Abstract
The ‘social market economy’ (Soziale Marktwirtschaft) is both a reality and a programme. It is regarded as the trademark of the economic system developed in Germany after the currency reform of 20 June 1948 and it is also an economic policy model. The term reflects the dual character of any economic system. On the one hand, it is ‘the totality of realised forms in which, at a given time, the daily economic process takes place in concreto’.1 On the other hand, it can be used as a yardstick for judgments on economic policy measures, in terms of both intentions and actions. An analysis of the role of the state within the social market economy must correspond to the use of the term. It is therefore necessary to deal with the public sector both from the point of view of the number of people employed and the resources used and as the creator of a deliberate social and economic (as well as governmental) system; state agencies acting in accordance with this system are also included.
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Notes and References
Walter Eucken, Die Grundlagen der Nationalökonomie, 7th edn (Berlin, Göttingen and Heidelberg: Springer, 1959) p. 238.
As used here, the term ‘public sector’ comprises the central, regional and local authorities and all other public institutions, including the quasi-governmental institutions. The public sector is responsible for political action on the part of state agencies in respect of their authority and obligations, on the one hand, and providing the citizens with public and merit goods on the other hand as well as for the performance of the numerous functions assigned to public institutions, such as statutory social insurance and state welfare assistance.
Eucken, op. cit., p. 239.
See Norman Barry’s essay in Chapter 5 of this volume.
Ibid.
Ibid.
See Hans Otto Lenel’s essay in Chapter 2 of this volume.
Franz Böhm, ‘Die Idee des Ordo im Denken Walter Euckens’, Ordo, Vol. 3, 1950.
Eucken, ‘Die Wettbewerbsordnung und ihre Verwirklichung’, Ordo, Vol. 2, 1949.
This fostered critical objections at an early stage. See Erich Preiser, ‘Wesen und Methoden der Wirtschaftslenkung’, Finanzarchiv, new series, Tübingen, Vol. 8, 1941. pp. 257 et seq., note 1;
Heinrich von Stackelberg, ‘Die Grundlagen der Nationalökonomie (Bermerkungen zu Walter Eucken’), Weltwirtschaftliches Archiv, Jena, Vol. 51, 1940, p. 251;
Hans Möller, ‘Wirtschaftsordnung, Wirtschaftssystem und Wirtschaftsstil. Ein Vergleich der Auffassungen von W. Eucken, W. Sombart und A. Spiethoff, Schmollers Jahrbuch für Gesetzgebung, Verwaltung und Volkwirtschaft im Deutschen Reiche, Vol. 64 (Berlin: Duncker & Humblot, 1940) p. 87.
Eucken, Grundsätze der Wirtschaftspolitik, 3rd edn, edited by Edith Eucken and K. Paul Hensel (Tübingen: J. C. B. Mohr [Paul Siebeck], 1960) p. 338.
Ibid., pp. 334 et seq.
As ‘a state run on a centralist basis tends more towards central planning’, Ibid., p. 332. This had already been put forward earlier by Wilhelm Röpke, Die deutsche Frage, 3rd edn (Zürich: Eugen Rentsch, 1948), pp. 255 et seq. and pp. 328 et seq.
Böhm, ‘Die Ordnung der Wirtschaft als geschichtliche Aufgabe und rechtsschöpferische Leistung’, Schriftenreiche Ordnung der Wirtschaft, Stuttgart and Berlin, Vol. 1, 1937;
‘Privatrechtsgesellschaft und Markwirtschaft’, Ordo, Vol. 17, 1966.
See Wernhard Möschel’s essay in Chapter 7 of this volume.
See Ludwig von Mises, ‘Kritik des Interventionismus’, in Wolfgang Stützel et al., Standard Texts on the Social Market Economy (Stuttgart and New York; Gustav Fischer, 1982).
See Friedrich A. von Hayek, The Road to Serfdom (Chicago: University of Chicago Press, 1944).
Röpke, ‘Staatsinterventionismus’, in Handwörterbuch der Staatswissenschaften (Jena: Gustav Fischer, 1929);
and Röpke, The Social Crisis of our Time (Chicago, University of Chicago Press, 1950).
Cf. Alexander Rüstow, ‘Zwischen Kapitalismus und Kommunismus’, Ordo, Vol. 2 1949
and Rüstow, ‘Wirtschaftsordnung und Staatsform’, in Ernst Winkler et al., Magna Charta der Sozialen Markwirtschaft (Heidelberg: Vita Verlag, 1952).
Röpke, 1st die deutsche Wirtschaftspolitik richtig? (Stuttgart and Cologne: W. Kohlhammer, 1950), pp. 22 et seq.
Cf. Emil Küng, ‘Interventionismus’, Handwörterbuch der Sozialwissenschaften, Vol. 5 (Stuttgart, Tübingen and Göttingen: Gustav Fischer, J. C. B. Mohr [Paul Siebeck] and Vandenhoeck and Ruprecht, 1956) pp. 325–6
and Hans Willgerodt, ‘Staatliche Hilfen in einer Marktwirtschaft’, in Zeitschrift für Wirtschaftspolitik, Cologne, No. 1, 1984, pp. 61 et seq.
On this subject, see Erich Streißler, ‘Kritik des neo-klassischen Gleichgewichtsansatzes als Rechtfertigung marktwirtschaftlicher Ordnungen’, in Streißler and Christian Watrin (eds), Zur Theorie marktwirtschaftlicher Ordnungen (Tübingen; J. C. B. Mohr [Paul Siebeck], 1980). The exceptions were Friedrich von Hayek, Gottfried Haberler and Wilhelm Röpke in their work on business-cycle theory.
Even though Röpke refers to Alfred Pigou in his work on ‘state intervention-ism’.
Erwin von Beckerath, ‘Die neuere Geschichte der deutschen Finanzwissenschaft (seit 1800)’; Handbuch der Finanzwissenschaft, Vol. 1 (Tübingen: J. C. B. Mohr [Paul Siebeck], 1952) pp. 424 et seq.
See Röpke, Finanzwissenschaft (Berlin and Vienna: Spaeth and Linde, 1929).
Eucken, Grundsätze der Wirtschaftspolitik, op. cit., p. 327.
Ibid., p. 311. Ordnungspolitik may be translated as ‘policy towards the organisation of the market’. Typically, it would mean the extent to which government intervention is required in order to make the market work more efficiently and equitably, such intervention being clearly identified in economic clauses in a written constitution.
See Leonhard Miksch, ‘Die Wirtschaftspolitik des Als-ob’, Zeitschrift für die gesamte Staatswissenschaft, Tübingen, Vol. 105, 1949.
Put forward with particular conclusiveness by von Hayek in ‘Marktwirtschaft und Wirtschaftspolitik’, Ordo, Vol. 6, 1954, pp. 9 et seq.
This is the prevailing opinion and is largely undisputed.
The currency reform fulfilled one necessary precondition—no more and no less.
As already stressed, apart from Wilhelm Röpke, Alexander Rüstow and Friedrich von Hayek, little, if any, theoretical consideration had been given by the Ordo and neo-liberals to the public sector, its control mechanisms and the way in which it should work with the private market sector. More pioneering work in this field had been done by the members of one of the Freiburg groups, the Erwin von Beckerath working party, which also included Franz Böhm and Walter Eucken. See Christine Blumenberg-Lampe, Das Wirtschaftspolitische Programm der Freiburger Kreise, Volkswirtschaftliche Schriften, No. 208, (Berlin: Duncker & Humblot, 1973). During the difficult war years and at great personal risk, the working party endeavoured to formulate the basic lines of a transitional economy leading the country from war to peace. Although all the members of the group had concerned themselves with Walter Eucken’s work, their views undoubtedly diverged from those of Eucken and Franz Böhm. After the war, each member of the group acted in his own way (Heinrich von Stackelberg was dead and Adolf Lampe died in 1947) and within his own environment as the ‘leaven’ for new liberal and market-economy solutions. Many of them constituted the first generation of members of the Wissenschaftlicher Beirat (set up in 1947) at the Economic Administration Authority of the United Economic Territory and, from autumn 1949, at the Federal Ministry for Economic Affairs.
The Labour Promotion Act of 25 June 1969 turned this institution into the present Federal Labour Office (Bundesanstalt für Arbeit). In accordance with Section 189 of this Act, the Bundesanstalt für Arbeit is a public corporation with legal powers. It has the right of self-administration and is responsible for unemployment insurance and unemployment assistance. It is also required to deal with matters concerning the placement of workers and vocational guidance as well as other labour market measures aimed at preventing and terminating unemployment.+
Franz Klein, ‘Aufgaben und Ziele der Finanzreform’, Neue Juristische Wochenschrift, Munich and Frankfurt am Main, Vol. 21, 1968, p. 1318.
Hans Möller, Zur Theorie und Politik der Wirtschaftsordnung, Kieler Vorträge, new Series 99 (Tübingen: J. C. B. Mohr [Paul Siebeck], 1983).
Karl Schiller, ‘Marktwirtschaft mit Globalsteuerung, Reden zur Wirtschaftspolitik 1, BMWI Texte, published by the Referat Presse und Information des Bundesministeriums für Wirtschaft, Bonn, 1970.
Egon Tuchtfeldt, ‘Soziale Marktwirtschaft und Globalsteuerung—zwei wirtschaftspolitische Experimente’, Wirtschaftspolitische Chronik, Cologne, No. 1, 1973.
Gerard Gäfgen, ‘Institutioneller Wandel und Ökonomische Erklärung’, in Jahrbuch für Neue Politische Ökonomie, Vol. 2 (Tübingen, J. C. B. Mohr [Paul Siebeck], 1983) p. 19.
Ratio of central, regional and local authority expenditure to the nominal gross national product.
See on this topic and on the relevance of the related structural indicators Eberhard Wille, ‘Öffentliche Sachausgaben versus öffentliche Personalausgaben’, in Peter Friedrich, Kurt Reding and Eberhard Wille (eds), Produktivitätsentwicklung staatlicher Leistungen (Berlin: Duncker & Humblot, 1985) p. 75.
For example, the introduction of the flexible age limit, the pension based on minimum income, the bringing forward of the adjustment date by six months and the admission of the self-employed and other persons to the pension insurance system.
Norbert Kloten and Karl-Heinz Ketterer, ‘Fiscal Policy in West Germany: Anti-cyclical versus Expenditure-reducing Policies’, in Stephen F. Frowen (ed.), Controlling Industrial Economies, Essays in Honour of Christopher Thomas Saunders (London: Macmillan Press, 1983) pp. 304 et seq.
See the introduction by Ernst-Joachim Mestmäcker in Freier oder selbstverwalteter Wettbewerb? Ein Gespräch über Konflikte zwischen Wettbewerbspolitik und Mittelstandsschutz (Bonn: Ludwig-Erhard-Stiftlung, 1984), pp. 7–18;
as well as Mestmäcker, Der verwaltete Wettbewerb. Eine vergleichende Untersuchung über den Schutz von Freiheit und Lauterkeit im Wettbewerbsrecht (Tübingen: J. C. B. Mohr [Paul Siebeck], 1984).
Mestmäcker, Freier oder selbstverwalteter Wettbewerb, op. cit., p. 18.
In June 1972, the Bank appeared to have lost its way for a short time following measures aimed at restricting capital transactions in the face of the almost uncontrollable influx of foreign investment (the outward reasons for Karl Schiller’s resignation as Federal Minister for Economic Affairs and Finance).
Heinz Lampert, ‘Grundzüge der Sozialpolitik in der Bundesrepublik Deutschland’, in Lampert and Gerhard Kühlewind, Das Sozialsystem der Bundesrepublik Deutschland, Bilanz und Perspektiven (Nuremberg: Institut für Arbeitsmarkt- und Berufsforschung der Bundesanstalt für Arbeit, 1984) p. 14.
See the introduction by Wolfgang Kartte, in Freier oder selbstverwalteter Wettbewerb? op. cit.
Ibid., p. 21.
Ibid., p. 21.
Gaston Thorn, Europäische Union oder Europäischer Untergang. Sein oder Nichtsein, Europäisches Hochschulinstitut, 7 (Florence: Jean-Monnet-Vortrag, 1984) p. 14.
Kloten, ‘Die Koordinierung westlicher Wirtschaftspolitik’, in Karl Kaiser and Hans-Peter Schwarz (eds), Weltpolitik, Strukturen, Akteure, Perspektiven (Bonn: Bundeszentrale für politische Bildung, 1985) pp. 388 et seq.
Moller, op. cit.
On this subject, see Ernst Forsthoff, Die Verwaltung ab Leistungsträger, Königsberger Rechtswissenschaftliche Forschungen (Stuttgart and Berlin: W. Kohlhammer, 1938) pp. 1 et seq.
See Willgerodt, op. cit., p. 59.
See Wille, ‘Gesamtwirtschaftliche Allokation zwischen “Markt- und Staatsversagen”—ein Ordnungspolitischer Überblick’, in Wille (ed.), Beiträge zur Gesamtwirtschaftlichen Allokation (Frankfurt am Main, Bern and New York: Lang, 1983) pp. 7 et seq.
Klaus Dieter Arndt, ‘Ein Gesetz zur Förderung der wirtschaftlichen Stabilität’, in Zeitschrift für angewandte Konjunkturforschung, Berlin, Vol. 12, 1966.
Alex Möller (ed.), Gesetz zur Förderung der Stabilität und des Wachstums der Wirtschaft und Art. 109 Grundgesetz, Kommentar unter besonderer Berücksichtigung der Entstehungsgeschichte (Hannover: Verlag für Literatur und Zeitgeschehen, 1968) p. 11.
Similarly Klaus Stern, Paul Münch, Karl-Heinrich Hansmeyer, Gesetz zur Förderung der Stabilität und des Wachstums der Wirtschaft, Kommentar, 2nd edn (Stuttgart, Berlin, Cologne and Mainz: W. Kohlhammer, 1972) p. 35.
Stern, Münch, Hansmeyer, op. cit., p. 39.
Schiller, Preisstabilität durch globale Steuerung der Markwirtschaft (Tübingen: J. C. B. Mohr [Paul Siebeck], 1966) p. 21.
Otto Schlecht, Konjunkturpolitik in der Krise (Tübingen: J. C. B. Mohr [Paul Siebeck], 1983) p. 9.
Rolf Wenzel, ‘Wirtschaft und Sozialordnung’, in Josef Becker, Theo Stammen, Peter Waldmann (eds), Vorgeschichte der Bundesrepublik Deutschland (Munich: Wilhelm Fink, 1979) p. 310.
The problems involved in both assumptions were already known at the time of the pension reform in 1957; it was criticised even then, particularly by the actuary Georg Heubeck, as ‘political mathematics’.
Arthur Woll, Das Ende der Stabilitätspolitik (Tübingen: J. C. B. Mohr [Paul Siebeck], 1983) p. 7 as well as pp. 12 et seq.
See Kloten, ‘Utopie und Leitbild im wirtschaftspolitischen Denken’, Bern Kyklos, Vol. XX, 1976, pp. 331–54.
On this subject, see the recently published work by Fritz Holzwarth, Ordnung der Wirtschaft durch Wettbewerb (Freiburg: Rudolf Haufe, 1985).
Lorenz von Stein, Die Verwaltungslehre, Part I, 2nd reprint of the 1869 Stuttgart edition (Aalen: Scientia-Verlag 1975) p. 208.
Karl R. Popper, Die offene Gesellschaft und ihre Feinde (Berne: Francke, 1957) p. 177.
Von Stein, op. cit., with reference to France, p. 159.
Ludwig Erhard, Prosperity Through Competition (London: Thames & Hudson, 1958) p. 185.
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Kloten, N. (1989). Role of the Public Sector in the Social Market Economy. In: Peacock, A., Willgerodt, H. (eds) German Neo-Liberals and the Social Market Economy. Trade Policy Research Centre. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-20148-8_4
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