The social market economy was Germany’s model to promote economic growth and prosperity after the ravages left by the Second World War. It, on a general principle, is an open and democratic liberal society, which seeks to protect the freedom of the economy and functioning competition while at the same time fostering the prosperity and social security of citizens.

However the objective of the social market economy is to achieve the greatest prosperity with the best possible Social protection. In context, the State must regulate specific measures and protect its citizens against evil and chomage thanks to a set of adequate social security regimes adaptable to changing circumstances around the world. He says globalization, digitization, climate change, population, and migration.

However in the current situation, after the global coronavirus pandemic, an analysis need on how to apply successful models that can use and that can help or generate ideas to come out of this crisis. Showing that public health and social protection systems are crucial alternatives to the market, that health is a fundamental right, and that universal public health is an essential element of egalitarian politics is that health gives as a market for selling individual consumption to the market.

Market Economy

There is a drop in demand that affects and reduces production. Simultaneously with an increase in health spending to cover those involved. Which does not significantly affect the economy in general because specialized goods and services focus on hospital care require. In these events, world leaders seek the tool to contain the crisis through increased public spending for public services, the purchase of goods and products produced in the country itself, and investment in new production activities. In a context of public policy that allows solving local needs amid quarantine.

These elements coincide with strategies used by the social market economy model. They ratified by Stiglitz (2020), who states that the State must inevitably  resort to when faced with a crisis like the current one (pandemic). Because meeting its demands requires a collective action led by the government.

Therefore, in those situations that aim to restore the well-being of the population, health systems are based on health as a fundamental right that public institutions must guarantee through the provision and provision of universal public services. Which is not in the logic of the market, to satisfy individual and social needs in the fairest way possible.

How can it Contribute?

The welfare state should not consider a “cost” for the private economic system in this context. Still, on the contrary. It is a parallel system that produces public goods and services to guarantee the development of society based on its rights, needs and duties. Instead of the spending capacity they may have. In the model, well-being and social quality are produce, which cannot  measure base on the market value of goods. The entire collective pays associates.

These same principles are vital in analyzing the environmental quality and collective resources that require designing an accounting system that objectively measures. The social and ecological externalities produced by conventional economic systems, generating negative impacts that are primarily costs.

Moreover to build and apply the strategies of the social market economy model to deal with this Covid-19 pandemic, existing political institutions, tools, and resources are required, promoting and promoting economic activities towards health protection. And wellness. It will allow a transition that will adjust in the short and medium-term to a path of sustained growth to solve this crisis with a complementary industrial policy that promotes the well-being of the collective. A more stable, healthy, egalitarian, and sustainable development.

Characteristics of a Market Economy

Below we describe the essential uniqueness of a market economy:

  • It is decentralized: The crucial problems of any economy solve through the free interaction of individuals. And decentralized election system.
  • It works through signals: Actions coordinate through signs without individuals knowing the processes that generate these signals. In a market economy, the critical passwords are prices, which indicate the relative scarcity of resources.
  • Distributes income: Income from factors produced distributed according to who owns them at a given time. Thus, workers are paid according to what they can contribute to the production process. At the same time. The owners of machinery and buildings will receive income according to the contribution that these goods make to production.
  • Creative Destruction: Competition for consumer preferences breeds innovation. Companies that  adapt to changes in the environment and consumer preferences will have to leave the market and be replaced by others.

Positive Aspects of the Market Economy

  • Mostly the primary compensation of the market economy are the following:
  • When the market is spirit, efficient use of possessions  lead to economic growth and increase competition.
  • It promotes innovation and efficiency by forcing companies to compete and continually improve.
  • The State should have a role of protector of property rights and the competitive environment. It prevents governments and institutions from distorting economic activities by responding to individual interests or power groups. Therefore, it does not require centralized planning, where the authorities must decide without having complete information on costs, preferences. And other factors that affect the market balance.

Negative Aspects of the Market Economy

  • Firstly the main disadvantage of the market economy are the following:
  • There may be problems in terms of competence and, therefore. The appearance of externalities or market failures: situations of social injustice. Pollution, or exclusion that lead the public sector to intervene.
  • Creation of monopolies or oligopolies, reducing competition and increasing price levels.
  • It can lead to a morally unacceptable circulation of resources.


Moreover the market economy is a system of economic relations based on the linkage of sale and exchange. This  a system in which the State does not play a decisive role and in which decisions are made by each economic entity independently. A market economy is characterize by private possession of resources, using a system of markets and prices to coordinate and manage economic activity.