Overcoming the Problem of Appropriation in the Social Market Economy

Abstract

The creators of the social market economy wanted to formulate a pattern
of economic policy that would help to achieve effective implementation of
a material goal of the economy without disturbing socially accepted values
such as freedom and justice. In their opinion it is possible to achieve this
goal thanks to the policy of creating an economic order and leaving the
economic process to the market entities. However, the research conducted
by the mainstream economists shows several deficiencies that do not allow
it to function fully effectively. One of those deficiencies is the problem of
appropriation, especially its effects. The companies’ desire to maximize profits
makes those companies give up their investments in case their investments may
be appropriated. That results in a deterioration of economic effectiveness and
the creation of economic rents in some groups of entrepreneurs. The article
is aimed at a closer analysis of the appropriation problem and possibilities of
overcoming it in the social market economy – with the use of means that do
not violate its fundamental principles. Moreover, overcoming the problem
of appropriation creates opportunities for more effective use of discretional
means in the situation of deep economic depression without the violation of
those fundamental principles.