State Intervention versus Private Initiative: New Challenges for the German Social Market Economy. Any Implications for Pakistan?

Abstract

There is a never ending discussion, whether economies of different development levels and cultural and social backgrounds can be compared or not. The protagonists of the modernisation theory - and of many other development theories - believe, that development is a uni-dimensional process, where the late-comers have to follow the same path, which the more advanced already went. Their opponents believe that each economy and each society have their distinct features and have to fmd and follow their own development patterns. Germany was a late-comer in industrialisation and suffered serious setbacks later. Its "miracle" reconstruction after World War II has made it prosperous; its economic order may help in mastering the unprecedented challenges set by the Unification and integration of the former East German "Socialist": command economy. Our economic order, however, is not as "free market" oriented, as many believe. With the present shift to more market orientation in the former Second and the Third World, it, therefore, should be worthwhile, to have a closer look at the German "social market economy". This especially applies to Pakistan, with its long tradition of "mixed economy", "welfare state", "Islamic socialism" and "Islamic welfare state".