SMEs in the idea of Ludwig Erhard’s Social Market Economy

Matthias Schäfer Head of Team Economic Policy Konrad-Adenauer-Foundation, Berlin

4 The „Entrepreneur“ in the eyes Ludwig Erhard

Matthias Schäfer

Head of Team Economic Policy [email protected]

Schmöckwitz, 22 August 2018 www.kas.de Content

› Ludwig Erhard and the model of Social Market Economy

› The role of entrepreneurship in a Social Market Economy:

The „honourable“ entrepreneur

› The current situation of entrepreneurship in Germany The „Entrepreneur“ Ludwig Erhard

› 4 February 1897 – 5 May 1977

› 1949-1963 Minister of Economic affairs

› Chief architect of the „Social market economy“ and the „economic miracle“

› 1963-1966 Chancellor of West Germany

The „Entrepreneur“

7 © Bundesarchiv The social market economy

› Is based on „free entrepreneurship“

› Has an economic and socio-political function

› Regulatory Policy instead of Planned Economy

The „Entrepreneur“

8 © Bundesarchiv Economic Models after WW II

Laissez-faire liberalism Socialistic Centralised Economies e.g.: UdSSR e.g.: : USA

1. Socialism will always fail!! 2. Capitalism (understood as laissez-faire liberalism) is curable!! The social market economy

How to cure capitalism? Keynesian thinking: • Public intervention during an ecomimic crises via fiscal policy or monetary policy • Public withdrawing in times of ecomic upsing

Ordoliberal thinking of founding fathers of Social Market Economy (Walter Eucken, Freiburg School of Economics): • Public framework for the markets (automatic stabilisation in opposition to market intervention) • Role of the state as a referee • Public intervention only in cases of market failure and in market conform ways The social market economy

› Is based on „free entrepreneurship“

› Has an economic and socio-political function

› Regulatory Policy instead of Planned Economy

The „Entrepreneur“

11 © Bundesarchiv The social market economy

The „Entrepreneur“

12 The honourable Entrepreneur

› Autonomous

› Liability: › He`s responsible for both gains and losses

› Has a personal stake in his enterprise

› Responsible for Product Development and Innovation

› Acts independently of government control The › Is either owner (personal enterprise) or manager (managerial enterprise) „Entrepreneur“

13 The current situation of Entrepreneurship in Germany

The „Entrepreneur“

14 The amount of SME is high and dynamic

The „Entrepreneur“

© Statistia, chart 1: KAS 15 The amount of managers increases with the size of an enterprise

The „Entrepreneur“

© BMAS 16 Few innovative SMEs

The „Entrepreneur“

17 © Statista In average, self-employers earn more but their salaries differ

Employees

Self-employment

Solo self- Self-employment with employees employment

The „Entrepreneur“

Salary per month (€)

18 SMEs are mainly responsible for apprenticeship

The „Entrepreneur“

19 © KFW Research Thank you for your attention!

Find more information on http://www.kas.de/ The „Entrepreneur“

20