Ordoliberalism

'Authoritarian Liberalism: From Schmitt via Ordoliberalism to the Euro' by Werner Bonefeld in (2017) 43(4-5) Critical Sociology 747 examines

the market liberal veracity of Hayek’s view that a dictatorship may be more liberal in its policies than an unlimited democratic assembly. Hayek’s warning about the potentially illiberal character of democratic government is key to the German ordoliberal thinking that emerged in the context of the crisis of the Weimar Republic. The ordoliberal thinkers were keenly aware of Schmitt’s political theology and argued with him that the state is the predominant power in the relationship between market and state, conceiving of this relationship as free economy and strong state. They maintained that the establishment of social order is the precondition of free economy; law does not apply to disorder and does not create order. The liberal state is the ‘concentrated force’ of that order. The contribution argues that ordoliberalism is best characterized as an authoritarian liberalism and assesses its contemporary veracity in relation to the European Union.

Bonefeld states

The program of liberalism ... summed up in a single word, should read ‘property’, that is, private property in the means of production ... All other demands of liberalism derive from this basic demand. (Von Mises, 1985: 137) It cannot be denied that Fascism and similar movements aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. (Von Mises, 1985: 51) ...

The term ‘authoritarian liberalism’ was coined by the German Jurist Hermann Heller in a 1933 publication about the rightist Von Papen government of 1932. His account explored Carl Schmitt’s ‘Strong State and Sound Economy’ (1998) as the theoretical manifestation of the authoritarian turn of liberal thought. Heller characterized the turn towards authoritarianism as a demotion of democratic government ‘in favour of the dictatorial authority of the state’ (Heller, 2015: 296).  Schmitt’s stance was by and large shared by the founding thinkers of German ordoliberalism. They too identified the democratic character of the Weimar Republic as the root cause of the crisis of Weimar, arguing that mass democracy is tyrannical in its consequences.

In the context of Weimar, the authoritarian reassertion of the state was thus not only meant to overcome the ‘lamentable weakness’ (Friedrich, 1955: 512) of the liberal state. It was also meant to reorder the socio-economic relations to achieve free economy. Authoritarian liberalism conceives of the state as ‘market police’ (Rüstow, 1942). According to Heller (2015) it posits the state in its pure liberal form as the organized force and concentrated power of the system of liberty, enforcing market freedom and sustaining depoliticized socio-economic relations. Depoliticization is an eminently political practice. To Schmitt and the ordoliberals ‘the Leviathan was and had to be there first’ (Streek, 2015: 363); and rightly so: by its own logic, and as Adam Smith had already argued, free economy descends into ‘bloodshed and disorder’ (Smith, 1976: 340) unless the state civilizes its conduct by means of law, police, and fabrication of the moral sentiments of the system of private property. The freedom to compete presupposes ‘market police with strong state authority’ (Rüstow, 1942: 289) to sustain it. The strength of the state as market police depends on its independence from society. Its capacity to neutralize democracy and civilize the conduct of a free labour economy depends on the state as the independent and concentrated power of society.

In the late 1920s/early 1930s, the critique of mass democracy was part of the rightist reaction to the Weimar Republic. In the 1950s, it became part of the ‘anti-totalitarian’ idea that mass democ- racy leads to unfreedom, and that for the sake of an open society democracy needed to be fettered. As Willgerodt and Peacock (1989: 6) put it, ‘those who rely on the rules for liberal decisions, irrespective of the results of these decisions, must answer the question: how can it be guaranteed that these decisions will not destroy the liberal rules?’. In this perspective, freedom needs to be protected against the enemies of freedom even if they move formally within the legal bounds of a free society and secure parliamentary majorities by free elections. That is, ‘trust in freedom must be accompanied by a distrust of forces that abolish freedom or interfere with it’ (Lenel, 1989: 21). Surveillance is the condition of trust. Recognition of the enemies of freedom depends on the certainty of indivisible socio-economic values and political norms that recognize free economy as a ‘universal form of existence’ (Eucken, 2004: 321).

There can be no doubt. Relativism has no values to defend. It succumbs, they say, to ‘trouble makers’ (Röpke, 2009: 50). In this remarkable manner, the rightist denunciation of Weimar democracy established itself as a militant defence of post-war democracy. ‘Militant democracy’ rejects liberality as an open invitation to the enemy within. Instead it demands the curtailment of democracy ostensibly in order to protect it against attack and communist overthrow.

In the 1970s the authoritarian liberal critique of democracy came to the fore again in the context of the then economic crisis. The debate focused by and large on Britain. It argued that the crisis had been brought about by an excess of democracy that had let to an overloaded interventionist state, which had stifled the economy with crisis-ridden consequences. Its crisis-diagnosis entailed the prescription for resolving the crisis. The economy had to be set free by rolling back the state and by curtailing the democratic excess. Its stance formed the theoretical foundation of the incoming Thatcher government in 1979.

However, in Europe, the most sustained effort in neutralizing mass democracy occurred in the form of European monetary union, which created the world’s only state-less currency. The government of the Euro is to all intents and purposes entirely removed from the territorially regimented democratic sovereigns. It sets in place a market liberal framework for the conduct of policy in the federated and democratically constituted member states. The paper lays out the argument that capitalist political economy entails the liberal state as market police. This conception of the state excludes the idea of mass democracy as the constitutive basis of the liberal rule of law. The next section introduces Schmitt’s authoritarian stance and examines the ordoliberal critique of mass democracy. The following section presents the neoliberal account of a crisis of democracy in the 1970s. The conclusion summarizes the argument with reference to the elements of authoritarian liberalism in the governance of the Euro. I hold that the European monetary union amounts to a system of imposed liberty, which strengthens the liberal character of the member states. It also tends to nationalize the critique of ‘liberty’ in the form of powerful neo-fascist political movements and parties, including populist nationalist rejection fed by impotent rage and pitiful delusions about ‘land and sea’, as in the case of Brexit.