Walter Eucken
Encyclopedia
Walter Eucken was a German
economist
and father of ordoliberalism
. His name is closely linked with the development of the "social market economy
".
, Thuringia
, as son of the philosopher Rudolf Eucken, who won the 1908 Nobel Prize in Literature
.
At first more interested in history, Walter Eucken finally chose to study economics in Kiel
, Jena
and Bonn
. He graduated in 1913, shortly before he had to serve as officer at the fronts of World War I
. In 1921, Eucken got his first professorship in Berlin
. In 1927 he moved to Freiburg
, where he was professor of economics until his death. During the Nazi
period, Eucken was associated to the resistance movement (Freiburg Bonhoeffer Circle
).
He died in 1950 during a journey to London
, UK
.
The Walter Eucken Institut
was founded four years after his death. Its president is James M. Buchanan
since 2004.
, which is the German
variant of neoliberalism
, claims that the state
has the task to provide the political framework for economic freedom
, in contrast to laissez-faire
. This includes a legal and institutional framework, including maintenance of private property, enforcement of private contracts, liability
, free entry
, and monetary stabilization
. In this, the state should refrain from directing or intervening in the economic processes of daily practices, as in a centrally planned economy (Molsberger, 2008).
The idea of ordoliberalism was introduced for the first time in 1937 in Ordnung der Wirtschaft, a periodical published by Walter Eucken, Franz Böhm
and Hans Großmann-Doerth. From 1948 on it was further developed in the journal ORDO
.
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...
and father of ordoliberalism
Freiburg School
The Freiburg School is a school of economic thought founded in the 1930s at the University of Freiburg.It builds somewhat on the earlier Historical school of economics but stresses that only some forms of competition are good, while others may require oversight. This is considered a lawful and...
. His name is closely linked with the development of the "social market economy
Social market economy
The social market economy is the main economic model used in West Germany after World War II. It is based on the economic philosophy of Ordoliberalism from the Freiburg School...
".
Life
Walter Eucken was born in JenaJena
Jena is a university city in central Germany on the river Saale. It has a population of approx. 103,000 and is the second largest city in the federal state of Thuringia, after Erfurt.-History:Jena was first mentioned in an 1182 document...
, Thuringia
Thuringia
The Free State of Thuringia is a state of Germany, located in the central part of the country.It has an area of and 2.29 million inhabitants, making it the sixth smallest by area and the fifth smallest by population of Germany's sixteen states....
, as son of the philosopher Rudolf Eucken, who won the 1908 Nobel Prize in Literature
Nobel Prize in Literature
Since 1901, the Nobel Prize in Literature has been awarded annually to an author from any country who has, in the words from the will of Alfred Nobel, produced "in the field of literature the most outstanding work in an ideal direction"...
.
At first more interested in history, Walter Eucken finally chose to study economics in Kiel
Kiel
Kiel is the capital and most populous city in the northern German state of Schleswig-Holstein, with a population of 238,049 .Kiel is approximately north of Hamburg. Due to its geographic location in the north of Germany, the southeast of the Jutland peninsula, and the southwestern shore of the...
, Jena
Jena
Jena is a university city in central Germany on the river Saale. It has a population of approx. 103,000 and is the second largest city in the federal state of Thuringia, after Erfurt.-History:Jena was first mentioned in an 1182 document...
and Bonn
Bonn
Bonn is the 19th largest city in Germany. Located in the Cologne/Bonn Region, about 25 kilometres south of Cologne on the river Rhine in the State of North Rhine-Westphalia, it was the capital of West Germany from 1949 to 1990 and the official seat of government of united Germany from 1990 to 1999....
. He graduated in 1913, shortly before he had to serve as officer at the fronts of World War I
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...
. In 1921, Eucken got his first professorship in Berlin
Berlin
Berlin is the capital city of Germany and is one of the 16 states of Germany. With a population of 3.45 million people, Berlin is Germany's largest city. It is the second most populous city proper and the seventh most populous urban area in the European Union...
. In 1927 he moved to Freiburg
Freiburg
Freiburg im Breisgau is a city in Baden-Württemberg, Germany. In the extreme south-west of the country, it straddles the Dreisam river, at the foot of the Schlossberg. Historically, the city has acted as the hub of the Breisgau region on the western edge of the Black Forest in the Upper Rhine Plain...
, where he was professor of economics until his death. During the Nazi
Nazi Germany
Nazi Germany , also known as the Third Reich , but officially called German Reich from 1933 to 1943 and Greater German Reich from 26 June 1943 onward, is the name commonly used to refer to the state of Germany from 1933 to 1945, when it was a totalitarian dictatorship ruled by...
period, Eucken was associated to the resistance movement (Freiburg Bonhoeffer Circle
Dietrich Bonhoeffer
Dietrich Bonhoeffer was a German Lutheran pastor, theologian and martyr. He was a participant in the German resistance movement against Nazism and a founding member of the Confessing Church. He was involved in plans by members of the Abwehr to assassinate Adolf Hitler...
).
He died in 1950 during a journey to London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
, UK
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
.
The Walter Eucken Institut
Walter Eucken Institut
The Walter Eucken Institut is a German ordo-liberal economic think tank based in Freiburg im Breisgau, Baden-Württemberg, Germany.The Institute was founded in 1954, four years after the death of economist Walter Eucken, by a number of his friends and pupils. The Institute's creation was supported...
was founded four years after his death. Its president is James M. Buchanan
James M. Buchanan
James McGill Buchanan, Jr. is an American economist known for his work on public choice theory, for which he received the 1986 Nobel Memorial Prize in Economic Sciences. Buchanan's work initiated research on how politicians' self-interest and non-economic forces affect government economic policy...
since 2004.
Theory
Eucken's ordoliberalismOrdoliberalism
Ordoliberalism is a school of liberalism that emphasised the need for the state to ensure that the free market produces results close to its theoretical potential . The theory was developed by German economists and legal scholars such as Walter Eucken, Franz Böhm, Hans Grossmann-Doerth and Leonhard...
, which is the German
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
variant of neoliberalism
Neoliberalism
Neoliberalism is a market-driven approach to economic and social policy based on neoclassical theories of economics that emphasizes the efficiency of private enterprise, liberalized trade and relatively open markets, and therefore seeks to maximize the role of the private sector in determining the...
, claims that the state
Sovereign state
A sovereign state, or simply, state, is a state with a defined territory on which it exercises internal and external sovereignty, a permanent population, a government, and the capacity to enter into relations with other sovereign states. It is also normally understood to be a state which is neither...
has the task to provide the political framework for economic freedom
Economic freedom
Economic freedom is a term used in economic and policy debates. As with freedom generally, there are various definitions, but no universally accepted concept of economic freedom...
, in contrast to laissez-faire
Laissez-faire
In economics, laissez-faire describes an environment in which transactions between private parties are free from state intervention, including restrictive regulations, taxes, tariffs and enforced monopolies....
. This includes a legal and institutional framework, including maintenance of private property, enforcement of private contracts, liability
Legal liability
Legal liability is the legal bound obligation to pay debts.* In law a person is said to be legally liable when they are financially and legally responsible for something. Legal liability concerns both civil law and criminal law. See Strict liability. Under English law, with the passing of the Theft...
, free entry
Free entry
Free entry is a term used by economists to describe a condition in which firms can freely enter the market for an economic good by establishing production and beginning to sell the product....
, and monetary stabilization
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...
. In this, the state should refrain from directing or intervening in the economic processes of daily practices, as in a centrally planned economy (Molsberger, 2008).
The idea of ordoliberalism was introduced for the first time in 1937 in Ordnung der Wirtschaft, a periodical published by Walter Eucken, Franz Böhm
Franz Böhm
Franz Böhm was a German politician, lawyer, and economist.-Early Life:Franz Böhm was born on 16 February 1895 in Konstanz...
and Hans Großmann-Doerth. From 1948 on it was further developed in the journal ORDO
Ordo
Ordo may refer to:* A musical phrase constructed from one or more statements of a rhythmic mode pattern and ending in a rest* Ordo , is a nomadic palace for the Mongol aristocrats and the Turkic rulers...
.