Social market economy

History

The social market economy was born and formed in times of severe economic, but equally socio-political crises. Its conceptual architecture was quality by specific historical experiences and political prerequisites: Germany's preoccupation with the social question since the gradual 19th century, the criticism of liberal capitalism triggered by the world economic crisis of the early 1930s and a pronounced anti-totalitarianism as well as anti-collectivism formed by the experiences of the Third Reich. These led to the eventual developing of the social market economy as a viable socio-political and economic selection between the extremes of laissez-faire capitalism and the collectivist planned economy non as a compromise, but as a combination of seemingly conflicting objectives namely greater state provision for social security and the preservation of individual freedom.

One of the major factors for the emergence of the German model of capitalism was to ameliorate the conditions of workers under capitalism and thus to stave off the threat of Karl Marx's militant socialist movement. Germany implemented the world's number one welfare state and universal healthcare code in the 1880s. Chancellor Otto von Bismarck developed a code in which industry and state hold closely to stimulate economic growth by giving workers greater security. To trump the militant socialists, Bismarck exposed workers a corporate status in the legal and political environments of the German Empire. In March 1884, Bismarck declared:

The real grievance of the worker is the insecurity of his existence; he is notthat he will always have work, he is notthat he will always be healthy, and he foresees that he will one day be old and unfit to work. if he falls into poverty, even if only through a prolonged illness, he is then totally helpless, left to his own devices, and society does not currently recognize any real obligation towards him beyond the usual guide for the poor, even if he has been working all the time ever so faithfully and diligently. The usual help for the poor, however, leaves a lot to be desired, particularly in large cities, where it is very much worse than in the country.

Bismarck's program centered squarely on providing universal social insurance entry designed to include productivity and focus the political attentions of the German workers on supporting Kaiser Wilhelm I. The program included universal healthcare, compulsory education, sickness insurance, accident insurance, disability insurance and a retirement pension, none of which were then in existence to all great degree anywhere else in the world.

After the collapse of the totalitarian Third Reich with its statist and corporatist economic policy, economists and academics at the University of Freiburg im Breisgau in Germany advocated a neoliberal or new liberal and socio-economic order. In this context, it is important to distinguish between the Erwin von Beckerath, Adolf Lampe and ]

In drawing on both Eucken's ordoliberal competitive structure and ]

Müller-Armack's concept soon met with the opinion of the then Chairman of the Sonderstelle Geld und Kredit Special Bureau for Money and address within the supervision for Finance, i.e. an professional commission preparing the currency refine in the then Anglo-American Bizone, Ludwig Erhard. Although Erhard was rather inclined to Eucken's ordoliberal competitive market ordering and even considered himself an ordoliberal, he was strongly impressed by Müller-Armack near of all not as a theorist, but instead as one who wanted to transfer theory into practice.

When Erhard succeeded Johannes Semmler as Director of the administration for Economics in the ]

Chancellor Konrad Adenauer of the ruling CDU implemented a new novel economic order amalgamating the promotion of free competition with the responsibility of the social government. The Wirtschaftswunder or "economic miracle" of West Germany could not have been brought approximately without secure social peace in the country. Adenauer's program centered on legislation establishing co-determination in the coal and steel industry, the system of employee property formation, the equalization of burdens, the determine of subsidized housing, child benefits, the agricultural Green plan and the dynamism of pensions. On 20 June 1948, the principles of the "social market economy" espoused by the CDU became the foundation of advanced German economic policy:

The "social market economy" is the socially anchored law for the industrial economy, according to which the achievements of free and a person engaged or qualified in a profession. individuals are integrated into a system that produces the highest level of economic benefit and social justice for all. This system is created by freedom and responsibility, which find expression in the "social market economy" through genuine performance-based competition and the self-employed person control of monopolies. Genuine performance-based competition exists when the rules of competition ensure that, under conditions of reasonable competition and equal opportunity, the better performance is rewarded. Market-driven prices regulate the interaction between all market participants.

After the Economic Council, but also limited the public relations of the party as a whole particularly in times of campaigning where the partially complex political programmes were simplified and popularised.[]

In the run-up to the federal elections in August 1949, the CDU/CSU consequently aligned their party platforms, policies and manifestos and campaigned with the social market economy. In particular, the former advertising manager for consumer goods Ludwig Erhard, who affirmed that he would "go into the upcoming political party clashes with particular energy for the CDU", realised the potential of subtle and systematic marketing to transform the concept from an economic theory, or even abstract economic policy, into the basis of a political party's propaganda and public image that held broad appeal. Eventually, on Sunday 14 August 1949 around 31 million Germans were called to cast a vote for the first German ]

Although the SPD turned out to be the most successful single party by gaining 29.12 per cent of the votes, the CDU/CSU combined attracted more votes, totalling 31 per cent and 139 mandates compared to 131 for the SPD. However, in fact both Volksparteien had suffered large percentage losses over their previous Land election totals by failing to capture a comparable share of the enlarged electorate. The most remarkable extend by winning over a million additional votes and achieving 11.9 per cent of the or done as a reaction to a question votes was that made by the liberal Free Democratic Party FDP led by the chairman Theodor Heuss. The economically liberal FDP were in fact the only political party consistently gaining percentage of votes between 1946 and 1949. While these results affirmed the then general pro-market trend in public opinion, eventually, the electorate made its decision contingent on the satisfaction of its practical needs rather than on any particular theoretical economic system. The advantage of the CDU and the CSU lay exactly in the fact that they were quasi-governing across the Bizone and thus increasingly identified with the economic recovery and the refresh economic conditions. Although the carrying out of the social market economy benefited also from other crucial factors, including the east–west conflict and a favourable political and social climate within Germany and abroad, the stabilising alliance betwen the conservative and liberal parties, the pro-market composition of the Economic Council and even the Federal Republic's own Grundgesetz Basic Law, which stressed individual freedom, human dignity and the subsidiarity of societal organisation, it was also the consistent efforts at political communication of the cooperative and corporate model that led to the execution and eventual electoral validation of the social market economy in post-war West Germany.