Editor's note

International Internet Magazine. Baltic States news & analytics Wednesday, 23.05.2018, 02:18

New trends in economic policy: OECD outlook

Eugene Eteris, European Studies Faculty, RSU, BC International Editor, Copenhagen, 08.06.2017.Print version

At the recent OECD ministerial council meeting its leaders suggested that a “better life for all” is quite real in the modern world. The message was shared by all 35 member states and OECD’s partners from about 90 states. Three Baltic States as OECD members shall follow the organisation’s measures towards responsible political economy.

The OECD ministerial council meeting, MCM (6-7.06.2017) discussed the need for inclusive growth to improve well-being for all in open, digitally advanced economies. The message was easy to formulate but it seems quite difficult to implement. Formulating a “more people-centered approach” both at the national level and in international regulations faces constant resistance from the liberal market itself, national protectionist measures and powerful elites, to name a few.

Though the MCM highlighted the importance of continuing countries’ focus on developing more integrated, and inclusive economies and societies, it is going to be seen how good intentions can turn into practical results. More states are already adopted so-called sustainability plans according to the pledges of the UN-2030 Agenda for Sustainable Development aimed at “leaving no one behind”. But making globalisation work for “better lives for all” seems to be in constant confrontation with existing economic policies’ structures. Some of them can be highlighted below. 

Changing course

All three Baltic States are the OECD members; that means they have “to stick” to the organisation’s opinion. OECD quite rarely takes a “soul-searching” path and change old-aged development course aimed at liberal market activity; this time it’s an exception… And therefore it is good enough to consider well-formulated OECD opinion.

Shortly, the arguments are actually known to the civil society: most people are already aware of that present “western system” is not fair and it does not make them happy. Examples abound: enough to mention that the so- called free trade creates more inequality and unemployment.      

See for example: www.oecd.org/economy/economicoutlook.htm

Eternal question: “what’s to be done”? According to OECD, protectionism is in no way a solution, though a “free trade” is still the background for increasing welfare. The way out is that of “political choice”: e.g. more equal distribution of  all the wealth, which free trade creates. That could be done through different means: re-assessment of taxation, investing in education new skills, adequate health system, modern infrastructure and, of course, new and active employment market.

Sounds quite familiar!? Yes, it’s something that the Nordic system of political economy is built on; the principle is called “flex-security”, which means, flexible job market and secure means of subsistence for re-trained workers. 

However positive, the message can came true only through a new consensus, argued OECD officials, between/among economic and political decisions, so-called political economy.

That recipe can be used for regulating globalization processes as well!   

Lessons for the Baltic States

This is how we enter the issue of political economy for the Baltic States: i.e. from the globalisation angle. There are, in fact, presently two main approaches to globalisation from a nation standpoint: one, the “liberal” approach is based on countries’ liberalisation and deregulation process of all traditional “market forces”. Another, “populist” approach is based on national protectionism behind “closed doors” with export-import restrictions/subsidies, customs barriers and other protectionist tools. Both ways, actually are leading to nowhere: we can see the “strange” outcomes of national-protectionist measures and public dissatisfaction resulted in present social changes on both sides of the Atlantic.

What OECD suggests is the “third way”: creating a political superstructure on the global markets’ functioning. The idea is to turn “all the goods” created globally by the global free market instruments (free movement of workforce, capital and production, etc.) for the benefit “of us all”! And OECD correctly underlines that this can be done ONLY through a responsible political economy.   

Probably the same recipe is true for the present EU of which all three Baltic States are members: isn’t it time to re-assess and truly implement not-so-old basic EU market principle: social market economy voiced some decades ago (around 1980s) by the then Commission president Jacques Delors. The pronouncement was good enough, but in has never materialised…

It’s the policy, stupid, correctly argued Danish daily Politiken’s lead recently (Ref. “OECD’s U-vending”, 6.06.2017). 

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