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Viktor Vanberg: The Constitution of Markets and Public Choice
Malte Dold
Pomona College
[Manuscript in preparation for the Oxford Handbook of Ordoliberalism, edited by
Thomas Biebricher, Werner Bonefeld, and Peter Nedergaard]
Abstract: This chapter provides an overview of the work of German economist-sociologist Viktor
Vanberg. By working out a synthesis between the contractarian economics of James Buchanan
and the evolutionary economics of Friedrich Hayek, Vanberg has made essential contributions to
the development and modernization of ordoliberal thinking. The first part of this chapter highlights
biographical milestones in Vanberg’s career, which help trace important personal and institutional
influences on his intellectual journey. The second part of this chapter carves out key themes of
Vanberg’s research program, constitutional political economy (CPE). It discusses CPE’s
methodological foundations, including its underlying behavioral model, the question of deliberate
design vs. evolution of social orders, and the relationship between market and state. The chapter
closes with an assessment of Vanberg’s contributions to ordoliberal philosophy and economics.
Keywords: Citizen and Consumer Sovereignty, Constitutional Political Economy, Evolutionary
Economics, Friedrich Hayek, Hans Albert, James Buchanan, Methodological and Normative
Individualism, Rule-Following Behavior
Acknowledgments: I would like to thank Viktor Vanberg for agreeing to an extensive FaceTime
interview on December 19, 2019. Moreover, I would like to express my gratitude to Stefan Kolev
for his feedback on an earlier draft of this chapter and to my research assistant Elias van Emmerick
for helping me to screen Vanberg’s vast oeuvre. This facilitated the identification of, what I
consider to be, the core themes of Vanberg’s work.
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1. A Brief Intellectual Biography
Growing up in post-WWII West Germany in Aachen, Viktor Vanberg (*1943) enjoyed a humanist
education at the Kaiser-Karls-Gymnasium where he earned his Abitur in 1963. He finished his
diploma studies in sociology at RWTH Aachen and the University of Münster in 1968. In his
thesis, Vanberg defended the methodological individualism of Harvard sociologist George Caspar
Homans, whose work was inspired by behavioral psychology and who understood social
phenomena as exchange processes (Vanberg 1967). During his studies in Aachen, Vanberg
discovered the Popperian critical rationalism of Hans Albert (Vanberg 2014a, 147). The contact
with Albert’s work – and the academic friendship with Albert formed over many decades later on
– would have a long-lasting effect on Vanberg’s career and thinking (Vanberg 2019). In particular,
Vanberg was inspired by three core ideas present in Albert’s work (for a summary, see Albert
1979): (i.) social theories should be built on hypotheses that are empirically refutable, (ii.) classical
economics with its individualist approach provides a powerful analytical lens for a general social
scientific research program, and (iii.) modern neoclassical economics is characterized by its
“model-Platonism as it turns the behavioral model of classical economics into a purely formal
logic of choice and short-circuits the role of institutions by assuming away knowledge and
incentive problems” (Vanberg 1994a: 2f.). More generally, the contact with Albert’s approach led
Vanberg to become intellectually alienated from the mainstream theories in sociology of the 1960s,
notably different versions of Neomarxist approaches and Talcott Parsons’ structural functionalism
(Vanberg 2014a, 148). At the time, Vanberg developed a critical distance toward leftist student
movements of the 1968 generation who, to him, were flirting too much with collectivist-totalitarian
conceptions of politics (Vanberg 1973).
Vanberg earned his Dr. phil. from the Technical University of Berlin in 1974. In his doctoral
dissertation, Vanberg further developed his defense of the individualist-economic approach within
sociology, this time inspired by the distinction Friedrich Hayek drew between the individualist
Anglo-Saxon and the collectivist French-Continental traditions of Enlightenment philosophy
(Vanberg 1975). After completing his doctorate, Vanberg joined the Institute for the Study of
Cooperatives at the University of Münster. This would become an important intellectual period for
Vanberg, as he began to question the comprehensiveness of Hayek’s individualist-evolutionist
perspective (Vanberg 2014a, 149). According to Vanberg, Hayek had fruitfully distinguished
between two kinds of social order, those that are spontaneously generated (market-type
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arrangements) and those that are deliberately designed (corporate-organizational arrangements).
While Hayek had delivered a systematic discussion of the first type of social order, Vanberg
thought that he remained surprisingly silent on the question of how the individualist approach
could be systematically applied to social phenomena of deliberately organized cooperation. During
his time at the Institute, Vanberg started to study the main contributions of public choice literature.
He was particularly intrigued by James Buchanan’s work, which rejected “any organic
interpretation of collective activity” (Buchanan and Tullock 1962: 11) and instead provided both
a positive explanation and a normative defense of (deliberate) cooperative political behavior from
a strictly individualist perspective. Moreover, Vanberg realized that Buchanan’s contractarian
individualism provided him with the missing theoretical tools to analyze the second Hayekian
order (Vanberg 2019, 149).
In 1981, Vanberg finished his habilitation thesis with a ceremonial lecture at the University of
Mannheim. In the thesis, for which Albert had served as “habilitation father,” Vanberg argued for
a general individualist explanation of social orders (both the organization-type and the market
type) that would combine Hayek’s individualist-evolutionist and Buchanan’s individualist-
contractarian perspective (Vanberg 1982). Of pivotal importance would be a Liberty Fund
conference in Freiburg in the same year. Both Hayek and Buchanan attended the conference and
it was Vanberg’s task to comment on Hayek’s talk. In his conference paper, Vanberg (1983) chose
to focus on the normative core of classical liberalism and the respective differences between the
normative commitments of Hayek’s liberal evolutionism and Buchanan’s contractarian
constitutionalism. Foreshadowing a core pillar of his later work, Vanberg argued that Buchanan
provided a more convincing discussion of normative justification of social rules, viz., consensual
voluntary agreement of the individuals affected by those rules. While, at that time, Vanberg’s work
was not yet directly influenced by the thinkers of the Freiburg School (in particular, Walter Eucken
and Franz Böhm), his writings were already ordoliberal in spirit in that he argued that evolutionary
processes alone would not suffice to secure the market’s full welfare-enhancing potential. In this
point, Vanberg followed Buchanan (1977: 31), who, according to Vanberg, had rightly criticized
that the “forces of evolution alone contain within their workings no guarantee that socially efficient
results will emerge over time.”
During the early 1980s, Vanberg met James Buchanan at various conferences, and the latter
clearly saw the affinity between their intellectual endeavors. Consequently, Buchanan invited
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Vanberg to spend some time as a visiting scholar at the Center for Study of Public Choice at
Virginia Tech in Blacksburg in the summer of 1982 (Vanberg 2014a, 153). Vanberg later earned
a prestigious Heisenberg fellowship from the German Research Foundation, which allowed him
to move to the US for the academic year 1983/84 and continue his research at the Center, which
now had moved to George Mason University (GMU) in Fairfax, VA. Once there he was able to
work closely with Buchanan who would, after Albert, become Vanberg’s second mentor and long-
time coauthor (for a selection of papers that illustrate their fruitful collaboration, see Buchanan
and Vanberg 1988, 1989, 1991, 2002). In fact, Vanberg credits Buchanan for having saved his
academic career. In the early 1980s, there was practically no demand for sociologists with a
classical liberal and methodologically individualist profile in the German academic system
(Vanberg 2014a, 153).
In 1985, Vanberg became a professor of economics at GMU and the editorial director of the
Center for Study of Public Choice. His following years would be extraordinarily productive, as
Vanberg himself noted: “The years I spent at the Center and GMU, closely cooperating with Jim
Buchanan, were without any doubt the most stimulating and enriching period in my academic life”
(2014a, 153). After Buchanan had won the Nobel prize in economics in 1986, Vanberg initiated
and edited the journal Constitutional Political Economy alongside Richard E. Wagner, which
would become (together with Public Choice) one of the most prestigious outlets for scholarship at
the intersection of politics, philosophy, and economics in the constitutional contractarian tradition.
The time spent in the US and his close collaboration with Buchanan spurred Vanberg to study
the work of the proponents of the Freiburg School of Ordoliberalism more deeply, a “tradition in
German economics that [he] had known about but that [he] had not paid much attention to before
coming to the Public Choice Center” (Vanberg 2014a, 154). Vanberg saw the substantive parallels
between the Buchanan and the Freiburg version of constitutional economics: both studied the link
between the legal-institutional framework and the quality of social processes, and both favored
rule-based policies over discretionary interventions into those processes. Vanberg also saw
systematic differences and potentials for mutual learning: According to Vanberg (2001: xiii),
public choice scholars that followed Buchanan had “primarily focused on the issue of how the
political process may be constrained by suitable rules to be responsive to citizens’ interests, the
principal focus of the Freiburg school has been on the institutional prerequisites for a market order
that is responsive to consumer interests.” Vanberg sought to explore the complementarities
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between ordoliberalism and contractarianism with the aim of building a new constitutional
economic synthesis similar to the one he had already established between Hayek’s and Buchanan’s
oeuvres.
In 1994, Vanberg was offered a chair as professor of economic policy at the University of
Freiburg – the very same chair that Hayek had held in the 1960s (Vanberg 2008b). This
institutional and geographical change to Southwest Germany enabled Vanberg to make use of “the
fruits of my cooperation with James Buchanan to further develop the Freiburg tradition, in teaching
and in research, by systematically fusing it with the contractarian constitutionalist paradigm and
with Hayek’s evolutionary approach” (2014a, 154). Vanberg’s research agenda was honored and
further boosted by his appointment as the director of the Walter Eucken Institute in 2001, the main
think tank in the German speaking world for research in constitutional economics and ordoliberal
thinking in the tradition of the Freiburg School. Vanberg retired from active teaching in 2009 and
from his role as director of the Eucken Institute in 2010.
2. Methodological Foundations: A Model of Rule-Following Behavior
Vanberg’s research program is rooted in a deep philosophical discussion about the proper
methodological foundations of social science, with a particular focus on economics. This
discussion takes him beyond neoclassical economics and shows that economics can and should be
practiced as a psychology-compatible social science. In doing so, Vanberg’s methodological
starting point is an explicitly naturalistic and empiricist outlook on human action that combines
insights from two different fields: evolutionary psychology and Austrian economics (Vanberg
2004a).
Vanberg acknowledges that the core feature of the Austrian economic research tradition is the
attempt to combine methodological individualism and subjectivism (Vanberg 1998). It is
methodologically individualist since it commits to analyze and explain social phenomena in terms
of individual choices. It is subjectivist in that it insists on subjective preferences, expectations, and
interpretations being essential determinants of human action. Ludwig von Mises (1978) has argued
that subjectivism presents a challenge for economists: Since economics deals with conscious
behavior or purposive activity of human actors, it cannot employ the methodology of the natural
sciences, which is concerned with matter that follows reactive responses to stimuli. Consequently,
Mises argued for a methodological dualism of natural and social sciences. In contrast, Vanberg
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(2004a) argues that a naturalistic-empiricist approach that aims at causal explanations of human
behavior can still be fruitful for economists and other social scientists if they explicitly analyze the
nature of cognitive processes and acknowledge the limitations of their approach due to the
complexity of the social phenomena they study.
In this context, Vanberg motivates insights of evolutionary psychology. According to Vanberg
(2004a: 15), the fundamental tenet of evolutionary psychology is that, because humans are the
product of the evolutionary process, explanation of their cognitive programs must be in line with
the character of that process. More specifically, when social scientists try to find causal
explanations, they must show that the cognitive programs or behavioral models they invoke to
explain a given aspect of human action could have evolved under evolvability constraints and
solvability constraints. The former refers to the fact that the cognitive program or behavioral
pattern could have evolved under the conditions that characterized human evolutionary history.
The latter refers to the idea that the cognitive mechanism or behavioral pattern actually helps
humans solve problems that they would encounter on a regular basis. A crucial point for Vanberg
is that the evolutionary approach suggests that the human capacity for purposive action can be
explained by the presence of cognitive decision rules of the form ‘if problem A is encountered,
then action X is an appropriate response.’ Such decision rules guide purposive action and
incorporate knowledge of the world that helps humans anticipate the consequences of alternative
courses of action. Crucially, Vanberg (2004a, 17) notes, individuals acquire the cognitive program
of those decision rules through two main processes, evolution, affecting genetically encoded
programs, and learning or habit formation, affecting memory-coded programs.
At various points in his work, (Vanberg 1994a/b, 2004b, 2006, 2012) contrasts his account of
rule-following behavior with rational choice theory. Vanberg admits that standard economics’
adherence to the rationality principle has intuitive appeal, since it is difficult to imagine a person
acting against their preferences. However, the drawback of this approach is that it has limited
explanatory power and it is hard to refute. Since social scientists cannot know as outside observers
what an individual’s preferences are, they can always ‘explain’ behavior ex post by hypothesizing
that the individual holds preferences and beliefs that are consistent with the observed behavior. In
order to turn the rationality principle into a refutable conjecture – what Vanberg calls a rationality
hypothesis – economists typically make ‘thicker’ assumptions about people’s beliefs and
preferences.
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Neoclassical economists have done this by modeling humans as self-interested maximizers of
utility under the assumption of stable preferences and perfect knowledge about the world. The
typical argument defending this modelling strategy follows the logic of Friedman (1953): while
economic actors do not make complex maximizing calculations before making a choice, they act
‘as if’ they did in market environments. In addition, Friedman argues that the self-interest
assumption is sensible since self-interested actors tend to succeed in life, whereas other strategies
lead to a waste of resources. Vanberg (2012: 509) doubts Friedman’s explanation. First, it is
unclear whether market forces exert sufficient strength to produce maximizing behavior. Second,
it is unclear whether self-interested behavior would extend beyond the market sphere. As Vanberg
(2004a, 17) argues, rational choice theory with its emphasis on the opportunistic nature of human
cognition would be hard-pressed to pass the evolvability and solvability constraints, as there is
ample evidence from evolutionary biology that throughout human history the behavioral pattern
of “mutually beneficial cooperation” has been a better source of gains than “unilateral
exploitation.”
Importantly, Vanberg (2012, 511ff.) also takes issue with attempts in behavioral economics to
add more realism to their models by including more elements into individuals’ utility functions,
e.g., by adding social preferences. Vanberg’s main critique is that behavioral economists fail to
discern between preferences over consequences and preferences over actions. Take, for instance,
the social preference for reciprocal fairness. This can be interpreted as a consequence-oriented
preference for equitable distributions of resources. Alternatively, it can be understood as an action-
oriented preference for rewarding people for cooperative behavior and sanctioning them for norm
violations. Vanberg points out that behavioral economists do not sufficiently differentiate between
those two preference types. This is a serious flaw, according to Vanberg, since only the first
explanation where agents are assumed to decide each choice situation that they encounter on its
own merits falls within the domain of rational choice. The latter explanation opens the door to
models of rule-following behavior. Here, individuals act according to some preconceived notions
of what kind of behavior is appropriate. This is a radical departure from the way both neoclassical
and behavioral economists model individual behavior.
In this context, Vanberg’s own work expands on Amartya Sen’s (1985) observation that people
have a tendency to accept certain rules of conduct as part of obligatory behavior, and seeing their
own behavior in a chain of past, present, and future behavioral patterns. Vanberg’s rule-oriented
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approach looks at rules of actions as tools for bringing about preferred patterns of outcomes.
Explaining actions in this way means that economists must “redirect attention from the effects of
expected consequences on present behavior to the effects that the actual consequences of past
behavior have on current choices and on the effects that the actual consequences of current choices
will have on future behavior” (Vanberg 2012, 515).
Why do people have an intrinsic tendency to develop preferences over preferred patterns of
outcomes or rules, rather than looking at each situation anew? Following a Hayekian logic,
Vanberg (2012, 517) points out that “the inherent limitations of our knowledge and our powers of
reason require us to rely on the guidance of rules if we are successfully to live our lives and to
coordinate our actions with others in a complex world.” Since individuals face a near endless
stream of choice situations with near endless arrays of options, they rely on generalized rules that
in the past have proven helpful in dealing with similar problems. Vanberg (2005) argues that it is
plausible to assume that, while not producing superior outcomes in each individual case, rule-
following behavior produces better patterns of outcomes on average and in the long-run than
discretionary choices that carefully weigh costs and benefits, considering that agents are
imperfectly rational, maximization is time-costly, and it is often simply not clear what the
maximizing choice is. It is crucial to note that Vanberg does not dismiss rational choice altogether.
Instead, he believes that it is appropriate to think of “a continuum along which program-based
problem solving can vary from entirely unconscious rule following to highly calculated conjecture-
based choice” (Vanberg 2012, 526). In any given situation, the distinction can be made about the
degree to which a person relies on rules and preconceived knowledge, and to what degree she
purely looks at the economic incentives of that situation.
3. Behavior and Institutions: Evolution vs. Deliberate Design
The second core theme in Vanberg’s work is the question of what the institutional implications of
the aforementioned behavioral model are. Vanberg (1986, 1994a/b, 2014b) connects this question
with a broader discussion of what the theory of cultural evolution implies for the role of deliberate
institutional reform and constitutional design. In this context, Vanberg builds on Hayek’s theory
of cultural evolution (see, e.g., Hayek 1979, 1988) which revolves around the idea that a society’s
institutions – including its informal rules, norms, and traditions – develop over time in a process
of trial and error. This process of collective learning of ‘what works, and what doesn’t work’ leads
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to the transmission and accumulation of knowledge from generation to generation and is ultimately
responsible for the tendency that the most ‘successful’ cultural norms – those with the highest
problem-solving capacity – survive. It is not the individuals themselves who become more
knowledgeable during this process, but the knowledge (which goes far beyond what individuals
are able to articulate) is tacitly embodied within the norms and rules of society.
Vanberg is aware that Hayek’s theory of cultural evolution is controversial (Hodgson 1991).
Hayek describes cultural evolution as “a competitive process in which success decides” (Hayek
1988, 3) without clearly specifying what success means. An obvious interpretation would be that
those norms and habits are successful that are beneficial to those individuals who adopt them.
However, Vanberg (1994b, 181) points out that Hayek’s arguments do not uniformly support that
interpretation. Hayek often portrays cultural evolution as a process that promotes rules and
traditions which make the groups in which they are practiced ‘successful,’ rather than each
individual separately. This, Vanberg notes (id., 182), can again be interpreted in multiple ways.
For one, we can see such rules as being in people’s constitutional interest in the sense that
individuals would want to see them implemented on a group-level, even if they do not benefit from
following them directly. Such a view is compatible with a methodologically individualist
explanation. The second interpretation, which Hayek (1988) stresses in his later work, but Vanberg
denounces as non-individualist, is a definition of success in terms of criteria like population size
or growth.
Vanberg (1994b. 187ff.) makes clear that Hayek’s theory of evolution presupposes competition
between various ways of organizing social activities. However, Vanberg points out that the
Hayekian account fails to address the question of what type of competition this is (e.g., peaceful
record-type vs. conflictual struggle-type), and to clarify what the relationship between different
types of competition and their respective social outcomes is. Vanberg argues that a theory of
cultural evolution must start from the premise that successful cultural evolution is a constitutionally
constrained process. The basic thrust of such a conditional notion of cultural evolution is described
by the idea of a process that allows and fosters rule contestability, i.e., alternative problem-solving
mechanisms can be tested, and responsiveness, i.e., those rules will be selected that are in the
interests of the individuals who live under them.
Vanberg (1994b, 190) argues that if one interprets Hayek’s theory in this way, it has
implications for the practical question of institutional reform. Vanberg sees it as a constructive
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goal of his research program to identify and advocate the constraining conditions on an
institutional level that contribute to the socially beneficial working of the process of cultural
evolution. This means that institutional reforms can arise from deliberate action as well as
organically, the crucial element in both being that the inputs (i.e., reform ideas) are subject to
competitive selection. That being said, Vanberg believes that the scope of deliberate institutional
redesign is limited and a gradual approach is warranted – or, as Hayek (1960, 63) said, “although
we must always strive to improve our institutions, we can never aim to remake them as a whole.”
Vanberg’s qualified defense of a rational constructive approach to institutional reform is
predicated on the insight that a society should aim for the creation of procedural conditions
(contestability, responsiveness) in which it can develop improved institutions; however, it can
never know in advance what set of institutions works best. Accordingly, Vanberg (1994b, 194)
interprets Hayek’s evolutionist outlook “as an advice to utilize, in our efforts in institutional
construction, the explorative potential of a competitive process of trial and error, a process through
which we can hope to achieve at least improvement, if not perfect solutions.”
4. Market and State: The Perspective of Constitutional Political Economy
A third core theme in Vanberg’s work is the question of demarcation between market and state
activities (Vanberg, 2001, 2005, 2008a). This question has usually been approached by economists
with two fundamental principles in mind: normative individualism (i.e., individual welfare is the
relevant normative standard) and methodological individualism (social phenomena are explained
in terms of the interplay of individual actions). While CPE respects those two principles, it
introduces an important nuance. According to Vanberg (2005: 47), the central question of CPE is:
“How can social arrangements and the process of societal change be framed or channeled’ by rules
so that the individuals involved are enabled, to the largest extent possible, to successfully pursue,
in mutually compatible ways, their individual and separate as well as their common interests.” If
one takes this perspective, then the question of markets vs. state is not so much an either-or
question. Instead, both kinds of arenas are seen as social arrangements that help people realize
mutual gains from voluntary cooperation. And, as alluded to in the previous section, the success
or failure of these arenas depends? on their respective constitutional constraints.
The main goal of CPE is to assess and improve the legal-institutional frameworks (the ‘rules of
the game’) of both markets and of politics. In both arenas, CPE is concerned with how the order
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of rules affects the order of actions and how people can improve their social outcomes by adopting
better rules. Importantly, CPE defines improvement in terms of what individuals themselves regard
as improvement (Vanberg 2005, 26). CPE advances the traditional Smithian focus on mutual gains
from exchange by looking at how people may realize mutual gains from joint commitment. In this
context, CPE stresses a twofold approach: on the one hand, it seeks to find a set of feasible joint
commitments (rules, policies) that might be mutually beneficial for all parties involved; on the
other hand, it tries to find procedural mechanisms for selecting those joint commitments, based
again on the goal of having those selection mechanisms be met with universal consent.
When it comes to the selection of feasible rules or policies, CPE follows Buchanan’s (1991)
critique of the ‘maximization-paradigm’ in neoclassical welfare economics. Buchanan argues that
the application of the maximization-paradigm to the level of social aggregates is misleading.
Welfare economists have a quasi-individualist understanding of society in that they evaluate policy
alternatives in terms of society’s own ‘utility-function.’ In contrast, a CPE perspective defends the
idea that individuals – not the economist-expert who constructs the social welfare function – are
the ultimate sovereigns of collective decisions among alternative policy options. Vanberg (2005,
34) calls the CPE perspective choice-individualism and highlights that the two approaches imply
fundamentally different concepts of both efficiency and legitimacy. The maximization-paradigm
stresses the outcome-oriented perspective of utility aggregates and suggest interventions when
those aggregate utility outcomes (such as GDP, labor productivity, or the growth rate) are
considered to be suboptimal. Choice-individualism, in contrast, operates on a procedural logic: it
measures improvements over the status quo by analyzing the quality of procedures (such as the
rules through which key economic players, such as the government, the parliament or the central
bank, reach their decisions). Here, a high-quality procedure would be one that is grounded in and
allows for mutually beneficial agreements of all parties involved, including the citizenry at large.
In line with the ordoliberal tradition, CPE’s process-oriented perspective implies Ordnungspolitik,
“namely an economic policy that abstains from intervening into the economic process and confines
its ambition to ‘improve the economy’ to reforms in the framework of rules and institutions within
which economic activities are carried out” (Vanberg 2005, 36). Vanberg defends this process-
oriented approach with Hayekian arguments by referring to (i.) the knowledge problem and (ii.)
the incentive problem which he believes are both inherent to the maximization-paradigm.
Economists are confronted with (i.) when attempting to measure and aggregate individual
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preferences into a social welfare function; and they are confronted with (ii.) since an interventionist
outcome-oriented approach is likely to be more susceptible to rent-seeking from interest-groups
than a constrained government that limits itself to rule reforms.
In line with a classic Smithian argument (Smith 1981, 660), CPE advocates for those rule
reforms that assign priority to consumer interests over producer interests (Vanberg 2005, 39). The
reason for this consumer orientation in CPE is the insight that societies’ collective interests are
best served in a performance-competition (Leistungswettbewerb) in which producers compete
fairly to offer consumers high-quality products at a low price. If we take this performance-
competition as a benchmark, a conflict between consumer interests and producer interests arise
only in situations when producers seek to escape the constraints of this performance-competition,
e.g., in the form of government-granted protectionist regulations. Such an escape strategy means
the granting of privileges to a particular group of producers; not all producers benefit equally and
indiscriminately from protectionist regulation (Vanberg 2001). Accordingly, since protectionist
regulations are grounded in privilege interests, they violate the core assumption of CPE that
policies must be in the common constitutional interests of all parties affected (in this case other
producers and the citizenry at large). Hence, Vanberg (2005, 40) concludes that consumer
sovereignty (i.e., a situation in which consumers’ common interests are the principal ‘controlling’
force of market activity) is uniquely equipped to serve as normative benchmarks for economic
policymaking.
In the realm of politics, CPE motivates a similar perspective (Vanberg 2005, 41ff.). The
criterion to measure the desirability of certain democratic policies is citizen sovereignty. This
means that the political process should be framed in such a way that citizens’ common interests
are its principal controlling force. Citizen sovereignty implies that the ‘producers of politics’ (i.e.,
politicians, government bureaucrats, advisors) are responsive to citizens’ common interests in a
similar vein as the producers of economic goods (i.e., firms, corporations, cooperatives) are
responsive to consumers’ common interests. Vanberg (2005, 43) highlights that in day-to-day
policymaking it is important to distinguish between the principle of citizen sovereignty and
concrete decision rules such as unanimous voting. Oftentimes there are significant costs associated
with unanimity as a decision rule, so it might actually be in citizens’ common interests to adopt
less-than-unanimity rules for reaching decisions in day-to-day political issues. However, it still
remains the task of the polity to derive those decision rules from a voluntary agreement at the
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constitutional level. Ultimately, CPE understands both the market and the political arena as
ongoing cooperative enterprises whose beneficial properties must be guaranteed through the
implementation of rules, which are to be based on ongoing voluntary agreements.
5. A Liberal-Democratic Research Program
Vanberg’s research program aims at improving the methodological toolbox of social science (in
particular economics) in the context of comparative institutional analysis. His program must also
be seen as part of a larger social theory project in the ordoliberal Freiburg School tradition of
“inquiring into the constitutional foundations of a functionable and humane socio-economic-
political order” (Vanberg 2004c: 7). In doing so, CPE shows a deep concern for the relationship
between liberalism and democracy. Particularly in his later writings (e.g., 2001c, 2008a, 2014d),
Vanberg makes clear that a fundamental goal of the CPE program is to combine Hayek’s
evolutionism with Buchanan’s contractarianism in order to overcome the tension some see
between the ideals of democracy (with its emphasis on popular sovereignty) and those of classical
liberalism (with its emphasis on constraining governmental discretion). For Vanberg (2008a: 142),
the essence of the liberal idea is that voluntary agreement should be the benchmark of social
coordination. In popular opinion, the democratic ideal is often equated with the benchmark of
majority rule. However, Vanberg’s CPE follows Buchanan and Tullock (1962), who have
developed a systematic argument for why “the majority principle must be regarded as a particular
institutional realization of the ideal of democracy and not be confused with the ideal itself”
(Vanberg 2008a; 146). Ultimately, the majority principle derives its legitimacy from the fact that
the members of a polity voluntarily agree to decide their social affairs by it.
Vanberg’s CPE program is built on the conviction that the underlying normative premise of
both democracy and liberalism is individual sovereignty. It is only in their focus and institutional
embodiment that the two differ. According to Vanberg, democracy is focused on citizen
sovereignty, and embodies this by embracing majority rule, regular elections, and other institutions
of democracy. Liberalism is focused on private autonomy, i.e., consumer sovereignty, and
embodies this with market institutions and systems of private law. The key takeaway according of
Vanberg’s work is that, in spite of differences in the respective institutional embodiments, both
liberalism and democracy are built on the same ultimate source of legitimacy: voluntary
agreement.
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Taken together, Vanberg’s CPE project provides contemporary ordoliberals with a
comprehensive theoretical perspective that seeks “to bring closer together again the economic,
social, political, philosophical and legal perspectives that were once part of the study of moral
philosophy, and that the process of specialization in modern academia has fragmented into separate
fields” (1994a: 5). Vanberg’s work combines the main subject of analysis from sociology (viz.,
institutions and rules) with the methodological lens of economics (viz., methodological
individualism). Like the ordoliberal scholars before and after WWII, Vanberg’s CPE program
explores the implications of a liberal-economic perspective in the context of a democratic political
framework. And like earlier ordoliberals, Vanberg’s work is built on the conviction that the best
way of improving both political and economic processes is to reason and reform their legal-
institutional framework. However, unlike some ordoliberal scholars of the second and third
generation, Vanberg’s work shows an eagerness to advance and not simply repeat ordoliberal
thoughts of the first generation (e.g., Eucken, Böhm, Röpke, Rüstow, Müller-Armack). Vanberg
considers ordoliberalism as an unfinished project that needs to be nourished by insights from more
recent developments in economic theory (in particular, constitutional economics and public choice
theory) and neighboring disciplines (such as biology and evolutionary psychology). This chapter
has illustrated various ways in which Vanberg has enriched the traditional ordoliberal approach.
His research program of constitutional political economy has put ordoliberal thinking on a firmer
methodological and normative foundation by connecting it to Hayek’s evolutionism and
Buchanan’s contractarianism. In particular, Vanberg’s introduction of the principles of consumer
and citizen sovereignty enriched the ordoliberal discourse immensely, as they help derive and
legitimize some of the liberal-economic principles that Eucken and others had envisioned. This
was an intellectual milestone, since it allowed ordoliberals to overcome the elitist-expertocratic
genesis of norms which earlier generations were rightly accused of. In laying these new conceptual
foundations, Vanberg’s work contributed successfully to a revival of a somewhat dormant
ordoliberal research program in the 1990s and 2000s (Dekker and Kolev 2019, 77).
It lies beyond the scope of this chapter to develop a constructive critique of Vanberg’s program.
However, attentive readers have surely noticed that his program raises a host of intricate questions:
Where are the limits of CPE’s commitment to methodological individualism if we allow for
reflexivity of structure (the rules) and agency (individual sovereignty)? Do adaptive preferences
pose a serious challenge to the ideas of citizen and consumer sovereignty (see, e.g., Vanberg
15
2014c)? Is there a way to measures and operationalize degrees of institutional contestability and
responsiveness in concrete historical-institutional circumstances? And, ultimately, how can
ordoliberal scholars successfully refute the recurring accusation that CPE is prone to a conservative
bias since it focuses on the realization of mutual gains relative to the status quo? These questions
(and many more) are surely worthwhile issues to ponder for the next generation of ordoliberal
scholars.
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