Werner Bonefeld’s The Strong State and the Free Economy is both a brilliant treatise on the work of a group of German thinkers in the interwar- and postwar years known as ordoliberals, and a forceful argument concerning the nature of present-day European monetary union. In the introduction, Bonefeld claims that ordoliberalism offers “a most concise confirmation” of Marx’s famous argument that the state is nothing but a committee for managing the affairs of the bourgeoise (p. 14), but this is one of very few Marx references in this text, which leans more on perspectives developed by Michel Foucault in his lectures on biopolitics (Foucault 2008) and Bonefeld’s own close readings of ordoliberal thinkers themselves, and of their contemporary Carl Schmitt.
In spite of the quite obvious instances of symbiosis, public debate regarding economic policies tends to conceptualize “states” and “economies” as though they were opposed entities: A strong, big or powerful state is imagined as something which would make an economy (or markets) less “free” or less important for social life, and vice versa. One of the major points of The Strong State and the Free Economy lie in (yet again) arguing against this simplistic and wrongful understanding of political economy, where state and market are seen as “distinct forms of social organization” (p. 155).
Jamie Peck (2010) and Cornel Ban (2016) are amongst those who have pointed out that neoliberal ideas and practice have taken different forms in different geographical contexts. Bonefeld’s focus on the European context and the ordoliberal branch of neoliberalism is thus a welcome antidote to a general understanding of neoliberalism heavily influenced by the American experience, and the dubious self-representation of American actors like Milton Friedman as “anti- state”, “anti-government” or “anti-regulation”. “De-regulation” is perhaps not the most precise term to describe developments in US political economy since the years of Ronald Reagan, but it does hold some explanatory power with regards to areas like finance. As concerns to the European Union and its seemingly expanding army of bureaucrats and competition lawyers however, one would be hard pressed to find anyone claiming that this political entity suffers from too little regulation. Bonefeld’s claim is that the powerful regulatory apparatus of the European Union is in no way opposed to neoliberalism, but rather a result of a particular type of it, German ordoliberalism, and that a proper understanding of this influential current is vital to appreciate the functioning of present-day Europe.
An interesting consequence of our current impasse, in which debates concerning political economy remained fixed within the matrix of “how much” states should be put to use in economic affairs, is that ordoliberalism, with its state-embracing content, has been misconstrued by some as an alternative to neoliberalism when it is in fact an important part of it. In the opening pages, Bonefeld singles out British Labour peer Maurice Glasman and German Die Linke politician Sahra Wagenknecht as people who in their books have held up ordoliberalism as a social alternative to the perceived laissez-faire politics of neoliberalism (p. 5). The ordoliberals were strongly critical of laissez-faire, but they were nonetheless committed to the idea of free markets and Adam Smith’s notion of an invisible hand. Bonefeld writes: “… in the ordoliberal argument, market regulation by the invisible hand amounts fundamentally to a political practice of government.” (p. 3). This is the key ordoliberal insight, and it was shared with other neoliberals at the time, for instance Friedrich Hayek. Ordoliberal thinkers were an important part of The Mont Pelerin Society, and when Hayek took over the chair of the ordoliberal Walter Eucken’s chair in Freiburg in 1961, he stated that the two had “the closest agreement on scientific as well as on political questions” (Streit et al. 2000), thus the bonds between ordoliberalism and neoliberalism in this formative period are many and close.
What emerges from Bonefeld’s thorough investigation of ordoliberalism is the extent to which it, like other forms of neoliberalism, was a twentieth century attempt to reorganise capitalism and defend a society built on private property from mounting democratic pressure. This had very little to do with laissez-faire, and the ordoliberals and other neoliberals heavily criticised laissez-faire liberalism as a “deistic philosophy”, unable to see the state as “the only power capable of not only confronting the dangers to economic freedom that lay hidden in society and indeed within the economic itself, but also of sustaining free economy” (p. 21). The ordoliberals’ main contribution was their understanding that market competition needs both a legal framework and moral sensibilities that cannot be generated by the market itself, but had to be conceived of and put into place as a regulatory policy – an Ordnungspolitik.
In the last chapters of the book, Bonefeld uses his interpretation of ordoliberalism as a prism through which European Monetary Union (EMU) and the Euro crisis of 2015 is seen. Like Wolfgang Streeck before him (Streeck 2014), he analyses the European Union as a political structure designed to be an almost perfect ordoliberal state, in which democratic pressures are kept in check by rule-bound institutions and a central bank that answers to no one. Yet Bonefeld insists that there is nothing automatic about the ordoliberal politics of the European Union. Rather, the European Ordnungspolitik “provides a supranational anchor for the domestic pursuit of market freedom” (p. 120). Forces within nation states working for what Bonefeld calls “market-freedom” can use European institutions as a weapon. Indeed, “the conception of Europe as a bureaucratic apparatus of technical regulation by unelected experts who process policy in a disenchanted world of instrumental reason falls short. Europe is not an ordoliberal administrative apparatus. It is a political creation and amounts to a political practice and decision making by executive agreement” (p. 119).
In this way, Bonefeld uses the ordoliberals’ own understanding of the depoliticisation of the economy as “an imminently political act” (p. 25), to point towards paths of resistance. In ordoliberal Europe, political actors are making political decisions which can be contested all the time, and the ultimate proof of this came during the Greek crisis of 2015, where he claims that the European Central Bank used a Schmittian power of exception and saved the system of rules by breaking them. The historical argument as to how European institutions and politics got to be so deeply influenced by ordoliberal thinking is not fully developed, however, and there is little causation offered as to how ideas from the 1930s came to play such an important part in the structuring of modern day Europe. It seems that the depolitisation of money-making through the creation of the EMU is a sort of highlight of ordoliberal influence on the European integration project in Bonefeld’s underlying historical narrative. However, the extent to which several ordoliberals have been critical to both the EMU and the EU is left out of the picture and differing approaches to the history of European integration, like that of Harold James (James et al. 2016), are not discussed. A more direct engagement with arguments and ideas about other influences than the ordoliberal on the European integration project as such, and the EMU in particular, could have been beneficial to the argument, and perhaps also helped push Bonefeld’s important analysis into the mainstream of political debate. This is such an important book that it would be a great shame if scholars of both ordoliberalism and European integration did not engage with it.
Ban, Cornel (2016), Ruling Ideas – How Global Neoliberalism Goes Local, Oxford: Oxford University Press.
James, Harold (et. al.) (2016), The Euro and the Battle of Ideas, Princeton New Jersey: Princeton University Press.
Peck, Jamie (2010), Constructions of Neoliberal Reason, Oxford: Oxford University Press.
Streeck, Wolfgang (2014), Buying Time, London: Verso.
Streit, Mannfred E. (et., al.) (2000), ”The Market Economy and the State – Hayekian and Ordoliberal Conceptions” in The Theory of Capitalism in the German Tradition, Hannover: Springer Verlag, Pp. 224 – 271.
This is an abridged version of a full review, which appeared at AntipodeFoundation.org