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The Social Market Economy As a Formula for Peace, Prosperity, and Sustainability

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The Social Market Economy As a Formula for Peace, Prosperity, and Sustainability Kennesaw State University DigitalCommons@Kennesaw State University Doctor of International Conflict Management School of Conflict Management, Peacebuilding Dissertations and Development Spring 5-10-2021 The Social Market Economy as a Formula for Peace, Prosperity, and Sustainability Almuth D. Merkel Follow this and additional works at: https://digitalcommons.kennesaw.edu/incmdoc_etd Part of the Business Intelligence Commons, Data Science Commons, Economic Policy Commons, Ethics and Political Philosophy Commons, Graphics and Human Computer Interfaces Commons, Growth and Development Commons, Policy Design, Analysis, and Evaluation Commons, Political Economy Commons, Public Policy Commons, and the Social Policy Commons Recommended Citation Merkel, Almuth D., "The Social Market Economy as a Formula for Peace, Prosperity, and Sustainability" (2021). Doctor of International Conflict Management Dissertations. 39. https://digitalcommons.kennesaw.edu/incmdoc_etd/39 This Dissertation is brought to you for free and open access by the School of Conflict Management, Peacebuilding and Development at DigitalCommons@Kennesaw State University. It has been accepted for inclusion in Doctor of International Conflict Management Dissertations by an authorized administrator of DigitalCommons@Kennesaw State University. For more information, please contact [email protected]. THE SOCIAL MARKET ECONOMY AS A FORMULA FOR PEACE i Dissertation THE SOCIAL MARKET ECONOMY AS A FORMULA FOR PEACE, PROSPERITY AND SUSTAINABILITY Almuth D. Merkel Presented to: School of International Conflict Management, Peacebuilding and Development Norman J. Radow College of Humanities and Social Sciences Kennesaw State University In Partial Fulfillment of the Requirements for: Doctor of Philosophy in International Conflict Management Chair Dr. Marcus Marktanner Dr. Luc Noiset Dr. Jack Zheng Spring 2021 THE SOCIAL MARKET ECONOMY AS A FORMULA FOR PEACE Acknowledgements I would like to express my appreciation to those who made this dissertation possible through their outstanding support and dedication. The League of extraordinary Gentlemen and Gentlewomen I am deeply grateful to Dr. Marcus Marktanner for his unwavering support and belief in me. With intuition and sensitivity, you have introduced me to ‘my field’ and accompanied me beyond what I considered possible. I would like to express my sincere gratitude to Dr. Luc Noiset for stimulating discussions and rigorous proofreading, Dr. Jack Zheng for honest feedback and substantial contributions to my web programming and data visualization skill set, and Dr. Raimundo Soto for serving as an advisor on my dissertation and always offering valuable input. My special thanks go to the faculty of KSU’s Economics, Finance, and Quantitative Analysis (EFQA), and Information Technology Departments. Dr. Brett Katzman has always had an open ear and made the EFQA department my intellectual home. Drs. Tim Mathews and Ben Scafidi supported me with summer research grants that allowed me to invest time in my coding and programming skills. Drs. Aniruddha Bagchi and Jomon Paul offered me opportunities to gain experience in presenting at brown bag seminars and symposiums. My first steps into the programming world were guided by Dr. Ming Yang. The generous flexibility of every instructor teaching courses for the Data Management and Analytics Certificate, especially Dr. Chi Zhang, enabled me to conduct research relevant for this dissertation. Your endless support allowed me to take roots in academia and to work on an multidisciplinary dissertation topic. Lastly, I would like to acknowledge my family and friends for being the ‘life’ in my work- life balance. Your positive energy kept me moving forward. THE SOCIAL MARKET ECONOMY AS A FORMULA FOR PEACE iii Thesis/ Dissertation Defense Outcome THE SOCIAL MARKET ECONOMY AS A FORMULA FOR PEACE iv Abstract The social market economy was developed in Germany during the interwar period amidst political and economic turmoil. With clear demarcation lines differentiating it from socialism and laissez- faire capitalism, the social market economy became a formula for peace and prosperity for post WWII Germany. Since then, the success of the social market economy has inspired many other countries to adopt its principles. Drawing on evidence from economic history and the history of economic thought, this thesis first reviews the evolution of the fundamental principles that form the foundation of social-market economic thought. Blending the micro-economic utility maximization framework with traditional growth theory, I provide theoretical support that aggregate social welfare is maximized in a stylized social market economy. Despite the presence of extensive qualitative research, no attempts have yet been made to measure social market economic performance empirically or to quantify the effects of social market economic principles on peace and prosperity. Thus, I explore potential indicators to develop a social market economic performance index. I provide empirical evidence that supports the notion that the application of social market economic principles carries a social peace dividend, creates more equal opportunity, promotes ecological sustainability, and generates higher per capita incomes. I use the empirical results to build an interactive web application that allows for the simulation, assessment, and visualization of the economic-performance effects of applying social market economic principles to the economies of 165 countries. Lastly, the interactive web application also allows for modification of the social market economic principles and reports the estimated impact on peace and prosperity in these countries. Key Words: Social market economy, conflict economics, economic impact study, public policy simulation, conflict, equitable socio-economic development, ecological sustainability, data visualization, data storytelling, web application. THE SOCIAL MARKET ECONOMY AS A FORMULA FOR PEACE v Table of Contents Acknowledgements ................................................................................................ ii Thesis/ Dissertation Defense Outcome ................................................................. iii Abstract ................................................................................................................. iv Table of Contents .................................................................................................... v List of Tables ........................................................................................................... x List of Figures ..................................................................................................... xiii Introduction ........................................................................................................... 1 Literature Review ................................................................................................... 5 Social Market Economy – Definition, Origin, Context, and Schools ......................................... 5 Economic History as a Social Market Economic Pillar .............................................................. 9 Mercantilism ........................................................................................................................... 9 Industrial Revolution and First Globalization Wave ............................................................. 12 Societal Change. ................................................................................................................. 12 Political Change. ................................................................................................................ 13 Economic Change. ............................................................................................................. 14 Anti-Competitive Practices. ............................................................................................... 15 Lessons Learned. ............................................................................................................... 16 The Interwar Period ............................................................................................................... 16 Humanistic Pillars of a Social Market Economy ....................................................................... 18 The Idea of the Human Being ................................................................................................ 18 The Idea of Justice ................................................................................................................ 24 THE SOCIAL MARKET ECONOMY AS A FORMULA FOR PEACE vi The Role of the State ............................................................................................................. 26 The Economic Principles of a Social Market Economy ............................................................ 30 State-Constitutional Principles .............................................................................................. 31 State-Political Principles ....................................................................................................... 34 Market Organizational Principles ......................................................................................... 35 Market Failure Correcting Principles ................................................................................... 36 Leitbild – A Summary ..............................................................................................................
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