What is the social market?

The social market philosophy seeks to marry markets and social justice. It neither sees the market as a necessary evil nor as an end in itself but as a means to improve people’s lives. The social market has been the radical force at the centre of British politics since the 1980s.

Two key principles underpin the social market approach:

  • A positive preference for market mechanisms, while recognising that a truly pro-market approach is often not a free-market one; and

  • A belief that a sustainable market economy rests on social and political foundations that are widely regarded as fair.

Well-functioning markets distribute resources efficiently. But they are also a manifestation of personal freedom, with open exchange allowing people to express preferences, often more effectively than they can through politics. The state must therefore protect the competitive environment from the dangers of both free-market and statist approaches: public or private monopoly, and government and market failure.

The state also has an essential role to play in promoting social justice, so that the market can work for everyone in society. A lack of social justice can lead to a sense of unfairness that erodes the legitimacy of the market economy and threatens its existence. In pursuit of social ends, government should use market mechanisms, where appropriate, to achieve the best outcomes.

The social market today

Over twenty years ago, the collapse of state socialism confirmed the pre-eminence of the market economy. Today, global economic turbulence has brought us to another fork in the road. New challenges lie ahead. The relationship between the market and the state will be redefined.

The failure of financial markets and rising unemployment are increasing social exclusion, leading to a growing sense of unfairness. Unless addressed, this disaffection threatens to undermine the legitimacy of the market economy and foster a contagious distrust of markets, reversing the progress of recent decades.

Public spending is also coming under significant pressure as the Government seeks to balance the budget after a protracted recession. This provides stronger impetus for improved efficiency in the delivery of public services than at any time in the last fifteen years.

Whatever world emerges from the current hiatus, public policy must continue to recognise the power of markets, embedded in a cohesive and fair society, to improve our lives. The Social Market Foundation will be at the forefront of that debate over the coming years.

Website by: Commotion