A recent article of my colleague Jesmond Saliba, published in another newspaper, caught my attention. He wrote about the need to keep the individual at the centre of politics and public policy, within the perspective of the common good. I would like to use this concept and place it within the perspective of the economy.
The discussion about the individual, the common good and the economy is very relevant today as we may very well be in a situation that is unlikely to repeat itself. In Malta we have been successful in facing the challenges of the international financial crisis and the worst economic recession in the last eight years. Our economy has not been devastated the way the economy of other countries has. We maintained our gradual but steady growth.
It is a good time at this juncture to ask ourselves what type of economy we want to have in future. The lack of any discussion could mean more of the same. However, I doubt if more of the same can guarantee us the results of the past years. Soon we will get to the stage where the Maltese economy will need to reinvent itself.
It is worth having this discussion now while we can still afford to have it in a most objective manner, i.e., it is not being forced on us. Other countries such as Greece, Ireland, Spain, Cyprus, Portugal and Italy have had this discussion forced on them because of the crisis they faced.
We need to search for a new economic model that will rise from the ashes of both the communist system and the free market system
The relationship between the individual, the common good and the economy is also very relevant in Europe. Most EU countries are coming out of a severe economic crisis. A couple, such as Greece and Cyprus, are still actually in it. In the scenario that is being created, what kind of economy should Europe have?
First, experience has taught us that State intervention in the operation of the economy is not beneficial. Experience has also taught us that the private sector must operate within specific rules and that there cannot be a disregard for such rules. Third, experience has also taught us that the financial economy cannot dictate what happens in the productive economy as the former is there to support the latter and not the other way round.
Going back to our own economy, one needs to ask if we are willing to learn from the nasty experiences that other countries have been through. Are we willing to sacrifice the common good for the benefit of the few? Are we willing to remove the individual as the focal point of economic policy?
Whether we like it or not, and in spite of how hard the road ahead may be, the experience of a number of countries of the last eight years has shown that one must speak of a reformed market economy.
The economic model adopted by a number of advanced economies in the 15 years previous to 2007, which was seen as the ultimate victory of the market economy over the communist system, failed miserably. This week’s news of the $6 billion worth of fines slapped on banks by the US government for manipulating interest rates and exchange rates is proof of this.
So we need to search for a new economic model that will rise from the ashes of both the communist system and the free market system.
This new economic model must have a thrust that is different from these two. It needs to be based on enterprise and entrepreneurship while keeping in mind the needs of the society in which they are operating.
We will need to stop talking about corporate social responsibility, as in the new economic model, businesses will need to live up to their responsibilities to society in the normal course of events and not on an exceptional basis, as happens today.
Where we go from here is, in my opinion, still uncharted territory. However, as the economy in the EUgradually picks up, and as Malta maintains the economic performance of the last 25 years or so, we must make sure that we do not go for more of the same.