Market economy

The market economy is a central concept in economic theory and economic history.

In the theory of economic systems called market economy ( formerly Transport Economics ) an economic system in which, the distribution of decision-making and action rights by the institution of private ownership of means of production. Planning and coordination of economic processes are decentralized. The individual use plans of households and firms (income and profit) and the development plans (profit education and income creation ) are coordinated by market prices. This coordination includes the one hand, the allocation and distribution of individual goods by market prices and on the other hand, the allocation and distribution of public goods by political decisions. About Market Prices Sections of economic entities are coordinated and made ​​available through the link of the markets in a macroeconomic context invoice. This refers also to public and merit goods despite the lack of markets for these, as for the preparation of the offer of public goods, the use of goods or factors of production that are themselves produced in a market coordinating process, condition is. Market economy is in economic theory, under the assumed condition of a decision and freedom of action of economic agents, conceived as a self-regulating and self-optimizing system. Therefore, the idealized market economy is also understood per se as a free market economy. However, real markets differ substantially in some cases from idealized model of this idea.

Among economic historians in particular Fernand Braudel insisted on the distinction between the historically older market economy and the consequent evolving capitalism.

Theory and real history

According to Walter Eucken there is in the analysis of economic systems, two fundamentally contrasting styles of thinking, which he describes as "thinking in orders " and " thinking in historical developments ." According to Egon Tuchtfeldt It is the question of which approach the overall problem of economic systems better corresponds to open today. In fact, thinking in terms of historical developments and thinking in orders need not be mutually exclusive. Properly understood, both approaches would rather form an equally necessary as fruitful supplement.

As a former economist described the Scottish moral philosopher Adam Smith in his major work, The Wealth of Nations the market as incentives and sanctions mechanism that coordinated the selfish behavior of the labor economic man, that the needs of the individual are satisfied as possible.

Walter Eucken understand market economy as a pure ideal type, which is to be found " in all epochs of human history." Ideal types served in the Eucken understanding of reality. A pure market economy, however, comes through loud Eucken not exist in reality.

Franz- Xaver Kaufmann summed up in the 1980s, the economic sociology discussion together so that the " dominant economic doctrine " the historical and " socio - cultural conditioning of the modern economic system " negligible. From a historical perspective, the market economy put as relatively autonomous economic system is a special case with specific, not self-evident given the conditions and limits dar. The prosperity of a society, however, depends not only on factors such as education level, degree of industrialization or endowments of natural resources, but is also based on the institutional framework of the economy, consisting of explicit and unwritten rules. In economics, the importance of institutions as "rules" for the market economy, especially of Douglass North is emphasized, together with Robert Fogel won the Nobel Prize for economics historical studies 1993.

A study of the historical and social condition of the market economy (or " transport sector " ) can already be found in Max Weber and other classics of economic sociology. The market community characterizes Weber as an impersonal, practical relationship that occurs in contrast to tribal affiliations or relationship. According to Weber, presupposes a market-based socialization of economic activity appropriation and market freedom, such as the absence of corporative monopolies.

The economic historian Karl Polanyi introduced the theory of Smith and Spencer in question, that early forms of the economy is based have to barter. He closed it in economic ethnological studies, especially Bronislaw Malinowski of Marcel Mauss and Raymond Firth, which in particular tribal societies, based on generalized reciprocity forms of economy ( see, eg gift economy ) have been studied. Polanyi was in all examined by him historically occurring economies find elements of reciprocity, redistribution and direct exchange. Following on from the market economy is today as a real type against other forms of economic activity, particularly subsistence agriculture, defined in cultural anthropology.

In his work " The Great Transformation " from 1944 Polanyi uses a narrow concept of market economy ( " actual market economy" ) for a self-regulating market. Its real historical existence he was confined to the historical period from 1834 to the end of the 19th century. He made fast to the development of the labor market your beginnings. It was not until the reform of the English Poor Law of 1834, which abolished any monetary support to unemployed but able-bodied needy ( " manpower had to be turned into a commodity " ), would have released the logic of the market system and thus " society as an appendage of the market", ie made ​​to the " market society ". Even the social laws and union recognition end of the 19th century would have counteracted the market mechanism again, although " the idea of ​​self -regulation remained dominant" is. From the limited historical perspective from 1944 marked for Polanyi the state regulation of the social democratic, communist and fascist regulations between the two World Wars, the end of the actual market economy, the " decisive shift away from the idea or the ' myth ' of a self -regulating market ". Politically Polanyi advocated social democratic regulations, while he rejected the communist and fascist as freedom hazard.

According to Fernand Braudel other hand have the market economy in Europe " step by step" emerged.

Considered " Historically, we have it M.E. from the moment to do with market economy in which markets a particular zone common price fluctuations and price matches have a characteristic appearance especially insofar as they reach beyond the various judicial districts and dominions. In this sense, the market economy is a long time before the 19th and 20th centuries. "

While Polanyi, the market economy is a synonym for capitalism, Braudel distinguishes between market economy and capitalism.

Similar to previously Weber, who - in a different terminology - had distinguished between employment and economic needs, not Niklas Luhmann sees the market economy as opposed to a planned economy, but in contrast to the subsistence economy. In this there is usually no money as a control medium and the economic system has not yet differentiated as a separate subsystem of society (see autopoiesis ).

Molding

Theoretical models

Free Market Economy

In the model of the free market economy is determined solely by the market, what is produced and consumed, in what quantity and at what price. A free market economy is to George Nicholas Halm if:

However, a completely free market economy is only an abstraction. In the economic practice is in all countries more or less a government regulation before ..

The in his book The Wealth of Nations by Adam Smith advocated ideas do not imply that the State any right to exist is withdrawn. It is responsible, rather more important functions. These include the external security guarantee to protect citizens from injustice and oppression of his fellow citizens as well as provision of public facilities for which there is no private investor. After some authors' opinion, the doctrine of Adam Smith was "one-sided " further developed to idea of ​​a free market economy. In a free market economy the State be attributed to regulatory functions. If these are kept to a minimum, it is called in accordance with an ironic twist of labor leader Ferdinand Lassalle, by a " night watchman state ".

Social Market Economy

The idea of the designed by Alfred Mueller Armack and Ludwig Erhard guiding principles of the social market economy is to realize the benefits of a free market economy, in particular the economic performance and high supply of goods, at the same time but disadvantages as destructive competition, concentration of economic power and anti-social effects of market processes to be avoided. The aim of the social market economy is the greatest wealth with the best possible social security. The state behaves differently than in the free market economy is not passive, but actively intervenes in economic activity, " such as by economic policy, competition policy and social policy measures. "

For Ludwig Erhard, the term social market economy was a pleonasm, because for him is socially the market itself. He developed this idea by emphasizing that the economy is more social, the freer it is. By contrast, saw Mueller Armack in the social market economy a " irenic formula " which "seeks to bring the ideals of justice, freedom and economic growth in a reasonable balance ".

Socialist Market Economy

A socialist market economy distinguished from the coordination principle decentralized planning and property ownership common ownership of the means of production. Contrary to this, the capitalist market economy with private ownership of the means of production and socialist centrally planned economy with a central planning.

Other models

There are a number of other theoretical models, raise with which various authors claim to develop the social market economy, such as the eco-social market economy, along with the Sustainable Market Economy ( Michael von Hauff ), the Humane market economy ( Erwin Niesslein ) and the Ethical Market Economy ( Hans Ruh ). Another variant is the civilized market economy of St. Gallen Wirtschaftsethikers Peter Ulrich; she is also, according to its creator a development of " national competitiveness orientation become weak conception of the social market economy."

Real economic systems

In practice existed and exist many different forms of market economy. These differ because of the different economic and social or socio-political objectives as reflected in the property and personal rights and the extent and forms of state intervention. Examples are the planification in France, the Swedish model in Scandinavia or the Austrokeynesianismus in Austria.

Market economy and capitalism

Several authors make the existence of a capitalist economic system from private ownership of the means of production and the market economy depends on the satisfaction of needs on markets. Often economists understand capitalism as a market economy with private ownership of the means of production. The currently prevailing economic system of the capitalist market economy is determined by both terms. A market economy is theoretically without capitalism - as a socialist market economy - as capitalism non-market economy - as capitalist command economy - conceivable. The French social historian Fernand Braudel, according to the market economy has developed " step by step" and emerged with his " standard of unlimited accumulation" even before capitalism.

For other authors, the concept of market economy can hardly be distinguished from capitalism. According to John Kenneth Galbraith, he was rather deliberately introduced after the Second World War as a new name for the geratenen through the Great Depression discredited capitalism. The term was in the process completely meaningless, because in principle it meant nothing more than the exchange of goods across markets. In fact, the market economy called atomic, maintains all structural elements of capitalism and can be equated with this.

Market mechanism and efficiency

The economist Jürgen Paetzold describes the market mechanism as a " coordination mechanism that requires no bureaucratic commands. Each business entity gets its information about the change in the price signals in the market economy. The plans and actions to adapt to these changing market signals continuously and thereby gradually adapted to each other. The market-driven system has therefore compared to the centrally planned economy greater flexibility and problem processing capacity. [ ... ] This undisputed advantages of the free market economy to the bureaucratic steering but do not rule out that the market economic reality can be characterized by negative developments. The experience with the classical laissez faire liberalism have vividly demonstrated that a market economy the design and correction by the state needs. "

Market failure

As a market failure situations in a market economy are referred to, in which, by the misconduct of the ideal of perfect competition, no economically optimal distribution of goods and resources is made,

Examples of market failure:

• Antitrust and monopolies
• Externalities
• Public Goods
• Information asymmetries

In particular, in the social market economy the state is therefore assigned the task of preventing market failure, for example by competition policy, environmental policy or the provision of public goods. If this does not lead to the desired extent or government action even further to market failure, then one speaks of state failure.

Market economy and social justice

The market economy leads in theory to a performance-related income distribution because the income significantly influenced by things such as education, professional qualifications, as well as motivation and personal performance. It naturally follows that less skilled workers are more highly skilled inferior level of income forth. In practice, the income distribution is also influenced by different starting conditions, which can be summarized under the term market power.

Due to government regulations, such as redistribution, income inequality can be reduced. But there is the danger that particular case by case government intervention usually leads to a market economy to side effects, which may be operating the intention partially reversed.

The determination of social justice is the subject of key political and philosophical debates since the 19th century. The utilitarianism by Jeremy Bentham designed the felicific calculus. This is based on the basis that the largest achievable Good is that which leads to the " greatest happiness for the greatest number." Marxist critique of the market economy proceeds from the class antagonism between capitalists and the working class, on the basis of which there can be no equitable social market economy. John Rawls developed the theory of justice. From this point of view a complete equality is perceived as not useful, as they are the motivation to deliver services, decrease.

Market economy and acceptance by the public

The Allen Bach Institute collects in rotation settings of the German population to the social market economy. According to a study conducted on behalf of the Initiative New Social Market Economy Survey from 2008, a relative majority agreed (45 percent) of the West German opinion about the market economy leads " automatically to social injustice." After a in 2012 from the John Stuart Mill Institute for freedom Research in Heidelberg commissioned representative survey voted 46 per cent of Germans (43 percent of West Germans ) of this opinion, while 38 percent were of the opinion, " market economy makes social justice only possible ".

Criticism

Main article critique of capitalism