The intellectual foundations of the social market economy

Purpose - This paper suggests that an adequate understanding of the notion of the social market economy, which has become a prominent aspect of debates on the social model of the European Constitution, is to be assessed in the context of the historist tradition in German economic and social thought. Design/methodology/approach - The paper explores the intellectual history of the notion of the social market economy and its conceptual relevance for a dynamic European social model by highlighting Alfred Müller‐Armack's contributions to ordoliberalism and their relationship with German historism, in particular with Gustav von Schmoller's approach toSocialpolitik. Findings - The paper finds that the decisive concern of the notion of the social market economy is the reconciliation of economic dynamism and social cohesion in a basic setting of legal rules and cultural values, reaching beyond common interpretations that focus more narrowly on institutional aspects of social policy. Practical implications - By highlighting the interplay of economic, social and cultural dimensions, the paper suggests an extension of the conceptual horizon of current debates on the social model of the European Union, promoting policy implications that account for the possibilities of balancing conflicting social interests in the process of integration. Originality/value - The paper applies a reconstruction of the intellectual history of the notion of the social market economy to the problem of designing a social order for the European Union with its underlying discourse on the constitutional status of a European social market economy.