Author Shankaran Nambiar offers food for thought on the problems and dilemmas besetting the economy. THE past few years have chimed with talk of reform, transformation, inclusiveness, equity and sustainability, and renewed zeal to achieve high income, fully developed status as prescribed by Vision 2020. But before these ideas trended up and into the forefront of public consciousness, some among us were already articulating the need for fundamental change. As slogans fade, and hazy ambitions face up to hard reality, it helps to read commentary that stays lucid, critical and methodical amid the fleeting buzz. Dr Shankaran Nambiar, of the Malaysian Institute of Economic Research, has been thinking hard about Malaysia’s development experiences, achievements and shortfalls. He vouches for a rethinking of our approach and method of advancing the economy toward maturity and better quality of life. From 2001 to 2013, he wrote consistently on these issues in local English language dailies (including The Star). These essays are now compiled into a book, The Malaysian Economy: Rethinking Policies And Purposes. The book’s central claim, a theme woven through these writings spanning a dozen years, is one we do not often hear about: an economy’s progress over the long haul is directed and sustained by its institutions. It is not investment rates, stock market rallies or development spending, not even transformation programmes or regime change, that ultimately matter, but institutions, defined as “those habits and organisations that encourage the practice of capitalism, the efficient working of the economy, that promote efficient public delivery systems, and that are compatible with ease in doing business”. Strikingly, capitalism features prominently, unlike in economics textbooks and popular discourses that revolve around seemingly more innocuous, or at least less contentious, terms like “the free market”. Capitalism entails lopsided power, sees economics and politics as intertwined, and sometimes polarizes opinion. The author plainly recognises that the economy we have is a capitalist one, with potential for dynamism and imbalance, so let us strive to get the most out of it. The book’s support for a functional capitalism certainly does not entail pandering to the wants and demands of capitalists, or giving free rein to markets through privatization and deregulation, or letting our affairs be ruled by the mentality that financial profit supersedes all other intents and purposes. The author laments how economics as taught in our universities “completely misses the relationship between the firm and the greater good of society”, and probably perpetuates dogma that privilege private interest over public benefit. Malaysia will do well to tap our capitalist system’s creative and productive potentialities while bridling its power-seeking and destructive tendencies. The author thus argues for more competition and economic freedom, for maintaining an open economy, while also advocating minimum wage, a continuing steady and flexible hand of government in development planning, and a firmer strategic role of the state in international finance and trade. Malaysia’s economy has increasingly had to grow and mature through raising efficiency of markets, dynamism of businesses, and efficacy of government since the 1997-1998 Asian financial crisis, which ushered out an era of booming investment, massive infrastructure growth, and reliance on low wage assembly lines for export competitiveness. Over the past decade and a half, and in decades to come, development will need to be driven by promoting innovation, improving governance, cultivating talent and negotiating new sites of opportunity in international trade and investment. This book’s broad range of topics delve into these challenges, succinctly setting the scene and helping us think through problems, dilemmas and uncertainties. Malaysia’s successes deserve credit, and the author gives that quite amply, but never effusively or heedlessly. Among other things, our government is commended for promoting private sector growth and public-private partnerships, for giving priority to the knowledge-based economy, and for putting in place a good legal and regulatory framework for government procurement. The book expresses critical dissent over other matters, such as overly ambitious planning and targeting, deficient accountability and transparency in public procurement, fiscal spending and official statistics, and lack of clear strategic positions in Malaysia’s Trans-Pacific Partnership negotiations. In all, 37 essays are clustered into six chapters. While the essays can be read independently, they piece together a bigger picture of ways Malaysia should rethink the foundations, objectives and mechanisms for moving forward. Still, the book would be aided by an introduction to each chapter, for better overall cohesion as well as to point out important topics receiving less coverage, like the schooling system, the future of manufacturing, and corruption. Nambiar does not quite explicitly reach a general assessment of the sufficiency of Malaysia’s institutions for lifting our economy to a higher plane, but one gets a distinct sense that much work remains to be done, that time is not on our side, and success considerably rides on political will to do the necessary but difficult. Of course, these are huge questions, and the author offers no “grand analysis”. Its bite-size offerings are bold, crisp and good. I hope more will pick up this book and chew on its ideas. Lee Hwok Aun is Senior Lecturer in the Department of Development Studies, Universiti Malaya.
Posted on: Wed, 29 Oct 2014 10:38:37 +0000
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