The social market economy seeks a middle path between socialism and capitalism and aims at maintaining a balance between a high rate of ecomomic growth, low in flation, low levels of unemployment, good working conditions, social welfare, and public services, by using state intervension.
Basically respecting the free market, the social market economy is opposed to both a planned ecomomy and laissez-faire capitalism. Erhard once that the free market economy did not need to be made social but was social in its origin.
In a social market economy, collective bargainning is often done on a national level not between one corporation and one union, but national employers' organizations and national trade unions.
The Union shall work for the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment.
Which economies are mixed?
There is not a consensus on which economies are capitalist, socialist, or mixed. It may be argued that the historical tendency of power holders in all times and places to limit the activities of market actors combined with the natural impossibility of monitoring and constraining all market actors has resulted in the fact that, as we understand a "mixed economy" being a combination of governmental enterprise and free-enterprise, nearly every economy to develop in human history meets this definition.
Monday, December 10, 2007
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