Introduction: The New Fragility of Western Order

“Order ” is certainly among the most complex and most fundamental notions in Western social philosophy (Anter 2007). This essay is dedicated to a perspective in the social sciences which approaches issues of economy and society through the notion of order —a perspective with a long-standing tradition and a multitude of thinkers related to it. James Buchanan ’s Constitutional Political Economy is one of the most recent and most prominent twentieth-century examples, and in the latest presentations of his life, he repeatedly emphasized his intellectual affiliation to this tradition, as embodied in the systems of the “Old Chicago” School and the Freiburg School (Buchanan 2010, 2011, 2012)—systems which share an astounding number of commonalities (Köhler and Kolev 2013). Following up on this self-characterization, the purpose of the essay is to embed and contextualize Buchanan ’s thought in the “thinking-in-orders ” tradition. In an attempt to transpose this tradition into the twenty-first century, the essay builds upon current formulations of the “New Economics of Order ” (“Neue Ordnungsökonomik”) research program as the most recent example in the “thinking-in-orders” tradition (Goldschmidt et al. 2016; Zweynert et al. 2016).

Such an order -based perspective can prove crucial for understanding our world and its current issues: The development of the past years can be characterized as a process of cumulative implosions of order . Since Brexit and Donald Trump’s election at the latest, the discourse of the financial crisis or the Eurozone crisis has shifted into even more profound debates about identity and culture. The topos of the Western socio-economic discourse seems to be moving away from issues of the economic order , and towards issues of other societal orders . Even “The Economist” put forward the thesis that the old dividing lines in economic policy will increasingly take a back seat, and that the future of the free order of the West will be decided along new categories, such as the openness of society (Economist 2016).

As I delineate in this essay, for economists in the “thinking-in-orders” tradition such a dichotomy between questions of the economic order and other societal orders is unnecessary and untenable. The emergence of this contrast shows, however, that our current debates challenge economics in a genuinely new way. Unlike earlier moments of economic shocks such as the dot-com crisis, the new fragility of our time—both in its causes and in its effects—is characterized by an interdependence of factors that stem from the economic, legal, political or even religious domains. Neither Donald Trump nor the fragility of the EU can be explained by the instruments that today’s students of economics acquire during their studies. And even where genuinely economic issues are at stake—such as in the explanation of the Eurozone crisis—a discussion has recently emerged which requires a historical sensitivity that is seldom taught to economics students.

In this discussion, an intriguing set of questions has been raised, on the policy level but even more so regarding the theory of political economy: How can we grasp the different economic philosophies about the macroeconomic need for control that were revealed during the Eurozone crisis in Germany, France and the Anglo-Saxon world (Brunnermeier et al. 2016)? What is this “German oddity” called ordoliberalism that might have urged German policy makers to react differently to the challenges in fiscal and monetary policy than other Europeans (Blyth 2013; Beck and Kotz 2017; Biebricher and Vogelmann 2017; Hien and Joerges 2017; Kolev 2018a)? Is history of political economy, after all its marginalization in academia during recent decades, nevertheless a helpful tool for economists to understand and handle the issues of today and tomorrow? And above all: In such times of profound transformations in the economic order and the other societal orders and amid the correspondingly increasing demand of citizens for “order security” (Popitz 1992, pp. 35–36): How can the economist meet these new expectations if “the task for the constitutional political economist is to assist individuals, as citizens who ultimately control their own social order ” (Buchanan 1987, p. 250)?

Intellectual Origins of the “Thinking-in-Orders” Tradition as Contextual Economics

What should economists do, as James Buchanan famously asked? And what is the domain of their expertise? A straightforward answer seems to be: studying the economic order . But does such an order universally exist, in any society across time and space? Can we always presuppose its existence, with clear-cut boundaries and a full-fledged logic of its own? According to Karl Polanyi, the functional differentiation of an economic order from the overall order of society cannot be taken for granted in an ahistorical, naturalistic manner (Polanyi 1944, pp. 178–191). This problem is as old as economic thought itself. Tensions between an economic and a political logic occupied already the economics of Plato and Aristotle: Especially Aristotle saw the distinction between the household-embedded “Oikonomia” with its cohesion-enhancing properties for the polis, and the art of accumulating wealth (“Chrematistics”) which follows its own laws that are not subordinate to the objectives of the polis, so that “Chrematistics” endangers the cohesion of the polis and is therefore to be discarded.

The relationship of an economic “value sphere” (Max Weber) to the overall order of society has occupied a central position over much of the history of economic and political thought. Adam Smith’s system can be seen primarily a response to Thomas Hobbes (Perlman and McCann 1998, pp. 35–72), and as for Hobbes, the “cohesion question” is central for Smith (Evensky 2005), that is the question of how order is created in society. At the same time—and this makes him a founder of modern economics—Smith realized that the question of order in a functionally differentiated society can only be answered in connection with the question of the ordering mechanisms which prevail in the various societal orders.

Smith addressed two questions on an equal footing: On the one hand the older one, which dominated the antiquity and the Middle Ages, about the (primarily normative) connection between the economic order and the other societal orders, and on the other hand the (primarily positive) quest for the laws and regularities within the economic order . These two questions can be seen respectively as the fundamental questions of “contextual economics ” versus “isolating economics” (Goldschmidt et al. 2009; Kolev 2018b). Contextual economics is primarily concerned with the processes at the interfaces between the economic order and the other societal orders, while isolating economics focuses on the processes within the economic order , so that for certain purposes the latter can be modeled isolated from the rest of society. Apart from the fact that isolating economics dominates today’s economics, it is by no means true that all economists do either the one or the other. However, very few economists—classics like Smith, Alfred Marshall, Joseph Alois Schumpeter, John Maynard Keynes and Friedrich August von Hayek —have made groundbreaking contributions to both contextual and isolating economics. James Buchanan ’s “Old Chicago” School teacher Frank Knight is another prominent example of a twentieth century economist who contributed to both contextual and isolating economics.

The development of the mainstream in economic theory, from classical political economy over neoclassical economics to Samuelson’s neoclassical synthesis, has been shaped by an ever-increasing focus on the processes occurring within the economic order and an ever greater outsourcing of the contextual issues—especially into sociology and later economic sociology. Consequently, the main focus of modern economics is currently the domain of isolating economics. There is nothing wrong with such a focus, or with a narrowing per se. The suggestion, for example, that this would mean “losing sight of the whole”, is problematic—after all, as discussed above, already Smith realized that one cannot understand functionally differentiated societies without specifically analyzing their sub-orders . The issue is not about an “either-or”, but rather about balancing the two questions.

This analysis also means that the relationship between isolating and contextual economics is not carved in stone, but that this relationship varies or should vary when economic reality changes. Since the market for (economic) ideas is usually structured in an oligopolistic manner and is characterized by corresponding positions of power, there can be considerable delays in the adjustment mechanism towards a new balance. Today’s economics seems to be in this very position: The core objection to the extent to which isolating economics is currently dominating contextual economics is that it does not do justice to recent changes in economic reality.

To justify this claim, we have to move back a little in history : It is far from a coincidence that the protest against isolating economics of the middle of the nineteenth century originated in Germany: Germany was the first country to carry out a “catch-up industrialization” compared to Western Europe. This finding can be interpreted in the sense that in most countries Polanyi’s “Great Transformation” (Polanyi 1944) only unfolded since the middle of the nineteenth century, and it was within the framework of this transformation that the economic order functionally differentiated itself within society. However, only when this process of functional differentiation is largely completed can scientific issues aimed at the processes within this order be addressed in a meaningful way. In other words, the isolating economics of David Ricardo implicitly predated what was still in the process of emerging in Germany and most other countries. Therefore isolating economics has little or nothing to say on the topic of “catch-up development”. This disability was the indispensable background against which historicist economics emerged. The contextual economics produced by the sequence of Historical Schools in Germany turned out to be a real export hit—not quite surprisingly, this economics was intensively received especially in countries facing the problem of “catch-up development”, such as Japan, Italy, Russia and the US. Thus, historicism in economics was by no means an intellectual “German exceptionalism” (Grimmer-Solem and Romani 1998; Pearson 1999; Caldwell 2001; Hodgson 2001), but rather a pan-European phenomenon that started in Germany as the first “latecomer” and became closely linked to economic reality in a large number of countries and the issues there. This economic reality was characterized by problems of structural change, upheavals and ruptures at the interface between economy and society.

And it is precisely these problems where contextual economics has its comparative advantage. One can say: Contextual economics is above all research of transition and transformation, a perspective on economics which has its comparative advantage where it is necessary to understand profound structural change. Conversely, where the economic order has differentiated itself from society and/or where the relationship between economy and society is reasonably stable, isolating economics has an advantage. This very simple consideration not only illuminates why contextual approaches in the nineteenth and early twentieth centuries were dominant in many countries of continental Europe, it also explains the triumph of isolating economics after the end of World War II. Today we know that the period from 1945 to about 1990, relative to the periods before and after, was a phase of globalization that was progressing slowly and above all rather steadily (Giersch 1986; Verde 2017, pp. 5–11). The balance of competing political orders slowed down the pace of institutional change worldwide and made sure that there was little change in the relationship between economy and society even in the developed industrialized countries. In short: In the economic reality of the Cold War, all the prerequisites were given that would grant an advantage to isolating economics. This has fundamentally changed with the collapse of socialism, and it is far from a coincidence that the deficiencies of isolating economics came to light for the first time when an analysis of post-socialist reform in Central and Eastern Europe became necessary. Here it also became apparent that almost all economists implicitly assumed something as given which was still only in the process of emergence: a differentiated economic order distinct from the rest of society. As these economists misjudged that their models reflected a reality which was simply not (yet) given in the countries to be analyzed, their economic policy recommendations were also partly inadequate. The emergence of so-called “oligarchs” in the course of a “state capture” in many countries of the post-Soviet area can certainly not be attributed directly to the recommendations of Western economic advisors. But it is strikingly a phenomenon involving the co-evolution of economics and politics (Weizsäcker 2017), which is a blind spot in isolating economics. And the post-socialist transformation in Eastern Europe was only the starting point for a renewed wave of fundamental changes in the institutional structure, especially of developing and emerging countries, but increasingly also of developed industrialized countries—again, the phenomena in the US and EU mentioned at the beginning of this essay are illuminating examples. Sooner or later the realization of these processes of structural change will lead to a shift within economics—and at the interfaces to its neighboring disciplines—between isolating and contextual economics . In fact, this process has already started. Before delving into the newer contextual approaches, the German ordoliberal tradition should first be located in the grid of contextual and isolating economics, since its varying success is particularly illuminating about the relationship between economics and economic reality.

Rise and Decline of German Ordoliberalism

For the reasons outlined above, the German reception of classical political economy was latently skeptical, and German economists of the nineteenth century turned towards a historical-ethical research program (Pribram 1983, pp. 200–206). In any case, it seems obvious that Gustav Schmoller did not contribute to economic theory—but only if one narrows the concept of economic theory to what was described above as isolating economics (Rieter and Zweynert 2006). The Younger Historical School—and this must be seen against the background of a fundamentally changing society in the late nineteenth and early twentieth century—radically shifted the focus of its research and teaching towards contextual issues and initiated passionate epistemological debates about the tasks of political economy. Ultimately, however, this led it to neglect the main task of economics. In the 1920s, a number of younger economists—among them the later ordoliberals Walter Eucken, Wilhelm Röpke and Alexander Rüstow—entered the scene, quite tellingly calling themselves “Ricardians” (Janssen 2009, pp. 34–50; Köster 2011, pp. 222–233). Their aim was to blaze a trail back to theoretical analysis for German economics and, in doing so, to reconnect it to the international mainstream of economic discussion and literature. However, as hard as Eucken, Röpke and Rüstow attacked the historicists, it was not their intention to banish those questions from economics. In a sense, ordoliberalism can rather be understood as the most recent historical school (Schefold 2003; Peukert 2000). Their concern was, firstly, to place the questions of historicism on epistemologically sound foundations (Gander et al. 2009); secondly, to mediate between the heritage of German contextual economics and the rapidly evolving insights of modern (isolating) economics; and thirdly, to show that economic policy recommendations should be understood not primarily as political volitions but rather as a scientific task in the domain of policy consulting. In 1938, Eucken clearly identified the questions about the economic process and those about the economic order as the two main problems of economics (Eucken 1938 [2005], pp. 30–54).

Within the different contextual domains, there was an implicit division of labor within German ordoliberalism . Franz Böhm and Walter Eucken were primarily concerned with the interfaces of the economic order to the legal order and political order , and here in particular with the problem of power in a free society. Wilhelm Röpke and Alexander Rüstow, sometimes referred to as the “sociological” or “communitarian” branch of ordoliberalism (Renner 2002, pp. 250–255; Zweynert 2013, pp. 116–120; Kolev 2015, pp. 424–431), focused more on the issues of social cohesion in modern market societies. In addition to these ramifications of original ordoliberalism , over the past seven decades the “thinking-in-orders ” tradition received significant additional input by several other approaches. Doubtlessly the work of Friedrich August von Hayek played a very special role here (Hayek 1983 [1992]; Streit and Wohlgemuth 2000; Kolev et al. 2014): His presence in Germany from the 1960s onwards and his impact on the neoliberal debates well into the 1980s produced a transformation within ordoliberalism : Quite a few later-generation self-perceived ordoliberals actually qualified better as Hayekians than as descendants of the Eucken tradition, so that the original ordoliberal approach of the Freiburg School moved more and more into an impasse.

Thus the question is more than straightforward: Was ordoliberalism simply a moment in history and thus, as seen from today, only an artefact for historians of political economy?

An assessment of the contribution of ordoliberalism as seen from history , and an evaluation of its potential for research programs today, provides some intriguing answers. To a certain extent, the obvious loss of importance of ordoliberalism can also be attributed to the later-generation ordoliberal economists themselves. In times of a more or less static system competition in the twentieth century, a number of representatives of the “thinking-in-orders” tradition confined themselves to “praising” the quality of the original program of Eucken, Böhm, Röpke and Rüstow. In terms of economic policy recommendation, these later-generation ordoliberals often argued in a pragmatic and intuitively liberal manner. Their contributions to theoretical discussions seldom had an explicit connection to the core of the “thinking-in-orders” tradition. Even more importantly for this essay, a search for connectivity between their ordoliberal approach and the more recent developments in Anglo-Saxon academia was pursued only seldom and unsystematically (Feld and Köhler 2016, pp. 71–76). In a critique of this impasse-like intellectual climate, the later-generation ordoliberals have been depicted as behaving like “islanders” who “isolated themselves from international discussion” (Bachmann in Braunberger 2014).

In this perspective it is understandable that observers today draw a rather sober record for ordoliberalism . In the course of the most recent “Methodenstreit” around 2009–2010 (Caspari and Schefold 2011), the historical mission of the ordoliberals was portrayed as helping German interwar and early post-war economics its way out of the historicist impasse and back to theory (Ritschl 2009). However, in the course of the post-war decades, the ordoliberals all too quickly lost the connection to the development of modern theory: After World War II, the priority in Germany was the reception of the missed Anglo-Saxon literature and particularly of Keynesianism (Hesse 2010).

The assessment that the contribution of ordoliberalism exhausted itself in regaining a place for economic theory in German economics is again acceptable under two conditions: Firstly, if under “theory” one understands only isolating economics, and, secondly and decisively, if one focuses on the problems of a world with relative low connectivity and dynamics, as the one of the second half of the twentieth century. In contrast, what makes “thinking-in-orders ” so topical for twenty-first century economics is that its early twentieth-century representatives understood how the two main problems of economics can only be understood as being interdependent, and that those representatives focused their attention especially on the relationship between isolating and contextual issues.

As indicated above, this necessity is increasingly evident in the course of the recent globalization wave as well as in the most recent ruptures in the US and the EU. Profound structural change is all over the place, and it affects both the economic order and its interfaces to the other societal orders . This raises questions about the “interdependence of orders”—above all about the relationship of the economic order to the political order and the legal order—as well as about the importance of informal institutions for economic development processes, a set of issues which deeply occupied Röpke’s and Rüstow’s attention.

Despite the evident revival of contextual problems, a decline of modern isolating economics is neither to be expected nor would it be desirable. But it may well be that future historians of economics will identify the partial failure of today’s economics to understand the contextual problem of post-socialist change and to make meaningful recommendations as the starting point for a re-adjustment of the relationship between contextual and isolating approaches, leading to a significant appreciation and “revaluation” of the former. This would most likely not be the case if the processes that took place in the former Eastern Bloc in the 1990s were a singular phenomenon, a kind of “accident of history ” for which the dominant strands of economic theory were not conceived. Today, we already know that these transformation processes were just the beginning of a new wave of profound structural change in a large number of countries. The current instability in the Middle East and North Africa and the associated migration flows show impressively that these are not abstract processes, but have very concrete points of contact with economic and social reality in the increasingly fragile order of the West.

In such a world, the “thinking-in-orders” tradition could soon emerge as a “hidden champion”. If one understands ordoliberalism as a contribution to explaining the co-evolution of economic and social phenomena, then the dust of history flees from the ordoliberal writings. Superficially, ordoliberalism plays no role today, especially in the international discourse outside of Europe. However, the “thinking-in-orders” approach addresses issues and possible solutions that can prove essential for today’s research in political economy. For if one interprets ordoliberalism not merely as a tool of economic policy leading to ultimately (neo-)liberal positions, but as a contextual access to the social sciences, a new “value added” becomes obvious: Current economic research—if it aims to explain processes in the real world—must face the same questions which the first-generation ordoliberals faced in the 1930s. As indicated above, these were and still are the questions of the epistemological foundations of economics, the relationship between contextual and isolating economics, and the content of economic policy recommendations, which—in Eucken’s terms—should simultaneously be “effective” and also “do justice to the dignity of man” (Eucken 1940 [1992], pp. 313–317).

Revitalizing Impulses from Across the Atlantic: Buchanan ’s Virginia School and the Ostroms’ Bloomington School

To be sure, revitalizing the ordoliberal tradition cannot confine itself to revisiting the “grand masters” of ordoliberalism . The rise and decline of ordoliberalism described in the section above can be matched to contemporaneous as well as to later developments in other strands of political economy in the “thinking-in-orders” tradition as embodied in contextual economics . This section focuses on the opposite side of the Atlantic, more specifically on two of the key paradigms in the renaissance of political economy in the US during the second half of the twentieth century, both clearly in the “thinking-in-orders ” tradition: the Virginia School around James Buchanan , and the Bloomington School around Elinor and Vincent Ostrom . The exposition certainly does not aim at a comprehensive overview as conducted in the extensive literature on these scholarly communities. Rather, for this analysis the legacy of Buchanan and the Ostroms functions as complements to the ordoliberal tradition, drawing primarily on reconstructions of these complementarities as conducted by Viktor Vanberg (on Buchanan ) and Peter Boettke (on the Ostroms).

The ordoliberals’ understanding of democracy has given rise to an extensive literature debating whether they were adherents of an “authoritarian liberalism” (Haselbach 1991; Ptak 2009; Slobodian 2018). While some of the authors have initiated intriguing debates, like the proximity of Eucken’s notion of the “strong state” to Carl Schmitt’s homonymous concept, other parts of this literature are similar, in tone and depth, to Nancy MacLean’s tendentious misrepresentations (MacLean 2017). Notwithstanding the rather ahistorical question whether the ordoliberals were “good democrats”, it is certainly true that their notion of the political process in a democracy is not particularly elaborate (Nientiedt and Köhler 2016). This has been a common critique to ordoliberal political economy: From the perspective of Public Choice, ordoliberalism has been located as being proximate to “technocratic-elitist approaches” to political economy (Kirchgässner 1988, pp. 55–58; Frey and Kirchgässner 1994, pp. 340–348). Challenging this irreconcilability by showing how the Freiburg legacy can be complemented by Virginia School impulses has been at the heart of the attempts to revitalize ordoliberalism , as conducted especially by Viktor Vanberg. While Public Choice can “fill the gap” in ordoliberalism regarding the conceptualization of politicians and bureaucrats in the democratic process, Constitutional Political Economy adds more nuance to the key ordoliberal notion of the economic constitution , and especially to the embedded character of this constitution , its establishment and maintenance in the interdependence to the democratic process (Vanberg 1988, 1999, 2013, 2014, 2015). Understanding the intricate mechanisms of this embeddedness —also in the sense of the recent concept of “Entangled Political Economy” (Wagner 2016)—is crucial not only for fundamental questions like the complex of legitimacy. Equally important, taking a Constitutional Political Economy perspective sheds light on practical issues like the “reformability” of economic constitutions in a democracy—and it has been convincingly argued that this will be the decisive “litmus test” for democracies to cope with the multiple, overlapping crises of our times (Wohlgemuth 2005, pp. 9–12).

Another important critique of ordoliberalism is related to the emergence of rules. Apart from the questions addressed in Hayek’s evolutionary theory, it is obviously important to ask to what extent the setting of rules must be seen as a prerogative of the state. In this respect there are differences between various proponents of ordoliberalism , with its “sociological” or “communitarian” branch represented by Wilhelm Röpke and Alexander Rüstow as discussed in section “Rise and Decline of German Ordoliberalism” being more willing than the Freiburg School to see a “division of labor” between formal rules-setting by the state and informal rules-setting within civil society (Kolev 2015, pp. 430–431; Giordano 2018, pp. 45–52; Goldschmidt and Dörr 2018, pp. 207–210). Nevertheless, the legacy of Elinor and Vincent Ostrom can add much nuance regarding the mechanisms of polycentric self-organization and informal rules-setting within civil society. While Vincent Ostrom’s approach profited methodologically and epistemologically from Eucken’s attempt to overcome the intricacies left behind by the “Methodenstreit” (Sproule-Jones et al. 2008, pp. 3–4; Kuhnert 2008, pp. 118–121; Boettke 2012a, pp. 148–156), Elinor Ostrom’s conceptualizations of self-organization within civil society, beyond the stereotypical dichotomy of state vs. market, is very helpful to understand the rules-setting in a context free of formal statehood, or of pockets of self-organization within formal statehood, also highlighting the dynamic effects of such self-organization on the cultivation of the citizens’ capability of self-governance (Boettke 2012b, pp. 164–171; Aligica et al. 2017, pp. ix–xi). As will be shown below, in the context of today’s digitalization such a perspective can gain considerably in relevance, as compared to the pre-digital age when notions like Vaclav Hável’s trust in the problem-solving capacity of civil society were commonly criticized as merely utopian.

“New Economics of Order” as a Research Program in Contextual Economics

“New Economics of Order” (NEO) (Goldschmidt et al. 2009; Goldschmidt et al. 2016; Zweynert et al. 2016; Kolev 2018b) is a very recent attempt at formulating a research program within the paradigm of contextual economics , and that with a twofold goal. Firstly, it starts with the Buchananite plea for searching for complementarities across research programs:

The diverse approaches of the intersecting ‘schools’ must be the bases for conciliation, not conflict. We must marry the property-rights, law-and-economics, public-choice, Austrian subjectivist approaches. Buchanan (1979)

Thus the first goal of NEO is to explore the possible complementarities of the research programs in the “thinking-in-orders” tradition on both sides of the Atlantic discussed above, along the lines depicted in section “Revitalizing Impulses from Across the Atlantic: Buchanan’s Virginia School and the Ostroms’ Bloomington School” as to how the German ordoliberal tradition can profit from Virginia and Bloomington impulses. The second goal is to update this intellectual heritage to today’s socio-economic reality, and exploring this second goal is at the core of this section.

As argued in section “Intellectual Origins of the “Thinking-in-Orders” Tradition as Contextual Economics”, the marginalization of contextual economics within today’s economics discipline appears unwarranted especially due to the current fundamental changes in economy and society. The challenges of this quickly and deeply transforming world can be caught with a term which featured at the beginning of this essay—fragility . For multiple reasons, the order of economy and society—in the West as well as elsewhere—appears to many citizens as far from robust, and the dynamics of this non-robust, fragile entity raises manifold fears. Heinrich Popitz’s notion of “order security” (Popitz 1992, pp. 35–36) can help to show the way to go for NEO. We can define “chaos” as an order which is not (anymore) intelligible to the observer (Anter 2007, pp. 44–52), and it is a common finding in opinion polls that many citizens perceive today’s socio-economic reality as chaotic. This is a highly dangerous sentiment for the political process, one that can easily lead to the rise of populisms and their simplistic solutions. A plausible diagnosis for this sense of chaos can be formulated in the following terms: The global-digital world brings for the citizen an extraordinarily high degree of dynamics and, at the same time, an extraordinarily low degree of statics (Kolev 2017, pp. 16–19). The sources of dynamics are global markets and digital technology, whereas the providers of statics are the state and the community (Kolev 2018c).

To formulate answers to these sentiments and “to assist individuals, as citizens who ultimately control their own social order ” (Buchanan 1987, p. 250), NEO has to engage in scholarly dialogue on two platforms. The first platform is the “traditional” interdisciplinary dialogue, indispensable for all the strands of contextual economics in the “thinking-in-orders” tradition discussed above. A discourse between economists, lawyers, political scientists, philosophers and sociologists is necessary for understanding the fragility of our governance structures—in the democratic processes on the national level (e.g., the weakening of centrism by right-wing populism) and in the constitutional framework on the international level (e.g., the encroachment on WTO rules by anti-globalist trade wars). Providing answers to the multiple and overlapping crises of our times clearly indicates the indispensability of this dialogue: What are likely reactions within the political order , already strained today despite the favorable macroeconomic climate, to the next major recession? How could citizens react within the political order if a sizeable inflation emerges in the economic order , leading to a devaluation of the pension schemes of millions of citizens and to the corresponding disappointment of long-term expectations about old-age material security? And what are likely changes of the political attitude to migrants if unemployment rises and the fear for one’s job is back as a mass sentiment in the economic order?

Next to this “traditional” platform of dialogue about the governance issues of globalization , a second—still nascent—platform of dialogue is needed, one focused on understanding the challenges of digitalization as the other major source of dynamics. Issues of natural monopolies, data protection or copyright, but also the impact of this fundamental process of “creative destruction” on the labor market (Eichhorst and Rinne 2017; Haucap and Heimeshoff 2018; Rolnik 2018) are ideally suited to be addressed from a contextual perspective: The process of “creative destruction” is by far not confined to the economic order —and as a consequence, a conceptual apparatus of interdependent orders can capture much better the causes and effects as located in different societal orders. What are the threats for the political order stemming from a labor market polarized between the winners (e.g., IT specialists) and losers (e.g., blue-collar workers) of digitalization ? What are likely changes of the citizen’s attitude to the political order stemming from the economic transformation of media markets, the possible loss of flagship media in the democratic discourse and the formation of “echo chambers” and “filter bubbles” in social media? Understanding these multiple—often intuitively unintelligible and frequently reinforcing—transmission and feedback effects of digitalization across societal orders as one source of the citizen’s perception of economy and society as being chaotic, imperatively requires this contextual conceptual apparatus of interdependent orders.

NEO is thus a particularly adequate access to understanding today’s dynamics within and across orders , as generated by globalization and digitalization . But it is also helpful to understand where the statics demanded by the citizen can come from. NEO analysis can show that, under certain conditions, the increase of abstractness and anonymity which goes along with the dynamics of globalization —in the sense of Ferdinand Tönnies’ “Gesellschaft”—can at least partially be compensated by the opportunities provided by the dynamics of digitalization to set up or revitalize virtual communities in the sense of “Gemeinschaft” (Kolev 2018c, pp. 653–659). Thus the statics for the citizen in search of “order security” must not necessarily be provided only by the formal institutions of the state, but also by the informal mechanisms of the “digital commons”. The ordering principles of these “digital commons”—including questions such as whether they favor large-scale players, or whether they have the potential to become a serious substitute for social welfare provision by the state—are still largely to be discovered, and it is within this process of discovery that NEO scholars will be able to assess the relative suitability and applicability of the ordoliberal, Virginia and Bloomington toolboxes. But it is already quite obvious that the questions raised by the phenomena in this section resonate more than well with the problem-solving capacity of the entirety of those toolboxes in the “thinking-in-orders” tradition—with the complementarities and updates identified as necessary by the NEO research program.

Conclusion: James Buchanan as Offspring of, Contributor to, and Revitalizer of Contextual Economics

This essay pursued one historical and one conceptual task. The sections dedicated to history of political economy aimed at reconstructing the distinction between the “thinking-in-orders” tradition as embodied in contextual approaches to socio-economic reality, and approaches classified as “isolating economics”. While the former focus on the interfaces between the economic order and other societal orders, the latter concentrate on the processes within the economic order . When matching this distinction to different phases in economic history , the claim could be substantiated that contextual approaches—from classical political economy to ordoliberalism —have their comparative advantage in periods of transformation and transition, while isolating economics is particularly powerful in periods when the general order of society is fairly stable.

James Buchanan experienced his scholarly socialization in the “Old Chicago” School, a community which—very much parallel to German ordoliberalism —emerged in the 1930s in a period of fundamental transformation, especially in the long shadow of the Great Depression and the profound structural change during the New Deal. While “Old Chicagoans” Frank Knight and Henry Simons also contributed to domains of isolating economics like capital and taxation theory, they were equally interested in the contextual issues of the economic order amid the increasingly fragile overall order of society. The “New Chicago” School, as it emerged from the 1950s onwards, left the contextual focus of its predecessors behind and moved away from “laissez faire within rules” towards an unrestrained “laissez faire” (Buchanan 2010). In the diagnosis of the current essay, this development is anything but surprising, given the increasing stability in the Cold War order .

As it is widely known, Buchanan ’s life-long contributions concentrated on the interface between the political order and the economic order. Both Public Choice and Constitutional Political Economy are deeply contextual in their nature. The aim of the essay’s conceptual sections was to show how Buchanan ’s politico-economic legacy—along with Bloomington School impulses—can prove vital for waking up the German ordoliberal tradition from a dormant state after its stagnation in recent decades. Apart from identifying complementarities in this attempt to “marry” Transatlantic contextual approaches (Buchanan 1979), the “New Economics of Order” research program targets primarily the specific challenges of today’s socio-economic reality, may they be related to the politico-economic ruptures in the West or the general transformations due to globalization and digitalization . This “New Economics of Order ” interdependent orders apparatus is constructed with the explicit goal to provide answers to today’s pervasive fragility in economy and society. In a Buchananite attempt “to assist individuals, as citizens who ultimately control their own social order ” (Buchanan 1987, p. 250), the “New Economics of Order ” toolbox could help enable economists to be not only “students of civilization”, but also its active defendants (Dekker 2016)—a task of ultimate importance amid today’s order fragility .