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Germany's Social Market Economy and the New Systems Competition

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Abstract

World championship in exporting manufactures notwithstanding, weak gross domestic product (GDP) growth and the largest number of unemployed since the 1930s have tarnished the splendor of Germany’s once celebrated social market economy (SME). In search of the reasons for their country’s present mediocrity, contemporary (ordo-) liberal German economists point to construction defects in the economic constitution that escaped the attention of the founders of the SME. This article reviews the legacy of the father of the SME as well as the liberal critique of the evolution of the SME in postwar Germany under the old systems competition (OSC) between capitalist West and communist East. The liberal white hope, that is the new systems competition (NSC), ensued by European integration and globalization, is presented as a mechanism for overcoming national policy blockades in reforming (labor) market institutions in accordance with the common socioeconomic preferences of all citizens.

Karl Farmer, "Germany's Social Market Economy and the New Systems Competition," Journal of Markets & Morality 9, no. 2 (Fall 2006): 317-336


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