Ordoliberalism: A German oddity? Edited by Thorsten Beck and Hans-Helmut Kotz
For over half a century, ordoliberalism has played a significant part in framing economic policy debates in Germany and, indirectly, the European Union. It emphasises principles and rules, stressing a long-term orientation. For the German economy, this approach has proven mostly successful.
The policymakers and academics contributing to this eBook decide whether this distinct approach to policymaking is uniquely suited to Germany, or whether common ground can be found with other national strategies to address urgent policy problems.
- Straightforward administering of principles might make sense in stable environments. Rules, however, cannot account for all contingencies. As we have seen during the Eurozone crisis, flexibility is indispensable.
- Rules that are too stringent to enforce (coming with prohibitive opportunity costs) are not credible; policies inevitably respond to new, unforeseen challenges so sustainable flexibility is needed (the Stability and Growth Pact disregarded crucial Eurozone problems, and proved unenforceable).
- Getting incentives rights is as important as having some form of Eurozone-wide risk sharing to underwrite macro stability (the banking union is still incomplete and hence the Eurozone is vulnerable).