Social Market Economy - Main Elements

Main Elements

The main elements of the Social Market Economy in Germany are basically:

• The Social Market Economy contains the central elements of the free market economy such as private property, free foreign trade, exchange of goods, and free formation of prices.

• The government implements policies that are designed to remedy some of the problems of the free market economy. One of these policies is the establishment of a social security system that includes pension insurance, health care and unemployment insurance. Members of the labor force pay into the social security system, providing it with its main source of revenue. Other policies of the social market economy are designed to restrain the free market (antitrust laws, laws against the abuse of market power, etc.).

• Some prominent authors (Werner Abelshauser, Bernd Rüthers) also regard social partnership as a key element.