One of the most disputed issues in economics is whether market economic order could be harmonized with social elements in the market economic system. In this paper, this issue is discussed analyzing German social market economy, which is known as a va...
One of the most disputed issues in economics is whether market economic order could be harmonized with social elements in the market economic system. In this paper, this issue is discussed analyzing German social market economy, which is known as a variety of market economy. The extrem liberal thinkers like F. A. von Hayek deny the possibilities to harmonize the different elements of economic system. We cannot find, however, countries in which social elements are not added to the market economy. Moreover, the economy of ex-west Germany flourished, despite the high government expenditure for social welfare. The federal government of this country expends yearly about 30% of GNP for that.
Accordingly, it might file of interest to find out the main theoretical ideas upon which extremely different elements of system could and should be co-existed and harmonized. In this paper, they are discussed in the following four ways : (1) through not dichotomic but structual approach in analyzing and understanding an economic system, (2) with more comprehensive and dynamic interpretation about the meaning of the 'social', (3) in trying to establish the stability of employment and price, and (4) in the process of eliminating causes of market failure and curing its results.