Coy uses a 1914 analogy which seems appropriate to me, because pigheadedness, arrogance and just plain stupidity seem to be playing outsizes roles in the current failure of European leadership in the crisis around the euro which is very likely to take down the EU in the near future. He adds a fire metaphor for good measure:
There is a whiff of August 1914 in the air. That was the month when Europe's leaders stumbled into World War I through arrogance, nationalism, entangling alliances, and myopia. The operating assumption is that Merkel will bend before the onset of a financial conflagration, but there's no assurance of that. In calling for treaty revisions, the Chancellor referred to "construction weaknesses in the euro zone" that need fixing. She perceives herself as a builder, not a firefighter. The question is whether, by the time Merkel has perfected the blueprints for the high-class renovation of Europe she and her supporters crave, the building will have burned down.I was particularly interested in Coy's reporting on Angie's adherence to an obscure, reactionary economic dogma called "ordoliberalism":
Modern German politics continues to be influenced by a philosophy that originated at the University of Freiburg in the 1930s: ordoliberalism, a conceptual blend of free markets and strong government. It says rigorous regulation is necessary, but only to help the free market achieve its full potential."Sound money" translates for Angie and her supporters into austerity economics.
Ordoliberals detest stimulative Keynesian policies. Jürgen Stark, a Merkel ally who has tendered his resignation from the European Central Bank's executive board in protest against its easy-money policies [!!!], once said that ordoliberalism theoretician Walter Eucken (who died in 1950) "has been a constant source of inspiration throughout my career." In a speech in Freiburg last February, Merkel said: "Unfortunately there aren't Euckens in all the countries of the world."
Sound money is the polestar of the ordoliberal tradition. [my emphasis]
Although my trusty 2006 digital edition of the Encyclopædia Britannica seems to be innocent of the concept of ordoliberalism, in its article on "money", the author, Milton Friedman himself, includes Walter Eucken's This Unsuccessful Age (1952) as the first of his brief list of "[u]seful readings in monetary theory". My 2007 German Microsoft Encarta Standard does have a brief piece on Walter Eucken (1891-1950) by Karl Bürgel which describes him as the "Hauptvertreter des Ordoliberalismus" ("chief representative of ordoliberalism"). He even got his picture on a German stamp in 1991.
Friedrich August von Hayek, one of the "Austrian economists" of which self-described libertarians claim to be so fond, served as the chairman of the Walter Eucken Institut. The Institut's website claims Eucken and Franz Böhm as the founders of the "Freiburg School" of economics. It also refers to their trend of thought as "Ordnungsökonomik" (economics of order), which sounds even creepier than "ordoliberalism". Eucken and Böhm edited the journal Ordo: Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft beginning in 1948.
In the post-Second World War era, ordoliberalism actually was a significant influence on the conservative concept of the "social market economy," a phrase identified with Ludwig Erhard, the first Economics Minister of the Federal Republic of Germany (West Germany) who also was a founder of the Walter Eucken Institut. Erhard was part of Merkel's Christian Democratic Union (CDU) party.
Ordoliberalism was also called "neoliberalism" in the postwar period. But today's neoliberalism, and the kind of present-day ordoliberalism with which Merkel identifies, seems to be considerably less concerned with any "social" element of the "social market economy" than most CDU leaders have been. The CDU still has a significant Catholic labor-union wing.
Carl Friedrich discussed the the ordoliberals in "The Political Thought of Neo-Liberalism" The American Political Science Review 49/2 (Jun. 1955). Referring in particular to a work by one of their leading German figures, Alexander Ristow, Ortsbestimmung der Gegenwart, Friedrich wrote:
There is a good deal of elitist thinking among these neo-liberals, with little appreciation of the role of the common man. Many of them - although not Ristow - confuse the common man with the mass man, in the manner of Ortega y Gasset. Although their idea of the constitution as the creative act of instituting the free market economy requires an elaboration of their image of man along democratic lines, showing that he is capable of much "common sense," they do not see democracy in this perspective. There is a general tendency to confuse constitutional democracy with the anarchic majoritarian democracy that the Jacobins read into Rousseau, and to see totalitarian dictatorship as its inescapable fruit. [my emphasis]Now that sounds more like Angie's approach to democracy in Europe during this crisis!
Tags: angela merkel, austerity economics, freiburg school, ordoliberalism