The future of Malta's capitalism

The future of Malta's capitalism - and as a consequence that of its successful stock exchange - can only be mapped out if the experience of its recent economic past were to be examined.

Its capitalism, along with its stock exchange, which is its very imperfect representative, is one of the economic miracles of the Mediterranean world. The MSE's decline reflects the highly abnormal world economic contraction, and not much else. It will revive along with world trends.

Not much statistical information is needed to realise that this country, despite recent unfortunate events, is still significantly wealthy. Immigrants from central Europe and from Africa are banging daily on its door.

Such an immigration situation would have been unthinkable not so long ago, when thousands of its inhabitants were leaving their shores. That mass emigration built up a diaspora several hundred thousand strong in Anglo-Saxon countries. This has created, by inadvertence, a sizable English-speaking Maltese diaspora oriented towards capitalism.

It is for this reason that the Maltese people of today are far different from those of 50 years ago. Our capitalist state was being founded. There is now a rich diaspora exercising influence on their former country. It is definitely a capitalist success story. Any politician in Malta, on the right or left, is going to have great difficulty in preaching any different form of socio-economic organisation.

The Maltese, like their brothers abroad, have tasted capitalist prosperity. They will certainly vote for it as it delivers the goods, eschewing vague economic dreams like those we see at the end of the harbour at Marsa, to mention only one of a rather sorry lot.

Politicians of any colour should not commit themselves to economic policies that have failed in this country and that have been responsible for nothing but disease and hunger in other lands, of which immigrants in our state are a testimony.

There has been a recent opposition utterance, which is undoubtedly an indication of what we have to come by, if the next election is won by the Socialists.

It seems to imply that it was in the interest of the Maltese people to have its government take over its importation. We stand to be corrected. Such an utterance would lead to the end of capitalism in Malta as we know it, and the beginning of state capitalism.

This has been a failure unless accompanied by a firing squad meting out a summary executions to all those who transgress its rules.

A case in point is the International Bank of China (ICBC), which, since its launch, has advanced prodigiously by much more than 100 per cent.

A full reconstruction of the world's wealth will not be possible before another 28 years as Nobel economic prize winner Joseph Stiglitz has pointed out.

The morality of the world financial situation is so bad that Bloomberg, which is an overtly secular news organisation, is reporting extensively the Pope's words on the need to create a new world ethical order.

The words of our philosopher Pontiff have an undoubted implication that the self-interest displayed by Wall Street - each banker greedily swallowing the option that promises the maximum short run benefit to self - is only a winning strategy in the dream world of orthodox economics which failed to notice that such actions have evil repercussions.

The great glory days of the banker capitalist world are gone forever, but not completely so. Santander, Europe's biggest bank, has advanced 152 per cent since March, while Barclays has advanced 600 per cent since last January.

Goldman Sachs and Deutsche Banks recently published results demonstrating what money is to be made in currency trading. Goldman is deriving 41 per cent of its profits from currency trading and Deutsche Bank advanced 62 per cent mainly because of such trading.

Capitalism still has the power to show us the other side of the coin, and if it will listen to the voice of our Father philosopher in Rome, it might recover more quickly than most people think. As always the greatest fortunes are made in a downturn.

Mr Azzopardi Vella, economic consultant with DBR Investments Ltd, has promoted the Malta Development Fund and advised S & P.

johnazzopardivella@hotmail.com