Programme on Social and Ecological Market Economy Organized

Monday, 18 January 2010
NCF January 2010 Notice Board


January 26: Nepal Constitution Foundation (NCF) in cooperation with the German Federal Ministry of Economic Cooperation and Development (BMZ) organized in Kathmandu a discussion programme on Social and Ecological Market Economy today in the context of constitution making in Nepal.

Two German experts Dr. Dieter Beneckend and Ms. Cornelia Richter made their presentation on the theme which was followed by floor discussion on the issues involved in the context of the draft constitution Nepal is working on. While Dr Dieter W. Benecke focussed on the principles of social and ecological market economy, Ms Cornelia Richter elaborated on impact of social and ecological market economy drawing on examples from Countries in transition.

The social market economy is a system of countervailing powers through which a dynamic equilibrium is created in the economy. The fundamental institutional requirements are the rule of law and a democratic order in which the interests of the different social groups are respected. Social partnership between trade unions and entrepreneurial associations is an essential component of labor market design to allow for entrepreneurial dynamics, investment, high employment rates, and social justice. The implementation of social market economy is based on three general principles: individual spirit of achievement and self-responsibility of citizens, solidarity within society and subsidiarity of the state.

Presenting his paper Dr. Dieter W. Benecke said that there has been certain crisis in the thinking of neoliberal approach - financial crisis. He said there have not been enough discussions done about economic vision in Nepal. He did not intend to give a recipe or blueprint but wanted to highlight the requirement of private initiative, free entrepreneurship, and free competition. Discussion has to be done at the local level on social and ecological market economy.

He said that everybody has to do the best possible. There should be solidarity of the stronger with the weaker ones.

He also highlighted the principles and aims of social and ecological market economy. Among others, economic aim: welfare for all, social aim: social justice for all, access to political participation, ecological aim were mentioned. We have to do more for ecological protection was his understanding. Use of renewable energy, recycling and saving resources is important for environment protection and conservation. It was desirable to have a role for everyone to behave responsibly.

Equal opportunities have to be created. Education for all is important in society as it creates opportunities.

He also highlighted role of State as economic actor.

Speaking on areas of legal regulation in the social and ecological market economy Dr. Dieter said the highest rate of income tax has to be determined.

Giving his views on institutional framework of the State, legally autonomous institutions, he said Central Bank should deal with monetary policies and not the Ministry of Finance. In case the latter dealt with the monetary policy there would be inflation.

He elaborated on the concrete functions of the government. The role of the State as entrepreneur has to be defined. Entrepreneurs should be given incentives for innovations.

Concluding his deliberation he said that State of law and good governance are half the way social and ecological market economy success.

Ms Cornelia Richter spoke of the role GTZ is playing in different countries in different capacities. She told the gathering that GTZ is the implementing agency of the German government. GTZ has been working in more than 130 countries around the world with more than 12000 national experts. Almost half century old partnership has been developed with Nepal. The achievements in Nepal is encouraging was her assessment.

GTZ has an expertise in local self government, renewable energy and family planning. Sharing of other countries’ transitional experiences will be beneficial to Nepal was her opinion. She said that social innovation is a crucial prerequisite for sustaining the process of (societal) transition. She further said that decision maker has to decide which institutions should be strengthened.

She enumerated the following as social and ecological market economy’s principles

1. Supporting the rule of law
2. Striving for broad based growth
3. Strengthening the private sector
4. Improving the conditions for the market economy
5. Making an economy viable for the future
6. Creating social partnership
7. Shaping the economy based on ecological concerns
8. Ensuring equal opportunities

Ms Cornelia shared the experiences of Armenia, Bolivia and Georgia where GTZ had assisted. In Armenia GTZ had worked in training judges. It supported the consolidation of the legal system. Sharing Bolivia’s experiences she said not only Bolivia was geographically similar to Nepal but also it has similar situation. Rights of the indigenous people had to be strengthened. In Georgia GTZ assisted in law and judicial reform. The success factors have been civil society and media was her analysis.

Welcoming the guests and the participants, Dr Bipin Adhikari, Chairperson of the Nepal Constitution Foundation, said that a market economy is based on division of labour in which the prices of goods and services are determined in a free market system set by supply and demand. Emphasizing that the concept of free market economy has gone far ahead, he pinpointed that recent advances have gone beyond the thoughts of David Hume, Adam Smith, Ricardo, Karl Marx etc. The social and ecological market economy provides a perspective from which to approach many problems that many economies face today. He said this discussion can help us find out what special provisions we might need in the new constitution that can address both the need for protection of the environment and the social fairness.

The programme was participated by about 35 plus members of the Constituent Assembly (CA), lawyers, university professors, business consultants,and social activists. CA members Ms Ratna Sherchan (Nepali Congress), Lucky Sherpa (UML), and Ms Sita Gurung (NC) also participated in the programme.

The discussion session was wrapped up by Dr. Horst Matthaeus. He also emphasized that political stability was important for economic development, welfare for all including for dalit women and men.

(Abhishekh Adhikari)