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
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.