From Schmoller’s Socialpolitik to Müller-Armack’s Social Market Economy: A Reconstruction of the German Conservative Discourse on the Social Regulation of Capitalist Market Systems

The concept of the social market economy, formulated by German economist Alfred Müller-Armack in the 1940s, reiterates a much older German discourse on the possibilities of following a “third way” beyond the confines of liberal market systems and socialist planning mechanisms. The following chapter explores the hypothesis that Müller-Armack’s approach resonated with preceding conservative discourses on the social question and the need for Socialpolitik as prominent features of the Schmollerian strand of the German Historical School that would critically inform subsequent socio-economic controversies on the balancing of economic and social concerns during the Weimar era. These conservative debates on the social balancing of market dynamism in German political economy reflect the profound political and economic ruptures during this period. One might argue that they inspired the concept of the social market economy with its ideational emphasis on the reconciliation of ideologies and worldviews. Yet its basic orientation towards a balancing of competitive markets and inclusive society can be most markedly traced already in the preceding debates on the social question that were prominently explored by Gustav Schmoller and other representatives of the German Historical School.