‘Beyond the Market: Economics for the 21st Century’: A book for GMA

This Week’s Winner

Marie Avenir, 41, was a journalist for seven years, writing for The Manila Chronicle, The Manila Times, We Forum and Malaya after graduating from UP in 1986. She then studied a new field called anthroposophy, which led her to Waldorf education. She earned her master’s degree in Waldorf Education from the University of the State of New York and now specializes in Waldorf education in the home setting.

To our beleaguered President Gloria Macapagal Arroyo, I offer my favorite book Beyond the Market: Economics for the 21st Century by Gaudenz Assenza. This is a book fit to be read by every adult Filipino, and most especially, by the President.

Our nation is dying – dying to change, dying to resurrect into a new, more human society. We are coming to a point where whoever happens to be the president of the country must do one thing: lead the nation into a transformation, into the still unknown or half-known: a better Philippines, a nation with its higher self intact.

To see that our nation is dying and needs to resurrect is not to deny the fact that there are good things happening around. But no statistics about our economy, nor about any government project can erase the fact that we are dying as a nation and we need to resurrect: all we need to do to see this is to look at the many poor children who live in the city streets . We are at the end of our rope; the deadline for us to begin real transformation is now. The kind of president we need is one who can be a midwife to the birth of the higher self of nation Philippines. Our beloved country needs a leader who is at least 50 percent a renaissance person and 50 percent evolutionary-revolutionary.

But how does one become a new kind of President for an asphyxiating nation? How does a nation transform itself? The masters say that to give birth to the Higher Self, one must undertake two major steps.

The first is to "Know Thyself." One must look at one’s qualities and defects. Then a conscious, consistent effort is made to overcome one’s flaw.

Something unexpected happens when one does this: defects you thought you never had come out. The lower self rears its head, and to overcome it, one needs the Christ’s force within. Out of the pain of knowing and overcoming one’s lower self, the Higher Self is born. Then Christmas – real Christmas – "happens," the birth of the Christ within, the return to God. I leave it to the private initiative of every Filipino, including the President to take this step of knowing one’s lower self: transform yourself, and in effect, transform your nation!

For the other step needed to give birth to our nation’s Higher Self, Beyond the Market offers a path. How so? Self-knowledge is not enough to give birth to the Higher Self. One must take the other step of gaining a higher consciousness of the reality of the world. What does this mean?

All those who have succeeded in Initiation – the birth of the Higher Self out of the ordinary self – know that reality is made of two aspects – the material and the spiritual. It is not only the material world that is real, rather everything material has a spiritual dimension. But the ordinary self occupies itself mostly or only with physical needs and wants. It is riveted to material concerns. If we want to give birth to the higher self, if we want to be whole human beings, we must see not only the material, we must also know the spiritual dimensions of life behind the physical. The contents of Assenza’s book will allow us to do this: gain a higher state of consciousness in our economic life, a more truthful grasp of economy life. Assenza presents an economic paradigm that allows one to see the human being in the economic process. This is very important: to see what is happening to human beings in the economic process, to know what human beings are doing in the economic process. God knows the Filipino – body, soul and spirit – is being clenched and tossed around the world by an oppressive world economy and a national economy that cannot revive itself.

The first thing Assenza does in his book is show a little known but staggering fact worthy to be reported as news: policymakers look up to free-market economics as the model for managing national and world economy, and yet in real life, the principles of market economics are hardly followed at all. To use the word staggering is not an exaggeration, considering how much policymakers adhere in their consciousness to free-market economics, yet in real life, Assenza reveals, "few of the fundamental requirements of market economics are met in practice."

For example, "minimal interference by the state is one of the fundamental tenets of free-market economics. In fact, economic life has long ceased to meet this basic condition. The reality in market-oriented countries is one of a widening gap between theory and practice. So radical is this divorce, that one wonders whether it is still valid to talk of free-market economies, if by that we mean industrialized countries such as the United States, Britain, Germany, and so on."

We in the Philippines may think our Caucasian brothers are the best practitioners of free-market economics, so we try to mimic them and practice measures to deregulate the market, but the fact is, Assenza says, "The states that hold most with ‘invisible hand’ theory are often the first to disregard its laws. In Switzerland, for example, even the retail prices of certain goods, such as milk and potatoes are controlled by the state. Capital economists warn that such contravention of the rules leads to a reduction in company profits and investment, distortion of markets, and on a macroeconomic level, decreased growth and efficiency. This, however, did not prevent the Swiss government, while professing adherence to free-market economics, from setting up the office of a price controller charged with keeping basic foodstuffs and rents affordable. In short, market forces are not trusted."

"Free market economics," Assenza explains, "demands that the state keep out of economic life and that the political arena should merely serve as a forum where rules are laid down in a democratic manner….Milton Friedman, (proponent of free-market) believes that state regulation fundamentally strains society’s cohesion because in his view, political channels require conformity." Yet in real life, the government "fundamentally interferes in the economy by way of public spending and taxes, control of interest rates, the political appointment of central bankers, and a host of other means…" Assenza gives more substantial evidence how free-market economics is contradicted in real life by actual economic practices, and every Filipino, including the President, is best advised to read them.

Why is it that despite the staunch adherence to free-market economics, the state has to intervene in myriad ways?

Market economics does not ensure the well-being of society. On the contrary, its grave failures have to be patched up by the government. "Wherever the market mechanism fails or leads to unwanted social conditions," Assenza explains, "the state steps in. Be it regional development, farming, the housing market, or the credit system, governments try to mitigate the negative consequences of the market." Assenza does a good expose describing the negative consequences of market economics and how the state steps in to mitigate them.

Followers of market economics actually see the divorce between free market theory and actual economic practice. To deal with it, they have invented a new economic system. Assenza says, "Realizing that there is no such thing as free-market economy, they have resigned themselves to differentiating between various grades of mixed economy. However, this departure has not led them to question market theories."

But this current blend of market economics and state intervention is not working at all. "The problems that face humanity at the turn of the millennium cannot be solved merely by the ‘right’ mix between state intervention and the free market." As Assenza shows in his book, both have failed to provide an outlook for a better future. State intervention, as free-marketeers validly claim, is usually ineffective and even counter-productive for various reasons (e.g. the state agencies’ lack of insight into economic circumstance, incompetence in controlling the economic process; bureaucracy and endless politicizing which slow down decision-making processes). But if the state is not good at directing economic affairs, the free-market’s idea is to let the market and its abstract forces such as the "invisible hand," inflation, devaluation rule economic life. As pointed out and substantiated well by Assenza in his book, market economics leads to negative social consequences.

"It is time to give up the naïve belief in the boundless capabilities and powers of the state and in the magic of the market," Assenza says. "Neither suffices for the coming challenge of the 21st century economic life."

Surprisingly, the solution Assenza suggests is not the overthrowing of capitalism or market economics. What is needed, he says, is the metamorphosis of capitalism, a broadening of market economics in many respects. We come now to the main content of Assenza’s book: how to undertake the transformation of market economics. This transformation results into a new paradigm they have named "associative economics." Assenza actually belongs to an emerging stream of economists who are advocating associative economics. Although they see the excesses and failures of market economics, "it is not the destruction of the old economic approach that is needed, so much as its metamorphosis…"

There is a crucial realization that associative economics points out, and more importantly, overcomes: in market economics, the economy is ruled by abstract forces (e.g. supply and demand, the market). But what is the market? How does supply and demand arise? It is human beings involved in the economic process who give rise to the market, to supply and demand. And it is human beings who must manage the economy consciously, not unconscious abstract, market forces. "Before anything else," says Christopher Budd, editor of Beyond the Market, (in his own book Prelude to Economics), "economics is a picture of man, a reflection of man…We read and hear and speak of the world’s economic problems as if they come towards us from some region foreign to us. We do not understand that economic events are our own authorship. We see the power of the banks, but we do not see how this power derives from our own unconscious use of money…We speak of inflation as if it were some extraterrestrial force, and we fail altogether to see that it is our own actions that create this so-called "public enemy."

Associative economics proposes that human beings reclaim control of economic life by forming organizations of producers, distributors and consumers into associations. These associations will take the place of abstract, unconscious market forces and inefficient state intervention of the economy. "What has previously been left to market forces or state directives becomes consciously decided; for example, resource allocation, production, and manpower deployment. Unlike in a planned economy, these decisions are not taken in a centralist, political way, but by those manufacturers, traders and consumers immediately involved. Market economics holds that producers, distributors and consumers are unable to communicate otherwise than through the bridge of the market. Associative economics, in contrast, sees the three as the different agents of one process, thus combined in the common aim of facilitating the exchange of goods and services. It is in this way that associative economics achieves the very self-regulation that the market is supposed to bring about, but does not, and that the state then intervenes to put right."

The suggestions of associative economics on how human beings can reclaim control of economic life are much more varied than can be mentioned here. As one reads more about them, one gets the sense that it is possible and not utopian to transform market economics. Our economic problem, Mrs. President, requires more than market economics and the state intervention needed to patch up the negative consequences of market economics. We need a President who has a higher understanding of our economic life, a more truthful grasp of economics that market economics and technocrat training cannot provide. It is in this sense that I sincerely offer Beyond the Market, Economics for the 21st Century, for our nation’s sake.