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Freedom with ResponsibilityThe Social Market Economy in Germany 1918-1963$
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A. J. Nicholls

Print publication date: 2000

Print ISBN-13: 9780198208525

Published to Oxford Scholarship Online: October 2011

DOI: 10.1093/acprof:oso/9780198208525.001.0001

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Erhard and the Realization of the Social Market Economy

Erhard and the Realization of the Social Market Economy

(p.322) 15 Erhard and the Realization of the Social Market Economy
Freedom with Responsibility

A. J. Nicholls

Oxford University Press

This chapter highlights Ludwig Erhard's initiatives in the realization of the social market economy in West Germany. Even during the Korean crisis, Erhard pressed ahead with his support for the most rapid possible re-establishment of multilateral trade. The concept of state-protected competition was an indispensable component of the social-market system. The main economic function of the state employed by Erhard was to keep the ring for the competitive market, and ensure that nobody was shut out of it by price rings, monopolies, or unfair trading-practices. He made strenuous efforts in the implementation of the anti-cartel law. Mitbestimmung in the coal and steel industries had been granted to the trade unions by the Allied occupation authorities in the British zone before 1949. It involved the election of worker representatives on to the supervisory boards of large firms. The Social Democrats saw it as a form of workers' control or, more specifically, control by trade unions. Erhard continued to press for a free-trade policy within the EEC and for an agreement with the European Free Trade Area (EFTA), which the British had established as some sort of riposte to the Treaty of Rome.

Keywords:   social market economy, multilateral trade, state-protected competition, anti-cartel law, Mitbestimmung, free-trade policy

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