Offering Perspective from Germany: the Social Market Economy

Since this sub is mainly about comparing economic systems, let me offer Germany's perspective on the matter, to further the discussion.

Of course, there are many different political stances on how policy should shape the way the economy works in Germany, from the rather libertarian Freie Demokratische Partei, Free Democratic Party, the Sozialdemokratische Partei Deutschlands, Social Democrats who stand for worker's rights and unions, as well as Die Linke, The Left, which would like to centralize banks, insurance and transportation companies.

The consensus, however, is that we (generally speaking) have a rather well-working economy, based on the idea of Social Market Economy.

What is this?

The social market economy (Soziale Marktwirtschaft) is a social and economic system combining free market capitalism which supports private enterprise, alongside social policies which establish both fair competition within the market and a welfare state.

The base for it is in our constitution - Art. 14 states: "Ownership of property entails social responsibility." That means that corporations / rich individuals pay higher taxes in order to preserve social peace and justice.

Next to income and wage taxes, which can arrive at up to 45% for individuals, corporations and workers pay into the Sozialversicherung, or Social Insurance, a state-controlled insurance system for health, unemployment, rent, etc. It is mandatory for everyone except those who wish to pay their insurance themselves; Privatversicherung or private insurance.

Of course, it isn't a perfect system, but it works quite well, and helps distribute the national income to many instead of the few.

We are the world's 4th economy (source), and have a Gini index of 0.3 (0 being perfectly equal, 1 completely inequal income), one of the lowest of industrialized countries. The Gini Index measures income equality.

Hope this may broaden the discussion in the sense that it is quite a good idea to combine capitalism with some aspects of socialism.