Wirtschaftsordnung und Wirtschaftspolitik: Soziale Marktwirtschaft, Wettbewerb, staatliche Steuerung
This domain tests the normative and institutional design of the German economy: what the state may and must do, how competition is protected and how conflicting macroeconomic goals are weighed. Expect tasks that ask you to classify a measure (Ordnungs- versus Prozesspolitik), identify a Zielkonflikt and evaluate it against explicit criteria.
The ordoliberal core
Soziale Marktwirtschaft goes back to the Freiburg School (Walter Eucken) and Alfred Müller-Armack. The state guarantees the rules of the game - private property, contract, liability, open markets, stable money, competition - rather than steering outcomes. Konstituierende Prinzipien secure the order; regulierende Prinzipien correct market failure and social hardship. Competition law (GWB, Bundeskartellamt, EU merger control) is the instrument, not price setting.
The goal bundle
§1 Stabilitäts- und Wachstumsgesetz (1967) names four goals: price-level stability, high employment, external equilibrium and steady, adequate growth; environmental protection is normally added, giving the magisches Sechseck. The goals conflict - growth against ecology, employment against stable prices - which is exactly why the metaphor is "magic".
Actors and instruments
Monetary policy belongs to the independent ECB with its 2% inflation target; fiscal policy to Bund, Länder and municipalities, constrained by the Schuldenbremse (Art. 109(3), 115: 0.35% of GDP structural deficit, exception clause for emergencies); wage policy to the Tarifparteien under Art. 9(3). Demand-side (Keynesian) stimulus, supply-side reform (taxes, deregulation, infrastructure, education) and Ordnungspolitik are three distinct answers. Automatic stabilisers act without legislation; discretionary packages face the lag problem.
Worked example
Inflation is 6% and unemployment rising; the government cuts VAT and raises spending. Reasoning: this supports demand and employment but pushes prices further, breaching the stability goal; a supply-side alternative (energy costs, bottlenecks) targets the cause; the Schuldenbremse limits the package. The judgement must weigh short-run employment against medium-run price stability instead of declaring the policy simply "good".
Traps
Equating the social market economy with laissez-faire or with a planned economy; saying the Bundesregierung sets ECB rates; treating Konjunkturpolitik (demand management) as Strukturpolitik (regional or sectoral adjustment); claiming the Schuldenbremse forbids all net borrowing.