The German Social Market Economy: Challenged by Caritas in Veritate

Abstract

Abstract“The functioning of a free market economy depends on sound cultural and ethical foundations.” For earlier thinkers like the moral philosopher and father of economics Adam Smith, this was self-evident. After the division of the academic disciplines ethics and economics shortly after Adam Smith, however, a partial approach gained momentum and is still prevalent. Economists and businessmen developed economic standards, ethicians and philosophers ethical standards for the market. We evidently lost greatly due to this segmentation. It might even have contributed to the emergence of the financial crisis in 2008. Although there has been a growing body of literature on business ethics, dialogue of the academic disciplines should not be a privilege of the few but an imperative for all dealing with business and economics. There is a lot to learn from the insights of earlier thinkers who followed an interdisciplinary approach. This was the fact for the precursors and founding fathers of the German Social Market Economy. Since they are not so much known outside Germany, a closer look at their writings could be an interesting contribution to an international and interdisciplinary discussion – especially given the fact that they were strongly influenced by Catholic social teaching. After an introduction to the normative foundations and a short look at the practical experience, this chapter highlights some important impulses from Caritas in Veritate for the enhancement of the Social Market Economy as well as for other liberal economic and social orders. The financial and economic crisis offers an opportunity for the Church to contribute to the enhancement of “Free Markets and the Culture of Common Good.”KeywordsFinancial CrisisMarket EconomyWelfare StateSocial OrderEconomic FreedomThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.