Ordoliberal Lessons for Economic Stability: Different Kinds of Regulation, Not More Regulation

Abstract

Since the Global Financial Crisis that started in 2008, the term “ordoliberalism” has experienced a marked revival. Academics and politicians of all couleurs have recently referred to ordoliberalism as a possible way forward. Others have held ordoliberalism responsible for Germany’s intransigent stance in the Euro rescue. However, most references use ordoliberalism merely as a shorthand for “liberalism with the state” or anti-inflationary macro-economic policy. Few have attempted to get at the heart of the ordoliberal theory of market regulation. This paper seeks to clarify the ordoliberal position in order to revisit current references to this theory. We argue that the ordoliberal distinction between market conforming and non-conforming state intervention holds some lessons for current debates about economic regulation. In particular, we focus on the Financial Crisis from an ordoliberal perspective and assess its relevance in the current context and its implications for regulatory reform.

This paper complements our research available at: http://ssrn.com/abstract=2142529

Keywords: ordoliberalism, liberal theory, institutional economics, financial crisis, financial regulation, Eurozone crisis

JEL Classification: A12, B25, B52, E02, H12, N44, P51