Volume 55, Issue 1

The paper anaylses the psychological and the social dynamics of the presumtion of knowldege and the arrogance of faith. It pleads for an institutionalisation of scepticism in order to preserve scientific knowledge from degenerating into sterile prejudice and to save faith from petrifying into dead and homocidal othodoxy.

The paper intends to analyse the potential contribution of economics about the economic usage of knowledge for innovations. The discussion starts with Adam Smith, who founded the economics science by analysing on the first place the advantages of the division of labour. Critical authors added right after Smith the advantages of the division of mental labour, as overseen by Smith. Later on Friedrich A. von Hayek developed a new theory of the division of knowledge. These attempts have not been followed by other authors until today, although nobody doubts about the importance of knowledge for innovations. The New Institutional Economics (NIE) offers a new chance for taking up this issue now. The paper focuses on the two types of competition: economic competition versus reputational competition, and their different institutional rules. The notion of transactions is substituted by interactions for the right understanding of knowledge sharing interactions. A proposal for the taxonomy of the new field of knowledge sharing interactions that are most important for the economy of tomorrow stands in the center of the paper. Final remarks about knowledge management and education policy, understood as Ordnungspolitik, conclude the article.

The article demonstrates that natural law devices of justifying norms, as they are developed in Christian Social Ethics, are in principle compatible with economic methodology. In particular, it is argued that moral scepticism dominating nowadays’ economics which denies the existence of objective, godgiven norms is untenable for logical reasons. For those reasons Karl Popper’s critical rationalist methdology is being inconsistently applied with respect to justifying norms. From an epistemological point of view the conflict between economic subjectivism and moral objectivism in Christian Social Ethics is undecidable. It is therefore finally analysed how Karl Popper personally thought about this question: surprisingly, Popper obviously had an objectivist notion of norms and sympathesized with Christian natural law teaching.

After differentiating between unrealisable and fundamentally realisable, only at present not really Utopias, the author asks whether, following the collapse of the socialist models - the cause of which he briefly analyses, Utopian thinking has on the whole been exhausted. He denies this by demonstrating the great line of liberal models of Utopian order, which focus on freedom, property and the family, starting with Aristotle. Here too there are wide-spanning models, including and in particular, in the present. Several are outlined including, among others, the minarchistic models of Hayek or Friedman, Hoppes “natural order”, or Kohrs subsidiarity Utopia of the small state. The hour of such models should now have arrived, even if their radical variants continue to remain utopian for the time being. Utopias do not have to be socialist! We need idealistic models of order for personal orientation and in order to judge politics.

This paper (1) investigates Hayek’s proposition that law in the sense of universal rules of conduct and property are the only solution to the problem of reconciling individual freedom with the absence of conflict. It (2) argues that the test of the compatibility with the inherited body of law as a guide line for the evolution of judge made law, basically comes down to the principle of “Ordnungskonformität” originating from W. Röpke. It (3) interprets Hayek’s “law of liberty” in Coase an terms and advances the contention that efficiency is the only workable criterion for the specification and allocation of property rights. It (4) delivers evidence that Hayek - despite his admiration of the create powers of spontaneous orders - makes out a case for government intervention. Finally, the paper discusses Hayek’s interpretation of the Rule of Law.

The Federal Government of Germany is responsible in many fields of activities that more assets are consumed than created and that chances for growth-oriented production and productivity are not taken. Therefore, it is no surprise that Germany’s economic growth and increase in prosperity lack behind the comparative figures of other EU states. The productive forces are prevented from developing fully. Previously created assets (savings and capital) are partly used up (borrowed prosperity). Thus, opportunities are ruined for creating better conditions of growth in the future. In this article an overview of the different forms of government-organized consumption of assets is given by means of several excamples. The demographic development urgently requires a departure from this wrong track and the adoption of a responsible growth-oriented strategy, as other states have done.

Agglomerative forces have an important influence on the competition of governments in Germany. The advanced German Länder behave like monopolists rather than competitors. Their interaction with the poorer German Länder leads not necessarily to more efficiency. Because of the economies of scale between firms, industry tends to stay together, either in one of the German Länder or in the other. This gives Germany on the one hand a so called „core“ and a on the other hand a so called „periphery“. Industry is not indifferent to location, even if political ineffinency is not taken into account. The core must be just sufficiently efficient so that the periphery does not want to compete. And the periphery can choose its inefficiencies unconstrained given this politics of the core. There are further well known problems in the competition of goverments in Germany, too. In the sum of this distortions the national competition of governments in Germany leads the Länder to have different possibilities to attract industries and to show different unemployment rates and welfare.

With his decision of March, 16th, 2004 European Court of Justice ruled that German compulsory health insurance funds (GKV) are not in conflict with European competition law when they fix prices for pharmaceuticals. According to the court German compulsory health insurance funds cannot be regarded as firms so that competition law is not applicable. German health care system is mostly governed by social law as opposed to civil law; competition law is not applicable. This strict separation has to be reviewed when more and more elements of competition are introduced into German health care system. European Court of Justice failed to clarify the case for introducing competition law into German health care system. Therefore there is no way how to control market power within a competitive health care system in Germany. Competition therefore may go into the wrong direction.

The social security systems in Germany are in the process of being tested. The paper first describes how these security systems fit into the concept of a social market economy. In addition, guidelines for the design of an order-conformal statutory health insurance (SHI) are developed. Subsequently, the paper shows if and how health policy makers in Germany adhered to these guidelines since the introduction of the SHI in 1883. Analyzing the topical reform suggestions, which are described under the headings “premium models” and “citizen insurance”, the premium models are more compatible with the guidelines than is the citizen insurance.

After years of political controversy, the German government passed an act to regulate resale price maintenance for books in 2002. Effectively, it bans all form of price competition at the retail level. According to its proponents - essentially the majority of the country’s publishers, booksellers, authors as well as their respective trade associations and guilds - resale price maintenance for books is a conditio sine qua non for the promotion of culturally valuable, yet unprofitable „quality literature“. What is more, it is deemed necessary to maintain a countrywide network of well-stocked bookstores. Both arguments, however, are unconvincing from an economic point of view, as is demonstrated in this paper. In particular, this is due to its fundamentally flawed institutional design which completely neglects the demand side and is ridden with counterproductive incentives on the supply side.

Voluntary agreements occur quite frequently in the economy. Of particular interest are those, which are the result of informal agreements between industrial associations and the government. A major part of them refers to environmental protection. In the relevant literature they are largely ignored, however. From a theoretical point of view, voluntary agreements frequently are ineffective and inefficient. And from a political standpoint, they promptly turn out to be anticompetitive and a breach of the economic order. These analyses suffer from simplified, inappropriate premises, however. In a more realistic perspective, there is a better evaluation of voluntary agreements. That is valid particularly for the criterion of „effectiveness“, to some extent for the criterion of „efficiency“, but less for the criterion of „competitive requirements“ and hardly at all for the criterion of „conformity with the economic order“. Voluntary agreements should be considered, generally, as a supplement and not as a substitution of a market-oriented economic policy. Finally, it is to be taken into account that they will lose their contemporary importance in the field of climate protection in the medium or long run because of the planned European emissions trading system.

The paper presents central bank constitutions in eleven federal states or federation of states and discusses how monetary policy decisions should be organized in a monetary union. Three aspects are analyzed: the size of the central bank council, including the majority rule applied, the weighting of council members’ votes, and the co-existence of centrally and decentrally appointed members. The paper shows that central bank councils should be small and that individual votes should be weighted according to the economic significance of the region that a member of the council represents.

For the European Commission the case of Ryanair is a precedence decision about the application of state aid policy to agreements between regional airports and airlines. In a long-term contract with the regional airport of Charleroi (near by Brussels), the Irish low-cost airline Ryanair received better conditions than other airlines. In return, it committed itself to transport a certain number of passengers to this airport for a period of fifteen years. This alleviates considerably the entry of the so far non-established Charleroi Airport into the market for international airports. The Commission interprets these better conditions as a discrimination, which distorts competition among airlines. Contrary to that, a thorough economic analysis shows that these conditions must be regarded as a normal form of price differentiation in effective competition. Any airlines would have received similar conditions, if they have offered similar advantages to the airport. Consequently, the decision of the Commission in the Ryanair case is wrong. Additionally, the principles of the Commission, which entail the danger of an allencompassing regulation of prices for airport services, are misleading from an economic point of view, because they tend to impede effective competition in the aviation sector. The real state aid problem is, however, whether and under what conditions the public funding of airports leads to a distortion of competition among airports. This problem remains unsolved. This is also true for the problem of the slot-allocation on airports. Zusammenfassung Im Fall Ryanair hat die Europäische Kommission eine Grundsatzentscheidung über die Anwendung der Beihilfenkontrolle bei Vereinbarungen zwischen regionalen Flughäfen und Fluglinien getroffen. Die irische Billigfluglinie Ryanair erhielt in einem langfristigen Vertrag mit dem regionalen Flughafen Charleroi (nahe Brüssel) wesentlich bessere Bedingungen als andere Fluglinien. Sie verpflichtete sich aber im Gegenzug, über 15 Jahre eine hohe Mindestmenge an Passagieren über diesen Flughafen zu transportieren, und erleichterte damit wesentlich den Eintritt des bisher unbedeutenden Flughafens Charleroi in den Markt für internationale Flughäfen. Im Gegensatz zur Kommission, die in diesen besseren Bedingungen eine wettbewerbsverzerrende Diskriminierung anderer Fluglinien sieht, ergibt eine genauere ökonomische Analyse, daß nur eine in funktionsfähigen Wettbewerbsprozessen unproblematische Form der Preisdifferenzierung vorliegt. Auch andere Fluglinien hätten diese Bedingungen erhalten können, wenn sie dieselben Vorteile angeboten hätten. Insofern wurde der Fall Ryanair falsch entschieden. In gleicher Weise wirken die von der Kommission aufgestellten Prinzipien, die die Gefahr einer umfassenden Regulierung von Preisen für Flughafendienstleistungen beinhalten, in eine ökonomisch grundsätzlich falsche Richtung, da sie den wirksamen Wettbewerb im Luftfahrtsektor eher beeinträchtigen werden. Das eigentliche Beihilfeproblem, nämlich ob und unter welchen Umständen die öffentliche Finanzierung von Flughäfen zu einer Verzerrung des Wettbewerbs zwischen Flughäfen fuhrt, bleibt dagegen ebenso ungelöst wie das Problem der Vergabe von Start- und Landerechten (Slots).

Subject of the present analysis is the draft of a constitution for Europe, proposed by the „Convention for the future of Europe“. At first (part 1), the structure of the proposal will be dealt with. It turns out to be a puzzling, unusually long document consisting of titles provisions, protocols and articles which runs counter to the conventions objective to make the European Union more transparent for its citizens. In part 2, one of the declared objectives of the constitution will be taken up and it will be argued that it represents a confusion with a conception of economic policy, the so-called social market economy. This is followed by an analysis of the constitutional status of the European Commission (part 3). According to the draft proposal, the Commission will become the most powerful authority of the EU because no constitutional safeguards are provided which can be employed to check and to control the use of its powers. This will prove to be a fundamental deficit in democracy of the EU when the proposed constitution will be accepted. In the final part (4), the perspectives will be explored which result for the EU when it is dealing with its various tasks as stipulated in the proposal. Starting from the deficit in democracy, it will be pleaded that the proposed constitution should be subjected to a referendum in the present as well as the new member countries in order to strengthen the legitimacy of the constitution and to induce European politicians to enter into a clarifying discussion of the project of a constitution for Europe.