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... is the German term for "the third way", a concept based on the idea that entrepreneurs and capitalism are intrinsically evil, of necessity markets bring about socially destructive results, and government's manifold wise interventions are needed to engender what possibly can be good about a market economy.
The term social market economy (soziale Marktwirtschaft) was not actually coined by Ludwig Erhard, however by popular myth it is associated with his name to such an extent that people like to think that even Erhard felt and thought like the economically illiterate social democrat that best represents the average well-(state-)educated German.
However Peter Klein reports:
Hayek, interviewed in 1983 by Encounter:
Hayek: “I regard ‘social justice’ as a nonsensical term….”
Interviewer: “But do we have the concept of the ‘social market economy’?”
Hayek: “May I tell you the story of when I last spoke to Dr. Ludwig
Erhard? We were alone for a moment, and he turned to me and said, ‘I
hope you don’t misunderstand me when I speak of a social market economy
(Sozialen Marktwirtschaft). I mean by that that the market economy as
such is social, not that it needs to be made social. . . .’ If you had
to make the market economy ‘social,’ . . . you can justify every demand
that cannot be reconciled with having the market determine prices and
incomes. There’s no better way of destroying the market economy than
with the concept of ‘social justice.’”
Source.
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