By Sebastian Sarbu.
One does not have to be a politician, economist, or statistician in order to realize that, for the last two decades, Romania, as is the case with other Eastern European ex-socialist countries, is paying an enormous price for the favor of being accepted in the Euro-Atlantic structures.
The process of globalization imposed by the developed countries and accepted without reserve by Moscow’s former satellite countries allowed for the emergence, preservation, and development of markedly experimental transitional processes from socialism to capitalism with consequences which are difficult to predict in numerous areas: the social area, the economic area, the political area, or in the field of national, European, and global strategies.
History will certainly record sooner or later that membership in the Euro-Atlantic structures for Eastern European countries, as an instrument for the process of globalization, is the most important historical event of the last century, more important than even great military conflicts.
Romania got caught in this process and was forced to accept radical and profound changes including changes pertaining to the strategic industrial sector and other key sectors of the economy such as agriculture, services, health care, and education. Slowly but steadily, sometimes secretly, and at other times via loud media shows influencing Romanian society, much of national wealth “vanished” or changed owners, while the political class and the governing bodies were acceptant or complicit, having for effect today’s situation in Romania.
At the beginning of the 90s, special industry comprised 26 units where 200,000 people worked; on the ruins constituting what remained of it only 11,900 people work today.
Great chemical and petrochemical enterprises, renowned industrial units in the field of heavy or light industry changed owners overnight (these became national or international celebrities out of pathetic nobodies) or have disappeared, including the buildings they used.
The energy sector, representing 35% of national budget, was privatized sometimes by individual units, at other times in bulk, depending on the interest of decision making factors, not according to rigorous criteria of contemporary management practices.
Some privatizations were made while disregarding the fundamental law, the Romanian Constitution (article 136, paragraph 3, states that “underground resources of public interest, the air space, rivers whose potential energy can be exploited for national interest, the beaches, territorial waters, natural resources of the exclusive economic zone and continental waters, as well as other goods referred to in organic laws, are entirely publicly owned”).
Romania has the opportunity to develop its intellectual capital, its own national strategic potential via the allocation of resources, including foreign investment.
Intellectual capital refers to the spiritual component of the human capital, the creative potential of a nation, its cultural and scientific potential, which is being formed and accumulated continuously; it can be seen as the human creative capital produced by past and current generations.
The structure of the intellectual capital subsystem, is, in my view, represented by:
– the educational heritage;
– the cultural heritage;
– the medical heritage;
– the cultural and athletic heritage;
– the scientific heritage;
– the religious heritage.
For the national intellectual capital to be long lasting and efficient, it is of great importance to correctly manage human capital.
The fundamental objective of the management strategy for Romania’s national development is represented by the socio-economic microsystemic and macrosystemic imperative of overcoming primary needs, that is survival needs (food, water, sex, etc.) and safety needs (safety against theft, illness, natural contingencies and calamities) and at the same time by the increase in motivation and multidimensional socio-systemic standards, by satisfying the needs of efficiency, superior needs of processual development: (self)esteem, (self)development, productivity, and individual performance.
The necessity of accomplishing this multisystemic strategy is determined by the relationship between the resource represented by the vital power potential and the practical possibility of implementation, by eliminating the psychological barriers standing between idea and implementation, as well as between managers and workers.
Law abidance has to be imposed at all levels within a state organized according to the rule of law. The social, economical, and law experience in Romania after 1989 has shown that we have functional laws, but lacking methodology for applying them, and as such administrative and socio-economic measures lack in value and effects.
Legislative void, state of anomy, the absence of law in various fields of social life, the lack of regulation for certain economic measures, deterioration of quality, utility, and moral value of laws dictated by financial oligarchy and immediate needs, the absence of anticipation of long term consequences, have led to managerial chaos, waste of resources, decrease in production, moral, social, and professional corruption, as well as ensuring the supremacy of certain social interest groups. All these negative phenomena have taken place in the absence of an unitarily applied management strategy for the development of Romania. In the transitional period after 1989 we had political mimicry, attempts of applying foreign models of development, not well suited to the tendencies in Romanian society, production capabilities, as well as economic, political, social, and moral changes.
Historical processes no longer favor social uniformity leading to the emergence of institutions (structures), but favor instead the individual, seen as the basic and exponential entity within society.
The reform of social life can only be accomplished by reforming the life of the individual having for basis the ethics of free individual self-realization.
An evil still haunting Romanian political thinking is the destruction of conceptual and doctrinal continuity starting with the moment of social and historical discontinuity in the life of our nation which culminated in a progressive transition, which presents itself as a sort of nihilistic denial of all ideas of management developed in Romania’s past eras; this is the practical aspect of the crisis in management.
It is this denial that led to waste of resources, mismanagement of public funds, and lack of priorities in the allocation of resources according to the social and human needs for self-development.
Another kind of denial is related to the social character of the economy. Well-developed countries such as France, Japan, USA, Germany were not afraid to create an unique and unitary management strategy for development, while Romania, still an underdeveloped country, is dependent upon financial subjects and incapable of overruling the autarchy intrinsic in the financial and banking system while a number of its political leaders naively believe that by applying such strategies they are making political compromises which are of great importance for the correct management of human capital.
Romania can achieve this strategy of development and became an great partner of US in economy , researcher, and national security with his human capital, creativity and innovation capabilities. Romania can be mediator between Asia, Europe and USA, especially between East and West, because of his notorious geopolitical privilegiate position and due to its cultural vocation.
Romania is orienting itself towards implementing the solution of popular capital, which could boost the economy and production via the transition from gross domestic product to lasting domestic product.
While defining a people’s capitalism, we assert that equating money and wealth, or national wealth respectively, is a great error in economic, cultural, and civic thinking. Food, shelter, water, which are the premises for survival, are wealth. Money has value only if it can be exchanged for something of value, that is goods and services. Money is only a measure of potential available wealth.
The true source of wealth is information, as valuable ideas exploit and use resources better and ensure the continuity in strategic thinking.
It should be mentioned that the creativity factor often generates a country’s wealth. As such, in order to create a people’s capitalism, the community state has to be the main producer of wealth, controlling money and favoring the creation of goods and services by managing the resource of human capability, as well as informational resources, by having as a priority not money, but instead informational and material goods, with money acting as a catalyst. For example, Japan has almost no natural resources while Mexico has plenty. Statistics show that the Japanese are measurably wealthier than Mexicans. Similarly, North Korea is poorer than South Korea. East Germany created measurably less wealth than West Germany before their reunification in 1990. As such, resources are not the main factor favoring a country’s wealth, but the human resource is, its capabilities for work and creation are, as they translate into methodical ideas for creating material wealth in a people’s capitalism.
We can see a tendency, in many developed countries, towards achieving a synthesis between capitalism and socialism, as the state acts by simultaneously taking measures towards both centralization and decentralization, economic planning as well as encouraging individual economic freedom, as the state ensures the material basis for the economy and social protection, then reducing its intervention to favor the self-administration of companies and free initiative in the context of free (relatively autonomous) social organization.
This phenomenon can be named state capitalism, ordo-socialism, or post-globalism; as a synthesis of right-wing and left-wing policies, it would be a positive solution for Romania.
We consider that the transitional period in Romania has to end, by critically implementing within Romanian society a modern and efficient strategy for social reconstruction and economic recovery, for the unitary development of the country’s vital potential which would lead on the medium and long run to a regeneration in the people’s life conditions.
Certainly, humanity as a whole finds itself in a period of transition, but Romania cannot play a game by the rules of another game; any model for managing the interests and demands of citizens has to be correlated with and adapted to the actual conditions in society and the real possibilities of progress for Romania.
Romania finds itself is six types of crises:
1) social crisis;
2) administrative crisis;
3) moral crisis;
4) informational crisis;
5) management crisis;
6) institutional crisis.
Among these, we find the most serious to be the management, administrative, and moral ones.
By lack of a coherent and unitary management strategy we have witnessed decisional chaos, waste of resources, decreasing work productivity, disloyal competition, contradictions in economic development, decomposition of community spirit, and fragmentary and arbitrary reforms, based on incompetent state intervention, taken without creating a framework that would favor profound changes without affecting individual life security, individual rights, and self-realization of the individual at work.
In the same context, lack of a management strategy for development led to the crisis of control structures, of authority and good communication in all sectors of activity; as such, the functions of the so-called market economy weren’t well defined to ensure that the needs and interests of the human community were met without material prejudice or social disservices.
We consider that in the past people were told that they deserved everything while at the same time they received nothing. Now they are trying to take themselves what they need without offering something in return, and when they do not obtain what they want they blame it on the leaders. They are thus trying to play a modern game at high stakes by someone else’s rules.
Moreover, the management crisis led to corruption, disrespect for duty (by placing rights before duties), disrespect for the law, morality, or fairness within work relations and processes, as well as in the act of serving the good of the community.
We have to fight poverty and material insecurity by militating for a society characterized by mutual help, founded on solidarity, shared responsibility, civic sense, moral consciousness, justice, and individual enterprise.
We consider that the phenomenon of political capitalism generated poverty and mishandling of public funds; as a corrupt form of capitalism, it represented the main obstacle in the way of economic competition, free initiative, the formation of small and medium-sized enterprises, and the middle class.
We need an alternative, relatively new program, based on the values of democracy and militating for a society which is to ensure equal opportunity and equal rights. This form of equality is achieved through competition, but we nonetheless consider that for disfavored social categories or for groups whose interests, needs, and rights are at risk of being marginalized, the state must intervene in order to provide necessary goods and services, as well as other facilities which would put these groups on equal footing within a competitive framework. There is no freedom in poverty, or democracy without development and authority in the act of leadership. As such, we consider that we cannot build a democratic state governed by the rule of law from top to bottom, while sacrificing people for the sake of institutions, and experimenting with social and economic integration and disintegration.
We must treat information as value and source of power in order to create economic performance, market efficiency, social justice and social balance, healthy human civilization, to encourage individual initiative, and to increase the number of jobs. With respect to the latter aspect, we support job growth while respecting obligations in the field of social security, and a flexible system of work mobility. The lack of new solutions via creative efforts has led to an important loss in human capital, and lack of use of the young generating starting with school by not creating centers for social and professional training and job search.
A necessary solution is to give priority to measures that lead to the creation of value in the national economy over measures destined to increase consumption.
It is equally necessary to privatize and capitalize the whole economy for this will erase differences between rich and poor, but such privatizations should not be characterized, as in the past, by fraud, incompetence, and modern feudalism.
We want meritocracy in public life, as the credibility, authority, and legitimacy of politicians is decreasing in Romania.
Ideology must serve only as an instrument for adjusting differing and useful social policies, not as a justification for lack of solutions to people’s work and life problems.
With respect to the administrative crisis, we must promote the solution of administrative decentralization while undertaking institutional reforms if the following criteria are met:
– economic strength;
– good material basis;
– competence in managing resources;
– responsibility of decision making factors;
– a favorable political environment.
It should be stressed that it is not administrative decentralization that represents the condition for eliminating economic disparities and underdeveloped areas, but the other way around.
Romania has for its pro-Western strategy reference points and principles which were thus far desired and must now become imperatives for national development; its partners would be the centers of power that would appreciate its offer in terms of human, economic, informational, strategic, and creative potential:
1) correlating wealth with merit;
2) creating a justice house in order to promote public morals, mutual agreements, and elimination of conflicts between individuals as well as social groups, such that the government would oversee the nation’s morale and honor and the dignity of its citizens;
3) synthesis between capitalism and socialism;
4) integrated citizen engagement in forms of partial decision making and leadership; social autonomy must not lead to anarchy, but to group unity, self-organization, self-regulatory and orderly mechanisms;
5) respect for human rights and pluralism, the essence of democracy and rule of law;
6) the right for any citizen to refuse a negative process of social integration with vitiating effects;
7) ensuring some balance between production and consumption;
8) assistance, training, and mutual help for retired people, abandoned children, and pregnant women;
9) eliminating parasitical structures for accumulating resources and capital, as well as tax evasion, while taking measures for reducing fiscality;
10) converting economic growth into social well-being;
11) fighting economic discrimination;
12) introduction of taxes that are proportional to revenue and profit;
13) transparency and financial protection for state functionaries;
14) implementing laws for managing public funds and reinvesting capital by taking into account the fixed or variable investment indebtedness to the state;
15) debureaucratizing public services;
16) sanctioning social disservices and improving the quality of services, work, goods, and products in order to raise the citizens’ living standards;
17) establish by law values for law reform, institutions, fields of activity, and justice; justice should be validated by social ethics;
18) eliminating customs duties in agriculture (such duties raise the price of agricultural machinery and equipment);
19) eliminating the autarchy of the financial and banking system; banks must grant loans for industry and agriculture by taking into account the potential of these sectors;
20) founding a labor university for professional education, implementing participatory management, mediating and solving work conflicts.
Necessities for reform in Romania
We consider as necessary macroeconomic stability, the elimination of financial oligarchy, the reduction of excessive fiscality, structural adjustments to the economy, introducing new technologies for use in competitive industries, revitalizing agriculture, and supporting small and medium-sized enterprises.
It is equally necessary to attract investments by external lobbying while taking measures for decreasing bureaucracy and increasing transparency, innovation, and both horizontal and vertical communication.
We stand for guaranteeing property rights. Property must be exploited for everyone’s profit, within the conditions created by market rules.
The state budget must satisfactorily finance local budgets set on becoming autonomous, thus contributing to fighting bureaucracy and unjustified spending of citizens’ money. Budgetocracy has to end. Every local community should have its own budget and to manage public finance. Every city, commune, or village should be tasked, as far as it is possible, with managing public funds, fiscal issues in its jurisdiction, and contributing by proportional taxes.
If someone’s salary is below minimum living standards, then that person should pay no taxes. In our view, we need progressive taxation: taxes should increase to the extent surplus revenue exceeds minimum living standards. We must in no way organize capital against labor or labor against capital. Besides taxes on revenue, a tax on companies’ profits is required; revenue tax must not exceed the profit tax, which should also be proportional, according to the economic principle of legitimate profit. The more the profit of an economic agent is legitimate, the less it should be taxed; this is especially the case for contributing to national economic development, adding value to the field of activity, applying programs for development, investment, and professional training, as well as for applying national and European projects with minimum costs and maximum performance.
When it comes to law making, we consider that overlegislating creates confusion in interpreting the law.
Justice must be professional and independent with respect to political factors; it should exercise specialized constitutional control over law making and governmental decisions and force the state to pay social compensations in the case of restitutive justice. We also condemn law excesses where methodological norms for applying the law are lacking or are not assumed. Justice must compensate the victim since justice does not consist so much in punishing the wrongdoer as it does in compensating the victim and minimizing disservices to society. In many cases the law reverses value and effects according to the way it is applied. The laws are numerous, but social justice is lacking. The most corrupt state is the one with the most laws, especially if these laws are immoral or lack in quality or utility.
During Communism we had commutative justice (to everyone the same), which existed alongside with distributive justice (to everyone according to their needs). We consider that nowadays, in the era of disorderly capitalism proportional justice (to each according to their merits) is being unilaterally applied by disregarding distributive, complementary justice (to each according to their needs); the presence of the latter form of justice would mark a synthesis between capitalism and socialism.
Salaries should be directly proportional to the value and utility of each form of work and each social field of activity and should be correlated to results and individual performance.
Romania must not remain at the outskirts of the global system, but rather integrate via:
1) modern economic competition;
2) liberalization of trade without corruption or tax evasion;
3) limiting state monopolies to national strategic sectors; simplifying government and the act of governing;
4) informatisation and modernization of transport;
5) building the social state governed by the rule of law;
6) national, pragmatic, participatory democracy;
7) efficient human potential;
8) strong administration;
9) modern living standards, well-suited to people’s social demands;
10) adapting to the demands and challenges of the 21st century;
11) authentic capitalism;
12) the development of autochthonous capitalism;
13) controlling and limiting corruption by creating a socioeconomic and informational quasiimmune system;
14) conversion of economic growth into social well-being;
15) limiting organized interests by imposing democratic will;
16) unitarily applying the law and increasing judiciary independence from the executive;
17) encouraging individual social and economic freedom in the context of social responsibility, balance of freedoms, and convergence of legitimate interests;
18) implementing the pragmatic-utilitarian economic system;
19) using public policies preceding and following institutional and social reform objectives;
20) introducing business ethics while implementing advocacy policy;
21) generating security and solutions for international security and development.
We must set up a society governed by the rule of law via the implementation of ethical norms for civic organization and the integration of moral values into administrative order; every citizens has thus the duty of being useful to the community and must not inflict upon other people’s rights by causing them disservices. To that extent, education must be reformed, culturalized, morals must be socialized, and justice moralized. This would be a society based on meritocracy and individualism. We shall define the “polyvalent” security concept as being existential safety within zero level parameters, that is the normal functioning of every field of state action.
We must reduce both the costs of energy and its consumption. We should equally set up a hierarchy of production, transportation, and distribution of energy. Economic transactions involving electrical energy must be impartial.
To that extent, some strategic regulatory measures should be undertaken, such as:
– limiting state monopoly;
– reducing interest when granting loans;
– encouraging competition;
– investments for modernization and new technologies;
– facilitating the emergence of new producers and distributors;
– granting market entry and exit for producers.
The following decisions should be taken in the field of transportation:
– setting up transportation of any kind within the framework of a company;
– partial privatization;
– modernization of transportation;
– informatisation of transportation;
– modernizing and consolidating infrastructure.
The same principles should be applied to other institutions subjected to the process of decentralization, having for objective purpose cost reduction and expansion of capabilities: ports, the postal service, radio communication, transportation by train, hospitals.
A scientifically based economic remark
In Romania there is no real capitalism as long as there is no national capitalism and as long as the EU sees Romania as a consumerist society and an outlet market.
“The fundamental principles of capitalism are private enterprise and market freedom. It is free competition that stimulates the economy, improves product quality, and moderates prices. Nowadays, when the creation and purpose of enterprises fall gradually, in all Western countries, into a ‘national’ economic plan and thus responding to a certain will of planning by the state, capitalism evolves towards a synthesis with socialism (the state has the power to stimulate or not certain sectors of the economy, by granting or not loans to enterprises) while absolutely preserving private initiative. Once a high degree of state intervention has been reached, can an economic system no longer be considered capitalist? Neologisms such as state capitalism have been conceived as a reply to this problem.” (Larousse dictionary of philosophy)
We hope that some of the solutions presented here, as well as other critical reflections, will pave the way for real capitalism where everyone is an owner and creator of wealth and added value.
The USA, an important partner of Romania, can uplift profound Romania and make it great and proud again of its survival tradition in millenary evolution!