Business Ethics

Germany’s ‘social market economy’ combines the principle of the free market with that of shared wealth. The most important elements are free enterprise, rules to ensure competition and the private ownership of the means of production, bringing with it the opportunity to make profits, on the one hand, but also liability for losses.

 

To this extent, morality is left to the system itself, which inquires not into the motives of the individual but into the results of their actions. In the end, through the ‘invisible hand of the market’, the pursuit of self-interest acts for the good of the communality. The baker, for instance, does not practise his trade for the benefit of mankind, to feed the people, but from a sense of his own economic interest.

 

However, the market is blind to issues of fairness where distribution and opportunity are concerned. In order to prevent an excessive gulf developing between rich and poor, the state uses the tax system to correct the distribution of market incomes retrospectively and improves opportunity by investing in education. In addition to this state intervention, the moral conduct of individual participants in the market also serves to maintain and increase acceptance of the economic order. Many companies contribute by demonstrating respect for society’s values and including social and ecological factors in their decision-making (corporate social responsibility and values management).