Theme: Incentives

Curt Doolittle updated his status.

THOUGHTS ON THE GERMAN POSTWAR THEORY: ORDOLIBERALISM

—“Is ordoliberalism an effective economic theory in your opinion? Why/why not?”—
https://en.m.wikipedia.org/wiki/Ordoliberalism

THE CORRECT ANSWER

Ordoliberalism refers to the state-private alliance used by Germans after world war two. The premise is for the state to extend the market such that it provides desired goods and services rather than to take over the market for the production of goods and services.

Ordoliberalism (geramn) differs from classical liberalism (anglo) just as continental law (german/french) differs from common law (anglo), in that the anglo seeks to suppress the state’s interference in the market (optimistic), and the german seeks to guard and manage the market (pragmatic to pessimistic).

The anglo model is Imperial and expansionist (seizing all growth opportunities), and the german is domestic (maximizing known wants).

The principle issue here is (a) demographic and (b) cultural. You can only conduct the german model with a martial (professional) bureaucracy and very honest people (farming). You can only conduct the anglo model when innovation is accessible (sail, piracy, conquest).

So again, there is no ‘best’ model of government, there are only organizations that satisfy wants, needs, and exploit opportunities.

The german postwar model was somewhat like the Chinese postwar model, and that is when you are ‘behind’ and want to ‘catch up’ it is a problem of organization. When you are ‘ahead’ and want to ‘stay ahead’ it’s a problem of innovation. The german model would be ‘bad’ for imperial purposes, and ‘good’ for postwar purposes.

Germans are unique because of superior and homogeneous genetics, superior political culture due to lack of a central state, superior culture due to mastering craftsmanship for production of quality products, and the professionalization of the bureaucracy in imitation of Frederick the Great – and the subsequent investment in technical education that allowed Germany to produce the scientific (rather than British empirical) revolution – from which the postwar era has so soundly benefitted. In other words, the Germans and the Japanese both pursued superior export goods as a postwar strategy – and they COULD because of genetic(demographic) and cultural superiority. This is not a strategy all peoples can pursue – they lack the genetics, culture, and institutions to do so.

As I’ve said repeatedly, and will continue to, the primary economic advantage any culture can seek is demographic. This will exacerbate over the next century such that smaller states with superior demographics will constantly outperform larger states with worse demographics. The people you live with have greater influence on your potential than do your abilities.