Social Market Economy and Universal Validity
Social Market Economy is universally applicable. e main nding of the
contribution is that economic progress in dierent countries can be attributed
to the implementation of the principles of Social Market Economy, which are
adapted to the political and economic landscape of the country in question.
Furthermore, the ‘New German Miracle’ in post-war Germany shows that
Social Market Economy can help a country in dicult times to increase
prosperity and to foster economic progress. Due to these arguments, the
concept can be applied worldwide. At the same time post-war Germany is in
itself an example of how badly an economy can stumble and stagger, once the
principles of social market economy are neglected and ignored. Germany’s
economy shrank only three times in post-war history: two times because of
irresponsible social, scal and economic policy on a national level between
1969 and 1982 and between 1998 and 2005 and once because of the subprime
crisis in 2008, again a consequence of ignoring market rules by ooding the
markets with cheap money and violating the principle of liability.
2. The Concept of Social Market Economy
e term “Social Market Economy” was rst coined by Alfred Müller-Armack
Social Market Economy is a market-based economic order, in which a
regulatory framework created by the State ensures economic competition and
the freedom of citizens. e main concern for Walter Eucken, founder of
the Freiburg School, was to have a “humane and functioning order” which
combines political and economic freedom (Kruber, 2002). e term “social”
of Social Market Economy refers to the functioning of the market itself.
e concept was rst promoted and implemented in West Germany by the
Christian Democratic Union under Chancellor Konrad Adenauer in 1949
Many scholars contributed to the dierentiation of Social Market Economy.
One has to mention proponents of ordoliberalism, such as Walter Eucken,
Franz Böhm and many of their students. Both are adherents of the Freiburg
School, which is a school of economic thought founded in the 1930s at the
University of Freiburg. Wilhelm Röpke and Alexander Rüstow, who were
advocating social humanism, were also contributing to the development of
social market economy.