ABDULRAHMAN A.ABDULRAUF writes on thoughts at a KAS-organised workshop in Abuja, on social market economy and its prospect in Nigeria.
Although recession is believed to be a major global concern, the intensity with which Nigerians experience this appears alarming. The fast-depleting purchasing power of Nigerians has become a source of serious worry. No thanks to the sharp drop in the prices of petroleum at the international market. The result therefore is that there is an increasingly alarming gap between the haves and the have-nots, thus raising fears of social crisis of sort.
This formed the thrust of discussion at a recent roundtable in Abuja on “Social Market Economy – A Tool for Economic Development for Nigeria,” organised by Konrad Adenauer Foundation, A German political organisation , based in Abuja.
Attendance at the meeting cut across traditional/religious institutions, small and medium scale business owners, members Civil Society Organisations and of course the media among others.
Setting the tone for the event, KAS Country Representative, Mrs. Hildegard Beherendt-Kigozi, shared the German experience with her audience on what social market economy, according to KAS, stands for.
Tracing the history of social market economy in Germany, she urges Nigeria to buy into it.
While noting that the economic system dwells much on “effective and equitable allocation of resources,”, the KAS boss said though “it might be slow, but certainly steady to achieve the desired goals for the overall benefits of the people.”
For instance, quoting a German economic theorist, Ludwig Erhard, she says, this brand of economy stands for solid public finances, stressing that “any experiment in the character of supposed welfare of charitable attitude to spend money than the treasury revenues, breaches good and proved principles.”
Furthermore, the KAS country representative says this brand of economy is “a commitment to partnership and collective bargaining,” stressing that “employees and employers can organise their labour relations better than the state.”
“It is also an equal participation in a meritocracy. This concerns the opportunities on the labour market , the possibility for economic mobility by education and social integration assistance for immigrants. It is also the appreciation of family and civil engagement,” she explained.
She lists other features of the economy to include open market in a globalised world not regulated by tariffs and trade restrictions, an independent monetary policy focussing on maintaining price stability, the protection of livelihoods and sustainable, resource-effcient economic activity among others.
Picking up the discourse from there, the lead paper presenter, Dr. Obadiah Mailafia, a former Deputy Governor of Central Bank of Nigeria, believes that with its virtues, the social market economy could work for Nigeria is sincerely implemented.
He breaks his paper into three parts namely; explanation of the concept and origin of the social market model, the key elements of the model; and its relevance and applicability to Nigeria.
Mailafia, also a former Chef de Cabinet, African Caribbean and pacific Group of States, Brussels, who held his audience spellbound throughout the presentation, says contrary to what may be imagined, there is no one universal model of capitalism. “The reality is that there are varieties of capitalism and there is no one standard , universal model of a market economy . Apart from the Anglo-Saxon Model, we can identify the Continental Eurpean Model(Belgium, Netherlands and Austria); the Social Market Model that has been operational in Germs since the post-war era; the Japanese corporate capitalism model; Nordic Model; the French dirigiste model, the Chinese socialist market model; the Nordic model and others.
“The Nordic model which informs the economic system of countries such as Sweden, Norway, Denmark and Finland, combines economic efficiency and growth with a peaceful labour market, a fair distribution of income and social cohesion. This model puts a heavy emphasis on high investments in human capital and commitment to a cooperative approach to labour market relations and high taxes for provision for provision of welfare . It has been uniquely successful in combining high growth as well as innovation and generalised welfare,” the resource person submits.
Tracing the history of the social market economy in Germany, the former CBN chief recalls that its intellectual origins date from social debates that accompanied the unification of Germany during the Bismarckian period.
“The great ideological debates between Austrian pure liberalism on the one hand, and Marxist socialism on the other, forced thinkers such as Gustav von Scmoller, Werner Sombart and Max Weber to seek a middle way that will reconcile the two extremes in teh ideological divide.
“The social market economy was thus designed to be third was between laissez-faire liberalism and socialist economics. Historically, it was influenced by what came to be known as the philosophy of Ordoliberalism associated with a group of economists and social thinkers at the University of Freiburg. The concept of Ordoliberalism aims to integrate the social democratic ideas with the ideals of Christian social teaching and ethics.”
The finance expert who describes Chancellor Konrad Adenauer as champion of the post-war social market economy model in Germany, states that “the so-called German economic miracle was essentially anchored on the principles of the social market: national competitiveness, exports drive, vibrant SMEs, economic and monetary stability, employee participation in corporate management, subsidised housing, child benefits, dynamism of pension and so on.
“In June 1948, his Christian Democratic Union (CDU) distilled the key elements of the social market approach as being solidarity, open and fair competition , free market principles social harmony and welfare.”
Narrowing it down to the Nigeria’s economic environment, the scholar warns that the Nigerian economy risks crashing if the economic space is not widened and fairly
regulated to accommodate all players, including the SMEs.
He laments, to the astonishment of his audience that about one percent(approximately 1.9million) of the nation’s population (188,996, 757 million) controls over seventy percent of the economy.
“We need to ensure a fairer system of taxation that makes the rich and affluent pay their due and promote SMEs as the backbone of the national economy. What I am saying here in essence is that there should be income distribution and equity. Those well-off should contribute to the economy.
“In Nigeria today, about one percent of the population controls over 70% of our economy. I stand to be quoted. I am not saying this out of envy. Of course, I will be much happier to see a one thousand Dangotes emerging in our economy.
The resource person who said the world economy was no more oil dependent, calls for diversification, explaining that it was the only way to save a looming danger in the country.
“Like I said, German economy thrives on SMEs and we should endeavour to do same here. The idea of people diverting resources to personal use must stop. As it is now, Nigeria is sitting on a time bomb.
“There is need to diversify the economy and develop a strong international trade networks. Oil, which some people brag about is now found in Niger, Cameroun and even Ghana. So, we must diversify desperately, persistently, efficiently, urgently, assuredly and accurately,” he adds.
On the applicability of the social market model to Nigeria, Mailafia notes that although both Germany and Nigeria “are wide apart in terms of economic and technological development, the two countries nevertheless share some similarities.
“Both are populous nations and regional powers in their respective regions. Both countries also operate the federal system of government and both have endured some traumatic experiences in their history. Both countries also have close economic, trade and diplomatic relations.”
And the comparison ends there. “Unfortunately, while Germany has succeeded in its nation-building efforts, Nigeria, is at best, a work-in-progress. I am persuaded that there is a lot Nigeria can learn from German social market model.
“The lessons of world development make it clear that markets matter, and so do institutions.
What I take away from the German market model is that there has to be a healthy mix between state and market.”
Also in another presentation, Deputy Executive Secretary, Caritas Nigeria, Abuja, lists the Catholic ingredients in the market economy to include; dignity of human person, social principles of solidarity, principle of the common good, and the principle of subsidiarity.
While it is not in dispute that the social market economy definitely has its own shortcomings, the consensus at the forum however is that this could be ‘distilled’ to fit into the Nigerian society. But the question essentially is; can the system really work for Nigeria , giving the many inherent inhibitions, including corruption?