Although Germany has the third largest economy in the world, it suffers from rising unemployment, massive capital flight and a growth rate approaching zero. These problems can be traced to the beginnings of the Federal Republic, writes Norman Barry, a professor of social and political theory.
Following World War II, Germany’s economy was resurrected by Ludwig Erhard, an obscure economics professor in a minor government post. Erhard’s revolution contained two conflicting strains of thought that began harmoniously: liberalism and the social market. Ultimately, though, one triumphed and it was the wrong one.
“Ordoliberalismus” was clearly free-market.
of the ordered market economy.
to preserve freedom.
“Sozialemarktwirtschaft” (social market economy), on the other hand, emphasized social consensus over economic freedom achieved, for example, by having union representatives on every corporate board. It worked well for awhile; Germany, for instance, did not experience the crippling labour strikes of Britain. Unfortunately, the social market thinkers had a much broader agenda.
Today, the social market thinkers have won.
Perhaps the biggest mistake of the free-market advocates was the failure to make their reforms constitutionally permanent.
Source: Norman Barry, Germany must rediscover the market, Financial Times, January 23, 2003.
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Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety.
Benjamin Franklin
