Third Way in Germany


Third Way 'in Germany' has been influential on German politics mostly during Gerhard Schröder, while the most of modern German history is influenced by centre-left and centre-right ideologies and politicians, there were times in that Third Way politics influenced the country outside of Schröder.

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

, who coinded the term "social market economy", used the term "Third Way" to describe the social market economy, for Müller-Armack the social market economy was neither libertarian nor socialist. Unlike Ludwig Erhard, he promoted social liberalism, and rejected the term of "Third Way" and also social democracy. Alfred Schüller also rejected the term "Third Way". Franz Oppenheimer, a friend of Erhard, described the social market economy as liberal and socialist, and later published Weder so – noch so. Der dritte Weg where he described the social market economy as a Third Way.

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, 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 hat economic liberalism failed. Before Rüstow also wrote a book with the name "Zwischen Kapitalismus und Kommunismus" which is translated in Between Capitalism and Communism. Ordoliberalism supports configuration of vital resources and progressive taxation. The ordoliberal emphasis on the privatization of public services and other public firms 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.
While ordoliberalism is often compared to Third Way social democracy, there are still differences Both adhere to the idea of providing a moderate stance between socialism and capitalism; the ordoliberal social market model often combines private enterprise with government regulation to establish fair competition, 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 repersents the German form of social liberalism. Röpke later described ordoliberalism as the "First Way". Other ordoliberals continued to see it as a "Third Way", including the likes of Alexander Rüstow. The non-Third Way Erhard is also considered by some as ordoliberal.
Later economists like were influenced by ordoliberalism, however he saw himself more as a classical liberal.

Ordoliberalism and the term Neoliberalism

In the ordoliberal Alexander Rüstow used the term neoliberalism to describe ordoliberalism, later ordoliberalism was often referred as "German neoliberalism", however this led to frequent confusion and mix-ups of terms and ideas in the discourse, due the term was then used for Friedrich August von Hayek and for Milton Friedman and his economic school, the Chicago School of economics, which is against state intervention. Due this, 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.
In the early 2000s both Wilhelm Röpke and Walter Eucken got seen to embrace something called "Soziologischer Neoliberalismus" or "Soziologischer Liberalismus" or also as "Religiös/Humanistisch begründeter Neoliberalismus".
Some people see Friedrich August von Hayek as an ordoliberal, however this theory got criticized due the point that Hayek wasn't against classical liberalism and even saw himself as a classical liberal and that Hayek didn't want to find a "Third Way" like ordoliberals want.

German and American think tanks on ordoliberalism

The Konrad Adenauer Foundation and the Friedrich Naumann Foundation both see ordoliberalism as Third Way. The Konrad Adenauer Foundation also criticized South Korean former President Kim Young-sam for embracing neoliberalism rather than ordoliberalism. The right-libertarian Foundation for Economic Education links ordoliberalism to Bill Clinton's Third Way.

History

1949–1963

In the beginning of the Federal Republic of Germany, the term was not used; however, Konrad Adenauer, the first Federal Chancellor of the Federal Republic of Germany, saw himself as a supported of the Third Way as he rejected Western liberalism and Soviet Communism. Franz Josef Strauss, the Minister-President of Bavaria from 1978 until 1988, also embraced the Third Way.

1969–1974

The first SPD chancellor of Germany Willy Brandt is considered to be a supporter of the Third Way by Konrad Sziedat, who argued that like Gerhard Schröder and Tony Blair he was for a third way between capitalism and socialism. Brandt saw himself as a democratic socialist.

1982–1983

During his first cabinet, Helmut Kohl advocated for ordoliberal economic policies and reforms; however, he later supported Keynesian economic policies mixed with neoliberal ones. At the time when he was the chancellor candidate for the CDU in 1983, he was influenced by Ludwig Erhard and also by Alfred Müller-Armack. Otto Graf Lambsdorff, Federal Economic Minister at that time, was an ordoliberal, which also embraced market liberalism.

1998–2005

Schröder is the most known German that embraced the Third Way. He called his variant "Neue Mitte" and later wrote together with Blair a paper about the Third Way, which has three different names. They called on Europe's centre-left governments to cut taxes, pursue labour and welfare reforms, and encourage entrepreneurship. The joint paper said European governments needed to adopt a "supply-side agenda" to respond to globalisation, the demands of capital markets, and technological change. Schröder portrayed himself as a pragmatic new social democrat. Schröder advocated for the economic ideas of Otto Graf Lambsdorff.

Domestic policies

His Agenda 2010 reform programme included cuts in the social welfare system, lower taxes, and reformed regulations on employment and payment. He also eliminated capital gains tax on the sale of corporate stocks and thereby made the country more attractive to foreign investors.

2020s

sees ordoliberalism as an alternative to neoliberalism. Some Alternative for Germany members like Dimitrios Kisoudis and Jurij.C. Kofner are embracing ordoliberalism.

Persons

  • Alfred Müller-Armack
  • Franz Oppenheimer
  • Alexander Rüstow
  • Wilhelm Röpke
  • Konrad Adenauer
  • Franz Josef Strauss
  • Willy Brandt
  • Otto Graf Lambsdorff
  • Helmut Kohl
  • Gerhard Schröder