The German constitution turned 75 on May 23 and Berlin was celebrating – with an official ceremony followed by a democracy festival for its citizens over the weekend. And Germany has every reason to celebrate. A period of 75 years of freedom, peace and prosperity is unrivalled in German history. For the east of the country, 2024 also marks 35 years since they their fight for freedom and democracy led to tha fall of the Berlin Wall. The German constitution has applied to both East and West since 1990.

After 1945, the young post-war democracy in the West – following dictatorship and oppression by the Nazi regime – was fuelled by the promise of prosperity. The German economic miracle opened up prospects for advancement. The new „prosperity for all“ established a social centre that gave democracy increasing stability. Before and during the war, the state and the party had intervened in the economy. But the post-War Minister for Economic Affairs Ludwig Erhard introduced currency reform and ended the state pricing system for goods. With this liberalisation, the shelves soon filled up again. Compulsory rationing with ration cards came to a swift end. The social market economy paved the way for the new prosperity in Germany.

Although democracy and prosperity are often mentioned in the same breath, the constitution remains neutral with regard to economic policy. The Weimar Constitution had explicitly laid down rules and a programme for managing the economy. However, the Parliamentary Council deliberately refrained from doing so. The economic system was to be allowed to develop freely. Instead, a series of essential principles for a market economy were laid down: private property including inheritance rights (Art. 14), freedom of occupation, trade and business as well as freedom to choose one's place of work (Art. 12). Freedom of movement for work and residence throughout Germany (Art. 11), freedom to form societies and other associations (Art. 9) explicitly to protect and promote working and economic conditions. Finally, the freedom of contract, which is manifested in personal freedoms (Art. 2). These principles became directly applicable law. As part of the first 20 articles of the German constitution, they are unalterable. No laws may be made against them.

This is simultaneously a foundation and a mandate. The social market economy has good legal conditions in this country. However, it must always be defended against excessive state interventionism. Just as democracy has not proved to be a sure-fire success. After all, prosperity does not result from redistribution, but from initiative, a willingness to organise, and opportunities for advancement. The anniversary is therefore also a reminder to strengthen the economic basis of democracy.

The constitution also has economic relevance in other areas – and certainly requires reform. Articles 104a to 115 set out the financial constitution of the federal and state governments. In a mixture of a separate and joint system, it stipulates who is entitled to which types of tax. Fiscal equalisation and the debt cap are also laid down there. This part has no guarantee of eternity, and has undergone regular reforms, in 1969, 2006, 2009 and 2017, but money has always been redistributed, and most recently the credit-financed special fund for the Bundeswehr was set up. There are already other ideas of this kind, such as an infrastructure fund.

However, fundamental questions remain unanswered. The confusingly intertwined financial relationships between the federal and state governments have never been reorganised, despite many amendments. A reform of the debt brake, which many would like to see, allowing for growing national debt, could be a place to make a new start. There is a need to clearly regulate for autonomy and responsibility for the federal state. Each level must be accountable to the voters. This would also be an important contribution to consolidating democracy.