How does the ‘Ordo-liberal stability culture’ discussed in the article conflict with the

Germany’s commitment to supranational integration in the European Union?

The problem that I will be presenting today is about the ordo liberal stability culture.

Specifically, I will be answering the question “How does the ‘Ordo-liberal stability culture’

discussed in the article conflict with the Germany’s commitment to supranational integration in

the European Union?”

Germany. This is the country that had started from the inside to look powerful from the

outside. This country had held the spotlight of centrality. Upholding the value of centrality,

people tend to put pressure and high expectations to this country. The aftermath of the crisis

that involved the Eurozone made Germany’s ordo liberal principles to outweigh any interest

and concern but not in the supranational governance.

Ordo-liberalism is an outgrowth of the classical liberalism that has originated during the

period of the Nazis, an ideology of an economist from Freidburg. This concept revolves in a view

that deficit spending to manage the demands of the people is unreasonable. It also upholds the

idea that capitalism needs a bold government to establish the rulings to give order or “ordo”, in

Latin, so that free markets can function orderly. This idea established the following notions:

first, when cartels dominate the economy, the state can intervene; second, this policy focuses

on the stability of prices; lastly, the act of enforcing of liability and responsibility. Therefore,

“ordo-liberal” means free order.

This school of thought believes that a strong country should ensure an economy that is

competitive and stands as a regulator of the activities of the state. This implies a very good
framework which will lead us to the merging of the Bismarckan welfare condition resulting to

the social market economy. Combining these ideas is basically about the linkage of capitalism,

labour and public authority. The institutions that command the policy of ordered are the cartel

office, the Bundesbank, the economic ministry, and other councils or supervisory boards.

This policy effect in the Eurozone crisis rests on the focus on financial stability, fiscal

conservatism and adherence to international competiveness. Hyperinflation, in the past, is a

way for Germany to support the monetary targets of their state. Bundesbank played very good

role for this goal.

It is an overarching foreign policy target to integrate with the Eurozone and for the

state’s economic and financial stability targets. There is the need to equalize sound

international relations to sound money control of Germany. The first try at the Economic

Monetary Union, Germany took the economic advantage than a monetary union. This is the

coronation of the EMU. This stands in conflict with its commitment with the supranational

integration.

Before we discuss this ordo liberalism to supranational governance, let us first explain

what supranational governance is. This idea is a spinoff of neo-functionalism. A new wave of

cooperation results to this particular theory. This pushes the idea that there are some sectors in

the policy that has more tendencies to follow the integrative steps. These sectors are those

which have been trading with the other member states because the interests that sustain the

trade should be maintained by the steps for integration. This calls for the support of the
national government of the involved states and the supranational actors. So, we now have the

supranational way of making policies in areas like the internal markets of the states.

Yet, it was added that the member states can control the steps to integrate but only in a

limited reach. When integration has been started, the movements of the supranational actors

may give a new dynamism that can lead to steps that are not anymore controlled by the

member states.

According to Bulmer, the main conflict between Germany’s sound money system and its

commitment to the supranational integration in the European Union is the question “who takes

control of what and of which”. Germany is known for its values especially on notions about

stability.

The real creator of conflict between the state’s sound money versus European

integration is made by the Bundesbank. Therefore, EMS does not stand as a challenge to the

stability culture of Germany. The EMU originally intends to bind the new Germany, reunified,

into integration. Then, the Germans are acting according to the rules of the Maastricht Treaty

where it was appealed to France, Germany’s former archival, to be liberated from being a

policy-taker from the decisions made by the Bundesbank. Because of the said treaty, the

German policy system was lifted to the level of the Eurozone’s control. Heightened in this step

is the entry to the convergence of one currency to establish stable financial system and the

impact of the Bundesbank to the rulings of the European Central Bank.

By making such actions, Germany has said to have instilled the Ordo-liberal principles to

the ECB’s system of policy. Thus, Germany entered and committed to supranational integration
by liberating from the Bundesbank and bringing those principles to the EU. Locally, in Germany,

there is no any tension between the monetary policy and the integration. However, there were

inconsistencies because the act of following of the treaty had led to the surfacing of the pro-

integrationist and Ordo-liberalism. The Federal Chancellor’s Office had seen the possible

challenges of the reunification of Europe, and consequently prevailed. Yet, the Bundesbank and

the Finance were insisting to institutionalise the sound money concerns. As a result, the Ordo-

liberalism coalition becomes fragmented and academic economists are set aside. This is where

the ordo liberalism becomes in conflict with the desire to integrate in terms of supranational

integration. Part of the government of Germany concedes with the idea of supranational

integration but its finance department is against it. The Finance still continued to push their

campaign for their sound money. They are assuming that when Germany will have this sound

finances, the country can stand on its own and preserve their valuing of the ordo liberalism.

On the other hand, while Germany is not in stable commitment, the ECB had its strong

reliant characteristic with the capabilities of the Bundesbank. There is the continuing action to

the fiscal discipline of the new currency by the Stability Growth Pact (SGP) and sustained the

pressure for stability while SGP uploaded the ordo liberal principals in the EU. But, the question

now is: Are all these steps effective and enough to make Germany committed to the

supranational governance?

The conflict in this ordo liberal stability culture of Germany lies within the ruling

government. As it was said, there is no problem with these principles with the Germans. Yet,

the ministers of the Eurozone Finance are in the picture of breaking the rules they had originally
made but them also making the sanctions for their own mistakes. This becomes relevant as the

transgressors become Germany, itself. In the early 2000s, Germany is already in the line of

being fired in contrast with the smaller Portugal and Ireland who also seeks the same recipe of

stability as Germany had taken earlier. However, Germany escaped from it by revising the

policies by the SGP.

For instance, Germany focused on their sound money objective while trying to commit

to the integration because it is impressive that Germany had ensured their sound money

objective, but their performance is far from being impressive. Ordo-liberal principles were

sacrificed domestically. With this, the conflict became graver as gradually, a fiscal crisis had

emerged which could not have happened if they had been faithful with ordo liberalism.

This Ordo-liberalism school of thought is very important to understand Germany’s

foothold in the Eurozone crisis. But, the reality must be differentiated from the rules. European

integration is an idea strongly promoted and safeguarded by the Basic law. But, this same idea

is also the instrument of other people to take advantage of their own held national interests.

So, in a plain picture, Germany upholds ordo liberalism while they pursue their sound money

policy. Yet, ordo liberalism is used by other people to push their own motives and take control.

Therefore, the ordo liberal stability culture became a leeway for the anti-integrationists to

sustain the conflict against sustaining the commitment to the supranational integration.

Overall, Germany had been always pro-integrationist to solve the problems where

Germany is on its central core. But, West Germany is constrained internally and externally that

is sustaining the said conflict but their diplomacy stands by several reasons. One there is
varying pro-integrationist ideas from different chancellors indicating political rivalries. Two,

there is a wide range of pro-integrationist initiatives. Three, the French-German partnership is a

good foundation. Four, there is a large consensus for the said integration supranationally. Even

if there are reasons for Germany to keep their diplomacy, the conflict due to disunity of the

nation to fully commit in the supranational integration is still evident.

Over time, the tamed power of Germany soon become suspected and interrogated.

Because of Germany breaking the rules and them giving the sanctions is overwhelming the

members of the Eurozone that leads to Germany escaping the tide. Greater unilateralism

helped the state to get past its older self—“a benign hegemon”.

From its ordo-liberal idealism, as it is being misused by people seeking their self-

interest, being in conflict with its commitment in the supranational integration in the European

Union, Germany had stuck itself to unilateralism on the onset of being fired from the Eurozone

due to the revising of the policies to relax rules. These acts of embracing unilateralism has

eliminated the conflict and thus, choosing supranational governance as the solution. Yet, we

should not set aside the fact that ordo liberalism can also become a strategy for domestic and

EU problem solving.

As a powerful influence in the Eurozone because of Eurozone lifting up the policy of

Germany into the system of the union, Germany is now seen as a big influence and a

contributor to bailout mechanisms but it cannot take any leadership role because of its capacity

and expectation gap due to its past record as a hegemon. It is implied here that although Germany has

its conflicting issue with the supranational integration in the EU, it still had chosen to choose its
commitment to the integration over their ‘free order’ (ordo liberal) policy. Finally, by choosing it,

Germany has been lifted from its own hegemony.