In Search of Ordoliberalism: Evidence from the Annual Reports of the German Council of Economic Experts, 1964-2017
103 Pages Posted: 26 Apr 2019
Date Written: April 23, 2019
The history of German economic thought is often told as a story of underdevelopment that started with a delayed adoption of Keynesianism. This narrative was reinforced by discussions during the Eurozone crisis that traced this perceived underdevelopment back to Ordoliberalism, a German school of economic thought that had emerged in Freiburg during the 1930s. In order to provide a more nuanced and dynamic view of this German economic distinctiveness, this study analyses the extent to which representative German economists adhered to an ideal type Ordoliberalism in the second half of the twentieth and the early twenty-first century. In particular, it uses the annual reports of the German Council of Economic Experts (GCEE) between 1964 and2017 as a case study.
A computational text mining technique known as Topic Modelling is introduced to structure and understand the annual reports’ vast amount of semantic data (over 21,000 pages). This quantitative exercise identifies three potential ‘ordoliberal episodes’ and shows the gradual decline of the macroeconomic perspective. These findings structure the further analysis of the data along four distinctive periods in the council’s history. Combining this quantitative analysis with qualitative evidence reveals that Ordoliberalism’s initial innovation cycle during the period of Germany’s post-war ‘economic miracle’ was followed by three peaks in ordoliberal thought: during the early 1970s, caused by concerns about price stability, during the 1990s , when ‘ordo’ reforms were used in an effort to create ‘complete competition’ in the former GDR, and during the Eurozone crisis from 2010 onwards in the form of rule-based regulatory proposals. Finally, narrative economics is used to frame the analysis of four mechanisms that could have triggered these new ordoliberal episodes.
Taken together, the results suggest that ordoliberal thought was not consistently present in German economic policy advice, but that certain ordoliberal ideas have been reactivated during times of domestic crisis that called for guidance by easily accessible narratives. In terms of methodology, this study demonstrates that quantitative and qualitative analyses have to be treated as necessary complements when analysing the influence of economic ideas.
Keywords: Ordoliberalism, GCEE, Great Recession, Text Mining, Topic Modelling
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