Ordoliberalism within Neoliberalism

Jane Ball recently published a post in this blog: Is France Ordoliberal? France has always been a country that I have wondered over whether it was, or was not, ordoliberal. It seems it has elements of ordoliberalism. Jane Ball’s post was very interesting and helped me to  see that this may not be an either/or choice. This was first developed in her groundbreaking book Housing Disadvantaged People? insiders and outsiders in french social housing. (Routledge, 2012).

A rather similar development came in Robert Ledger’s article on Britain “Converging and Conflicting Terms: Neo-liberalism, Thatcherism and Market Fundamentalism”. The article is too long to include in a post but the abstract is as follows:

ABSTRACT: Thatcherism has come to denote a coherent, if contested, doctrine. It is often seen as an ideological project closely associated with neo-liberalism. The latter term has drifted from a moderate revision of classical liberalism at the Freiburg School in the 1930s to the more austere Friedmanite strand of the 1970s and latterly to encompass a broader Hayekian or Austrian ‘market fundamentalism’. Thatcherism converged only partially with neo-liberalism in its Chicago School version and several examples show how markets were created by the state, often for political purposes. Financial deregulation also acted as a catalyst in the acceleration of globalisation. Although the influence of Hayek is prevalent in some policies, the generalized use of neo-liberalism today as a market fundamentalist ideology, is not appropriate when describing the Thatcher government. This is because of its political and nationalist dimensions, as well as neglect of micro-economic themes.

Jane has brought another book to my attention, on a similar theme. It seems the issue is in the air, so to speak.

Institutional Economics in France and Germany: German Ordoliberalism versus the French Regulation School  (Editors: Agnes Labrousse and Jean-Daniel Weisz) published by Springer (2000).

I would like to read this book but buying it is too expensive, something like SEK 1,500, so it will have to wait until I can get hold of a used copy at a price I can afford. Here is a synopsis:

German Ordoliberalism and French Regulation theory, two institutionalist theories born in different national contexts, show striking convergences and complementarities. Based on an original comparison, Institutional Economics in France and Germany analyses the basic concepts, the development and the present relevance of both schools, the way they deal with the crucial methodological issue of complexity and with transformation in post-socialist Europe. It underlines the specificity and fruitfulness of these European approaches to institutional economics, often unfortunately ignored in the English-language literature. Written by leading scholars, this book is a clear presentation of both theories, with numerous illustrations and in-depth analysis of recent research developments. This theoretical, methodological and thematic comparison raises central issues in the growing field of socioeconomic and institutionalist theory.

Another book that is of interest is an updated issue of Why So Different? (edited by Bo Bengtsson and Hannu Ruonavaara: Varför så olika?) which tries to understand the very wide housing tenure differences between Nordic countries. The Nordic countries are otherwise relatively homogeneous with strong welfare states. I have not read this book yet but had a quick flick through the chapters, especially the chapter on Iceland, which has seen an increase in rental housing.

Why so Different shows two important and in part contradictory trends. The first is the subprime mortgage crisis. I have been waiting for this for many years. The fixation on increasing home owership by encouraging low income earners to buy bottom of the market housing at a premium that represents a price that is totally unsustainable in the longer run. So when the boom turns to bust the bottom of the low-income housing market quite simply falls out, leaving many buyers with enormous debts to finance at impossible cost. Widespread abandonment is one result, most marked in cities like Chicago. The production of cars is another aspect (see the post on this: https://ordoliberalism.wordpress.com/2014/05/18/neoliberalism-and-the-automobile-industry/.

We are now into the 6th year of the subprime mortgage recession, and even if the next boom climaxes soon (as seems likely) the bust will follow as night follows day. The roller-coaster of boom-bust is then repeated, bringing a new generation of subprime mortgagees into the same carousel while the previous generation of ex-buyers are still struggling in rental housing.

But the most important for me is that I have, myself, indicated how Swedish ordoliberalism becomes ever more compromised as we enter deeper into a neoliberal era, such as we are in now. I made this point in the very first post of  this blog on German Ordoliberalism, pointing out that Swedish ordoliberalism has moved in the same direction.

It is clear to me that in a neoliberal era ordoliberal ideas and approaches become ever more diluted. The latest dilution in Sweden is seen in the Social Democrats new government under Stefan Lövfen. The ground lost by each compromise is never likely to be regained more than in part, until this particular cycle of neoliberalism ends in disillusion and is abandoned. Reaganomics and Thatcherism will then lose its appeal until the next attempt to create a neoliberal society many decades down the line.

So I am doubly grateful to Robert Ledger and Jane Ball for showing the way in terms of the mix of neoliberal and ordoliberal policies in the UK and France respectively.

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