The government's policy of free enterprise

Title

Creator

Balmaceda, Cornelio

Language

English

Source

Panorama XIV (5) May 1962

Rights

In Copyright - Educational Use Permitted

Fulltext

Free trade is built on the sound doctrine that a country should utilize ’ its labor and natural resources in the lines of production that could give it tiie greatest advantage and should buy from other coun tries goods that it cannot so advantageously produce. Al though this doctrine is actual ly repudiated in the general practices and policies of gov ernments, which have used the protective tariff as an instrument of national policy, this fact does not detract from the soundness and vali dity of the economic doctrine of free trade. Akin to it is the policy of free enterprise that opposes in principle government control of business. Just as a nation or a community could desire the greatest gains from its commercial relations under a regime of free trade, so the business enterpreneur could attain its maximum growth and healthiest development under a free enterprise econo my. However, we must re alize that even the freest so ciety under the complex eco nomic conditions and prob lems of today requires some THE GOVERNMENT'S POLICY OF Cornelio Balmaceda degree of government control and certain forms of govern ment regulation of business in order to serve the best in terest and the common wel fare of our interdependent so ciety. Modem man can no longer say that “that govern ment governs best which gov erns least”. His complex •existence necessitates social coordination and planning for which the authority and crea tive activity of government must be concerned with to protect the general welfare. Thus we need laws govern ing franchises granted by the government to public utilities, laws prohibiting monopolies or combination in restraint of trade, laws regulating the operations of banks, insurance companies, exchanges and other financial institutions, 18 Panorama FREE ENTERPRISE laws punishing unfair trade practices, laws regulating the relations between capital and labor, pure food and drug laws, etc. These are normal form§ of economic controls being exercised by govern ments. When unusual situa tions arise, like wars and other great calamities, and a state of national emergency is created thereby other forms of government controls and regulations are devised to meet such emergencies. These are temporary measures that remain in force for the dura tion of the emergency, such as: price controls, export controls, credit controls, im port and foreign exchange controls. It was such a situation that gave rise to the adoption of economic controls in our coun try after the last war. The first Import Control Law, R.A. No. 330, was enacted bn June 24, 1948 and put into ef fect on January 1, 1949 and the second, Republic Act No. 426, was approved on May 18, 1950. The objective was to conserve our foreign exchange through the reduction of nonessential imports and to chan nel the use of our limited supply of foreign exchange to the purchase of capital goods and other essential imports that were urgently needed to rehabilitate our war-devas tated economy. Exchange control was insti tuted by the Central Bank on December 9, 1949 following the tightening of import on December 1, 1949. When the Import Control Law expired on June 30, 1953, the control of imports was continued by the Central Bank by promul May 1962 19 gating rules and regulations for the licensing of foreign exchange for the payment of imports. As already stated, the sys tem of controls that was adopted herein 1949 was in tended to serve only as a temporary measure. I was Secretary of Commerce and Industry when the control system was started by the government in 1949. The du ty and responsibility of start ing the operation of the Im port Control Law was assign ed by law to the Secretary of Commerce and Industry as Chairman of the Import Con trol Board. Although it could not then be easily determined how long the controls as a temporary measure would have to remain in effect, the expectation was that the con dition of the economy would gradually improve so that in not much longer than five or six years the controls would be gradually terminated. It took, however, over twelve years before the sys tem of controls reached its end and free enterprise was again restored to our country. Real decontrol came on Jan uary 22, 1962, twenty days after the new administration took over the reins of govern ment. For the first time in more than a decade, the Phil ippine peso was freed to find its own level in the open market and the licensing of foreign exchange purchases was totally abolished. In taking this step and in announcing the government’s policy of free enterprise, President Macapagal said: “We should clear the obstacles which have grown up in .the past during the regime of con trols, and liberate the energies and imagination of our peo ples and our entrepreneurs for economic projects of last ing value to the country. “In assuming our proper responsibilities, we shall be guided by the economic philo sophy of ‘Faith in the Filipi no’. We believe that economic development is principally a task of private enterprise and not of government. The gov ernment’s role is to create a favorable environment that will provide the inducements necessary, in terms of suitable policies and measures needed, to foster economic growth and stability. It must be in a position to devise new and effective methods, democratic in character and spirit, to in duce the private sector — pro perly called the dynamic sec tor— to risk idle capital for development purposes.” With this clear statement of policy by the President, it can b • expected that all obstacles to the complete restoration of 20 Panorama free enterprise will be cleared and that the remaining res trictions made necessary by the effects of the regime of controls that still have to be overcome will be gradually liquidated. Future policies will tend to strengthen and solidify rather than hinder the progress toward free en terprise economy. Under the democratic sys tem, the solution of our socio economic problems has to be sought within, the framework of free enterprise. As an eco nomic policy, free enterprise operates to maintain and pre serve the free market econo my wherein the instruments of production are owned by private individuals and enter prise's and the distribution of goods and services is gov erned by free market forces. The government will continue to exercise leadership in the economic and social advance ment of the nation. It is the obligation of the government to set a high example of ho nesty and morality in the public service for those in pri vate pursuits to emulate. The government must see to it that private property is res pected, private contracts are strictly adhered to, peace and order are maintained, justice is administered with impar tiality, and that currency which is the lifeblood of the nation’s economy is main tained on a sound basis. In other economic systems like socialism and commun ism, government interference in any economic process is dominant. The economy is centrally planned and con trolled by the governing authority. In the free market economy, market forces and price mechanism determine the operation of the economy. Voluntary cooperation of the citizens in all economic pro cesses is its essential feature. These are the conditions that the present administration de sires to create and institute in order to give real meaning to democracy under which the Filipino people must be gov erned and the Philippine gov ernment must be run. The initial steps toward this direction have already been taken particularly with the launching of the decontrol program. Necessary measures and policies are gradually be ing instituted with the utmost c^re in order to cushion the effects of decontrol and to les sen the pains and difficulties that must necessarily attend the transition from controlled economy to a free enterprise economy. Other steps that will be taken by the administration which will help to insure the free enterprise policy include May 1962 21 the orderly and consistent implementation of the govern ment’s five-year socio-eco nomic program, and, particulary (1) the creation of con ditions that will provide more income and employment to the people; (2) the attain ment of -self-sufficiency in the staple food of the people; (3) the maintenance of a balanced budget and discontinuance of deficit spending; (4) the pro gressive reduction of the pub lic debts; (5) providing the proper incentives to domestic and foreign investments; (6) dispersal of most of the gov ernment-owned corporations to the private sector; and (7) “the establishment of policies that will strengthen the rural fiber of our nation and re introduce those values that would invigorate our demo cracy.” THOUGHTS ON THE . . . There is really nothing in herently wrong in working for one’s individual welfare as long as the ambition to im prove one’s condition does not make him forget that he is a citizen, that he is a member of the community, that such membership binds him to all the other members, and ?o he is under an obligation to ren der positive assistance to his fellows and to his nation. The privilege of citizenship or of membership of a society irre vocably implies social rela tionships and mutual coopera tion. The degree of fulfill ment to which our social duty should take us depends upon our awareness of the moral nature of this obligation. We can disregard it just as some of us quite often disregard the promptings of our personal conscience. But if this prac(Continued from page 6) tice becomes general, if those who direct the national poli cies follow suit, the time will come when the social con science will cease to respond to the clamor of the nation fongenuine betterment. The evils that beset us these days are largely traceable to that selfish ambition that en tirely ignores the superior in terests of the nation. In the pursuit of that spirit, some of our countrymen have come to worship wealth as the bes£ means of acquiring everything in life including public offices and the fellowship of the high and the mighty. So with much money in their hands, ballots and offices are bought and public men are made to do their bidding. With noth ing but personal prosperity in (Continued on page 32) 22 Panorama

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