Question

What are the basic philosophy of the Social Market Economy?

Answer 1

Social Market economy is the also sometimes known as the mid-way between a completely free market, ie. Lassie - faire and complete socialism. It has been widely used in Europe, especially Germany.

The term social market economy was coined by the German economist Alfred Müller-Armack in the 1940s, and he has since advocated it a a mix of market freedom of maximum output, and the social justice, ie. goverment intervention by providing subsidy on production, employment level corrections, forex interventions etc.

After Alfred coined this term, it has been used widely in the western Germany by alternative terms and definitions about what social market economy means.

But all in all, we can say that the main philosophy behind the Social market economy and why it comes to exist is ultimately the middle way between two extremes - the free market or Capitalism, and the Government intervention or Socialism. It is sometimes said to be a mixed economy as well, where there is free play of markets and government interventions too.

Hope it helps. Thanks :)