Dhe greatest force of change in human history is neither the far-reaching social design nor courageous political action. The greatest force of change is technical progress, as the economist Oded Galor impressively described in his brilliant book “The Journey of Humanity – The Journey of Humanity through the Millennia”, which was also published in German a good six months ago.
Nothing has thrown human history off its millennia-long rather quiet and inert path quite like the First Industrial Revolution, which began in Britain in the late 18th century. It was also the time when Enlightenment thinkers, for example in Scotland, were formulating liberal ideas. Examples include David Hume and Adam Smith, who in his masterpiece “The Wealth of Nations” developed the basics of the market economy through a critical examination of mercantilism.
The Industrial Revolution brought the first flowering of liberalism and a powerfully developing economy that went hand in hand with advances in civilization and a considerable increase in life expectancy. However, the 19th century was also the century of the development of power, both political and economic. This world came to an end in the First World War, a murder that had only become possible in its hitherto unknown dimensions through technical progress and the industrial production of war equipment.
The First World War was followed by the interwar period characterized by political, economic and social uncertainty, which came to a horrific end with the Second World War. After that, the conviction that had already grown in the years up to 1945 that the liberalism of the 19th century had failed just as much as the economic and social models based on the strong regulatory influence of the state grew, not only in Germany.
break with beliefs
The idea that a free economic and social order needs to be flanked by a state that sets rules and guarantees has found resonance. In Germany, it found its realization in the social market economy, which broke with some beliefs. In retrospect, of all the elements of the social market economy, apart from the plea for free prices, the declaration of war on economic power is the most remarkable in view of the German tradition, which tended to idealize power.
The 1950s are often referred to as the heyday of the social market economy, but by the 1960s its luster had faded, and in the 1970s it faced serious headwinds. Why was this?
The first epoch of the post-war period can be understood economically as the arrival in Europe of the standardized mass production of consumer goods known as Fordism. Together with the post-war reconstruction boom, there was strong economic growth supported by sustained increases in productivity, the momentum of which allowed its fruits to be shared among companies and employees. Ludwig Erhard’s conviction that the social aspect of the market economy consists above all in the growing consumption opportunities of a working population was confirmed in this environment.
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