Another Story of the Great Transformation: Ordoliberals on Power, Competition, and the Crisis of Liberalism

This article reconstructs the historical diagnosis of the interwar crisis developed by Walter Eucken, Wilhelm Röpke, and other fellow ordoliberals. While lacking a single counterpart to Karl Polanyi’s Great Transformation, ordoliberal works collectively articulate a coherent alternative narrative. This article argues that their diagnosis rests on a specific anthropological hypothesis – individuals’ lust for power – which drives a destructive institutional dynamic of power, i.e. a cumulative process whereby private interests permeate the state apparatus, progressively yet fundamentally reconfiguring the society’s political and economic institutions. By tracing this mechanism, the article demonstrates how, according to the ordoliberals, the blindness to power issues of nineteenth-century liberalism allowed private economic interests to capture the state, paving the way for interventionism and planning in the interwar period. They did not view this process as a sign of society’s self-defence, as Polanyi argued, but rather as a degeneration from liberalism into economic planning. Uncovering this power-centric narrative is essential to understanding why ordoliberals endorsed a particular type of liberal interventionism, in which a strong, reformed state could act as guardian of the competitive order.