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Chancellor Helmut Kohl Celebrates the Success of the Social Market Economy (October 25, 1989)

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There was also a time, however, when the achievements of the postwar period had become such a matter of course that the regulatory foundations of our economic and social order were almost forgotten.

Why – we must ask when looking back on the 1970s – wasn’t our society more successful in managing the oil crises and structural change and in preventing the emergence of lasting high unemployment? How was it possible that so many people who considered themselves the “more social” democrats so persistently underestimated the dire effects of inflation on economic growth and employment? Part of the answer is the sobering realization that the state cannot, in fact, control business cycles and the economy to the extent that some people had claimed.

Against this backdrop, the economic crisis at the beginning of the 1980s brought about at least two things: on the one hand, it forced us to become more modest in our expectations of what state economic policy can directly achieve beyond shaping the basic conditions [of the economic environment]. On the other hand, it hastened a return to that which had already proven successful in a perilous situation once before – namely, resolute policy in the spirit of Ludwig Erhard. In concrete terms, that means:

– Monetary stability as a priority
– Sound public finances
– Performance before redistribution
– Prosperity for all: that is, for employers and employees, and
– The protection of our environment, which is much more urgent today than it was forty years ago


The tangible results of this policy since 1982 have again proven the effectiveness of the Social Market Economy.

– We are now seeing the longest and most stable upward economic trend in the postwar period. In real terms, the gross national product in 1989 will be about twenty percent higher than it was in 1982. And the upswing will continue in 1990, that is, for the eighth year in a row. The leading economic research institutes also assume this in their most recent forecasts.

– More than 1.25 million new jobs have been created since unemployment peaked in 1983. That means: at 27.8 million we have never had as many jobs as we do today.

– Unemployment is declining, despite the fact that the labor supply has skyrocketed.

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