Raphaël Fèvre, A Political Economy of Power: Ordoliberalism in Context, 1932–1950 (New York: Oxford University Press, 2022), pp. 280, $64 (hardcover). ISBN:9780197607800.

In recent years there has been a minor surge in the literature on German ordoliberalism (see, e.g., Innset 2020; Dold and Krieger 2021; or Dyson 2021). This monograph by Raphaël Fèvre, which evolved from a thesis completed in 2017, adds to this series; its distinctive feature is its focus on the primary sources from the founding generation of ordoliberalism.

The period covered in this investigation ranges from the birth of ordoliberal thought at the depth of the Great Depression and the collapse of the Weimar Republic, over its clandestine blooming during WW II, when some of its major works were written, to the “acme” of its biggest policy success, the transformation of West Germany into an economy modeled on ordoliberal principles, soon followed by the death of two of its leading figures in 1950. Of the book’s dramatis personae, Walter Eucken is the major character, and his main works, in particular the Foundations of Economics, are carefully examined, in some parts almost by chapter and verse. In spite of some elaboration on Wilhelm Röpke’s specific contributions on the moral and sociological foundations of the market economy, his works get a less coherent treatment. Other figures, although important in some regards—e.g., Leonhard Miksch on competition policy, Franz Böhm on the legal framework, Heinrich von Stackelberg on the theoretical foundation of market forms, or Alexander Rüstow on the sociological foundation of liberalism—are awarded only comparably minor roles. In any case, the reader should be warned that these authors are too diverse for easily compressing them into something like an “ordoliberal thought collective.”

A major issue addressed by these ordoliberal writers is neatly summarized as “How was the modern industrialized economy to be endowed with an efficient and yet humane order?” (p. 215). They found a common solution in advocating an order of the economy based on the disempowerment of public and private authorities: that is, of public power as epitomized in an economy governed by central planning, and of private power most visible in the exertion of market power (while other forms were neglected). Thus, the ordoliberal project is aptly characterized as that of a “political economy of power.”

The book is made up of five chapters and an epilogue. The first chapter recounts the ordoliberal narrative of how in the German case, historical liberalism, unable to sustain itself, drifted into an era of interventionism, where eventually the state proved too weak to resist the rising power of cartels and to adjudicate the claims of special interest groups. The ultimate result was the demise of German democracy, the coming to power of the Nazis, and the transition to economic planning.

The second chapter introduces the reader to the philosophical and methodological foundations of Eucken’s project. We learn about his experience of how the private power of vested interests had in the past contaminated the interpretation of German economic history—another example where disempowerment proved indispensable. And, still more crucially, we read how he put forward his approach based on the notion of “order” and of “thinking in orders” as an attempt to solve the battle of methods between theory and history.

The next chapter asks how Eucken’s morphological analysis, the classification of types of economic systems with its two pure forms, the (centrally) administered economy and the exchange economy (subclassified into various market forms), fits into contemporaneous theoretical debates. Concerning the debate on socialist economic calculation, the ordoliberal position is peculiar in stressing the problem of power. Thus, the well-known market solution for socialist calculation would fail not because of the lack of incentives or of knowledge (as Friedrich Hayek would have argued) but because the central authority would not voluntarily abdicate from its position of power. In the controversy on imperfect competition, we see that Eucken eschewed the notion of “perfect competition” in favor of a more practical criterion for the lack of market power, that is, the open entry to markets and the individual firm’s inability to strategically set prices.

The fourth chapter describes how the ordoliberal prescription of a competitive order (with its constitutive and regulatory principles) as a solution for the social question of the day would transform into concrete policies. For closer inspection, we will pick three topics from the many more discussed. The first one is competition policy. Here the ordoliberal recipe is not only the prohibition of cartels but also the regulation of monopolies by a “monopoly office” in order to re-establish the results of what Miksch termed “as-if competition.” Thus, in this field, policy recommendations advanced well beyond a mere framework of rules into the realm of discretion. Second, the author wonders (p. 178) about the fact that Röpke et al. had been ready to embrace expansionist measures at the depth of the German depression in the 1930s but rejected full-employment policies in the postwar era. But this need not be a contradiction. These Keynesian remedies, although appropriate in an emergency, may be regarded as harmful as a permanent feature: as a permanent source of government expenditure, they could distort the price system and thus interfere with the consumers’ direction of the economy. Third, insofar as competition provided freedom to individuals by subjecting them to the anonymous forces of the market, a counterpoise was needed in the moral–sociological sphere. This gave rise to the ordoliberal quest for “spiritual reform” and proved a distinctive feature as compared with other strands of “neoliberal” thought. Yet not all ordoliberals may have shared the conservative, if not anti-modernist, leanings that characterized Röpke’s position in this regard and which—as the author correctly notes (e.g., p. 182)—may have easily proved “uncomformable” with the spirit of competition pervading a market economy.

The fifth chapter observes the ordoliberals’ postwar policies in action. The aim was to make West Germany an example of their type of a “third way” by providing it with a competitive order, distinct from ancient laissez-faire but terminating the continuity of economic planning from Nazi rule well into the postwar years under Allied control. They eventually succeeded by coupling the monetary reform of 1949 with a wholesale liberalization of prices, commonly considered as the driving force of the German economic miracle (although the author cautions against the conventional wisdom of this story).

The epilogue provides a cursory description of what happened to ordoliberalism after the “tipping point” of 1950. Curiously, the book is completely silent on how ordoliberal positions shaped the debate on competition policy in the 1950s, when it was still well and alive, and the author has little to say about the decades of decay that followed, apart from his lucid observation that it proved “a political hit, but an academic flop” (p. 215). There are some scattered critical remarks on the contributions by an “ossified” version of ordoliberalism to the economic policy debates in the aftermath of the euro debt crisis. It is a case of bad luck due to the time that passed from the completion of the thesis in 2017 until today that now—in the face of inflation rates close to double digits—the contention that the Economic and Monetary Union policies are locked in an “iron cage of ordoliberalism” (p. 3) appears to this reviewer less convincing than perhaps at the time of writing.

Summing up, this book distinguishes itself from other works on ordoliberalism by focusing on a narrow time period, from its inception to the year of Eucken’s death, and on the discussion of primary sources, again mostly from Eucken. Although taking account of the historical context of the ordoliberals’ contributions, it is almost exclusively restricted to published writings—we get little biographical information, and little use has been made of the documents prepared for government commissions or of the correspondence between the main figures. It is also awkward that despite the emphasis put on competition policy as a main expedient to realize the aim of curbing private power, the story neglects the ordoliberal endeavors with regard to the first drafts of cartel legislation before 1950 and their role in the debates on cartel and anti-monopoly legislation up to 1958, when the respective law was eventually enacted.

In this vein, there may be some readers whose expectations will be disappointed by this book’s specific approach, but it certainly does not count among the reviewer’s prerogatives to impose his own set of preferences on the author. In any case, anyone interested in ordoliberal thought may be assured that reading this book will provide many illuminating insights. It is a welcome addition to the literature.