The poverty rates did not substantially decrease in the Philippines during the recent decades. The last administration, in spite of high economic growth rates, failed completely to reduce poverty, in contrast to other countries in the region.

What could the government do to reduce poverty? The new administration came up in June with a 10-point plan for its socio-economic policies. The points are not wrong, but very general and they include a list of very different approaches. A few of them, like “increase competitiveness and the ease of doing business,” “the relaxation of the Constitutional restrictions on foreign ownership,” “to promote rural and value chain development toward increasing agricultural and rural enterprise productivity” and ”to address bottlenecks in land management and titling agencies,” might, in fact, contribute to more investment, more jobs and by that a reduction of poverty. And some others, like “invest in human capital development, including health and education systems,” “match skills and training to meet the demand of businesses and the private sector,” “improve social protection programs ... to protect the poor against instability and economic shocks” could also be useful elements of a policy to bring down the poverty rates.

However, what is missing is a convincing, sustainable concept of a modern humane socio-economic order in which different elements of economic and social policy are combined into a strategy to overcome poverty: through the creation of productive jobs for all who can work and the social assistance for all who cannot take care of themselves and their basic needs.

Centrist Democrats – in Europe, but also in the Philippines – know that such a concept is available. It rejects the simple, inhumane solutions of capitalism in which the weaker citizens become victims of the market forces and of the ones with economic and political power. And it rejects similarly the unrealistic dreams of the socialists, in which a centralized bureaucracy treats everybody as equal and distributes goods without taking into account the freedom, ideas, wishes and different contributions of the citizens to the community. This concept is called “Social Market Economy.” It was designed by liberal economists who believed in the core value of human dignity and saw the mistakes and unacceptable sufferings of human beings in capitalist economies. The concept enabled Germany after the total devastation in the Second World War to rebuild its economy, built on the active contributions of its citizens, in an economic miracle – to become the strongest economy in Europe, and a country with high achievements of social justice and social peace. The concept of a Social Market Economy is today considered worldwide as an interesting model for the implementation of a vision of a society built on human dignity: it combines a highly effective and productive economic order with social protection and the protection of our natural environment.

Why not take this concept as orientation for bringing down poverty in the Philippines and lead the country in a modern, productive and humane future?

The basic ideas of a Social Market Economy are very simple:

1. In the center are the human beings, each and any one of them: providing every one of them with the opportunity of a life in dignity. Not maximizing profits – like in capitalism; not planning for and building up a perfect society – like in communism/socialism. Each human being shall find favorable conditions for living and working in freedom, productively, being responsible for herself/himself and ready to exercise solidarity for the ones who need help.

2. The key steering mechanism for connecting the work and contributions of the individual citizens in a modern mass-society with the needs of others and the reasonable functioning of their joint economy cannot be the planning bureaucracy of the state. It has to be the market mechanism, which provides everyone producing or providing something to the community with the value as this individual contribution is considered by the rest of the community. But the market and its underlying competition mechanism is an instrument, not an objective in itself, and it works in this beneficial way only if it is not distorted by power or fraud.

3. The State in the concept of Social Market Economy has to be a strong state, with authority in order to protect the openness of the markets and fair competition and to set and implement the rules and systems of social assistance and justice, as well as environmental protection. But it is not an overall planning, intervening, steering state. It is a subsidiary state, coming into the picture only where the economic activities of the citizens need a favorable legal framework and where human dignity and livable environment need to be protected and ensured through common rules and systems.

Building on the fundament of “subsidiarity,” one of the key principles of Christian Social Teaching for a humane society, the Social Market Economy as a socio-economic order concept can be considered as a sibling of “federalism,” which builds, as a concept of structuring state and administration, on the same principle of subsidiarity – giving priority to local and regional government structures before a central state shall take over tasks.

The details, how this concept of Social Market Economy would be implemented in the Philippines, shall be described in the continuation of this article.

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Dr. Peter Koeppinger is the current project director of the European Union – Konrad Adenauer Stiftung (EU-KAS) Philippines Partnerships for Integrity and Jobs Project (Project I4J). He is a former resident representative of the Konrad-Adenauer-Stiftung (KAS) in the Philippines (2009-2014), he served as one of the co-convenors of the Centrist Democratic Movement (CDM) of the Philippines in years 2010 to 2011 and has been the foreign political consultant of the Centrist Democratic Party of the Philippines: Ang Partido ng Tunay na Demokrasya (CDP) from its establishment in 2012 and at present. He is a member of the Board of Advisors of CDPI.

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