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Social market economy
 
 
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The social market economy was the main economic model
Economic system

An economic system or ?conomic system is a system that involves the Economic production, distribution and consumption of Good and Service between the entities in a particular society....
 used in Western
Western Europe

Western Europe refers to the countries in the western most half of Europe. This concept has had different meanings, political and cultural as well as geographical issues have influenced the area....
 and Northern Europe
Northern Europe

Northern Europe is the northern part or region of Europe. The United Nations defines Northern Europe as including the following countries and dependent regions:...
 during the Cold War
Cold War

The Cold War was the continuing state of conflict, tension and competition that existed between a number of world powers, including the United States, the Soviet Union, People's Republic of China, France, United Kingdom and those countries' respective allies from the mid-1940s to the early 1990s....
 era. It originated in West Germany
West Germany

West Germany was the common English name for the Germany , from its formation in May 1949 to German reunification in October 1990, when East Germany was dissolved and its States of Germany became part of the Federal Republic, ending the more than 40-year division of Germany....
, and it is known as Soziale Marktwirtschaft in German
German language

German is a West Germanic languages, thus related to and classified alongside English language and Dutch language. It is one of the world's world language and the most widely spoken mother tongue in the European Union....
.

In West Germany, the social market model was created and implemented by the Christian Democrat
Christian Democratic Union (Germany)

The Christian Democratic Union of Germany is a christian democracy and conservatism political party in Germany.Along with its Bavarian sister party, the Christian Social Union of Bavaria, the CDU forms the CDU/CSU faction in the Bundestag....
 Ludwig Erhard
Ludwig Erhard

Ludwig Wilhelm Erhard was a Germany politician and Chancellor of Germany of West Germany from 1963 until 1966. He is notable for his leading role in German postwar economic reform and Wirtschaftswunder, particularly in his role as Minister of Economics under Chancellor Konrad Adenauer after 1949....
, Minister of Economics under Konrad Adenauer
Konrad Adenauer

Konrad Hermann Josef Adenauer , 5 January 1876 ? 19 April 1967) was a Germany statesman.Although his political career spanned sixty years, beginning as early as 1906, he is most noted for his role as the Chancellor of Germany of West Germany from 1949?1963 and chairman of the Christian Democratic Union from 1950 to 1966....
's chancellorship and German Chancellor in his own right from 1963 to 1966.

social market economy seeks a mixed economic system
Mixed economy

A mixed economy is an economic system that incorporates a mixture of private and government ownership or control, or a mixture of capitalism and socialism....
 rejecting both socialism
Socialism

Socialism refers to a broad set of economic theories of social organization advocating public or state ownership and administration of the means of production and distribution of goods, and a society characterized by equality for all individuals, with a fair or Egalitarianism method of compensation....
 and laissez-faire
Laissez-faire

Laissez-faire is a term used to describe a policy of allowing events to take their own course. The term is a French language phrase literally meaning "let do"....
 capitalism
Capitalism

Capitalism is an economic system in which wealth, and the means of producing wealth, are private property and controlled rather than commonly, publicly, or state-owned and controlled....
, combining private enterprise with measures of the state to establish fair competition, low inflation
Inflation

In economics, inflation is a rise in the general price level of goods and services in an economy over a period of time. The term "inflation" once referred to increases in the money supply ; however, economic debates about the relationship between money supply and price levels have led to its primary use today in describing price inflatio...
, low levels of unemployment
Unemployment

File:World map of countries by rate of unemployment.pngUnemployment occurs when a person is available to work and currently seeking work, but the person is without Wage labour....
, good working conditions, and social welfare.






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The social market economy was the main economic model
Economic system

An economic system or ?conomic system is a system that involves the Economic production, distribution and consumption of Good and Service between the entities in a particular society....
 used in Western
Western Europe

Western Europe refers to the countries in the western most half of Europe. This concept has had different meanings, political and cultural as well as geographical issues have influenced the area....
 and Northern Europe
Northern Europe

Northern Europe is the northern part or region of Europe. The United Nations defines Northern Europe as including the following countries and dependent regions:...
 during the Cold War
Cold War

The Cold War was the continuing state of conflict, tension and competition that existed between a number of world powers, including the United States, the Soviet Union, People's Republic of China, France, United Kingdom and those countries' respective allies from the mid-1940s to the early 1990s....
 era. It originated in West Germany
West Germany

West Germany was the common English name for the Germany , from its formation in May 1949 to German reunification in October 1990, when East Germany was dissolved and its States of Germany became part of the Federal Republic, ending the more than 40-year division of Germany....
, and it is known as Soziale Marktwirtschaft in German
German language

German is a West Germanic languages, thus related to and classified alongside English language and Dutch language. It is one of the world's world language and the most widely spoken mother tongue in the European Union....
.

In West Germany, the social market model was created and implemented by the Christian Democrat
Christian Democratic Union (Germany)

The Christian Democratic Union of Germany is a christian democracy and conservatism political party in Germany.Along with its Bavarian sister party, the Christian Social Union of Bavaria, the CDU forms the CDU/CSU faction in the Bundestag....
 Ludwig Erhard
Ludwig Erhard

Ludwig Wilhelm Erhard was a Germany politician and Chancellor of Germany of West Germany from 1963 until 1966. He is notable for his leading role in German postwar economic reform and Wirtschaftswunder, particularly in his role as Minister of Economics under Chancellor Konrad Adenauer after 1949....
, Minister of Economics under Konrad Adenauer
Konrad Adenauer

Konrad Hermann Josef Adenauer , 5 January 1876 ? 19 April 1967) was a Germany statesman.Although his political career spanned sixty years, beginning as early as 1906, he is most noted for his role as the Chancellor of Germany of West Germany from 1949?1963 and chairman of the Christian Democratic Union from 1950 to 1966....
's chancellorship and German Chancellor in his own right from 1963 to 1966.

Model

The social market economy seeks a mixed economic system
Mixed economy

A mixed economy is an economic system that incorporates a mixture of private and government ownership or control, or a mixture of capitalism and socialism....
 rejecting both socialism
Socialism

Socialism refers to a broad set of economic theories of social organization advocating public or state ownership and administration of the means of production and distribution of goods, and a society characterized by equality for all individuals, with a fair or Egalitarianism method of compensation....
 and laissez-faire
Laissez-faire

Laissez-faire is a term used to describe a policy of allowing events to take their own course. The term is a French language phrase literally meaning "let do"....
 capitalism
Capitalism

Capitalism is an economic system in which wealth, and the means of producing wealth, are private property and controlled rather than commonly, publicly, or state-owned and controlled....
, combining private enterprise with measures of the state to establish fair competition, low inflation
Inflation

In economics, inflation is a rise in the general price level of goods and services in an economy over a period of time. The term "inflation" once referred to increases in the money supply ; however, economic debates about the relationship between money supply and price levels have led to its primary use today in describing price inflatio...
, low levels of unemployment
Unemployment

File:World map of countries by rate of unemployment.pngUnemployment occurs when a person is available to work and currently seeking work, but the person is without Wage labour....
, good working conditions, and social welfare. Basically respecting the free market
Free market

A free market is a market that is free of government intervention and regulation, besides the minimal function of maintaining the legal system and protecting property rights, and is also free of private force and fraud....
, the social market economy is opposed to both a planned economy
Planned economy

A planned economy or directed economy is an economic system in which the government or workers' councils manages the economy. It is an economic system in which the central government makes all decisions on the production and consumption of goods and services....
 and laissez-faire capitalism. Erhard once told Friedrich Hayek
Friedrich Hayek

Friedrich August von Hayek Order of the Companions of Honour was an Austrian economist and philosopher known throughout the world for his defense of classical liberalism and free market capitalism against socialism and collectivism thought....
 that the free market economy did not need to be made social but was social in its origin.

In a social market economy, collective bargaining
Collective bargaining

Collective bargaining is the process whereby workers organize together to meet, converse, and compromise upon the work environment with their employers....
 is often done on a national level not between one corporation and one union, but national employers' organizations and national trade unions.

Important figures in the development of the concept include Franz Oppenheimer
Franz Oppenheimer

Franz Oppenheimer was a German sociologist and political economist, who published also in the area of the fundamental sociology of the state....
, Walter Eucken
Walter Eucken

Walter Eucken was a Germany economist and father of ordoliberalism. His name is closely linked with the development of the "social market economy"....
, Wilhelm Röpke
Wilhelm Röpke

Wilhelm R?pke was one of the most important spiritual fathers of the German social market economy.For R?pke , rights, moral habits , and social norms and values were decisive elements with which not the market, but the state and central bank continually need to be concerned....
, Franz Böhm
Franz Böhm

Franz B?hm was a German politician, lawyer, and economist.B?hm studied law in Freiburg, where he became professor in 1933. He was associated to the resistance movement in Nazi Germany and survived only because of a confusion of names....
 and Alfred Müller-Armack
Alfred Müller-Armack

Alfred M?ller-Armack was a Germany economist and politician.He was professor of economics at University of M?nster and University of Cologne....
, who originally coined the term Soziale Marktwirtschaft.

History

At first controversial, the model became increasingly popular in West Germany and Austria, since in both states economic success (Wirtschaftswunder
Wirtschaftswunder

The term describes the rapid reconstruction and development of the Economy of West Germany and Austria after World War II. The expression was used by The Times in 1950....
) was identified with it. From the 1960s, the social market economy was the main economic model in mainland Western Europe, pursued by administrations of both the centre-right
Centre-right

The centre-right is a politics term commonly used to describe or denote individuals, political party, or organisations whose views stretch from the centrism to the right-wing on the Left-Right politics, excluding far right stances....
 (usually led by some christian democratic
Christian Democracy

Christian democracy is a political ideology that seeks to apply Christian principles to public policy. It emerged in nineteenth-century Europe, largely under the influence of Catholic social teaching, and it continues to be influential in Europe and Latin America, though in a number of countries its Christian ethos has been diluted by secular...
 parties) and the centre-left
Centre-left

The centre-left is a politics term commonly used to describe or denote individuals, political party or organisations whose views stretch from the centrism to the left-wing on the Left-Right politics, excluding far left stances....
 (usually led by the most of social democratic
Social democracy

Social democracy is a political philosophy of the left-wing politics or centre-left that emerged in the late 19th century from the socialism movement and continues to exert influence worldwide....
 parties).

Southern European
Southern Europe

The term Southern Europe, at its most general definition, is used to mean 'all countries in the south of Europe'. However, the concept, at different times, has had different meanings, providing additional Policy, Linguistics and Culture context to the definition in addition to the typical Geography, Phytogeography or Clime approach....
 states preferred large-scale public services
Public services

Public services is a term usually used to mean Service s provided by government to its citizens, either directly or by financing private provision of services....
, high salary growth rates and a low unemployment rate over low inflation
Inflation

In economics, inflation is a rise in the general price level of goods and services in an economy over a period of time. The term "inflation" once referred to increases in the money supply ; however, economic debates about the relationship between money supply and price levels have led to its primary use today in describing price inflatio...
, low national debt, low public expenditure and other economic health policies.

The term “Social market economy” is still the common economic basis of most political parties in Germany and a commitment to some form of social market economy was present in the European Union Constitution
Treaty establishing a Constitution for Europe

The Treaty establishing a Constitution for Europe , commonly referred to as the European Constitution, was an international treaty intended to create a constitution for the European Union....
 (now in limbo following the referenda in France
France

France , officially the French Republic , is a country whose Metropolitan France is located in Western Europe and that also comprises various Overseas departments and territories of France....
 and the Netherlands
Netherlands

The Netherlands is a country that is part of the Kingdom of the Netherlands. It is a parliamentary democratic constitutional monarchy. The Netherlands is located in North-West Europe, and bordered by the North Sea to the north and west, Belgium to the south, and Germany to the east....
).

See also

  • Mixed economy
    Mixed economy

    A mixed economy is an economic system that incorporates a mixture of private and government ownership or control, or a mixture of capitalism and socialism....
  • Ordoliberalism
    Ordoliberalism

    Ordoliberalism is a school of liberalism emphasizing the need for the state to ensure that the free market produces results close to its theoretical potential ....
  • Social Market Foundation
    Social Market Foundation

    The Social Market Foundation is a United Kingdom public policy think-tank based in Westminster, London. It was set up by supporters of David Owen after the Social Democratic Party was disbanded in the late 1980s....
  • Note: The social market economy is not to be confused with the socialist market economy
    Socialist market economy

    A socialist market economy is an economic form that is practiced in the People's Republic of China, where it is called socialism with Chinese characteristics, as well as in Vietnam....
     - the economic system of the People's Republic of China
    People's Republic of China

    The People's Republic of China , commonly known as China, is the largest country in East Asia and the List of countries by population in the world with over 1.3 billion people, approximately a fifth of the world's population....
    .


External links

  • - U.S. Library of Congress