Economic Constitution

In research literature, questions concerning the fundamental ideological and institutional premises of European economies are often discussed under the title of “economic constitution”.[1] Here, the concept of constitution refers not only to a legal structure but also to the overall social and political framework that has shaped the post-war economies on both national as well as European-wide level. It answers the basic question in what ways should economy be regulated on the European level, and to what extent should individual nations give away their economic and political sovereignty.

In the debate on the economic constitution of the EU, the concept of ordoliberalism is often used to denote the German-oriented, rule-based approach to economic policy. Traditionally, ordoliberals have been in favor of strong competition laws that seek to regulate the markets by dismantling monopolies, preventing the abuse of controlling market positions, and limiting state aid. Following the German experience of the interwar period, ordoliberals have accentuated the need of a strong legal framework for economic environment, emphasizing the role of executive institutions over legislative ones. In today’s Europe, ordoliberalism is linked to strong budget rules (e.g., the Maastricht criteria limiting sovereign debt and budget deficits) as well as a politically neutral central bank (i.e., the ECB modelled on the basis of Bundesbank).[2]

[1] A recent contribution by Tuori & Tuori spells out two different aspects of “economic constitution” of the EU: (i) the “microeconomic constitution that consists of free market principles and competition law; (ii) the “macroeconomic constitution” that limits the budget autonomy of individual states. Tuori, Kaarlo & Tuori, Klaus (2014) The Eurozone Crisis: A Constitutional Analysis. Cambridge: Cambridge University Press, p. 231ff. See also See e.g. Streit, Manfred & Mussler, Werner (1994) “The Economic Constitution of the European Community: From Rome to Maastricht” Constitutional Political Economy 5(3), 319–353.

[2] See e.g. Markus K. Brunnermeier’s, Harold James’ and Jean-Pierre Landau’s recent book The Euro and the Battle of Ideas. Princeton, NJ:  Princeton University Press, 2016.