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Principles of the "Social Market Economy" (December 19, 1962)

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Confusion has arisen as a result of its similarity to neoliberalism. Therefore, it is not surprising, but still totally incorrect, that, for instance, the Dominican priest Father Nawroth viewed the Social Market Economy as a mere variant of neoliberalism in his comprehensive analysis of the philosophical foundations of the new liberalism.* The similarity to neoliberalism need not be denied; we owe it countless important impulses, but whereas neoliberalism views the machinery of competition as the sole principle of organization, the idea of the Social Market Economy finds its roots elsewhere. Those roots lie in the dynamic theory developed in the 1920s, in the philosophical anthropology of the 1920s, in a different view of the state, and in the further development of the concept of a style, which is usually rejected by neoliberalism. The coordinated functions of the Social Market Economy do not lie exclusively in the mechanical rules of competition. The organizational principles relate to the state and society, both of which express their value norms and responsibilities in the overall system of the Social Market Economy.

The Social Market Economy is not exclusively a theory of competition. It may best be described as a stylistic concept, in the sense that the Social Market Economy seeks a stylistic coordination between the spheres of life represented by the market, the state, and social groups. Its approach is thus as much sociological as economic, as much static as dynamic. It is a dialectical concept in which social objectives are given as much weight as economic ones; it therefore combines economic and social policies in one.

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Let us take a closer look at this. Our society is an entity in which some groups strive more for freedom and others more for social security, an entity in which all are interested in growth, but only to the extent that their private milieu is not disturbed too much. As is often the case in monetary and foreign trade theory, we might also speak of a magic triangle whose corners represent the goals of personal freedom, economic and social security, and growth. In the past, these opposing goals have given rise to situation of social conflict because each tried to assert itself at the expense of others. This led to extreme forms of radical liberal or radical interventionist social goals but also to the escape route of rigid adherence to inherited forms or to an unsystematic mixture of all principles, as in interventionism.

The Social Market Economy is not a philosophy about the fundamental values of our society. It leaves that to the system of norms by which judgments are made from a religious or philosophical perspective. Instead, it is an irenic notion of order, a strategic idea within the conflict of different goals and perspectives. It is a stylistic formula through which an attempt is made to bring the essential goals of our free society into a new practical balance that has never before been realized in the course of history.

* Egon Edgar Nawroth, Die Sozial- und Wirtschaftsphilosophie des Neoliberalismus (Sammlung Politea series, publications of the International Institute for Social Sciences and Politics, University of Freiburg, Switzerland, ed. F. A. Utz, vol. 14). Heidelberg: Löwen, 1961.

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