The human content of social market economy

Over the years, in theoretical, but also more generally speaking, in political debate, many have wondered what the social content of the model of "social market economy" was and is: what distinguishes it from the market economy tout court. At this level of discussion, we may consider an interesting essay by the German economist Alfred Müller-Armack, entitled "The Human Content of Social Market Economy," recently published in the series "The Types" of the Italian publisher Rubbettino in the anthology "The Social Market economy and its Enemies."

In this paper, written in 1973,  Müller-Armack seems to oppose himself to a powerful "enemy" of the social market economy: the idea that a central guiding of the economy can be a more efficient means than the guide carried out by the classical indicators of a market economy: prices. Contrary to what even the most respected critics of the social market economy can imagine, the founders, and Müller-Armack in particular, (to whom we owe the very expression,) believed that freedom, security, and well-being, represent goals to be pursued, while willpower, motivation, and the desire to improve one's own conditions remain necessary for that pursuit.  These are essential elements to the development of an economy capable of authentically ensuring justice and individual freedom for all-a development that a central guide would unlikely be able to activate and guide.

In short, to overcome the social blocks and their immovability, for the widest possible participation in the economic success overall with an expansive perspective of the economy involving as many people as possible from various social groups, and for significant growth in real incomes, you need the classic conditions of a market economy-such as the maximum spread of private property rights and strong and independent institutions, that enforce contracts and promote social harmony.

To this end, Müller-Armack puts the company at the heart of a market economy that pursues social objectives, aimed at the pursuit of well-being as widespread as possible.  The company as a subject and idea can be summarized in the following points:

1. The company is not just a "technological black box" and a commercial unit, but a community of people.

2. It follows that the men working in the company may not be arranged by capital, or by technology, or by the organization. On the contrary, the technical and organizational requirements need to interface with the people who work within the company, with respect to their relational dimension, and their family needs, so as to correspond to the identity of persons at whose service the company has put itself, rather than the opposite.

3. On the other hand, the need for a strict discipline of a company and a clear responsibility to conduct it derive from the needs linked to the realization of technological and organizational efficiency, as well as from its dependence on markets and the relative productive purposes.

4. The company's function gives it a public responsibility (we could also call it a social responsibility) that, in addition to the typical character of the institutions of the private sector, raises some inevitable social obligation. We are referring in particular to large enterprise as a necessary tool for both the existence of its employees and their families, and also as an essential institution to the livelihood of the broader population, because of goods and services that it is able to produce daily, and, therefore, to offer.

This is the way in which the entrepreneur, the business manager, the merchant and the artisan pay the just claim of the maximum freedom of the modern economic order, despite a thousand difficulties that they seem to encounter. The tribute to the freedom that businessmen pay, in the perspective of social market economy, is a great responsibility towards civil society: its groups, its spontaneous initiatives, its rising up in favor of the marginalized, its promotion of a culture of freedom and responsibility, its resistance to the all-consuming claims of the state, and finally its strenuous defense of an institutional system that prevents and rightly sanctions corruption and saves us from the drift of indifference that homogenizes and makes everything blurry. That is the human content of the social market economy-its content is more "human," more "social" and, therefore, more "economical."


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