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This chapter presents a genealogy of neoliberalism as a free-market ideational program, from the early decades of the 20th century through to its consummation with state power in the 1970s. Neoliberalism was born as a contradictory and contested project, specifically through a series of situated, sympathetic critiques of 19th-century laissez-faire. These were played out, most explicitly, through the work of the Mont Pelerin Society and its associated networks, though these have often been spaces of debate and contestation. In this sense, neoliberalism has always been an open-ended, plural, and adaptable project. At the heart of this lies its contradictory embrace of liberty and order — what can be seen as its ‘Chicago School’ and ‘Ordoliberal’ faces of neoliberalism, respectively. Highlighting the constructed nature of neoliberalism's ideational project, the chapter exposes some of the ‘hidden hands’ that shaped this purposive critique of, and alternative to, Keynesianism.

This chapter explores debates between neo-Marxists and radical democrats as an important feature of the ideological structure of neoliberal societies. This chapter argues that the impasse created between the economic and the political in debates between neo-Marxists and radical democrats is a symptom of the ambivalent relationship between the neoliberal State and the economy.

This chapter traces the long-term development of German capitalism from the vantage point of uneven and combined development. It argues that Germany’s postwar social market economy was built upon an externally oriented developmental model inherited from its belated insertion into the world market, and used to enroll capital and labor in a global export offensive. The underlying vision of Germany as the workshop of an advanced industrial and newly industrializing world coincided with the postwar plans of the United States for an open, multilateral global economy. And yet the chapter cautions that the prevailing image of Germany as a liberal “trading state” (Handelsstaat) that had traded power for wealth as its prime objective fails to capture the novel ways in which the German state, from the crisis of the 1970s onward, has come to exert its influence internationally to sustain this export-led social model.

This chapter explores how the German political economy was transformed by the global rise of neoliberalism and how this change feeds into Germany’s approach to the eurocrisis. Rather than being pushed down an Anglo-American road, German policymakers still seek to preserve what is left of the domestic compromise between capital and labor. The chapter argues that China’s massive demand for German exports informs the long-term vision of a neoliberal Europe structurally adjusted to support the global position of German manufacturers. At the same time, the perceived threat of US interest rates rising out of step with economic conditions in Europe and emerging markets hardened the German stance on austerity during the fever-pitched policy battles at the height of the eurocrisis. Together, these international pressures and opportunities have produced the predicament of German primacy as a transformative and yet destabilizing force within the EU.

Current accounts of the interaction between competition law and state activities are based on a clear-cut old liberalism style distinction between “state”/“government” and “market” that does not take into account the emergence of the neoliberal state. By advancing a “bureaucratic-centered theory” of the competition law and state interaction, this chapter offers an alternative interdisciplinary theoretical framework that can be successfully transposed into different institutional and cultural settings.

Chapter 3 argues that the cooperation in the interwar period between, economically, unions and employers and, politically, between Social and Christian Democracy, estranged the liberal Protestant camp from its former pet project, social reform. An important consequence of this estrangement was the birth of ordoliberalism. Ordoliberalism, however, was much less influential in the postwar period than usually claimed. It legitimized a politics of non-intervention, which rather left a void for the corporate actors to fill, so it involuntarily furthered corporatism, not liberalism. Otherwise it provided the inability of the central state to actively manage the economy with a post hoc ideological justification. Thus, Germany’s postwar compromise was “bipolar,” combining corporatist cooperation between capital and labor, heavily reliant on the organizational and material resources of the welfare state, with a central government with limited capacity for macroeconomic steering and without the means of credibly issuing promises of full employment (as the main difference in comparison to the Scandinavian cases).

The introduction outlines the purpose of the book, its perspective, and its approach. Having identified three chronological moments in the making of ordoliberalism, the author illustrates its main themes and objectives and their relations with the current debate on ordoliberalism. The author then summarizes the contents of the book and indicates its basic structure and features, briefly anticipating its main conclusions. He examines the contributions of several important figures in the ordoliberal arena, including Walter Eucken and Wilhelm Röpke, and gives a brief history of their works and their influence on modern economics as it pertains especially to Europe. A discussion of the concept of “power” in economics is also provided.

This first chapter outlines ordoliberals’ implicit philosophy of history, building a causal link between historical liberalism in the nineteenth century and economic planning as developed in the first half of the twentieth century. Ordoliberals based their historical interpretation on an anthropological hypothesis in which the instinct to acquire power is the driving force of mankind. To paraphrase Marx’s famous formula: for ordoliberals, history is the history of the struggles for economic power. Rather than reflecting on the conditions for the development of a competitive market economy, the ordoliberals analyzed what they perceived as the deleterious effects of certain types of economic systems (laissez-faire liberalism for instance) for the whole political and social order.

Ordoliberals studied the manifestations of power through a “morphological” lens (opposing the centrally administered economy to the economy of exchange), leading Eucken to take a stand in relation to two of the great international discussions of the discipline in the interwar years: the feasibility of a socialist calculation and the debate over imperfect/monopolistic market structures. The theoretical substance of these two debates is closely related to a political quest for stability of the economic and social order. The centrally administered economy is characterized by the strong influence of what ordoliberals saw as illegitimate powers on the economic process. But ordoliberals considered that, within the exchange economy system itself, markets were not free from power relations. The contribution of Stackelberg to the analysis of unbalanced market structures is therefore indispensable for understanding the literary marginalism of the ordoliberals.

From a political perspective, ordoliberals formulated a “new” social question based on the collapse of human freedom and autonomy in the face of the rise of private and public economic powers. Thus ordoliberals regarded the dispersion of economic power within the economic process as the key to overcome the social question. Finding an answer to the social question required the institution and perpetuation of the competitive order. Thus, the ordoliberal economic policy is directed toward the dispersion of economic power. Ordoliberals considered competition as a formidable tool for the disempowering of private economic power and for regulating the social body. Tracing the various manifestations of economic power led the ordoliberals to consider a broad program of economic and social policies that should be politically implemented by a strong state.

This last chapter outlines the ordoliberal discourse in the early postwar period (1946–1950) and the way it gained traction on the political stage. The author shows that the ordoliberals sought to establish a continuity between the economic order of the Third Reich and the administration of the Western Allies and thereby confronted political authorities with the fact that proper denazification could succeed only if Nazi planning methods were rejected. This argument has been constructed around various kinds of documentation, including advisory reports, newspaper/magazine articles, and academic publications. Ultimately, the chapter contributes both to a better definition of ordoliberal ideas (especially of their critical scope) and to a better knowledge of competing ideologies in the early Cold War context.

After having briefly summarized the content of the book, this concluding chapter uses the definition of ordoliberalism as a political economy of power to discuss what is today called the “ordoliberal core” of European governance. The conclusion shows that the word “ordoliberalism” refers to two separates—and at time conflicting—paradigms: an old form of political economy and a new form of neoliberal orthodoxy. Hence the conclusion investigates the reasons for the political success of ordoliberalism in the immediate aftermath of the war, as well as to what extent the lasting influence of the ordoliberal discourse was accompanied by its transformation: abandoning its original form of a political economy of power to embody the contemporary form of neoliberal orthodoxy in the European Union.

This chapter analyzes the development of French, German, and Italian liberalism from the nineteenth century to the 1980s, giving particular attention to each tradition’s conceptions of the role of the state and its relationship to groups and individual citizens. Using a broad range of historical source material and the works of influential political philosophers, it outlines the analytical frameworks central to French “statist liberalism,” German “corporate liberalism,” and Italian “clientelist liberalism.” It shows how these evolving traditions shaped the structure of each country’s postwar political-economic model and the policy priorities developed during the postwar boom through the early 1970s and provides conceptual touchstones for the direction and character of these traditions’ evolution in the face of the neoliberal challenge since the 1990s. The chapter demonstrates that each tradition accepted elements of a more liberal economic order while rejecting neoliberalism’s messianic market-making agenda and its abstract and disembedded political-economic vision.

The chapter deals with the development of the welfare state in the first three decades after World War II, in which the West German economy ran through a remarkable catching-up process. Economic policy in the new Federal Republic of Germany in that period was decisively shaped and influenced by the ordoliberal ideas of Walter Eucken and the Freiburg school and the principles of the social-market economy. Whereas Keynesianism of the Hicks-Samuelson neoclassical synthesis had already evolved into the dominant view in the academic sphere during the 1950s, it took until the 1966–67 recession for Keynesianism to find a late (and short) entry into German economic policy with the entry of the Social Democrats into government and their charismatic minister of economics, Karl Schiller.

<Online Only>This chapter explores how the crisis of the material constitution was underpinned by the erosion of democracy, and not only by the dominance of ordoliberalism and neo-liberalism. It discusses how the deepening of the liberal market rationality of integration came to occur in a more disciplinary mode throughout the euro crisis, dismantling domestic social contracts, if ultimately still under the guidance of domestic elites. This was contested by extraordinary popular countermovements, which emerged to break out of the straitjacket of austerity. In particular, the chapter discusses the election to government in Greece of a left-wing party, Syriza, reflecting broader anti-systemic currents across Europe. The chapter concludes by examining how Syriza’s subsequent capitulation symbolized not merely the increasingly powerful external constraints of EU membership, but the homegrown roots of the dominant constitutional imaginary: a fear of popular sovereignty and of radical democracy under the veil of an ideological Europeanism.</Online Only>

The fact that the global dissemination of neoliberalism during the 1970s found postauthoritarian Spain with a critical mass of internationalized policy economists exposed to competing Keynesian and ordoliberal influences gave Spanish neoliberalism its moderate flavor. In postwar Spain, the relatively liberal regulation of the economics profession, the Western training of many key economists and the exposure to neoclassical economics of many academics during the interwar years facilitated the gradual spread of neoclassical economic ideas in both the central bank and academia. However, Anglo-American neoclassical economics had a major competitor in the local translation of Germany’s ordoliberalism, which contributed to the moderation of both Keynesian and neoliberal ideas in Spain throughout this country’s authoritarian and postauthoritarian history.

The interplay between external structural constraints, domestic institutions, and domestic ideological debates explains the resilience of disembedded neoliberalism in Romania after 2008. IFIs and transnational firms with political leverage knocked on an open door when they demanded deep austerity and neoliberal structural reforms. However, it was local intellectual innovations that explain why policy leaders at the highest levels outbid these demands with a blend of libertarian, conservative, and ordoliberal theories about the state and society. Benefiting from a period of institutional cohesion, many of these ideas jelled into policy. Although technocrats less committed to neoliberalism took up top posts in a new cabinet after 2012, their ideas had a limited reach in the policy process because of the constitutionalization of fiscal policy by the EU, the conditionalities of the Troika, the pressures of foreign capital, and the institutional fragmentation of the policy process.