Themes

What is Ordoliberalism definition/concept

Most definitions about the human being converge on a basic idea: man is a social animal . This means that our nature can only be understood within the context of a society . In this sense, different types of societies emerged from antiquity and continue until today. Each has different forms of organization. Ordoliberalism

After centuries of absolutism during the Middle Ages and Renaissance, in the 17th century, an Englishman named John Locke theorized about a new paradigm : political liberalism.

This doctrine is based on the protection of private property, individualism, freedom and equality before the law.

Two centuries later a Scottish philosopher named Adam Smith adapted this idea to economics and laid the foundations for economic liberalism. This current defends freedom in the markets, free competition and the minimum role of the state in economic activity . Adam Smith recorded the metaphorical label of the invisible hand to explain his economic model.

A non-concrete power, the invisible hand, is responsible for regulating the economy instead of direct state intervention. The participation of this invisible force is what organizes the flow of economic activity as a whole, that is, different prices, market competition and the prosperity of society in general.

The main thesis of Ordoliberalism

At the beginning of the 20th century, economists at the Freiburg School in Germany laid the foundations for ordoliberalism. Its main approach is to correct the excesses of liberalism within the framework of capitalism. The doctrine of ordoliberalism emerged as a response to the two great crises in Germany: the military defeat of World War I and, later, the disaster caused by Nazism.

The greatest representative of ordoliberalism was Walter Eucken, who defended a social liberalism based on the principles of liberalism, but with interventionist policies promoted by the State. According to the ordoliberal doctrine, the state must have as its main function to maintain the best conditions in the market, mainly by avoiding monopolies and oligopolies. State intervention must be carried out through institutions such as a Central Bank that regulates monetary policy without the direct participation of the State.

Ordoliberalism today

Approximately a decade ago, the German economy began to direct its approaches through ordoliberalism. This implies a drastic reduction of the public debt, a control of inflation and austerity measures.

Germany is today one of the engines of the European Union and a major player in the world economy. And all of this is directly related to the postulates of ordoliberalism.

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