Among the following countries, where did the idea of 'Social Market Economy' emerge in 1950s?
- A.Germany
- B.France
- C.United States of America
- D.United Kingdom
Correct answer
Explanation
The correct answer is A, Germany. The Social Market Economy, Soziale Marktwirtschaft, was the model on which West Germany rebuilt its economy after the Second World War.
The term was coined by the economist Alfred Müller-Armack in 1947, and the policy was put into practice by Ludwig Erhard, economics minister under Chancellor Konrad Adenauer from 1949 and later Chancellor himself. It combines free markets and private enterprise with a strong social safety net, competition law, and cooperation between employers and trade unions. Its success in the 1950s produced the rapid recovery known as the Wirtschaftswunder, the German economic miracle.
B, France, followed indicative planning under Jean Monnet's planning commission in the same years. C, the United States of America, kept a largely free-market economy with a smaller welfare state. D, the United Kingdom, built its welfare state and nationalised key industries under the Labour government from 1945, which is a different model.
Exam tip: Social Market Economy, West Germany, Ludwig Erhard, the 1950s economic miracle.
Practice Questions
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- B.United Kingdom
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- A.1 and 2 only
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- C.1, 2 and 3
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- B.Shipbuilding
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