The social market economy is the solution


Dr. Carsten Linnemann | Chairman of the CDU/CSU's Small Business and Economic Union and Deputy Chairman of the CDU/CSU Parliamentary Group in the Bundestag

The Corona crisis leaves many losers in its wake - one of them being the social market economy. Even before the crisis, there was a discernible political and social tendency to always look to the state for the solution to many problems. The state is no longer supposed to merely set the framework within which people live and companies do business, but is also supposed to act as a steer and saviour. In addition to more and more tax increases and government spending, there are also regulations and quotas for citizens and companies.

This dangerous tendency has intensified in the current crisis: instead of limiting itself to support, the state is getting right into companies. Instead of setting a clear framework and reinforcing market-based incentives early on, the state is failing in mask procurement, vaccination and test management.

The solution continues to lie in the best economic and social order in the world: the social market economy. Its principles remain valid: the subsidiarity of state action, the creativity and personal responsibility of citizens, the consistent coupling of the freedom of the individual with liability for the associated risks, the extensive renunciation of state intervention and the safeguarding of open competition for performance.

We must shape policy on the basis of these principles: for example, with a policy of unleashing and easing the burden, modernising working time legislation and freeing companies from constraints; with a fundamental reform of tax law, flattening the bulge in the middle class, allowing the top rate of tax to take effect later and completely abolishing the solidarity surcharge; with an exit plan so that the state quickly reduces its shareholdings in Lufthansa, Post and Co; with an energy and climate policy that relies on price mechanisms and competition instead of a planned economy and dirigiste pay-as-you-go systems.

The state must once again provide the framework for companies to freely unleash their flexibility, dynamism and innovative power. If we now manage to unleash the forces of the social market economy anew, we will succeed in overcoming the consequences of the pandemic in the long term and return to sustainable growth.