Wednesday, 14 October 2009

Guest post by Dieter Benecke: Qualitative growth - progressive economics and inclusive development

Dieter Benecke: Last Saturday TASC organised a conference entitled “Towards a Progressive Economics”.

The speakers focussed mainly on the reasons for the Irish crisis and recession. As the conference title indicates, the aim was to chart a path forward for Ireland. This is in line with former Irish President, Mary Robinson, who – during the Michael Collins commemoration – talked about the need to reclaim a “vision for the future of Ireland”.

After analysing the past and taking measures to overcome the crisis, other countries are more focussed on addressing the future. An interesting approach was taken by the German government together with the Indian government, inviting representatives from all Asian countries to discuss the possibilities of a more qualitative growth.

The considerable macroeconomic growth in Asia during recent years has tended to be an exclusive development: the rich people benefited much more than the poorer part of the population. The outcomes of this conference (September 2009), in which 270 representatives from the government, business, trade union, scientific and civil society sectors in 13 Asian and five European countries – as well as several international organizations - participated, could be of interest for the discussion in Ireland as well.

In general terms, it was agreed that the neo-liberal approach is inadequate for a progressive and inclusive development process.
Free competition - without concentration tendencies - is necessary in non-systemic markets in order to maintain economic dynamics. In systemic markets, however, stringent control and regulation are required.

The primary outcomes of the two-day deliberations were as follows:

1. Economic growth is a necessary, but not sufficient, condition for inclusive development and progressive economics.

2. A certain inequality is natural and can even be considered as a push for more achievement; however, excessive social inequality poses a danger to political stability, and reduces the access to development opportunities.
3. Economic and social development factors must work together, and must be combined with ecological measures. The current crisis can be viewed as an opportunity to link these factors in a better way.

4. Exclusive growth is an obstacle to international economic cooperation. Long-term FDI seeks profit and security. Social conflict militates against an investment-friendly environment.

5. A progressive economics need a public-private dialogue, as well as the participation of civil society organizations.

6. Government must invest primarily in education, infrastructure, health service and other public goods. Incentives for innovation in technology and ecology are of high priority.

7. A progressive economics is based on a model of Social and Ecological Market Economy and its fundamental principles
- individual responsibility,
- social solidarity,
- subsidiary action by the State.

8. Inclusive development can be achieved by
- responsible competition and ethically acceptable behaviour on the part of business,
- regulation of systemic markets,
- structural policy aiming towards diversification of production and services,
- social protection and prevention of social weakness,
- environmental protection through recycling, alternative and renewable energy, energy saving and emission reduction.

9. Inclusive development requires efficient and non-corrupt institutions working in the interests of stakeholders, more than in the interests of the shareholders.

10. Leading public positions must be occupied by persons appointed because of their expertise and ability, rather than party affiliation or personal contacts.

The 270 participants in the New Delhi conference would probably be delighted to exchange views with those in Ireland seeking to create a new vision. TASC must stay in touch with international thinking and experiences.
Dr. Dieter Benecke is a German economic consultant based in Dublin and former President of Inter Nationes in Bonn.


Paul Hunt said...

Would it be possible to define - or provide examples of - systemic and non-systemic markets, please?

Slí Eile said...

@Dieter Very good ponits. You wrote that'the 270 participants in the New Delhi conference would probably be delighted to exchange views with those in Ireland seeking to create a new vision. TASC must stay in touch with international thinking and experiences.'
In Ireland we are too often absorbed in our own situation and problems to fully realise that there is a much bigger - and inclusive - debate about the larger picture and the future shape of societies. What I like about the summary you gave of the conference on this post is the way in which balance is achieved - between public, private and civil society, between markets, regulation and competition, between the short-term and the long-term. This type of wide-eye view is missing from much of public debate in Ireland. Left and left don't talk with each other let alone left and right: we tend to shout across the barricades many of which are self-imposed. The truth in any set of proposals or world views is refined through dialogue, clarification and mutual agreement where possible and respectful and continuing difference where not possible. On the latter, there is often a tendency to deny or obfuscate this. Think of many reports, analyses and framework documents that fail to name (and respect) differences in approach.