Contradictions of German ordoliberalism and their impact on the European Union during the Euro crisis

This thesis sought to look at German economic practices and contrast them with the "guiding principles" of German economic thought, ordoliberalism, which is more commonly labeled the "social market economy". Thus, the first chapter of this thesis looked at ordoliberalism and its view of how the economy should be, and what the views of different "cliques" of ordoliberalism are. The second chapter looks at German economic practices to show the contradictions of ordoliberal economic practice. Ordoliberals argued for a strong "market police" state, and starting from Ludwig Erhard and to this day Germany has prided itself in its ordoliberalism and the "social market economy", yet in practice the state wanted the creation of national champions and a strong export performance to bolster economic strength. Chapter Two shows that the ideals of free market get sidelined when the push comes to shove. Furthermore, Germany while labels itself a liberal (ordo) state, it is commonly considered to be an export-mercantilist country. And another contradiction of German economy shown in Chapter Two was the state of German welfare state, which saw cut-backs starting in the 90's and then in the 2000's with the Hartz reforms to make the economy more competitive (to internally devalue so as to bolster exports), which makes the "social" in the "social market economy" also dubious. The third and final chapter looked at how ordoliberalism also influenced the European Union as a result of rising German economic power which was also mostly a result of the European Monetary Union (EMU), which revalued some currencies (against the Deutschemark) and prevented competitive devaluations, which combined with the internal devaluation of Germany through the Hartz meant Germany would become more competitive. Thus, Germany has been running a surplus since 2002, which is considered to be the cause of the persistent deficits that led to the Eurozone debt crisis. The Eurozone debt crisis is also looked at to show that the ordoliberal austerity measures have not benefited the crisis countries and has not brought their economies back to health. This thesis thus concludes by saying that Germany and its ordoliberalism has not been beneficial to the European Union and Germany has not acted as a benevolent leader acting for the benefit of the Union, but instead acted opportunistically in its own interests.