All of the different forms of capitalism and progressive economic philosophy a government can espouse, if taken up without adequate precepts of democracy, accountability and transparency, will come to nothing. Al-Masry Al-Youm chose this topic as the subject for its second book publication.
This is part of the newspaper’s mandate, expressed by Al-Masry Al-Youm board member Salah Diab to “enlighten through thought as well as news.”
Panelists gathered last night to join Professor Robert Litan (available via video conference) to launch and discuss the new publication by Al-Masry Al-Youm, of his book Good Capitalism, Bad Capitalism (Yale University Press, co-authored by Prof. William J Baumol, and Prof. Carl J. Shramm).
Originally published in 2007, the book comes at an apposite time for Egypt, as the public has begun to lose faith in the lumbering and, in many cases, catastrophically mismanaged privatization program.
Litan describes the varying stages of capitalism from the most centralized allocation of wealth and control to the most open form of entrepreneurial capitalism, which he said, “accounted for all net job growth in America since the nineteen eighties.”
While Litan’s speech was an insightful and instructive narrative on enterprise and the right to ownership, most of the panelists agreed that the road blocks impeding Egypt’s transition to good capitalism are political and intellectual, rather than economic.
Magdy al-Gallad, editor-in-chief of Al-Masry Al-Youm noted that, even though Egypt has officially made the transition from socialism to capitalism, there has been a time lag in that transition in the minds of the people. One reason for this has been the general failure of the country’s business community to convince the public of their positive influence.
American University in Cairo Professor Sabry al-Shabrawy, after engaging the audience in a useful lesson on economic history, decried the current state of Egypt’s economy as neither good nor bad but decadent capitalism. “There’s no other way to describe those people making annual profits of between one and three billion Egyptian pounds, who do not enhance the country’s developmental prospects,” he said.
The concentration of economic power in Egypt within a very specific small group and their inability to translate wealth into a broader context from which the public can benefit, are signs that Litman’s assessment of the current state of the Egyptian economy may be slightly amiss. His overly optimistic predictions for the country may have been intended to appease the local audience--or mask a lack of local knowledge--but the panelists and audience compensated by their discussion of the book within the Egyptian context.
One of the strong points of the book, according to Ahmed Galal, Managing Director of the Economic Research Forum, is its discussion of micro-economic units of growth. He argues that, in Egypt, we often boast decent levels of growth but this does not necessarily translate into development at a grassroots level. Sustainable economic development only occurs with a mixture of democracy, diversification or industry focus, regulation, and distribution of wealth.
Litan introduced the book and the discussion with reminders that they are both discourse on the post-Cold War, “end of history” context; a context the speakers all seemed in accordance with. This caveat, however, does not exclude the role of the government altogether. The panelists seemed to constantly question themselves as to what level of freedom versus regulation is needed in order to encourage the most growth and development. This question, though, is predicated on the notion that people are willing to be productive economic actors.
Al-Shabrawy does yet think this is the case. “Before any of this, before the government and the forces that be get their affairs in order and encourage innovation, no one will want to create or be entrepreneurial in the first place.” One thing the panelists and the author appeared to agree on is that in a free market, Adam Smith’s “invisible hand” is not always invisible, but in fact takes the form of a regulatory body that needs to steer the ship to an optimal form of capitalism; one that, according to Litan, has yet to be discovered.