The basis of our prosperity was the principle of the social market economy. As a result of the politics of the past few years, the social market economy is increasingly being equated with more and more social benefits – but that is wrong.
A lot is wrong in Germany. Nevertheless, we are still in a good position in an international comparison. We do not owe this to a state bureaucracy that claims to know better what people need. The basis of our prosperity was the principle of the social market economy, the almost ingenious combination of economic performance and social security, of a competitive economy and the welfare state.
But do Germans even know the principles according to which our economy works? At first glance yes. “Trust in the social market economy is higher than it has been for a long time. 54 percent of people have a good opinion of the German economic system. That’s more than twice as many as in 2005, when only 25 percent of citizens said so,” the “Frankfurter Allgemeine” rejoiced in the spring of this year.
The newspaper referred to a survey by “Allensbach”. The pollsters also found out that only 18 percent of Germans fundamentally question our economic system.
However, support for the market economy is not as great as these figures suggest. Because the majority does not understand the social market economy to be the same as market-oriented economists and entrepreneurs. For the Germans, the social market economy focuses on something completely different: fairness, redistribution and social security.
This is what the “Ludwig Erhard ifo Center for Social Market Economy and Institutional Economics” in Fürth found out in a survey. According to this, a third of citizens (34 percent) primarily associate efficiency with the economic system. But most (49 percent) think more of social aspects.
The head of the Ifo Center, Sarah Necker, comments: “This tunnel view of the social market economy can explain many political decisions that strive for a stronger welfare state and ignore the effects on the economy, such as raising the minimum wage to 12 euros.”
Two partial results of this survey are particularly striking: Older respondents have internalized the original idea of the social market economy to a greater extent than younger ones. And: A higher level of education in no way leads to considering both aspects of the social market economy, namely “market aspects” and “social aspects” to be equally important.
If people increasingly equate the social market economy with more and more social benefits, this is the result of the politics of the past decades. In the Merkel era, the CDU, Ludwig Erhard’s party, entered into a socio-political bidding war with the Social Democrats. The Social Democrats, on the other hand, wrote “social” very large and “market” increasingly small, but undeterred invoked the social market economy, which was viewed positively by the population.
Characteristic of this partisan strategy was a keynote speech given by the then SPD chairman and Federal Economics Minister Sigmar Gabriel in early 2014. Gabriel: “If we now enforce minimum wages, regulate agency and temporary work and work contracts, make more money available for care and pensions, then that strengthens the social aspect in our market economy.”
And he added that he considered the associated burdens on the German economy “appropriate and justifiable”. The primacy of the social cannot be emphasized more clearly.
With the social market economy, Ludwig Erhard aimed for a society of self-confident citizens. His goal: “So that the individual can say: I want to prove myself through my own efforts, I want to bear the risk of life myself, want to be responsible for my own fate”. The market had priority at Erhard: what is not developed cannot be distributed.
But for his grandchildren in the Union as well as for the Social Democrats, the model has long since ceased to be the independent citizen, but the cared for. Distributing or redistributing often comes before working out.
The programs and policies of the three grand coalitions (2005-2009, 2013-2018, 2018-2021) breathed more of the redistribution mentality of the social-liberal 1970s than of Erhard’s spirit. As a result of the corona pandemic, the energy crisis and inflation, black and red and then the traffic light have constantly switched to more state and less market.
If today only a minority of citizens in the social market economy sees anything other than ever new social benefits, it shouldn’t really come as a surprise. People consider what politics is currently offering them to be a social market economy, not Erhard’s principles. “The fat man with the cigar” would turn away in horror if he had to experience that.