Ensuring Prosperity for All in the Digital Age

The digital revolution is currently in full swing, transforming both our economy and our society. The full force of this development is evident from the wide variety of apps on our smart phones to the digitalisation of our workplaces. The rise of a new generation of intelligent machines has already begun. Modern algorithms record many of the things we do, analysing our behaviour and using the data to develop advertising and new products. Cars will soon be able to drive themselves. Tiny bracelets monitor our day-to-day health. Blockchain technology and a world without cash are just around the corner. Business models are changing at break-neck speeds to keep up with these complex markets.

In light of these rapid developments, Professor Achim Wambach, president of the Centre for European Economic Research (ZEW) and chairman of the German Monopolies Commission, and Hans Christian Müller, editor at Handelsblatt, are looking into how the basic principles of the social market economy can successfully be translated into this new digital age. In their new book “Digitaler Wohlstand für alle – Ein Update der Sozialen Marktwirtschaft ist möglich”, which is released by Campus Verlag, they explain how we can secure prosperity for all, even in the internet age. While the authors are convinced that Ludwig Erhard’s policies no longer have a place in today’s world, his ideas still have merit.

In the book, the authors detail the implications of digitalisation for individual markets and the entire economic and prosperity model. They look at the Big Five in the internet economy, list the challenges posed by the data economy, describe the imminent split of the labour market and explain why new business models are stirring up old markets. According to the authors, competition between firms remains a decisive force even in the digital age, producing innovations, rewarding effort and giving everyone a chance to succeed. It is therefore important to protect fair competition from the monopolising tendencies of the internet economy.

Digitalisation exhibits great potential to increase our prosperity. However, if the potential profits are to be shared by everyone, the current economic order must be adapted to fit the times. Strategies developed by Ludwig Erhard many decades ago may still be helpful in this endeavour, even if they no longer entirely fit our needs and have to be modified. Now just as back then, the markets need rules and must be monitored to ensure that they work to the benefit of everyone and do not develop destructive forces. If we set the correct path now, Ludwig Erhard’s vision of prosperity for all can still become a reality in the digital age.