Politics and Government in Germany, 1944-1994: Basic Documents

By Carl-Christoph Schweitzer; Detlev Karsten et al. | Go to book overview

14
Economic and Social Policy

Detlev Karsten

T he economic system of the Federal Republic of Germany has always been market-oriented, whereas in the German Democratic Republic a socialist system with central planning and a dominance of state ownership of all larger firms was established.* With reunification, the economic system of the Federal Republic of Germany was extended to the new Länder.

In the Federal Republic of Germany, a conscious decision in favour of a market system was taken in 1948 when the planned economy with its fixed prices--the heritage of the war and of the extreme poverty of the post-war period--was abandoned. This economic system of the Federal Republic of Germany can be characterized as basically market- orientated, with strong government intervention mainly for social reasons. The underlying theoretical concept of the economic system was--and to some extent is--the neo-liberal idea of a 'social market economy'. The basic philosophy of this concept is that economic processes should be regulated by market forces rather than by state control. The market forces, however, can only operate to the best advantage if they are harnessed by a legal framework, the most important element of which is a law to protect competition. As the market forces attribute income only to those who also contribute to production, a social policy has to supplement the system. In Germany, the essence of social policy is seen on the one hand in a strategy which secures growth, prosperity and full employment in a situation of stable prices (the latter being considered an instrumental goal both for the functioning of the economy and also a precondition for an effective social policy). This policy is, on the other hand, supplemented by specific welfare measures in support of those who are unable to work, but which also aim at a reduction of economic inequality by helping the economically weaker persons. This mixture of economic and social policy, which also incorporates a legal strengthening of the position of the weaker party in economic conflicts (e.g. the tenant vis-à-vis the landlord, the worker vis-à-vis the employer), is considered to be conducive to social stability.1

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*
Notes for this chapter begin on p.426.

-401-

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Politics and Government in Germany, 1944-1994: Basic Documents
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Preface to the First Edition xv
  • Preface to the Second Edition xvii
  • Introduction xix
  • 1 - The Origins of The Federal Republic Of Germany, 1944-1949 1
  • 2 - Berlin 29
  • 3 - The Two Germanies 48
  • 4 - Germany Reunited 1989--Her First Successful Revolution, And a Peaceful One 76
  • 5 - Foreign Policy 108
  • 6 - Defence Policy and the Armed Forces 150
  • 7 - Parliamentary Democracy: The Bundestag 175
  • 8 - Political Parties 201
  • 9 - Chancellor, Cabinet, and President 239
  • 10 - The Judiciary 272
  • 11 - Basic Rights And Constitutional Review 297
  • 12 - Federalism: Bund and Länder 325
  • 13 - Public Opinion: Interest Groups and the Media 371
  • 14 - Economic and Social Policy 401
  • Statistical Tables 432
  • Glossary 446
  • Select Bibliography 449
  • Notes on the Editors 458
  • Index 460
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