Bringing focus on the dangers of unbridled capitalism

Pope Benedict XVI has brought focus on the "grave deviations and failures" of capitalism exposed by the financial crisis and issued a strong call this week for a "true world political authority" to oversee a return to ethics in the global economy. The Pope's call came just before the Summit in Italy of the G8 heads of Government, attended by 39 heads of government and international institutions. The Pope's concerns to find new "forms of Redistribution of Wealth" is likely to fuel debate on the failure of rich nations, notably Italy and France, to honour past aid commitments to poor nations.

The Pontiff's call was also to find a sustainable business development model in the broadest sense, and doing business with a social responsibility. It is capitalism in a globalised world where the market forces are regulated by a strong oversight authority. Enterprises are needed to seek a new way of understanding business that would respect the dignity of workers and foster the "common good by prioritising ethics and social responsibility over dividend returns" said the Pope.

The prevailing economic paradigm in most of the countries of the world including Maldives is capitalism.

Eight months after President Nasheed took office, our government is still pre-occupied with the old issues including investigating the corrupt practices of the Gayoom government that remained in power for thirty years. For the legislative agenda of the Nasheed government to become effective, the government needs to pass several bills to fulfil their election pledges, including the decentralisation of power to the provinces. These bills that are necessary to bring structural, social and economic reforms are getting hindered by the opposition party holding the majority in the parliament . They have placed their own party politics over the national interest and the future direction of the country.

Moving away from the crony capitalism of the previous government, the Nasheed government is embarking on initiatives to privatise state-controlled industries and empower the private sector to do business. But such private sector empowerment allowing for a more business-friendly environment and the government pulling out of doing business is not a panacea to root out corruption or solve all of our problems.

If we are to learn anything from the 2008/9 financial meltdown of the United States, the bastion of free market capitalism, we now know that unless adequate oversight regulations are enforced timely the same financial market that makes people rich can also ruin livelihoods with millions of people losing their jobs, bankrupt companies and even countries. The financial collapse that began in the Wall Street due to greed, reckless risk-taking, and dangerous speculation of investors, traders and bankers, quickly spread all across the globe bringing the worst recession since The Great Depression of the 1930s. The US federal oversight authorities failed to act for far too long until the economic roof fell on their head.

The Nasheed government needs to maintain strong oversight institutions in Maldives entrusted with the authority and responsibility to monitor our stock market with proper disclosure and good governance. Such oversight authorities should hold financial market players like the banks and financial brokers accountable, thus reducing the room for market manipulation. A well educated citizen who understands the financial markets is the best tool to avoid huge losses and financial havoc.

Maldives can only achieve the ideals of a strong democracy by building a strong economy that values innovation and provides opportunity to its citizens.

The present government needs to lay down a firm foundation of the institutional framework for good governance and create a system that provides a more equitable distribution of wealth. Unless the citizens reap the benefits from such reform process, it is likely that our country could slip back into crony capitalism and the "business as usual" system with another change of government. If that happens we will be back to the old system that promoted widespread corruption and allowed open borders for illegal drug traffickers who made tons of money while addicting and killing our youth.