9 Alexander Rüstow: The failure of economic liberalism

Alexander Rüstow (1885–1963) belonged to the nucleus of the first Ordoliberal generation and contributed seminal impulses to the Ordoliberal research programme. As a gifted networker in Berlin during the 1920s and early 1930s, he connected political economists of various ideological backgrounds. As a public intellectual, he suggested reforms for the ailing Weimar Republic, a testimony of which is his address to the Verein für Socialpolitik in September 1932. After his emigration to Istanbul in 1933, Rüstow focused on a historical diagnosis of civilisation which was on the brink of extinction, and Das Versagen des Wirtschaftsliberalismus (The Failure of Economic Liberalism) is a key document in this regard. After returning to Germany in 1949, he finished his monumental Ortsbestimmung der Gegenwart (The Coordinates of the Present Times) and resumed his role as a vocal public intellectual in the young Federal Republic.

Alexander Rüstow was born on 8 April 1885 in Wiesbaden and died on 30 June 1963 in Heidelberg. He grew up in a Prussian officer’s family in several garrison towns and received his Abitur in 1903 at the humanist Bismarck-Gymnasium in Berlin (Eisermann, 1960; Rüstow, 1980, p. xiii). During these early years, he had already focused on studying ancient Greek language and culture. From 1903 to 1908 he studied mathematics, physics, philosophy, economics and psychology at Göttingen, Munich and Berlin (Hegner, 2000, pp. 15–16). Rüstow was also involved in the German Youth Movement and, in 1908, married his first wife, the artist Mathilde Herberger (Landesarchiv Baden-Württemberg, 2021). After completing his doctoral dissertation in Erlangen in 1908, entitled Der Lügner: Theorie, Geschichte und Auflösung (The Liar: Theory, History and Resolution) about the classical Greek liar paradox, he worked from 1908 to 1911 as the lead editor of academic publisher B. G. Teubner in Leipzig. From 1911 to 1914 he prepared for a habilitation on the epistemology of Parmenides (Röpke, 1955, pp. 12–13; Eisermann, 1960, p. 148), but military service from 1914 to 1918 put an end to this endeavour.

After returning from the front ‘as a radical socialist and Marxist’ (Rüstow, 1957, p. 647) and settling down in Berlin, Rüstow connected to various groups of socialist intellectuals and saw himself as one of them. The war pushed him away from the ‘philological-aesthetic path’ and towards the practical challenges of the time, many of which were of a politico-economic nature (Rüstow, 1980, pp. xiv–xv). In 1926, he married his second wife, the ethnologist Anna Bresser. Of special importance was the Kairos Circle in Berlin around the religious socialist Paul Tillich (Bavaj, 2007, pp. 112–113), where Rüstow developed an increasingly close relationship to the economists Adolf Löwe and Eduard Heimann (Rieter, 2011, pp. 250–253). Löwe and Heimann were students of Franz Oppenheimer, the economist and sociologist who also had a formative influence on Ludwig Erhard. Intellectual exchange with this circle had a significant impact on Rüstow’s later ideas of a ‘Third Way’ between capitalism and socialism, even regarding the very name of this reformist agenda: while Oppenheimer called his Third Way ‘liberal socialism’, Rüstow named his neoliberal Third Way ‘social liberalism’ (Rüstow, 1949, p. 131; Dörr, 2017, pp. 38–41). The conversion of ‘liberal socialism’ to ‘social liberalism’ was also important for Erhard’s development, who located the Social Market Economy in Oppenheimer’s lineage (Erhard, 1988).

Rüstow’s engagement with economic theory—in a rather ecumenical manner, since his interests included numerous varieties of liberal and socialist theories—came to the fore during his tenure at the German Ministry of the Economy from 1919 to 1924, also the period of his gradual transition from socialism to liberalism (Dathe, 2015, pp. 3–5). Initially, he was in charge of accompanying the various plans for nationalising heavy industry, especially coal, in the Ruhr area (Rüstow, 1980, p. xv), but after these projects lost their topicality, his responsibility shifted towards the domain of cartels. He had a major influence on drafting the ‘Decree against the Abuse of Economic Power Positions’, but when it came into effect in 1923, the principle he had introduced to prohibit cartels had been replaced by the principle of abuse (Böhm, 1948, pp. 198–201). In the late 1920s, his brother Hanns-Joachim Rüstow joined the same ministry (Feldman and Nocken, 1975, p. 438).

In 1924, Alexander Rüstow moved to the Mechanical Engineering Industry Association (VDMA) and remained there until 1933. As head of VDMA’s economic policy department, he saw the growing concentration of economic power as one of the direst threats to the prosperity of the Weimar Republic, and wrote numerous popular pieces on this topic (Oswalt, 2003, pp. 729–733). In the course of these activities, he established ties to liberal newspapers such as Vossische Zeitung and Frankfurter Zeitung (Feldman and Nocken, 1975, pp. 436–438) and attracted liberal-minded scholars like Friedrich A. Lutz and Theodor Eschenburg to work for VDMA (Veit-Bachmann, 2003, pp. 11–12). As VDMA’s political strategist, he chastised the pressure exercised by various special interest groups, especially of heavy industry, towards protectionism, subsidies and privileged treatment. Rüstow’s department became an institution increasingly consulted both by the Ministry of the Economy and by the major business associations (Rüstow, 1980, pp. xv–xvi). In the academic debate, he and other younger economists such as Löwe, Heimann, Wilhelm Röpke and Walter Eucken turned against the Historical School (Klinckowstroem, 2000, pp. 75–76; Hennecke, 2005, pp. 65–68), especially through the group which they called the ‘German Ricardians’. Across ideological dividing lines between socialists and liberals, the Ricardians attempted, in the late 1920s, to regain an adequate place for economic theory within the German academic landscape, especially in the Verein für Socialpolitik as the main association of German economists (Dathe, 2009, pp. 64–69; Janssen, 2009, pp. 107–115). In this context, Rüstow was portrayed by the anti-capitalist and nationalist magazine Die Tat as a ‘ “spider” of a neoliberal conspiracy network’ in Berlin (Röpke, 1955, p. 15).

During the Great Depression, which Rüstow saw as an existential blow to the economically weak Weimar Republic, his principal worry became the urgent reforms needed for the fragile democracy to survive. In an attempt to form a counterweight to the increasingly common pleas for autarky, Rüstow, Röpke and Eucken joined the Deutscher Bund für freie Wirtschaftspolitik (Janssen, 2009, pp. 113–114). In those very years, Rüstow delivered two important addresses: a talk in a lecture series at the Deutsche Hochschule für Politik in Berlin in July 1929, ‘Diktatur innerhalb der Grenzen der Demokratie’ (‘Dictatorship within the Limits of Democracy’) (Rüstow, 1959), as well as the widely received presentation ‘Freie Wirtschaft, starker Staat’ (‘Free Economy, Strong State’) at the Dresden meeting of the Verein für Socialpolitik in September 1932 (Rüstow, 2017). In the very final months of the Weimar Republic, Rüstow was even listed as a potential minister of the economy in a cabinet devised by Kurt von Schleicher to prevent the NSDAP’s seizure of power (Röpke, 1955, pp. 15–16; Eisermann, 1963, p. xxiv). In March 1933, after Hitler’s accession to power, the Gestapo searched Rüstow’s home and he decided to leave Germany with his third wife, Lorena Gräfin Vitzthum von Eckstädt, finding refuge in Istanbul owing to Mustafa Kemal Atatürk’s attempt to establish a modern university system. After initial scepticism in the Istanbul faculty due to his primarily practical activities until that point (Hennecke, 2005, pp. 94–95), Rüstow was appointed a position with the ‘forced combination “economic geography, economic and social history” ’ as the designation of his chair (Röpke, 1955, pp. 16–17). A lifelong friendship tied Rüstow with Röpke, who had also emigrated to Istanbul and whose endorsement of Rüstow was decisive in overcoming the faculty’s scepticism (Masala and Kama, 2018, pp. 12–14).

In 1938, Rüstow and Röpke were amongst the most active participants at the Colloque Walter Lippmann in Paris, where they pleaded for a thorough reform of the legacy of liberalism to make it viable in the twentieth century (Röpke, 1955, pp. 19–20), with Rüstow being amongst those who explicitly suggested ‘neoliberalism’ as the most suitable term for such a stance (Reinhoudt and Audier, 2018, pp. 25–27). In August 1939, he visited Röpke in Geneva to attend an envisaged conference on the disintegration of the global economy, which could not take place because of the outbreak of the war (Röpke, 1955, pp. 19–21; Hennecke, 2005, pp. 120–124), but Rüstow’s conference paper (Rüstow, 1942) was published as an appendix to Röpke’s International Economic Disintegration (Röpke, 1942). During the Istanbul years, Rüstow lamented the practical limitations, such as the scarce library resources (Rüstow, 2001, pp. 21–22), but the seclusion at the Bosporus enabled him to conduct an extensive research programme which produced works like Das Versagen des Wirtschaftsliberalismus (The Failure of Economic Liberalism) (Rüstow, 2001) that summarised his positions in the years following the Colloque Walter Lippmann (Maier-Rigaud and Maier-Rigaud, 2001), as well as his magnum opus Ortsbestimmung der Gegenwart (The Coordinates of the Present Times), large parts of which were conceived and written in Istanbul. During the war he was twice unable to accept calls from the New School for Social Research in New York where his friends Löwe and Heimann were teaching (Eisermann, 1960, p. 151).

After 16 years of emigration, Rüstow returned to Germany in 1949, first as a visiting professor at Heidelberg. Alfred Weber had briefly returned to the university in 1946 at the age of 78 (Demm, 2003, pp. 9–10) and supported Rüstow’s joining the faculty in 1950 as successor to Weber’s chair (Rüstow, 1980, p. xiii; Molt, 2002, pp. 90–91). Federal President Theodor Heuss, who in his earlier function as Minister of Education in the local government was responsible for the reorganisation at Heidelberg, played a key role in recruiting Rüstow back to Germany, seeing the latter’s role at Heidelberg as ‘managing the legacy of Max Weber and developing the work of Alfred Weber’ (Heuss, 1955, p. 11). Ortsbestimmung der Gegenwart can indeed be read along these lines. While he retired at Heidelberg in early 1956, Rüstow continued his involvement in the discussions about the liberal order of economy and society in the young Federal Republic. The chairmanship of the Aktionsgemeinschaft Soziale Marktwirtschaft from 1955 to 1961 enabled him to disseminate his ideas in an attempt to convince citizens and politicians of the advantages of the Social Market Economy (Menant, 2002). The Aktionsgemeinschaft became a crucial meeting place for scholars, journalists, entrepreneurs and politicians (Dörr and Kutzner, 2017). In addition, in 1951, jointly with Alfred Weber, he co-founded the Deutsche Vereinigung für Politische Wissenschaft, a key institution for the professionalisation of political science in the Federal Republic, with Rüstow as its president from 1951 to 1956.

When reminiscing about the decade ahead of 1933 and their joint transformation from socialists to liberals, Röpke underscored that even though the terms ‘neoliberalism’ and ‘Social Market Economy’ had not yet been coined, key parts of this research programme had already been formulated by Rüstow prior to their emigration (Röpke, 1955, pp. 15–16). This chapter puts the spotlight on Rüstow’s two seminal contributions to political economy ahead of the emigration: his lecture on 5 July 1929 at the Deutsche Hochschule für Politik, ‘Diktatur innerhalb der Grenzen der Demokratie’ (Rüstow, 1959), and his presentation on 28 September 1932 at the Dresden meeting of the Verein für Socialpolitik, ‘Freie Wirtschaft, starker Staat’ (Rüstow, 2017). These two pieces combined contain the essence of Rüstow’s diagnostic and therapeutic suggestions for the ailing Weimar Republic, especially the constellation between the democratic state and the economic order. Taken together with Eucken’s ‘Staatliche Strukturwandlungen und die Krisis des Kapitalismus’ (Structural Transformations of the State and the Crisis of Capitalism) (Eucken, 2017), Rüstow’s pieces (in the following: DiGD and FWsS) represent founding documents of Ordoliberal political economy during its inception phase, a research programme in constitutional political economy avant la lettre conceived during the collapse of democratic constitutions in Central Europe. These texts, in particular, have become the object of a large literature which accuses the Ordoliberals of having advanced an ‘authoritarian liberalism’ (e.g. Bonefeld, 2017; Biebricher, 2018).

DiGD was held at a moment when, yet again, constitutional amendments were being discussed by German legal scholars, politicians and public intellectuals to make the Republic’s decision-making process more effective. Rüstow juxtaposed the two principal political forms of the 1920s: dictatorship in the sense of the real-existing regimes in Italy or Spain, and democracy as the real-existing orders in France or Germany. His diagnosis of the democratic process in Weimar, as seen from July 1929, was full of worry and apprehension. Rüstow emphasised, referring to Carl Schmitt’s contemporaneous writings and his lecture in the same series, the ‘escape from responsibility’ (Verantwortungsflucht) by decision makers who left political action to be ‘juridified’ by the legal system. For example, he saw the fight against cartels as being too often delegated to the courts (Rüstow, 1959, p. 89). A similar escape from responsibility could happen when political decision makers let an informal body ‘pre-juridify’ the case, so that the decision makers only ratified what those informal committees or expert bodies, often consisting of special interest groups, had already preconfigured. Similarly, when the decision makers waited long enough for the situation to have reached the stage of ‘there is no alternative’, they simply bowed to the mandatory measure.

Rüstow tracked all those cases not to the psychological weakness of the players involved, but to the Weimar constitution. In his view, coalition-led governments at the time proceeded in the mode of ‘horse trading’, which often produced results that were not intended by any of the parties involved. Accordingly, parties refused to take responsibility for the result of the negotiations, so that the compromise of the democratic process ended up not being defended by anybody (Rüstow, 1959, pp. 90–91). Expressed in terms of today’s Public Choice theory, he saw the combination of rent-seeking by special interest groups and log-rolling by coalition-participating parties as leading to the ‘political disintegration’ of the state (Rüstow, 1959, p. 90). Given this diagnosis, he positioned himself within the ongoing debate about necessary constitutional reforms which involved, amongst others, Hermann Heller, Rudolf Smend and Carl Schmitt. Using the latter’s ‘four possibilities of leadership’, that is, by the president, the chancellor, the cabinet and the parliament (Rüstow, 1959, pp. 95–97), he opposed Schmitt’s proposal to empower the president who, in Rüstow’s view, could not be the guardian of the constitution and simultaneously an active political leader. After discarding the possibilities of leadership by the cabinet and the parliament, he was left with pleading for leadership by the chancellor who could and should be made a more responsible political figure—including a ‘dictatorship with a probation period’ (Diktatur mit Bewährungsfrist) in the sense of ruling with a ‘qualified majority’ in parliament of only one-third for a limited period of one year (Rüstow, 1959, pp. 97–99). For today’s reader, the rhetoric feels contaminated by the usage of German vocabulary for leader and leadership. And yet it was still a debate about the established Weimar parties and their options to reconfigure the system, while the National Socialists were quite irrelevant in the polls at the national level ahead of the turbulences of the Depression. Rüstow’s therapeutic suggestions to readjust the institutional weights of the different players within the constitution of the ailing Weimar Republic were clearly targeted at reforming a political system which, even in the very few stable years between the hyperinflation of the early 1920s and the Great Depression, had great operational difficulties. Once polarisation in the polity exploded, due to the Depression with its economic havoc, the dysfunctionalities of the constitution and especially the increasingly dominant role of the president brought about its collapse.

This collapse was already happening when Rüstow delivered his presentation ‘Freie Wirtschaft, starker Staat’ at the Verein für Socialpolitik meeting in Dresden on 28 September 1932. This address was widely discussed and reprinted under various titles, amongst them ‘Die staatspolitischen Voraussetzungen des wirtschaftspolitischen Liberalismus’ (‘State Policy and Necessary Conditions for Economic Liberalism’) (Rüstow, 2017), in several other outlets, including Der deutsche Volkswirt (Oswalt, 2003, p. 733). As in 1929, Rüstow’s spotlight in FWsS was on the structural transformation of the state, which he saw as decisive for the Weimar Republic’s capability to conduct economic policy at all, both during the dire economic turbulences and in the long run. He identified ‘policies of interventionism and state subsidy’ (Rüstow, 2017, p. 143) as the gates through which the state had become the increasingly attractive prey of players interested in ever-increasing interventions and subsidies, and underscored that ‘it is not the economy, but the state which determines our fate—and that the state also decides the fate of the economy’ (Rüstow, 2017, p. 144). In his diagnosis of the crisis he joined the opponents of interventionism and agreed that the interventions of earlier years had made the recession even worse. With regard to the options at hand, however, he disagreed with the proponents of laissez-faire, probably targeting Ludwig von Mises who also attended the Dresden meeting. Rüstow explained why the two most widely discussed options, laissez-faire non-intervention or status-quo preserving intervention, were both undesirable and politico-economically impractical: the first would entail frictions and suffering on the way to the new equilibrium which, given the situation in 1932, appeared prohibitive; the second would make the period of suffering and adjustment even longer.

In Rüstow’s perspective, there was a ‘third way of responding’. By harnessing Röpke’s typology of interventions (Röpke, 1929; Giordano, 2018, pp. 54–56), he distinguished between preserving and adjusting interventions and pleaded for a primacy of the latter. Adjusting interventions facilitate and accelerate the process towards the new equilibrium, for example by providing educational and financial help to those who are affected by the transformation, and clearly signal that sustaining the old equilibrium is illusionary (Rüstow, 2017, pp. 145–146). For such an approach, which is conducive to the dynamic transformation of the economy, Rüstow assessed a transformation of the state as necessary. He criticised Carl Schmitt’s and Ernst Jünger’s ‘total state’, whose strength these authors believed to stem from its expansion into all domains of life, as being precisely the opposite: a weak state. In his diagnosis, such an ever-expanding state was doomed to be captured by special interest groups: with every state expansion into new domains, they would find the state more and more attractive—and eventually it would no longer be ‘in the position of the subject but in that of the suffering object’ (Rüstow, 2017, p. 147). The lack of a plan which many decried did not happen by mistake, but was instead the very nature of the interventionist state, and could only be overcome if, like the Russian case, one group succeeded in totally capturing the state and turning it into a ‘tyrannical and autocratic rule’ (Rüstow, 2017, p. 147).

Rüstow’s counter-proposal was a ‘strong state’ which succeeded both in overcoming its entanglement with special interest groups and its ‘self-limitation’, aiming instead at neutrality and impartiality vis-à-vis various players in the economy. He had few illusions that any state can ‘hover in a vacuum’ and located the main anchor of his ideal in the individual citizen: along with having one’s special interest, Rüstow trusted that citizens had a ‘decent core’ and want to be ‘ruled with decency’, so this enlightened self-interest can be poised as a maxim against the egoistic self-interest of the individual and its special interest (Rüstow, 2017, pp. 147–148). Historically, the ‘old liberalism’ had not aimed at a ‘weak state’ either, but requested from the extremely strong absolutist state the liberation of the economic playing field under the protection of this same state. Rüstow’s ‘new liberalism’ hoped to make this constellation more stable and more sustainable, that is, to put the state not only above the economy, but also above and beyond the power of special interest groups (Rüstow, 2017, pp. 148–149).

When Rüstow joined the Istanbul faculty in 1933, he had published a lot in newspapers, political magazines and journals dedicated to the humanities, but relatively little in academic politico-economic outlets (Oswalt, 2003, pp. 728–733). A look at his publications as an émigré indicates that while he did not lose the former affinity and continued his pronouncements as a public intellectual in outlets such as Die Friedens-Warte (Rüstow, 1938, 1939, 1947), he initiated a series of politico-economic publications mostly published in the Revue de la Faculté des Sciences Économiques de l’Université d’Istanbul, a journal founded in 1939 and edited cooperatively by the German émigrés and their Turkish colleagues (Masala and Kama, 2018, pp. 23–25). These publications culminated in a piece which is at the centre of this chapter: ‘Das Versagen des Wirtschaftsliberalismus als religionsgeschichtliches Problem’ (‘The Failure of Economic Liberalism as a Problem of the History of Religion’) (in the following: DVWl) (Rüstow, 2001). It was first published in 1945 as a paper in the Revue despite its length of more than 140 pages, and in 1950 as a book under the shorter title Das Versagen des Wirtschaftsliberalismus (The Failure of Economic Liberalism) in a slightly revised second edition. This edition was published by Helmut Küpper, the same publishing house where, in 1948, Eucken and Franz Böhm had launched the ORDO: Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft. Rüstow was already listed as one of the journal’s associates in the first volume and published his ‘Zwischen Kapitalismus und Kommunismus’ (‘Between Capitalism and Communism’) in the second volume of ORDO (Rüstow, 1949).

DVWl is a crucial text for understanding Rüstow’s contribution to Ordoliberalism for a number of reasons. Its historical evolution is noteworthy and started with his statements at the Colloque Walter Lippmann in August 1938, followed by the conference paper for the failed Geneva conference from August 1939 (Rüstow, 1942). DVWl is a study in the history of ideas and combines Rüstow’s early-age fascination for the ancient Greek and Latin civilisations with his later interests in political economy. It consists of a set of diagnostic and therapeutic suggestions for the ailments of twentieth-century civilisation to the extent that it was a product of the ideas of liberal political economists.

Rüstow’s central claim was that eighteenth- and nineteenth-century liberalism had committed a crucial mistake by becoming increasingly uncritical of its own ideational history and by forgetting the ‘preconditions and prerequisites’ (Bedingungen und Bedingtheiten) embedded in this history. He identified the ‘absoluteness’ in its belief in and reliance on laissez-faire as the central culprit, while the exaggerated focus on the economy at the expense of thinking about liberty in other societal orders led to the narrowing of liberalism into ‘economic liberalism’, as in the title of the book (Rüstow, 2001, pp. 25–27). He explained this narrowing by liberalism’s success to demonstrate its ‘great, revolutionary, epochal discovery’ precisely in the domain of the economy: ‘the automatism of the market economy, the self-steering of the competitive economy through the price mechanism of supply and demand and the harmony which is established and sustained between private interest and general well-being, between everyone’s egoism and the greatest well-being of all’ (Rüstow, 2001, p. 27). And it was the unconditional promise of harmony not only in the economy, but in society as a whole, which constituted Rüstow’s main target: he admired how liberalism fulfilled the first hope it had raised, the material advancement of society; but the second hope, the harmony of interests and convictions in society, proved illusionary and threatened the very foundations of the liberal order.

Even though religion did not play an important role in his personal life, Rüstow understood its formative civilisational power and structured the book around the notion of ‘economic theology’, by which he hoped to capture the quasi-religious belief of liberals in the harmonious order of economy and society. Starting with Pythagoras and Heraclitus, he highlighted Stoicism as the popular philosophy which, for a very long time, propagated trust in the divine logos as the generator of cosmic harmony in nature and human affairs. In the early modern period, he connected this belief directly to Leibniz’s concept of ‘pre-established harmony’. Newton’s physics, and the general progress in the natural sciences by identifying laws and regularities in the cosmos of nature, was quasi-automatically applied to social affairs (Rüstow, 2001, pp. 28–36). He depicted the physiocrats with their focus on the ‘ordre naturel’ as proponents of the stance that it was the very same logos who governed nature and society (Rüstow, 2001, pp. 36–44).

When it comes to Adam Smith, Rüstow defined his own task as identifying the ‘metaphysical, sub-theological prerequisites of Smith’s neo-stoicism’. He portrayed Smith’s rare support for interventions into the market process as based on the belief that if only we stopped intervening, we would perceive the laws of the natural order as discovered by Smith and as intended by God—and Rüstow connected here The Theory of Moral Sentiments and The Wealth of Nations to Smith’s essay ‘The History of Astronomy’. In the final analysis, Rüstow attested to Smith the trust in the ‘perfectly autarkic and autonomous automatism of economic liberty if left to itself’. He assessed the role which Smith left for government as a proof of Smith’s lacking sensitivity for systematic ‘limits of validity’ of the domain in which this automatic harmony could prevail. It is precisely vis-à-vis Smith that Rüstow coined what might be the most prominent concept of the book within the overall terminology of Ordoliberal political economy: By ‘sociological blindness’ he accused liberal economists and ‘vulgar-liberals’ to have overlooked the ‘ideational and institutional conditions’ necessary for liberty to thrive (Rüstow, 2001, pp. 42–62). As the corresponding positive programme, in Ortsbestimmung der Gegenwart (1950, 1952, 1957), he conducted a monumental historical analysis of how the ‘superstratifications and superincumbencies’ (‘Überschichtungen und Überlagerungen’) of domination, the archenemy of liberty as an idea and as an institution, had to be overcome for liberty to become possible and sustainably prevalent.

Rüstow subdivided Smith’s posterity into those who joined the optimism of Smith’s ‘deistic providentialism’ and those who took his impulses but combined them with pessimism about the future of the liberal order. Amongst the optimists, Rüstow listed personalities as diverse as the Königsberg Kantian Christian Jakob Kraus, economists such as Johann Heinrich von Thünen and Hermann Heinrich Gossen in Germany, Jean-Baptiste Say, Frédéric Bastiat and Charles Dunoyer in France, but also activists including Richard Cobden and John Prince-Smith. Amongst the pessimists, he depicted Thomas Robert Malthus, David Ricardo and Karl Marx, who did not endorse Smith’s belief that prosperity and harmony would prevail as the consequence of the laws and regularities which they discovered (Rüstow, 2001, pp. 63–77). For all these thinkers, Rüstow doubted that their attitude to science in general, and to the social sciences they conducted in particular, could be disconnected from the tacit, mostly theological presuppositions behind the world view which they had inherited from earlier generations.

In the politico-economic practice, this led to different patterns: the ‘trust in a divinely intended happy end’ in the case of the liberal optimists brought about a passivism of anticipating the automatically positive development, while an ‘activist reaction’ prevailed amongst those pessimists who turned to socialism; finally, pessimist liberals like Ricardo turned to a ‘pessimistic passivism’. However, what Rüstow considered to be crucially missing was optimistic activism amongst liberals: driven into a complacency by their belief in the automatically positive development, liberals failed to provide institutional proposals as to how the orders of economy and society could be improved and life in them become even better (Rüstow, 2001, pp. 78–89). Once cured of the sociological blindness, that was precisely what Rüstow expected from liberals: institutional proposals about societal cohesion and integration beyond the competitive mechanism of the market. In international affairs, Rüstow diagnosed the decline of free trade in the late nineteenth century as a similar process of disintegration: earlier integrating forces such as the respect for contracts dwindled in the course of society’s secularisation, but liberals nevertheless blindly relied on the automatism of these forces (Rüstow, 2001, pp. 90–112). All this led to the successive degeneration of the liberal order, including the monopolisation of markets instead of competition, the excessive size of companies, the massification processes within society, collectivisms as the predominant ideologies, and the degeneration of the state as the prey of special interest groups. Still, due to their blind trust in the harmonious properties of the societal order, that is, sociological blindness, liberals grossly failed to provide institutional alternatives (Rüstow, 2001, pp. 113–140).

This is why Rüstow attached so much attention to the renewal of liberalism—especially as seen from the year 1945 and the potential for recreating a new, more robust liberal order. The final sections of DVWl and ‘Zwischen Kapitalismus und Kommunismus’ (Rüstow, 1949) contain some of Rüstow’s finest formulations about the nature and essence of ‘his’ neoliberalism. The narrow focus on the economy as the prime illness of nineteenth-century liberalism, which he called ‘economism’, can be overcome by re-focusing on ‘Vitalpolitik’ (see Chapter 32 in this Handbook). This particular approach to social policy aims at establishing healthy forms of a humane life in freedom and dignity for the individual. Rüstow also outlined his theory of justice as the guiding principle for his ‘liberal interventionism’. ‘Equality of opportunity’ in his reading emphasised fair starting conditions for the individual when joining the competitive process. This notion of justice entailed severe constraints on inheritance, an emphasis on the accumulation of private property as broadly dispersed as possible across various strata of society, and on broadening access to education across society (Rüstow, 1949, pp. 146–152, 2001, pp. 141–153).

Rüstow’s contributions to the first-generation Ordoliberal research programme were of fundamental importance and also in accordance with what the other Ordoliberals put forward, even though his approach and methods were peculiar. First and foremost, he was the scholar whose writings were closest to the humanities. He approached issues of economy and society, including politico-economic themes like interventionism or the (dis-)equilibration of markets, through the historical plenitude of ideas which he studied throughout his life. This enabled him to become the most profound analyst of Adam Smith amongst the Ordoliberals. While this did not disqualify him as an economist during his lifetime, to today’s economists he may appear alien to the field as currently practised, including the impression that his writings miss the clarity of the way in which they write. Second, Rüstow was the Ordoliberal who was most outspoken in his public engagements in practical politico-economic debates. Before and after his emigration, he concentrated his efforts on fortifying the statics of the Weimar and the Bonn Republics and did so not primarily as an advisor to politicians, but—in his numerous pieces as a public intellectual and in his role in the Aktionsgemeinschaft Soziale Marktwirtschaft—as an advisor to the individual citizen. Finally, this approach to the citizen was mirrored in his humanistic world view and his attitude to democracy. At first sight his writings can appear as elitist, as being composed by someone who pretends to know what is good for others. But we certainly disagree with the charge that he was an authoritarian antidemocrat. While he and the other Ordoliberals were struggling with the tensions between individualism, markets and political representation, their aim was to make liberal democracy less vulnerable to lethal crises such as the ones in the first half of the 20th century. In the dire times of the Great Depression, Rüstow was thinking of constitutional reforms by changing formal institutions. During the stable post-war years, he focused on embedding individuals, and thus markets and democracy, in specific informal institutions. These formal and informal institutions combined should generate and foster a political culture of strong and independently thinking citizens. This is how, in Rüstow’s narrative, liberal democracy can become a strong state and thrive sustainably.