The social market economy was an important factor in Germany’s remarkable
success after the Second World War. As a concept, it attempts to strike a
balance between market forces and the political desire to serve the common
good. As a system, it is geared towards inclusion. The idea is for as many
people as possible to be able to benefit from social and cultural life, from the
labour market and from consumption.
Economic and social needs are kept in balance by the following mechanisms:
an independent and liberal legal system, a market system driven by competition
and openness, a social partnership between management and unions, a welfare
system to reduce social disparity, and democratically legitimate parties that
reconcile various needs and interests through the democratic process. The
resulting economic and social system is robust yet flexible and is the envy of
many other countries.