Abstract
The article expounds the ordo-liberal tradition that emerged as a distinct neo-liberal conceptualization of free economy as a political practice. According to this tradition there are things more important than GDP in as much as free economy depends on the formation of the moral and the social preconditions of market freedom. The social facilitation and moral embedding of free economy are fundamental to the ordo-liberal conception of a human economy, which entails a social policy of Vitalpolitik – a politics of life. Particularly at a time of manifest economic crisis and austerity, the social and moral veracity of economic liberty depends thus on the exercise of strong state authority.
Introduction: Ordo-liberalism and the order of liberty
Ordo-liberalism is not frequently discussed in English as a great contribution to the liberal economic thinking of the 20th century. This is unfortunate since it is the theory behind the German social market economy (Nicholls, 1994), and for some – see, for example, Moss (2000) and Bonefeld (2005) – its contribution to European construction has been fundamental. It developed in the context of the manifest crisis of the Weimar Republic in the 1920s and 1930s. Its founding thinkers were Walter Eucken, Franz Böhm, Alexander Rüstow, Wilhelm Röpke and Alfred Müller-Armack. For them, the economy has no independent existence. Rather, they say, its independence amounts to a political practice. This conception of the state as the political authority of free economy entails a distinctive understanding of social policy. Its purpose is the achievement of a human economy. The main thinker of human economy is Röpke and to a lesser extent Rüstow. Rüstow provided human economy with its decisive term, that is, Vitalpolitik. 1 The term describes the distinct social policy objective of maintaining society as an enterprise society.
Ordo-liberalism developed a liberal-conservative critique of what Norman (2010) calls the rigor mortis economics of numerical equations and government by central targets. It argues that free economy depends on vitally satisfied individuals, and it therefore challenges economic arrangements that are driven solely by numbers, which pursuit places excessive bureaucratic burdens on innovation, social interaction, social connection, and on entrepreneurial capacity. Such an economy suppresses personal responsibility and social innovation in favour of what the intellectual conservative Guglielmo Ferrero (1963) called a ‘quantitative civilization’. That is, the qualities that make an economy a human economy, an economy on a human scale and by means of human action, become rationalized to the extent that the entrepreneur loses her or his vitality and therewith entrepreneurial spirit. The ordo-liberal idea of human economy seeks, as it were, a ‘qualitative civilization’ – one that is founded on the moral sentiments that connect the freedom of competition with civic responsibility and encourage the entrepreneurial vitality of individuals. That is to say, for the ordo-liberals the viability of free economy is a matter beyond demand and supply (Röpke, 1998). It is a matter of social policy. They thus argued for a socially conscious and morally decisive social policy to secure the social preconditions of free economy. In their view, free economy produces what they called proletarianized workers, and they perceived the proletarian condition as a problem of ‘vitality, i.e. a non-economic, spiritual problem’ (Röpke, 2009: 53). There was thus need for a social policy to secure the vitality of an entrepreneurial society, that is, a Vitalpolitik. The term describes a political project of human economy, which Müller-Armack (1978: 328) defines succinctly as an attempt at incorporating competitiveness into a ‘total life-style’.
Apart from Foucault’s (2008) lectures on neo-liberal reason in the late 1970s, one is hard pressed to find critical presentations of the ordo-liberal idea of Vitalpolitik in English. 2 Foucault defines Vitalpolitik as a countervailing effort to the socially and morally destructive effect of free economy on what the ordo-liberal conceives as the fundamental sociability of human community. The purpose of Vitalpolitik is thus subsumed by that same economic rationality which it seeks to facilitate in the economic sphere. Vitalpolitik is a means towards the end of an entrepreneurial society as the foundation of economic liberty. Hajo Riese (1972) made this point about the innately economic rationality of Vitalpolitik when he criticized the ordo-liberal social market economy as a project of a ‘formed society’ – a formierte Gesellschaft – which he rejected as ‘totalitarian’. Franz Böhm’s rejoinder to Riese focuses the ordo-liberal stance succinctly: economic freedom ‘is an eminently political decision’ (Böhm, 1973: 39), which needs to be made time and time again to contain the illiberal use of freedom. There is need for the constant political facilitation of free economy by means of a ‘market police’ (Rüstow, 1963[1932]), which includes the embedding of the ‘psycho-moral forces’ (Röpke, 1942: 68) of enterprise in society at large to maintain its entrepreneurial ‘vitality’ (Rüstow, 1942) in the face of a socially and morally disintegrating market logic.
The issues raised by Riese and Foucault point towards ‘a rather different orientation from that usually attributed to the term’ social market economy (Tribe, 1995: 205). Indeed, for Tribe (ibid.: 212) ordo-liberalism amounts to an authoritarian liberalism that he associates with the political philosophy of Carl Schmitt. 3 Bentin (1972: 145, note 16) argues similarly: like Schmitt (1998[1932]), this ‘conservative liberal’ school of thought looked at the strong state as the means of guaranteeing the self-regulation of the market. Given Schmitt’s role in the Nazi dictatorship, this association does not sit well with ordo-liberalism as the theoretical foundation of the theory of social market. 4 In this context, advocates of ordo-liberal thought – for example, Rieter and Schmolz (1993) – have argued that ordo-liberalism did not originate in the context of the manifest crisis of the Weimar Republic. Rather, for them the roots of ordo-liberalism go back to the Nazi period. In this perspective ordo-liberal ideas of free economy and a strong state are not part of the authoritarian liberal-conservative reaction to the Weimar Republic. Rather ordo-liberalism appears as a liberal-democratic alternative to Nazism, which became manifest in the post-war period. Ordo-liberalism thus becomes part of the opposition to Nazism, formulating a programme of political economy that, as Rieter and Schmolz (ibid.) argued, was to be lasting, free and humane. This attempt at cleansing ordo-liberalism from the liberal authoritarian critique of Weimar is confronted by the paradox that its founding thinkers did not write in defence of Weimar liberal democracy. Rather they perceived Nazism as the tyrannical consequence of the lamentable weakness of the Weimar Republic to maintain a liberal economy.
In distinction to Rieter and Schmolz, Anthony Nicholls (1994: 48) and Sibylle Toennis (2009: 169) acknowledge the origin of ordo-liberal thought in the Weimar Republic. They see Rüstow’s (1963[1932]) then enunciation of the strong state as a landmark in the theory of the social market economy.
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Rüstow has argued that the Weimar state was … being pulled apart by greedy self-seekers. Each of them seeks out a piece of the state’s power for himself and exploits it for its own purposes … This phenomenon can best be described by a term used by Carl Schmitt – ‘pluralism’. Indeed, it represents a pluralism of the worst possible kind. The motto for this mentality seems to be the ‘role of the state as a suitable prey’. What is needed is a state that ‘governs, that is, a strong state, a state standing where it belonged, above the economy and above the interest groups’. (1963[1932]: 255, 258)
For Eucken (1932: 318) Weimar is characterized by a state of lamentable weakness and demanded the strong state to maintain and sustain the socio-economic order. The lamentable weakness of Weimar was a consequence of unrestrained forces of a system of politicized pluralism and mass democratic demagogy, which transformed the economy into a state economy that suspends economic regulation by the free price mechanism in favour of politicized social forces, from cartels and oligopolies to trade unions and mass parties, leading to an economic policy of planned chaos that pushed society towards tyranny (Eucken, 2004). For the sake of economic liberty, there is thus need for a strong state that acts as ‘the guardian of enterprise’ (Vanberg, 2001: 50). The strong state is the limited state – it rejects the interventionist welfare state as a step towards the inevitability of totalitarian government. That is, the strong state is an ‘economic planner for competition’ (Hayek, 1944: 31). Facilitating competition is not just a matter of the liberal rule of law. It is also a matter of creating and maintaining a moral framework to secure the human foundation of enterprise, which provision is the task of Vitalpolitik.
The remainder of the article explores the ordo-liberal argument that free economy requires a decisive social policy to maintain market liberty. The next section presents the ordo-liberal argument that a free economy produces devitalizing social outcomes, and outlines ordo-liberals’ critique of the welfare state as an understandable manifestation of a devitalized society. The second section expounds ordo-liberal social policy as a political practice of human economy. The conclusion argues that ordo-liberal social policy presupposes an ever-vigilant state that governs with strong state authority to secure the capacity of society to cope with economic shocks in the manner of the entrepreneur.
Free markets: Proletarianization, the welfare state and the true interests of workers
For the ordo-liberals, the experience of the capitalist crisis of the late 1920s was proof that the economy cannot be left to organize itself. They accepted that capitalism had brought about miserable social conditions, and they recognized collectivist responses to capitalism as understandable reactions to this misery but argued that such responses compound that same misery. They therefore demanded that the state intervene in society to resolve the impasse and secure the conditions of enterprise and argued that economic freedom has no independent existence. Free economy requires the establishment of ‘market police’ (Rüstow, 1942). For free economy to succeed, it needs to be ordered. It is an ordered economic freedom, and the purpose of government is to provide that order, preventing the illiberal misuse of freedom. Order is more than just a legal order. Fundamentally it is a social and moral order – an order that rests on the ‘will of the participants’ (Böhm, 1937: 52).
In conventional (neo-)liberal terms, the ordo-liberals argue that in a market economy individuals are dependent on the impersonal laws of the market that, with the help of the invisible hand, transform prices from private vices into public virtues, adjusting the production of goods and provision of services to market preferences by means of the free price mechanism. This means of economic regulation is they say the only basis for a rational economy – yet it is most fragile: not only does competition, as Rüstow (1942: 272) put it, ‘[appeal] solely to selfishness’, it also ‘[continuously increases] the property-less masses’ (Röpke, 2002: 149) who struggle to make ends meet, and who therefore demand welfare support to secure subsistence needs. They rebuke laissez-faire liberalism for having committed the fatal error of ‘assuming that the market mechanism supplies morally and socially justifiable solutions if left to its own devices’ (Müller-Armack, 1978: 329). Although competition is a human necessity, without which ‘man [is] not a human being’ (Eucken, 1989[1948]: 34), it does ‘neither improve the morals of individuals nor assist social integration’ (Rüstow, 1942: 272). If unfettered, the society of ‘greedy self-seekers’ destroys the ‘ethical and social forces of coherence’ upon which competition rests (Rüstow, 1963[1932]: 255). If left to itself, competition leads to ‘a progressive disintegration and atomisation of the body politic’, and this sets ‘in as soon as the fund of the inherited integration’ has ‘been spent’ (Rüstow, 1942: 173; also Müller-Armack, 1976: 235). Competition, thus, rather than ‘increas[ing] the moral stock … reduces the moral stamina’ (Röpke, 2009: 52), particularly of workers. They ‘cannot bear, without excessive harm to themselves and society, the constant mental, nervous and moral tension which is forced upon them by an economic system dominated by supply and demand’ (ibid.: 119). Social cohesion is the fundamental presupposition of enterprise competition, and cohesion is a matter also of moral integration. There is thus need for a social policy that secures the fundamental sociability of the unsocial interests, and achieves the integration of property-less workers into the system of free economy.
Rüstow defines the property-less workers in orthodox Marxist terms. He argues that the most severe sociological pathologies of capitalism belong to what ‘Marx described most concisely as the transformation of labour power into a commodity, which results from the separation of the worker from the means of production’ (2005: 365). The proletarianized worker is thus, as Marx had argued, doubly free – free of the means of subsistence and free to sell his or her commodity, that is, labour power, to acquire means of subsistence (see Marx, 1983: ch. 26).
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The ordo-liberals accept that workers are fundamentally dispossessed and morally estranged from the sentiments of private property. Röpke thus argues that the proletarian condition … means nothing less than that human beings have got into a highly dangerous sociological and anthropological state which is characterized by lack of property, lack of reserves of every kind … by economic servitude, uprooting, massed living quarters, militarization of work, by estrangement from nature and by the mechanization of productive activity; in short, by a general devitalization and loss of personality. (Röpke, 2002: 140)
For the ordo-liberals, the prospects of economic freedom require a resolution to the workers’ question. Fundamentally, proletarianization is not caused by material hardship. As Röpke (2009: 223) explains, ‘working class problems are … problems of personality’. The workers are ‘too depressed by their proletarian status to help themselves’ (Röpke, 1957: 23). That is to say, proletarianization is fundamentally ‘a psychological condition’ (Müller-Armack, 1981a: 261), which ‘neither higher wages nor cinemas can cure’ (Röpke, 1942: 3; Rüstow, 1942). Workers, says Röpke (1998: 57), ‘plunge themselves into the mass’ because they ‘are made deeply unhappy by the social enmassment which prises people out of the fabric of a true community’. The proletarianization of society amounts thus to a ‘decomposition of the humans of society and its transformation into a social dust bowl’ (Röpke, 2009: 54). For the sake of the free economy, liberalism has therefore to ‘look outside the market for that integration which is lacking within it’ (Rüstow, 1942: 272). Ordo-liberals thus demand a social policy that secures the socio-economic cohesion of free economy.
They reject the welfare state as the false answer to ‘the workers’ question’ because it ‘consolidates proletarianization’ (Röpke, 2009: 224). 7 They see the welfare state as a product of unfettered ‘mass passion’ (Röpke, 1998: 152). It allows ‘“mass-produced” men to shirk their own responsibility’ (Röpke, 1957: 24), establishes ‘government-organized mass relief’ for a ‘society crippled by proletarianism and enmassment’ (Röpke, 1998: 155) and compounds proletarianized social structures by disempowering individuals to take their lives into their own hands. Progress, they declare, should not be measured by the provision of welfare, that is, the satisfaction of human needs. Rather, it should be measured by what the masses can do for themselves ‘out of their own resources and on their own responsibility’ (Röpke, 1957: 22). Nevertheless, the proletarian demand for human security is a real one. It is ‘created by the market’ (Röpke, 1998: 10). If unfettered, competition – this necessity of human freedom – entails the ‘survival of the fittest’ (Röpke, 2009: 164), and in this struggle workers cannot succeed. They cannot ‘withstand the insecurity and instability of the living conditions which [this entails]’ (ibid.: 119) and they will thus engage in a struggle for welfare provision. That is, for the sake of free economy, liberalism has to address the workers’ question and achieve incorporation of the ‘dispossessed class’ into civil society, transforming proletarianized workers into personalities of private property (Rüstow, 2005: 111).
According to the ordo-liberals, the real causes of working-class discontent lie in the workers’ devitalized, unpropertied existence. The problem of vitality can only be solved by a social policy that, on the one hand, does not ‘intervene with the free price mechanism’ (Müller-Armack, 1976: 132) and that, on the other, achieves incorporation of the dispossessed into the social fabric of the market society as willing participants of economic value. The workers are ‘devitalized’ because they are not possessed by the ‘ethic and spirit of the bourgeois’ (Campbell, 2009: xvi). ‘True’ welfare policy is therefore about the empowerment of the worker as a ‘citizen’, that is, as an entrepreneur of the free price mechanism. Behind working-class demands for employment and material security there exists, they say, the much deeper human desire to enter the ‘civitas’ (Röpke, 2002: 95) of a human economy – an economy that empowers the individuals as self-provisioning, self-responsible and self-reliant entrepreneurs of their own life-circumstances. Ordo-liberal social policy is about achieving vitally satisfied workers.
Social policy: Vitality and enterprise
The ordo-liberal social policy objective is perhaps best summarized in Röpke: We need to eliminate the proletariat as a class defined by short-term wage-income. In its stead we have to create a new class of workers who are endowed with property and assets, and who are rooted in nature and community, self-responsible and able to sustain themselves by their own labour, and who thus become mature citizens of a society of free humanity. (Röpke, 1950a: 182)
Citizens of free humanity
Material security is an elementary human desire. However, the very attempt at trying to organize it for the sake of the propertyless is the ‘surest way … of coming to grief. Security is only to be had at a price of constant watchfulness and adaptability and the preparedness of each individual to live courageously and put up with life’s insecurities’ (Röpke, 2002: 198). They thus argue that the free market is in itself ‘social’ (Müller-Armack, 1976: 253). It is social because free economy ‘stimulates production and increases output, leading to greater demand for labour’ (ibid.). The ‘general increase in productivity’ (Böhm, 1937: 11) triggers the (in)famous trickle-down effect, spreading wealth to workers (Müller-Armack, 1976: 179, 198, 253, 301). In addition, the increases in labour productivity tend to reduce prices, which makes commodities affordable to workers, who benefit as consumers. According to Eucken (1951: 67), such market-facilitating social policy makes a ‘policy of full-employment’ unnecessary, since the expansion of the market absorbs available labour into employment. 8 The social question is thus solved by a well-ordered economy: it provides for employment and thus gives ‘workers a far greater choice of jobs and therefore greater freedom’ (Nicholls, 1994: 324). It also makes the poor wealthier in the long run as wealth trickles down, rendering ‘other forms of social welfare superfluous’ (ibid.: 325). The most important objective, then, of ordo-liberal social policy is to unfetter the ‘productive forces of society’ (Böhm, 1937: 11). Social policies ‘which encourage economic growth’ (Müller-Armack, 1989: 85), and which make money to invest in production rather than incestuously in finance, 9 are of the essence. Social policy has therefore to support ‘the initiatives of employers’ to ‘increase the productivity of their employees who have to regain interest in their work’ (Müller-Armack, 1981b: 72). Social policy in support of more productive workers is beneficial to workers because it generates jobs, provides secure wage income and improves conditions. However, the satisfaction of material needs is by itself insufficient to secure vitally satisfied workers. In their view, working dissatisfaction with conditions is fundamentally a psychological problem.
Ordo-liberal social policy focuses thus on empowering workers as responsible market agents by means of a Vitalpolitik, a politics of life, as Rüstow (1963[1932], 2005, 2009) called it. The worker is devitalized because of the effects of ‘urbanization and massification’, and because of the barracks discipline of industrial work. These, says Rüstow (2009: 71), are the causes for the deeply felt discontent of workers, which material reward and economic security cannot cure. Vitally satisfied workers, he argues, can cope with wage pressures and can adjust to adverse market conditions and perilous working conditions in a robust and entirely responsible manner because they have the courage to get on with things (ibid.: 73–4). The decisive social policy issue, then, is not the material welfare of the workers but their vitality, that is, their entrepreneurial capacity to face adverse conditions with courage, with determination and in a self-responsible manner (see Rüstow, 2005: 365). Workers have to learn to accept risk akin to an entrepreneur who sees opportunities when misfortune strikes. Vitalpolitik has thus to penetrate the mental make-up of workers (Müller-Armack, 1976: 198) to undercut a proletarian consciousness in favour of the notions of ‘quality, sincerity, eternity, nobles, human scale, and simple beauty’ (Röpke, 1950a: 194) that characterize the ‘caritas of responsible brotherhood’ (Röpke, 1964: 87). 10
In sum, social policy is tasked with the formation of market-conforming personalities. In its essence, says Campbell (2009: xvi), this is ‘an attempt to socially nurture the ethic and spirit of the bourgeois’. It is a ‘plea for embourgeoisement’ (Quinn, 1998: xvii). That is to say, social policy is engaged in a constant battle for the freedoms of price and private property. Property, says Quinn (ibid.: xix), ‘is social propriety. Without it the particular moral universe of bourgeois values simply ceases to exist.’ And it is the entrenchment of these values of human economy into a ‘total life-style’, transforming a proletarian personality into a personality of private property, that defines the purpose of ordo-liberal social policy.
Deproletarianization: Community and nature
Since the status of the worker is characterized by dependency on the vagaries of the labour market, the capacity to absorb shocks is thin. The ordo-liberals recognize this, and argue for alternative ways of securing means of subsistence and moral obligations without entering into collective welfare commitments. They say that a politics of life, a Vitalpolitik, has to re-root workers in natural forms of community, by which they understand the nuclear family situated in a small ‘parochial community’ that extends to workers a particular ‘human warmth’, which is indispensable for securing the human anthropological condition of the worker (Röpke, 1957: 41). Since the proletarian condition is one of dispossession, workers have to have access to independent means of subsistence outside the market to maintain themselves as vitally satisfied citizens. The ‘misery of “capitalism” is not that some have capital but that others have not, and for that reason are proletarianized’ (Röpke, 1942: 263). As proletarians, workers are not able to ‘accumulate individual property’ and wage income alone is a source of discontent that explains their class struggle.
Deproletarianization amounts thus to a policy against the dispossessed status of the worker, it is a policy of ‘restoring small property ownership’ (Campbell, 2009: xvi) to the worker who ‘must in all circumstances be divested of his chief material characteristic, viz., his unpropertied state’ of being (Röpke, 2009: 221). Workers have to be enabled to ‘rent garden plots’, or, better still, own ‘a house and arable ground’ (ibid.) as a precondition for ‘attaining a degree of relative independence and security, that awareness of kinship and tradition which only property can give’ (ibid.). That is, for the ordo-liberals, workers have to have access to market-independent means of subsistence to increase their capacity to secure provision by their own effort and initiative. Röpke does not endorse proletarian self-help by means of a ‘cash in hand’ black market economy. He advocates the transformation of proletarians into vitally satisfied individuals who resist, say, the populist tide of commercialism and the materialism of welfare state security for a holistic approach to living sensibly and responsibly in small-scale communities. 11 These independent means of subsistence are a matter of community values, family obligations and individual responsibility. They reject collective forms of decommodifying a part of the workers’ subsistence in favour of decommodified forms of market-independent means of meeting subsistence needs by ‘self-provisioning’.
The demand to ‘re-root’ workers in ‘decongested’ and ‘ruralized’ communities envisages decentralized communities of artisans, small traders and craft workers, and family farmers, as an ideal condition for deproletarianization. These forms of life and work are the most ‘important sectors of non-proletarian existence’ (Röpke, 2009: 218). The workers have to be extracted out of the masses and into these forms of non-proletarian existence, which provide the appropriate ‘anthropological framework’ (Röpke, 2002: 32) for a human economy that is characterized by ‘closer relation to the soil and … the place of work’ (Röpke, 2009: 221), and its human scale is ‘indispensable for the salvation of a free economic and social system’ (Röpke, 2002: 34). Human economy is characterized by an ‘anthropological framework’ that is built on the recognition of human effort; it proceeds by the ‘demassification of society’ to allow for a socio-economic reality based on ‘smaller units of production and settlements’ and for ‘sociologically healthy forms of life and work’ (Röpke, 2009: 162). This effort at human economy is to make working-class families more independent of the market and more resilient in the face of economic downturns. Re-rooting workers in decongested communities will, they say, empower workers to help themselves and others. It will thus provide conditions of ‘self-provisionment and property … which will enable it [the nation] to withstand even the severest shocks without panic or distress’ (Röpke, 2002: 221).
Re-rooted workers are ‘anchored’ in community and family, and this enables them to cope in the ‘cold society’ (Rüstow, 2009: 65; 2005: 365) of economic price and factor competitiveness. It also prevents them from falling prey to the proletarian craze that asks for the ‘rotten fruit of the welfare state’ (Röpke, 1957: 14). They thus conceive of deproletarianization in quasi-feudal terms. Workers are to work for an employer during the waged part of the working day, and for themselves during the remainder of the day, once they have exited the factory gate, be it the gate of the manufacturing or the service sector. Vitally satisfied workers obtain a part of their sustenance from their own non-commodified labour, including vegetable production in ‘allotment gardens’ (Röpke, 2009: 224).
Independent forms of subsistence are to give workers a ‘firm anchorage, namely, property, the warmth of community, natural surroundings and the family’ (Röpke, 2002: 140; Rüstow, 2009: 65; 2005: 365). The intended outcome is a ‘real and fundamental alteration of the economic cellular structure’ (Röpke, 2002: 211) that enables workers to succeed in competitive labour markets (see Müller-Armack, 1976: 235). They thus propose the resurrection of 18th-century values of an organic society in combination with the virtues of the entrepreneur. Since for the ordo-liberals, the proletarian existence is a problem of ‘personality’, the point about this ‘combination’ is to instil, ground and harness those ethical values upon which the sociability of competitive social relations and enterprise rests. That is, ‘self-discipline, a sense of justice, honesty, fairness, chivalry, moderation, public spirit, respect for human dignity, firm ethical norms – all of these are things which people must possess before they go to market and compete with each other’ (Röpke, 1998: 125). In the same manner, they propose ‘adjustment interventions’ to accelerate processes of economic restructuring by means of, for example, provision of financial incentives in support, say, of greater labour mobility and acquisition of employable skills. Unemployed workers are fundamentally workers in transit, from one form of employment to another. In this respect, too, non-market forms of self-provisioning, especially ruralized subsistence-labour, are to secure the personality of the worker, containing the threat of proletarianization. Rüstow’s notion of vitality and Röpke’s idea of true community do not contain notions of human solidarity and purpose, which are absent from the ordo-liberal idea of the good society. For the ordo-liberals, empowering the vitality of the worker is a means towards securing the liberal-utility of enterprise competition. Vitalpolitik is about the establishment of a socio-economic order founded on economic liberty, which requires also the establishment of an ideological bond that, in the terms of a Vitalpolitik, bespeaks the proletarian as a free individual who relishes empowerment as a self-responsible entrepreneur of her or his own labour power (see Ptak, 2007: 24, 27). 12
Private property as social right
Let us, says Röpke (1950b: 153), ‘put economic freedom on the firm foundation of mass property ownership, of one’s house, and one’s workshop and garden’. Rooting workers in ruralized subsistence work does not empower the working individual as a full stakeholder of the free economy, transforming a proletarian personality into a personality of private property. For this to happen, the worker must ‘be able to acquire freely disposable funds and become a “small capitalist”, possibly by being given the opportunity of acquiring stocks’ or have a ‘share in the profits’ (ibid.). Then there are the ‘beneficial activities of savings banks, mutual building societies, co-operatives’, which social policy has to promote in order to ‘do away with that leading characteristic of the proletariat, namely lack of property’ (Röpke, 2002: 156). For the ordo-liberals, ownership of capitalized property transforms proletarianized workers into personalities of private property, to whom the ‘notions of privacy, independence, self-reliance, freedom, and dignity’ are second nature. With the ownership of private property comes responsibility, and with responsibility comes a ‘particular social and moral universe’, for which ‘the word “bourgeois” imposes itself’ (Röpke, 1998: 98). Money, says Röpke (1950b: 252), ‘is coined freedom’. The proposed civitas of coined freedom is to harness the ‘whole network of social relationships’ on the basis of common moral values: … individual effort and responsibility, absolute norms and values, independence based on ownership, prudence and daring, calculation and savings, responsibility for planning one’s own life, proper coherence with the community, family feeling, a sense of tradition and the succession of generations combined with an open-minded view of the present and the future, proper tension between individual and community, firm moral discipline, respect for the value of money, the courage to grapple on one’s own with life and its uncertainties, a sense of the natural order of things, and a firm scale of values. (1950b: 252)
For the ordo-liberals, debt has no place in a human economy; what they demand is sound money. Workers are not meant to meet subsistence needs by access to private credit, but by working for themselves and others after the conclusion of the waged part of the working day. At the same time, however, they also speak about the diffusion of share ownership and the partaking of workers as investors in stock markets to make the laws of coined freedom manifest in society at large. Indeed, if money is coined freedom, then private debt is an investment into future earnings, into future freedom. It is a promissory note of freedom to come. However, private indebtedness does not reveal entrepreneurial networks of social relationships; on the contrary, it cripples its owners and destroys communities. Private debt is probably a far greater force of deproletarianization than the savers’ morality, which is expectant of a golden goose, delivered on judgement day. Private debt privatizes the debtor, impoverishes the future in the present and acts as a powerful restraint on working-class solidarity (see Bonefeld, 1995). That is, the diffusion of private property entangles society in the laws of private property, including its laws of bankruptcy, personal risk and private insurance. Ordo-liberal social policy is therefore not really about the spreading of coined freedom. It is about the acceptance of coined freedom as a character trait. For neo-liberal political economy, the free price mechanism is the calculating machine of economic freedom, and when the chips are down society has to accept life’s misadventures with inner strength, courage and conviction.
The enterprise society of vitally satisfied workers is confronted by the paradox that the law of coined freedom depends on income generation, that is, on the exertion of productive labour in an ever-expanding economy. The bottom line of human economy is therefore price competitiveness based on increased labour productivity. Foucault’s comment on social market economy is succinct: there ‘can be only one true and fundamental social policy: economic growth’ (2008: 144). It is indeed its ‘social content’ (Müller-Armack, 1976: 253). Only the ‘total mobilisation of the economic forces allows us to hope for social improvements, which achieve real social content by means of increased productivity’ (Müller-Armack, 1981b: 79). In short, for the ‘plea for embourgeoisement’ to be heard, the free economy has to grow and grow without limits, so that the infamous trickle-down effect, this liberal reward of labour, appears in reach. Economic crisis thus indicates that things are at a standstill, requiring, as Adam Smith put it, state action to facilitate ‘the cheapness of goods of all sorts’ (Smith, 1976: 333), that is, to increase labour productivity and price competitiveness in order that the accumulation of wealth ‘rewards labour’ with the prospects for employment and wage income.
For Müller-Armack, the trickle-down effect of wealth is the raison d’être of the free society (Müller-Armack, 1976: 179, 198) – time and time again, it requires a real breakthrough in the productive effort of labour to redeem the promissory note of an affluent future. Ordo-liberalism is about this future for which it strives in an ever-renewed present. This future present requires vitally satisfied workers with access to private property and means of self-provisioning to absorb risks. Social policy is an attempt at establishing this connection between the ‘human beings and private property’ (Müller-Armack, 1976: 133). It aims to make ‘competition socially effective’ (ibid.: 246). For what, as Foucault (2008: 148) put it succinctly, is ‘private property if not an enterprise’? What, he asks, is home ownership ‘if not an enterprise’, an investment, a commodity, something for profit, for exchange? Enterprise competition is the formative idea of the ordo-liberal social policy of deproletarianization. The achievement of a human economy is the foundation of enterprise.
Human economy and political authority
Müller-Armack (1981b: 92) defines the purpose of ordo-liberal social policy succinctly. It is to relieve individuals from fear of freedom and to make individuals accept responsibility for that freedom. Vitalpolitik is about committing the social individuals in the (self-)responsible use of economic freedom. Social policy aims thus at making society to ‘approximate as closely as possible to the ideal of perfect competition’ (Rath, 1998: 68). This task is never completed. The free economy contains the ‘natural tendency towards proletarianization’ (Röpke, 2009: 218) and it is therefore necessary to conquer the free economy ‘anew each day’ (Röpke, 1998: 27). Rath’s point is worth considering: social policy is intended to make reality in the image of its idea, that is, the reality of a market mechanism of supply and demand is decided beyond supply and demand. Laissez-faire does not extend to social policy. Instead, society requires constant observation and formation, and the task of removing impediments to its operation is incessant. The free economy ceases ‘to flourish if the spiritual attitude on which it is based – that is the readiness to assume the responsibility for one’s fate and to participate in honest and free competition – is undermined by seemingly social measures in neighbouring fields’, that is, those employment and welfare policies that constitute the welfare state (Erhard, 1958: 184). Ordo-liberal social policy is therefore more than just a policy towards society. Fundamentally, it is a means of securing free economy in the ‘will of its participants’ (cf. Böhm, 1937: 11) to secure the liberal purpose of economic freedom in the mentality of society. As a policy of ‘will formation’ it is in fact devoted to the formation of character. It is therefore not only a policy ‘of society’ (Foucault, 2008: 146) but, also and fundamentally so, a policy in and through society, shaping its inner physiology.
Free economy is thus a political practice. As Foucault put it (1997: 97), the free economy ‘must be supported, managed, and “ordered” by a vigilant internal policy of social interventionism’ to sustain and facilitate the freedom of spontaneous action without which, they say, ‘man’ is not a human being. The internal policy of social intervention that Foucault talks about is a policy of human economy. It provides for the free economy those requisite ‘psycho-moral forces’ (Röpke, 1942: 68) upon which the conduct of economic liberty depends. Without them, the relations of liberty will ‘degenerate into a vulgar brawl’ (Röpke, 1982: 188). 13 Embedding the rationality of enterprise into the mentality of society requires a perpetually vigilant and active security state that acts as ‘market police’ to secure a human economy of vitally satisfied entrepreneurs (see Röpke, 1963; Eucken, 2004: 327 ff.; Rüstow, 1942: 289).
Conclusion
I have argued that ordo-social policy focuses on two principal ideas. First, free markets produce ‘deficient’ social outcomes in the form of proletarianized workers and decaying structures of social and moral integration; and, second, the economy has no independent existence. The cohesion of an enterprise society is a matter beyond demand and supply as Röpke argued in his book A Human Economy. 14 Fundamentally, human economy is a political practice of a Vitalpolitik, which is conscious of the devitalizing ‘effects’ of free economy, which does not yield to the ‘clamour of the poor’, and which instead provides for the market that requisite social integration and those ‘psycho-moral forces’ upon which it depends but which it is unable to produce by its own effort. Vitalpolitik is to transform a proletarian mentality into the moral sentiments of private property, harnessing workers as self-responsible entrepreneurs of their own labour power.
For the ordo-liberals, therefore, there really are ‘things that are more important than GDP’, inasmuch as GDP does neither breed the moral sentiments nor provide for liberty that social and moral order, upon which its progress depends. 15 The laws of justice do not apply to disorder, and enterprise is a function of the moral sentiments of human economy. For the ordo-liberals, the well-being of capitalism is synonymous with the well-being of the entrepreneurial spirit – innovative, energetic, enterprising, competitive, risk-taking, self-reliant, self-responsible, eternally mobile, always ready to adjust to price signals, etc. (see Eucken, 1932: 297). Vitalpolitik is the ordo-liberal means of governing the mentality of the social individuals as self-responsible and willing entrepreneurs of free enterprise, who have the moral stamina and courage for competition and the inner strength to absorb shocks, and who help themselves and others when the going gets tough, and who adjust to market pressures willingly and on their own initiative. GDP derives from the productive assertion of vitally satisfied individuals, and not the other way round. They therefore criticize the welfare state as a ‘pumping system of the Leviathan’ (Röpke, 1957: 20). In its stead, they demand a strong state as the political authority of human economy. Instead of yielding to mass demands for welfare support, the state of human economy declares for a society that helps itself and seeks the incorporation of the mentality of the entrepreneur into the moral fabric of society. Ordo-liberal social policy entails thus a political practice of governmentality – the mentality of enterprise (see Foucault, 1991).
Foucault’s (2008: 242) treatment of ordo-liberal social policy in terms of a modern manifestation of ‘biopolitics’ is apposite. Market police intervenes in the ‘human disposition’ to generate the requisite psycho-moral forces of human economy, securing the conduct of the entrepreneur in the mentality of social individuals. In distinction to Foucault, social policy is thus not only a policy towards and of society. It is fundamentally a policy in and through society, governing its mentality from within. According to Tribe (2009), Foucault argues on the basis of two distinct, though interdependent, logics, the logic of the market and the logic against the market. It is because of this duality that Foucault’s account of ordo-liberalism does not draw it out fully. Foucault identifies the logic for the market as a competitive market economy that is ruled by the laws of perfect liberty – free competition, pursuit of economic value, and regulation of entrepreneurial preferences and innovation by the free price mechanism. He conceives of the logic against the market as comprising the principle of ordo-liberal social policy, that is, Vitalpolitik, which for Foucault somewhat compensates for the heartless logic of economic value (2008: 242). However, for the ordo-liberals, Vitalpolitik is not a politics against the market. It is a market-facilitating and -embedding policy, which has to be pursued relentlessly to sustain and maintain the moral sentiments of economic liberty in the face of the destructive sociological and moral effects of free economy. For the ordo-liberals, if unchecked, free economy destroys the moral and social fabric of society, leading to its proletarianization and politicization, which manifests itself in collective demands for a Keynesian economic policy, welfare support and commitment to full employment, which for them pushes society towards planned chaos and tyranny. Vitalpolitik is the pre-emptive means at containing the proletarianization of society. It is therefore not a politics against the logic of free economy. Rather, it is meant to render free economy effective. It seeks the ‘formation’ of enterprise competition in the mentality of the social individuals (Riese, 1972; Ptak, 2007). There really is only one freedom, and that is the freedom of the self-responsible entrepreneur. Instead, then, of allowing society to govern through the state, they demand that the state governs not only over society but, also, in and through society to ensure ‘the will’ for enterprise as the foundation of the freedom of enterprise competition.
Peacock and Willgerodt (1989: 9) capture the essence of ordo-liberal social policy well when they argue that it amounts to ‘medication’ that is administered in order to help the market ‘organism to self-regulate’. Nevertheless, in distinction to Peacock and Willgerodt, the ordo-liberals do not see the market as a self-regulating organism. For them, it is neither self-regulating, nor is it an organism. The free economy is a political practice and its operation depends thus upon a constant political effort of market police. In a word, in the face of the self-destructive logic of the free economy, ordo-liberal social policy entails a constantly reasserted political decision for free economy, facilitating the social preconditions of competition and embedding the moral sentiments of enterprise. Vitalpolitik therefore does not manifest ‘a logic against the market’. Rather it is a means of social and moral ‘planning’ for competition. 16