Capitalism, Globalization, Brenton Woods and International Trade, Is It An Evil for Papua New Guinea?

By Douveri Henao

Background

There have been some great facebook threads on the subject of globalization and how Papua New Guinea should respond accordingly. From the tsunami of wiping out domestic industry, multinationals grabbing land to fueling corruption. There are then the arguments of Brenton Woods Institutions spreading their hegemony. Norms that are unrealistic as they promote liberal economics (Washington Consensus.) So beckons the question, are these issues diabolical and catastrophic for PNG? My answer is no for the simple reason been, there appears to be gains and these gains need to be advanced though intelligent and creative policymaking.

There is a plethora of literature on both sides of the spectrum giving views on the good and bad sides of globalization, capitalism, Brenton Woods and international trade. From the high priest of Globalization Thomas Freedman’s “The World Is Flat”, provocative insights to the failure of Brenton Woods Institutions in Joseph Stieglitz’s Globalization and Its Discontent to Erik Reinert’s How Rich Countries Got Rich… and Why Poor Countries Stay Poor. A disposition of trade been responsible for perpetuating poverty.

Aside from literary works, Michael Moore’s documentary on Capitalism a Love Story as well as the Matt Damon narrated Inside Job are compelling cinematic works on where things have gone horribly wrong. Of course one can also lean on confessional semi autobiographies like Allan Greenspan’s Age Of Turbulence, who has been accredited to the father of deregulation and blamed by many as the person responsible for the current financial mess.

Like most folks, why bother reading all this, defer to the norm, air an opinion because I need to be heard. That’s all good, but what would it achieve when not all the issues are been considered. So here is my attempt to bring some clarity on this issue as I do feel if not considered in all its facets, will bring reckless policy and would indeed make our dear people suffer.

What are the Issues?

The term capitalism is in relation to a political ideology that promotes the idea of individual ownership and the promotion of wealth creation through it. So it looks to ensure there is less regulation stifling business transactions, cumbersome rules and less State supervision and intervention.

Following this ideology, globalization is the act of exporting this concept outside the internal borders of proponents of capitalism. Thereby promoting international trade, commercial practice and business norms to facilitate capitalism.

For such a process to occur, Brenton Woods Institutions, World Bank and International Monetary Fund and the World Trade Organization as well as other multilateral organizations facilitate treaties, programmes, and projects and where appropriate, develop regional or national integration solutions.

So What’s The Problem?

Like any ideology and system, it is prone to pressures that will challenge its practicality and functionality. Joseph Stieglitz’s book I mentioned previously is a must read as it eloquently details the failure of capitalism and globalization by solely making the implementation institutions responsible i.e. Brenton Woods Institutions. Examples of Argentina, Ethiopia and beloved PNG are all discussed. Whereby unsustainable fiscal and property reform, devaluing currency, austerity measures, the results have been devastating. Unemployment, civil unrest to wars.

The underlying problem has been the exclusive consideration of economics and not considering other factors such as cultural, social and political factors. The strong viewpoint was the basis of his sequel, Making Globalization Work. He does probe into deeper engagement on anthropogenic considerations issues and not exclusively rely on economics.

Such consideration of health, education, financial inclusion, cultural factors and others must be considered in appropriately applying economic development models. Thereby, moving away from the capitalistic ideology and formulate a combination of different systems. This in turn may have a domino affect in changing norms, programmes and projects in Brenton Woods Institutions and related trade and commercial practices.

But here is the challenge, especially for a nation like PNG; this particular consideration must come from Papua New Guineans. We must augment the ideology and system to suit our way of life.

Infusing PNG’s Way of Life in Ideology and Systems

Our forefathers were aware of these issues and in the CPC Report, cited cases of the traumas of Africa, Asia and Latin America, on the dangers of capitalism. They cited the complications multinational companies may bring and the importance of protecting land. These ideologies have evolved in to norms and feature in areas of land protection, investment rules and natural resource management.

They have been used the basis to interact in dealing in safeguarding our people from capitalistic approaches that is not consistent with our way of life, negative impacts of globalization, fight against Brenton Woods Institution polices that are inconsistent with our national interest and are to advocate our right to protect our domestic industries in international trade. Sadly, these norms are eroding and so one has to ask why this is the case.

I can only conclude by saying that we are not resourcing our time and energy in developing policy responses to maximize the benefits but rather have spent more time either looking at short-term objectives or crusading to all that it is indeed is an evil.

Policy Response To Maximize Capitalism, Globalization, Brenton Woods Institution and Trade

To be fully effective in providing policy responses, it must be inclusive of all stakeholders. From the Executive, legislature, judiciary, NGOs, Private Sector and regional blocs and organizations.

Executive Support

Administrative coordination:
–Establishing an interagency and private sector committee;
–Build capacity of industry, commerce, trade IP administrations;
–Build capacity in compliance, monitoring and enforcement of protecting business interests;

Policy coordination:
–policy paper on micro and SME Development;
–Tax and other preferential treatment to them;
–promoting polices in technology transfer, information sharing and capacity building to systems to improve product development of domestic industries;
–Training on product and marketing development;
–Grants and other capital financing incentives;
–Export promotion and market access of exporting goods and services.

Legislature Support:

–Amend or enact laws to promote domestic industries;
–Conduct hearings to parliamentary committees on promoting and protecting domestic industries.

Judiciary

–Judicial system to facilitate appropriate alternative dispute and judicial pronouncement to commercial disputes;
–Build jurisprudence on commercial practice;
–Enforce reciprocal judgments of disputes relating to PNG businesses.

NGO And Private Sector

Encourage domestic industry to establish entities representing different sectors e.g. manufacturers, hotels etc;

•These entities may then form the basis to create standards, licensing bodies and liaise with government on industry support;

•Develop intra private sector relations on facilitating investment and business opportunities;

•Develop relations with legal professionals on assisting business and commercial law advice;

•Actively partake in formulating regional and international arrangements and agreements in trade, commerce and investment norms.

Conclusion

There is indeed positive side to this complicated system of rules and ideologies and we need to be clever in creating wins. Who knows, one day a Papua New Guinean may be inspired to write his tale on how they beat all odds to become a winner.

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2 thoughts on “Capitalism, Globalization, Brenton Woods and International Trade, Is It An Evil for Papua New Guinea?

  1. Some Comments on this from facebook:

    Murf E. Lee
    I believe the local body of work on models and ideology needs more development as well as greater circulation.

    We are moving from Robert Owen’s ‘self-sustaining’ hamlets to wider market production seemingly overnight.

    There needs to be robust discussion on economic schemes led by the educated middle-class who straddle the divide between the economically independent wealthy, and the socially dependant lower class.

    With the advent of Free Trade schemes being pushed by the oh so near likes of Australia, the need for socio-economic consciousness cannot be understated.

    I am for inclusive and comprehensive debate by Papua New Guineans with local insight and Global perspective for the development of an appropriate variant of Capitalism for individual economic freedom without marginalizing our social cohesion and values.

    Emmanuel Narokobi
    I can see allot of references to further reading on this topic so thank you Dou and others for the pointers.

    I particularly like Murf’s comments as I believe shaping what ideology we stand on for our economic models is the focal point to grow from. Our relationship to our land, our cultural ties to others in PNG have to be fully explored individually and understood before we can take it to the next step of dealing with investors and banks.

    Do we necessarily have to be socially dependent to be lower class? or does economic independence always mean wealth?

    Douveri Henao
    Great questions Manu and I suppose the role of policy making is to provide an environment to propagate oppitunituties. These oppitunitites may provide wider safety nets and disposal income. I do know athose that are catagorized in the middle class (based on monetarty earnings) are socially dependent or rather culturally subsidized on goods and services and more importantly, these transactions are not conducted through monetary values. Its this process that requires further consideration as it transends to all economic, trade and financial transactions. Its this fusion that we need to be creative in. I’ll cite examples on how this influences commerical practice later but I guess the message is clear, we need to generate discussions on fusing our way of life to formulate an approrpaite economic norm.

  2. Many human societies evolved through various phases but have ended up in many ways going the full circle. An extended family / then a king and subjects / then an aristocracy and serfs / finally a middle class that ultimately developed capitalism. Then the introduction of social support schemes started in the 19th and 20th Centuries effectively tried to emulate what the extended family used to provide.

    Yet the essence of the dilemma is about power and the use of it. Who has the power and what do they do with it? In the traditional PNG society, the power was held jointly and decisions made in a collective and inclusive way. This unfortunately does not allow much in the way of individual initiative and is quite often counter productive when it comes to competitive business development.

    Can you have a dichotomy of social systems where you can voluntarily opt out of one and step into another any time you like? That’s the real issue isn’t it? We’d all (well mostly all) like to sit around the camp fire and discuss the world in general. It just doesn’t feed and clothe the family and educate the children to cope with modern life.

    What’s the answer? Well if I knew that I’d be able to sell it and be rich wouldn’t I? But then I’d have to worry about all the material goods I owned and who might want to steal them?

    Ehya! Displa kain tingting em bagarapim het blo mi. Maski, skin blo mi les na bai mi go slip nau.

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