Social Market Economy History, Principles and Implementation – From A to Z Social Market Economy History, Principles and Implementation – From A to Z Edited by Rolf H. Hasse, Hermann Schneider & Klaus Weigelt English edition © 2008 Ferdinand Schöningh, Paderborn, Germany All rights reserved While copyright in this publication as a whole is vested in Verlag Ferdinand Schöningh GmbH, Paderborn, Germany, copyright in the text rests with the individual contributors, and no section may be reproduced in whole or part without the express permission, in writing, of both the con- tributors and the publisher. It should be noted that any opinions expressed are the responsibility of the individual contributors and that Ferdinand Schöningh does not necessarily subscribe to the opinions of contributors. ISBN: 978-0-9802543-7-2 Produced by: Konrad-Adenauer-Stiftung 60 Hume Road Dunkeld 2196 Johannesburg Republic of South Africa PO Box 55012 Northlands 2116 Johannesburg Republic of South Africa Telephone: (+27 +11) 214-2900 Telefax: (+27 +11) 214-2913/4 E-mail: [email protected] www.kas.org.za Translator: Vera Leckie Language editors: Tracy Seider and Richard Proctor-Sims Layout and production: Tyrus Text and Design, South Africa Printing: Paarl Print, South Africa First published in German: Lexikon Soziale Marktwirtschaft – Wirtschaftspolitik von A bis Z ISBN 3-506-97018-6 © 2002 Verlag Ferdinand Schöningh GmbH, Paderborn, Germany Second updated and extended edition, 2005 The editors Prof. Dr Rolf H. Hasse was born in Berlin in 1940. He completed his undergrad- uate studies in economics in Münster, Westphalia and Cologne. Hasse graduated in 1967 and completed his doctorate (1973) and post-doctoral qualification (1981) in Cologne. From 1981 to 1998 he was Professor of Economics, in particular econom- ic policy, at the University of the Federal Armed Forces in Hamburg. Hasse was at the University of Leipzig from September 1998 to March 2006. Since March 2006 he has been acting manager of Fraunhofer-Zentrum für Mittel- und Osteuropa (MOEZ), Leipzig. His main focus of research and publications include economic policy, international business relations and European integration. Dr Hermann Schneider was born in Niederwalgern (near Frankfurt) in 1940. He completed his undergraduate studies in economics in Frankfurt and Marburg. After graduation he became a research assistant in Marburg, concentrating on economic policy. Schneider’s doctorate focused on development policy. He became a research assistant for the Konrad-Adenauer-Stiftung (KAS) both in Germany and abroad. Schneider was the KAS national representative in Colombia (1977–1982), and director of the Science Project for Latin America (Buenos Aires) (1988–1994), where he was able to focus on socio-economic institutional order policy issues. Schneider was the KAS national representative in Chile from 1994 to 1996. Dip Vw (Master in Economics) Klaus Weigelt was born in Königsberg, Prussia, in 1941. He is an economist (Freiburg), and since 1971 he has been a KAS research associate both in Germany and abroad. Weigelt was director of the KAS Academy for 11 years (1981–1992), KAS national representative in Caracas, Venezuela (1975–1981), director of the KAS European Office in Brussels (1992–1998), and director of the KAS foreign branch in Budapest, Hungary (2002–2007). The main focus of his publications is institutional order policy and economic ethics in the social market economy. 7 Preface fter half a century of economic policy under the banner of the social market economy, the vast majority of Germans have accepted this as their country’s Aeconomic order. This is particularly due to the consistent implementation of the institutional order (Ordnungs) concept and the resulting rapid economic and social successes in the initial phases of the Federal Republic. However, insight into the context and functioning of the social market economy has declined considerably over the years, while its interpretation has become highly arbitrary. Vital institu- tional order policy principles of the social market economy have thus been diluted beyond recognition. In public debate the social market economy has become almost an empty formula that is used by all and sundry. In this way, the model of the social market economy has become an example of the continuation of an idea, even though its fundamental principles are often flawed in their implementation and its core is under threat. Economic policy in Germany is faced with enormous problems. At present, neither its economic aims nor its social aims are being satisfactorily achieved. Unresolved problems range from long-term unemployment to increasing demands on the welfare system, the dangers of renewed inflation and the unanswered ques- tions relating to an economic policy in a European context, as well as the worldwide challenges of globalisation, environmental problems and poverty. The social market economy in its conceptual form can offer answers to these questions and problems; however, these answers have become obscured, with the result that they are no longer clearly visible and are therefore not sufficiently used. The German and European economic policies are looking for direction and are currently going through an institutional order policy crisis. The aim of this volume is to clarify the concept of the social market economy in terms of economic and social policy and its political implementation. On the one hand, it is an attempt to retrace the origins and basic principles of the social market economy. On the other, it presents the different forms of social market economy, the need for adaptation in the light of recent challenges, the objections to social market economy and its prospects as a future economic and social system. The book is aimed at the younger generation, which has the impartiality, openness and critical attitude necessary for implementing reforms, as well as an openness to conceptual orientation. The editors and contributors have tried to summarise the essential aspects in short articles and to formulate the sometimes difficult factual issues in comprehensible 8 Preface language. Cross-referencing makes the book more user-friendly, while a glossary is included for the explanation of specialised terms and their relevance. In terms of work on the original German version, the editors are particularly grateful to Prof. Dr Hans Willgerodt for his suggestions regarding the conceptual unity of this work, to Marina Ignatjuk for her diligent work in coordinating and editing the contributions, and to Wolfgang Reeder for selecting the illustrations and diagrams. The editors would like to thank all the contributors for their punctual and diligent work. Particular thanks go to Joachim Hummel who managed and coordinated the complicated task of editing the original German second edition. Furthermore, we would like to thank the staff of the Institute for Economic Policy at the University of Leipzig and the Konrad-Adenauer-Stiftung (KAS) in St. Augustin, which have both contributed to the book’s success in many ways. This english version is based on the second edition (2005) of the original German work, with updates where relevant. At a time of international upheaval of institu- tions and structures, its content responds to the lively interest in this subject as well as providing invaluable information on institutional order policy (Ordnungspolitik). Regarding this English version, we must acknowledge the translator Dr Vera Leckie and the English language editors Tracy Seider and Richard Proctor-Sims for their diligence and commitment to this challenging task. The editors would also like to thank the KAS Johannesburg office staff for their constructive collaboration in producing the English version of this book. KAS head office deserves thanks for its immediate and positive response to the idea, for its encouragement and support while the work was in progress, as well as for provid- ing the necessary funds. Rolf Hasse Hermann Schneider Klaus Weigelt Leipzig Bonn Budapest 9 Contents Alphabetical list of biographies and themes 11 Biographies 27 Themes 79 Glossary 477 Sub-division of themes 495 Abbreviations 503 List of tables, figures and other illustrations 505 List of contributors 507 Index Biographies and other personalities 515 Themes 517 Appendix Selected German economic research and advisory institutions 530 11 Alphabetical list of biographies and themes Biographies Beckerath, Erwin von 27 Norbert Kloten Böhm, Franz 29 Ulrich Immenga Briefs, Goetz A. 30 Anton Rauscher Dietze, Constantin von 31 Nils Goldschmidt Einaudi, Luigi 32 Hans Willgerodt Engels, Wolfram 33 Rolf H. Hasse Erhard, Ludwig Wilhem 34 Rainer Klump Eucken, Walter Kurt Heinrich 36 Lüder Gerken Frickhöffer, Wolfgang 39 Joachim Starbatty Hayek, Friedrich August von 40 Gerd Habermann Hensel, K. Paul 42 Gernot Gutmann Höffner, Joseph Kardinal 43 André Habisch 12 Alphabetical list of biographies Kamitz, Reinhard 45 Wolfgang Schmitz Karrenberg, Friedrich 47 Martin Honecker Lutz, Friedrich August 47 Verena Veit-Bachmann Meyer, Fritz W. 49 Helmut Gröner Miksch, Leonhard 50 Heinz-Dieter Smeets, Michael Sket Müller-Armack, Alfred 52 Friedrun Quaas Nell-Breuning, Oswald von 53 Lothar Roos Nipperdey, Hans Carl 57 Hans-Jürgen Papier Röpke, Wilhelm 58 Hans-Günter Krüsselberg Rueff, Jacques 60 Josef Molsberger Rüstow, Alexander 63 Jan Hegner Schiller, Karl 65 Egon Tuchtfeldt Schleyer, Hanns-Martin 67 Franz Schoser Schmölders, Günter 67 Horst Zimmermann Schreiber, Wilfrid 68 Heinz Lampert Alphabetical