Developing a business culture
Editorial
Stabroek News
January 8, 2004
In modern China one encounters the peculiar phenomenon whereby a society that has for years been successfully encouraging massive foreign investment and to a lesser extent, the growth of a local entrepreneurial class, lacks much of the important underpinning and infrastructure of a developed capitalist economy. For example, consider the legal situation. In developed capitalist economies like America and the United Kingdom contracts are enforced by court action if there is a failure to perform or a breach. There is no such supporting legal infrastructure in China though efforts are being made to put one in place and there have been visits by and conferences with high level judicial figures. There is an embryonic stock market but much of the financial architecture that undergirds a market economy remains to be developed and put in place after decades of state ownership and control.
In Russia, despite the astonishing privatisation some years ago after the collapse of Communism of massive state owned industries that created overnight a new class of economic `oligarchs' one senses that the country is still in a kind of limbo, psychologically, between the old, inefficient, planned economy, which had dominated the horizon for so long and the brave new world of capitalism. An entrepreneurial class has come into being but there again much of the important supporting infrastructure of a market economy remains to be put in place.
Since colonial times Guyana had some of the basic infrastructure of a capitalist economy. In its legislation there was the Companies Act which provided for the incorporation and operation of private and public companies limited by shares, a major watershed historically in the development of business enterprise allowing, as it did, persons to invest in business ventures and to limit their liability at the same time. The English common law of contract was part of the legal system. Though the economy used to be dominated by foreign capital, there was a local entrepreneurial class. The late Peter d'Aguiar pioneered the formation of a public company in which a prospectus was issued and capital was raised from thousands of small shareholders. But there was no stock exchange and several other important facilities that are a standard part of a developed market economy were not in place. Furthermore, the socialist experiment that started in the seventies and led to some eighty per cent of the economy being state owned, and which also sought to miniaturise the local business class tended to marginalise capitalist enterprise, both in fact and in the minds of citizens. Private investment and profit became questionable activities.
Since at least the early nineties there has been an important formal change. Both main parties now explicitly welcome private investment, local and foreign, and have proclaimed the private sector to be the engine of growth. Yet the kind of momentum one might have hoped for has not been forthcoming. In the first place, the business class which by the late eighties was a demoralised remnant of what it had once been has not yet regained its confidence. Moreover the massive emigration over the last few decades of the traditional entrepreneurial and managerial class has left a gap which cannot be readily filled. In addition, as in Russia and China, there are large residues of the attitudes that resulted from the socialisation undergone by the people in planned, state owned economies. There is an unfamiliarity and a discomfort with the attitudes and lifestyle of a private sector dominated economy. Indeed, though the two main parties have announced their transition to a new era of capitalism one cannot help but sense in some quarters in those very parties and their supporters a less than complete awareness of and commitment to a successful private enterprise economy and an ambivalence to capitalism. It is a case of social lag, old attitudes dying hard. Changing one's political church late in life is not easy and requires more than just the expression of ritual verbal formulas.
In brief, there has been some new investment since 1990 but that economic take off the more optimistic had hoped for after years of stagnation, especially with the return to free elections in 1992 and the anticipated `democratic dividend' has never materialised. There has been no take off nor is there an immediate prospect of one.
The formation of a stock exchange is a positive step, despite the perhaps inevitable slow start. A clear investment code will also help. But there also surely needs to be more emphasis, more reporting on business matters and on the culture of a market economy. With that in mind, it is the intention of this newspaper to introduce from today a weekly coverage of business matters in place of the monthly Business Supplement. There is much to be done if one is to go beyond ritual genuflection to a new idea and to gradually inculcate a better awareness and understanding of the possibilities and problems of the private sector and the contribution it can make to a better standard of living.