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The German Social Market Economy: Challenged by Caritas in Veritate

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Part of the Ethical Economy book series (SEEP,volume 41)

Abstract

“The functioning of a free market economy depends on sound cultural and ethical foundations.” For earlier thinkers like the moral philosopher and father of economics Adam Smith, this was self-evident. After the division of the academic disciplines ethics and economics shortly after Adam Smith, however, a partial approach gained momentum and is still prevalent. Economists and businessmen developed economic standards, ethicians and philosophers ethical standards for the market. We evidently lost greatly due to this segmentation. It might even have contributed to the emergence of the financial crisis in 2008. Although there has been a growing body of literature on business ethics, dialogue of the academic disciplines should not be a privilege of the few but an imperative for all dealing with business and economics. There is a lot to learn from the insights of earlier thinkers who followed an interdisciplinary approach. This was the fact for the precursors and founding fathers of the German Social Market Economy. Since they are not so much known outside Germany, a closer look at their writings could be an interesting contribution to an international and interdisciplinary discussion – especially given the fact that they were strongly influenced by Catholic social teaching. After an introduction to the normative foundations and a short look at the practical experience, this chapter highlights some important impulses from Caritas in Veritate for the enhancement of the Social Market Economy as well as for other liberal economic and social orders. The financial and economic crisis offers an opportunity for the Church to contribute to the enhancement of “Free Markets and the Culture of Common Good.”

Keywords

  • Financial Crisis
  • Market Economy
  • Welfare State
  • Social Order
  • Economic Freedom

These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Notes

  1. 1.

    See Schneider (2004, 57ff).

  2. 2.

    Dietrich Bonhoeffer (1906–1945) was a German Lutheran pastor and theologian who had participated in the German Resistance Movement against the Nazi regime. He was arrested in 1943 and executed in Flossenbürg concentration camp on April 9, 1945, for his involvement in the attempt to assassinate Adolf Hitler on July 20, 1944. He was a founding member of the Confessing Church.

  3. 3.

    Ordoliberalism is a German version of neoliberalism. Many German and German-speaking economists of the time called themselves neoliberal. However, the term “neoliberalism” in Germany today is broadly used in a pejorative way and equated with laissez-faire liberalism. Historically, it is a renewed (“neo”) version of classic liberalism that explicitly rejects the notion of laissez-faire liberalism.

  4. 4.

    First date refers to original year of publication. Second year refers to year of edition used.

  5. 5.

    See also Eucken (1952/1990, 178) where he stresses that men have lost the feeling for what freedom is and for its value. We rediscover this thought in CV where Benedict asks us to reflect on “how rights presuppose duties, if they are not to become mere licence (Benedict XVI 2009, 43).

  6. 6.

    All subsequent quotes, whose original is in German, have been translated by the author.

  7. 7.

    See the article with the same title by Rüstow (1963a/1963b).

  8. 8.

    As a consequence of the short-term profit orientation that contributed to the financial crisis, the German government introduced rules concerning compensation for managers. Compensations now have to take long-term sustainability into account.

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Schneider, A.M. (2012). The German Social Market Economy: Challenged by Caritas in Veritate . In: Schlag, M., Mercado, J. (eds) Free Markets and the Culture of Common Good. Ethical Economy, vol 41. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-2990-2_17

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