This week I participated in a seminar on the theme ‘A reformed market economy – entrepreneurship for human development’. This was the title of a paper produced by the Centesimus Annus Pro Pontifice Foundation, and the seminar was organised by the local chapter of the Foundation.
The main point made was that, although experience shows that economic development, driven by entrepreneurship and practical innovation at all levels, is the key driving force to reduce poverty, the human person must remain at the centre of economic policymaking. The economy has to serve the human person and society in general and not the other way round.
If we take a long-term view of what has happened in the last 25 years, we note that the communist system collapsed. However, we would also note that the free market system did not live up to expectations with the international financial crisis in 2008 and the recession that followed it and the scandals that came in their wake.
Public institutions, robust regulations, welfare initiatives are important and are required; but they should be there to support the human being and not to disempower him
At a time when the market economy reigned supreme, income inequality increased, as I highlighted in last week’s contribution. It is a real example of the economy of exclusion that Pope Francis has so often referred to. So, in a sense, there is no going back. We are at a crossroad and a reformed market economy is a must.
The answer to the various scandals that have been perpetrated has been a more robust regulatory system. Moreover, the answer to the increasing level of poverty has for decades been more social welfare. Both are positive developments. However, are they enough?
These two solutions – that is more regulation and more welfare – imply an increasing dependence on the State. Shouldn’t we be looking at other solutions, such as more responsible economic behaviour and a sustainable use of resources? That is shouldn’t the solution be driven by us as individuals and the collective, rather than by the State?
I pose one question which may sound provocative: has the welfare state developed to such an extent that it has acquitted us from our responsibility to show solidarity towards others? Do we seek to keep our conscience quiet by paying the taxes due and then leave it to the State to look after the vulnerable members of society?
The ethical dimension emphasised in the paper prepared by the Centesimus Annus Pro Pontifice Foundation challenges us to think in this direction. If we accept that the human being is to be the focal point of economic policymaking, then we should also accept that the human being be empowered to achieve this goal. Public institutions, robust regulations, welfare initiatives are important and are required; but they should be there to support the human being and not to disempower him.
In this regard, there is a reference in the document to development projects starting from the bottom of local communities, which captures this need to empower the individual very well. The objective is not to create dependence of the State but to help persons to help themselves.
The document highlights a number of areas where action is required, such as inflexible labour laws and wrong education policies. However, I would add to these the lack of protection of the environment and wastage, especially of food.
As the document rightly points out, “development and the market with sound economic policies are the only contexts in which poverty has been effectively reduced in large numbers”. It also says that it is important for entrepreneurship to be given the space to develop freely, but it needs to apply itself to human development.
Within this context, there is no doubt that we must create a new economic model whereby the market economy is reformed by empowering the individual to operate for the benefit of the common good.