The Social-Ecological Market Economy in Germany
General characteristics, main features and current challenges of a unique and successful economic system
The economic system of Germany evolved over a period of many decades since WWII, but its roots go back even further. Since about the 1980s, the economic system of Germany can be characterised as a Social-Ecological Market Economy with the main focus on maximising common welfare. It consists of three pillars:
- Economic prosperity
- Social cohesion
- Ecological sustainability
The political and societal consensus in Germany to operate within the boundaries of the Social-Ecological Market Economy is stable over time – the most important prerequisite for a smooth functioning of the social-ecological market economy. These principles of the Social-Ecological Market Economy are rooted in the German constitution, which creates an “institutional memory” for social-ecological economic policies. This means that changes in government are not followed by fundamental changes in policies as far as the concepts of the social-ecological market economy are concerned.