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'ORDO-LIBERALISM'
Erhard's close collaborator in the 'social market' project, Walter Eucken, was head of the 'Freiburg School' of economists based in the University of Freiburg where, after the National Socialist assumption of power, Martin Heidegger was elected as rector. Spicka (p.30) says that Eucken 'was relatively successful in creating some distance between his "Freiburg School" and the Nazi regime, despite the efforts of the University rector, Martin Heidegger, to "Nazify" the Institution. Eucken sought to rehabilitate classical economics in the face of the autarchic economy Hitler was building in the Third Reich.' It would be interesting to know more about this in detail. Eucken's father, Rudolf, was a philosopher, well-known in his day (he won the Nobel Prize for Literature in 1908) and after Rudolf's death in 1926, Walter and his mother became close friends with Edmund Husserl, Heidegger's predecessor in the Philosophy Chair at Freiburg. Both Walter Eucken and Husserl (despite his Jewishness) were members of the Confessing Church, the Protestant church that refused incorporation into the state supported German Evangelical Church. According to one account: 'Eucken belonged to the core group of the Freiburg Circles [a group of theologians and economic theorists formed in 1943. Dietrich Bonhoeffer was involved with it - PB], a resistance movement opposing National Socialism. He was one of the university-intern opponents to Heidegger’s attempt to establish the Führerprinzip and the Gleichschaltung ['synchronisation'] at the university, and he risked his life in fighting Nazi ideology, propagating ordoliberal ideals for a new socio-political and economic ordering for the post-war-period, and of course due to his remaining contact with persons who fell in disgrace under the Third Reich dictatorship [presumably a reference to Husserl - PB]. Walter Eucken received death threats after his lectures Kampf der Wissenschaft, the second edition of his book Nationalökonomie wozu? was prohibited, and he was arrested and interrogated after the failed July 20 plot. This is all the more astonishing reminding [sic - PB] the fact that Eucken’s mother in law was, due to the NS-racial laws, a Jew, his wife Edith was a half-Jew, and Walter Eucken himself was classified as non-Arian (interrelated).' (9)
(9) Rainer Klump and Manuel Wörsdörfer: 'On the Affiliation of Phenomenology and Ordoliberalism: Links between Edmund Husserl, Rudolf and Walter Eucken', The European Journal of the History of Economic Thought, Vol. 18(4) (2011); pp. 551-578. This extract from footnote 72, p.27. The context of the article is commentary on an argument by Michel Foucault given in lectures in 1978-9 and published posthumously as Naissance de la politique (2004). Foucault presented the Husserl/Eucken relationship as a sign of an intrinsic connection between phenomenology and Neoliberal economic theory.
We may however note that whereas after a couple of years Heidegger withdrew from engaging in anything other than his own very isolated philosophical research, Eucken continued in public life throughout the whole Nazi period. Abelshauser again says (p.186) that 'the Party leadership maintained close contact with the reformers. It put the Party's publication resources at their disposal and very quickly took up their demands into its own economic programme', abandoning the doctrines of its own founder-economist Gottfried Feder, who wanted to put an end to the 'bondage of interest.' Alfred Müller-Armack, a very close collaborator with Eucken who is credited with having coined the term 'social market', was a member of the Nazi Party. The point here is not to tarnish the 'ordo-liberals' with an association with the Nazis (or pace Foucault, to tarnish phenomenology with an association with the ordo-liberals!). Two other leading ordo-liberal theorists, Wilhelm Röpke and Alexander Rüstow, left when the Nazis took power - both spending some time in the University of Istanbul. The point is rather that German National Socialism, like Italian Fascism, allowed of a wide range of debate on economic matters and that the 'ordo-liberalism' that emerged with Erhard was not necessarily a radical break in the continuity of German economic thinking, however congenial it might have been to the Anglo-American - especially American - occupation.
Eucken died in 1950 but the thinking associated with him continued with the publication of the journal Ordo. As the name, evocative of 'order', suggests, the 'ordo-liberals' were not avocates of laissez-faire, of an absence of government interference in economic life. They regarded Ludwig von Mises as something of a father-figure and Friedrich von Hayek was a frequent contributor to Ordo but they nonetheless believed in regulation of the economy, primarily to prevent the emergence of cartels, of those sections of the economy that were above the rules and disciplines of competition. As such their position was opposite to that of the SPD which, following the lead of Rudolf Hilferding, saw the emergence of the cartels and of 'organised capitalism' as an advance towards socialism. As 'socialism' in an imagined pure state might be thought to be the end of history, the achievement of a state of affairs in which the economy ceased to be problematical, so the ordo-liberals regarded a pure state of competition as the ideal to be aimed for that would solve social problems while ensuring the highest degree of individual liberty. Although Erhard continued to be associated with them it hardly seems that they could have been happy with him, or with the American influence on the German economy, if Halevi is right in arguing that the principle tendency was a development towards 'oligopoly.' According to an account by Henry Oliver, Professor of Economics in Indiana University: 'Erhard's professional colleagues favour more stringent measures than those which Erhard's party has sponsored. Among the restrictions most frequently recommended are the outlawing of all agreements restricting competition, the prohibition of mergers and other combinations that result in monopoly or oligopoly, the splitting of monopolistic and oligopolistic firms except where this is not technically feasible, and the prohibition of competitive practices intended to cripple one's rivals: e.g., price wars, price discrimination, and pre-emptive purchases. In general, the fight on cartels receives the greatest attention. Among the administrative devices widely proposed is a monopoly bureau to keep potential recalcitrants constantly in fear of the law.' (10)
(10) Henry M. Oliver Jr: 'German Neoliberalism', The Quarterly Journal of Economics, Vol. 74, No. 1, Feb 1960, pp. 117-149. This extract, p.142.