social market economy


Without a planned economy, there is no way to ensure full employment.

Capitalism consistently operates under capacity. This means empty facilitates, full of productive machinery, while those who could operate it are unemployed.

That’s not an accident.

Competition for jobs drives wages down. If 1000 people are willing and able to fill one post, the employer can choose the cheapest from a large pool of workers, all undercutting the cost of each other’s labour to secure the job.

If there are only a handful of people to do a job, wages cannot be forced down as far.

Near-full employment would leave employers with a very small pool of potential workers, forcing wages to increase or stay the same.

The market drives unemployment, demanding the longest possible hours from the cheapest available labourers.

You know what astonishes me about the upcoming presidential elections in the US?

The fact that Bernie Sanders is considered a socialist.

In Germany, Sanders’s ideas of a more social market economy would be attributed to the social democrats, whose biggest party, the SPD, is not only the oldest and second most popular party in Germany but is also part of the government and many federal governments.

So what Germans - or Europeans - consider to be a perfectly normal policy is seen as revolutionary in the US.

This is not supposed to be a lecture of any kind. It just amazes me, and I think it shows how different our (political) mindsets are.


Robert Reich: 3 Biggest Myths Blinding Us to Economic Truth

Robert Reich breaks down the 3 biggest economic myths.

1. The “job creators” are CEOs, corporations and the rich, whose taxes must be low in order to induce them to create more jobs. Rubbish. The real job creators are the vast middle-class and the poor, whose spending induces businesses to create jobs. Which is why raising the minimum wage, extending overtime protection, enlarging the Earned Income Tax Credit, and reducing middle-class taxes are all necessary.

2. The critical choice is between the “free market” or “government.” Baloney. The free market doesn’t exist in nature. It’s created and enforced by government. And all the ongoing decisions about how it’s organized – what gets patent protection and for how long (the human genome?), who can declare bankruptcy (corporations? homeowners? student debtors?), what contracts are fraudulent (insider trading?) or coercive (predatory loans? mandatory arbitration?), and how much market power is excessive (Comcast and Time Warner?) – depend on government.

3. We should worry most about the size of government. Wrong. We should worry about who government is for. When big money from giant corporations and Wall Street inundate our politics, all decisions relating to #1 and #2 above become rigged against average working Americans. 

The major political parties in Germany
  • CDU / CSU: Christian Democratic Union (in Bavaria: Christian Social Union) is the major center-right party, based on christian-democratic and liberal-conservative worldviews as well as fiscal and national conservstism. It is decisively anti-communist, although elements of socialism were present when the party was founded after world war II. Five of the eight chancellors of Germany were members of the CDU. Its main achievements in post-war Germany were the integration of Western Germany into the western world, the establishment of a social market economy in Western Germany and the German reunion combined with European integration.
  • SPD: Social Democratic Party of Germany, the oldest political party originating from marxist parties rooted in the worker’s movements of the 19th century, supports now center-left policies within a capitalist system based on freedom, justice, and social solidarity. Social market economy is promoted as long as it supports a welfare state supporting the poor. A sustainable fiscal policy is aimed for. It is a party of civil and political rights in an open society. Three of the eight German chancellors were members of the SPD. Their main political achievements were the opening of West Germany towards the Eastern bloc states to start and intensify a dialog between the rivaling parties of the cold war aiming to overcome the division of Germany and Europe, as well as far-reaching reforms of the social system and labor market.
  • The Left Party was founded in 2007 by fusion of the Party of Democratic Socialism (PDS, direct successor of the autocratically ruling party of East Germany, SED), and the West German Electorial Alternative for Labor and Social Justice (WASG), a spin-off of the left wing of the SPD. The party aims to overcome the capitalist system, replacing it with a socialist economy. The ultimate goal is to overthrow the current property and power structures. Parts of the party are under surveillance by the domestic security service of Germany. The current minister president of the state of Thuringia is a member of the Left Party.
  • Alliance ‘90/The Greens originates from the anti-nuclear movement in West Germany. Its main focus is on alternative power generation and sustainable development. The party aims to restrict individual mobility and to increase costs for energy consumption in favor of environmental protection. The ultimate goal is to overcome the growth-oriented economy of our time. The current minister president of Baden-Württemberg is a member of Alliance ‘90/The Greens. They were part of the German government in a coalition with the SPD from 1998 to 2005.
  • Free Democratic Party (FDP) is a party of the political center, strongly supporting human rights, civil liberties, individual responsibility, internationalism, economic liberalism, and free markets. It is the party with the longest contribution to German governments, being in coalitions with the CDU from 1949 to 1953, 1961 to 1969, 1983 to 1994, and 2009 to 2013, and with the SPD from 1969 to 1983. Their most highly regarded politician is long-term foreign minister Hans-Dietrich Genscher, whose lifetime achievement was the initiation and deepening of the dialog between West and East during the final phase of the cold war, ultimately leading to the German reunion and the European integration. The party fell into disfavor with large proportions of its potential voters for its failure to assert its promise of a radical tax reform after the 2009 elections and for their pronounced support of privatizations of the public sector.
  • Alternative for Germany (AfD), originally founded in 2013 as a protest party against the Euro bailout policy during the Euro crisis, but has meanwhile turned into a right-wing populist party targeting the economically strained lower middle class. It is supporting direct democracy, dissolution of the Euro zone, is opposed to immigration and gay marriage and aims to strengthen traditional family patterns. Some major forces in the party openly express racist views. The party has seen a steep rise in popularity, replacing the CDU as the second-strongest political power in the recent elections in the state of Mecklenburg-Western Pomerania.