Entrepreneurship, knowledge and employment

Ordoliberalism, State and Employment

Ozgur Erdem , Dokuz Eylül Üniversitesi, Turkey
Yukcu Onur, Dokuz Eylul University

Although its roots go back to the 1930s, ordoliberalism, or German neoliberalism, characterized post WWII German economic policies. Well-known features of ordoliberalism are strong opposition to anti-competitive practices -private or state monopolies- and the role assigned to the state as the protector of competitive market. Distorted or limited competition results in exploitation of masses according to ordoliberals. Altough they agree on the role of the state in providing a competitive environment, we know that prominent names of ordoliberal thought such as Walter Eucken and Alfred Müller-Armack, both being major designers of post WWII German economy, had different views on the role of the state in the labor market. For Eucken, price stability had to be the basic aim of macroeconomic policies and policies toward full-employment had a potential of distorting price signals which were vital for the proper functioning of a competitive market. Müller-Armack, on the other hand, was in favor of a redistributive welfare state. He agreed with the importance of competitive markets, while perceiving full employment as one of the basic aims of macroeconomic policies. Another prominent ordoliberal, Röpke maintained that mass unemployment can be destructive for the society yet overemphasis on full-employment might result in stagflation. Insisting on full-employment, for Röpke, could discourage risk taking and innovative entrepreneurial activity. Ordoliberals perceived the state intervention as a precondition for a well-functioning liberal economy, but the differences in their views on policies regarding employment need to be examined more carefully to locate their position among liberal schools of thought. This paper questions the effects of their active state intervention policies -to the operation of markets- on the labor market. To put it differently, it aims at discussing the place of labor market in the “social market economy”.

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Keywords: Ordoliberalism, employment, labor market, state

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