungspolitik.

5. The principle of indirect regulation

The ordoliberals referred to their conception of Ordnungspolitik as ‘indirect regulation’. Government did not ‘direct’ the ‘processes’ of the economy. It merely established the ‘forms’ or structural conditions within which those processes could function effectively.61 This distinction between process and form was fundamental to the ordoliberal conception of economic policy. Where governmental activity relating to the economy was not subject to the ordering function of an economic constitution, they said, it typically was beset by the problems of inconsistency and self-contradiction. The consequences of any individual action were likely to be counteracted by some other actions, and the result was likely to be inefficiency, confusion and, ultimately, economic chaos.62 Ordnungspolitik combated these problems by requiring the organization of governmental action around the principles of the economic constitution.

The concept of indirect regulation was supported by both ‘constitutive’ and ‘regulative’ principles.63 Constitutive principles were the fundamental principles of economic policy for a transaction economy. Their function was to establish the basic ‘form’ of the economy. For Eucken, they included the principles of monetary stability (the need to maintain a stable monetary unit), open markets, private property, contractual freedom, liability (legal responsibility for one’s acts), and policy consistency (the need to avoid frequent (p.249) changes in economic policy).64 Regulatory principles flowed from constitutive principles and were bound by them, but they were more specific and served to maintain the effectiveness of the constitutive principles. For example, the all-important principles of competition law were regulative principles that flowed primarily from the constitutive postulates of open markets and contractual freedom.

The ordoliberal program required a comprehensive view of a community’s legal, political and economic systems. Ordoliberals repeatedly emphasized the need for an ‘integrated policy perspective in which each individual decision had to be understood as part of a greater whole from which it received its meaning and effect’.65 According to Eucken, ‘All principles—the constitutive as well as the regulative—belong together. To the extent that economic policy is consistently based on them, a competitive order will be created and made operational. Every principle receives its meaning only in the context of the general blueprint of the competitive order’. Only thus could the program function effectively. Monetary, social, labor, and trade policy, for example, all had to flow from the same basic principles and support each other.

This conception of the roles of law in relation to the economy reflected the ordoliberals’ deep distrust of the executive branch of government and their confidence in the legislative and judicial branches. In it, the legislature would make the fundamental decisions about the content of the economic constitution and translate the economic model into normative language. The judiciary then had the responsibility for assuring that specific governmental acts were consistent with these basic norms. The executive branch had little power in this scheme. Administrators were to follow the dictates of the legislature, and, in principle at least, there was minimal room for discretion.

The ordoliberal conception of Ordnungspolitik also envisioned a community with particular characteristics. The ordoliberals recognized that Ordnungspolitik could be effective only where the members of that community willingly supported it and actively co-operated in implementing it. In their view, economic freedom had its correlate in duty, and community members would have to voluntarily implement the principles they chose in their economic constitution if they wanted to reap the benefits that the ordoliberal program promised.66

6. The problem of the strong state

In order to accomplish their goals, the ordoliberals called for a strong state, and many have criticized this aspect of their program as an inevitable threat (p.250) to economic freedom. For Eucken, Böhm and their colleagues, however, the experience of the Weimar period left no doubt that such a state was necessary. A weak state could be co-opted—as the Weimar state had been—by private economic interests and thus would be unable to create and maintain the conditions of competition. The ordoliberals were convinced that the economy needed the state to protect it, and they placed their full—perhaps inordinate—confidence in the capacity of the legal process to constrain the power of the state.

E. Competition Law And Its Roles

The keystone of the ordoliberal program was a new type of law called ‘competition law’. While all law relating to the economy should represent Ordnungspolitik, the ordoliberals assigned competition law the direct responsibility for creating and protecting the conditions of competition. According to a postwar German commentator, ‘Ordoliberalism moved anti-monopoly policy to the center of an entire economic system’.67 Monetary and other policies designed to foster competition would have little effect, ordoliberals argued, if firms could act in concert in setting prices or determining output, or if firms with economic power could use that power to foreclose opportunities for competition.

1. The ordoliberal conception of competition law

The ordoliberals rejected the administrative control measures that had been in vogue in the late 1920s as fundamentally flawed.68 The idea of merely granting authority to the executive branch to combat cartels was doomed, they urged, because those being regulated were powerful enough to subvert the objectives of the regulators in favor of their own interests. Moreover, lacking a reliable conceptual framework and support from other similarly oriented policies, the regulators would have little chance of success.

The story that informed ordoliberal thought relating to competition law was the recurring self-destruction of economic freedom, particularly during the 1920s. For Eucken and his colleagues, history—particularly Weimar history—had demonstrated that competition tended to collapse, because enterprises preferred private (that is, contractual) regulation of business activities rather than competition, and because they were frequently able to acquire such high levels of economic power that they could eliminate competition.

The ordoliberals conceived competition law as a means of preventing this degeneration of the competitive process. Competition law would ‘enforce’ (p.251) competition by creating and maintaining the conditions under which it would flourish! The model of complete competition would establish the general principles, and an independent monopoly office would enforce those principles. This was a fundamentally new conception that flowed from the conceptual framework of ordoliberalism. It was a particular application of Ordnungs-politik and rested on its theoretical underpinnings.

The model of complete competition provided the substantive standards for competition law, as it did for all Ordnungspolitik. In the competition law context, the complete competition standard demanded that law be used to prevent the creation of monopolistic power, abolish existing monopoly positions where possible and, where this was not possible, control the conduct of monopolies.

This conception of competition law focused attention on one core problem—private economic power.69 From the ordoliberal perspective, such power necessarily threatened the competitive process, and the primary function of competition law was to eliminate it or at least prevent its harmful effects. The use of a broad conception of economic power as the primary structuring device is one of the features of German and European competition law thinking that most clearly distinguishes it from its analogues in US antitrust law.

2. Prohibiting monopoly

One component of competition law was directed at the structures of monopoly power. Monopoly should be prohibited, they argued, because its very existence distorted the competitive order. A firm or group of firms that had power over price or the power to hinder the performance of its rivals was structurally inconsistent with the complete competition standard. This prohibition was directed primarily at cartels and other agreements between competitors. Such agreements created the very power that threatened the competitive process and, therefore, had to be prohibited. The ordoliberals had witnessed the destructive influence of cartels on the German economy, polity and society during the Weimar period, and they considered a prohibition of cartel agreements to be necessary for the maintenance of a competitive economy.

Where a monopoly position was not based on agreement between competitors, the task of competition law was more complicated. Single firms could also acquire monopoly power, even where government policy maintained the basic conditions of competition. This could occur, for example, in cases of natural monopoly, such as utilities, where the market could not sustain more than one enterprise. It could also occur where one firm had won the (p.252) competitive battle and had acquired sufficient power to block or discourage attempts by rivals and potential rivals to compete with it.

Ordoliberals generally agreed that where single firms held monopoly power, this should also be eliminated where possible.70 Competition law thus had to provide a means of requiring that firms divest themselves of components of their operations or otherwise eliminate their monopoly positions. This concept was a far more significant interference with private property than firms in Europe had experienced, except in wartime, and thus it was highly controversial. Moreover, its proponents tended to be vague about how it would work, in part because of the controversy and in part because they assumed that it would seldom be necessary to use the procedure.

3. Conduct control

Such divestiture would not be required, however, in cases of natural monopoly or where the monopoly position was based on a legally protected right (for example, a patent or copyright) or where divestiture would otherwise be impractical or entail economic waste. In such cases competition law was to provide a standard of conduct for such firms. It required that economically powerful firms act as if they were subject to competition—that is, as if they did not have such power.71

The idea was appealing. It promised—through a single objective legal mechanism—to limit the harms associated with both private economic power and state intervention. Application of the ‘as-if’ standard required that firms not engage in conduct that would not be available to them if they did not have monopoly power. They were to be limited, therefore, to conduct that was consistent with complete competition. They would not be allowed to use their power in ways harmful to competitors or to society in general.

According to the ordoliberals, the as-if standard would not create the danger of governmental intervention. It was conceived as an objectively applicable measure that in most cases would provide clear answers. The monopoly office would be authorized merely to apply this standard, and thus the law would not give discretionary power to regulators to intervene in the economy. The idea promised, therefore, to deal simultaneously with the dual evils of uncontrolled political power and of unrestrained economic power.

This standard found support in a legal distinction that was developed in the 1920s and continues to be central to German competition law. In applying the (p.253) German statute against unfair competition (UWG) a leading scholar named H. C. Nipperdey had perceived a distinction between ‘performance competition’ (Leistungswettbewerb) and ‘impediment competition’ (Behinderungs-wettbewerb).72 The former included conduct that made a firm’s products more attractive to consumers, typically by improving their characteristics or lowering their prices, while the latter referred to conduct designed to impede a rival’s capacity to perform.

Franz Böhm and other ordoliberals borrowed this distinction and placed it at the center of their new conception of competition law.73 Performance competition was consistent with the competitive model, they said, because under competitive conditions, performance improvement was the sole means by which a firm could improve its profits. Where, however, a firm used its power to impede the performance of a rival—for example, by excluding the rival from the market—it was interfering with the competitive process and thus the state should prevent such conduct. In effect, the as-if standard of conduct prohibited impediment competition. Böhm’s early work had focused on analyzing the characteristics of competition by economically powerful firms, and he had identified a catalogue of types of conduct that represented ‘impediment’ or ‘non-performance’ competition.74 These included, for example, predatory pricing, boycotts and loyalty rebates. In each case, he considered the conduct inconsistent with the as-if standard, because a firm would not be able to engage in such practices unless it had monopolistic power.

4. The problem of oligopoly

There was little agreement among ordoliberals with regard to oligopoly situations in which a small number of firms dominated a market and, as a result, could exercise power over rivals through consciously parallel conduct. Leonhard Miksch argued that in this situation the government’s only means of opening the market and eliminating the oligopoly was to regulate the market, particularly through controls on prices.75 This, he believed, would prevent large firms from using their collective dominance of the market to eliminate competition from smaller firms.

This solution was, however, criticized by some ordoliberals as impracticable. Eucken considered it unnecessary, provided that the controls on monopolies were sufficiently strict. He believed that firms would not be likely to engage in impediment competition if this would give them monopoly power and thereby subject them to the highly restrictive as-if conduct standard.76

(p.254) 5. Application and enforcement

The procedural aspects of the ordoliberal conception of competition law often were as distinctive and original as their substantive counterparts. The ordoliberal vision required a specific institutional framework for creating, applying, and enforcing its substantive provisions. The legislature would enact a competition law based on the economic constitution, an independent monopoly office would assure compliance with that law, and the judiciary would supervise interpretation of the principles by the cartel office. The executive branch of government was to play virtually no role in this scheme.

The ordoliberals assigned an important, but comparatively simple, role to the legislature. It was to translate the economic principles embodied in the model of complete competition into normative terms. This meant drafting a statute that identified deviations from the competitive model as violations of legal norms. It thus implemented the ‘economic constitution’ by imbedding its principles in the legal system. In this role, the legislature had little discretion in fashioning a competition law, because once the constitutional decision in favor of the competitive ‘order’ had been made, the complete competition model itself generally dictated the provisions of the statute. This would also reduce the legislature’s vulnerability to lobbying efforts.

An autonomous monopoly office was to have sole responsibility for enforcing competition law norms. It would investigate alleged violations of the statute, and it would have authority to take enforcement actions. This included, for example, invalidating cartel contracts and ordering that particular conduct be terminated, in some cases with the threat of fines for failure to comply. The actions of the office were to be subject to review by the regular courts for their conformity to the economic constitution. According to Eucken, Tn the situation of the modern industrial state this great, central figure of the monopoly office had to appear. Without it the competitive order and with it the modern Rechtsstaat is threatened. The monopoly office is as indispensable as the highest court’.77

Eucken did not expect the monopoly office to handle large numbers of cases, because he believed that a consistent and comprehensive Ordnungs-politik would keep markets open and reduce instances of monopoly creation to a minimum. He did, however, believe that the office would have to send a clear message to firms that it would enforce these regulative principles strictly.

The most important—and most controversial—characteristic of this office was its autonomy. It was not intended merely to be a part of the state bureaucracy and hence subject to political influence. The ordoliberals had witnessed during the Weimar period the capacity of cartels and large corporations to eviscerate attempts at control by putting political pressure on the executive (p.255) branch, and they were convinced that this new office had to be autonomous in order to exclude such influences. They envisioned it as a quasi-judicial office and as such guided not by political considerations, but by the application of judicial methods to authoritative texts.

For the same reasons, the monopoly office would also have to be made into a strong institution. It would have to have significant enforcement authority, so that it could effectively demand compliance, and it would have to have the resources necessary to operate quickly and decisively and to attract and maintain personnel of the highest caliber. This issue was particularly important from the ordoliberal perspective, because in that view the function of the monopoly office was to apply objective criteria. It thus needed career specialists with a high level of economic and legal training, and they had to be largely protected from outside political or pecuniary influences.

The role envisioned for the judiciary in this scheme was limited, but important. The courts were to be available to assure that decisions of the monopoly office correctly interpreted the competition statute and conformed to the economic constitution (’the comprehensive constitutional choice’).78 Actions of the monopoly office were, therefore, made reviewable by the regular courts.

This element of reviewability by the regular courts was a means of emphasizing the autonomous role of law in the ordoliberal program. The actions of the monopoly office did not represent ordinary administrative action that administrative courts could review to determine whether discretion had been abused. The monopoly office was applying legal principles according to objective standards; there was not supposed to be any discretion. Consequently, the regular courts were the appropriate instances for reviewing the conformity of its acts with the economic constitution. Here again the image of the Rechtsstaat plays an important role in informing the contents of the ordoliberal program.

F. The Integrity Of The Ordoliberal Program

The ordoliberal program thus represented a well-developed and highly integrated whole. The theoretical and methodological premises generated a set of interpretive principles about the economic system, and these, in turn, were tied directly to the specific substantive and procedural proposals. It integrated sophisticated analytical contributions with practical policy initiatives.

The intellectual dimension of the program focused on what the ordoliber-als considered a new method of understanding economic reality, and this methodological and philosophical component of the program broadened and deepened its impact and established a fundament on which to build an (p.256) integrated policy framework. Eucken’s concept ‘Ordnung’ provided a construct that served to organize data about the economy and to elucidate the inter-relationships among the components of an actual economic system, and it promised new levels of certainty and dependability in dealing with the economy.

The introduction of legal-constitutional discourse added a critical dimension to these insights by recoding them as a framework for the articulation of policy. Laws determined the conditions and structures within which market processes operated, and thus economic knowledge had to be translated into the language of law. At the core of the ordoliberal program is the symbiotic character of the relationship between legal and economic processes.

The program’s policy dimension was thus directly integrated with its intellectual foundations, and the concept of an ‘economic constitution’ was the primary integrative tool. Its implementation required a combination of careful ‘scientific’ analysis of the economy, community participation in the choices based on this knowledge, and the translation of those choices into legal norms and institutional structures.

Competition law was the institutional anchor for this program, and it was also tightly interwoven with the theoretical component of the system and with the overall constitutional framework. Its role was to assure that firms did not create monopoly power or use it to distort the competitive system, and thus its substantive principles were emanations of ordoliberal economic insights. Competition law’s roles were tightly circumscribed by the principles of the economic constitution, however, so that the legal regime did not generate opportunities for government to interfere in the economy. According to the ordoliberals, competition law could only be effective where it was part of the larger framework of ‘Ordnungspolitik’. While emphasizing that competition law was necessary as part of an overall framework of economic policy, Eucken continually warned that it could not stand alone and that by itself it would be of little or no value.

The exceptional degree of integration in the ordoliberal program between intellectual and policy dimensions, and between legal and economic processes, is impressive by any measure. It was facilitated, and perhaps made possible, by the unique situation in which a small band of intellectuals managed to operate for years without the need to make political or doctrinal compromises or even to consider fitting their ideas into the existing political and economic framework. This situation allowed them to develop a remarkably comprehensive and tightly integrated theoretical perspective and concomitant policy language, and this high level of integration may have played a role in the postwar success of the program. The ordoliberals did not offer an assortment of recipes from which a postwar regime could pick and choose a few elements. They argued that such a regime would have to take the entire program—from intellectual perspective to policy prescriptions.

(p.257) G. Ordoliberalism And The Shaping Of Modern Germany

When the war did end, there seemed little likelihood that ordoliberal ideas would become influential. Throughout Europe, liberalism had been so thoroughly discredited that few wished to be associated with it. Socialist solutions had captured the public imagination and/or the fancy of intellectuals. Rage at the governments whose conduct had caused such havoc during the preceding decades and the desire for increased access to political and economic power fueled this enthusiasm. In Germany, in addition, the importance of the ‘Volk’ and the excoriation of individualist values that had dominated thought for more than a decade generated a predisposition for collective solutions in many social groups.

Some form of socialism thus seemed all but inevitable in Germany.79 The Marxist socialism of the Social Democratic Party had a solid base of support in the working class in many areas, and many of its leaders from the pre-Nazi period had returned from exile to provide leadership.80 Christian socialism also had strong support. The church as an institution seemed to promise not only material support, but also moral strength during a period when both were in great need, and socialism based on Christian values became popular, particularly in Roman Catholic areas.

In this context, members of the Freiburg School emerged from the shadows in which they had operated for over a decade and quickly found themselves at center stage. The US military government sought to develop an economic policy that would both minimize government economic planning and eliminate cartels, and members of the Freiburg School presented a coherent plan for achieving these goals. In addition, they were among the few qualified Germans who were not tainted by ties to Nazism, and thus they met the rigorous US denazification standards. As a result, many members of the group soon assumed leadership positions in German self-government. Leonhard Miksch, for example, was a director of economic policy planning in the bizonal administration,81 and ordoliberals are reported to have constituted more than 50 per cent of the members of the Academic Advisory Council (Wissenschaftlicher Beirat) that was formed in 1947 to give advice to the government and that had great influence on the development of policy.82

The ordoliberals began to campaign for their program almost immediately after the end of the war. They poured out an extraordinary spate of books, (p.258) pamphlets, and articles directed primarily at German intellectual and political leaders and intended to demonstrate the need for their program.83 In 1948, for example, Eucken and Böhm together founded the ORDO journal, which became highly influential as a forum for debate about economics and economic policy.

Many ordoliberals also pursued their goals on the popular level. For example, perhaps the leading national newspaper of the period, the Frankfurter Allgemeine Zeitung, was controlled by ordoliberals, and it effectively disseminated ordoliberal principles.84 Members of the group also spoke widely to numerous groups on behalf of their program, propagating their ideas to whomever would listen. Fortunately, many of them knew how to present their message in a form that made it accessible to the general population. Franz Böhm, for example, also played the role of politician as a member of the Bundestag for two terms (1953–61).

1. Occupation dynamics

The special circumstances of the postwar period provided the ordoliberals with exceptional opportunities to propagate their ideas and put them into practice. The Nazi regime had been crushed, and there was widespread recognition of the need for fundamental changes. Reconstruction was called for, and the ordoliberals were among the few in Germany in a position to provide a well-developed program for such reconstruction. According to Hayek, ‘How fortunate and valuable [Eucken’s] quiet impact had been even during the National Socialist period became clear only after its collapse, as the circle of his friends and students in Germany emerged as the most important support for economic reason’.85 Moreover, by 1947, economic policy authority for the British and American zones of occupation had been unified under US leadership, and the strong market-orientation of United States officials led them to provide institutional backing for ordoliberal ideas.86

The rupture of co-operation between the Soviet Union and the other occupation authorities that led to the ‘Cold War’ further intensified United States support for ordoliberal proposals, as economic structure and policy quickly became part of the East-West conflict. The United States sought to demonstrate the superiority of its free-market-based social system through the success of such a system in Germany.87 This dynamic also impelled efforts to make the German test case as ‘pure’ an example as possible of a capitalist (p.259) economy, on the theory that the ‘purer’ it was, the stronger the proof that the market economy was superior to its socialist competitor.

These efforts of the ordoliberals soon achieved success on the intellectual level. Within a few years after the end of the war, ordoliberal methods, ideas, and values had become the starting point for most serious thinking about economic policy. High-ranking government officials and academics in these areas (the overlap between these two groups was significant) generally had accepted the central notions of ordoliberalism.

2. The road to political success

In the longer term, however, the issue was whether these ideas would find broad-based support within the German population and, in particular, within the emerging political parties. In the western zones of occupation, political activity was allowed to resume soon after war’s end. Parties emerged or re-emerged in 1946 in most areas, and elected assemblies with limited rights were formed there by 1947. It was in these parties that the future of Germany would be shaped.

Many of the central elements of the ordoliberal program were eventually successful on this level as well, and many of them achieved enormous influence on the evolution of modern Germany as part of a broader program known as the ‘social market economy’. This program, as originally developed by Alfred Müller-Armack,88 included central components of the ordoliberal program such as the concepts of ‘economic constitution’ and Ordnungs-politik, and it emphasized the need for a law to protect the process of competition.89 He imbedded these ideas, however, in an idiom that placed greater emphasis on social values and concerns. For him, the economic benefits of Ordnungspolitik were valuable in themselves, even necessary, but his focus was on their roles in unifying and integrating German society.

The social market economy became a political program in the context of the evolution of the Christian Democratic party (CDU).90 This party emerged during the postwar period as the primary representative of the middle class and of Catholic workers. Immediately after the war, Christian socialism was the prevailing credo within the party, and during 1946 and 1947 a (p.260) struggle ensued within the party to define a platform that appealed to both the middle and working classes.91

Under these circumstances, the concept of the social market economy appealed to many leaders of the CDU. At the very least, it was a promising political symbol that in three words appealed to those interested in the market economy, those concerned about receiving a fair share of the social product, and all who sought to unite and integrate the nation. Moreover, the substantive elements of the program promised the prosperity that all considered essential, while emphasizing the politically attractive message that this had to be done in the context of social improvement for all members of society.

The decisive event in the success of the social market economy occurred in 1948. In the midst of the severe economic difficulties of the reconstruction period, Ludwig Erhard—the highest official in German self-government, a member of the CDU and an ardent and vocal supporter of ordoliberal and social market economy ideas92—took an extraordinary step. Without the required formal approval of the US authorities (though with tacit support from the US commander General Lucius Clay) he eliminated virtually overnight most rationing and price controls in Germany.93

At first, many observers saw this bold move as unlikely to succeed and probably foolhardy. Erhard was, for example, heavily criticized for the inflation that followed his termination of price controls. For several months it seemed that Erhard’s critics might be right.

But Erhard’s gamble did work.94 By the end of the first year the economic situation had changed dramatically. Prices had stabilized, and employment, profits, and investment had shown impressive advances. This began a period of continued growth and improvement that has lasted with few interruptions until very recently. The so-called ‘German miracle’ had begun.

The success of Erhard’s action soon generated widespread support for his party and enthusiasm for his social market economy ideas. In 1949 the CDU adopted many of the central principles of the social market economy in its ‘Dusseldorf platform’ (Düsseldorfer Leitsätze),95 and some version of those ideas has been part of the CDU program ever since. This was particularly important, because the CDU was the governing party in western Germany from then until 1966, and thus those principles were the primary economic (p.261) policy guidelines in Germany for almost two decades. When the Federal Republic of Germany (FRG) was established in 1949, Konrad Adenauer of the CDU was named its first chancellor, and Ludwig Erhard became its minister of economics, a post he held until 1963, when he replaced Adenauer as chancellor.

Erhard interpreted Germany’s economic successes during this period as a direct result of applying social market economy ideas, especially those most closely associated with ordoliberalism.96 He repeatedly and forcefully propagated this interpretation, and his personal popularity and influence over the development of German economic policy gave that interpretation massive impact. He ascribed particular importance to the concept of the economic constitution as a means of structuring the relationship between government and the economy, and he viewed competition law as vital to the success of the social market economy.97

H. Freiburg And Europe

Scholars generally have paid little attention to ordoliberalism’s influence outside Germany. In the early postwar period, in particular, this was tied to ordoliberalism’s German origins. Although ordoliberal thought was antithetical to Nazism and although the ordoliberals themselves often were victims of the Nazi regime, they were still German in a world in which there was much resentment toward ‘things German’. In recent years the disincentive to studying these ordoliberal influences has been the political dynamic of the process of European unification, which impedes recognition of national influences on this process. The identification of ideas or programs with particular Member States is generally regarded as likely both to increase resistance to such ideas and to interfere with Europeanization, and this creates a powerful incentive to avoid such identification. As a result, I can do little more than sketch the outlines of ordoliberal influence outside of Germany. Intellectual and political factors were intertwined in spreading and deepening this influence, but it is useful to separate the two strands of the process for analytical purposes.

1. Intellectual reception

Neo-liberals living outside Germany during the war prepared the way for the rapid spread of these ideas outside Germany after the war. The ideas spread (p.262) principally along networks established by Ropke, Hayek and others. Ropke had actively promoted his brand of ordoliberal thought from his base in Switzerland, and his extensive journalistic activities achieved a wide following on both the popular and intellectual levels in many areas of Europe. In particular, he had a coterie of friends and supporters in the media and in government in England, France and Italy.98 Beginning early in the 1930s, Friedrich von Hayek had preached his neo-liberal message from the London School of Economics. He had there become an important figure in the social sciences,99 publishing widely in English, and helping to establish that institution as a major center for neo-liberal thought.

During the immediate postwar period, Röpke and Hayek, in particular, continued to use their respective bases to influence European thought. For example, in 1947 Hayek gathered a group of leading economists and politicians from many European countries to a conference on Mont Pelerin, Switzerland. From this meeting developed the Mont Pelerin Society, which has been an influential force in maintaining neo-liberal and particularly Hayekian ideas. As soon as postwar conditions in Germany permitted them to travel, Eucken, Böhm and other ordoliberals joined this proselytizing activity, lecturing and participating in seminars throughout Europe and the United States. Walter Eucken died on a lecture tour in England in 1950.

These activities not only disseminated neo-liberal influence after the war, but also helped to create the conditions for their acceptance. In particular, they highlighted the contrast between neo-liberal ideas and the ideas of the Nazi regime. In a sense, they helped ‘cleanse’ these ideas of potential associations with the Nazi regime, fostering the perception that they represented a common European front against totalitarianism and the recent past.

By the early 1950s, German neo-liberal ideas were being discussed in academic (economic) circles in several European countries. In France, for example, numerous scholarly analyses of German neo-liberalism were written by influential economists in the 1950s.100 Raymond Barre, later to become a leading economics professor in France and still later Prime Minister, wrote one of the earliest scholarly articles on ordoliberalism in 1952.101 In Italy, the (p.263) economist Luigi Einaudi maintained an important neo-liberal school in Turin that had ties to Wilhelm Röpke. These economists’ channels carried German neo-liberal ideas throughout Europe, often intermingling them with the neo-liberal ideas of the American Walter Lippman in the process.102

2. Ordoliberals and European unification

The main vehicle for disseminating the ordoliberal version of neo-liberalism outside of Germany has been, however, the process of European unification. Through their influence on thought and institutions in the European Communities, these ideas have acquired a degree of dispersion and a level of force that they are unlikely to have acquired in any other way.

Ordoliberal ideas suffused the process of European unification at its earliest stages and its highest levels. The leading German representatives in the founding of the European Communities generally were closely associated with ordoliberalism, or at least shared an appreciation of it. Walter Hallstein, for example, was one of the founders of the European Communities and the first president of the European Commission. He had been a law professor in Germany and a friend of Franz Böhm and Heinrich Kronstein. He became associated with the ordoliberals during the 1940s, acquiring a high regard for the ideas of Walter Eucken.103 Many of his views on the role of law in shaping the future of European institutions clearly reflect ordoliberal ideas, and he actively propagated and pursued these ideas during the formative period of the European Community. Another key figure with strong ties to ordoliberalism was Hans von der Groeben, one of the two principal drafters of the so-called ‘Spaak Report’, the document on which the Rome treaty was based.104 Finally, Müller-Armack, the creator and a chief proponent of social market economy ideas, was himself responsible as an official of the German government for influencing the development of European Community economic policy during its formative years.105

The primary political impetus for establishing a European common market did not come from the ordoliberals, but ordoliberal thought provided a (p.264) comprehensive and theoretically-grounded set of ideas that helped give legal and institutional form to general political goals. It supplied a framework for the process of European integration that has been highly influential among most Germans involved in European unification and has influenced other leaders as well.

Ordoliberal ideas were well suited to the goal of pursuing European integration through creation of a common market. This task called for establishing a new community centered on the operation of a market economy, for example, and this corresponded to the central objective of ordoliberal thought. This community was to be based on a voluntary agreement, and that agreement could play a role something like the one played in ordoliberal thought by the concept of an economic constitution.106 Thus the body of ordoliberal thought could be seen as directly applicable to the problems of this new European community, and the German representatives in the creation and early structuring of the European Community tended to see the process in that light.107

Ordoliberal influence has been particularly important in relation to competition law. As we shall see, Germans were major supporters of the inclusion of competition law provisions in the Rome Treaty. The structure of the two main competition law provisions of the Rome Treaty (Articles 85 and 86) also closely tracked ordoliberal thought and bore little resemblance to anything to be found in other European competition laws at the time. While the prohibition of cartel agreements had analogues in US antitrust law, the concept of prohibiting abuse of a market-dominating position was an important new development that was particularly closely associated with ordoliberal and German competition law thought and very different from the discourse of US law.

Many ordoliberals also emerged as leaders in the competition law area. The ordoliberal Hans von der Groeben was, for example, appointed the first Commissioner for Competition Policy of the European Commission, and the Director General of the competition directorate has customarily been German and thus necessarily imbued, at least in the early years of the Community, with ordoliberal thought.

* * *

(p.265) Ordoliberals and their ideas have played an important role in shaping German and European thought and institutions during the last half century. Without an appreciation of ordoliberal concepts and the architecture of ordoliberal thought, much of the discourse about economic policy in Germany—and to some extent in the European Community—cannot be understood and is likely to be misunderstood.

The ordoliberals redefined the tradition of economic liberalism and in so doing helped to resuscitate it. They articulated a new version of liberalism in which law was a necessary companion of the market that transformed the market from a source of social divisiveness into a tool for social integration. In this version of liberalism, the market was necessary, but not sufficient. The economy needed to be imbedded in a constitutional-legal framework that would both protect it and help integrate society around it. Competition law was at the center of this project.

Notes:

(1) As Wolfgang Fikentscher has put it, ‘The traditional way of viewing economic policy assumes a thesis-antithesis process and arrives at three types: there are the models of complete liberalism and of the totally-planned economy, and the practice of most states lies somewhere between them. The decisive importance of the Freiburg School was to break this tripartite scheme’. Wolfgang Fikentscher, II Wirtschaftsrecht 42 (Munich, 1983).

(2) Walter Eucken’s principal theoretical work, Grundlagen der Nationalökonomie, was translated into English in 1950 as Foundations of Economics (London, 1950), and his more popular Unser Zeitalter der Misserfolge was translated the following year as This Unsuccessful Age (W. Hodge tr., London, 1951). They seem to have had little circulation since the early 1950s.

There has been a modest revival of interest during the last decade. Two collections of translations of seminal articles in the development of thought regarding the German social market economy, including many by members of the Freiburg School, have been published during the last decade. In 1989, the German economist Hans Willgerodt and the British economist and public policy scholar Alan T. Peacock edited an anthology entitled Germany’s Social Market Economy: Origins and Evolution. An accompanying volume contains articles on the same topic. See German Neo-Liberals and the Social Market Economy (Alan T. Peacock & Hans Willgerodt, eds., New York, 1989). The Ludwig-Erhard Stiftung published a similar anthology in 1982, entitled Standard Texts on the Social Market Economy (W. Stützel et al eds., Stuttgart, 1982). See also Manfred E. Streit, ‘Economic Order, Private Law and Public Policy: The Freiburg School of Law and Economies’, 148 J. of Institutional and Theoretical Econ. 675 (1992) and Heinz Rieter & Matthias Schmolz, ‘The Ideas of German Ordoliberalism 1938–45: Pointing the Way to a New Economic Order’, 1 Eur. J. of Hist. of Econ. Thought 87 (1993). I have discussed the ordoliberals and their influence in somewhat greater detail in David J. Gerber, ‘Constitutionalizing the Economy: German Neo-Liberalism, Competition Law and the “New” Europe’, 42 Am. J. Comp. L. 25 (1994).

(3) See generally Andreas Heinemann, Die Freiburger Schule und ihre geistigen Wurzeln (Munich, 1989).

(4) For a brief but fascinating portrait of early influences on Eucken’s thought, see Walter A. Jöhr, ‘Walter Euckens Lebenswerk’, 4 Kyklos 257 (1950). See also Francois Bilger, La Pensée Économique Libérale dans L’Allemagne Contemporaine 46–8 (Paris, 1964).

(5) See, e.g., Walter Eucken, Kapitaltheoretische Untersuchungen (Leipzig, 1934).

(6) Hans Grossmann-Doerth, Selbstgeschaffenes Recht der Wirtschaft und staatliches Recht (Freiburg i.B., 1933).

(7) See Heinrich Kronstein, ‘Franz Böhm’, in Wirtschaftsordnung und Rechtsordnung: Festschrift für Franz Böhm zum 70. Geburtstag, at i, ii (Helmut Coing et al eds., Karlsruhe, 1965).

(8) Franz Böhm, Wetbewerb und Monopolkampf Eine Untersuchung zur Frage des wirtschaft- lichen Kampfrechts und zur Frage der recht lichen Struktur der geltenden Wirtschaftsordnung (Berlin, 1933).

(9) Another influential figure in both the early development of Freiburg thinking and its propagation after the Second World War was Heinrich Kronstein, a close friend of Franz Böhm and later Professor of Law at Georgetown University Law School, who in 1931 published a book that dealt with the use of subsidiaries by large corporations to avoid legal constraints. See Heinrich Kronstein, Die abhängige juristische Person (Munich, 1931). According to Wolfgang Fikentscher, this book provided ‘the starting-point for the neo-liberal way of looking at law’. Wolfgang Fikentscher, III Methoden des Rechts: Mitteleuropäischer Rechtskreis 418 (Tübingen, 1975). For a discussion of some aspects of Kronstein’s life and work, see David J. Gerber, ‘Heinrich Kronstein and the Development of United States Antitrust Law’, in Der Einfluss deutscher Emigranten auf die Rechtsentwicklung in den USA und in Deutschland 155–69 (Marcus Lutter et al eds., Tübingen, 1993).

(10) Franz Böhm, ‘Die Forschungs- und Lehrgemeinschaft zwischen Juristen und Volkswirten an der Universität Freiburg in den dreissiger und vierziger Jahren des 20. Jahrhunderts’, in Franz BöhmReden und Schriften 158, 161 (Ernst-Joachim Mestmäcker, ed., Karlsruhe, 1960).

(11) Böhm, ‘Forschungs-und Lehrgemeinschaft’, 162.

(12) Bilger, La Pensée, 76.

(13) See generally Constantin von Dietze, ‘Die Universität Freiburg im Dritten Reich’, 3 Mitteilungen der List-Gesellschaft 95 (Aug. 9, 1961). Freiburg has been described as ‘a kind of nature preserve of liberal economic scholarship’. Gunter Schmölders, Personalistischer Sozialismus 29 (Cologne, 1969). See also Christine Blumenberg-Lampe, Das Wirtschafts- programm der ‘Freiburger Kreise’ 15 (Berlin, 1973).

(14) According to one commentator, the Freiburg School represented ‘the quiet, but bitterly fought war of resistance of German economic scholarship’. Gunter Schmölders, ‘Freiburger Imperativ’, Frankfurter Allgemeine Zeitung, Apr. 26, 1990, at 15. For discussion of the situation of economists during the Third Reich, see Wernhard Krause, Wirtschaftstheorie unter dem Hakenkreuz: Die bürgerliche Ökonomie in Deutschland während der faschistischen Herrschaft (Berlin, 1969).

(15) For discussion, see Blumenberg-Lampe, Das Wirtschaftsprogramm.

(16) See Blumenberg-Lampe, Das Wirtschaftsprogramm, 15–54.

(17) For an overview of German neo-liberalism, see Alan T. Peacock & Hans Willgerodt, ‘Overall View of the German Liberal Movement’, in German Neo-Liberals and the Social Market Economy 1–15.

(18) The term ‘neo-liberal’ is not without difficulties. Walter Eucken, for example, did not consider the term applicable to the Freiburg School because it suggested a return to the prior policies of liberalism, whereas he considered ordoliberalism to be something significantly new. See Walter Eucken, Grundsätze der Wirtschaftspolitik 374 (6th ed., Tübingen, 1990).

(19) The term ‘ordoliberal’ apparently was first used in Hero Moeller, ‘Liberalismus’, 62 Jahrbücher für Nationalökonomie 214, 224 (1950). The reference is to the ‘Ordo’ or ‘natural order’ of scholastic philosophy. It was used as the title of the ORDO journal that was founded in 1948 by Franz Bohm and Walter Eucken and that became the principal journal of the ordoliberal movement as well as one of the most respected scholarly journals in the German-speaking world relating to economic policy.

(20) For discussion of Röpke’s thought and activities, see Bilger, La Pensée, 93–114, and Daniel Johnson, ‘Exiles and Half-Exiles: Wilhelm Röpke, Alexander Rüstow and Walter Eucken’, in German Neo-Liberals and the Social Market Economy 40–68.

(21) See Reinhard Blum, Soziale Marktwirtschaft: Wirtschaftspolitik zwischen Neoliberalismus und Ordoliberalismus 94 (Tübingen, 1969).

(22) Hayek knew Eucken well and showed much respect for his thought. In addition, he was a principal contributor for decades to the ORDO journal. For a comparison of their thinking in this area, see Artur Woll, ‘Freiheit durch Ordnung: Die gesellschaftspolitische Leitidee im Denken von Walter Eucken und Friedrich A. von Hayek’, 40 ORDO 87 (1989).

(23) Walter Eucken, Grundlagen der Nationalökonomie 24–37 (9th ed., Berlin, 1989).

(24) John M. Keynes, The End of Laissez-Faire? (London, 1926).

(25) See Eucken, Grundsätze, 55–58.

(26) See generally Willi Meyer, ‘Geschichte und Nationalökonomie: Historische Einbettung und allgemeine Theorien’, 40 ORDO 31 (1989). For Franz Böhm, historicism was still a dominant style of thought in economics in the 1930s. Franz Böhm, Die Ordnung der Wirtschaft als geschichtliche Aufgabe und rechtsschöpferische Leistung xi–xviii (Stuttgart, 1937).

(27) Walter Eucken, ‘Die Überwindung des Historismus’, 63 Schmollers Jahrbuch 63 (1938).

(28) Bilger, La Pensée, 45.

(29) See Böhm, Ordnung der Wirtschaft, ix–xii.

(30) According to Eucken, ‘The normal discussion of economic policy [is] full of outdated con cepts and polarities’. Eucken, Grundsätze, 2.

(31) John M. Clark, Alternative to Serfdom 6–7 (Oxford, 1948).

(32) See also Reinhard Behlke, Der Neoliberalismus unddie Gestaltung der Wirtschaftsverfassung in der Bundesrepublik Deutschland 38 (Berlin, 1961).

(33) Leonhard Miksch, ‘Walter Eucken’, 4 Kyklos 279 (1950). Note Miksch’s use of ‘neo-liberal’ here to refer to something separate from, and inimical to, ordoliberalism. Presumably he was here referring to the Hayekian ‘pure liberal’ version of neo-liberalism.

(34) See, e.g., Eucken, Grundlagen, 196–204, and Franz Böhm, ‘Das Problem der privaten Macht. Ein Beitrag zur Monopolfrage’, 3 Die Justiz 324 (1928), reprinted in Franz BöhmReden und Schriften 25 (Ernst-Joachim Mestmäcker ed., Karlsruhe, 1960).

(35) See, e.g., Wilhelm Röpke, Civitas Humana 80 (Erlenbach-Zurich, 1946).

(36) Eucken, Grundsätze, 1.‘For Eucken, “social” was the equivalent of “independent”, that is, to live in a world without monopolies and without power’. Otto Schlecht, ‘Macht und Ohnmacht der Ordnungspolitik—Eine Bilanz nach 40 Jahren Sozialer Marktwirtschaft’, 40 ORDO 303, 309 (1989).

(37) See, e.g., Eucken, Grundsätze, 185–93. See also generally Helmut Becker, Die Soziale Frage im Neoliberalismus (Heidelberg, 1965). Böhm claimed that a liberal program could not work if it did not satisfy this type of’social need’. Böhm, Ordnung der Wirtschaft, 185.

(38) See, e.g., Röpke, Civitas Humana, 372–75, and Eucken, ibid., 350–68. In these contexts the ordoliberals tended to refer not to economic growth, but to ‘improving economic performance’. See, e.g., Eucken, ibid., 249.

(39) Eucken, Grundsätze, 369.

(40) Hans O. Lenel et al., ‘Vorwort’, 40 ORDO, at viii (1989). For discussion, see, e.g., Hans O. Lenel, ‘Walter Euckens “Grundlagen der Nationalökonomie”’, 40 ORDO 3 (1989).

(41) ‘[The Grundlagen] contained the development of a completely new basis for economic knowledge (eines neuartigen nationalökonomischen Erkenntnisprogramms)’. Meyer, ‘Geschichte und Nationalökonomie’, 31. For references to some of the intellectual influences on Eucken’s thought, see Gerber, ‘Constitutionalizing the Economy’, 38–41.

(42) Eucken, Grundlagen, 27–37.

(43) For discussion, see, e.g., Ernst Heuss,’ “Grundlagen der Nationalökonomie” vor 50 Jahren und Heute’, 40 ORDO 21 (1989).

(44) See generally Böhm, Ordnungder Wirtschaft, 107.

(45) See generally Hans-Günter Krüsselberg, ‘Zur Interdependenz von Wirtschaftsordnung und Gesellschaftsordnung: Euckens Plädoyer für ein umfassendes Denken in Ordnungen’, 40 ORDO 223 (1989).

(46) Eucken, Grundlagen, 58.

(47) An intellectual forerunner of ordoliberal thought in this area was the so-called ‘Marktformenlehre’ (doctrine of market forms) that was developed primarily in the 1920s and 1930s and whose most influential advocate was Heinrich von Stackelberg. See, e.g., Heinrich von Stackelberg, Marktform und Gleichgewicht (Vienna, 1934). For discussion, see Fritz Holzwarth, Ordnung der Wirtschaft durch Wettbewerb: Entstehung der Ideen der Freiburger Schule 112–34 (Freiburg i.B., 1985).

(48) See Eucken, Grundlagen, 58.

(49) For detailed discussion, see Gemot Gutmann, ‘Euckens Ansätze zur Theorie der Zentralverwaltungswirtschaft und die Weiterentwicklung durch Hensel’, 40 ORDO 55 (1989).

(50) Ludwig von Mises was one of a few others who had taken preliminary steps in this direction. See Norbert Kloten, ‘Zur Transformation von Wirtschaftsordnungen’, 40 ORDO 99, 104–05 (1989).

(51) Bilger, La Pensée, 58.

(52) The German term ‘vollständiger Wettbewerb’ is often translated as ‘perfect competition’, but I here use the term ‘complete competition’ because, as Wernhard Möschel has pointed out, ‘What counts for him [Eucken] is the absence of coercive power’. Wernhard Möschel, ‘Competition Policy from an Ordo Point of View’, in German Neo-Liberals and the Social Market Economy 157 n.16 (Alan T. Peacock & Hans Willgerodt, eds., New York, 1989). This reflects the difference in emphasis between the ‘perfect competition’ of neo-classical price theory and ordoliberal thought. For further discussion, see Fikentscher, II Wirtschaftsrecht 186–95.

(53) Bilger, La Pensée, 78–79.

(54) The earliest sustained use I have found is in Siegfried Tschierschky, Wirtschaftsverfassung (1924). Its underpinnings derive, however, from the Weimar Constitution. See Knut W. Nörr, ‘Auf dem Wege zur Kategorie der Wirtschaftsverfassung: Wirtschaftliche Ordnungsvorstel- lungen im Juristischen Denken vor und nach dem Ersten Weltkrieg’, in Geisteswissenschaften zwischen Kaiserreich und Republik 423–452 (Knut W. Nörr et al eds., Stuttgart, 1994).

(55) For an analysis of Böhm’s contributions to competition law thinking, see Christina Dümchen, Zur Kartellrechtlichen Konzeption Franz Böhms (Frankfurt a.M., 1980).

(56) Böhm, Wettbewerb und Monopolkampf, 107. Bohm relied here on ideas developed in the late 1920s by Carl Schmitt, a public law theorist who was extremely influential during the Weimar period (but who later employed his theoretical talents in the service of the Nazis). Schmitt defined constitution as a ‘comprehensive decision {Gesamtentscheidung) concerning the nature and form of the political unit’. Carl Schmitt, Verfassungslehre, 20 (Munich, 1928).

(57) Böhm, Ordnung der Wirtschaft, at xix.

(58) This term is exceptionally difficult to render into English and other languages, because it depends so much on the ordoliberal thinking with which it is associated. The ‘order’ in ‘order- based policy’ is not ‘order’ merely for the sake of any form of ordering, but ‘order’ in the sense of Eucken’s economic orders. That referent is not, however, apparent in English translation.

(59) Böhm, Wettbewerb und Monopolkampf, ix. See also Böhm, Ordnung der Wirtschaft, 54.

(60) See, e.g., Eucken, Grundsätze, 48–53. For a detailed discussion of the development of Rechtsstaat theory through the early period of ordoliberal thought, see Friedrich Darmstaedter, Die Grenzen der Wirksamkeit des Rechtsstaates (Heidelberg, 1930).

(61) See Böhm, Ordnung der Wirtschaft, 7–9.

(62) The ordoliberals often referred to this problem as ‘Punktualismus’, which means, in effect, that the actions affected particular points (Punkte) in the economy without being organized into any coherent whole. See Eucken, Grundsätze, 251.

(63) Ibid., 253.

(64) Ibid., 254–89.

(65) Ibid., 304. Eucken believed that US antitrust policy had been ineffective precisely because it had not been integrated in a broader policy framework. Ibid., 305.

(66) See, e.g., Eucken, Grundsätze, 350–54.

(67) Moeller, ‘Liberalismus’, 225.

(68) See, e.g., Böhm, Wettbewerb und Monopolkampf, 363–70.

(69) Franz Böhm’s pathbreaking article on this subject was published in 1928. See Böhm, ‘Das Problem der privaten Macht’.

(70) For Böhm’s views, see Dümchen, Zur Kartellrechtlichen Konzeption, 80–84.

(71) Leonhard Miksch, a leading student of Walter Eucken, was chiefly responsible for elabo rating and refining this idea. See, e.g., Leonhard Miksch, Wettbewerb als Aufgabe: Grundsätze einer Wettbewerbsordnung (2d. ed., Godesberg, 1947) and ‘Die Wirtschaftspolitik des Als Ob’, 105 Zeitschrift für die gesamte Staatswissenschaft 310 (1949). Not all ordoliberals were enthusi astic about the ‘as-if’ standard.

(72) H. C. Nipperdey, ‘Wettbewerb und Existenzvernichtung’, 28 Kartell-Rundschau 127 (1930).

(73) See, e.g., Böhm, Wettbewerb und Monopolkampf, 178.

(74) Böhm, ibid., 250–56 & 291–317.

(75) See Miksch, Wettbewerb ah Aufgabe, 91.

(76) Eucken, Grundsätze, 298–99.

(77) Eucken, Grundsätze, 294.

(78) Ibid., 307.

(79) See generally Edgar Salin, ‘Wirtschaft und Wirtschaftslehre nach zwei Weltkriegen’, 1 Kyklos 26 (1947) and Blum, Soziale Marktwirtschaft, 13–38.

(80) See, e.g., Dieter Klink, Vom Antikapitalismus zur Sozialistischen Marktwirtschaft: Die Entwicklung der Ordnungspolitischen Konzeption der SPD von Erfurt (1891) bis Bad Godesberg (1959) at 65–134 (Hanover, 1965).

(81) See Gerold Ambrosius, Die Durchsetzung der sozialen Marktwirtschaft in Westdeutschland 1945–1949 at 114 (Stuttgart, 1977).

(82) See Bilger, La Pensée, 211.

(83) For a review of this literature, see Ernst-Wolfram Dürr, Ordoliberalismus und Sozialpolitik 13–15 (Winterthur, 1954).

(84) Bilger, La Pensée, 269.

(85) Friedrich A. von Hayek, ‘Die Überlieferung der Ideale der Wirtschaftsfreiheit’, 31 Schweizer Monatshefte 333, 337 (1951).

(86) See generally Blum, Soziale Marktwirtschaft, 184–215

(87) See ibid., 182–84.

(88) For discussion of Müller-Armack and his roles and ideas, see Christian Watrin, ‘Alfred Muller-Armack: 1901–1978’, in Kölner Volkswirte und soziale Wissenschaftler 39 (Christian Watrin, ed., Cologne, 1988). For description and analysis of the development of social market economy ideas, see Alfred Müller-Armack, Genealogie der sozialen Marktwirtschaft (Bern, 1974) and A. J. Nicholls, Freedom with Responsibility: The Social Market Economy in Germany 1918–1963 (Oxford, 1994).

(89) See, e.g., Müller-Armack, ibid., 29.

(90) See generally Geoffrey Pridham, Christian Democracy in Western Germany (New York, 1977) and Arnold J. Heidenheimer, Adenauer and the CD U (The Hague, 1960).

(91) See, e.g., Bilger, La Pensée, 248–63, and Rolf Wenzel, Adenauer und die Gestaltung der Wirtschafts- und Sozialordnung im Nachkriegsdeutschland 38–108 (Flensburg, 1983).

(92) Erhard had spent the Nazi years as an economics professor in Nürnberg, where he became a supporter of the ideas of the Freiburg School. For discussion of Erhard’s thought and the for mative influences on it, see Christoph Heusgen, Ludwig Erhards Lehre von der Sozialen Marktwirtschaft (Bern, 1981).

(93) See generally, e.g., Henry C. Wallich, Mainsprings of the German Revival 113–52 (New Haven, 1955).

(94) For discussion, see generally ‘Symposium: Currency and Economic Reform—West Germany After World War II, 135 Zeitschrift für die gesamte Staatswissenschaft 301–404 (1979).

(95) Blum, Soziale Marktwirtschaft, 280.

(96) See, e.g., Ludwig Erhard, Prosperity through Competition (New York, 1958).‘… the economic policy shaped into the mid-1960s by Ludwig Erhard, was quite consciously pursued as Ordnungspolitik’. Heuss,‘“Grundlagen der Nationalökonomie”’, 23.

(97) For discussion, see Heusgen, Ludwig Erhards Lehre, 144–238.

(98) Bilger, La Pensée, 96–97.

(99) See generally Kurt R. Leube, ‘Friedrich A. von Hayek zum 90. Geburtstag’, 40 ORDO xxi (1989).

(100) See, e.g., Jacques Bertrand, ‘La Notion d’Ordre Économique et ses Possibilités d’Utilisation’, 31 Revue D’Histoire Économique et Sociale 152 (1953); Jean Meynaud, ‘Pouvoir Politique et Pouvoir Économique’, Revue Economique 925 (1958); and Jacques Cros, Le Néo- Libéralisme: Étude Positive et Critique (Paris, 1951). Note that the discussion in France tended to focus more on the work of Wilhelm Röpke than on that of the Freiburg School. See Bilger, La Pensée, 6.

(101) Raymond Barre, ‘L’Analyse économique au service de la Science et de la Politique Economique’, 8 Critique 331 (1952) (a review essay on the English translation of Eucken’s Grundlagen der Nationalökonomie). As Prime Minister in 1977, Barre was the impetus behind a significant strengthening of French competition law.

(102) For discussion of this intermingling in France, see Cros, Le Néo-Libéralisme, 167–222.

(103) For discussion of Hallstein and his roles in European integration, see Walter Hallstein: Der Vergessene Europäer? (Wilfried Loth et al eds., Bonn, 1995) and Theo M. Loch, ‘Einleitung und biographische Skizze’, in Wege nach Europa: Walter Hallstein und die junge Generation 1–41 (Theo M. Loch, ed., Andernach am Rhein, 1967). Hallstein’s speeches and writings in relation to the Community are replete with ordoliberal concepts and references. See, e.g., Walter Hallstein, Europe in the Making 28 (Charles Roetter, tr., New York, 1972) (’What the Community is inte grating is the role of the state in establishing the framework within which economic activity takes place’.)

(104) See generally Hans-Jürgen Küsters, Die Gründung der Europäischen Wirtschaftsgemeinschaft 135–60 (Baden-Baden, 1982).

(105) For his own discussion of his roles in the development of Community thought and institutions, see Alfred Muller-Armack, Aufdem Weg nach Europa (Tübingen, 1971).

(106) The interpretation of the treaty as a ‘constitution’ has channeled the evolution of the Community, and this interpretation undoubtedly owes much to ordoliberal thought. See, e.g., Hans von der Groeben, ‘Der gemeinsame Markt als Kern und Motor der Europäischen Gemeinschaft’, in Europa Ringt um seine Wirtschaftsverfassung (Festschrift für Karl-Heinz Narjes) 19, 30 (Ernst-Joachim Mestmäcker, ed., Bonn, 1984) and Manfred Zuleeg, ‘Die Wirtschaftsverfassung der Europäischen Gemeinschaften’, in Wirtschaftspolitische und Gesellschaftspolitische Ordnungsprobleme der Europäischen Gemeinschaft 73 (Schriftenreihe des Arbeitskreises Europaische Integration e.V., Würzburg, 1978).

(107) See, e.g., Ernst-Joachim Mestmäcker, ‘Auf dem Wege zu einer Ordnungspolitik für Europa’, in Eine Ordnungspolitik für Europa (Festschrift fur Hans von der Groeben) 9 (Ernst- Joachim Mestmäcker, et al eds., Baden-Baden, 1987).