Against the backdrop of the COVID-19 pandemic, we are well advised to recall the basic principles of economic success.
In recent months, many countries have introduced enormous stimulus packages to help their economies overcome the devastation caused by the COVID-19 crisis. In Germany, the government made available emergency funds, created sector-specific relief programmes, and implemented demand stimulus measures such as a temporary reduction in the sales tax rate.
The dramatic economic crisis required quick and decisive action – even though the efficiency and efficacy of some of the measures is debatable. The drastic curtailments of movement and commerce, aimed at slowing the spread of the virus, caused devastating damage to companies and entire sectors on instruction of the state.
Under these conditions, it would have been unconscionable not to put in place relief measures. But unfortunately, the abundance of interventions appears to have rekindled Germany’s fatal attraction to state intrusion and interference.
The crisis has led some people to believe that the state can act as a universal saviour, and that it should take charge in as many areas of the economy as possible. The basic principles of the social market economy, which to this day play an important role in Germany, seem to be fading from memory.
We are, therefore, well advised to recall the principles that made Germany’s economic order a success over the past 70 years. Not least because the latest restrictions imposed during the winter of 2020/2021 mean that we are confronted with the task of getting the economy going in 2021.
It is against this background that the expert report on the Success Factors of the Social Market Economy summarizes the historical development of the social market economy in Germany and its fundamental principles. Of course, a modern economic order has to look different to what it would have been 70 years ago.
Trends such as globalization and digitalization require changes in the framework conditions. But in my view, the basic regulatory principle that the state should be the referee, with private market participants the players, continues to be the right approach for successful economic politics in the 21st century.
It remains true even after the Corona crisis that the state is not the better entrepreneur. And even in the 21st century, we have to generate wealth before we can distribute it.
With this in mind, we should look back to the successful years of the economic miracle – the German Wirtschaftswunder – to draw lessons for the impending restart of our economy.
The expert report is available in English at: https://shop.freiheit.org/#!/Publikation/940