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Third Way in Germany

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Not to be confused with Third Way (Germany).
(from left to right, top to bottom) Konrad Adenauer, Willy Brandt and Gerhard Schröder were affiliated with the Third Way movement 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

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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

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Alfred Müller-Armack, 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.[1][2][3] Unlike Ludwig Erhard, he promoted social liberalism,[4] and rejected the term of "Third Way" and also social democracy.[5][6][7] Alfred Schüller also rejected the term "Third Way".[8] Franz Oppenheimer, a friend of Erhard, described the social market economy as liberal and socialist,[9] and later published Weder so – noch so. Der dritte Weg (1933) where he described the social market economy as a Third Way.[10]

Konrad Adenauer Foundation on the social market economy

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The Konrad Adenauer Foundation described the social market economy as a Third Way.[11]

Ordoliberalism

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The Freiburg school embraced the social market economy and developed their own variant of liberal economic thought called "ordoliberalism" by Hero Moeller [de] in 1950.[12] 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) 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.[13] Ordoliberalism supports configuration of vital resources and progressive taxation.[14] The ordoliberal emphasis on the privatization of public services and other public firms such as telecommunication services,[15] and wealth redistribution and minimum wage laws as regulative principles makes clear the links between this economic model and the social market economy.[16][17] Philipp Ther defined ordoliberalism as followed "combination of neoliberalism with a welfare state" and the combination of "promarket liberalism with a regulatory welfare state".[18]

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 (although German network industries are known to have been deregulated),[15] 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.[19] Despite this, it is still often seen as a third way between collectivism and classical liberalism.[20] Ordoliberalism repersents the German form of social liberalism.[21] Ordoliberals advocated for there own variant of supply-side economics, ordoliberals also embrace monetarism.[22][23][24] Röpke later described ordoliberalism as the "First Way".[25] Other ordoliberals continued to see it as a "Third Way",[26][27][28][29][30][31][32][33] including Alexander Rüstow.[34] The non-Third Way Erhard is also considered by some as ordoliberal, due the fact that he integrated ordoliberal ideas into the concept of a social market economy.[35][36][37] 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 the economist a brother in spirit. On 17 August 1948, Erhard referred to Müller-Armack by whom he was strongly impressed most of all not as a theorist but as one who wanted to transfer theory into practice.[38][39][40] 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 social market economy.[41][42]

Later economists like Roland Baader [de] were influenced by ordoliberalism, however he saw himself more as a classical liberal.[43][44]

Ordoliberalism and the term Neoliberalism

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In the ordoliberal Alexander Rüstow used the term neoliberalism to describe ordoliberalism,[45] 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.[46][47][48]

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".[49][50] The non-ordoliberal Hans-Dietrich Genscher was for a clasical neoliberalism but with social aspects.[51]

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.[52][53][54][55][56][57][58][59][60][61][62][63][64][65]

German and American think tanks on ordoliberalism

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The Konrad Adenauer Foundation and the Friedrich Naumann Foundation both see ordoliberalism as Third Way.[66][67] The Konrad Adenauer Foundation also criticized South Korean former President Kim Young-sam for embracing neoliberalism rather than ordoliberalism.[68] The right-libertarian Foundation for Economic Education links ordoliberalism to Bill Clinton's Third Way.[69]

History

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1949–1963

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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.[70]

1969–1974

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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.[71] Brandt saw himself as a democratic socialist.[72][73]

1982–1983

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Main article: First Kohl cabinet

During his first cabinet, Helmut Kohl advocated for ordoliberal economic policies and reforms; however, he later supported Keynesian economic policies mixed with neoliberal ones.[74][75][76][77][78][79] 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.[80] Otto Graf Lambsdorff, Federal Economic Minister at that time, was an ordoliberal, which also embraced market liberalism.[81]

1998–2005

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Schröder is the most known German that embraced the Third Way.[82] He called his variant "Neue Mitte" and later wrote together with Blair a paper about the Third Way, which has three different names (Schröder-Blair-Papier, Der Weg nach vorne für Europas Sozialdemokraten. and Europe: The Third Way/Die Neue Mitte). 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.[83][84][85] Schröder portrayed himself as a pragmatic new social democrat.[86] Schröder advocated for the economic ideas of Otto Graf Lambsdorff.[77] The Seeheimer Kreis supported Schröders policies.

Domestic policies

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His Agenda 2010 reform programme included cuts in the social welfare system (national health insurance, unemployment payments, and pensions), 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.[87]

2020s

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Sahra Wagenknecht sees ordoliberalism as an alternative to neoliberalism.[88][89] Some Alternative for Germany members like Dimitrios Kisoudis and Jurij.C. Kofner are embracing ordoliberalism.[90][91] The AfD member Markus Frohnmaier is for economic liberalism with social welfare but only for germans, he calls this concept "Volkskapitalismus".[92][93][94][95]

Persons

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See also

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References

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  1. ^ 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.
  2. ^ 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.
  3. ^ "Making sure you're not a bot!" (PDF). www.econstor.eu. Retrieved 2026-03-01.
  4. ^ 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.
  5. ^ 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.
  6. ^ "Ludwig Erhard's social market economy - a liberal, not a social democratic concept | Institute of Economic Affairs". Archived from the original on 2016-04-15. Retrieved 2026-03-01.
  7. ^ "A German Approach to Liberalism? Ordoliberalism, Sociological Liberalism, and Social Market Economy | Cairn.info".
  8. ^ 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.
  9. ^ 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.
  10. ^ Oppenheimer, F., Weder so – noch so. Der dritte Weg, Potsdam, 1933.
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  13. ^ Zwischen Kapitalismus und Kommunismus, 1949
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