By Dr. Randolph Persaud

READERS will recall my article a few days ago in which I asked if the United States is a good political economy model for Guyana. The piece received some attention in “cyber-media” and, on account of the interest shown, I would like to elaborate on the central concerns recently expressed.

The central articulating principle of my position is that the American socio-economic structure is based on a lop-sided model that favours businesses, rather than markets. While the self-regulating price mechanism does generate inequalities, these are magnified when big business exercises their structural power to derive “special interest” benefits.
My contention is that the structural power of capital did not end with the Robber Barons but took a new form in hyper neoliberalism that came to be known as Reaganomics. This neoliberalism is based on a philosophy of “personal responsibility.”

It is “blame-the-poor” philosophy. It is profoundly anti-labour, and firmly rejects state provision of resources to the working classes. It is a corrupt philosophy because, while it preaches no help for the working class and the marginalised (due to race and gender), it supports subsidising businesses with the excuse that the benefits will trickle down.
Many will recall that the first action taken by President Reagan was to fire 11,000 air traffic controllers. Recall that one in three Americans does not have $400 in cash to meet an unexpected expense and that 650,000 people declare bankruptcy every year to medical bills.

It is important to know that personal responsibility capitalism in the United States is not confined to the Republican Party. Recall, for instance, that it was President Clinton who removed Glass-Stegal which, since 1933, had separated commercial banking from investment banking.

In my own view, this gift to Wall Street contributed to the housing-market led “financial crisis,” followed by a full-blown economic meltdown in 2009-2010.
The PPP’s model from Cheddi Jagan, through Janet Jagan, Sam Hinds, Bharrat Jagdeo, Donald Ramotar, and Mohamed Irfaan Ali, has always been pro-working class. There are variations, of course.

This is to be expected for a period spanning three-quarters of a century. Yet, the core beliefs and practices of the PPP amount to a rejection of trickle-down economics.
In contradistinction to the neoliberalism of personality responsibility capitalism al la the United States, the current Guyana model is based on the following:
(a. A social-democratic approach to economic governance that advances the economic well-being and human development of the population.
(b) An economic environment with concomitant policies that are conducive to market dynamics within the parameters of the protection of private property rights, human security, and the rule of law.
(c) A fundamental commitment to national unity based on democratic values, (One Guyana), democratic institutions, and the paramountcy of the Constitution of Guyana.
(d) Based on the above, I am of the view that the Guyana Model is akin to the post-war German approach, that is, the Social Market Economy (SME). However, given that our LCDS (2009-2010 and 2030) also offer constitutive elements to our approach, the SME should be adjusted to Socio-Ecological Market Economy (SEME) (see O’Hara and Stagl, (2001).
Professor H. Call described the SME “…as an economic order [in] which a framework of market economy aims for social security and social equity by means of political intervention and measures in line with the market.

“It aims at maintaining the mechanisms of the free market while simultaneously ensuring social equity by keeping a balance between a high rate of economic growth, low inflation, low levels of unemployment, good working conditions, social welfare, and public services by using state intervention” (Horst Call, 2012).
The ecological dimension of the Guyanese SEME is based on three components. First, is the 44 million acres of pristine, tropical rain forest, which is a natural resource.
The second aspect is what I conceptualize as “Ideas-Based Value,” that is, an economic model that transforms the raw (natural) resource of the forest into an actionable, realized value, expressed in monetary payments.

As you know Hess Corporation is paying US$750 million to Guyana under the ART-TRESS framework. In the first iteration of this model, Guyana and Norway signed the first bilateral deal based on Avoided Deforestation. The third component is President Ali’s comprehensive food security policies pursued through sustainable agriculture.
Some readers will ask where oil and gas fit into the model, and that is a perfectly relevant question.

The first and obvious answer is that O&G will allow the GoG, under the PPPC, to bring to fruition its main objectives at a much faster pace.
Yet, as President Ali and Vice President Jagdeo have said on numerous occasions, hydrocarbons form only one plank of the economy. O&G is allowing Guyana to transform the basic foundations of the economy.

New sectors are emerging, as could be seen in the tourism, hotel, food, and beverage industry. A new generation of highly trained Guyanese is now rising and will form the bedrock of a dynamic, skills-based economy. Finally, the financial resources derived from oil and gas will allow President Ali and the PPPC to deepen its commitments to those who have been left behind.
The arguments put forward reflect deep concerns about the central tendencies of the American economy. While personal responsibility neoliberalism has facilitated the fantastic accumulation of wealth, millions of Americans are still mired in poverty. There are, in fact, varieties of capitalism.

The US model is an extreme form. Other countries such as Canada, Japan, Germany, and Norway, have pursued more social-democratic versions where state intervention aimed at correcting “externalities” are politically and culturally acceptable. The Guyana Model of Socio-Ecological Market Economy builds on these varieties of capitalism, albeit with a sound tropical twist due to our LCDS.
In closing, I feel compelled to state that small countries under sound leadership can also provide innovative, global leadership.