If Margaret Somers and Fred Block are right, as I think they are, then periods of neoliberal revanchism return periodically. These are longue durée changes, waxing and waning, affecting the public-private divide in cyclical neoliberalism.
The European Divide: It may seem odd to need this post in a website that is devoted to ordoliberalism. I was quite surprised that the title was not already taken. But the fact remains that it is a foreign concept for English-speaking peoples. I include in this the land of my birth, Britain, with its Thatcherite influence and the USA with its Reaganomics, as well as all other English-speaking countries, the main ones being Australia, New Zealand, Canada and South Africa, all with strong monotenural home ownership traditions.
The ordoliberal association with Germanic cultures has created a north-south gulf in Europe – and I include with Germanic even the more tenuous ordoliberalism of Sweden, Denmark (including Greenland), Finland, the Netherlands (Norway and Iceland are exceptions, neither of which are in the EU). None of these have local banks (see the post on German Ordoliberalism). Germanic cultures covers a huge area and it is all in northern Europe, including some of the most dynamic economies in Europe. It is interesting to note that one of the most famous sociologists ever is Max Weber and that he wrote about the Protestant Ethic and the Spirit of Capitalism, originally published in 1905.
It does not surprise me in the least that it is among Mediterranean countries – from Portugal through Spain, Italy, Greece, and Cyprus – where the euro is in crisis. That crisis is also spreading to many ex-Warsaw Pact countries, hungering after material living standards long denied them by the USSR and also excluded from aid from the Marshall Plan. The same goes for some countries that kept armed neutrality after the cold war ended, like Yugoslavia, though not Sweden.
France was always a borderline case for me, resolved in the recent book by Jane Ball Housing Disadvantaged People: insiders and outsiders in French Housing (Routledge, 2011). I discuss this here.
Ordoliberalism: a general introduction (Wikipedia). The original ordoliberals were German and fled to Switzerland when Hitler came to power. After the war their ideas formed the basis of the German social market, under Konrad Adenauer and then under his successor Ludwig Erhard in 1963, who drawing on his ordoliberal advisors (notably Alfred Müller-Armack) was responsible for the German Economic Miracle, or Wirtschaftswunder, experienced by Germany and Austria after the war.
Ordoliberalism remained influential between the 1920s and the 1970s. It was based on liberalism but taking advantage of political order (hence the name ordoliberalism). But since the 1980s we have witnessed the re-born dream of a free market, with minimal state involvement.
As the wikipedia page on Ordoliberalism puts it:
“Ordoliberal theory holds that the state must create a proper legal environment for the economy and maintain a healthy level of competition (rather than just “exchange”) through measures that adhere to market principles. This is the foundation of its legitimacy. The concern is that, if the state does not take active measures to foster competition, firms with monopoly (or oligopoly) power will emerge, which will not only subvert the advantages offered by the market economy, but also possibly undermine good government, since strong economic power can be transformed into political power.“
Reaganomics and Thatcherism both comprise an attempt to return to the dream of the free market. It is not entirely free however, even then. Far from it, some laws and legislation are always needed. This is especially true of the need for police and for army to maintain control and minimise petty crime and organised crime. The Night-watchman state is based on a list of desirable state-provided services – a desiderata that varies in length depending on ideological preference: In the Wikipedia item on the Night-watchman state the desiderata may include many items:
“A night-watchman state, or a minimal state, is variously defined by sources. In the strictest sense, it is a form of government in political philosophy where the state‘s only legitimate function is the protection of individuals from assault, theft, breach of contract, and fraud, and the only legitimate governmental institutions are the military, police, and courts. In the broadest sense, it also includes various civil service and emergency-rescue departments (such as the fire departments), prisons, the executive, the judiciary, and the legislatures as legitimate government functions.”
This can be extended to privatisation of welfare, education and all other public services, including transport, like rail and bus. These privatisation waves, too, come and go as the dance of neoliberalism and ordoliberalism retreats and advances. Sweden, as usual, is a latecomer to this wave, but it is also one of the first to realise its mistake and pull back. An important part of this is the strength of feminist movements in all the Scandinavian countries.
For the Swedish wirtschaftswunder see the Wikipedia item on Tage Erlander, prime minister from 1946-1969, combining both the laying of the foundations of the welfare state and continuing armed neutrality. The Wikipedia item continues:
“In foreign policy, he initially sought an alliance of Nordic countries, but without success, instead maintaining strict neutrality while building up among the most impressive armed forces in the world (surpassed only by the United States, the Soviet Union and Israel in terms of per-capita spending), making the Swedish Air Force the third largest in the world, while ultimately rejecting nuclear capability, signing the nuclear non-proliferation treaty in 1968. Erlander’s mandate coincided with the post-World War II economic expansion, in Sweden known as the record years, in which Sweden saw its economy grow to one of the ten strongest in the world, and subsequently joined of the G10.”
Yet the three predominantly German-ophone countries of Germany, Austria and Switzerland have always been at the heart of the European social market. This is something that British critics of Germany are reluctant to recognise.