The Basis of The ‘Social – Market’ Economy

Abstract

In this paper, I argue that the foundation of the social-market economy is the need to overcome the shortcomings of capitalism and Marxian socialism, two popular and conflicting socio-economic models as well as the possibility of combining cooperativism and social democracy. In an attempt to substantiate its claim, the paper adopts three approaches. The first approach concerns the exposition and analysis of the demerits of capitalism. This is done within the context of Marxian critique of capitalism and the capitalist society. Marxian critique of capitalism and the capitalist society involves an examination of the works of Adam Smith and David Ricardo. It also relates to the Marxian concept of alienation which presupposes the concept of surplus value. The second approach comprises the identification and discussion of the deficiencies of Marxian socialism. The paper reveals some of the practical inadequacies of Marxian socialism which raise questions on its effectiveness as a socio-economic alternative. The paper recognizes the difficulty that Marxian socialism has experienced in transforming into communism. In addition, it takes cognizance of the emergence of co-operative economy (i.e. co-operativism) and social democracy. Taking cognizance of some of their merits, the paper maintains that the set-backs facing capitalism and Marxian socialism warrant the evolution of cooperativism and social democracy as a nucleus of “social – market “ economy. The third approach adopted by the paper involves the exploration of the value of cooperative economy and social democracy as the nucleus of ‘social- market’ economy.

Keywords: Basis, Society, Market, Co-Operativism, Democracy, Economy.