The aim of the article is to find the answer to the question whether the social market economy, which forms the basis of social and political system of Germany, constitutes a theoretical foundation for social or welfare state. After the author has presented a theoretical part concerning the social market economy concept as well as the differences in terms between social and welfare state, he will proceed to demonstrate the course of realisation of the concept-in-question in West Germany after 1948. The evolution of the German social state, into welfare state, will be portrayed on the basis of Ludwig Erhard's economic and financial reforms, the analysis of their effects, as well as the following changes in an approach to the social and economic order in Germany.
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