Ordo Liberalism

The Ordo Liberalism as Source of Institutions

An important tradition in law Opens in new window and economics Opens in new window that focused on institutions Opens in new window is the Freiburg School, sometimes also called the German ordo liberal school.

Ordo liberalism (also known as the Freiburg School) refers to a specifically German tradition that began in the 1920s and 1930s. It attributed the economic (and political) failures of the Weimar Republic to interest-group-driven political rent-seeking and the government’s tolerance of the closure of markets to competitors.

Ordo liberalism was inspired for decades by Walter Eucken and Franz Böhm, who showed the deleterious effects of the decay of the basic rules of competition in the Weimar Republic (1919-1933) and Nazi Germany.

They adapted the basic institutions described by the Scottish philosophers to modern industrial mass society with multi-party democracy, self-seeking bureaucracies and organized interest groups.

The ordo liberals recommended that the key institutions Opens in new window that the Scottish Enlightenment Opens in new window had identified (private property, freedom of contract, rule of law) be supplemented by an active defense of competition by government to counter the influence of the opportunism of political parties, organized groups, and bureaucratic egotism. They also demanded that policy should help to create stable expectations and desist from stop-go policies.

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