PCDForum Column #22   Release date December 1, 1991

by Sixto K. Roxas

Nongovernmental organizations (NGOs) around the world have become

increasingly assertive in challenging the conventional export-oriented,

industrial, foreign investment dependent development model favored by such

institutions as the World Bank and the IMF. Many Philippine NGOs, for example,

find this model poorly suited to the needs of a country already burdened with a

52 percent poverty rate, a rapidly growing population and deteriorating natural

resource base, and a national budget allocated 46 percent to debt service and 26

percent to military expenditures.

We have come to realize, however, that we will gain little by criticizing

prevailing economic models until we are able to offer credible alternatives.

This is a central commitment of Green Forum-Philippines a consortium body of 130

NGOs engaged in articulating and building public consensus in support of a

community-centered Philippine development model. A series of sustainable

development conferences involving 1,251 participants from 934 grassroots

organizations in eight different localities has provided the foundation of such

a consensus.

Building from the results of these conferences, we have been working to

craft an alternative development model based on what some of us call

community-centered capitalism. We chose this term because competitive markets

and private ownership of capital are foundations of our model but with a

substantial difference. Unlike more conventional market-oriented models,

households and communities are the central players in our system. Their net

incomes and net worth, rather than enterprise profits and capital, are the key

indicators of economic performance. The underlying principle is that economic

development should increase the returns to households from the sustainable use

of the ecological resources of their bio-region.

Using economic modeling techniques we have demonstrated that such a

community-centered development strategy will produce significantly greater

levels of employment, household income, and export earnings with less total

financial investment than will current officially favored alternatives.

Our efforts have underscored the limitations of conventional frameworks of

economic analysis and measurement and led us toward the construction of a new

development economics that takes the household as the basic economic unit. Our

logic may be instructive to others who find conventional economic analysis

unresponsive to human and ecological reality.

The term economics is derived from the Greek word oikonomia, which means the

management of the household. This is consistent with traditional modes of

economic organization in which households are the primary economic units and

accumulators of capital. However, the founders of our modern system of economic

theory chose the firm, rather than the household, as the basic unit of analysis.

This has led economics to consistently favor the interests of the firm over

those of people and community. The importance of the distinction is illustrated

by the simple fact that while the household considers high wages to be a

contribution to improved well-being, the firm considers them a cost to be

reduced when possible.

Everyone belongs to a household, and every household to a community. Every

community is aligned with a distinctive local ecology that is its habitat.

Business firms are not similarly rooted. Consequently, building our analysis

around the household rather than the firm results in a much stronger alignment

with social and ecological needs.

Now consider the problem of measuring economic development. The conventional

practice of equating development with growth in national income the aggregate of

the income, wages, rents and interest paid by enterprises and government means

that depleting natural resources for current consumption is counted as

development. In reality this depletion reduces future productive potential and

should be subtracted from any meaningful development accounts.

In a community-centered economics we think of a human community or

settlement and its inter-related ecosystem as a holistic unit of organization

for the production and consumption of goods to meet the community’s current

needs, and for the preservation and enhancement of the settlement’s present and

future productive capacity. Economic development occurs when the community’s

capacity for increased future economic output, including the sustainable output

of its natural resources and ecological capital, is increased. An appropriate

community accounting method should reflect this basic logic.

Defining new national development strategies, doing economic modeling, and

reconstructing the tools of economic analysis and measurement are uncommon tasks

for NGOs. Philippines NGOs are finding, however, that they are central to our

commitments to social justice and sustainability and constitute a new frontier

of NGO concern.

Sixto K. Roxas is president of SKR Managers and Advisors, Inc., No. 10

Crestline Drive, Blueridge, Quezon City, Philippines, and a contributing editor

of the People-Centered Development Forum. This column was prepared and

distributed by the PCDForum based on his presentation on "An Alternative

Economic Model" to People’s Forum 1991.

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