Economic Freedom

Despite the success of the social market economy, in politics again and again deviated from its principles: free pricing and competition, personal responsibility and individual responsibility, freedom of contract and private property are not considered rare enough. For in democratic systems, there are incentives for politicians to deviate in the name of social justice or the public interest by these principles.How can we resolve this dilemma?

The social market economy has performed in Germany since its introduction to growing prosperity. The collapse of the former GDR has also planned economic systems, the dysfunctions revealed and an understanding of the social market economy as the superior economic model of the system can be competitive. Moreover, a glance at economic history, that economic development was stronger in market-economy societies than in those who had chosen a different economic system. Accordingly, the per capita income grew significantly in these countries – not least for the benefit of the poorest. The spread of market economy has led to, for example, that over the past thirty years, the number of people in the world living on two dollars a day, cut in half. Has

Frequently used argument that markets mean that the gap between rich and poor is getting bigger, is not tenable in a global comparison: For example, the situation in China and India where the poor are now more so improved extent that some reinforcements of inequality more than offset within individual states. Only Africa lags behind this trend, what is not, however, in its turn to a market economy, but in many wars, uncertain property rights and widespread corruption.

While the social state principle is enshrined in the German Basic Law, this is not for the social market economy. In the political process, it is susceptible to the influence of interest groups that try to enforce privileges for themselves at the expense of the public. Democracy itself tends to undermine the social market economy. The interpretation open attribute “social” opened the door to politicians, to interpret the term according to the needs of their constituencies. Politicians can thus increase the chances of their own choice. They are driven to engage in a race that leads to ever-new reallocation arrangements are introduced – by specific groups of entrepreneurs and citizens and to the detriment of the public. Here we can see the dilemma between social market economy and democracy: on the one hand, needs the social market economy, the legitimacy of the voters, on the other hand, tend to politicians, from the principles of social market economy to deviate in order to increase their electoral prospects.

How can we protect the social market economy better? – Generally, competitive federalism within a state and interstate system competition effective means to prevent the risk of undermining the social market economy to meet. Worsen the conditions for economic activity in one state because of too much interest-driven politics, workers and capital can migrate from the relevant local authority or at least threatened with depopulation. Politicians be encouraged more in the public interest to impose solutions.

May also contribute to the depoliticization of certain areas to curb the negative effects of democracy on the social market economy. For example, monetary policy decisions in Germany and Europe and in many other countries by an independent central bank and are not made by politicians. This is to prevent political influence on monetary policy and those committed solely on maintaining price level stability, another principle of the social market economy, are. Such a rule also provides the binding is currently located in the debt brake legislation, since public debt on objective criteria and the current political-directed action are largely removed.

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