Social Market Economy and Sustainable Development

This paper emphasizes the fact that it is necessary to ensure a balanced use of principles harmonizing all factors of production in order to provide sustainable economic development based on them. In general, economic development means improving the systematic, lasting and wide mass of the material conditions of life, representing the consumption conditions: food, clothing, housing, housing facilities, transport, communications, access to services and others. Such a common approach is adequate as it correctly expresses people’s expectations, as consumers in economy. However we can define economic development as a process resulting in the systematic growth of labour productivity or - given the circumstances in which the number of employers (or job providers) increases - the increase of the number of productive jobs. This approach does not contradict the first one; on the contrary: the systematic improvement of economic living conditions is not possible without the growth of labour productivity. The advantage of the second napproach is that it refers to the most important force leading to the improvement of the living conditions for people as consumers and it forces us to consider phenomena this force depends on.Social market economy, an expression of Ordoliberalism1, (“Soziale Marktwirtschaft”) has turned from a”theoretical paradigm”2 (“Ordnungstheorie”)3 into public policy („Ordnungspolitik”); afterwards it has become an economical system which influenced Germany’s development after World War II. Pressured by Marxism on the one hand and Keynesianism on the other hand, Germany chose in 1949 a “regulatory policy” which sought to combine, based on a competitive economy, “free enterprise and social progress” (Alfred Müller-Armack). This is the description of social market economy.Social market economy is not “the third way” because Ordoliberals have not made concessionsto socialism; however, it is neither a combination of liberalism and Keynesianism4, nor laissez faire. Population aging is a phenomenon that should be considered when analysing demographic development because it affects economic development as well. Therefore reforming public pensions, health and long-term care for the elderly is to be considered. The speed of this process is also important because when the share of elderly in total population increase in a short period of time, it becomes difficult for the relevant institutions to adapt rapidly.