[Pocket Liberal] Walter Eucken

Ordoliberalism: The Order That Created the Miracle on the Rhine

Eucken (Walter Eucken, 1891–1950)

- Born in Jena, Germany

- Received his doctorate from the University of Bonn in 1913

- In 1931, together with German liberals, published the “German Neoliberal Manifesto” and engaged in anti-Nazi activities

- Professor at the University of Tübingen and the University of Freiburg

- Major works: The Foundations of Economics (1940), The Principles of Economic Policy (1952), among others

“The government’s economic policy should be to form a framework of stable order and must never arbitrarily intervene in the market economy process.”

— From The Principles of Economic Policy —

Eucken advocated “ordoliberalism,” arguing that government intervention should be permitted only to the extent necessary to create and maintain the economic order and competitive framework that serve as the preconditions for competition and market principles to function properly. Aside from that, the operation of the economic process—including investment, production and consumption, and the coordination of growth—should be left entirely to the autonomy of the market.

According to Eucken, the government’s role should be specifically limited to establishing and preserving the constitutive principles of the market economy acquired through historical experience: monetary stability, open markets, private property, freedom of contract, the principle of individual responsibility, and consistency in policy.

Eucken warned that those who view society as if it were a machine and believe that an entire national economy can be controlled in the same way a machine is controlled, as well as those who draw up a “blueprint” for an ideal society and set out to reform society as a whole accordingly, were in fact the most powerful collaborators in the experiment of the centrally controlled economy. He argued that society must remain constantly alert to such people.

Eucken believed that government intervention in the market inevitably expands the influence of interest groups over economic policy, which in turn leads to the politicization of the economy. Arguing that groups never feel pangs of conscience under any circumstances, Eucken maintained that once a group obtains one privilege, it will continue demanding another. In this process, the scope of government activity expands, yet at the same time the authority of the state is weakened, producing the paradoxical result that the state becomes ever more vulnerable to pressure from interest groups.

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Original title: [주머니 속의 자유주의자 ] 오이켄(Walter Eucken

Author: Center for Free Enterprise (CFE)

Date: 2005-12-20

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=21&idx=10665