NPP schooled on Social Market Economy

Jake Obetsebi-Lamptey is the new Chairman of the New Patriotic Party (NPP)in Ghana

By William Yaw Owusu

Monday March15, 2010
Dr. Kwesi Jonah, Head of Political Science Department of the University of Ghana says most developing countries have embarked on economic reforms without enough attention to social development and that is impeding accelerated development.

“There is economic reform but no social development. In this context probably turning to social market economy could provide a viable route to economic and social development”, he explained.

Dr. Jonah was explaining the concept of a social market economy to delegates of the New Patriotic Party (NPP) at a retreat organized by the party in Mankesim in the Central Region.

The political science lecturer was selected by the Konrad Adenauer Stiftung (KAS) to speak to the delegates on behalf of the Christian Democratic Union (CDU) of Germany, one of the largest political parties in Europe which shares most of the ideals of the NPP.

Dr. Jonah who spoke on the topic “The Social Market Economy (SME): What is it?”, said to better understand how the SME works it was useful to contrast it with two preceding concepts namely the Free Market Economy (FME), practiced in capitalist countries and Centrally Planned Economy (CPE) practiced by most socialist states.

He said while the FME relied on free competition and price mechanisms characterized private ownership in the means of production for efficient allocation of resources, the CPE took decisions for both producers and consumers by setting production targets, what to produce and by fixing prices for goods and services.

“The FME gives freedom to producers and consumers and yet unless the state assumes full responsibility for setting the rules for free competition society will suffer great injustice”.
He said as a result, the German Federal Republic adopted the SME concept in 1948 after the Second World War to combine free competition with the concept of social harmony.

Dr. Jonah said the SME concept had been developed in the 1930’s by the Freiburg School of Economics but could only be implemented after the war, saying “this concept is not simply an economic model; it is a total social and economic system.”

He said the SME concept ensures equal opportunity for everybody distributes wealth through the market mechanism rather than government intervention and guarantees personal incentives for higher productivity.

“The golden rule of SME is equal opportunity”, adding “SME should not be regarded as a model for economic efficiency only. It replaces the concept of economic man with that of a social man”.

Dr. Jonah said for SME to work effectively certain preconditions such as free competition, a well functioning and open market, private property ownership, freedom of contract, rule of law, stable economic policies, monetary stability state intervention in the event of market failure and social balance must all be guaranteed.

“The superior economic performance of SME is evident in the strong performance of the German economy, the largest export economy in the world and one of that rose from the ashes of war to become the third richest country in the world”, he said.

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