Gustav Schmoller and the Idea of a Social Market Economy: A Precursor to Ordoliberalism?

Despite the trenchantly formulated attempts of early ordoliberals to distance themselves from Gustav Schmoller, his research program can undoubtedly be identified as one of the numerous intellectual influences of their economic and sociopolitical ideas. In this article we dispel prominent misconceptions regarding Schmoller’s work and explain why the most fitting understanding of his approach today is contextual economics. We establish six characteristics of ordoliberalism that were already essential in Schmoller’s work, and which show great continuity in the tradition of German-speaking political economy. In this context, there is little more emblematic than the idea of the Social Market Economy as an “irenic formula”. We argue that the basic thought of social irenicism is also the essential leitmotif in Schmoller’s progressive conception of an economic order, which we call, by analogy with Müller-Armack, a Sittliche Marktwirtschaft [Ethical Market Economy]. For a better and more reflective self-understanding, a modern economics of order [Ordnungsökonomik] would be well advised to develop a heightened awareness of its own intellectual roots.