aren ’ t ( tonne ) necessarily always the best ones – and are often not even effective, to boot. indeed, good intentions do not always produce good results. it ’ s up to policymakers to weigh up different objectives, and economists cannot take that responsibility from them. but economists can and should point out the economic costs and side - effects of the different courses of action available. ever since the federal ministry for economics was founded back in 1949, it has been advised by an economic advisory council. the joint economic forecast of economic research institutes came along one year later, in 1950, followed by the establishment of the german council of economic experts in 1963. this meant that academic advice was a ﬁrm ﬁxture in the federal republic ’ s economic policy from the outset. 3 how the social market economy has evolved over time our economic system underwent its ﬁrst major transformation in the mid - 1960s. the change of course towards an active business cycle policy drew inspiration from keynesian thinking. the thrust of overall economic management was to smooth cyclical ﬂuctuations by aligning aggregate demand with potential output. there was a great deal of optimism at that time in political circles, but also amongst economists, that the business cycle was now under control. it was a belief that culminated in karl schiller ’ s remark that the ups and downs of business cycles should not simply be accepted as fate but were the result of decisions and actions. problems soon cropped up in practice, though. attempts to use demand management instruments to respond to supply - side shocks like the oil crises in the 1970s just made matters worse. not just that : it was not possible to predict the ups and downs of the business cycle with any great certainty, or it was impossible to respond in time. as a result, what had been conceived as a countercyclical policy proved to be procyclical in some respects. economic ﬁnetuning increasingly turned out to be a fantasy. this prompted intense academic and political debate over the need to change the trajectory and direction of economic policy. nobel prize winner paul samuelson is said to have quipped that god gave economists two eyes : one for supply and one for demand. all the way through to the mid - 1970s, their vision was excellent in the eye they had on demand, but somewhat poor in the eye they had on supply. the german council of economic experts – and chief among them gerhard fels, the later head of the german economic institute – provided the

, academic estimates differed as to the amount above which the minimum wage would start to have negative effects on employment. in actual fact, the effect of introducing the €8. 50 minimum wage in 2015 was much smaller than many had feared. [ 20 ] basic concerns remain unaffected by this, for example that tax and social welfare policy is better suited than the minimum wage to achieving distributive aims. to be convincing, though, not just humility but good communication is key. that ’ s why the alliance of science organisations in germany is calling for public communication by academics to be improved and also to be valued more in academic circles. communication with various target groups in society has always been central to the german economic institute ’ s work. and it masters this task with aplomb. how else could a study by the institute on the perception and reality of income distribution have made it to the front page of the “ financial times ” a few years ago? the institute ’ s work is compelling evidence that academic formality and understandable language are not mutually exclusive, that academia is by no means stuck in an ivory tower, and that educating the public about economic matters can be successful. it was precisely this job of informing the public that fritz hellwig, the ﬁrst director, saw as the main task of the german industry institute, as it was then called. 5 relationship between market and government after the pandemic it was also fritz hellwig who, in 1997, warned : “ in the day - to - day business of politics, ( … ) [ the social market economy ] has become an empty phrase about which friedrich von schiller ’ s couplet about science is ﬁtting : ‘ to one, science is an exalted goddess, to another it is a cow which provides him with butter ’. ” in hindsight, it is clear that economic policy has been able to constantly emphasise different points over the past few decades, without departing from the foundation prepared for it by the social market economy. however, recently lars feld rightly pointed out that social market economy cannot be the name given to anything that seems politically desirable. he warned against considering oneself, like voltaire ’ s candide, in a panglossian world where anything good must be social market economy. the concept would then only be ﬁtting for soapbox speeches, not for economic policy decisions. ladies and gentlemen, each period comes with its own challenges – for academia and equally for policy. we are