THE BEAR’S LAIR
The US needs Ordnungspolitik
By Martin Hutchinson
The resignation a week ago of Jurgen Stark, Germany’s representative on the executive board of the European Central Bank (ECB), was due to a failure by the ECB to follow the German concept of Ordnungspolitik.
In the German view, Ordnungspolitik – which may roughly be translated as the politics of order – demanded that Greece be treated harshly because of its failure to follow even the most basic rules of euro membership, while the ECB should avoid risking its credit standing by investing in the debt of tottering Mediterranean countries. It’s a very useful concept; its presence explains much of Germany’s extraordinary economic success, and its recent absence explains many of the failures in the remainder of the West.
Ordnungspolitik is not a traditional attribute of German economic life. While the great Otto von Bismarck was undoubtedly a devotee, under Kaiser Wilhelm II economic policy was determined largely by the whims of the kaiser himself and his leading ministers at any given moment; consequently it tended to be somewhat arbitrary. Under the Weimar Republic, the breakdown of political and social order extended to the economic sphere. There was no Ordnungspolitik about Rudolf von Havenstein’s creation of the great inflation; he simply printed money in order to meet the government’s day-to-day bills.