Towards a Two-Tiered Conception of a Good Regulatory Politics Based on Vital-Political Standards

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Peter Ulrich:

"We need a two-tiered conception of a good regulatory politics (Ulrich 2005: 167ff.). This reminds us of what has been postulated in principle by the ordoliberal thinkers with a humanistic orientation, namely Wilhelm Röpke (1960) and Alexander Rüstow (1955: 74): we need to conceive of a good political order as a connection of superordinate “vital policy” (nice term, isn't it?) and competition policy – the latter is just as important but systematically subordinate to vital policy (Diagram 3). In order to avoid that the economic efficiency becomes an inherent necessity or an end in itself, we have to use economic efficiency consciously with regards to the vital-political standards. Hence, the goal is not to achieve compromises between economic and life-practical criteria but rather to switch from a horizontal to a vertical perception of the problem and to become aware of the right order of aspects. It is essential that we do not perceive socially and ecologically motivated standards as annoying external limitations of our economic dynamics and of the „economic rationality“, but that we instead perceive them as a precondition for the legitimacy and as a horizon of the meaning of a truly efficient and lifepractically reasonable economic development. (An example may be the latest expert report from the UN agricultural council: it signalizes a change of thought 8 towards an agriculture that adapts itself to cultural and regional characteristics and so promotes the conservation of soils, forests and water sustainably)."

Diagram 3: Two levels of an ordoliberal regulatory politics:

1. Vital policy (A. Rüstow)

= embedding the market economic system “within a higher order of things which is not ruled by supply and demand, free prices and competition” (Wilhelm Röpke 1960: 6)

= design and limitation of the “blind” market forces according to ethical aspects of the service of life

2. Competition policy

= imposition of open markets and effective competition within the scope of the vital-political standards

= efficient use of competition in the market economy for “vital” ends

Economic rationality, understood in an unabbreviated sense, is to be seen as a kind of a magical triangle between efficiency, meaning orientation, and justice in which efficiency is subordinate to the other angles for inherently logical reasons."


A Civilized Market Economy as the Horizon of Progress

Peter Ulrich:

"The horizon of a socio-economic development in the service of life could consist in a literally civilized market economy (Diagram 5) that is consequently embedded into a fully developed civil society – as a means for a good life and living together of free and equal citizens. This third way in principle leaves the ideological 20th century debate about systems with the idolization of the market on the one hand and the idolization of the state on the other hand behind. Instead, priority is given to really free citizens, not just to the „free market” – free of what is the market supposed to be then? (It is not possible to develop the whole foundations of “civilizing” the market economy here; instead, I allow myself to hint at my English book Integrative Economic Ethics: Foundations of a Civilized Market Economy, which has come out in Cambridge University Press in 2008.)

To make it simple: It is important that we overcome the puberty-like period of an overly autonomous economic system and that we learn to reorganize the perverted relationship between market economy and civil society. Civilizing the market economy certainly requires an epochal cultural and political learning progress. We have the epochal task of thinking about the new chances of good life and living together that the incredible productivity of modern economy could offer us within a well-ordered (world) society – if only we are reasonable enough. No less a figure than the great and nowadays rediscovered economist John Maynard Keynes has recognized this civilisatory chance. In his essay „Economic Possibilities for Our Grandchildren” (written 1930) he predicted that future generations would experience that the economic production problem will be solved. In about 100 years, thus around 2030, the standard of life would be 8 times higher with a remaining 15 hours work per week, he wrote. Then people could ascribe „economic life“ the limited place it deserves and they could primarily dedicate their time to the more meaningful things of a cultivated life: abundance of life instead of mere abundance of goods could enrich human existence.

The institutionally unrestricted competition between locations is always also a competition between national regulatory frameworks. According to the dominant logic of private capital investment, a framework is „good“ if it is efficient for profit-making. This symptom of a political economism makes the current confusion between means and ends of the economy most evident: today there tends to be a competition between market frameworks instead of a supranational framework of global competition. Only such a supranational framework would be able to design and implement the vital-political standards necessary for sustainable development and for a competition that serves this development. Put in a nutshell: Who says A, must say B – who is in favour of market globalization, should be reasonable enough to support a supranational framework for competition – and such a framework should not limit itself to a competition pol11 icy that is merely oriented towards efficiency as advocated by the WTO, but should extend to a supranational vital policy! This task is to be understood as an epochal challenge that certainly cannot be resolved politically in the short term. But we should acknowledge the principal reasonableness of Keynes' vision. Yet, as mentioned before, if we keep advocating the logic of economic growth as an inherent necessity we will never achieve a civilized market economy that is embedded into sustainable ecological, social and cultural standards. Designing a civilized market economy is the epochal vital-political task that involves the community of all autonomous world citizens in the 21st century. I don't see any alternative to such an endeavour of civilizing the market economy: in times of the global competition between national locations it is even more important to promote the transition of the global market economy from the paleoliberal „state of nature“ in which the right of the stronger rules into a cosmopolitan state of law. In the very sense of Immanuel Kant's „Idea for a Universal History with a Cosmopolitan Purpose“ (1784) the project of civilizing the global market economy merely can be solved within a global governance, not in a solo run by single countries. What we need most today is the courage to conduct supranational politics with a civilizing intent."


More information

  • Röpke, W. (1960): A Humane Economy: The Social Framework of the Free Market, transl. E. Henderson, Chicago: Henry Regnery Co. (orig. German: Jenseits von Angebot und Nachfrage, 2nd ed. 1958).
  • Ulrich, P. (2008): Integrative Economic Ethics: Foundations of a Civilized Market Economy, Cambridge/New York: Cambridge University Press.