rest on marginalism, the Ôsocial marketÕ model that underpins GermanyÕs economic success since 1945 draws on a much richer tradition of political economy that includes many elements of Catholic Social Thought.11 Against both liberalism and Marxism, this tradition has sought to fuse ideas of the common good and human flourishing with new institutions in order to entan- gle the operations of both state and the market in the skeins of interpersonal relationships. This offers an important alternative to KeynesÕ political econ- omy, which did not sustain the post-war trentes glorieuses precisely because it lacked the ideas and institutions that made Germany a continual success, as Maurice Glasman has argued.12
There is much that other Western countries can learn from the German model, in particular the importance of regional banks for channelling capital into productive activities and thereby involving it in longer-term investment rather than letting it roam around in search for short-term speculative profit; sector-specific arrangements such as wage bargaining and guild-like licenses to diversify the economy; vocational institutions to preserve and renew knowledge, trust and innovation, as well as to provide alternative avenues for labour market entry; a proper governance model for firms to broker coopera- tion out of the conflicts between the management and workers by allowing co-determination and workersÕ representation on company boards, plus the importance and honouring of place in terms of tradition and ethos.13
However, GermanyÕs economy involves a compromise between Catholic Social Thought and ordo-liberalism. Faced with the crisis of laissez-faire lib- eralism in the Great Depressions of 1873Ð1896 and 1929Ð1932, ordo-liberals argued for a much stronger role of the state in ensuring that market competi- tion produces outcomes that are both efficient and equitable. The state should enforce central regulations that create the conditions (Rahmenbedingungen) for free and fair competition in the marketplace, on the debatable assumption that where these prevail, they will automatically tend in the direction of equity and fair reward. Indeed, ordo-liberals assumed that a more genuinely post- feudal market would perforce be a fairer one, less intrinsically tending towards inequality.14 This follows Wilhelm RšpkeÕs illusory view that the grosser tendencies to inequality within a market system were but the result of a feudal hangover.15 But in reality, capitalism relies upon, augments and de- ethicises pre-capitalist inequalities. Over time, and at an increasing distance from Nazi dirigisme and the exigencies of warfare, it is largely because of these incorrect assumptions that ordo-liberalism, becoming since the early 1980s evermore convergent with neo-liberalism pure and simple, has shifted GermanyÕs Ôsocial marketÕ economy away from the pursuit of the common
good towards the defence of the combined interests of the largest players in the private and public sectors.
The ordo-liberal version of a Ôsocial marketÕ combines bureaucratic state control with an amoral economy that does not, after all, ÔautomaticallyÕ share the proceeds of export-led growth with ordinary workers, whose real incomes have stagnated for much of the past fifteen years since the introduction of the euro.16 These and other market failures are partially compensated by rational- ised welfare and a significant role of the state in the economy.
It is, nonetheless, true that the German model still differs fundamentally from Anglo-Saxon capitalism that fuses a Benthamite utilitarian ethic with Rawlsian political liberalism. By contrast, ordo-liberalism weaves together a Kantian ethics of context-less duties with Weberian rationalist (and sternly amoral) statecraft and Bismarckian welfarism: strict rules, multiple layers of bureaucracy, and a Prussian desire for more efficient and quasi-military management of civilian populations thereby become evermore the order of the day.
At its core, this compound combines a large measure of Kantian formalism with a dose of Schmittian decisionism. Thus it dictates rules to the rest of the Eurozone based on the heinousness of national debt allegedly arising from fiscal profligacy and over-consumption (when in reality it was largely to do with a credit bubble, a heavily indebted private sector and reckless financial speculation).17 Meanwhile, it regards itself as a justified exception by virtue of its effective economic sovereignty, and, so, as uniquely permitted to run a persistent current account surplus sustained by domestic under-consumption (because of stagnating real wages and lack of investment), which in a different way is equally damaging. For this surplus, which amounts to over €250 billion per year or 8 per cent of national output, neither benefits ordinary German workers, nor is re-invested in the peripheral countries or even at home. In fact, the surplus was a cause of the crisis and is an obstacle in resolving it. Before the 2008 crash, it fuelled the irresponsible lending by German banks to Ireland and the southern Eurozone members, above all Greece. Since then GermanyÕs depressed domestic demand (through excessive wage restraint) is exporting deflation to the heavily indebted countries, thus deepening their debt problems.
It follows that GermanyÕs export mercantilism is largely responsible for the balance of payments crisis, which is the true reason for the Eurozone turmoil.18 The combined banking and sovereign debt problem was mostly a consequence of the trade imbalances between the Euro countries and uncontrolled financial flows between banks (within the Euro-area and between the Eurozone and the United States)19 Ð combined with the influx of substantial savings from emerging markets (especially in East Asia). Therefore, debt was the result of other structural trends Ð not the original cause of the Eurozone
AQ: Òecon- omyÓ per- haps in the phrase Ôas a performing well of the economic moreÕ? Please check.
crisis that is now undermining the remnants of the social market model. Moreover, GermanyÕs export-led growth and persistent surplus cannot be adopted by the rest of the Eurozone or the Union as a whole because most Euro or EU members trade more with each other than with the rest of the world, which inevitably involves deficits; not all countries within a trading and monetary union can run a surplus at the same time.20 Thus the current version of the German social market economy runs against the interests of European workers, including those in Germany itself.
Whereas the social market economy tends to restrict the role of the state to providing a legal framework for the supposedly neutral operation of competi- tion in pursuit of abstract wealth, the Ôcivil economyÕ alternative requires that the state assist in crafting a different sort of market altogether.21 The purpose of a Ôcivil marketÕ is not to engender growth as a purely quantitative sum, but the real wealth of human flourishing in every dimension Ð which dictates an imperative to a different sort of ÔincreaseÕ. If such real wealth be pursued, then the first aim of all economic activity must be social benefit, with accept- able rates of profit related to such benefit, in terms of both proportion and rates of successful achievement. Accordingly, state promotion of economic development naturally includes at its heart an encouraging and rewarding of virtuous behaviour. From our post-liberal perspective, the latter is best understood not as a sort of moral addendum to purely economic activity, but rather a performing well of the economic construed to be the securing and distributing of human consumable and renewable benefit, as we argue in the following sections.