Third Way in Germany is a political doctrine that has been influential in German politics mostly during the chancellorship of Gerhard Schröder. While most of modern German history has been influenced by centre-left and centre-right ideologies and politicians, there have been times outside that chancellorship when Third Way politics have influenced the country.
Background During World War II, economists tried to find a third way between capitalism and socialism. The results were social market economy and ordoliberalism.
Social market economy Alfred Müller-Armack, who coined the term "social market economy", used the term "Third Way" to describe the social market economy; for him, the social market economy was neither libertarian nor socialist.Alfred Müller-Armack: Stil und Ordnung der Sozialen Marktwirtschaft (1952). In: Alfred Müller-Armack: Wirtschaftsordnung und Wirtschaftspolitik. Studien und Konzepte zur Sozialen Marktwirtschaft und zur Europäischen Integration. Rombach. Freiburg i. B. 1966, S. 242.Alfred Müller-Armack: Stil und Ordnung der Sozialen Marktwirtschaft (1952). In: Alfred Müller-Armack: Wirtschaftsordnung und Wirtschaftspolitik. Studien und Konzepte zur Sozialen Marktwirtschaft und zur Europäischen Integration. Rombach, Freiburg i. B. 1966, S. 236. Unlike Ludwig Erhard, he promoted social liberalism,Erhard, L., Franz Oppenheimer, dem Lehrer und Freund (1964), in: Hohmann, K. (ed.), Ludwig Erhard. Gedanken aus fünf Jahrzehnten, Reden und Schriften, Düsseldorf/ Vienna/ New York, 1988b, p. 861. and rejected the term "Third Way" and also social democracy.Regarding the influence of Oppenheimer on Erhard, see Wünsche, H. F., Der Einfluss Oppenheimers auf Erhard und dessen Konzeption von der Sozialen Marktwirtschaft, in: Caspari, V.; Schefold, B. (eds.), Franz Oppenheimer und Adolph Lowe, Zwei Wirtschaftswissenschaftler der Frankfurter Universität, Marburg, 1996, pp. 141-161; Haselbach, D., Franz Oppenheimer's Theory of Capitalism and of a Third Path, in: Koslowski, P. (ed.), The Theory of Capitalism in the German Economic Tradition. Historism, Ordo-Liberalism, Critical Theory, Solidarism, Berlin et al., 2000, pp. 54-86. Alfred Schüller also rejected the term "Third Way".Alfred Schüller stellt Freie Marktwirtschaft und Soziale Marktwirtschaft als Formen des Ersten Weges der zentral geplanten Sozialverwaltungswirtschaft als Zweitem Weg und dem Marktsozialismus (wozu Schüller auch den Wohlfahrtsstaat zählt) schließlich als Dritten Weg gegenüber. Schüller verweist dabei auf Wilhelm Röpke, der zeitweilig zwar von einem Dritten Weg sprach, sich später jedoch von dieser Bezeichnung nachdrücklich distanzierte. Alfred Schüller: Soziale Marktwirtschaft und Dritte Wege. In: ORDO – Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft. Band 51. Lucius & Lucius, Stuttgart 2000, S. 169–202. Franz Oppenheimer, a friend of Erhard, described the social market economy as liberal and socialist,Oppenheimer, F., System der Soziologie (III/1). Band 3: Theorie der reinen und politischen Ökonomie, Teil 1: Grundlagen, Jena, 1910, p. 9. The economist Franz Oppenheimer (1864–1943) also published his economic conception in Sprung über ein Jahrhundert, Bern/ Leipzig, 1935 under the pseudonym F. D. Pelton. and later published Weder so – noch so. Der dritte Weg (1933) ("Neither that way nor that way. The third way") in which he described the social market economy as a Third Way.Oppenheimer, F., Weder so – noch so. Der dritte Weg, Potsdam, 1933.
Konrad Adenauer Foundation on the social market economy
The Konrad Adenauer Foundation described the social market economy as a Third Way.
Ordoliberalism The Freiburg school embraced the social market economy and developed their own variant of liberal economic thought called "ordoliberalism" by in 1950. In Civitas Humana (1947), ordoliberal Wilhelm Röpke saw ordoliberalism as liberal conservatism against capitalism. While not part of the Freiburg school, Alexander Rüstow influenced ordoliberalism and wrote in Das Versagen des Wirtschaftsliberalismus (1950) ("The breakdown of economic liberalism") that economic liberalism had failed. Rüstow had previously also written a book entitled "Zwischen Kapitalismus und Kommunismus" ("Between capitalism and communism").Zwischen Kapitalismus und Kommunismus, 1949. Ordoliberalism supports the configuration of vital resources and progressive taxation. The ordoliberal emphasis on the privatization of public services and other public companies such as telecommunication services, and wealth redistribution and minimum wage laws, as regulative principles makes clear the links between this economic model and the social market economy. Philipp Ther defined ordoliberalism as the "combination of neoliberalism with a welfare state" and the combination of "promarket liberalism with a regulatory welfare state".
While ordoliberalism is often compared to Third Way social democracy, they differ. Both adhere to the idea of a moderate stance between socialism and capitalism; the ordoliberal social market model often combines private enterprise with government regulation to establish fair competition (although German network industries are known to have been deregulated), whereas advocates of the Third Way social democracy model have been known to oversee multiple economic deregulations. The Third Way social democracy model has also foreseen a clash of ideas regarding the establishment of the welfare state, in comparison to the ordoliberal's idea of a social market model being open to the benefits of social welfare. Despite this, it is still often seen as a third way between collectivism and classical liberalism. Ordoliberalism represents the German form of social liberalism. Ordoliberals advocated for their own variant of supply-side economics; ordoliberals also embrace monetarism.So etwa Helmut Kohl in einer Regierungserklärung 1983. Hermann Adam: Von der Inflationsphobie bis zur „schwarzen Null". In: Wirtschaftsdienst. Band 2016, Nr. 7, 2016, S. 492–500 (wirtschaftsdienst.eu [retrieved 20 October 2021]).Zur Abgrenzung der „Amerikaner" von den sozialpolitischen Grundfesten der Bundesrepublik Deutschland s. auch Michel Foucault: Die Geburt der Biopolitik. Geschichte der Gouvernementalität II. Vorlesung am Collège de France 1978–1979. Frankfurt am Main 2006, S. 205 f. Röpke later described ordoliberalism as the "First Way".Röpke, Wilhelm (1951). Die Lehre von der Wirtschaft, Erlenbach-Zürich [The teaching of the economy, Erlenbach-Zürich] . pp. 56–59. Other ordoliberals continued to see it as a "Third Way", including Alexander Rüstow. The non-Third Way Erhard is also considered by some as ordoliberal, because he integrated ordoliberal ideas into the concept of a social market economy. Erhard was rather inclined to Walter Eucken's ordoliberal competitive market order, though. Although he even considered himself an ordoliberal later, Erhard perceived Röpke's books as works of revelation, and considered him a brother in spirit. On 17 August 1948, Erhard referred to Müller-Armack, who greatly impressed him, most of all not as a theorist but as one who wanted to transfer theory into practice.Erhard, L., Deutsche Wirtschaftspolitik – Der Weg der Sozialen Marktwirtschaft, Düsseldorf/Vienna/New York/Moscow, 1992 (originally published in 1962), p. 592.Hentschel, V., Ludwig Erhard – Ein Politikerleben, Berlin, 1998, pp. 75-78.Hentschel, V., Ludwig Erhard – Ein Politikerleben, Berlin, 1998, p. 25. The FDP 1977 Kiel Theses and 1985 Liberal Manifesto returned the FDP towards its traditional free-market, ordoliberal approach, even while former chairmen were more proponents of social liberalism or only of the social market economy.Frank B. Tipton, A History of Modern Germany since 1815 (2003) 596-99
While the ordoliberals had close contact with Carl Friedrich Goerdeler, who was a proponent of laissez-faire capitalism,Rothfels, Hans (1961). The German Opposition To Hitler. London: Oswald Wolff. ISBN 0854961194 ordoliberalism rejects laissez-faire economics. Besides, Goerdeler is regarded as a forerunner of the social market economy due to his contact with various ordoliberals; however the social market economy also rejects laissez-faire economics.
Later economists like were influenced by ordoliberalism; however he saw himself more as a classical liberal.
Ordoliberalism and the term Neoliberalism The ordoliberal Alexander Rüstow used the term neoliberalism to describe ordoliberalism: this was one reason why ordoliberalism was often later referred to as "German neoliberalism"; however this led to frequent confusion and mix-ups of terms and ideas in the discourse, as the term was then applied to Friedrich August von Hayek and to Milton Friedman and his economic school, the Chicago School of economics, which is against state intervention. Thus debate and criticism of both economic schools accured. In 1991 political economist Michel Albert published Capitalisme Contre Capitalisme, and in 2001 Peter A. Hall and David Soskice published Varieties of Capitalism, and both separated the concepts and developed the new terms "liberal market economy" and "coordinated market economy" to distinguish neoliberalism and ordoliberalism.Taylor C. Boss, Jordan Gans-Morse: Neoliberalism: From New Liberal Philosophy to Anti-Liberal Slogan. In: Studies in Comparative International Development. Band 44, Nr. 2, 2009, ISSN 0039-3606, S. 150, doi:10.1007/s12116-009-9040-5.Andreas Renner: Die zwei Neoliberalismen. In: Fragen der Freiheit. Nr. Heft 256, October/December 2000.Peter Ulrich: Zivilisierte Marktwirtschaft. Eine wirtschaftsethische Orientierung. Haupt, Bern / Stuttgart / Wien 2010, S. 155.
In the early 2000s both Wilhelm Röpke and Walter Eucken were seen as embracing something called "Soziologischer Neoliberalismus" or "Soziologischer Liberalismus" or also as "Religiös/Humanistisch begründeter Neoliberalismus".Wilga Föste: Grundwerte in der Ordnungskonzeption der Sozialen Marktwirtschaft. Metropolis-Verlag, Marburg 2006, ISBN 3-89518-576-0, S. 147.Andreas Renner: Die zwei Neoliberalismen. In: Ingo Pies, Martin Leschke: Walter Euckens Ordnungspolitik. Mohr Siebeck, Tübingen 2002, ISBN 3-16-147919-X, S. 176. The non-ordoliberal Hans-Dietrich Genscher favoured a classical neoliberalism but with social aspects.