Other critics characterise the European Union as a contemporary manifestation of a tradition of authoritarian liberalism that goes back to Carl Schmitt’s political theology and expresses the political project of the founding ordoliberal thinkers. In this argument the Europe that has come to pass is an exception to law-based policy making by democratic government. Jonathan White (2015, 314) thus speaks about an ‘emergency Europe’ that replaces law-based policy making with ‘emergency politics’ or with ‘managerial decisionism’ (Everson and Jörges 2013; Jörges and Weimer 2014) by the European Council, which is the meeting of the heads of government.¹ Jürgen Habermas is the most prominent critic of what he calls the emergence of a European ‘executive federalism’. He charges that ordoliberalism has ‘more confidence in economic constitution than democracy’ and that executive federalism amounts to a ‘faceless exercise of rule behind closed doors by the European Council’ (Habermas 2012, 102, 129). He rejects Eurozone governance as a ‘post-democratic exercise of political authority’ (Habermas 2012, viii). Wolfgang Streek (2015, 361) summarises this argument about European policy making well. In his judgement the European Council now ‘closely follows the liberal – authoritarian template devised by Schmitt and others in the final years of the Weimar Republic’. What Streek refers to as ‘the others’ are the founding ordoliberal thinkers (see also Oberndorfer 2012, 2015; Wilkinson 2014, 2015).

The book expounds the principles of ordoliberal political economy and analyses the character of an ordoliberal Europe. The identification of ordoliberalism with austerity is not helpful and does not hold up. The ordoliberal argument is not about this economic policy and that economic technique. Rather, it is about the construction of what Müller-Armack (1976, 231–242) called a definite ‘economic style’ of moral sociability.² It is an argument about the liberal state as a market constituting and preserving power. It is to civilise and moralise the economic conduct and restrain competition to rules. Ordoliberalism recognises the political state as the concentrated power of economic liberty. The book argues that the European Union is founded on and integrates the role of the federated member states as ‘market police’ (Rüstow 1942). This term is central to the ordoliberal conception of political economy and places the argument about ‘emergency Europe’ into the context of a history of authoritarian liberal thought, from Benjamin Constant to Carl Schmitt.

The founding ordoliberal thinkers reprimanded laissez-faire liberalism for its neglect of the state, which led to its abandonment to social democracy and the lobby of powerful economic interests, including the trade unions. ‘What’, asks Rüstow (1954, 221), ‘really distinguishes our neoliberalism from the long vanquished paleo-liberalism of … laissez faire? The distinction is this: we do not expel the state from the economy only for a much weakened state to come back through the backdoors of interventionism, economic subsidies, and protectionism. Right from the start, we assign to the strong and independent state the foundational task of market-police to secure economic freedom and complete competition’. The ordoliberals recognise that free economy is a social construct, an ‘artificial order’ (Müller-Armack 1947a, 86), that has to be actively constructed and maintained by means of state. Ordoliberalism asks about the conditions of liberty and what needs to be done to achieve and maintain them, and what can one hope for?

In the ordoliberal argument the freedom to compete defines the essence of Man (Eucken 1989, 34). They argue for a system of complete competition and identify unrestrained greed, protection from (labour) market pressures and the democratic welfare state as a threat to human freedom. The ordoliberals reject any talk about the state as a weak night-watchman state. The weak state does not govern for complete competition. Rather, it is overwhelmed by the powerful rent-seeking private interests (see Rüstow 1963, 258). The ordoliberal state is a strong state. It does not allow itself to become the prey of the competing social interests, nor does it allow a mass democratic citizenry to influence the liberal utility of government. Only the strong state is able to maintain its distinction from society. The strong state is the limited state. The primary meaning of the ordoliberal state lies precisely in this dimension. The ordoliberals conceive of the state as a ‘planner for competition’.⁴

What then, according to the ordoliberals, can one hope for? The hope is for a harmonious social order of free economy, which they conceive of as ORDO. ORDO is cosmos. It constitutes an essential correspondence, some consonance and adequacy between the presumed essence of Man, the freedom to compete, on the one hand, and the world, the structure of being, on the other. ORDO ‘accords with reason’ in that it combines the nature of man with the social structure (Eucken 1959, 239). An ORDO does neither come about by ‘spontaneous actions’ nor by the laws of history, God or nature. An ORDO is a political creation and amounts to an eminently political practice of Ordnungspolitik – of ordering. Its purpose is the ‘moralization of economic life’ (Versittlichung des Wirtschaftslebens) (Müller-Armack 1947b, 147).

In distinction to traditional political economy analyses, ordoliberalism does not define the state by its relationship to the economy, and conversely, the economy by its relationship to the state. This view implies a conception of market and state as two distinct modes of social organisation. The perennial question about such a conception is whether the market has autonomy vis-à-vis the state or conversely whether the state has autonomy vis-à-vis the market, characterising its retreat or resurgence as a power vis-à-vis the economic. For the ordoliberals, the relationship between economy and state is an innate one, and within their ‘inner connection’ or ‘interdependence’ (Eucken 2004) the state is fundamental. Indeed, free economy has no independent existence. Rather its independence amounts to a ‘political event’ (staatliche Veranstaltung) (Miksch 1947, 9; Böhm 1937, 101). Ordoliberalism recognises the state as the political form of the capitalist social relations and conceives of it as the concentrated power of bourgeois society.⁵

In this context, contemporary analysis of the European Union as resembling an ordoliberal iron cage is most intriguing. The European Union is not a political union. It is a supranational union founded on common market rules and common market institutions. The euro is a stateless currency. In the context of the European Union the ordoliberal argument that economic liberty amounts to a political practice and that the state is the predominant power in the relationship to free economy appears dated. This is, however, not the case at all. The book argues that the European Union incorporates the role of the state in sustaining ‘Europe’ as a seemingly stateless market liberal framework. The euro is a politically constituted and sustained currency. It rests on the capacity of the federated member states to operate in concert as executive states of monetary union. The notion of an executive state belongs to Carl Schmitt’s political theology and characterises the ordoliberal idea of freedom as a political event, as a practice of government.

The remainder of this introduction places ordoliberalism in contemporary and historical contexts to establish points of reference, set the analytical framework, introduce however briefly its founding thinkers and review its character and relationship to neoliberalism.

Conventionally, neoliberalism has been associated with buccaneering deregulation, especially of financial markets, and a weak state, which was accepted even when the argument held that the retreat of the state amounted in reality to a transformation of the national state towards a market enforcing, enabling and embedding state.⁶ In this perspective, the neoliberal character of the relationship between economy and state comprised the global economy as an independent force.⁷ Analysis of the capitalist social relations was set aside for an argument about the relationship between two apparently distinct structures of social organisation, that is, state and economy (see Gill 2003). At its core was the question of whether the economy had achieved unassailable power over the state or whether the state retained some degree of influence over the national economy.⁸ The financial crisis of 2008 was thus identified as the demise of neoliberalism. It heralded the return of the state as a principal actor vis-á-vis the economy (Jessop 2010).

It was in this context that ordoliberalism resurfaced as a term of reference for a state-centric post-neoliberal political economy. According to Peck (2010, 275), it stands for ‘a more orderly, restrained form of market rule’ that might now be ‘back in favour’.⁹ Sheppard and Leitner (2010, 188) argued that ordoliberalism subjects the economy ‘to controls’ and on the basis of this insight they draw a line between neoliberalism as pro-capitalist and anti-state and ordoliberalism as critical of capitalism and pro-state. In their view ordoliberalism is an anti-capitalist alternative to neoliberalism. Their identification of capitalism with neoliberalism is widely shared, including third-generation ambassadors of ordoliberalism, for example Oswalt (2012) and Wörsdörfer (2012), who view the ordoliberal critique of monopoly power and cartels as evidence of its anti-capitalism.¹⁰ Some left-wing critics argued likewise. Sahra Wagenknecht (2011), for example, urged the successor party of the former ruling party of the GDR, Die Linke, to adopt the ordoliberal idea of a social market economy to achieve social justice, full employment and wage-led economic growth.¹¹ According to Maurice Glasman (1996, 54–56), who was appointed a Labour-peer to the British House of Lords in 2011 and who coined the phrase ‘blue labour’ as the small-‘c’ conservative successor of social democracy, the ordoliberal idea of a social market economy is not a market economy at all (see also Giddens 1998). Rather, it stands for a socially responsible economy that protects individuals from the strife that markets bring about.

Glasman’s account highlights the elements of cultural conservatism in ordoliberal thought. Ordoliberalism includes a critique of what Jesse Norman (2010) calls the rigor mortis economics of numerical equations and government by central targets. Röpke (2009, 57, 66) in particular rejects what he calls economism. He likens it to a ‘religion of scientific positivism’ that, intoxicated by ‘mere numbers’, reduces the supposedly human quality of the free economy to a mathematical numbers game at worst, and to an argument about economic technique at best. The latter is the means of the former, that is, economic argument about technique is about the most effective means of achieving, say, productivity gains, be it by means of socialist economic technique or capitalist technique. For Röpke political economy is fundamentally a moral philosophy about the freedom of Man through the institution of private property.¹²

In ordoliberal thought, economy policy is fundamentally social policy (see Eucken 2004, 303). It rejects what the intellectual conservative Guglielmo Ferrero (1963) called a ‘quantitative civilisation’. The ordoliberals identified this ‘civilisation’ as a proletarianised mass society. They portray this society as one in which the individual is absorbed into a literally gigantic socio-economic machinery defined by mass production, mass parties and a mass state that governs in the interest of mass Man for material security. Ordoliberalism seeks, as it were, a ‘qualitative civilisation’ – one that is founded on the entrepreneurial vitality of the market participants. Indeed, ordoliberal social policy amounts to a Vitalpolitik (Rüstow 1942), a politics of vitality or a biopolitics (Foucault 2008). Vitalpolitik has to do with the establishment of an enterprise society in which the freedom to compete is second nature. Vitalpolitik is about the incorporation of competitiveness into a ‘total life-style’ (Müller-Armack 1978, 328).¹³

Foucault’s (2008) lectures on biopolitics in the late 1970s recognised ordoliberal social policy as an original contribution to the practices of liberal governance and liberal governmentality (Foucault 1991). Foucault considers ordoliberal social policy as a countervailing effort to the destructive effect of the free economy on human community. However, in distinction to Foucault’s view, ordoliberal social policy is not a policy against the destructive character of economic competition. Rather, ordoliberal social policy intervenes in the ‘human disposition’ to enable a competitive economy. Ordoliberal social policy is therefore not directed against the market. Rather it is a means of market freedom. Foucault argues on the basis of two distinct though interdependent logics, the logic of the market and the logic against the market.¹⁴ It is because of this duality that Foucault’s account of ordoliberalism does not draw it out fully. He identifies the logic of the market as a competitive market economy that is ruled by the laws of perfect liberty – free competition, pursuit of economic value and regulation of entrepreneurial preferences and innovation by the free price mechanism. He conceives of the logic against the market as comprising the principle of ordoliberal social policy, which for Foucault somewhat compensates for the heartless logic of economic competition (2008, 242). However, for the ordoliberals, Vitalpolitik is a market facilitating, enabling and embedding policy, which, in the face of the destructive sociological and moral effects of the free economy, has to be pursued relentlessly to sustain and maintain the free economy. The ordoliberals recognise that, if unchecked by the power of the state, the free economy destroys the moral and social fabric of society, leading to proletarianised social structures, politicised economic relations and erosion of (entrepreneurial) morality. Ordoliberalism therefore demands the provision of market sustaining and enabling ethical, moral and normative frameworks of individual behaviour, securing the mentality of enterprise in society at large. Ordoliberal social policy is a means of ‘liberal ...