Social market economics revisited

Purpose - The socioeconomic as well as the political world has undergone significant changes, challenging the meaning and validity of economic and political paradigms. This treatise highlights that Eucken's paradigm of a “social market economy,” with its structural and regulating principles, needs to be modified to account for changing strategic factors. Design/methodology/approach - No economic theories, however relevant in the past, hold true for all time. This is verified by the dynamics of change as indicated by Hegelian dialectics, functionalism and structuralism, as well as by quantum theory. Findings - National economies have become linked in the widening web of the global economy, exemplified, for example, by the European Union, the Euro Bloc, NAFTA, WTO, as well as by other trading arrangements. Enterprises have developed a global orientation, internationalizing their products and services, encouraging labor and capital to move instantaneously among industrialized countries, affecting social, fiscal, and monetary policies. Furthermore, these developments have increased awareness, on a global scale, about human rights and dignity, a healthy environment, changing demographics, and of limited natural resources. Practical implications - There is increasing awareness of contemporary challenges facing mankind and the environment, as well as the merging of national economies within a global framework. These challenges with their demands for modifications in socioeconomic as well as political policies may transform the paradigm of a “social market economy” into an “ecological social market economy”. Originality/value - Traditional economic theories usually consider capital and labor as the primary factors of production. Nature (all natural resources), on the other hand, tends to be neglected as an economic good and as an essential third factor of production. A political economy is suggested which assigns equal importance to man and nature, the costs of which have to be fully accounted for, including those for the preservation and regeneration of natural resources.