Comments: Monsignor Diarmuid Martin
- Ke-young Chu, Sanjeev Gupta, and Vito Tanzi
- Published Date:
- May 1999
I am not an economist, but what I have to say is very much in harmony with what we have heard so far. I come from Ireland, and my Irish bishop, when he was invited to speak at international conferences, always found it necessary to explain to the interpreters that when he said that in Dublin there were parishes with a 70 percent unemployment rate, the interpreters should not translate this figure as 17 percent. Interpreters could not imagine that within a successful economy like Ireland’s, there could be pockets of extremely high unemployment.
In fact, high unemployment is only part of the story. Where unemployment is concentrated in certain areas, these areas tend to be marked by social deprivation. To put it mildly, these areas rarely attract the best doctors, the best teachers, or the cream of the public administration. Poor health, poor education, and poor social services become part of the problem: a pattern of passing on poverty and exclusion. So I am grateful to Sen for broadening the term “equity” and for pointing out that inequities and inequalities can exist, as we have found, in different regions, in different countries, and even within a city.
I would put Sen’s last phrase, “demands of equity are central to economic policy,” as the leitmotiv of this entire conference. I am pleased that this phrase came from an economist rather than from someone, like me, who is more concerned with questions of ethical interest. A world in which the immensely rich and the miserably poor live side by side, the have-nots are deprived of essentials, and some waste what others desperately need, is not only unacceptable from an ethical point of view, but also constitutes, as has been repeated here, an unsustainable economic pattern.
In his paper, Sen says that equity in social development has supported equity in economic development, and that social development requires sustained economic growth. I would add that an economic growth that leaves large sectors of the population on its margins will not be sustainable even in economic terms. The only form of sustainable development is development with equity. This applies to a country and to the emerging global economic reality.
Why this convergence between the ethical question, the social question, and the economic question? It has something to do with the nature of the economy. The driving force of a successful economy is not the market. The market is only a means. The driving force of a successful economy is the initiative, the creativity, and the work of people. The primary element of the national or global economy is the human person, even when that person is looked on only as human capital.
Sen speaks of “the social roots of economic success” when referring to the Asian situation. We should reflect on this term. Where have there been social roots of economic success? Where have these been suppressed and where have they been fostered?
First, let us look at the negative aspect. Sen talks about occasions in which social factors have been submerged in attempts at maintaining financial soundness. We have to draw out this debate between financial soundness and the social factors necessary for economic success. We could talk about the problems of structural adjustment, or we could talk about safety nets, which have appeared to be afterthoughts or decorations on a Christmas tree rather than integral parts of a reform project. We have all spoken about policies that damage social and human capital, through nonproductive spending, unnecessary spending, arms expenditure, prestige projects, and corruption—and we could add unsustainable debt repayment. I have a very special concern about a new problem that is emerging: economic sanctions. Some countries are stagnating under economic sanctions, and there is a danger that this instrument will inflate in the future as a way of dealing with crises. We must find ways in which we can punish those responsible for grave misbehavior without damaging the overall human and social capital of a country. We cannot punish the next generation for the sins of the past.
Second, and much more important, is to look at the phrase “social roots of economic success” in positive ways. How can we foster these social roots for the future? Again, Sen talked about the tremendous power of human capital. The path from inequity and exclusion to one of equity and inclusion will not be economic. To put it nicely, leave the preaching to us. Economists can greatly help, although the thrust of economic expertise should be in finding new ways of capacity building and institution building that lead toward overcoming disadvantage. In this area, capacity building and institution building must address the infrastructures of social capital in the broadest sense—namely, that of enabling people and their social institutions to function and flourish as best as possible. Again, we are back to the definition of poverty. The definition of poverty is deprivation of basic capacities. The answer to poverty is enabling people and social institutions to flourish as much as possible. The poor person is not an object but one who is deprived of capacities that he or she should have. The answer here is not to assist but to empower the poor person. I would also like to add that not only is the person living in poverty not merely an object, but that person is not someone we should be afraid of. Very often, fear is presented as a motive for saying that if we do not do something, then we will have problems.
This reflection on an economic system that involves the concept of social empowerment is essential to economic policy, and it is essential to the growth and functioning of the market. The market must understand that investment in human and social capital is in the best interest of the market itself. The private sector, which stands to gain most from the global economic market today, must be helped to find a concept of social responsibility. Maybe enlightened philanthropy can be in the market’s best interest.