Social Market Economy: An Inquiry into the Theoretical Bases of German Model of Capitalism (original) (raw)
Related papers
Social Market Economy: origins, meanings and interpretations
Constitutional Political Economy, 2008
This paper investigates various possible meanings of 'Social Market Economy'-60 years after its political initiation in Germany. We focus on the variety of intellectual sources that influenced the formation and interpretation of the concept in Germany during the first half of the last century. Our particular attention is on Müller-Armack's definition of a rather dualistic concept of 'social' versus 'market economy' and the subtle differences it has with an original (Freiburg School) view of ordo-liberalism that lends itself more easily to a constitutional economics perspective. Keywords Social Market Economy Á Ordo-liberalism JEL Classification A11 Á B20 Á H10 Á N44 1 Introduction This year marks the 60th birthday of the German 'Soziale Marktwirtschaft' (Social Market Economy). In fact, the political initialization of this economic policy concept can be dated quite exactly: On Sunday, 19th June 1948, Ludwig Erhard, then director of the Administration for Economic Affairs, let it be known via radio that (for many products) rationing would be ended and prices freed. The occupation
West Germany: Economic policy in a "Social Market Economy
1969
Si:nce West Germany emerged once more as a sovereign nation after World War II, it has become known as a " Social Market Economy " to describe its economic policy making mecha nism. This system places a strong emphasis on the free interplay of the market forces of supply and demand, tempered only by the need to eliminate its excesses by providing social benefits to the less privileged members of society. Theoretically, therefore, the " Social Market Economy " occupies the middle ground between the capitalist and socialist states. The thesis suggests a spe cific definition of the term as an observable entity. West Germany's economy has functioned very successfully during this era, and it is generally believed that the practice of " Social Market " economic policy has been responsible. Al though there is some truth in this assertion, the overwhelming evidence suggests that " Social Market " policy had little di rect credit for the "...
German Neoliberalism and the Idea of a Social Market Economy: Free Economy and the Strong State
The German ordoliberal tradition developed in the Germany of the Weimar Republic amidst a server crisis of an entire political economy. It proposed a neoliberalism in which free economy is the practice of the strong state. It rejected laissez-faire liberalism as a deist idea that is unable to defend free economy at a time of need. For them free economy is only possible by means of strong state authority to contain the proletarianisation of workers, and they developed neoliberal social policy proposals to transform workers into citizens of private property. This transformation is a matter of an ever vigilant security state that may resort of dictatorial means of imposing order in case of a liberal emergency. The article presents the main ideas of ordoliberalism and argues that the present crisis has led to the resurgence of the strong as the concentrated force of economy, as ordoliberalism says it must.
Germany's Social Market Economy and the New Systems Competition
The Journal of Markets and Morality, 2006
World championship in exporting manufactures notwithstanding, weak gross domestic product (GDP) growth and the largest number of unemployed since the 1930s have tarnished the splendor of Germany's once celebrated social market economy (SME). In search of the reasons for their country's present mediocrity, contemporary (ordo-) liberal German economists point to construction defects in the economic constitution that escaped the attention of the founders of the SME. This article reviews the legacy of the father of the SME as well as the liberal critique of the evolution of the SME in postwar Germany under the old systems competition (OSC) between capitalist West and communist East. The liberal white hope, that is the new systems competition (NSC), ensued by European integration and globalization, is presented as a mechanism for overcoming national policy blockades in reforming (labor) market institutions in accordance with the common socioeconomic preferences of all citizens.
Social Market Economy in the context of the eurocrisis and as a feasible policy option
The specific model of growth of the German economy has some guiding theoretical principle in Soziale Marktwirtschaft (SMW) (Mueller-Armack, 1956). Although SMW was conceived in the context and with a particular attention to European integration, the present crisis has highlighted how it is difficult to integrate the German economy to the rest of the Europe. The expansionary and deficit-spending-pull policies of the other countries, particularly the “Latin”, tend to be difficult to convert into the stability-shaped configuration of Germany. This fact is causing some worry to those who considered the framework of the SMW as a valuable and viable model of economy.The first part of the paper considers in which extent the present German economy can be assimilated to the framework of the SMW. In particular, we discuss three points: 1. how much abandoning income policies, i.e. the policy of blocking salary growth negotiated with trade unions (1999-2011) can be in harmony with SMW; 2. How over-evaluated currency as the euro/dollar at 1,40 can be considered a strong currency in line with SMW;3. In which case a fiscal stimulus is needed and how it should be performed.The second part of the paper, therefore, looks at the epistemological dimension of the SMW to highlight the fundamental principles that should inform a reform policy in this direction. Moreover, we will discuss how to transform such principles in a set of policies that fit different contexts. The actual issue is that most of the points listed by Mueller-Armack as the fundamental elements of SMW tend to be context specific. As a consequence, a broader perspective on the spirit and history of SMW should be considered, extending the insights to Wilhelm Röpke and other scholars, singling out the true objectives from the instrumental ones. Finally the paper will discuss the exportability of SMW in two specific contexts: in Italy and in Argentina. It will find a relation between the structure of the economy and the reforms needed to achieve such kind of economic order. The result will be contrasted with other competing theories.
The Social Market Economy model functioning in the Federal Republic of Germany is a valuable source of inspiration for numerous states that want to reform their political, social and economic systems. It also constitutes an interesting ‘object’ of research and analyses. The Social Market Economy was initially introduced in the western occupation zones and after the German reunification in 1990 it was extended into the territory of the former German Democratic Republic and, to some extent, it constituted a point of reference for the reforms in the Central European states. The article tries to answer the question to what extent the German experience with the Social Market Economy may be useful for the states undergoing the process of system change, especially in the Eastern European region.
Social Policy in Germany: The Dual Model of the Social State
In the Federal Republic of Germany the exercise of social policy is based on the corporatist-conservative model and its particular form of dual organization, with the participation of state and non-state agencies being institutionally determined. A brief historical overview of the creation of the social state in Germany is initially presented, along with the effect of the historical facts, the political and socioeconomic characteristics of the German system so that the composition and the operational philosophy of the dual form of the corporatist model can become clear. Next, the analysis centres on the structures, and the way in which the principles and organizational characteristics of the dual model of sociopolitical intervention are setup based on the provisions of its institutional framework of operation. The ulterior objective is to comprehend the main elements that define the administrative and executive synergy between the state and specific agencies of the social sector that contribute to the operation of the dual organizational model of the social state in Germany.
Transttellar, 2019
This article wants to conduct a comparative study between ordoliberal theory and the measures adopted by the German state in the post-World War II. Thus, analysing how this theoretical scope corroborated to remedy the political, economic and social crisis that has brought the country. In fact, the ordoliberals as theoretical thinking begins to be drafted since 1938 in the journal entitled Ordo, linked to Freiburg school, but applied more effectively only after 1945. Among its most prominent measures can highlight the guarantee of a healthy environment competition through market principles, in order not to allow the formation of monopolies and oligopolies, thus the Freiburg school stands out in normativity that arises in the role of the state and monopolies, the latter, understanding the beneficial role of state intervention and the great problem of the concentration of monopolies (SCHNYDER and SIEMS, 2012). Among the main goals for progress was the monetary reform, the end of control over production and its products, and control over monopolies, increasing population density and demand for jobs and services