Page 67 - The Making of the German Post-war Economy

40 THE MAKING OF THE GERMAN POST-WAR ECONOMY

Ordo-liberalism in a broader sense includes other liberal currents and their
3
representatives, for instance, Alexander Rüstow and Wilhelm Röpke.
Whereas the latter predominantly expressed their views in monographs
and articles, the Freiburg School presented its economic concept inter alia
in the co-edited publication series Ordnung der Wirtschaft which passed into
the annual ORDO, Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft,
founded by Böhm and Eucken in 1948. In the first volume of their joint
publication, the editors Franz Böhm, Walter Eucken and Hans
Großmann-Doerth included a co-authored programmatic preface in
which they stressed the importance of an ‘Economic Constitution' as a
formal legal institutional order within which economic activities take
4
place. Accordingly, the state must create a proper legal environment for
5
the economy and maintain a healthy level of competition through
measures that follow market principles. Thus the paramount means by
which economic policy can seek to improve the economy is by improving
the institutional framework. Precisely this interdependence of the
economic and the legal orders, which was further elaborated by Franz
6
Böhm in the first essay of the publication series, was both fundamental to
the development of ordo-liberalism and in opposition to the relativism of
the German Historical School of Economics. While the latter school of
7
economic thought used the empirical method in examining society as a
whole, Eucken, whose procedure was reportedly rooted in the
philosophical antirelativistic perspective of his father, the Nobel prize
laureate Rudolf Eucken, and the ontological paradigm as ‘absolutism in
transition’ by the philosopher Edmund Husserl, preferred a
8
methodological approach based on phenomenological methods combined
with the programme of a so-called ‘isolating abstraction’. In particular
9
Walter Eucken aimed to overcome the antinomy of historical and
theoretical examination in order to cope with the interdependence of
orders, as economic and political tasks cannot be approached in isolation.
He considered joint efforts indispensable, and aspired to bring scientific
reasoning, as displayed in jurisprudence and political economy, into play in
order to create conditions under which economic actors while pursuing
10
their own interests promoted the common interest too. This pursuit
finally became the foundation subject matter of Walter Eucken’s
Ordnungsökonomik (Constitutional Economics); whereas classical
economics is concerned with individual behaviour in the context of an
economic order, constitutional economics focuses on analysing alternative
regulatory policies in order to achieve shared commitment leading to
shared gains.
11
Eucken’s thinking in terms of economic orders, or styles, which also
gave its name to the school, owes much to the historical and sociological