Germany, Economy and State as a Strategist since China’s Accession to the WTO (2001-2026): between Ordoliberal Heritage, Industrial Policy and New Sovereignty

Réalisation Le Lab Le Diplo

By François Souty

François Souty, PhD in Economic History, former International Affairs Officer at the European Commission’s Directorate-General for Competition (2021-2024), was a member of the OECD Expert Committee on Competition Policy from 1996 to 2024. He teaches European institutions and geopolitics at the Excelia Business School group (La Rochelle-Paris Cachan) as well as European competition law and policy at the Faculty of Law of the University of Nantes. He is head of the economics section at Le Diplomate Media.

"Ich bin überzeugt: Je freier die Wirtschaft ist, um so sozialer ist sie."
Ludwig Erhard, Wohlstand für Alle, Düsseldorf, Econ Verlag, 1957.

Executive Summary

China’s accession to the World Trade Organization (WTO) on December 11, 2001, has profoundly changed the conditions for international competition. The globalization of value chains, the digital revolution and artificial intelligence, the energy transition, the rise of geopolitical rivalries and the return of sovereignty concerns have led the major industrial powers to redefine the role of the state in the economy. Germany, often presented as the main heir to ordoliberalism and the social market economy, occupies a singular place in this evolution.

This article is part of a series of research studies devoted to the transformations of the strategic state in the world’s main economies since 2001. Its objective is to analyze the evolution of the German model by distinguishing three realities that are too often confused: ordoliberalism as an economic doctrine, the social market economy as an institutional compromise, and the policies actually carried out by federal governments.

The study shows that Germany has never ceased to act as a strategic state. Behind its distrust of industrial policy, it has continuously mobilised powerful instruments in the service of its productive apparatus: public development banks, applied research institutes, support for the Mittelstand (SMEs), dual professional training, cooperation between the Länder and the economic "double barrier" between the federal and Länder levels for new non-German entrants, universities and companies, as well as a decisive influence on several economic policies of the European Union. German industrial policy has therefore not disappeared; it developed according to different modalities from the French tradition, often more discreet but no less ambitious and probably much more effective than the latter.

The difficulties encountered since the 2010s cannot be interpreted as the simple consequence of an excess of ordoliberalism. Rather, they reflect the gradual weakening of the doctrinal culture that had ensured the coherence of the German model, to which have been added several questionable strategic choices in the fields of energy, certain industrial dependencies and digital transformation. Since 2022, the Zeitenwende (literally the turning point of an era) has marked a major inflection: Germany is reinvesting in the policies of energy, industrial, technological and military sovereignty without renouncing the main foundations of its economic organization or its claims to European governance.

A comparison with Japan, South Korea and Taiwan is a useful way to shed light on this evolution. These economies continue to consider several characteristics of the German model – industrial power, applied research, technical training, quality of institutions, cooperation between the state and companies – as major references, while developing policies of digitalization, innovation and technological sovereignty, some of which are now inspiring German officials. Influences have thus become reciprocal.

The analysis ultimately leads to a nuanced conclusion. Ordoliberalism has neither remained identical nor erased. It has gradually transformed into a more diffuse institutional culture, several of whose principles remain deeply rooted in the German economic organization, while others have been reinterpreted under the combined effect of globalization, the digital revolution and AI, European integration, the energy transition and the return of sovereignty imperatives. The German experience thus confirms a conclusion common to our entire series of research: the most successful strategic states are not so much those that remain faithful to an immutable doctrine as those that know how to adapt their institutions, public policies and instruments of intervention to changes in the economic and geopolitical environment, without losing the coherence of their national project.

Introduction

China’s accession to the World Trade Organization (WTO) on December 11, 2001, was one of the main turning points in contemporary economic history. In just a few years, the intensification of international competition, the fragmentation of value chains, the rise of digital technologies and artificial intelligence, the rise of environmental concerns and the return of geopolitical rivalries gradually led the major industrial powers to redefine the relationship between market, industry and public power. After a period during which the very idea of industrial policy seemed to be fading away in many Western countries, the notions of economic sovereignty, security of supply, industrial resilience and strategic autonomy are once again taking centre stage in public policies.²

In this context, Germany occupies a singular place. As Europe’s leading economic power, it is traditionally presented as the main heir to ordoliberalism and the social market economy. Monetary stability, balanced budgets, competition policy, the quality of its industrial apparatus, the power of the Mittelstand, the excellence of vocational training and the density of its research institutes have long nourished the image of a particularly coherent and efficient economic model. However, the twenty-five years that followed China’s entry into the WTO also revealed several weaknesses: energy dependence, growing exposure to the Chinese market, difficulties in certain industrial sectors, lagging behind in several digital technologies, an ageing population and the inadequacies of the defence effort.

These developments have led to a significant renewal of work on the German economic model. While some authors continue to see ordoliberalism as the main intellectual matrix of German economic policies, others emphasize on the contrary its gradual disappearance in universities, its retreat within German economic science and the gradual disappearance of generations of economists and senior civil servants who had been directly trained in this tradition. Conversely, several studies highlight the permanence of its influence within certain administrative, legal or political institutions, as well as in the economic culture of German conservative circles. The question is therefore no longer whether ordoliberalism has disappeared, but to understand in what forms it continues – or not – to inspire public action in Germany.³

A second confusion also deserves to be cleared up. Ordoliberalism, the social market economy (Soziale Marktwirtschaft) and the economic policy actually conducted by the Federal Republic cannot be equated. Ordoliberalism is above all a doctrine of the economic order developed by the Freiburg School.⁴ The social market economy is the result of a broader synthesis, integrating in particular the contributions of Ludwig Erhard, Konrad Adenauer, the Christian Democratic traditions, the principle of subsidiarity, co-determination and social partnership. Finally, the policies actually implemented since 1949 are always the result of a balance between these doctrinal legacies, economic constraints and historical circumstances. This distinction is one of the keys to interpreting the transformations observed since the beginning of the twenty-first century.

This article is part of this perspective. It does not seek to determine whether or not Germany has remained faithful to an ordoliberal orthodoxy. Such a question would be reductive and historically debatable. Its ambition is to analyze the evolution of the three historical pillars of the German model — ordoliberalism, the social market economy and a largely implicit industrial policy — in order to assess the extent to which they continue to structure public action since China’s entry into the WTO and how they have been gradually recomposed under the effect of the new demands of energy, industrial, technological and geopolitical sovereignty.

The central hypothesis of this analysis is that Germany has never ceased to act as a strategic state. On the other hand, the political, administrative and economic elites have gradually lost part of the doctrinal culture that had largely contributed to the coherence of the successful post-war German model. The institutions remain, for the most part, in place; their intellectual foundations are now less explicitly mobilized. The difficulties encountered over the past fifteen years do not necessarily reflect an excess of ordoliberalism, but can also be interpreted as the result of a gradual weakening of this doctrinal culture, to which have been added several major strategic choices that have proven to be erroneous in the light of experience – particularly in the field of energy; these choices have even increased certain external dependencies and even profoundly modified the conditions of competitiveness of German industry. There is a certain symmetry with today’s France, to a much more worrying degree given the very negative results of the French performance, alas: the political class has retained some of the Gaullist rhetoric, even its phraseology or institutional terminology, with a weakening, an erasure of operational acts and practices, or even actions in the opposite direction.

The demonstration will be organized in three parts. The first part will recall the doctrinal foundations for understanding the specificity of the German strategic state. The second part will analyze the policies conducted between 2001 and 2021 in the context of globalization and European integration. Finally, the third will examine the most recent recompositions of the German model, marked by the return of power, sovereignty policies and an industrial policy that is now more explicitly assumed.

I. The Doctrinal Foundations of the German Model: From Ordoliberalism to the Gesamtkonzept of the Strategic State

Questions of doctrine and principles are of major importance, essential in Germany. The analysis of German economic policies since China’s entry into the World Trade Organization cannot be limited to an examination of the successive decisions taken by the federal governments. Unlike many Western states, including France, Germany is indeed and consistently part of an intellectual and institutional tradition, whose roots go back to several decades of economic, legal and political reflection. The choices made since 2001 only take on their full meaning in the light of this long history of doctrines and principles.

Ordoliberalism naturally occupies a central place in this construction. Developed mainly within the Freiburg School in the 1930s and 1940s, this doctrine profoundly marked the economic organization of the Federal Republic of Germany after 1949. It inspired competition policy (national but also European), the conception of the role of the State, monetary stability as well as several more or less "independent" institutions and administrative authorities, which were to become emblematic of the "German model". However, reducing the latter to ordoliberalism alone would constitute an oversimplification. The social market economy, Christian Democratic traditions, economic federalism, co-determination, public regional banks, the role of the "Mittelsta⁵nd" and the "Hausbanken", dual vocational training and innovation policies have gradually enriched this doctrinal matrix to form a coherent whole, with no exact equivalent among the major industrialised economies, and especially all the neighbouring countries.

This first part pursues a twofold objective. On the one hand, it is a question of recalling the main stages in the formation of this economic thought, from some of its precursors to contemporary doctrinal debates. On the other hand, it should be shown that ordoliberalism has never been a fixed doctrine. The controversies that have swept through it, particularly with the Austrian School or the Chicago School, testify, on the contrary, to a permanent capacity to adapt to the transformations of the contemporary economy. The works of Erhard Kantzenbach, Ingo Schmidt and Jan Rittaler, among others, illustrate this intellectual dynamic, often unknown in France, which is gradually leading competitive analysis to integrate more closely the dimensions of innovation, market structures and technical progress.

One of the major challenges of this first part will be precisely to distinguish between what is part of the doctrinal heritage and what is the result of the successive adaptations imposed by globalization, European integration, the digital revolution and new geopolitical constraints. Indeed, several founding principles of ordoliberalism have been preserved, others have been reinterpreted, while some have gradually lost their influence among the new generations of political, administrative and economic leaders. This evolution does not necessarily reflect the abandonment of a model, but rather its gradual recomposition.

Such a perspective is essential to avoid two pitfalls frequently encountered in the literature. The first consists in presenting Germany as the almost mechanical application of a doctrine developed nearly a century ago. The second, conversely, leads us to consider that the recent economic difficulties are evidence of the disappearance of ordoliberalism. The reality appears to be significantly more nuanced. The institutions inherited from this tradition remain largely in place, but they are now mobilized in a profoundly renewed economic environment, marked by Chinese competition, the digital revolution, the energy and climate transitions, as well as by the return of concerns about industrial, technological and geopolitical sovereignty.

It is in the light of this doctrinal and institutional history that the policies actually carried out by Germany since 2001 and the recompositions that have taken place over the last twenty-five years can then be analysed.

A. The origins of the German model: from the first competition theorists to the Freiburg School (1900-1949)

To understand the transformations of the German strategic state since 2001, it is necessary to return to the intellectual foundations of the economic model that has profoundly marked the Federal Republic. This doctrinal tradition did not originate with the Freiburg School: it is part of an older reflection on the organization of markets, the role of the state and the conditions of a competitive economic order, which we analyzed in one of our books in 1996. The study of its precursors, and then of its systematization by ordoliberals, allows us to better grasp the continuities, but also the evolutions that will be analyzed in the following developments.

1. The precursors of ordoliberalism: competition, market organization and the role of the state. Ordoliberalism is generally presented as an intellectual creation that appeared in the 1930s around Walter Eucken, Franz Böhm and the Freiburg School. This presentation, if correct in principle, nevertheless tends to simplify the history of German economic thought. The questions relating to the conditions of a competitive order, the relationship between the state and the market, and the forms of organization of industry actually go back much further. From the first decades of the twentieth century, or even at the end of the previous century, several German economists tried to understand the consequences of the second industrial revolution, the concentration of companies, the proliferation of cartels and the transformations of capitalism. These highly modern works constitute an essential background for understanding the genesis of ordoliberalism.

Among these precursors, Robert Liefmann occupies a special place. Already a professor at the University of Fribourg, he developed an original reflection on companies, forms of economic concentration and the functioning of competition before the First World War. He is well identified in Anglo-Saxon economic thought but not very well in France. Contrary to approaches that equate any concentration with a market failure, Liefmann insists on the diversity of economic situations and rejects uniform solutions. Some forms of concentration can meet technical, financial or industrial needs without calling into question the functioning of competition, provided that the State guarantees a legal framework ensuring freedom of access to the market.⁷

At the same time, Kurt Bloch developed a line of thought that deserves to be rediscovered today. Faced with the challenges of industrialization and international competition, he admitted that certain forms of coordination or cartelization could, in particular circumstances, serve the objectives of industrial rationalization, modernization or general interest when they were supervised by the public authorities. This position, far from both absolute laissez-faire and centralized planning, testifies to the existence, from the first decades of the twentieth century, of a current of thought seeking to reconcile competition, economic efficiency and public intervention. In some respects, these analyses foreshadow several contemporary debates relating to industrial alliances, technological cooperation and policies of economic sovereignty.⁸

Reread in the light of the transformations that have taken place since China’s entry into the WTO, these authors of the Freiburg School appear in a new light and their reflection reveals a modernity that is sometimes striking. Their fundamental question was no longer to choose between the market and the state, but to determine the forms of economic organization capable of simultaneously preserving competition, productive efficiency, the capacity for innovation and industrial power. It is precisely this articulation that China has been striving to build since 2001, by mobilizing in a pragmatic way multiple intellectual references, among which German economic thought occupies a real place, without being exclusive.⁹

2. The Freiburg School: the competitive order as the foundation of the social market economy. The world economic crisis of the 1930s was a decisive turning point. The collapse of markets, the rise of monopolies, social imbalances and the instrumentalization of the economy by totalitarian regimes led several German jurists and economists to seek a new synthesis between economic freedom and the legal order. It was in this context that the Freiburg School gradually emerged around Walter Eucken, Franz Böhm, Hans Grossmann-Doerth, then Wilhelm Röpke, Alexander Rüstow and, in a more political register, Ludwig Erhard.¹⁰

The ambition of this new school is often reduced to a defence of free competition. In reality, its project is much broader. It consists in defining the institutional conditions of an economic order in which competition can be exercised dynamically in the long term, for the benefit of society as a whole, and not capture or confiscate the benefits of efficiency for their own benefit. Far from conceiving of the market as a spontaneous order regulating itself like some economists of the Austrian School, the ordoliberals consider that it is up to the state to set the rules of the game, to prevent the constitution of private economic powers likely to threaten economic freedom and to guarantee a stable legal framework. The state is therefore neither a producer, nor a planner, nor a simple arbiter: it is the guarantor of the competitive order.¹¹

This conception explains the central place given to competition policy in post-war German thought, in sharp reaction to the practices of the Nazi era. For ordoliberals, competition is not only a mechanism for economic efficiency; it also represents a guarantee against excessive concentrations of power, whether public or private. This institutional dimension profoundly distinguishes ordoliberalism from both classical liberalism and the neoliberal approaches developed later in the United States.

However, it would be inaccurate to present ordoliberalism as a fixed doctrine. From the 1960s, and especially in the following decades, the debates around Erhard Kantzenbach, Ernst-Joachim Mestmäcker, Erich Hoppmann, Ingo Schmidt and Jan Rittaler show on the contrary a constantly evolving way of thinking. The controversies with the Austrian School and then with the Chicago School gradually led German economists to integrate more closely the dynamic dimensions of competition, innovation, market structures and technical progress, without renouncing the fundamental principles inherited from the Freiburg School.¹²

This perspective allows us to understand that the German economic model does not proceed from a single doctrine that appeared ex nihilo in 1948 or 1949. It is the result of an intellectual maturation that began several decades earlier, enriched by various influences and gradually transformed into a veritable Gesamtkonzept of economic organization. It is this continuity, as well as its successive adaptations, that sheds light on German policies conducted since China’s entry into the WTO in 2001.¹³

B. From classical ordoliberalism to the social market economy: doctrinal enrichments and first inflections (1949-2000)

Ordoliberalism has never been reduced to the thought of Walter Eucken or Franz Böhm. From the first years of the Federal Republic, it has gradually been enriched by contact with economic realities, academic debates and European integration. This evolution is essential for understanding contemporary German economic policy. Far from abandoning their founding principles, German economists have adapted them to an economy that has become more open, more industrial and more innovative. This capacity for evolution was undoubtedly one of the main strengths of the German model until the end of the twentieth century.¹⁴

1. The social market economy: a synthesis between competitive order, social cohesion and prosperity. The expression social market economy (Soziale Marktwirtschaft) is often used today as a simple synonym for the German economic model. However, such an assimilation is reductive. The social market economy does not replace ordoliberalism; it constitutes one of the most successful political translations of it. Under the impetus of Ludwig Erhard, but also of Alfred Müller-Armack, it seeks to reconcile the principles of the competitive order with the requirements of social justice, monetary stability and individual responsibility.¹⁵

Contrary to a widely held idea, the adjective "social" does not refer primarily to the extension of the welfare state. Rather, it expresses the conviction that competition, when properly organised, is itself a factor of social progress. Redistribution cannot therefore replace the proper functioning of markets; it complements an economic order that guarantees freedom of enterprise, social mobility and the responsibility of econom¹⁶ic actors. This conception largely explains the economic success of the Federal Republic in the post-war decades. The Wirtschaftswunder is not only the result of favourable international circumstances or the Marshall Plan; it is also based on an institutional architecture combining budgetary discipline, monetary stability, competition, social dialogue, vocational training and industrial mode¹⁷rnisation.

Box 1 — Five common misinterpretations of ordoliberalism: back to the founding principles

Contemporary debates on the German economic model are often obscured by several approximations that lead to interpretations that are sometimes far from the thought of the founders of the Freiburg School. Without claiming to be exhaustive, five of them deserve to be briefly recalled, as they constitute as many keys to understanding the developments that follow.

• The first misinterpretation consists in equating ordoliberalism with a form of laissez-faire. Such a reading is difficult to reconcile with the writings of Walter Eucken, Franz Böhm or Wilhelm Röpke. Ordoliberals do not defend the erasure of the state; on the contrary, they consider that economic freedom can only prosper in the long term within a carefully constructed legal order guaranteed by a public authority strong enough to enforce the rules of competition. The market is therefore not a natural state: it is a legal and political institution whose stability, predictability and proper functioning must be ensured by the state.

• The second misinterpretation consists in spontaneously comparing ordoliberalism to the Chicago School. While the two currents share the same confidence in market mechanisms, their intellectual foundations remain significantly different. Chicago economists give a preponderant place to economic efficiency and the results produced by competition. Ordoliberals, on the other hand, are primarily interested in the organization of markets, the dispersion of economic power, and the institutional conditions for sustainable competition. In many respects, their thinking has more affinities with the structuralism developed at Harvard University during the 1940s and 1950s. The attention paid to the structure of markets, the control of concentrations, and the limitation of private power brings ordoliberals closer to the work of Joe S. Bain, Edward S. Mason, or Donald F. Turner than to the analyses of George Stigler or Robert Bork. This intellectual proximity, often underestimated, sheds light on several historical convergences between German, European and American competition policies before the dissemination of the Chicago analyses.

• The third misinterpretation follows directly from the two previous ones: ordoliberalism is in no way hostile to the state. However, it rigorously distinguishes between interventions intended to organize the functioning of the market and those that aim to replace it. The ordoliberal state is neither a universal entrepreneur nor a simple passive arbiter. It is the guarantor of the economic order (Ordnungspolitik); it ensures monetary stability, the protection of property, the enforcement of contracts, the prevention of dominant positions and the impartial application of competition rules. This conception explains why competition policies, independent administrative authorities and monetary institutions occupy such a central place in the German model.

• A fourth confusion concerns the social market economy (Soziale Marktwirtschaft). This cannot be reduced to a simple social policy correcting the imperfections of the market. It is the result of a much more ambitious synthesis between ordoliberalism, the Christian Democratic traditions, the social doctrines of the Churches, the principle of subsidiarity, co-determination (Mitbestimmung) and social partnership. The aim is not to oppose economic efficiency and social cohesion, but to demonstrate that one cannot prosper in the long term without the other. Although this notion is now less frequently invoked in the German public debate, many of the institutions that have emerged from it nevertheless continue to structure the economic action of the Federal Republic.

• Finally, it would be inaccurate to consider that German industrial policy is a recent creation, which emerged as a result of the energy, health or geopolitical crises of the 2020s. Since the beginning of the Federal Republic, the federal government, the Länder, public banks, Fraunhofer institutes, universities, standardisation bodies, chambers of commerce and companies have cooperated closely in order to strengthen national productive capacities. This strategy has long been characterised by its discretion and by the refusal to claim the very expression "industrial policy", which in Germany is often associated with overly dirigiste state intervention. It nevertheless constitutes a long-term industrial policy, favouring innovation, applied research, vocational training, patient financing, support for the Mittelstand and the organisation of industrial sectors.

These five clarifications thus invite us to go beyond the often simplifying oppositions between market and state, liberalism and public intervention, competition and industrial policy. They also allow us to better understand why Germany has been able to remain a strategic state while claiming an ordoliberal heritage which, contrary to certain preconceived ideas, has never implied the withdrawal of public power from the economic sphere. The transformations that have taken place since the beginning of the twenty-first century therefore reflect not so much the abandonment of this tradition as its gradual reinterpretation under the effect of globalization, European integration, the digital revolution and the return of the imperatives of economic sovereignty. It remains to be seen whether this reinterpretation has remained faithful to the spirit of the founders of ordoliberalism or whether, by dint of successive adaptations, it has ended up moving away from it on several essential points. This is precisely the purpose of the following developments.¹⁸

2. The evolution of ordoliberal thought: innovation, dynamic competition and implicit industrial policy. From the 1960s onwards, ordoliberal thought underwent a profound evolution. Without questioning the founding principles of the Fribourg School, several economists believe that the protection of freedom of competition alone is no longer sufficient to account for the transformations of industrial capitalism. The globalization of trade, the acceleration of technical progress, the concentration of certain industries and the appearance of new high-tech sectors have led to a renewal of economic analysis.¹⁹

The work of Erhard Kantzenbach occupies a decisive place here. By developing the concept of "optimal intensity of competition", he shows that economic performance depends not only on the number of companies present in a market but also on the structure of the market and the ability of companies to maintain competitive pressure favourable to innovation. This approach, which is part of the trend of workable competition and gives an important place to dynamic competition, contributes to the renewal of German competiti²⁰on policy. The research subsequently conducted by Ingo Schmidt and the legal work of Ernst-Joachim Mestmäcker continue this evolution, each in its own field, by challenging purely static conceptions of competition. Competition cannot be reduced to a simple static efficiency mechanism: it is also an institutional process, framed by law, intended to preserve economic freedom, the capacity for innovation and the sovereignty of the²¹ consumer.

This doctrinal evolution deserves to be highlighted, because it is gradually leading German economists to recognize, often without using this expression, the legitimacy of certain industrial policies. Support for research, scientific infrastructures, vocational training, Fraunhofer institutes, networks of innovative SMEs (Mittelstand) or technological cooperation are never presented as industrial policies in the French sense of the term. They are nevertheless instruments intended to strengthen national productive capacities in the long term.²²

3. A changing doctrine on the eve of the twenty-first century. At the end of the 1990s, several developments appeared simultaneously. German reunification, the deepening of the European internal market, economic and monetary union, the globalisation of value chains and the rise of digital technologies gradually led political leaders to favour a more institutional, legal and European approach to economic policy. This evolution had already been perceptible in the 1990s and had led some observers to question the renewal of ordoliberal thinking.²³ In retrospect, this period appears to be a pivotal moment. The great theoreticians who had profoundly marked the previous decades gradually disappeared from the intellectual scene, while a new generation of administrative and political leaders often showed themselves to be less familiar with the doctrinal foundations of ordoliberalism. The principles remained largely affirmed in discourse; However, their understanding is becoming more diffuse and their implementation more pragmatic.²⁴

This discrepancy between the permanence of references and the evolution of practices has undoubtedly been one of the keys to reading German policies since 2001. He explains why Germany has been able to maintain a strong culture of stability and competition while developing, sometimes discreetly, instruments of industrial policy, technological support or economic sovereignty that would probably have been considered compatible with the spirit of the founders of the Freiburg School. It is precisely this evolution that should now be examined through the development of the concept of the social market economy.²⁵

C. The social market economy: the political translation of ordoliberalism

Ordoliberalism provided an essential part of the intellectual framework of the German economic model, but it was not in itself its political translation. This was carried out, from the foundation of the Federal Republic, through the social market economy (Soziale Marktwirtschaft), which combined the principles of competition and economic order with references from Christian democracy, Christian social doctrine and the German tradition of partnership between economic and social forces. It was therefore not only a question of transposing an economic doctrine into government action: the Soziale Marktwirtschaft was also a political and social construction intended to give democratic legitimacy to the market economy.²⁶

1. Erhard, Adenauer and the Economic Conversion of Christian Democracy. Ludwig Erhard occupies a singular place in this history. He was neither the founder of ordoliberalism nor a simple executor of the thought of the Freiburg School. His originality lies precisely in his ability to transform economic principles into a political programme capable of winning the support of a society deeply marked by the experiences of crisis, war, the administered economy and dictatorship. The monetary reform of 1948, the gradual abolition of quantitative restrictions and the liberalisation of prices gave this conception concrete expression even before the creation of the Federal Republic.

Erhard also understood that economic freedom could only be politically sustainable if it produced results that were perceptible to the majority of the population. This was the meaning of the famous program Wohlstand für alle ("Prosperity for All"), published in 1957. Prosperity was not conceived as the fortuitous consequence of the market, but as the expected result of a system in which competition prevented concentrations of economic power and allowed productivity gains to spread widely throughout society. Erhard himself summed up this logic by making the "Wohlstand durch Wettbewerb" the means to achieve the &²⁸quot;Wohlstand für alle".

Konrad Adenauer, however, played at least as important a role in politics. Contrary to a retrospective representation that Erhard was the only "father" of the social market economy, the CDU’s adoption of this orientation was the result of a political decision. Initially, the young Union was still crossed by several traditions: social Catholicism, Protestantism, social Christianity, Rhineland conservatism and currents still in favour of certain forms of collective ownership or planning. The Ahlen programme of 1947 still bore witness to this h²⁹esitation.

The break occurred gradually between 1948 and 1949. Adenauer understood that the economic policy proposed by Erhard could become one of the main elements of differentiation of the CDU from the SPD and the socialist planning of the Soviet zone (East Germany, or the GDR or "DDR"). The Düsseldorfer Leitsätze of 15 July 1949 enshrined this development. In it, the CDU simultaneously affirmed competition based on performance, monopoly control, private property, professional and commercial freedom, but also the need for a comprehensive economic policy, a social policy and the active participation of entrepreneurs, employees and ³⁰consumers.

The social market economy thus appeared from the outset as a political compromise that was much broader than the mere defence of the market. It sought to reconcile economic freedom and social cohesion, private property and collective responsibility, competition and protection against the abuse of economic power. This combination partly explains its ability to become the common economic language of a large part of the Federal Republic.

1. CDU, CSU and Christian social doctrine: the ethical dimension of the economic order. This synthesis cannot be understood without taking into consideration the ethical foundations of German Christian democracy. The CDU and the CSU are not liberal parties in the classical sense. Their conception of the economy is nourished by a Christian tradition that places the human person, responsibility, solidarity and subsidiarity at the heart of social organization. The Soziale Marktwirtschaft thus differs from classical economic liberalism by the idea that economic freedom is only legitimate and sustainable if it is part of a broader social order.

The principle of subsidiarity plays a special role here. Stemming from Catholic social teaching, in particular the 1931 encyclical Quadragesimo Anno, it is based on the idea that social functions should, as far as possible, be assumed by the level closest to the individuals and communities concerned, the intervention of a higher level being legitimate only when the lower level cannot adequately fulfil its function. Transposed to the economy, this principle leads to distrust both excessive nationalization and the private concentration of power.³²

Subsidiarity does not therefore mean the disappearance of the state. On the contrary, it implies a particular conception of its role: the state must create and guarantee the conditions for the autonomy of individuals, families, enterprises, associations and intermediary bodies. This conception is similar in several respects to ordoliberalism, which also assigns to the state a function of establishing and guaranteeing the economic order. But the two traditions are not confused. Ordoliberalism reasons first of all in terms of the competitive order and the economic constitution; Christian social doctrine introduces a more explicit anthropological and ethical dimension.³³

This difference is important. The Soziale Marktwirtschaft is not based on the idea that the market alone is capable of producing a just society. It assumes that economic actors remain responsible for their decisions and that society has institutions that make it possible to articulate freedom, responsibility and solidarity. The market is therefore a means of organising economic activity efficiently; it is not an end in itself.

1. Social partnership, co-determination and economic responsibility. This conception finds a particularly original expression in the relations between employers and employees. The German model is based neither on a permanent opposition between capital and labour nor on a complete integration of industrial relations into the state apparatus. It is gradually favouring a system of Sozialpartnerschaft, in which trade unions and employers’ organisations have a significant autonomy to negotiate working conditions, wages and the rules of working life.

Co-determination (Mitbestimmung) is one of the most significant institutional expressions of this conception. The law of 21 May 1951 established joint co-determination in companies in the mining and steel industries, sectors that were particularly sensitive in post-war Germany. The system provided in particular for employee representation on the supervisory board and the presence of a director of labour. It was not only a social concession intended to pacify industrial relations: co-determination was part of a conception of capitalism in which economic power had to be institutionally regulated and in which workers were recognised as stakeholders in the company.³⁵

The 1952 Act on the Internal Organisation of Enterprises (Betriebsverfassungsgesetz) then extended the mechanisms for employee representation to the level of the establishment. The major law of 1976 on the co-determination of employees in enterprises was a new stage by extending parity representation to many large enterprises. The whole gradually formed an original system, distinct from both Anglo-Saxon liberal capitalism and the model of state-administered ownership and management.³⁶

Social partnership and co-management thus reveal an often neglected dimension of the social market economy. The latter does not only seek to organize the relations between the State and the market; it also intends to structure the relations between the economic actors themselves. Economic responsibility does not therefore rest exclusively on the individual entrepreneur or on public action. It is distributed among several institutions: companies, employees, trade unions, employers’ organizations, local authorities and the State.

It is this architecture that makes it possible to understand why the social market economy has been able to be simultaneously favourable to competition and compatible with a high degree of social protection. Solidarity is not thought of as a substitute for economic performance, but as one of its political and social conditions of legitimacy. The stability of the system is thus based on a form of reciprocity: the market economy guarantees the creation of wealth and the possibilities of initiative; social institutions help to ensure its acceptability and cohesion.

1. Why did the reference to the Soziale Marktwirtschaft gradually disappear after 2000? This is an important question in order to understand the rupture, or at least the displacement, that occurred after 2000. The social market economy has not disappeared from the fundamental German texts. It remains officially the reference framework for the economy and social policy of the Federal Republic. But it is gradually ceasing to be the dominant political language that makes it possible to articulate all the dimensions of the German model.

Several factors can explain this development. First, globalization profoundly changed the environment in which the Soziale Marktwirtschaft had been conceived. The German economy became increasingly dependent on world markets, international value chains and external outlets. Economic policy was then confronted with constraints that went far beyond the national framework in which Erhard and Adenauer had built their compromise.³⁷

The deepening of European integration is producing a similar shift. An increasing number of the rules governing competition, public aid, financial markets and trade are now part of European law. At the same time, Economic and Monetary Union is introducing a new hierarchy of priorities, in which the stability of public finances, monetary discipline and European coordination are becoming increasingly important. The financialisation of the economy, the transformation of large German companies, the evolution of shareholder capitalism and the rise of institutional investors are also changing the balances on which Rhine capitalism was based. The traditional relationship between companies, banks, employees and territories is gradually becoming less stable. The model has not been abolished, but some of its institutions are losing some of their centrality.

Finally, the gradual disappearance of the founding generation played an intellectual and political role. Adenauer, Erhard and the main leaders who had built the Federal Republic had directly experienced the 1929 crisis, Nazism, war and the administered economy. Subsequent generations inherited the institutions without necessarily having the same awareness of their doctrinal genesis. The social market economy then became less an explicitly discussed doctrine than a largely presupposed institutional framework. This phenomenon does not mean that principles have disappeared. Rather, it suggests a shift in the relationship between doctrine and institutions. References to competition, monetary stability, individual responsibility or social partnership remain, mechanically rather than dynamically; but they are increasingly dissociated from the intellectual construction that gave them their initial coherence.

The return, during the 2010s and especially since the early 2020s, of concerns about economic sovereignty, security of supply, industrial policy and international competition with China and the United States is helping to call this development into question. The German state is once again intervening more directly in certain strategic sectors, while continuing to claim to be part of the social market economy. This paradox is essential: far from disappearing, the ordoliberal and social-economic heritage now seems to have to be reinterpreted in an environment radically different from that of 1949.

The question is therefore no longer just whether Germany remains faithful to the social market economy. It is to determine what, in this model, is a matter of doctrine, what belongs to institutions and what depends on the elites responsible for keeping them alive. This distinction will help us understand why institutions can survive the weakening of the thought that inspired them — and why their functioning can gradually change its meaning. In short, ordoliberalism is the intellectual matrix of the competitive order; the Soziale Marktwirtschaft is its broader political translation; and the Rheinischer Kapitalismus designates rather the institutional entity that has been formed around this synthesis, in particular with social partnership, banks, co-determination and the role of professional organisations.

II. Germany since 2001: the permanence of institutions, the transformation of the model

At the beginning of the twenty-first century, Germany seems to have found in ordoliberalism and the social market economy a formula sufficiently tried and tested to no longer need to be really discussed. The economic success of the 1950s and 1960s, followed by European reunification and integration, had gradually transformed a doctrine of reconstruction into a kind of national economic culture. Monetary stability, competition, individual responsibility, collective bargaining and export power seemed to form a coherent whole whose solidity now made it unnecessary to question its foundations. However, it was precisely at the moment when this confidence reached its peak that the conditions of operation of the model began to change profoundly.

The year 2001 is a particularly enlightening starting point in this respect. China’s entry into the World Trade Organization opens a new phase of industrial globalization; the euro transforms the monetary and trade conditions of the German economy; the enlargement of the European Union towards Central and Eastern Europe reshapes the continent’s value chains. At the same time, the digital revolution, the increasing financialization of the economy and the intensification of international competition are gradually shifting the traditional boundaries between industrial policy, trade policy and competition policy.³⁸ Germany will benefit considerably from some of these transformations, but it will also become more dependent on an external environment whose developments it has only imperfect control over.

It is in this context that the transformation initiated by Gerhard Schröder’s reforms is taking place. Agenda 2010 and the labour market reforms are not just an episode of short-term economic policy. They reflect a profound change in the way in which the conditions for German competitiveness are conceived: more flexibility, wage moderation, reduction of certain protection mechanisms and the search for better integration into international competition.³⁹ The paradox is remarkable. While the political discourse continues to claim to be part of the social market economy, some of its practices are moving away from the harmonious representation of an economic order that spontaneously reconciles competition, prosperity and social cohesion. Germany is becoming more competitive, but also more dependent on its external performance and more exposed to the internal imbalances of its model.

The following decade seemed to confirm its success, however. Germany appeared to be the main beneficiary of the euro, the major industrial power of the European Union and one of the few Western countries to have retained a particularly robust manufacturing base. Its Mittelstand, its large industrial companies, its vocational training system and its ability to combine technological specialisation and the conquest of world markets gave the image of an almost perfect continuity with the principles inherited from the post-war period. But this success was increasingly based on conditions that were no longer directly related to ordoliberalism: dynamic global demand, abundant and relatively cheap energy, China’s trade opening and the international organisation of production chains.⁴⁰ The German model therefore remained institutionally stable at the very moment when its economic drivers were being transformed.

The financial crisis of 2008, and then that of the euro zone, made this tension more visible. The German conception of budgetary and monetary stability imposed itself with renewed vigour in European crisis management, while national economic policy remained largely attached to the control of public spending, competitiveness and wage discipline. But Europe itself began to raise a question that the founders of the social market economy obviously could not have known in these terms: to what extent can a national doctrine of the economic order be transposed to an integrated economy whose monetary, budgetary, industrial and commercial mechanisms are now largely European?⁴¹

From 2011-2012, and even more clearly after 2014, another fragility appeared. The German energy strategy, particularly after the decision to accelerate the phase-out of nuclear power, gradually increased dependence on energy imports. At the same time, industrial specialisation in automotive, mechanical, chemical and capital goods increased the German economy’s exposure to world markets. The relationship with China thus became both a formidable factor of growth and a growing source of vulnerability.⁴² Ordoliberalism had conceived of the economic order within the framework of a state capable of establishing the rules of the game and guaranteeing the conditions of competition; Germany in the twenty-first century must now face industrial, technological, energy and geopolitical power relations on which competition policy alone is no longer sufficient to act.

The disruption caused by the pandemic, and especially by the war in Ukraine in 2022, has brutally accelerated this awareness. Germany is suddenly discovering that economic rationality cannot be dissociated from energy security, technological sovereignty and industrial power in the long term. Dependence on Russian gas, the vulnerability of certain supply chains and the delay in several strategic technologies are leading to the rehabilitation of instruments that German economic culture had long viewed with suspicion: public support for investment, targeted subsidies, industrial policy, security of supplies, European cooperation and increased state intervention.⁴³ The Zeitenwende is therefore not only a change in foreign and military policy; it also opens a period of review of the German economic model.

However, this development does not mean the disappearance of ordoliberalism or its pure and simple replacement by a dirigiste industrial policy. Rather, it reveals a shift in the centre of gravity. Competition remains a fundamental principle, but it must now deal with resilience, economic security and the control of strategic dependencies. Budgetary stability remains a major reference, but it is coming under pressure from the considerable need for investment in infrastructure, defence, energy and the digital transition. The Soziale Marktwirtschaft continues to be invoked, but its political content is confronted with new trade-offs between economic efficiency, social protection, international competitiveness and sovereignty.⁴⁴

It is also in this space of transformation that the rise of the Alternative für Deutschland (AfD) must be situated. Without reducing its economic project to a simple return to ordoliberalism, it will be necessary to examine what, in its economic thinking, extends certain references to monetary stability, budgetary responsibility and the limitation of public intervention, and what, on the contrary, breaks with the intellectual universe of the social market economy. The AfD’s programmatic texts explicitly demand private property, freedom of contract, individual responsibility and an economy based on competition, while associating them with a radical critique of European integration and a sovereignist conception of economic policy.⁴⁵ Its relationship to ordoliberalism thus appears less as a direct filiation than as a revelation of the new tensions that run through German economic thought.

The evolution of Germany since 2001 therefore appears less as the abandonment of a model than as its gradual reconfiguration. The institutions inherited from the post-war period have retained a remarkable capacity for resistance, while economic behaviour, political priorities and the power relations that surround them have profoundly changed. It is this progressive dissociation between the principles proclaimed, the institutions preserved and the policies actually carried out that must now be examined. It allows us to understand why Germany was able to remain presented for a long time as the last great ordoliberal country even though the economic and geopolitical foundations of its success were gradually moving away from those that had presided over the construction of its model.

A. 2001-2010: on the garden side, the apparent triumph of the German model

Between 2001 and 2010, Germany experienced a spectacular reversal: the new conditions of globalization, far from immediately weakening its industrial model, first amplified its performance, while revealing the first dependencies that would gradually modify its nature.

1. European and global opening, a new opportunity for German industry. At the turn of the century, Germany seemed to be emerging from a long period of doubt. Reunification had left behind a considerable economic and budgetary cost, growth remained mediocre and unemployment high. The country that some observers had begun to describe as the "sick of Europe" seemed to have lost some of the advantages that had made it industrial power. However, less than a decade later, the same country would appear as the reference model of the European economy. This reversal was not a simple cyclical recovery. It was the result of a profound transformation in the way the German economy was integrated into Europe and glob⁴⁶alisation.

In this respect, the year 2001 was a real change of era. China’s entry into the World Trade Organisation accelerated the integration of world markets and opened up considerable prospects for German companies that were highly specialised in capital goods, automobiles, chemicals, mechanics and industrial technologies. At the same time, the gradual enlargement of the European Union towards Central and Eastern Europe offered German companies a geographically close production and subcontracting area, with a qualified workforce and whose costs remained significantly lower than those in Western Germany. For German industry, globalisation did not therefore mean the disappearance of national production: on the contrary, it allowed for a new international division of labour in which Germany retained high value-added activities while integrating the economies of Central Europe into its production chains. ⁴⁷ The process was considerably faster and more extensive than the equivalent French relocations in Central Europe or the Maghreb.

This evolution is essential to understand the singularity of the decade. German industry is no longer satisfied with exporting finished products; it is organising cross-border production networks in which German and Central European suppliers are increasingly closely intertwined. The Czech Republic, Poland, Hungary, Slovakia and, more broadly, the economies of the former communist space thus became components of the "German workshop". The development of these regional value chains enabled German companies to combine geographical proximity, industrial specialisation, labour qualification and cost differentiation, which were much lower in Central and Easte⁴⁸rn Europe. German competitiveness was therefore built as much in Germany as around Germany.

The euro reinforces this dynamic. The disappearance of exchange rate risk within the monetary zone from 2001 onwards facilitates trade and investment, while the single currency deprives European partners of the possibility of making nominal adjustments to their exchange rates vis-à-vis Germany. In an economy where wage costs are rising more moderately than in several other European countries (and even much more moderately compared to France, whose socialist government has chosen the period to implement the reform of the 35-hour paid week40!) and where industrial productivity remains high, this configuration contributes to improving the relative position of German companies.⁴⁹ However, it would be excessive to reduce Germany’s success to the mechanical effect of the euro. This is less a single cause than an environment that is particularly favourable to a German industrial strategy already structured around exports and specialisation in manufactured goods.

2. Schröder, competitiveness and the new export economy. This is where one of the most characteristic features of German development lies: the shift in the centre of gravity of growth towards external demand. Between 2000 and 2010, the contribution of exports to German economic activity increased sharply, while domestic consumption remained relatively contained. Industry, Mittelstand companies and large global groups found in this configuration the conditions for a remarkable expansion. At the beginning of the 2000s, wage moderation and reforms of the German labour market further reinforced this cost advantage. Germany therefore not only became more productive; it became particularly competitive in sectors exposed to international competition.⁵⁰

The reforms undertaken by Gerhard Schröder play an important role here, but their significance deserves to be precisely appreciated. Agenda 2010, the Hartz laws and the reform of unemployment benefits do not constitute an industrial policy in the traditional sense. They seek first and foremost to increase employment, to reduce certain rigidities in the labour market and to restore cost competitiveness. Their effect on the German industrial model is nevertheless considerable: they help to contain unit costs and encourage a reorientation of the economy towards export sectors.⁵¹ The German success of the 2000s is thus based on an original articulation between an old industrial base, training and collective bargaining institutions inherited from the post-war period, a new European organization of production and a more demanding supply-side policy.

However, it would be misleading to see in this development the simple resurrection of classical ordoliberalism. Institutions remain largely in place, but their economic environment has changed. The principle of competition remains central, monetary stability retains an almost constitutional value, and the state continues to favor the definition of rules rather than the day-to-day management of productive activity. But German economic policy is now based on a profoundly globalized economy, on international value chains, and on the strategies of multinational companies that go far beyond the intellectual framework in which Eucken or Röpke had thought about the economic order.⁵²

The contradiction becomes even clearer if we consider the relationship between Germany and its European partners. The success of the German model contributes to the constitution of large current account surpluses, while several euro zone economies are simultaneously accumulating external deficits. The single currency, designed with a logic of stability and convergence, thus operates in an environment where productive specialisation and competitiveness performance diverge sharply. Germany can then appear to be the main beneficiary of European integration, without this situation necessarily being the result of a deliberate strategy of economic domination until then.⁵³

1. A success that already brings dependencies. The phenomenon is particularly visible after 2005. Global demand is growing rapidly, emerging economies are expanding spectacularly and China is becoming a major market for German industrial products. German companies benefit from their positioning in the technological and industrial segments where global demand is growing the fastest. Between 2000 and 2018, Chinese value added incorporated into German exports increased almost tenfold, from $7.8 billion to $77.7 billion, on the eve of the Russian attack on Ukraine; China is gradually becoming the main individual contributor of foreign value added incorporated into German exports. This figure already reveals the paradox that will develop in the following years: globalisation simultaneously increases Germany’s industrial power and its dependence on value chains that it does not fully control.

The success was such that the German model seemed to have solved an equation that the other major European economies were struggling to master: like Taiwan, Japan and South Korea, Germany would retain a powerful industrial base while fully participating in globalisation, maintain a high level of qualification and technological specialisation while reducing costs, preserve strong social protection while reforming the labour market, and finally combine budgetary discipline and export power. The formula seems all the more convincing given that the 2008 financial crisis hit several European economies harder than Germany. The latter emerged relatively quickly from recession and its labour market held up better than expected.⁵⁵

But it was precisely at this moment that the misunderstanding on which part of the later narrative of the "German model" was to be based began to form. The solidity of ordoliberal institutions is readily attributed to what is also due to an exceptionally favourable international configuration: strong global demand, trade openness, relatively abundant and inexpensive energy, the rise of China, the integration of the economies of Central and Eastern Europe and the stability of the European market. Success was real, but its conditions were c⁵⁶ontingent.

The Germany of the 2000s did not abandon ordoliberalism; it placed it in a new configuration where the competitiveness of companies increasingly depended on factors outside the national space. The permanence of the institutions gave the impression of remarkable continuity, while the economic content of the model was transformed. The Wettbewerbsordnung remained as a reference principle; but German competitiveness was now based on the integration of European and global value chains, on a particularly advanced export strategy and on the choices of companies whose horizons had become global.

This distinction between the permanence of rules and the transformation of the conditions of their application is essential to understanding what comes next. The "German model" that triumphed around 2010 is both the direct heir of the social market economy and the product of a globalization that none of the founders of ordoliberalism could have anticipated. Its success will gradually create its own dependencies. It is when the international environment ceases to be as favorable to it that the fragilities long masked by export performance will become visible.

B. 2002-2010: on the court side, the Schröder reforms and the transformation of the social compromise

The reforms undertaken under Gerhard Schröder constitute the second movement in the transformation of the German model: they restore threatened competitiveness and contribute to a lasting reduction in unemployment, but at the cost of a profound change in the social balances on which the social market economy was traditionally based.

1. From the "sick man of Europe" to the reform of the labour market. At the beginning of the 2000s, the dominant diagnosis in Germany was that of an economy whose institutions, long considered a factor of stability, were now perceived as a source of rigidity. Growth was weak, unemployment remained high and the costs linked to social protection weighed on employment. Germany was then in a paradoxical situation: it retained a powerful industry, a qualified workforce and internationally competitive companies, but it struggled to transform these assets into sufficient job creation. The problem was therefore no longer that of the disappearance of productive capacity, but that of its articulation with the labour market and with the financing of the social model.

It was in this context that Gerhard Schröder’s government embarked on a series of reforms from 2002 onwards that culminated in Agenda 2010. The commission chaired by Peter Hartz proposed a profound reorganisation of the employment institutions, whose various laws adopted between 2003 and 2005 modified unemployment benefit mechanisms, activation policies and certain forms of employment. The general philosophy was clear: to make the return to work faster, to reduce the duration and sometimes the level of benefits, to strengthen incentives to return to work and to bring social policies closer to the functioning of the labour market.⁵⁸

The reform of the Arbeitslosenhilfe and the Sozialhilfe, replaced by the Arbeitslosengeld II, is a turning point in this respect. The traditional distinction between unemployment insurance and social assistance has been partly abolished in favour of a system that is more focused on the beneficiary’s ability to find a job. The principle of activation is taking on a new place in German social policy: benefits are no longer only designed as a protection against the risk of unemployment, but as an instrument to promote professional reintegration. ⁵⁹ These principles would greatly deserve to be considered in the France of 2027.

This orientation is not unrelated to certain conceptions of the economic order developed in the ordoliberal tradition. It is based on the idea that social protection must preserve the dignity and security of individuals without removing incentives to work, and that institutions must allow the labour market to function without the assistance mechanisms themselves becoming a lasting obstacle to the return to work. But the Schröder reforms introduced an important inflection: the principle of individual responsibility, already present in the social market economy, acquired a much more restrictive dimension.⁶⁰

However, we must avoid making the Hartz reforms the only explanation for the German recovery. Their implementation coincides with an exceptionally favourable international situation for German exports, with the accelerated integration of the economies of Central and Eastern Europe into industrial value chains and with the spectacular expansion of world demand. The effects of the reforms are therefore real, but they are combined with external factors and with transformations that have been underway for several years in companies and in industrial relations.⁶¹

The result on the labour market is nevertheless remarkable. After exceeding five million at the beginning of the decade, the number of unemployed fell sharply even before the 2008 crisis. The structural unemployment rate also fell, while employment increased. The OECD’s work underlines that the reforms undertaken from 2002 onwards improved incentives to work and the reconciliation between labour supply and demand, contributing to the gradual decline in structural unemployment.⁶² The financial crisis of 2008-2009 even provided further proof of the adaptability of the German labour market.

But this success has a less visible dimension. The new equilibrium is not based solely on a more efficient labour market; it is accompanied by a growing diversification of employment statuses and a development of the low-wage sector. Mini-jobs, part-time jobs and certain forms of temporary employment are taking a more important place in an economy where the objective of a rapid return to activity sometimes tends to take precedence over job stability.⁶³

The reform does not destroy the German social compromise; it displaces it. The system retains its fundamental institutions of collective bargaining, employee representation and co-determination, but a growing part of the working population is less directly protected by the traditional mechanisms of the model. It is this development, more than just the measures of Agenda 2010, that will gradually change the social physiognomy of the German economy.

2. Wage moderation and a new configuration of industrial relations. The transformation is particularly marked in the wage sector. The moderation of German wages is not the result of a government decision alone. It is the product of a set of choices made by companies and the social partners, in a context of strong competitive pressure and industrial restructuring. Collective bargaining is gradually moving away from the highly centralised model of previous decades and giving more space to company agreements and clauses allowing derogations from sectoral standards in certain circumstances.⁶⁴

This development has a distinctly German logic. Trade unions and employers’ organisations are not renouncing the principle of collective bargaining; they are adapting it to the need to preserve employment and the competitiveness of companies. Wage moderation can thus be negotiated in return for commitments on employment, a reduction in working hours or guarantees concerning the future of an establishment. Social compromise is therefore not disappearing: it is becoming more decentralised, more pragmatic and more subordinate to the constraints of company competitiveness.⁶⁵

This development makes a major contribution to German competitiveness. Unit labour costs are rising less rapidly than in several other European countries and are falling in some sectors in relative terms. For export-oriented industrial firms, this advantage is considerable. The combination of a skilled workforce, high industrial specialisation, efficient production organisation and contained wage growth allows Germany to strengthen its position on world markets.⁶⁶

But wage moderation also has a counterpart. It contributes to slowing down the growth of disposable incomes and increasing the dispersion of wages. Between 2001 and 2006, research based on individual employee data shows a significant increase in wage inequality in Germany, linked in particular to the decline in collective bargaining coverage and the increase in wage differentials at the bottom of the distribution.⁶⁷ This phenomenon is particularly important because it occurs in a country that had long had a relatively low wage dispersion and where collective bargaining had precisely contributed to limiting inequality.

The decline in collective bargaining coverage is indicative of a more profound transformation. According to OECD data, the proportion of employees covered by a collective agreement fell from around 85% in 1990 to less than 60% in 2015. This development cannot be attributed solely to the Hartz reforms; it is part of a movement that began in the 1990s, characterised by the decentralisation of negotiations and the gradual weakening of the capacity of sectoral agreements to cover all employees.⁶⁸ The German model is therefore not ceasing to be based on social partnership, but it is becoming less homogeneous.

However, we must be careful not to read it too unequivocally. The increased flexibility of the labour market and wage moderation have also helped to preserve industrial employment and to strengthen the adaptability of companies. The 2008-2009 crisis provides a particularly clear illustration of this. While many developed economies are experiencing a sharp rise in unemployment, German companies are largely adjusting their activity by reducing working hours rather than by mass layoffs. The use of the Kurzarbeit, combined with the flexibility introduced in certain collective agreements, makes it possible to retain skills in the company that could have been lost during a more traditional recession.⁶⁹

This adaptability thus reveals an important continuity with the old model. Germany has not simply replaced social protection with flexibility. It has combined more external and internal flexibility with collective institutions that are strong enough to absorb shocks. It is precisely this combination that explains why the results of the reforms cannot be reduced to that of liberal deregulation or to that of a simple strengthening of ordoliberalism.

3. The paradox of a success that transforms the Soziale Marktwirtschaft. The German paradox then emerges clearly. The reforms of the early 2000s helped to restore competitiveness, reduce unemployment and give companies the means to take full advantage of globalisation. They have therefore, in several respects, strengthened the economic conditions of German industrial power. But at the same time, they have shifted the balance between the two terms of the expression Soziale Marktwirtschaft. The market has become more flexible, while social protection has focused more on activation, empowerment and return to work.

This shift does not mean that Germany has abandoned its social model. Social spending remains high, social insurance remains powerful and co-determination institutions continue to profoundly distinguish the German economy from an Anglo-Saxon-style free market system. But the political meaning of the word "social" is changing. It no longer refers so clearly to collective protection against the effects of the market; it tends more to designate the institutional organization that allows individuals to participate in the labor market and to bear it⁷⁰s demands.

This evolution is in line with an idea already present in the ordoliberal tradition: the function of social policy should not be to correct market results indefinitely, but to create the conditions that allow individuals to remain actors in the economic order. The difference is that, in Germany in the 2000s, this logic is now subject to much stronger pressure from international competition. Individual responsibility is no longer just a moral value; it is also becoming an instrument of competitiveness.

This is why it would be simplistic to present the Schröder years as a break with ordoliberalism. Rather, they constitute a transformation of its environment and some of its applications. The state remains essentially a state of rules, the institutions of competition remain, the social partnership has not been abolished and individual responsibility retains a central place. But the priority given to competitiveness, employment and adaptation to world markets changes the effective hierarchy of objectives. The Soziale Marktwirtschaft is thus moving closer to a compromise in which the protection of individuals must be more about integrating them into a competitive economy than about limiting the effects of this competition.

This change also helps to explain why Germany’s success could be so easily interpreted, outside the country, as a victory for the "German model". The reforms have produced visible and measurable results: a reduction in unemployment, an increase in employment, a recovery in competitiveness, a rise in exports and remarkable resistance to the 2008-2009 crisis. But they have also produced less visible effects: the development of a low-wage sector, a decline in conventional coverage, a widening of pay gaps and the gradual dualisation of the labo⁷¹ur market.

The real paradox is therefore that Germany has regained some of the economic power that had characterized its post-war model by moving away from some of the social conditions that had contributed to its legitimacy. Competitiveness has not destroyed the Soziale Marktwirtschaft; it has shifted its point of equilibrium. And this new configuration, long masked by the success of exports, will gradually become one of the major issues in the German debate when globalization ceases to produce the same benefits.

C. 2010-2021: the apogee of the German model and the constitution of its dependencies

The 2010s were the moment when the German model seemed to reach its point of perfection: powerful industry, external surpluses, reduced unemployment, controlled public finances and growing political influence in Europe. But this success is increasingly based on a set of external conditions – the euro, Russian energy, the Chinese market and industrial globalisation – whose fragility will only become apparent after 2020.

1. Germany at its zenith, an industrial power at the heart of Europe. In the aftermath of the 2008-2009 financial crisis, Germany emerged stronger in comparison with its main European partners. While several euro zone economies are facing recession, the banking crisis and the sovereign debt crisis, the German economy is rapidly returning to sustained growth. Unemployment is falling, public finances are recovering and exports are resuming their growth. The Merkel decade thus seems to confirm, with particular brilliance, the superiority of the model based on industrial competitiveness, budgetary discipline and international specialisation.⁷²

The performance is all the more remarkable given that Germany has retained a manufacturing base that most other major Western economies have gradually reduced. Industry still accounts for almost a fifth of Germany’s gross value added over the decade, while industrial employment, applied research, vocational training and the Mittelstand business network maintain a particularly dense productive capacity.⁷³ The country is therefore not content with exporting more: it retains a substantial part of the skills, equipment and supplier networks necessary for this exporting power.

This situation fosters an apparently virtuous circle. Specialization in capital goods, automotive, chemicals, machine tools and industrial equipment allows German companies to benefit from global growth without being directly exposed to cost competition from emerging economies across the entire production chain. Some of the most labor-intensive steps can be carried out in Central and Eastern Europe, while the design, manufacture of sophisticated components, system integration and marketing remain largely organized from Germany.⁷⁴

European integration plays a decisive role here. The European Union is becoming both the main local market for German companies and the area in which they organise their value chains. Enlargement towards the East therefore has an economic significance that goes far beyond the mere extension of the internal market: it brings German industry closer to economies capable of accommodating production and subcontracting activities while remaining part of a common regulatory environment. Germany can thus take advantage of a form of regionalisation of globalisation.⁷⁵

The euro reinforces this architecture. For Germany, the single currency eliminates exchange rate risk with its main European partners and helps to stabilise financing and investment conditions. Above all, it prevents euro zone economies from adjusting their relative competitiveness through national devaluations. In a monetary union where developments in wages, productivity and domestic demand diverge sharply, this situation automatically favours economies with the most efficient export sector.⁷⁶

It would nevertheless be excessive to present Germany as an economy that lives exclusively on its exports. Domestic demand, investment and services naturally play a major role. But the contribution of external demand to growth and, above all, the place of industry in international trade give the German model an undeniable singularity. The country’s success thus becomes associated with a formula that seems to combine the virtues traditionally attributed to the social market economy: competitive companies, responsible social partners, a relatively thrifty state, a stable currency and an export industry.⁷⁷ This representation is reinforced by the economic policy conducted under Angela Merkel. The German government consistently defends the stability of public finances, competitiveness and budgetary responsibility. The inclusion in 2009 of the Schuldenbremse, the "debt brake", in the Basic Law gave constitutional scope to this or⁷⁸ientation. The choice was consistent with the German tradition of budgetary discipline, but it took on a new meaning in a Europe confronted with the sovereign debt crisis. Germany then appeared not only as an economic power, but as the main defender of a rigorous conception of stability within the euro zone.

However, it was at this precise moment that ambiguity set in. Germany’s success was increasingly attributed to internal virtues — discipline, competitiveness, industrial quality, responsibility — while it also depended on particularly favourable international conditions. Global growth, China’s trade opening, access to relatively cheap energy and the stability of the European market were all external factors that contributed to performance. The model seemed autonomous at the very moment when its dependencies were increasing.

1. China, energy and Russia: the triangle of dependencies. The relationship with China gradually became one of the pillars of this new configuration. At the beginning of the 2000s, China was above all an emerging market to be conquered. Over the next decade, it became an essential outlet for German industry and a major partner of its companies. The automotive industry provides the most spectacular example: German manufacturers are investing massively in China, developing production capacities there and building an increasing part of their future growth there.

This strategy is not irrational. It corresponds to the logic of an industrial economy specialising in high-quality goods, complex equipment and high-end vehicles. German companies have technological advantages and benefit from the rapid growth of the Chinese middle class. But this success gradually creates an asymmetry: German industry becomes dependent on access to a foreign market that is beyond its political control and whose local companies are themselves rapidly moving upmarket.

China thus ceases to be just a customer; it simultaneously becomes a competitor, a supplier and a systemic player in value chains. This evolution is particularly visible in the automotive industry, electrical equipment, digital technologies and certain chemical industries. As we have recently pointed out, China’s industrial policy, in particular Made in China 2025, explicitly aims to reduce the country’s dependence on foreign technologies and to promote the emergence of national champions in strategic sectors.⁸⁰ The German model is therefore faced with a new situation: its main growth market is working at the same time to reduce its dependence on the technologies it buys from it.

The second dependence is energy. The German choice of the Energiewende is the result of complex environmental, political and industrial considerations. After Fukushima, the decision to accelerate the nuclear phase-out reinforces the weight of gas in the energy transition and increases, initially, the importance of natural gas imports. Russia then becomes a major supplier to the German economy. Russian gas, which is relatively abundant and competitive, appears to be the natural complement to an energy system that seeks to reduce nuclear and coal simultaneously.⁸¹

The construction and completion of Nord Stream 1 and the Nord Stream 2 project symbolise this strategy. They reflect an essentially economic conception of interdependence: Germany supplies its industry with competitive energy, while Russia finds a stable outlet for its gas exports. However, geopolitical criticism is never entirely absent. Several European partners, notably Poland and the Baltic States, warn of the risk that this energy dependence could become an instrument of Russian power.⁸² The problem is not that Germany has ignored these warnings; it is that it has long subordinated them to a conception of interdependence based on the idea that economic relations can help stabilise political relations. This conviction, sometimes summed up by the phrase Wandel durch Handel, "change through trade", had older roots in Ostpolitik and in the German culture of interdependence. However, it took on a particularly important dimension under the Merkel go⁸³vernments.

The third element of the triangle is precisely Russia. For an industrial economy that is highly dependent on energy imports and for a country that is seeking to develop its trade with Eurasian markets, the stability of relations with Moscow has been of major and obvious economic interest. Germany thus found itself at the crossroads of three logics: selling to China, buying energy at low prices from Russia and maintaining European trade openness. This configuration produced a form of prosperity based on interdependence that seemed, for several years, compatible with the principles of an open and competitive economy. But this interdependence had a conceptual weakness: it assumed that the economic partners shared the same rules of the game sufficiently for reciprocal dependence to be effectively reciprocal. However, the rise of geopolitical rivalries has gradually shown that economic exchanges can create asymmetries of power as well as prosperity. The market does not necessarily neutralize power; it can sometimes reinforce it, as is so often observed in the implementation of competition policy.⁸⁴

This question goes far beyond the German case. It marks the gradual return of a dimension that classical ordoliberalism had, in another form, always taken seriously: an economic order presupposes a political and institutional framework capable of protecting it. However, the globalization of the twenty-first century had led Germany to outsource part of its economic security conditions. Its energy, some of its outlets and part of its value chains now depend on decisions taken outside its institutional space.

1. The model at its peak, the vulnerability already constituted. On the eve of the pandemic, Germany seems to be at the peak of its economic power. Its unemployment rate is historically low, its industrial companies are present in all the major world markets and the country has been accumulating considerable current account surpluses for several years. Germany then gives the image of an economy that has succeeded in what many other European countries have failed to accomplish: preserving a powerful industry while participating fully in globalization.

This success contributes to a form of excessive confidence. Weaknesses in investment in public infrastructure, the digital backwardness, the difficulties of certain administrations and the dependence of entire sectors on foreign technologies or markets are long masked by the performance of major exporters. The industrial excellence of some companies thus gives the impression of a general excellence of the economic system.

The paradox is clearly apparent in the digital field. Germany retains a remarkable power in industrial technologies, but it remains largely dependent on the major American and Asian players in several structuring areas of the digital economy. This asymmetry is not immediately visible in traditional foreign trade statistics, which mainly value manufactured goods. However, it heralds a fundamental transformation of international competition: economic power no longer depends solely on the ability to produce machines or automobiles, but on the mastery of data, software, semiconductors, digital infrastructures and artificial intelligence.⁸⁶

The automotive industry is a particularly striking example of this fragility. German manufacturers remain among the most powerful in the world, but their position is largely based on combustion engine technology, Chinese markets and complex international supply chains. However, the transition to electric vehicles is simultaneously changing the technology, cost structure, value chain and geography of competition. Chinese companies are beginning to move from being suppliers or partners to direct competitors. The German industrial model is thus facing a technological transformation that it did not fully anticipate, far from it.⁸⁷

The problem is therefore less that of a bad industrial policy than that of an industrial policy that has become implicitly dependent on the stability of the outside world. For a long time, Germany was able to consider that the best industrial policy consisted in creating the general conditions for competitiveness and letting companies choose their own technologies, markets and locations. This approach was consistent with an ordoliberal tradition of distrust of the administrative choice of "winning sectors". But it becomes more difficult to maintain when foreign competitors massively and concurrently mobilize their states, their public funding and their industrial policies in the service of strategic objectives, such as China or the Unit⁸⁸ed States.

This is where the real limit of the model lies on the eve of 2020. Germany remains institutionally faithful to several principles of the social market economy: monetary stability, budgetary discipline, competition, social partnership, corporate responsibility and the importance of the law. But its economy has become dependent on an international environment whose rules are less and less exclusively economic. China is pursuing a proactive industrial policy; the United States is renewing massive support for strategic industry; Russia is gradually using energy as an instrument of power; the European Union itself is beginning to talk about economic sovereignty and strategic autonomy.

Germany is therefore not yet confronted with the failure of its model. It is confronted with something more subtle: the success of this model has produced dependencies that it can no longer manage, on its own. Fiscal discipline, competitiveness and trade openness remain assets; however, they are no longer sufficient to guarantee economic security when trading partners become strategic competitors, when energy becomes a geopolitical issue and when technology becomes an instrument of power.

The pandemic of 2020, and especially the invasion of Ukraine in February 2022, will transform these latent vulnerabilities into immediate constraints. The energy crisis in 2022-2023, supply disruptions and the questioning of relations with Russia will force Germany to rediscover a truth that its own ordoliberalism had always contained: an economic order of freedom – as conceived by the Founding Fathers of ordoliberalism – cannot function sustainably without a political order capable of guaranteeing the conditions of security.

D. 2022-2026: Zeitenwende, return of industrial policy and new security economy

Russia’s attack on Ukraine in February 2022 acted as a real electro-shock in Germany. It was not only a geopolitical and military rupture: it brutally revealed the fragility of an economic model whose operating conditions had become excessively dependent on the external environment. The dizzying rise in gas and electricity prices produced, through its effects on industry, something that resembled a real industrial accident on the scale of the national economy. European natural gas rose from €18.8 per MWh in January 2021 to €66.4 on 23 February 2022, on the eve of the invasion, and then to €180 in July. ⁸⁹ For a particularly energy-intensive German industry, the shock is immediate.

In Chancellor Olaf Scholz’s speech of 27 February 2022, the Zeitenwende first points to a strategic and military turning point. But its economic consequences are much more profound. In a few months, Germany has to question several of the assumptions that have accompanied its rise since the beginning of the century: abundant and relatively cheap Russian energy, privileged access to the Chinese market, globalised value chains, confidence in trade stability and the state’s restraint in industrial policy. The problem is no longer just to preserve the competitiveness of the Standort Deutschland; it becomes to preserve the material and strategic conditions for this competitiveness.

1. The Ukrainian shock: when economic dependence becomes a question of security. The brutality of the energy shock is primarily due to the extent of previous dependence. Before the war, about 55% of the gas consumed in Germany came from Russia. In a few months, Berlin must therefore abruptly replace a source of supply that had long been considered one of the pillars of its industrial competitiveness. The accelerated construction of liquefied natural gas terminals imported in particular from the United States or international markets at much higher tense prices, the diversification of suppliers, the filling of storage capacities and energy-saving measures are becoming national priorities.⁹⁰

For the most energy-intensive sectors, the problem quickly goes beyond that of a temporary increase in costs. Chemicals, metallurgy, glass, paper, fertilisers and building materials are seeing their comparative advantage directly challenged. In autumn 2022, the OECD noted that German industry had already reduced its gas consumption by around 25% compared to the 2018-2021 average, in particular through production cuts in certain energy-intensive sectors.⁹¹ The energy shock thus acts as an indicator of industrial vulnerability: cheap energy was not only an advantage for households, but one of the building blocks of German competitiveness, especially after the abandonment of its nuclear power plants for ideological rather than economic reasons.

The crisis is therefore changing the very notion of dependence. For the previous two decades, interdependence had been largely understood from the perspective of mutual gains. Importing Russian energy reduced costs; exports to China opened up a huge market for German companies; Central European value chains increased the efficiency of production. The war shows that dependence can change in nature when the geopolitical context deteriorates. An economically rational relationship can then become strategically dangerous.

This is one of the most important transformations of the period. The question is no longer whether a dependency is economically efficient, but whether it is acceptable in view of the risk it poses to the continuity of national activity. This distinction between dependence, vulnerability and economic security will gradually extend to energy, critical raw materials, semiconductors, digital technologies and certain infrastructures.

The first Nationale Sicherheitsstrategie, adopted in June 2023, explicitly reflects this new concept. It is a major document, which went largely unnoticed in Europe and especially in France at the time. German security is considered in a much broader sense than military defence. Infrastructure resilience, supply chain protection, cybersecurity, import diversification and the reduction of unilateral dependencies become components of national security.⁹²

The same inflection appears in the German China-Strategy published a few weeks later, as a direct result of the previous economic strategy document. Germany adopts the European formula according to which China is simultaneously a partner, a competitor and a systemic rival.⁹³ It is not a question of breaking with Beijing, but of no longer considering trade relations as independent of power relations. Economic policy must now take into account the possibility that certain trading partners are also technological competitors and, in certain circumstances, vectors of vulnerability.

The Ukrainian shock therefore has a doctrinal significance that goes far beyond the Russian question. It leads to the reintroduction of security into German economic reasoning. The market remains the organizing principle of the economy; but the security of the conditions of operation of the market now becomes an explicit responsibility of the state.

2. The United States, China and Europe: the return of industrial policy. This German development comes in an international environment that has itself changed profoundly. The war in Ukraine is not the only cause of the return of industrial policy. For several years now, the United States and China have been using their financial, regulatory and technological capacities to support sectors deemed strategic. Washington is crossing a new threshold with the CHIPS and Science Act and the Inflation Reduction Act adopted in 2022.

The CHIPS Act provides $52.7 billion in federal support for semiconductor production and research. At the same time, the Inflation Reduction Act introduces massive tax credits and support for electric vehicles, batteries, hydrogen, renewables, and other clean technologies.⁹⁴ The American logic is no longer that of a state that merely creates an environment conducive to private investment: governments are now explicitly directing capital to technologies that are considered decisive for economic power and national security.

For Germany, the change is particularly destabilizing. Its model was based precisely on the idea that competitiveness could be achieved without a systematic sectoral industrial policy, thanks to the quality of training, research, infrastructure, institutions and companies. However, both the United States and China are now demonstrating that a competitive environment can be profoundly shaped by the strategic choices of states.

At the same time, China is pursuing its policy of moving upmarket in industry. In electric vehicles, batteries, solar panels, digital equipment and certain green technologies, it is no longer content to be the world’s workshop: it is seeking to control the segments with higher added value. For German industry, and particularly for the automotive industry, Chinese competition is therefore gradually becoming technological competition.

The change in context is also forcing the European Union to revise its own doctrine. Germany, which has traditionally defended a demanding interpretation of competition rules and state aid, is faced with a new difficulty: how to maintain an open internal market when European companies are facing competitors benefiting from massive industrial policies from external powers?

The European response is gradually being developed through a new combination of instruments: control of foreign subsidies, investment screening, trade policy, support for strategic technologies and temporary relaxation of state aid rules. The European Chips Act of 2023 and the Net-Zero Industry Act of 2024 reflect this shift. The second sets the objective for 2030 that European production capacity for "net zero" technologies can reach around 40% of the Union’s annual deploym⁹⁵ent needs.

The evolution is considerable. For a long time, European industrial policy was largely thought of as the indirect result of the internal market, competition and trade policy. It is gradually becoming a policy of economic power. The objective is no longer just to allow the most efficient companies to prosper, but to guarantee that Europe retains productive capacities in certain areas deemed essential.

Germany is participating in this development while maintaining a certain distrust of generalised subsidy policies. However, its new IndustrieStrategy 2023 explicitly recognises the need for a "strategic industrial policy" and makes Wirtschaftssicherheit, economic security, a goal in its ⁹⁶own right. The language is revealing: industry is no longer just another sector of the economy; it is becoming a component of national strength and resilience (see Annexes 1 and 2).

This transformation does not mean a return to an administered economy. The German state does not seek to set prices or directly determine production volumes. It intervenes more in infrastructure, energy, research, critical technologies, financing conditions and securing supply chains. It is less a question of replacing the market than of making it possible to remain permanent in an international environment that has become more conflictual.

3. 2024-2026: from Standort Deutschland to Wirtschaftssicherheit. From 2024 onwards, this new orientation will gradually cease to be an emergency response and will become a more structured economic policy. The German debate is once again focusing on the Standort Deutschland: energy costs, taxation, infrastructure, administrative slowness, investment, innovation, productivity and industrial competitiveness. The question is no longer just about financing the energy or digital transition; it is becoming one of the ability of the German territory to remain attractive for industrial investment.

The energy issue remains at the heart of this reorientation. The rapid disappearance of Russian gas has made it possible to avoid a physical disruption in supply thanks to the diversification of imports and the development of LNG infrastructure. But it has left behind a more lasting problem: that of the cost of energy for industry. The energy transition, long conceived primarily as a climate policy, must now be thought of simultaneously as a policy of industrial competitiveness.

This difficulty partly explains the change in the scale of German public investment. The constitutional reform of 2025 and the creation of a special €500 billion fund for infrastructure and climate transformation mark a spectacular shift in fiscal policy.⁹⁷ Transport, electricity grids, digital infrastructure, energy transformation and defence capabilities are thus becoming objects of strategic investment.

The change is particularly significant with regard to the Schuldenbremse.⁹⁸ This is not abolished as a principle of budgetary discipline, but its application is adjusted to allow investments considered necessary for the country’s security and productive capacity. The economic reasoning has been modified: debt is no longer assessed solely on the basis of its immediate cost, but also on its ability to finance the infrastructure and assets necessary for future growth.

The same logic extends to disruptive technologies. Artificial intelligence, data centres, semiconductors, robotics, quantum technologies and biotechnology are gradually entering the scope of an industrial policy that no longer distinguishes as clearly as before between research, innovation and economic security. In January 2026, Friedrich Merz insists on the need to invest in energy and digital infrastructure, artificial intelligence and data centres, while improving the transformation of German research into industrial activities.⁹⁹

This development is leading to a redefinition of the role of the state. The state is still not conceived as a producer or as a central planner. Instead, it must guarantee infrastructure, energy, research, skills and certain industrial capacities without which competition itself may no longer be able to function under balanced conditions. The boundary between general economic policy and strategic industrial policy is thus becoming much more porous.

It is in this context that the AfD must be situated, due to its considerable rise in electoral power over the decade. Its interest in our analysis lies in the fact that it explicitly claims part of the ordoliberal vocabulary: private property, freedom of contract, individual responsibility, competition and limitation of public intervention. Its 2025 programme still claims to be part of the Soziale Marktwirtschaft and associates this reference with the defence of the Mittelstand, entrepreneurship and competitiveness.¹⁰⁰

But this filiation is profoundly transformed by a sovereignist conception of the economy. The AfD criticises European integration, community climate policies and certain regulatory constraints; it favours a much more national conception of energy and industrial policy. In particular, it defends the maintenance of the German car industry and calls for a substantial reduction in the constraints weighing on companies.¹⁰¹ In 2026, the energy issue is still fuelling this orientation, with the party calling in particular for a return to Russian energy imports in order to reduce costs.¹⁰²

The AfD is therefore not a simple return to the ordoliberalism of the 1950s. It takes up certain economic principles, but combines them with a sovereignist conception of the state and territory that is foreign to the intellectual universe of the first Freiburger Schule. In this respect, its positioning is indicative of a broader transformation: the reference to the market remains strong, but it is now articulated with the question of national control of the conditions of production.

Between 2022 and 2026, Germany has thus come a much longer distance than a simple cyclical adjustment. In a few months, the Russian attack on Ukraine destroyed the belief in economic interdependence that was stable enough to constitute a security guarantee on its own. American and Chinese competition then showed that the major powers were openly using their industrial policies, their fiscal capacities and their regulatory instruments to defend their technological positions. Finally, the European and German response gradually reintroduced industrial policy into the field of public action.

However, this is not a complete break with the ordoliberal heritage. Competition, responsibility, freedom of enterprise and economic discipline remain important references. But the general conditions for their exercise have changed. Energy security, industrial resilience, technological mastery, infrastructure and investment capacity are now considered as conditions of the economic order itself.

Germany has therefore not gone from a minimal state to an interventionist state. It has gone from a state mainly responsible for guaranteeing the rules of a relatively stable economic order to a state forced to guarantee the strategic conditions of this order in an international environment that has become conflictual.

It is this shift that allows us to understand the true scope of the Zeitenwende. The turning point of 2022 has not abolished ordoliberalism; it has shifted the central question of German economic policy: it is no longer enough to guarantee the proper functioning of the market, it is now necessary to guarantee the conditions of power that allow this market to continue to function.

III. Germany in search of a new strategic state: industrial power, economic sovereignty and ordoliberal recomposition

Russia’s attack on Ukraine in February 2022 acted as a real electro-shock in Germany. It is not only a geopolitical and military rupture: by brutally revealing the energy vulnerability of an economy that had made openness and interdependence the mainsprings of its prosperity, it is causing an upheaval whose scope goes far beyond foreign policy alone. The explosion in gas prices, the threat of an energy shortage and the difficulties encountered by the most energy-consuming industries resonate almost like a real industrial accident on the scale of the national economy. The shock is thus forcing Germany to reconsider some of the assumptions that had underpinned its growth model for two decades, strongly influencing the approach of all the Member States of the European Union, with very few exceptions.¹⁰³

For a long time, Germany’s economic power had been based on an exceptionally favourable combination. The euro provided the export sector with a stable monetary framework; the enlargement of the European Union enabled German companies to set up closely integrated production chains in Central and Eastern Europe; Russian gas provided abundant and relatively cheap energy; and the opening up of the Chinese market offered industry, and in particular automobiles and capital goods, a rapidly expanding outlet. In this environment, the state could remain the main guarantor of competition rules, monetary stability, education and infrastructure, leaving it to companies to determine their investments, technologies and markets.

The Ukrainian crisis reveals, however, that this favourable configuration had produced its own vulnerabilities. Dependence was no longer just economic: it could become strategic. A disruption in energy supply could disrupt industry; an excessive concentration of exports in certain markets could expose entire sectors to geopolitical reversals; dependence on technologies, raw materials or components produced abroad could transform apparent economic efficiency into political fragility. The notion of economic security therefore takes on a new place in German thinking. The Nationale Sicherheitsstrategie of 2023 states that security must now include the resilience of supply chains, the protection of critical infrastructure and the reduction of unilateral dependencies.¹⁰⁴

This shift is all the more important as the international environment itself has changed. The United States, with the CHIPS and Science Act and the Inflation Reduction Act adopted in 2022, has adopted a policy of massive support for domestic industrial and technological capacities. China is pursuing, with renewed determination, its policies of technological upgrading and securing value chains. The European Union, which has long been more reluctant to intervene directly in industrial choices, is in turn responding with the European Chips Act, the Net-Zero Industry Act, the control of foreign subsidies and the temporary relaxation of state aid rules.¹⁰⁵ The world economy remains open, but the major powers no longer behave as if trade openness were enough to guarantee security of supply, technological mastery and the sustainability of industrial capacities.

Germany cannot therefore remain on the sidelines of this movement. Its 2023 industrial strategy explicitly recognises the need for a "strategic industrial policy" and makes Wirtschaftssicherheit – economic security – a fully-fledged dimension of publ¹⁰⁶ic action. However, this is not a return to dirigisme, much less an imitation of the Chinese model or a pure and simple alignment with American protectionism. The ordoliberal tradition continues to weigh on German choices: distrust of distortions of competition, preference for general rules, concern for corporate responsibility, attachment to budgetary discipline and refusal to substitute administrative decisions for the functioning of the market in the long term.

It is precisely this continuity that makes the current transformation particularly interesting. Germany does not seem to be abandoning the idea of an economic order based on competition; rather, it is redefining the conditions necessary for its preservation. In the period of triumphant globalization, it was more than enough to ensure the proper functioning of the market in an international environment that was considered sufficiently stable. From now on, the state must also help to secure the energy, infrastructure, critical technologies, industrial capacities, skills, and supply chains on which the market depends. The boundary between economic politics and power politics is thus becoming much more permeable.

The question is therefore no longer just whether the German state intervenes more in the economy. It is to determine what the state now considers to be its strategic responsibility. The change is less quantitative than qualitative: from being the guarantor of the competitive order, the state tends to become the guarantor of the conditions of power in which this order can continue to function.

This development leads us to examine three closely related movements. The first is the transition from a competitiveness policy of the Standort Deutschland to an industrial policy that takes greater responsibility for its strategic choices. The second is the emergence of the Wirtschaftssicherheit, which transforms the management of external dependencies into a question of economic sovereignty. The third, finally, concerns the contradictions of this new orientation: between public intervention and competition, investment and budgetary discipline, trade openness and the protection of strategic interests, but also between Germany’s national ambitions and the need for a European response.

The issue thus goes beyond the German conjuncture alone. Through this recomposition, a new stage in the history of ordoliberalism is perhaps taking shape : not its disappearance, but its adaptation to a world in which economic power, technological power and geopolitical power have once again become inseparable. The real German change is therefore perhaps not the return of the state to the economy, but the return of power to German economic thought.

A. From Standortpolitik to Strategic Industrial Policy: The Return of the State as a Producer of Conditions

The first inflection of the new German strategic state can be seen in the transformation of the very notion of competitiveness. It is no longer enough for German companies to be efficient: it is also necessary that the territory in which they produce remains able to accommodate them, supply them and provide them with the infrastructure, energy, skills and technologies they need. The Standort Deutschland, the location of production activities in Germany, long considered one of the achievements of the German model, is thus once again becoming an explicit object of economic policy. But this evolution does not mean that the state intends to replace companies. Rather, it reflects the shift from an essentially regulatory conception of "framework conditions" to a much more active conception of the territory’s productive capacity.

1. Rearm the Standort Deutschland. During the boom years, German competitiveness had benefited greatly from an exceptionally favourable external environment. Companies could rely on relatively cheap energy, efficient infrastructure, a skilled workforce, industrial networks that were deeply integrated into Central Europe, and increasing access to world markets. The state therefore did not need to define an industrial policy in the strong sense: it was sufficient, to a large extent, to preserve the general conditions under which companies could invest and export.

The situation changed during the 2020s. The energy crisis reveals that the price and availability of energy are not simple market variables when the national industry depends on imports that are likely to be interrupted for geopolitical reasons. The ageing of infrastructure, delays in digital technology, the complexity of administrative procedures and the growing need for investment in turn reinforce the feeling that the Standort is stalling. The question is therefore no longer just about the cost of labour or taxation: it becomes that of the overall quality of the German productive ecosystem.¹⁰⁷

The diagnosis is particularly significant in a country where industry remains exceptionally important. In 2022, it still accounted for 20.4% of German gross value added, compared to around 10 to 11% in France, a gap close to double. The Federal Ministry of Economic Affairs also points out that 90% of German manufacturing companies are small and medium-sized enterprises, organised around the Mittelstand and a dense network of Hidden Champions, which has been one of the main drivers of the country’s industrial competitiveness for several decades. In France, SMEs also represent the vast majority of companies (95.8% of companies in the market sectors in 2022), but they only account for about 24% of value added, while medium-sized companies and large groups still account for most of production, exports and research and development. The contrast between the two countries is thus less due to the number of SMEs than to their place in the organisation of the production system: in Germany, the Mittelstand is the very backbone of industrial power; in France, the economy remains more structured around large national groups, even if recent reindustrialisation policies tend to gradually strengthen the role of SMEs and mid-caps. Therefore, defending the Standort is not just about preserving a few large companies: it is about maintaining the coherence of a productive ecosystem where innovative SMEs, mid-caps, applied research centres, regional banks, Länder and large groups form a set of interdependencies that constitutes one of the main strengths of the German model.¹⁰⁸

This new approach is gradually leading to the rehabilitation of instruments that have long been viewed with suspicion: public investment, guarantees, support for infrastructure, acceleration of authorisation procedures, support for technological transformations and targeted aid to particularly exposed sectors. However, the logic remains different from that of a dirigiste industrial policy. The problem facing the State is not to decide for entrepreneurs which companies should survive or which technologies will prevail, but to ensure that the material conditions of production do not themselves become an obstacle to competition.

The new German policy can thus be understood as a policy of rearmament of the economic territory. It is less about the ownership of companies than about the environment in which they operate: energy, electricity networks, transport, digital technology, research, training, financing and the speed of public decision-making. The paradox is obvious: the more Germany wants to preserve its market economy, the more it must now accept public intervention aimed at preventing the conditions of market functioning from deteriorating.

This development is clearly reflected in the Industriestrategie presented by the Federal Ministry for Economic Affairs in October 2023. The document no longer limits itself to recalling the virtues of competition and openness. It starts from the " Zeitenwende ", the deterioration of certain location factors and climate change to explicitly call for a "strategic industrial policy", intended to maintain a strong industrial base while developing the indus¹⁰⁹tries of the future. The vocabulary itself marks a break with traditional prudence: industry is no longer just the spontaneous result of a good economic environment; it is becoming a national capacity that must be preserved and renewed.

2. From "framework conditions" to industrial policy. The shift here is deeper than it seems. In the ordoliberal tradition, the state is indispensable because it must establish and enforce the order in which competition can be exercised. But this order was conceived mainly from a legal and institutional perspective: monetary stability, competition law, liability of actors, protection against monopolies and preservation of a competitive framework. The globalization of the 1990s and 2000s had allowed this concept to remain very relevant. Germany could indeed benefit from an open world market without having to directly choose the technologies or sectors of tomorrow.

This assumption has become much more difficult to maintain. The United States and China have reintroduced public power into industrial competition with renewed vigour. The US CHIPS and Science Act of 2022 provides for $50 billion in federal support for the US semiconductor ecosystem; the Inflation Reduction Act mobilises tax credits, loans and aid to accelerate investment in energy and industrial technologies.¹¹⁰ China, for its part, as already mentioned, has been pursuing a policy of technological upgrading for several years in which public support, financing, orders and industrial strategy are closely combined. In the face of this transformation of global capitalism, the idea that it is enough to maintain neutral rules for national companies to remain competitive seems less and less convincing.

However, Germany has not converted to the American or Chinese model. Rather, its response is to extend the notion of framework conditions. Energy and digital infrastructure, semiconductors, hydrogen, batteries, decarbonisation technologies and critical raw materials are becoming areas in which the state can legitimately intervene, not because it claims to know in advance the winners of the economic competition, but because their absence would compromise the general ability of the German economy to participate in this competition.¹¹¹

This distinction is essential. It explains why contemporary German industrial policy remains, in principle, compatible with a certain reading of ordoliberalism. The state does not give up on the market; it seeks to produce the conditions under which the market can still function effectively. But these conditions have become much more material than in the past. It is no longer enough to guarantee freedom of contract if companies do not have competitive energy at their disposal; competition is no longer sufficient if infrastructure is saturated; trade openness no longer guarantees technological autonomy when entire sectors depend on a very limited number of foreign suppliers.

The transformation is therefore as much semantic as political. The term Standortpolitik, which could once refer mainly to the improvement of taxation, training or the regulatory environment, now tends to encompass energy security, technological sovereignty, the resilience of supply chains and the capacity for public investment. The line between horizontal and sectoral policy is therefore becoming much more blurred.

The 2023 Industriestrategie reflects this evolution by simultaneously affirming the need to preserve the entire German industrial base and to develop the "industries of the future". It claims a European orientation, while considering the preservation of German industry as a contribution to the Union’s industrial capacity. It also favours, where possible, repayable financial instruments – loans, guarantees, participations – rather than permanent ¹¹²subsidies. Here we find a profoundly German trait: even when the State intervenes more, it seeks to make this intervention part of a logic of responsibility, discipline and a return to economic viability.

It would therefore be misleading to speak of an abandonment of the previous doctrine. Germany is moving from a state that guarantees the rules to a state that guarantees capacities. The difference is considerable. It means that industrial policy is no longer perceived as an exception to the normal functioning of the market economy, but as one of the means of preserving this functioning in an environment that has become more conflictual.

3. The new balance between market and power. However, this development raises a more delicate question: how far can this new industrial policy go without breaking with the very principles that have made the strength of the German model? The problem does not only lie in the growing volume of public intervention. It lies in the difficulty of determining what is still covered by the general rules and what now justifies selective intervention.

The issue of aid to large companies, a major issue in European competition policy, provides a first illustration of this. For a long time, the German economic culture has been reserved with regard to subsidies intended to support particular companies. The objective should have been to maintain a competitive environment, not to choose the winners. However, the energy transition, semiconductors, batteries or digital infrastructures require investments whose horizon and risks sometimes exceed private financing capacities. The State is then led to share part of the risk, provided that it can justify its intervention by the existence of a sufficiently clear collective interest.

The transformation also concerns infrastructure. The spectacular €500 billion programme adopted in 2025 for infrastructure and climate neutrality marks a change of scale in this respect. This fund, planned over twelve years, is intended to finance transport, digital, energy, housing and infrastructure for the Länder and local authorities.¹¹⁴ It is no longer simply a question of correcting a market failure on an ad hoc basis: public investment is becoming an instrument for the systemic modernisation of the Standort Deutschland.

This shift is all the more significant in that it touches on one of the taboos of German economic policy: the relationship between public investment and budgetary discipline. The loosening of the constraint does not imply the disappearance of the Schuldenbremse. Rather, it reflects a new distinction between current expenditure and investment in the country’s future capacities. Discipline remains a value, but it can no longer justify inaction when insufficient investment threatens the future competitiveness of the economy.¹¹⁵

The real change therefore lies in the definition of the economic responsibility of the state. The state does not seek to become the owner of the means of production or to organize the economy administratively. On the other hand, it agrees to take charge of part of the investments, risks and infrastructures that the private sector cannot assume alone when they condition the productive power of the country. The state thus becomes less a "producing state" than a producing state of productive capacity.

This nuance makes it possible to understand why the German transformation remains deeply ambivalent. On the one hand, it breaks with the excessive confidence in the self-regulation of a stable international environment. On the other, it retains a very strong distrust of dirigisme and unlimited support. Germany is therefore looking for a third way: to use public power to rebuild the conditions of competition without substituting political decisions for entrepreneurial decisions in the long term.

This is perhaps where the real relevance of ordoliberalism lies. In its historical context, it was intended to prevent the market from being handed over to private power or subject to political arbitrariness. In the contemporary geo-economic context, the stakes are widening: it is also necessary to prevent the opening of the market from transforming economic power into strategic dependence. German industrial policy does not necessarily constitute a negation of the ordoliberal heritage; it can be interpreted as its reinterpretation under the constraint of circumstances.

The question remains, however, whether this new industrial policy can produce the expected results quickly enough. Because rearming the Standort requires more than financing: it is necessary to restore the administrative capacity to decide, to build infrastructure within a timeframe compatible with global competition, to reduce the cost of energy, to accelerate innovation and to bring research and industry much closer together. It is precisely this dimension that industrial policy alone is not enough to solve. It leads directly to the second major component of the new German strategic state: the transformation of economic security into a central category of public action.

B. The Wirtschaftssicherheit: when economic security becomes a category of economic policy

Perhaps the most profound change since 2022 is not the scale of public intervention, but the way in which Germany now defines what needs to be protected. Economic security is no longer seen as simply the product of a prosperous and open economy; it is becoming a prerequisite for this prosperity. This shift is essential. It leads to a different view of external dependencies, a change in the relationship with China, and the gradual integration of considerations that previously fell under the umbrella of foreign policy, defence, or national security into economic policy.

1. From economic dependence to strategic vulnerability. The Russian experience first produced an intellectual revision of the notion of dependence. As long as a trade relationship is perceived as reciprocal, stable and reversible, dependence may appear to be the normal price of international specialization. But it changes in nature when the concentration of a supply, a technology or an outlet creates a vulnerability that can be exploited in a context of crisis.

The distinction is decisive. An open economy cannot avoid dependencies; it can, on the other hand, seek to avoid critical dependencies, i.e. those whose rupture would cause disproportionate damage and for which no alternative solution can be mobilized quickly. The question is therefore no longer absolute economic autonomy, which would be incompatible with Germany’s industrial and commercial vocation, but the ability to retain several options when circumstances require it.

This new approach is particularly clear in the Nationale Sicherheitsstrategie adopted in June 2023. For the first time, a German national security document makes the resilience of the economy an explicit element of the country’s security. The diversification of raw material and energy supplies, the development of strategic resource projects, the creation of reserves, the protection of critical infrastructure and the strengthening of cybersecurity are seen as security instruments in their own right.¹¹⁶ The economy is therefore no longer just a resource of national power: it itself becomes an area that must be secured.

This change leads to a change in the role of economic information. Identifying the concentration of suppliers, measuring the exposure of a company or sector to a given country, knowing the real location of value chains and assessing the possibility of quickly substituting one source of supply for another are becoming strategic functions. Dependency mapping thus takes on a new importance. It brings economic policy closer to methods traditionally used in the analysis of geopolitical risks.

Incidentally, the phenomenon does not only concern raw materials or energy. Semiconductors, batteries, electronic components, pharmaceuticals, digital infrastructure, data and some dual-use technologies raise similar problems. A supply disruption can now bring an entire industrial chain to a standstill without the need for any general physical shortages. Vulnerability lies precisely in the concentration of risk.

This conception also leads to changes in the doctrine of foreign investment. Opening up to international capital remains the rule, but certain acquisitions can now be assessed in the light of their impact on security and public order. To this end, Germany has a system of foreign investment controls that has gradually been strengthened, particularly for sectors and technologies considered sensitive.¹¹⁷ This control does not reflect a general distrust of foreign capital: it introduces a new limit to openness when it risks transferring a strategic capacity or creating lasting vulnerability.

The same logic applies to infrastructure. Ports, energy networks, telecommunications, digital systems, or essential industrial capabilities can no longer be understood solely as economic assets. Their ownership, technological dependence, and ability to operate in crisis situations can now become national security issues. The market remains the normal mechanism for allocating capital; but some assets are now considered important enough that their location, control, or going concern is of direct interest to the state.

This development does not mean that Germany suddenly discovers the notion of strategic interest. Rather, it marks the gradual disappearance of a border that had long seemed natural between economy and security. The implicit assumption that trade helps stabilize international relations does not disappear; it simply ceases to be sufficient. An economic relationship can be mutually beneficial while eventually producing an asymmetry of dependence that can be used as a means of pressure.

The Wirtschaftssicherheit refers precisely to this new reality. It does not aim to eliminate the economic risk inherent in any market economy, but to prevent certain risks from becoming systemic, concentrated and politically exploitable.

2. China: from assumed interdependence to de-risking. It is naturally with regard to China that this new conception takes its most successful form. The Chinese case is indeed much more complex than that of Russia: it is neither a simple problem of energy supply, nor a relationship that Germany could easily reduce without major economic costs. At the same time, China remains an essential market for many German companies, an important source of goods and components, a leading industrial competitor and a player whose technological and geopolitical power is transforming the very conditions of competition.

The German strategy adopted in July 2023 explicitly assumes this ambiguity. China is defined as a partner, competitor and systemic rival at the same time.¹¹⁸ This formula is not only diplomatic. It reflects an attempt to move away from an alternative that has become too simple between engagement and decoupling. Germany does not want to give up its trade with China; it wants to reduce the situations in which this trade could turn into critical dependencies.

The term de-risking thus becomes central. Its scope deserves to be clarified: it does not mean the mechanical reduction of trade with China, much less a policy of isolation. It refers to a diversification policy designed to reduce concentration risks while maintaining openness. The federal government expressly places it in the context of resilience and considers that companies themselves must assume an increased share of the risk when they choose to concentrate their activities on the Chinese market.¹¹⁹

This last idea is particularly interesting in the light of the German tradition. The new strategic state does not necessarily go back on the principle of corporate responsibility; on the contrary, it seeks to reaffirm it. If a company decides to take on a high geopolitical exposure, it does not necessarily have to be able to count on the state to fully socialize the losses when the situation turns. Economic security therefore does not become a general mechanism for public insurance against international risks.

This is an important difference from an industrial policy conceived as a succession of rescue plans. The role of the state is more to enlighten, prevent, diversify and protect essential collective interests than to guarantee the profitability of private choices. Corporate responsibility and the strategic responsibility of the state are thus called upon to coexist, but on different registers.

This approach is also a response to the transformation of Chinese competition. During the 2000s and 2010s, China appeared above all as a huge market for German companies to increase their volumes, margins and economies of scale. It has now also become a source of direct competition in several of the sectors that were the strengths of German industry. The question is therefore no longer just whether Germany is dependent on China; it is whether China can gradually reduce its own dependence on German industry while increasing Germany’s dependence on its own industrial and technological capacities.

China’s own strategy feeds this concern. The German government notes that China is seeking to strengthen its autonomy from foreign inflows while developing, in certain areas, external dependencies for its own benefit. It also highlights the combined role of industrial policy, domestic market protection, technological strategies such as Made in China 2025 and Dual Circulation, as well as the proximity between companies, research and public authorities.¹²⁰

The German problem then becomes that of competition that is no longer only about prices or the quality of products. It concerns power ecosystems : the ability to finance innovation, control technologies, secure raw materials, impose standards, control data and support companies over the long term. This transformation explains why Chinese policy can no longer be left to the sole discretion of German companies, however international they may be.

However, de-risking should not be confused with a rupture. Germany retains a major interest in maintaining an economic relationship with China. Rather, it is seeking to regain room for manoeuvre: diversify its suppliers and markets, develop partnerships with other Asian countries, strengthen European capacities in certain areas and prevent the search for short-term profitability from leading to concentrations of risk that are incompatible with collective security.

The shift is therefore considerable. The classic question of trade policy — "where can our companies sell and buy at the best cost?" — is now coupled with a strategic question: " on whom can we depend without losing our freedom of decision?" It is in this gap between economic efficiency and freedom of action that a large part of German economic security policy now lies.

3. The institutionalization of the Wirtschaftssicherheit. The real change finally appears when this new conception of economic security ceases to be only a diagnosis and becomes an architecture of public policy. The Wirtschaftssicherheit gradually tends to cross several administrations and several fields of action: foreign trade, investment, raw materials, energy, critical technologies, infrastructure, research and European policy.

The Nationale Sicherheitsstrategie 2023 is a major milestone in this respect. It places economic resilience in a holistic approach to security and provides for a diversification of supplies, targeted support for raw materials projects and the creation of strategic reserves, among other things.¹²¹ This is important because it breaks with a strictly sectoral approach to economic policy: a decision on a raw material, infrastructure or technology can now be assessed in the light of its consequences for Germany’s overall ability to withstand a crisis.

Germany’s strategy towards China complements this system by introducing the concept of de-risking in the conduct of foreign economic relations. In particular, it provides for better coordination between the various ministries and insists on the need to simultaneously strengthen the German and European economy, competitiveness and technological sovereignty.¹²² Foreign policy thus ceases to be external to economic policy: it helps to determine the conditions under which German companies can take risks abroad.

This development is part of a broader European movement. Germany is gradually understanding that it cannot deal with certain vulnerabilities alone. A German company may be exposed to an American technology, a Chinese raw material, a supplier located in another Member State and an Asian market; economic risk therefore crosses national borders as easily as value chains. Economic security cannot therefore be fully ensured by Berlin alone. It calls for a European capacity for surveillance, diversification, protection and, when necessary, response.

This European dimension is particularly visible in the reaction to economic coercion practices. Lithuania’s experience with Chinese trade pressure measures has helped to make Berlin understand that the vulnerability of one Member State can become the vulnerability of the Union as a whole. The protection of the internal market, the common commercial policy and the European instruments to combat coercion thus take on a new importance.¹²³

The doctrinal consequence is significant. The German strategic state is no longer defined solely by its action within national borders. It must also contribute to the organisation of a sufficiently robust European environment for external openness to remain possible. Economic sovereignty thus tends to become a sovereignty organised in a network, in which Germany retains its own interests but recognises that certain capacities can only be guaranteed at the European level.

This point also provides a better understanding of the evolution of the very notion of power. In the previous model, Germany’s economic power was measured primarily by the competitiveness of firms, export capacity, and the strength of public finances. In the new model, these criteria remain essential, but they are no longer sufficient. A strong economy must also be able to withstand a supply disruption, quickly replace a critical supplier, protect critical infrastructure, maintain access to critical technology, or withstand trade coercion.

Power thus becomes inseparable from resilience. The latter does not mean closure: it refers to the ability to remain open without becoming vulnerable to the point of losing one’s freedom of action. This conception offers perhaps the best key to interpreting the German transformation since 2022.

Above all, it helps to understand why the Wirtschaftssicherheit is not a parenthesis linked to the war in Ukraine. It corresponds to a more sustainable transformation of the international economic environment. Globalisation has not disappeared, but it is now crossed by power rivalries; value chains remain global, but their concentration has become a risk; the market remains the ordinary mechanism for allocating resources, but some dependencies have become sovereignty issues.

Germany thus discovered a proposal that would have seemed paradoxical a few years earlier: in order to remain an open economy, it must now have the means to avoid being locked into certain dependencies. The new strategic state was built less against globalization than against its excessive vulnerabilities.

The question then remains as to whether this new doctrine can be durably reconciled with the principles that have long structured German economic policy. For protecting certain capacities, selecting certain risks and mobilizing the state to preserve room for maneuver necessarily implies crossing the boundary between general rule and strategic choice more often. It is precisely this tension — between the competitive order, public power and sovereignty — that now constitutes the real contemporary test of the ordoliberal legacy.

C. The contradictions of the new strategic state: ambition for power, external dependencies and European leadership

The recomposition that has been underway since 2022 does not mean that Germany already has all the instruments necessary for its new ambition. On the contrary, it reveals a paradox: at the very moment when Berlin is rediscovering the need for economic and strategic power, it must note that several of the essential springs of this power remain outside its control. The question is therefore no longer just whether Germany accepts more public intervention, but whether it is capable of converting its economic resources into real power capacities. This difficulty appears in fiscal policy, in the relationship with the United States and, even more, in a few decisive technological and industrial sectors.

1. Invest more without sacrificing discipline. The first contradiction is internal. Germany now wants to invest more in its infrastructure, defence, energy transition and future-oriented technologies, while fiscal discipline remains one of the most deeply rooted foundations of its economic culture. The recent reform of the constitutional framework and the creation of the €500 billion special fund for infrastructure and climate neutrality show that the taboo on public investment on credit has nevertheless weakened significantly.¹²⁴

However, it would be excessive to see this as a conversion to Keynesianism. The Schuldenbremse has not been abandoned; it has been adapted to make it possible to distinguish more clearly between current expenditure and investment intended to increase the country’s future capacities. This nuance is important. In the German conception, debt remains problematic when it finances public consumption in the long term; it becomes more acceptable when it makes it possible to restore the infrastructure, energy capacity or equipment on which future growth depends.

The change is therefore less due to a new philosophy of spending than to a new definition of what constitutes a strategic investment. During the previous period, the state could consider that companies and capital markets were the main agents of productive accumulation. Now, the inadequacy of public infrastructure, the numerical backwardness or the needs of defence show that some capabilities cannot be reconstituted without a sustainable mobilisation of collective resources.

However, this shift remains surrounded by precautions. Germany retains a marked preference for mechanisms that can make the beneficiaries of public funds accountable, for guarantees and repayable financing, and for investments whose economic or strategic profitability can be identified. It is thus seeking to prevent industrial policy from turning into a permanent regime of subsidies.

The paradox is therefore particularly German: it is now necessary to spend more to preserve economic discipline itself. A degraded infrastructure, an insufficient electricity network or a technological backwardness are no longer just future costs; they compromise the country’s ability to remain competitive and to finance its social model in the future. Budgetary discipline is thus gradually changing its purpose: it is no longer intended only to limit the financial power of the State, but to preserve its capacity for action in the long term.

However, this development has a simple limit: investing is not enough. It is also necessary to be able to quickly transform expenditure into operational capacities. However, the administrative slowness, the complexity of authorisation procedures and the difficulties of coordination between the federal government, the Länder and the local authorities are still major obstacles. The German strategic state is therefore faced with a question that affects its own efficiency: can it decide and execute at the speed of technological and geopolitical transformations? This question is all the more important because some of the capacities it is currently seeking to build are in areas where Germany cannot act alone.

2. The American paradox: emancipating itself without really being able to detach itself. It is here that one of the deepest contradictions of the new German strategy appears. Berlin intends to strengthen Europe’s strategic autonomy, reduce its external dependencies and assert its own interests more; but it remains deeply dependent on the United States in several essential areas of its security and power.

This dependence is first and foremost military. Europe’s protection remains backed by the Atlantic Alliance and, in practice, by American capabilities that the Europeans cannot yet replace quickly: intelligence, surveillance and reconnaissance, command, refuelling, anti-missile defence, space capabilities, certain munitions and, above all, the American nuclear umbrella. However, European defence spending has risen spectacularly: it reached €418 billion in 2025 and is expected to rise to around €454 billion in 2026. But this increase in financial power does not automatically mean the emergence of an equivalent European industrial and operational capacity.¹²⁵

The problem is particularly visible in Germany. Berlin is considerably increasing its military spending and intends to become the main conventional contributor to European defence. But some of the most sophisticated equipment is still based on American technologies or on transatlantic production lines. The choice of the F-35 for the air component of NATO’s deterrence and nuclear participation provides the most visible example. It testifies simultaneously to Germany’s desire to strengthen its military power and the persistence of technological dependence on the United States.

This situation is not necessarily contradictory to NATO membership. It becomes more so when the stated objective is that of true European strategic autonomy. A Europe that is able to spend more but remains dependent on American equipment, software, intelligence or capabilities does not have the same freedom of action as a Europe that itself masters the technologies necessary for its defence. The difficulty is even greater because the transatlantic relationship is no longer as predictable as it used to be. American questions about burden-sharing, demands for European rearmament and Washington’s growing desire to focus its resources more on the Indo-Pacific are forcing Europeans to consider greater military responsibility. In 2026, Washington is now openly urging European allies to take more responsibility for the continent’s conventional defence.¹²⁶

Germany thus finds itself faced with a strategic contradiction that it cannot avoid. It wants a more autonomous Europe, but it needs the United States to make this Europe immediately safer, at least from its point of view in the centre of the European continent. It wants to strengthen the European defence industry, but some of its most urgent purchases can still be met more quickly by the American industry. It intends to reduce dependencies, but some American capabilities are precisely those that would be the most expensive and time-consuming to replace. This ambiguity also explains some of the German "hesitations" in European programmes. Berlin may want a stronger European industrial base while favouring an American solution when an operational capability must be obtained quickly. The issue is therefore not only economic: each choice of equipment contributes to determining the industrial and technological structure of European power for several decades. The contradiction also applies to civilian technologies of high strategic value.

Table 1

Germany’s new industrial priorities since the Zeitenwende (2022-2026)

German priorities	Differences with France	Convergences with Japan, South Korea and Taiwan
Semiconductors	Focus on industrial manufacturing and attracting foreign investment (Intel, TSMC…)	Very strong convergence with Asian strategies for securing production capacity.
Batteries	Integration into the automotive industry	Priority is also given to complete value chains.
Hydrogen	High industrial and energy priority	Similar orientation in Japan and Korea.
Automotive industry	Transformation to electric without abandoning the industrial base	Direct competition with Asian manufacturers.
Artificial Intelligence	Focus on industrial applications	This approach is closer to Japan than to the United States.
Robotics	Support for the manufacturing industry	Close proximity to Japan and Korea.
Defence	Accelerated reindustrialization after 2022	Similar developments have taken place in Japan since the security reforms.
Quantum technologies	European cooperation but national industrial logic	This approach is comparable to Taiwan and Korea.
Biotechnology	More targeted support than in France	A policy close to the major Asian industrial countries.

_________________________________________________________________________________________¹²⁸

3. Defence, digital, AI and pharmaceuticals: the blind spots of German power. Germany has a remarkable industrial power, but it remains unevenly distributed. It traditionally excels in machine tools, automotive, chemicals, industrial equipment and many Mittelstand segments. It is much less dominant in certain technologies that now structure economic power: digital platforms, cloud, operating systems, large artificial intelligence models, advanced semiconductors and certain biotechnologies.

This asymmetry is becoming particularly worrying with the rise of artificial intelligence. The United States and China concentrate the bulk of the companies capable of developing the cutting-edge models, while Europe is still looking to build compute, financing and operating capacity on a comparable scale. European investment in AI infrastructure is progressing rapidly, but it still faces US dominance in processors, cloud and large models.

The problem therefore does not only lie in the absence of European "champions". It concerns the entire value chain. A digital sovereignty policy that would have European data centres but would depend on American components, American software and American models would only produce partial autonomy. Infrastructure can be European without the technology that makes it work is really European. This issue takes on a particular dimension in the field of defence and we will come back to it. Artificial intelligence, autonomous drones, electronic warfare, command systems and software are becoming essential components of military power. However, the boundaries between civil and military technology are rapidly disappearing. The 2025 paper on the economics of European rearmament underlines that autonomous systems and robotics are increasingly crucial on the battlefield and that Europe is still lagging behind in terms of large-scale production and software capabilities.

The German paradox then appears with particular clarity. The country has an industry capable of manufacturing complex machines, armored vehicles, industrial systems and high-precision equipment; but the new frontier of power is increasingly based on software, data, computing and artificial intelligence. The transition from traditional industrial power to techno-industrial power is therefore a challenge of a different nature.

The situation is comparable, albeit differently, in pharmaceuticals and biotechnology. Germany still has large groups and a large research base, but the global momentum of the sector has shifted to the United States and, in some areas, to Asia. The problem is not so much the lack of successful companies as the ability to quickly transform basic research into products and then into industrial capabilities on a very large scale. This weakness leads to a more general question: is Germany’s scientific power converting quickly enough into industrial and technological power?¹²⁹

This question is essential for the strategic state. In traditional industries, Germany could count on a particularly dense entrepreneurial fabric, remarkable professional training and long experience in exporting. In disruptive technologies, these advantages remain useful but are no longer enough. It is also necessary to accept much riskier investments, faster innovation cycles, capital markets that are better able to finance growth and much closer cooperation between public research, companies and defence.¹³⁰

Germany must therefore avoid the illusion that its past industrial power automatically guarantees it a dominant position in the industries of tomorrow. The transformation of the motor vehicle into a digital system, the rise of AI, robotics, semiconductors, space and biotechnology are shifting the boundaries of competitiveness. They require less only "good framework conditions" than a collective ability to quickly identify, finance and industrialize decisive innovations.

This observation explains why the relationship with the United States is so difficult to redefine. Europe may wish for more technological autonomy, but it cannot, in the short term, do without many American contributions. The question is therefore not to choose between dependence and rupture: it is to build enough European capabilities so that dependence ceases to be a unilateral constraint.

4. The ambiguity of German leadership in Europe. This difficulty finally raises the question of Germany’s role in the European Union. Berlin naturally aspires to exert a decisive influence on the economic and industrial orientation of the continent. Its demographic, economic and financial weight gives it a singular position. But this German leadership remains permeated by a fundamental ambiguity: Germany wants a more powerful Europe, on the condition that it remains compatible with the interests of its own Standort. This tension appeared particularly clearly during the negotiations that led to the Turnberry Agreement with the United States in 2025, as well as during the finalisation of the agreement between the European Union and Mercosur.

This tension is not new. It was already noticeable in the debates on the euro, energy policy, fiscal rules or competition. However, it becomes much more visible when Europe has to build a common industrial and defence policy. The single market can benefit German industry, but a real European industrial policy also requires that investments, value chains and technological capacities are distributed across the continent.

The field of defence, already mentioned, is particularly revealing. The massive increase in European budgets opens up a historic opportunity to strengthen the European industrial and technological base. But it can also produce a different result: a juxtaposition of national purchases, a significant part of which benefits non-European suppliers. The European Union is now seeking to direct more investment towards its own defence industrial base; the Commission explicitly affirms the objective of building a "sovereign and capable" European technological and industrial base. But the achievement of this objective will depend on the choices of the main Member States, first and foremost Germany.¹³²¹³¹

The German case is particularly sensitive in this respect. Part of its defence industry has a real European, even global, capability. But the search for immediately available solutions can come into tension with the objective of building complete European sectors. The choice between a rapidly available American capability and a European solution that takes longer to develop is therefore not only a military issue: it involves Europe’s future industrial structure.

The same contradiction can be found in the digital sector. Germany has every interest in having a European market large enough to bring out companies capable of competing with American and Chinese groups. But the construction of a true European digital sovereignty presupposes accepting that immediate national interests do not always coincide with long-term European industrial interests. It is sometimes necessary to prefer a European solution that is less immediately efficient than a foreign solution that is already available, if the objective is to maintain an autonomous capacity in the long term.

This difficulty also concerns the Franco-German relationship. France has traditionally defended a more political conception of European sovereignty, while Germany has long favoured economic power, the internal market and transatlantic cooperation. The new circumstances are bringing the two countries closer together on the need for a more autonomous Europe, but they do not eliminate their differences on instruments, industrial priorities and the relationship with the United States. Germany is therefore faced with a strategic choice that goes beyond its own future: does it want to be Europe’s leading economic power or to contribute to making Europe an economic and technological power capable of counting against the United States and China? The two objectives may coincide, but they are not necessarily the same.

This is one of the most important limitations of the new German strategic state. Power can no longer be thought of exclusively on a national scale, because markets, value chains, technologies and defence have acquired a continental dimension. But neither can it be left to an abstract Europe, because industrial capacities remain rooted in national territories, companies, education systems and economic cultures.

Germany must therefore learn to exercise its leadership differently. It is no longer enough for it to defend its own interests within the Union; it must be able to transform part of its national power into a European power. It is on this condition that its economic weight can become a real instrument of collective sovereignty. The difficulty is all the greater as the new international environment leaves little time. The United States is reorienting its strategy, China is accelerating its move upmarket, Russia has made force an instrument of foreign policy and critical technologies are becoming power assets. Europe is increasing its defence spending and technological investments, but it is starting considerably behind in several areas. In 2026, Member States’ defence spending is expected to reach around €454 billion and investment in equipment to increase sharply; however, purchases are still largely national and the share of truly cooperative programmes remains limited, while many Member States prefer to obtain equipment produced or controlled by the United States. The most emblematic – and contradictory – example is unfortunately the German choice to supply its fighter aviation fleet with American Lockheed Martin F 35s (which nevertheless has a complete production line of Leonardo subcontractors in Italy) for its fighter aviation fleet instead of retaining the only European equipment already operational, the French Rafale from Dassault Aviation. The German-Italian industrial and strategic relationship deserves to be highlighted as an important parameter for the redeployment of the German strategic state, and even the strategic states of the various member states. The subsequent evolution of relations between Brussels, Berlin and Rome appears to be revealing. Despite the strong reservations expressed during the Italian election campaign in September 2022, relations between the European Commission, the German government and Giorgia Meloni’s government have gradually normalised. This development can certainly be explained by Ms Meloni’s constant support for Ukraine, NATO and European budgetary discipline, but also by the growing convergence of the industrial and strategic interests of several Member States facing the challenges of reindustrialisation, economic security, trade policy vis-à-vis China and the strengthening of the European defence industrial base.

The risk would then be to build a Europe that spends more without really becoming more autonomous, and a Germany that invests more without managing to transform these investments into technological and strategic capabilities. The question of the new strategic state ultimately boils down to this: how to convert existing economic power into sustainable technological, industrial and geopolitical power?

This is the question that the German trajectory has led to since 2022. It shows the limits of a model that had long excelled in industrial production and exports, but which must now learn to also produce safety, technology and power. Above all, it shows that autonomy cannot be conceived as a break with the United States, nor as a national withdrawal. For Germany as for Europe, it presupposes a new ability to choose its dependencies, to diversify them and, when necessary, to build the capacities to free themselves from them.

On the basis of these considerations on industrial capacity, the table in Annex 5 on international comparisons of sovereignty highlights a major evolution of the world economy in the first quarter of the twenty-first century. since the beginning of the twenty-first century. The countries that have best resisted the shocks of globalization are not necessarily those that have made the least use of public intervention, but those that have managed to preserve their industrial base, their capacity for innovation and sufficient financial room for manoeuvre at the same time. In this respect, China, South Korea, Taiwan and, to a lesser extent, Germany have trajectories that are significantly different from those observed in several major Western economies. While their institutional models remain very different, all have continued to consider industry as a strategic asset and to support, in various forms, their national productive capacities.

Conversely, states whose deindustrialization has been accompanied by high public debt now appear to be more exposed to external constraints. The United States certainly retains a unique situation thanks to the international role of the dollar, the depth of its financial markets and its technological advance, but it has itself embarked on a spectacular return to industrial policies since 2022. France illustrates more clearly the difficulties that can result from the combination of an erosion of the manufacturing base, high public debt and significant dependence on foreign investors. Germany occupies an intermediate position: its industrial apparatus remains one of the most powerful in Europe, but the energy, geopolitical and technological crises have revealed the limits of the growth model built since the 2000s. All in all, these comparisons confirm that contemporary economic power is based less on the opposition between the market and public intervention than on the ability of states to combine macroeconomic discipline, industrial policy, technological innovation and economic security in the long term.

1. Ordoliberalism, a legacy that is now disputed. For the past ten years or so, the reference to the social market economy (Soziale Marktwirtschaft) has no longer been the doctrinal monopoly of the CDU/CSU or the FDP. Several German political parties now claim, each according to its own interpretation, certain elements of this heritage. This evolution testifies less to a homogeneous return of ordoliberalism than to its transformation into a common reference for public debate, the meanings of which diverge significantly according to the political families. The case of the AfD is, in this respect, particularly revealing: its economic programme reaffirms its attachment to private property, freedom of contract, entrepreneurship, competition and the Soziale Marktwirtschaft, while articulating them with a much more general criticism of certain European, energy and migration policies.

Such a claim cannot, however, be interpreted as a direct filiation with historical ordoliberalism. The latter formed a coherent doctrinal whole associating competitive order, the rule of law, monetary stability, economic openness, individual responsibility and liberal democracy. The adoption of some of these principles by contemporary political actors does not therefore mean that they are part of the intellectual continuity of Walter Eucken, Franz Böhm, Wilhelm Röpke or Ludwig Erhard. Rather, it illustrates the plasticity of a heritage whose references are now mobilized in profoundly different political contexts, consecrating the growing distance between the doctrine or the major economic principles regularly invoked as if by reflex, and the reality of operational practices. In this respect, Germany is no exception in the broader context of the European Union, of which it intends to remain the undisputed vector on its own matrices.

Conclusion

The evolution of Germany since China’s entry into the World Trade Organization in 2001 invites us to overcome several oppositions that have long structured European debates. Opposing the State to the market, competition to industrial policy or ordoliberalism to any form of public intervention leads to a misunderstanding of the historical reality of Modell Deutschland. Since the post-war period, it has been based less on the search for an immutable balance than on a continuous ability to adapt around a few guiding principles: stability of institutions, rule of law, organised competition, responsibility of economic actors, social partnership and the search for sustainable prosperity.

Ordoliberalism therefore never meant the disappearance of the state from the market. On the contrary, it assigned it a particular responsibility: to establish and preserve the economic order in which competition could produce its effects, to prevent the concentrations of power likely to destroy this order, and to guarantee the institutional conditions for economic freedom. The social market economy of Erhard and Müller-Armack added to this construction a social and political dimension that contributed to its acceptance by German society. The strength of the model was thus neither the withdrawal of the state nor its permanent intervention, but the ability to articulate rules, institutions, responsibility and productive power.

The analysis carried out in this study shows that, from this point of view, Germany has never really given up on a long-term economic strategy. Behind an often reserved rhetoric with regard to "industrial policy", the federal state, the Länder, the public banks, the research institutes, the social partners and companies have continued to act in a coordinated manner in order to preserve and develop the country’s productive capacities. This policy has not always been designated as such. It is nevertheless an original form of strategic state, whose instruments are deeply rooted in the institutional history of the Federal Republic.

However, the exceptional success of the 2000s and 2010s helped to mask the fragilities of this construction. Global opening, European integration, the euro, Central European value chains, privileged access to the Chinese market and the abundance of Russian gas created a configuration in which German interests seemed to spontaneously converge with those of globalisation. Germany could then believe that economic power was essentially born from the competitiveness of its companies and that the stability of its external environment could be taken for granted. It is precisely this illusion that has gradually dissipated.

The German difficulties of recent years are therefore not mainly the result of an "excess of ordoliberalism". Rather, they seem to reflect a gradual weakening of the intellectual coherence that once linked the doctrines, institutions and elites responsible for implementing them. Energy choices, certain industrial dependencies, hesitations in the face of the rise of China, and delays in digital technology and certain critical technologies are less a matter of a rigorous application of the founding principles of the Freiburg School than of a succession of pragmatic adaptations to an international environment that has become much more conflictual.

This distinction between doctrine, institutions and elites is essential. An institution can outlive the doctrine that inspired it; a rule can continue to produce its effects even though the historical reasons for its adoption have been forgotten; a political or administrative elite can finally mobilize an intellectual heritage without always mastering its presuppositions. The German model has thus retained a remarkable institutional continuity while experiencing a certain erosion of its original economic culture. It is not so much the disappearance of ordoliberalism as its gradual dilution into a set of practices, compromises and constituted interests that makes it possible to understand some of the contradictions that have appeared since the beginning of the century.

The Zeitenwende announced by Chancellor Scholz after Russia’s invasion of Ukraine in February 2022 made these contradictions visible with particular brutality. The energy shock revealed the fragility of a dependency that had long been interpreted as a mutually beneficial economic relationship. Security of supply, resilience of value chains, critical infrastructure, strategic raw materials, sensitive technologies and defence capability then became central to German economic thinking.

However, this is not a return to dirigisme. The new German strategic state does not seek to administer the economy or to systematically replace the company. Rather, it tends to broaden its definition of the "framework conditions". Energy, networks, digital infrastructure, research, skills, critical industrial capacities and now the security of supply chains are gradually being seen as necessary conditions for the very functioning of the market economy.

The transformation could thus be summed up in a formula: Germany is moving less from a liberal state to an interventionist state than from a state that guarantees the rules to a state that guarantees capabilities.¹ This shift is considerable. It means that the state can no longer only ensure the quality of the economic order; it must also contribute to preserving the material, technological and strategic capacities without which this order would lose its substance.

This German change is part of a much broader movement. With the CHIPS and Science Act and the Inflation Reduction Act, the United States has adopted an industrial policy whose scope would have been difficult to conceive of a few years ago. China is pursuing a policy of upgrading technology and securing its value chains. Japan and South Korea are strengthening their instruments to support strategic sectors. The European Union itself, after having long favoured market integration alone, is now developing a policy of economic security, support for critical technologies, investment control and protection against economic coercion.

The strategic state is therefore not an anachronistic resurgence. It is one of the major characteristics of the political economy of the first quarter of the twenty-first century. Globalization has not disappeared; it has changed in nature. Markets remain global, but states no longer consider trade to be sufficient to guarantee security. Value chains remain international, but their concentration is now perceived as a potential source of vulnerability. Competition remains essential, but it is increasingly taking place between industrial ecosystems supported by public authorities.

It is in this new environment that the German experience takes on its full significance. First, it shows that an open economy cannot be sustainably prosperous if it relinquishes control over some of its essential dependencies. But it also shows that economic sovereignty cannot be confused with autarky. A modern industrial power must choose its interdependencies, diversify them and retain the ability to reorganize them when circumstances require it.

Above all, it reveals a difficulty that Germany will have to solve if it wants to transform its economic weight into a real European power: the persistence of its dependence on the United States.

The ambiguity is profound. Germany now wants a Europe that is more sovereign, more technologically autonomous and better able to defend its interests. It intends to reduce certain external dependencies and calls for a greater European defence capability. But, at the same time, its military security remains largely embedded in the transatlantic system and many of the most critical technologies of the new economy – intelligence, digital systems, the cloud, semiconductors, artificial intelligence, some space and defence capabilities – remain heavily dependent on the United States.

It would be too simple to see this as a pure and simple contradiction. In a world that has become more dangerous, the American partnership remains a considerable strategic resource for Germany and for Europe. The difficulty arises when the desire for European autonomy comes up against the inability to build the capabilities that effectively allow it to be exercised. A Europe that spends more on its defence but continues to depend massively on foreign technologies is not yet an autonomous strategic power. Similarly, a policy of digital sovereignty that would be based on European infrastructures but on mainly American components, software, platforms or technological models would only constitute partial autonomy.

The German case is particularly revealing because its economic weight gives it an exceptional capacity to influence the direction of the European Union. Berlin legitimately aspires to a leading role in the definition of European industrial, trade and technological policies. But its leadership contains an ambiguity that it would be dangerous to conceal: defending the interests of the Standort Deutschland is not always equivalent to building European industrial power.

This distinction is particularly important in defence and in advanced technologies. The purchase of an American capability can sometimes be a rational response to an operational emergency; it can also, if it becomes systematic, delay the creation of a European industrial capability. Similarly, favouring the most efficient technological solutions in the short term may seem perfectly coherent from the point of view of economic efficiency, while maintaining a strategic dependence in the long term. The strategic state must be able to integrate precisely this temporal dimension: what is rational for a company today is not necessarily so for a political power in twenty years’ time.

This question goes beyond Germany alone. It concerns the whole of Europe. If Europe wants to retain real freedom of decision in a world structured by the rivalry of powers, it will have to be able to convert part of its economic power into its own technological, industrial and military capabilities. This does not mean breaking with the United States or seeking to compete with it in all things. It means having enough autonomous capabilities to ensure that the transatlantic partnership remains a strategic choice and not a dependence on them.

It is here that the German experience is directly linked to the French question. France has assets that Germany does not possess in the same combination — in particular a strategic tradition, a nuclear capability, a relatively complete defence industry and a longer experience of state intervention in critical sectors. Germany, for its part, has an industrial depth, an export power, an exceptional network of SMEs and a financial capacity that give it other means of action. The European challenge should therefore be less about making one of these models triumph over the other than about combining their strengths without reproducing their weaknesses.

For France as for the European Union, the German experience thus calls for a more general reflection on the strategic state. First, it reminds us that no policy of economic power can be based in the long term on favourable circumstances alone. Secondly, it shows that institutions produce their effects only if the officials who run them understand their aims and know how to adapt them. Finally, it stresses that a strategy cannot be reduced to the accumulation of administrative or financial mechanisms: it presupposes a hierarchy of priorities, continuity over time and the ability to distinguish what is essential from what is not.

The real German lesson is therefore neither that ordoliberalism should be imported, nor that France should reproduce Berlin’s industrial policy. It is more demanding. It consists in understanding that an effective strategic state is not defined by the amount of public intervention, but by the ability to direct collective resources in the long term towards the capacities on which the country’s freedom of action depends.

Doctrines are necessary, but they are not enough. Institutions are indispensable, but they can be diverted from their initial spirit. Budgetary, industrial or regulatory instruments can be numerous without constituting a strategy. What makes the difference is the ability of the political, administrative and economic elites to articulate a vision of the world, a hierarchy of interests and means proportionate to the objectives pursued over the long term.

This has probably been the main lesson of German history since 2001. Germany has not been a victim of ordoliberalism; it has sometimes been the victim of forgetting what this ordoliberalism sought to guarantee. It had built a remarkably efficient economic order because it had been able to articulate economic freedom, rules, responsibility, institutions and productive power. It then benefited from an international environment that allowed it to push back against certain strategic constraints. When this environment turned around, it discovered that the conditions for its prosperity were not eternal.

The response that has been taking shape since 2022 remains incomplete. It will still have to resolve considerable contradictions: between budgetary discipline and investment, between competitiveness and energy transition, between global openness and the reduction of dependencies, between national interest and European interest, between ambition for autonomy and transatlantic dependence. But an essential shift has now been achieved: economic power can no longer be thought of in isolation from technological, industrial, energy and military power.

The strategic state of the twenty-first century cannot therefore be the one that claims to foresee, finance or control everything. It must be the one that knows how to identify decisive capacities, create the conditions for their emergence, protect those that have become critical and accept, when circumstances so require, to take risks that the market alone cannot assume. Above all, it must know how to distinguish between openness and dependence, cooperation from vulnerability, and interdependence from the loss of freedom.

It is, at bottom, a profoundly realistic conception of public action that German history finds today. Circumstances change; the instruments must change with them. But the goal remains: to proportion the means to the designs, to preserve the capacities that make freedom possible, and never to confuse the principles with the particular historical conditions in which they were formulated. Understood in this way, the lesson of ordoliberalism is not to remain faithful to a fixed doctrine. It is to maintain an economic order capable of resisting the transformations of the world. And the lesson of the Zeitenwende is perhaps even broader: in a century where the competition of powers now crosses markets, technologies and value chains, sovereignty does not consist in producing everything oneself; it consists in preserving the ability to choose.

Appendix 1

The ten directions of the German industrial strategy for 2023

Strategic focus	Objective pursued	Preferred Instruments
1. Preserving the German industrial location (Industriestandort Deutschland)	Maintain an industrial base representing more than 20% of the added value	Assumed industrial policy
2. Strengthening economic security (Wirtschaftssicherheit)	Reduce strategic vulnerabilities	Supplier and value chain diversification
3. Reduce critical dependencies	Limiting geopolitical risks	De-risking, targeted relocations
4. Accelerating the energy transition	Ensuring competitive and carbon-free energy	Hydrogen, renewables, grids
5. Support critical technologies	Maintaining a technological edge	Semiconductors, batteries, AI, quantum, biotechnology
6. Consolidate the Mittelstand	Preserving industrial chains	Financing, innovation, training
7. Speed up procedures	Restoring competitiveness	Administrative simplification, faster authorizations
8. Invest in skills	Responding to the labour shortage	Training, skilled immigration
9. Placing action in the European framework	Avoiding national withdrawal	IPCEI, Chips Act, internal market
10. Better targeting of public aid	Correcting market failures	Temporary aid, evaluated and with an exit strategy

Appendix 2

What changes compared to classical ordoliberalism

Ordoliberalism of the 1950s	Germany of 2023
Priority to the competitive order	Prioritizing economic security
Competition as an organizing principle	Resilience as a complementary principle
Sectoral neutrality	Targeted support for strategic sectors
Market leadership	State-industry cooperation assumed
Commercial openness	De-risking
Competition policy	Competition and industrial policy
Monetary stability	Technological sovereignty
Exceptional intervention	Strategic but supervised intervention

Appendix 3

The German special fund of 500 billion euros (2025-2037): a new instrument of the strategic state

Strategic Objective	Main investments	Economic purpose
Modernising transport infrastructure	Railway network, roads, bridges, tunnels, waterways	Reducing the accumulated investment gap and strengthening industrial competitiveness
Accelerating the energy transition	Power grids, hydrogen infrastructure, energy efficiency	Securing energy supply and supporting decarbonisation
Developing digital infrastructure	Fiber, 5G/6G, data centres, public digital infrastructure	Supporting the digital transformation of the German economy
Strengthening research and innovation infrastructures	Universities, Fraunhofer Institutes, Laboratories, Technology Platforms	Strengthening innovation capabilities and technological competitiveness
Modernizing social infrastructure	Schools, universities, hospitals, public facilities	Increasing long-term productivity and the quality of human capital
Supporting climate adaptation	Flood protection, water management, territorial resilience	Reducing climate vulnerabilities and preserving productive capacities
Financing investments by the Länder and local authorities	Specific allocations for local infrastructure	Ensuring a balanced modernisation of the German territory

Appendix 4

The Merz government (2025-2026): ordoliberal continuities, strategic inflections and new industrial convergences

Orientation	Measures and priorities of the Merz government	Relationship to historical ordoliberalism	Proximity to Japan, South Korea and Taiwan	Convergence or difference with France
Social market economy and private initiative	Reaffirmation of competitiveness, private investment, innovation and the Mittelstand as engines of growth	Strong continuity: primacy of private enterprise and the competitive order	Proximity to Japan and Taiwan through the central role of companies, but with a strongly coordinating state	Convergence on the search for competitiveness; persistent difference with a more readily centralized French tradition
Reducing bureaucracy and modernizing the state	Administrative simplification, speeding up procedures, encouraging the creation of companies	Very ordoliberal: the state must set stable rules without unnecessarily hindering private initiative	Convergence with Japanese and Korean reforms to accelerate industrial investment	Strong convergence with French concerns, but Germany insists more on streamlining the regulatory framework
Investment and corporate taxation	Investmentsbooster, accelerated depreciation, planned reduction in corporate tax, strengthening of research incentives	Modernised continuity: supply-side policy and improvement of the economic framework rather than direct management	Very similar to the instruments used in Korea and Taiwan to stimulate private investment	Closer to recent French policy, but with a clearer German preference for general incentives
Industrial policy and critical technologies	Increased support for semiconductors, AI, advanced technologies, research and industrial transformation	Substantial adaptation: partial abandonment of traditional sectoral neutrality in favour of strategic priorities	Strong convergence with Japan, South Korea and Taiwan, particularly on semiconductors and AI	Competition but also Franco-German cooperation; possible divergences on the location of investments and the constitution of sectors
Digitization	Desire to make Germany a "nation of AI and start-ups", investments in digitalisation and modernisation of administrations	A subject absent from classical ordoliberalism; a possible extension of its logic of institutional adaptation	Very close proximity to South Korean and Taiwanese strategies; German need to catch up	France has stronger positions in several digital and AI segments; a field of cooperation but also of competition
Infrastructure	Special fund of €500 billion over twelve years for transport, digital, public infrastructure and climate neutrality	An important instrumental break, but not necessarily doctrinal: public investment is accepted as a condition for the efficient functioning of the economy	Proximity to major Japanese and Korean infrastructure programs	Strong convergence with the French tradition of programming and public investment
Schuldenbremse and public finances	Constitutional debt brake maintained but 2025 reform, exemptions in particular for certain defence spending and recourse to the special fund	Relaxed continuity: fiscal stability remains a principle, but it is no longer absolute	Asian models are traditionally less doctrinaire about the fiscal rule and more focused on strategic investment	Partial approximation with the French concept, which is more flexible on the use of debt
Energy and industrial costs	Reducing energy costs, securing supply, modernising networks	A return to a logic of competitiveness and security of supply that classical ordoliberalism would have found difficult to separate from general conditions of production	Proximity to Japan and Korea, which make energy security a central dimension of the industrial strategy	Major difference with France because of nuclear power; possible point of lasting tension in European industrial competition
Defence and military industry	Sustainable increase in the defence effort and strengthening of the defence industrial base	A major novelty compared to traditional economic ordoliberalism; the return of power as an economic variable	Spectacular convergence with Japan and South Korea, which are also strengthening their defence capabilities and dual industries	Essential cooperation with France but growing competition on programmes, exports and industrial architecture
Economic security and critical dependencies	Diversification of supply chains, resilience, reduction of strategic dependencies on China	Expansion of the Ordnungspolitik: economic security becomes a prerequisite for the proper functioning of the market	Very strong convergence with Tokyo, Seoul and Taipei, which have long been confronted with these vulnerabilities	Clear convergence with France and with the current orientation of the European Union
European Union	Desire to strengthen European economic and strategic power while preserving German competitiveness	Continuity with the traditional use of the European framework as an extension of the German economic order	Difference with Asian models, which are necessarily national; a particular advantage for Germany thanks to the European market	Structural cooperation with France but rivalry for influence over the definition of European industrial priorities

Appendix 5

International comparison of selected indicators of economic sovereignty (2001-2025)

Pay	GDP 2025 (Md€)	Public debt 2025 (€bn)	Public debt (% GDP) 2001	Public debt (% GDP) 2025	Manufacturing (% GDP) 2001	Manufacturing (% GDP) 2025	Debt held by non-residents (%) 2025*
China	≈ 18 400	≈ 12 300	23 ≈	≈ 67	≈ 32	26 ≈	< 5
United States	≈ 28 700	≈ 34 900	≈ 54	≈ 122	≈ 15	10 ≈	30 ≈
Japan	≈ 4 300	≈ 10 300	≈ 150	≈ 235	22 ≈	20 ≈	12 ≈
South Korea	≈ 1750	≈ 950	22 ≈	≈ 54	28 ≈	25 ≈	≈ 15
Taiwan	≈ 760	≈ 210	≈ 32	31 ≈	27 ≈	≈ 33	< 5
India	≈ 3 900	≈ 3 100	≈ 58	≈ 82	≈ 15	17 ≈	6 ≈
Germany	≈ 4 900	≈ 3 100	≈ 59	≈ 63	22 ≈	19 ≈	≈ 45
France	≈ 3 000	≈ 3 500	≈ 57	≈ 116	16 ≈	10 ≈	≈ 53

*Data on the holding of public debt by non-resident investors are not entirely homogeneous across jurisdictions and should be interpreted with caution. They reflect important institutional differences, particularly between countries whose debt is mainly held by domestic investors (Japan, China) and those more open to international markets (France, Germany, United States). Figures are rounded.

Appendix 6

Strategic reading of national trajectories (2001-2025)

Country	Deindustrialization	Debt	Financial dependence	Strategic assessment
China	Very Low	Moderate	Very Low	Assumed strategic state
United States	Strong	Very high	High	Dollar-funded technological powerhouse
Japan	Low	Very high	Very Low	Essentially national debt
South Korea	Low	Moderate	Low	Continuous industrialization
Taiwan	Very Low	Low	Very Low	Global leadership in semiconductors
India	Low	Moderate	Low	Accelerated industrialization
Germany France	Limited Very strong	Moderate Very high	Medium High	Resilient but tense standort Deindustrialization and growing dependencies

Appendix 7

Evolution of productive power (2001-2025)

Country	Industrial policy	Dominant economic doctrine	Position vis-à-vis globalisation
China	Very strong	Market Socialism	Controlled opening
United States	Very strong (CHIPS, IRA)	Strategic Capitalism	Targeted protection
Japan	Strong	Coordinated capitalism	Selective opening
Korea	Strong	Developer State	Exporter
Taiwan	Very strong	Technological capitalism	Exporter
India	Strong	Economic nationalism	Partial substitution
Germany	Assertive return	Renewed Ordoliberalism	Strategic prudence
France	Gradual return	Mixed economy	Reindustrialization rhetoric

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