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A Study on European Model of Social Market Economy

Author: HongZuo
Tutor: WangHe
School: Graduate School of the Chinese Academy of Social Sciences
Course: World economy
Keywords: European Union Social Market Economy Reform Economic Growth Social Equity
Type: PhD thesis
Year: 2012
Downloads: 765
Quote: 1
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In its past six decades of integration, the European Union has seen remarkable achievementsin economic growth and social establishments. However, since the nineties of the last century, theEU nations were stranded into prolonged economic slow-down, economic and social policydilemma and unsustainable growth pattern after unprecedented integration and expansion, and arefacing with social economic problems and multiple internal and external pressures. Structuralreforms and national welfare system reforms since Lisbon Agenda indicates the iconic charactersof EU economic model have not undergone fundamental changes. A clear message conveyed byeither the re-launched new strategy from mid-term evaluation of Lisbon Strategy or post-financialcrisis Treaty of Lisbon and Strategy2020, is that the EU will follow the path of building EU socialmarket economy on the dual tracks of economic dynamics and social cohesion.The theoretical foundation of social market economy plan under the EU economic modelderives from the theoretical exploration and policy practice of Ordoliberalism branch of GermanNew liberalism. Besides from copying from the German model, it also builds upon experiencesfrom other nations’ models, such as the New Liberalism of the UK and flexicurity politicspractices of Nordic nations. Given the European economy’s three major objectives of Stability,Cohesion and Growth and their correlations, the future of European economic model shall lay onthe foundation of traditional European values of social stability, to empower the sustainablesynchronized development of economic growth and social cohesion through the direct positiveeffects of social policies on economic efficiency, namely, through the simultaneous achievementof equity and efficiency pursued by the “reinforced” social market economy. The result is a“reinforced” social market economy based on the governing economic and social policies andprinciples of German social market economy plan and other nations’ experiences. The majorcharacters of European economic model include unified institution, mechanism and policy on thestructure side, and national intervention, macro-economic stability and high competitiveness ineconomic operation.As a most significant phenomenon thoroughly influencing and reshaping modern economicstructure, Globalization present to the future of European economic model both challenges andopportunities. The key for the future success of economic model reform in EU is to balance thejoggling balls including policy adjustment to provide the weak enough protections, and themissions to promote competitiveness and social economic reforms simultaneously. The future reform of the EU economic model has three parts:to enhance productivity with innovationstrategy and labor market competitiveness with flexible social security, to improvemacro-economic policies with coordination and integration, and to aim at the final goal anddirection of comprehensive economic and monetary union. On one hand, the EU has placedconsistent emphasis on economic growth since Lisbon Strategy under the premise of maintainingthe core values. The decision makers of the EU are clear-minded that economic growth isnecessary for lower unemployment rate and sustainable fiscal health, which are vital indicators oftwo fundamental goals of the EU social market economy model (stability and social cohesion). Onthe other hand, the EU as it is today remains a combination of multi-national governments, andtherefore the future success of its economic model is pending not only on the resumption ofeconomic growth, but also the political determination of its member states especially that of bigones.

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