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The current economic crisis, which showcased the weaknesses and the failures of the current neo-liberal economic model, should be a good time to determine a new economic model to adapt, according to German economic expert Dr. Dieter W. Benecke. Dr. Benecke, who visited the Philippines upon the invitation of the Konrad-Adenauer-Stiftung and has also lectured on the subject worldwide, delivered a series of lectures to various societal groups on the German Social Market economy, which is celebrating its 60th anniversary this May.
The Asian Institute of Management Policy Center (APC) and the Konrad-Adenauer-Stiftung (KAS) organized a forum to discuss “Social Market Economy: A Viable Development Option for the Philippines?” together with 200 established leaders of thought in economics, the business sector, and various members from government institutions last May 19,2009 at the Manila Peninsula Hotel.
Crisis means “crosspoint” in Greek, and not collapse, according to Dr. Benecke. A rethinking or a rejection of the failed status quo is what is most needed in times of crisis, and in order to move forward, societies must make changes. Dr. Benecke presented the Social Market Economy model of Germany as an alternative economic model, stressing that the current approach gave more importance to profit over social justice.
Social Market Economy was the German post-war social economic model touted as the basis for the “German economic miracle” that took place in the 1950’s under the leadership of then Chancellor Konrad Adenauer and Ludwig Erhard. SME was also the basis for the successful process of reunification between East and West Germany. It rejects the laisez-faire capitalism as well as planned economies under socialism, however, allowing for private enterprise at the same time promulgating state policies to provide rules geared towards protecting welfare and maintaining fair competition.
From the very beginning, Social Market Economy was understood as a concept for development, economy and society at large. Political vision and academic spirit, closely linked to the names of Ludwig Erhard, Konrad Adenauer, Walter Eucken and Wilhelm Röpke, paved the way for a concept that guaranteed prosperity, stability and social justice.
The value of social justice for all has been espoused in the Philippines as early as the 1960s under the late Senator Raul S. Manglapus, who wrote heavily on the subject. KAS country representative Klaus Preschle also stressed that now is a good time to introduce (or re-introduce) SME to the Filipino people, and posed the question: What is the best way to translate economic growth into the improvement of social conditions?
APC Executive Director Atty. Ma. Lourdes Sereno argued that social market economy is compatible with the Philippine constitution, which explicitly pursues social justice for all. The explanation of Dr. Benecke would have made clear that what the Germans have implemented is actually exactly what the Filipinos have envisioned for themselves.
However, Filipino economic experts say that the success of social market economy is based on the rule of law and strong political institutions. Therefore, the implementation of social market economy in the Philippines would be a huge task and that the country could move only step-by-step. Emmanuel De Dios, Dean of the University of the Philippines School of Economics said that social market economy would require a strong and competent government bureaucracy; therefore, he doubted whether the country is ready for social market economy.
De Dios further stressed that the social market model will “…degenerate in the country where rent-seeking schemes and other forms of corruption are prevalent.”
Other noted economists also shared their reflections on Dr. Benecke’s lecture, which included Dr. Joseph Lim of the Ateneo de Manila University, Dr. Rene Ofreneo, former dean of the UP School of Labor and Industrial Relations, Dr. Josef Yap, president of the Philippine Institute for Development Studies, along with Dean Emmanuel de Dios.
The book, Social Market Economy: Principles and Implementation – Economic Policy from A-Z, was also launched during the lecture. The publication, published in English only recently, features a comprehensive compilation of articles written by top German scholars and experts on Social Market Economy in Germany.
For further information, please visit the AIM Policy Center webpage: http://www.policy.aim.edu