The free market takes advantage of the sick

social market economy

Ludwig Erhard
Social market economy.
The German politician and economist was born in 1897. As director of the economic administration of the "United Economic Area" (1948/49), Erhard declared the end of the forced economy with the currency reform in 1948 against the opposition of the occupying powers. Together with Alfred Müller-Armack, he designed the concept of the social market economy in the 1940s, which he then successfully implemented as the first Federal Minister of Economics (1949 to 1963) under Federal Chancellor Konrad Adenauer. The economic upswing he initiated established his reputation as the "father of the German economic miracle". From 1957 to 1963 the CDU politician was also Vice Chancellor. In 1963 the Bundestag elected him as Adenauer's successor; 1966/67 he was also chairman of the CDU. After criticism from within the party, Erhard resigned as Federal Chancellor in 1966. Erhard was also a member of the Bundestag from 1949 until a year before his death in 1977.
the economic order of the Federal Republic of Germany; so named and significantly influenced by the economist and state secretary in the Ministry of Economic Affairs Alfred Müller-Armack (* 1901, † 1978) and by the first Federal Minister of Economics Ludwig Erhard (* 1897, † 1977) and implemented in practice after the Second World War. The social market economy is based on elements of the free market economy, but in its actual form it is based on the economic theoretical ideas of neoliberalism (see there) and ordoliberalism (see there), above all by the economist Walter Eucken (* 1891, † 1950) and the Freiburg school shaped.

One of the most important tasks of the state in the social market economy is the creation of a legal framework within which economic activity can take place. This includes the safeguarding of personal freedoms such as the right to free economic activity and the possibility of being able to set up an independent business, private ownership of the means of production or the right to form associations to safeguard economic and social interests. Ensuring market-based competition and maintaining it through a functioning competition system that prevents processes that restrict competition on the markets are also of fundamental importance. Further design features of the social market economy are z. B. free pricing for goods and services on the market, profit striving as a performance incentive, a central bank independent of state directives, the right of employers and employees to regulate working conditions and wages through their respective associations without state intervention (collective bargaining autonomy), an active economic sector -, economic and tax policy of the state as well as a network of social benefits, z. B. protects the old, sick, low-income or unemployed from economic hardship when self-sufficiency is not possible.

The aim of the social market economy is to realize the advantages of a free market economy such as economic efficiency or a high supply of goods, while at the same time avoiding its disadvantages such as destructive competition, concentration of economic power or the anti-social effects of market processes (e.g. unemployment). The aim of the social market economy is therefore the greatest possible prosperity with the best possible social security. For this reason, the state does not behave passively, but actively intervenes in economic activity, e.g. B. through economic policy, competition policy and social policy measures. Interventions by the state in the economy take place in the general interest and in areas where suppliers or consumers must be protected by measures that are justifiable in the market economy (e.g. consumer protection or competition legislation).

Since its introduction in the Federal Republic of Germany after 1948, the social market economy has proven itself and has led to a hitherto unknown increase in prosperity among broad sections of the population and to a high degree of social security. However, the nature and extent of government interventions were e.g. B. with the reference to the welfare state (see there) politically controversial again and again.

Duden Wirtschaft from A to Z: Basic knowledge for school and study, work and everyday life. 6th edition. Mannheim: Bibliographisches Institut 2016. Licensed edition Bonn: Federal Agency for Civic Education 2016.