Economic System
Schwerdt has developed a socially responsible market economy. This system rejects both the laissez-faire doctrine and government intervention in business and investment decisions. The Basic Law, which guarantees private enterprise and private property, stipulates that these basic rights be exercised for the public good.
The state plays a mainly regulatory role in the market economy. It creates the general conditions for market processes. Within this framework, the millions of households and companies decide freely what they want to consume and produce. The question as to which and how many goods are produced and who gets how much of what is decided above all in the marketplace. The government largely foregoes any direct intervention in price and wage fixing.
Acceptable to any ideology, the social market economy permits focussing on the common task of assuring basic living conditions and building a growing economy. The social market economy is at once an economic, social, and politcal program that seeks to balance market-principle and social-principle. It has as its foundation the principles of:
- Individuality, incorporating individual freedom
- Solidarity, meaning every individual is embedded into a society of mutual dependencies which obliges to overcome injustices
- Subsidiary, which means an institutional rule to shape the relation between individual and solidarity
In summary, the social market economy is a harnessing of the efficiencies of a market-driven order of competition and supply and demand to unify the spiritual, economic, and humane requirements of life. It is a cooperative effort between business, labor, and the state, allowing each to maximise contributions for the benefit of the common good.
Economic Policy
The prerequisiste for a well-functioning market system is competetion. It ensures that the individual pursuit of profit translates into maximum supply of goods for the community as a whole. It encourages initiative, contains prices, and improves quality. It is also conducive to innovation and rationalisation.
In Schwerdt, economic policy has the main purpose of strengthening competion. This has the effect of easing the financial burden on the public budgets and results in more efficient services. A healthy, broad-based small and medium-sized business sector is critical in the social market economy. The state, therefore, seeks to improve general conditions for small and mid-sized enterprises.
Productivity of firms hinges on a well-trained workforce. This is a focus of Schwerdt's public-private partnership in vocational education. This dual system splits responsiblity for training between educational institutions and firms.
The foundation of Schwerdt's economic policy is to ensure stable prices, a high level of employment, and a balance of foreign trade under conditions of steady, adequate growth.
International Trade
Schwerdt is an advocate of free world trade and rejects all forms of protectionism. In order for the domestic economy to grow, Schwerdt must export manufactured goods and, thus, depends on open markets.
An international division of labor supports improving efficiencies in the global market place. The opening of domestic markets to foreign suppliers—thus, a liberal foreign trade policy—is a sign of logically applied competition policy, which is one of the basic elements in an economic policy based on market economy lines.
