At the end of the Second World War, the major mission in Germany was to better the living conditions of people and to put up a new nation and a new economy. Debate arose between the socialistic group on one hand and the capitalistic group on the other, on how these issues will be undertaken. As a result, the Social Market Economy was introduced in Germany by Ludwig Erhard. This model is based on the economic view point of Ordoliberalism which was being advocated for by Freiburg School of thought, (Kees, 1995, pp.45-47). The term ‘Social Market Economy’ was coined together by Andreas Muller-Armack and Walter Eucken.
James (2004, pp. 27-30) asserts that, Social Market Economy was a blend between capitalism laissez-faire and socialism market economic system. As such, the major objectives of Social Economy Market were economic aspects as well as freedom and social justice. The three are; individuality principle which focus on the open-minded ultimate of individual freedom, solidarity principle which asserts that individuals are rooted into a society of reciprocated reliance which require to overcome injustice, and lastly, the subsidiary principle which refers to an institutional decree to model the connection between solidarity and individuality, Michael (2002, pp 3-5).
Finally, according to Robert & Jean (2001, pp 34-39), the Social Market Economy came to be accepted widely in West Germany and Austria. Admittedly, in the 1960s the model was the core economic model in Western Europe which was observed by both the centre-left and the centre-right. To-date, this model is forms the universal economic foundation of political parties in Germany.
James, C. V., Rebuilding Germany: the Creation of the Social Market Economy, 1945-1957.
Cambridge: Cambridge University Press, 2004.
Kees, V. K. Social Capitalism: a study of Christian Democracy and the Welfare State. New
York: Routledge, 1995.
Michael, R. The German Social Market Economy and its Transforms, 2002. Retrieved on 21st
March 2011 from http://tiss.zdv.uni-tuebingen.de/webroot/sp/spsba01_W98_1/germany1b.htm
Robert, G. & Jean, M. G. Global Political Economy: Understanding the International Economic
Order. Washington, DC: ABC Press, 2001.