Freedom of trade

from Wikipedia, the free encyclopedia
This article needs to be revised: Significantly more essay than encyclopedic article, POV-blah blah blah blah blah blah, especially in the section on regulation of vocational training , no evidence available.
Please help to improve it , and then remove this flag.

Freedom of trade , also known as free entrepreneurship , is the fundamental freedom for everyone to be commercially active. It arises as a practical consequence of the basic motive of general occupational freedom . The freedom of trade is therefore the central demand of classical liberalism in relation to the restrictions of the guild system and the class society . It has been a basic economic right since the second half of the 18th century and has found expression in numerous constitutions. Already proclaimed during the French Revolution , freedom of trade was introduced in Prussia in 1810 as the main component of the Stein-Hardenberg reforms .

Freedom of trade and its legal restrictions are the basic principles of a free economic constitution. They represent, so to speak, the operating system of the market economy . In the economic perspective, freedom of trade means free competition with as free market access as possible. Accordingly, the degree of trade freedom is usually divided into three levels, depending on the market entry options:

  • free and easy market entry
  • limited market entry
  • closed market entry

While there are lively debates in the Anglo-American world about the type and scope of freedom of trade, the issue is not given priority by politics in Germany. The discussions are mostly limited to legal disputes and discussions about changes to the applicable laws and regulations.

Legal Definitions

Art. 12 paragraph 1 of the Basic Law reads:

“All Germans have the right to freely choose their profession, workplace and training location. The practice of the profession can be regulated by law or on the basis of a law. "

In Section 1, Paragraph 1 of the German Industrial Code (GewO) it says:

"Anyone is permitted to operate a business, unless exceptions or restrictions are prescribed or permitted by this law."

In Section 1, Paragraph 1 of the Trade Regulations of 1869 it was determined:

"Anyone is permitted to operate a business, unless exceptions or restrictions are provided for or permitted by this law."

In the Weimar Imperial Constitution , too , Article 151, Paragraph 3 read:

"The freedom of trade and commerce is guaranteed in accordance with the Reich laws."

The standards are based on the principle of freedom of trade, but allow exceptions. The restrictions are determined in each case by the laws, such as in the trade regulations (see, for example, the catalog of § § 33a to 34e of the trade regulations) or the Restaurant Act . The need for these restrictions is, however, controversial in detail.

The positive voices believe that it is the result of the social market economy. It is always important to balance the interests of the freedom of the market with other interests such as social , labor market policy or consumer protection .

Critics, on the other hand, believe that market interventions, which de facto amount to market foreclosure and prevent job seekers from participating in working life, can neither be justified economically nor socially.

Trade Freedom Restrictions

Businesses requiring a license

Official approval is required for businesses that require a permit. Official restrictions on the freedom of trade are justified with hazard prevention and reference to public safety and health. As a rule, a certificate of expertise is required. For some professions, proof of personal reliability and orderly financial circumstances is also required. Depending on the profession, admission is also referred to as proof of suitability, license or concession .

Incomplete list of activities and trades requiring a permit
  • Trade in over-the-counter drugs
  • private hospitals and nursing
  • Manufacture of weapons and medicines
  • Trade in weapons, ammunition, explosives and poisons
  • Trade in parakeets and vertebrates
  • Operation of bars and restaurants
  • Accommodation company
  • Temporary employment
  • Auctions
  • Vending machine installation
  • Transportation of people by buses, rental cars, taxis
  • Road haulage company
  • estate agents
  • Welding work on load-bearing and pressurized parts
  • Financial services
  • Investment advice and brokerage
  • Activities in the security industry
  • Debt collection agency
  • Elderly care, child care

The restrictions of the craft regulations

Due to the freedom of trade and the free choice of profession, everyone is free to choose the profession of a craftsman , for example a painter. The practice of the trade is made dependent on a passed master craftsman examination . In most cases this means: three years of apprenticeship and a few months to two years of master class. In total, this results in a period of up to five years and total costs of up to 25,000–50,000 euros (including travel expenses and loss of earnings) for master craftsman courses.

The master craftsman's diploma , "great certificate of competence", is a prerequisite for the high quality of the German craft and its exemplary training. Its supporters argue that it serves to ward off dangers and protect consumers from bumbling work. Opponents of this practice, however, brand the compulsory master craftsman's certificate as a “master craftsman's privilege”, a privilege intended to protect master craftsmen from cheap competition from simple journeymen or even unskilled workers. Due to the “master compulsion”, the craft has the character of a licensing business, which - as in the past in the guild system  - means that the masters stay among themselves when placing orders, at the expense of the consumer and in favor of undeclared work . The lack of competition caused the high hourly rates for craftsmen. The example of the USA and many other countries, on the other hand, show that a highly efficient construction industry can function without the need for a master craftsman . In addition, the master craftsman's certificate should not be abolished. The opening of the market, on the other hand, leaves the consumer to decide about his own quality requirements.

Restrictions for liberal and academic professions

The so-called liberal professions such as doctor , pharmacist , alternative practitioner , midwife or lawyer do not represent a trade in legal terminology. Therefore, a trade registration is not required for their practice, nor are they subject to trade tax, etc.

At the same time, access to these professions is not unlimited. A university degree is required for many liberal professions. In many cases, a number of other conditions (internships, legal traineeships, etc.) must be met in addition to the completed degree: For admission to the tax advisor examination, for example, an economics or law degree and two years of practical tax work are generally required.

The training opportunities for academic professions are often limited by the limited number of study places. Access to the course is then often limited by a numerus clausus , the necessity of which, however, is controversial.

The role of chambers and professional associations

In the Federal Republic a large number of tasks have been assigned to the chambers and professional associations. They contribute to the creation of job profiles, formulate the fundamentals, standards and fees and monitor training and examinations. These organizations are also interest groups for the interests of their members. One of their interests is to preserve entry barriers for new competitors.

This is why representatives from business in particular advocate market structures that run counter to the liberal principles of freedom of trade and free competition. The representatives of the trades usually speak out against the liberalization of the craft regulations , the pharmacists against the abolition of the pharmacy monopoly , the lawyers and tax advisors against the abolition of the fee structure, etc. Interest representatives are very often opposed to the opening of the markets, as the previously allowed legal privileges protect entire professions from the extensive dynamics of free competition.

Regulation of vocational training

There are currently around 350 state-recognized training occupations in Germany . The training lasts two to three and a half years, depending on the profession. At the end there is usually a state examination. Although the dual vocational training system is seen by many as exemplary, this type of regulatory market regulation has very detrimental effects on the freedom of career choice. While many activities are available as “ jobs ” in the American working society , where entry and change are easily possible, social mobility in Germany is impaired by the fact that a very rigid scheme of formal legal professions is adhered to . With the intention of making all apprenticeships more or less the same, state regulatory models were created that regulate the most diverse activities - from building cleaners to electronics technicians - if possible in a regular, three-year training template. Incidentally, job profiles that were traditionally designed for a lifelong professional activity. Several years of apprenticeship are required even for activities that can be learned in a few weeks or months. This makes professional reorientation much more difficult. Even if training is not compulsory in practice, so that the work can also be done by ambitious newcomers, the rigid design of vocational training proved to be an obstacle to market entry - both for job entry and for the job change .

The historical development of the freedom of trade

Germany

Until the introduction of the freedom of trade by the Stein-Hardenberg reforms in Prussia in 1810 , most of the commercial economy was regulated by the guild system. In Saxony and other German states, freedom of trade was only introduced much later. The guilds controlled wages, prices, and most importantly, market access. The competition, which has now been freed from guild shackles, was perceived by many as a threat. Some even feared they would fall by the wayside. The general freedom of trade was therefore a thorn in the side of the established craftsmen from the start. They organized to run a storm against the expansion of competition. This was the resolution of the craftsmen's trade congress in Frankfurt on July 15, 1848:

“We solemnly protest against freedom of trade. Not only because of the endangered interests, our civil liberties and our well-earned property, but because of the threatened future, the impoverishment of the middle class, out of patriotism. "

The protest of the craftsmen went unheard, despite massive outrage. On July 13, 1868 the law concerning the operation of standing trades was announced. When the trade regulations came into force on June 21, 1869, freedom of trade was extended to the states of the North German Confederation ; With the transition to the German Empire in 1871, it was expanded to include the new territory. The economic boom of the Wilhelminian era followed , which was accompanied by numerous social upheavals. It was not until the beginning of the 20th century that the newly founded chambers of crafts managed to exert lasting influence in politics. In 1908, the "small certificate of competence" was therefore reintroduced. The master craftsman's certificate was again required to train apprentices. In the time of National Socialism , the master craftsman's certificate was finally made a prerequisite for running a craft business again in 1935 with the "large certificate of proficiency" . The freedom of trade in the craft was thus effectively suspended.

After the Second World War , almost unlimited freedom of trade was introduced in Germany's US occupation zone - now based on the US model. The mandatory membership in the chambers and guilds (so-called institute of the facultative compulsory guild) now became a voluntary matter. From January 10, 1949, a postcard was sufficient to register a trade - the master craftsman requirement was no longer required. Once again a start-up boom set in. In Munich alone , as many trades were registered in the first year of trade freedom as had previously existed.

However, this freedom was restricted again in 1953 with the adoption of the Crafts Code. For 94 skilled trades, the master craftsman's obligation was again introduced nationwide. The members of the Bundestag Richard Stücklen and Hans Dirscherl were in charge .

Similar ordinances have since been set for the liberal professions : In coordination with chambers and associations, laws were gradually passed that restrict the freedom of trade. The policy of the "social market economy " broke away  from free competition - as early as the time of Ludwig Erhard - and met interest-driven regulatory requirements. For example, fee regulations were created (for architects, engineers, tax consultants, lawyers, etc.) - which prevent price competition. Stricter admission barriers reduce the number of market participants, which in turn guarantees a high income for those admitted. - This practice has been criticized several times by the EU Commission . Above all, the former competition commissioner Mario Monti saw in the chambers and their fee regulations not only anti-competitive, but also criminally relevant price agreements . The monopoly commission of the German Bundestag made a similar statement about the craft regulations . The restrictions of the craft regulations are a massive encroachment on individual rights of freedom, they block even experienced journeymen the way to self-employment. As a result, the creation of jobs is prevented. The Commission therefore advises largely abolishing the master craftsman's obligation. Following the recommendations of the commission, the Federal Minister of Economics, Wolfgang Clement, launched an offensive in 2003 to fundamentally redesign the craft regulations. The master craftsman's examination should only be retained for trades prone to danger. However, the attempt by the federal government to liberalize the skilled trades failed due to opposition in the Federal Council . After tough negotiations, a compromise was finally reached: the green light was given, especially for rare and less harmonious trades - the master craftsman obligation was lifted. The main market share of the handicrafts remained largely untouched. Self-employed trades such as the profession of painter, bicycle mechanic or hairdresser etc. continue to be only permitted for masters.

Austria

The Austrian trade regulations , which were issued by Emperor Franz Joseph I in 1859 , are also based on the principle of freedom of trade. However, it has been restricted several times since then.

  • 1883 Certificate of qualification for craft businesses
  • 1885 Regulations for industrial health and safety
  • 1893 Building Trade Act
  • 1895 Sunday Rest Act
  • 1907 Proof of use for various commercial trades
  • 1934 Introduction of the “bound trade” and compulsory master craftsman examination
  • 1937 Introduction of the “Prohibition Act”. The freedom of trade was thus almost abolished.
  • 1940 The German trade law is introduced.
  • 1952 The prohibition law is repealed, but the qualification certificate for the tied trades is tightened.
  • 1994 Renewal of the trade regulations
  • 2002 amendment to the trade regulations from 1994

A certificate of competence is required for trades, tied trades and partial trades. The "free trades" are an exception. There are also “businesses requiring a license” (e.g. arms trade) for which a special official license is required. In Austria you have to apply for “recognition” or “equality” to the Federal Ministry of Labor and Economy, depending on the type of trade. Operating facilities are mostly subject to approval. Anyone who has obtained a trade license automatically becomes a member of the Chamber of Commerce organization. The professional groups and guilds have changed compared to the historical guilds , but continue their tradition. Today you are primarily responsible for the framework conditions of the commercial sector and vocational training.

Switzerland

Freedom of trade is referred to in Switzerland as “freedom of trade or economic freedom”. Free choice and practice of a profession as well as the right to make entrepreneurial decisions largely independent of state regulations have the fundamental importance of a human right , which in turn is designed as a "right of defense". Freedom of trade or economic freedom is granted to both Swiss citizens and resident foreigners as an independently formulated basic right. This is a Swiss peculiarity and, in connection with the freedom of establishment and the guarantee of property, represents a foundation of the fundamental market economy in Switzerland.

The freedom of trade was introduced with the lifting of compulsory guilds on October 19, 1798, at the time of the French occupation . Over night, as it were, the craftsmen were exposed to unrestricted competition, which many initially felt unable to cope with. During the Restoration there were passionate arguments among the Confederates as to whether the old guild rules should be reintroduced. This also happened in some cantons . However, the government and the population have always rejected the state demands for protection by organized craftsmen. In contrast to Austria and Germany , Switzerland remained without compulsory organizations and without restrictions on independent professional practice (no compulsory master craftsman). Most recently, in 1954, a regulatory project by shoemakers, hairdressers, saddlers and wagons to regulate market access by means of a compulsory certificate of ability was brought down by a referendum .

As a small export-dependent country, Switzerland has always been prepared for international competition and has successfully prevented the establishment of interest-driven economic barriers inside. According to the ranking of the International Institute for Management Development in Lausanne, Switzerland has been one of the ten most competitive countries in the world for many years.

Criticism of the freedom of trade

The liberal demand for freedom of trade is itself exposed to a wide range of criticism. The background to the objections are often specific doubts about existing market situations or also fundamental concerns about the ideally conceived self-regulation of a completely free market. Numerous encroachments on economic freedoms are justified mostly for social reasons but also for reasons of safety and environmental protection. Above all, the problem of unemployment and the resulting impoverishment of those affected, as well as low wages for less qualified employees, are mostly blamed on competition, which is to be corrected with an appropriate social order.

However, political interventions in the market are often registered by market players as a competitive disadvantage and a sustainable cost burden. Tightly calculated profit expectations can be consumed. The abundance of regulations and the level of social security contributions therefore affected the profitability of many businesses. The dismissal protection also provokes an additional deterrent effect in the case of new hires, despite various efforts to relax, since the companies are urged to be particularly careful with job applicants. Statutory overregulation could thus generate overall economic exhaustion and disenchantment, which would freeze existing unemployment into structural unemployment. Artificial stimulus and employment programs can hardly help in this case. The alleged elimination of the market failure is then countered by obvious political failure . An impartial balance of social and economic policy decisions can not be guaranteed, especially in a party democracy. Ultimately, the political leadership could consciously prefer their supporters and assure them competitive advantages in the market structure. Anti-competitive and socially harmful monopoly formation , cartels and price fixing can therefore not only be prevented by the legislature , but also guarded and even expanded. The mistrust of the social standpoints of the political parties is just as justified as the mistrust of the representatives of the commercial economy.

The basic justification for freedom of occupation and trade

“The property that every person has in his work is sacred and inviolable to the highest degree, because it is the origin of all other property. A poor man's inheritance lies in the strength and skill of his hands, and preventing him from using both as he sees fit without harming his neighbor is an open violation of that most sacred property, evidently one Encroachment on the well-founded freedom of the worker and of all others who may be ready to employ him. Just as one is prevented from working on what he thinks is right, so the other is prevented from employing someone who suits them. The decision as to whether it is suitable for the work can be left to the decision of the entrepreneur, whose interests are so strongly affected by it. The legislature's hypocritical concern that these might employ at least an unsuitable person is obviously as outrageous as it is oppressive. "

- Adam Smith , The Wealth of Nations , p. 106

literature

Web links

Wikisource: Law relating to the operation of standing trades. 8 July 1868 (North German Confederation)  - Sources and full texts