Ordo-Liberalism

Description

Louise Guillot, Rémy Seillier et Sebastien Shulz:

"In the family of neoliberal thoughts, the ordoliberals are those who proposed the most elaborate theorization of the role and especially of the transformation of the State to structure economic life, inspiring numerous reforms throughout the world, particularly in Germany and within the European Union.

Ordoliberalism, the foundations of which were developed in Germany between the wars, considers the free and undistorted market as the most efficient and democratic economic system. Like most liberals, ordoliberals consider that the market makes it possible to bring about progress through the meeting between the supply of competing producers and the demand of rational consumers, acting freely and without constraint. Nevertheless, ordoliberals differ from economic liberalism on a fundamental point: they defend the idea that the market is not a natural phenomenon – no “invisible hand” – and that it is necessary to attribute to the State the role of guarantor of free and undistorted competition.

To begin with, the development of the economy in the form of the free market is only possible through the establishment of a normative framework established by a political and legal apparatus. This framework, which they call “Economic Constitution”, is a condition of possibility of the free market because it makes it possible to distribute power between economic agents, for example by avoiding monopoly situations. This “Economic Constitution” must be established by political organizations which guarantee it and enforce its rules. The ordoliberals therefore justify the intervention of an “ordinating State” which does not intervene in the economy (to decide what to produce or in what quantity), but on the economic system, in order to give it control. particular form of a free and undistorted market.

Then, this “Economic Constitution” integrates general principles. The ordo-liberals have developed norms intended to guarantee that economic systems take the form of free markets, avoiding any situation of economic monopoly or political dirigisme: monetary stability, opening of markets, protection of private property, contractual freedom, etc. .

Finally, these general principles have inspired numerous reforms of national and international institutions since the 1980s. These reforms relate both to the policies and legislation implemented by these institutions, like the rules of European law which led to the opening to competition of sectors such as rail, and both to the The very organization of these institutions, the paradigmatic example being the European Central Bank (ECB) which is one of the most independent central banks from political power in history. More broadly, new public management strives to apply the liberal precepts of competition to the organization of public authorities and the functioning of all public administrations.

Belief in the virtues of the market is not completely unfounded. The market is an important mode of exchange, which has made it possible to meet many needs and make great advances. On the other hand, the sacralization of the market, carried out by the ordoliberals then the neoliberals, is dangerous and demonstrates its limits a little more every day. It has led our societies to organize the entire economy and public institutions through competition. To take just one example, the privatization and opening to competition of the energy sector has negative consequences on social justice, ecological transition and even economic sovereignty."

(https://aoc.media/opinion/2024/04/11/de-lordoliberalisme-a-lordo-communalisme/ - translation from French original)