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Monetary Stability and the Stability of the Open Society

In: Saving and Investment in the Twenty-First Century

Author

Listed:
  • Carl Christian von Weizsäcker

    (Max Planck Institute for Research on Collective Goods)

  • Hagen M. Krämer

    (Karlsruhe University of Applied Sciences)

Abstract

Historical experience shows that the welfare stateWelfare state is what holds democracy and the market economy together. Neither a welfare stateWelfare state that is too small nor one that is too large can fulfill this connective function. A “stability pactStability pact” between citizens and the state is needed: 1. A welfare stateWelfare state to provide citizens security even in their old age. 2. In order to preserve appropriate incentives, the retirement system has to be a form of “savingSaving” (forced savingSaving, forced) for old age. 3. In addition, most citizens also undertake voluntary saving. 4. The state provides for monetary stabilityMonetary stability. 5. The state uses itsPolicy, fiscal fiscal policyFiscal policy to promote high employment. A modern understanding of personal freedomFreedom includes the security provided by a welfare stateWelfare state of appropriate dimensions. It follows that in the twenty-first century, a large part of the wealth of citizens consists of net claims on the state.

Suggested Citation

  • Carl Christian von Weizsäcker & Hagen M. Krämer, 2021. "Monetary Stability and the Stability of the Open Society," Springer Books, in: Saving and Investment in the Twenty-First Century, chapter 0, pages 249-259, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-75031-2_9
    DOI: 10.1007/978-3-030-75031-2_9
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