Our market economy
By
Bahaa Alieddin
Depending on your point of view, the Egyptian transition to a market economy commenced either 30 or 12 years ago. Either way, if you judge by the private sector's contribution to GDP (now at 76 per cent), the transition is complete. But the general view is that this has not yielded significant developmental results. And reasonable people disagree about both the cause and the solution.
Creating a market economy involves much more than transferring the means of production from the public to the private sector. A market economy operates within a highly complex institutional structure whose fundamentals are: market- oriented legislation, independent regulatory authorities, and a highly mobilized civil society (consumer associations, citizens advice bureaus, environmental lobbies, etc). Neither political controls nor self-regulation is a substitute.
Take, for example, competition legislation. Even Adam Smith knew that you couldn't gather business folk in one room without them entering agreements restraining trade. And he also knew that the self-interest of the market mechanism produces public welfare only when the former has been checked by effective competition legislation.
For eight years now, oligopolists and monopolists have mounted campaigns of disinformation and fear-mongering every time draft competition legislation seemed to be making headway through the labyrinthine legislative process. In the absence of active consumer associations they keep winning, and the Egyptian economy remains without this fundamental regulatory instrument.
You cannot blame a market economy until you have one. And you cannot have one until you have the institutional structure.
* This week's Soapbox speaker is a lecturer of commercial law at Menoufiya University
