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Theoretical and Applied Economics
No. 3 / 2007 (508)

The German Social Market Economy – (Still) a Model for the European Union?

Klaus Dieter John
Chemnitz Technical University, Germany

Abstract. The model of a Social Market Economy (SME) defines a policy concept of economic order which is based on free markets but, at the same time, includes elements of social balancing. The term “Social Market Economy” can neither be found in the Treaty on European Union nor in the Treaty establishing the European Community. The documents only use the terms “open market economy” and “free competition”. The Commission has never made a clear statement whether its economic policy is guided by the principles of a SME. Because the SME-concept is not new and its value is not undisputed it is worth to reflect on it and to find out what it has to offer for the economic and social policy of the EU.

Keywords: social market economy; regulation; social policy; European model.

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