Some time in the early years of the 18th century there appeared on the streets of London a sixpenny pamphlet, published anonymously, that was destined to cause the scandal of the century. Titled "The Grumbling Hive; or Knaves turned Honest," it was later described as the "wickedest cleverest book in the English Language." Bernard Mandeville, who subsequently surfaced as the author of the pamphlet, admitted that the work was mere doggerel. Yet it was a most damning assault on social ethics. Thus he mocked: The root of Evil, Avarice
That damn'd ill-natur'd baneful Vice,
Was Slave to Prodigality,
That noble Sin; Whilst Luxury
Employed a Million of the Poor,
And Odious Pride a Million more:
Envy itself, and Vanity,
Were ministers of Industry;
Their darling Folly, Fickleness,
In Diet, Furniture and Dress,
That strange ridic'lous Vice, was made
The very Wheel that turn'd the Trade.

The playfulness of these "loose lines", as Mandeville called them, was a masquerade for the proposition that was later brought to bear on various disciplines of learning including philosophy and ethics. But of lasting impact was the emerging field of study called economics; greed, vanity and envy were to be celebrated as the encomium of beneficence to society at large. Self- interest, not altruism, was the key for the promotion of wealth and prosperity, and any form of government control and regulation was suspect.

Ultimately it required periodic hard knocks to restore balance and to drive home the point that a society without any means of checking private greed would suffer dire consequences. One should not underestimate the power of greed for when it comes to it, even geniuses can be fools. Sir Isaac Newton capitulated to greed and folly in the South Seas speculative hysteria and lost 20,000 pounds. Later, in a more sober mood, he was reported to have said: "I can measure the motions of bodies, but I cannot measure human folly."

We succumb to folly the moment we throw prudence and common sense to the wind. Zeal may be a virtue. But overzealousness is a vice that springs from a simplistic mindset, which gives rise to the periodic pendulum swings in economic policy. Whether it is blind faith in market-driven solutions or reverent belief in government as the sole arbiter on the production and distribution of goods, both attitudes suffer from the naivete that there are simple prescriptions to complex societal problems. It takes a strong sense of realism underlined by humility to avoid such pendulum swings and to keep us on the middle path -- the Islamic "awsatuha", the "chun yung" of Confucius or the "golden mean" of Aristotle. And consistent with our vision of integral man, only by taking the middle path can one address economic problems as human problems and do justice to its manifold dimensions.

Since the 1980s global public opinion is swinging back in favour of the invisible hand. It was accelerated by the collapse of Communist and socialist regimes. Thus today the world has once again fallen in love with the supremacy of the market place.. In the industrial countries the welfare system is under severe attack. Upon the insistence of the industrial world multilateral agencies are prescribing with religious zeal macroeconomic stablization as the cure-all for economic ills. Thus they enjoin: "Thou shalt privatize, thou shalt deregulate; and thou shalt not interfere in the market." Alas, while free trade and competition are highly valued by industrialized countries as rhetorical devices, they have not been notable features of their practice except when expedient.

I for one am not against macroeconomic stabilization per se. Any economy suffering f rom structural difficulties requires major adjustments rather than mere tinkering with the superficial causes. Sound economic management must be instituted. Growth must be stimulated, investment must be attracted, prices must be stabilized, government expenditure must be controlled, etc. But economic problems are not mere mechanistic theories. They are invariably intertwined with politics and societal concerns. Each particular country is embedded in its own history. We are not dealing with people as ciphers and society in abstraction. We are dealing with human beings. Thus any policy or prescription must take into account its human implication. I am confident that with a sense of realism augmented with justice and compassion one could devise macroeconomic stabilization measuress suitable for one's country. It should minimize the pain of adjustment and put the economy on the path of sustained growth that benefits all and marginalizes none. Unless this is done macroeconomic stabilisation programmes will be viewed as punitive rather than rehabilitative.

In Malaysia, we have indeed been most fortunate in having been able to fortify ourselves against pendulum swings. Our approach to life, be it in economics, politics or religion, may perhaps be epitomised in a word in the Malay language, namely, sederhana, which means moderation and taking the middle path. Yes, we believe in the power of the market to create wealth. But growth is not the only objective of our economic policy. We also design our policy to promote social justice. Until very recently deficit spending was an important feature of our economic management. But our public funds were directed to education, health care, infrastructure and rural development. In all these, the main objective was to battle poverty and to provide more humane living conditions for the poor. Defence spending never exceeded the disbursements on education and health.

There is nothing more harmful to society than dogmatism in social and economic matters for it inhibits proper responses to changing situations. For many years we were Keynesian but we did not cling to it for dear life when it became clear that by doing so it would cause further injury. Thus when our country faced a severe recession in the mid- 80s we opted to tighten our belts. Expenditure was reduced, except on projects meant to improve the livelihood of the poor. Debt was curtailed. Macroeconomic stabilisation was generally supported by the people because we also instituted programmes to reduce the pain of the groups most severely affected by the stabilisation process and the recession.

When our economy rebounded, we did not go on a spending spree. Prudent financial management became the rule and the result was a balanced budget for three consecutive years. But we do not balance the budget on the backs of the have nots. Certainly, we are under no delusion that prodigality is the answer to poverty and other social ills, nor would splurging and squandering put us on the road to social justice. Social programmes must be able to withstand the rigours of financial discipline and accountability.

We were probably one of the first countries to embark on privatisation on a major scale. But unless the pursuit of profit is matched with a sense of fairness and social concern privatization will only serve the interest of the corporate elite at the expense of the larger public particularly those in the lowest rungs of the social ladder. The government cannot abdicate social responsibility. Thus privatization will only make sense to the people if measures are instituted and moral suasion exercised to ensure privatized entities and beneficiaries of the policy are not driven solely by profit motives. The government should be pro- business, but businesses must have a human face. Conglomerates cannot be allowed to grow into banyan trees under which no others can flourish. Thus in our case the private sector has ventured into activities that were previously the hallowed turf of government such as poverty eradication, education, health and public housing.

Malaysia and other East Asian countries have been quite successful because we strive to strike a balance between market forces and benign intervention. But admittedly we would not have reached this far without continuous inflow of capital from the industrialised countries seeking new markets for their products and technology.

Be that as it may the success of the East Asian economies has evoked too much uncritical admiration. It is being marketed by multilateral institutions as a living model for others to emulate. But a few East Asianists have even extended their claims to domains beyond economics. So enamoured are they of their own success that they have proffered the so-called East Asian Miracle theory as a vindication of their self-styled Asian way. In some ways they are responding to the continuing attempt by the West to dominate and to impose their cultural views on others. The basic proposition of this view is that in Asia society takes precedence over the individual. Democracy, and the dominant features of modern political systems, are said to be fundamentally incompatible with the Asian way of life. It has also been claimed that the notion of freedom, individual liberty and human rights is alien to the Asian psyche. Such a view although well articulated by a few should not be portrayed as the dominant and representative view of Asia.

Views within Asia, be they on economic, social and political issues, are far more varied and diverse than is commonly projected and perceived in the West. Critical examination of our own societies is more widespread than is generally known. Even in the economic domain where Asia, especially East Asia, has outperformed other regions, there are strong voices questioning its sustainability. Thus the ensuing debate on issues of the lack of investment in human resource, the paucity of creative innovation, the impact of rapid industrialization and the degradation of the environment. There is a wave building against corruption, the abuse of power and the widening disparity between social groups and regions; rigidities hampering competitiveness and general decline of the moral and ethical fabric. There is a renewed quest for the meaning of traditional values and religious precepts, be it Islam, Confucianism or Buddhism, that permeates all levels of understanding including the notion of development and growth. The idea of balanced and holistic development, that is the concept of development guided by ethical and social concern, is gaining wider acceptance.

Thus, far from indulging in self-adulation on account of their economic success, a new generation of Asians are subjecting every aspect of their societies to close scrutiny. In rediscovering the humanistic traditions of Asia, they are able to relate to the contemporary notions of liberty and democracy and regard them as part of their intellectual and cultural heritage. Indeed, this rediscovery has led to greater awareness of our shortcomings and fuelled the desire to reform our ways and enhance the institutions of civil society. Certainly we resent being associated with the vestiges of what used to be known as Oriental des potism.

The sustainability of growth and economic development neither rests on ideological rectitude nor follows the imperial dictates of the superpowers. It lies in striking a pragmatic, sederhana approach, an approach that can deliver our people from the vagaries of the pendulum swings in economic opinion. In the final analysis, however, no notion of economic sustainability can be divorced from a vision of man as a spiritual and moral being. The renewal of interest in the relevance of the ethical dimension in the discourse on economics, departing from the conventional enquiry founded upon the idea of homo economicus in pursuit of self-interest, is an intellectual revolution of our time. It is in part inspired by a rediscovery of the moral philosophy of Adam Smith in its more integral form. While the founder of the discipline of economics has been largely credited with the discovery of self-interest as the engine of wealth accumulation, he also cautioned that while our disposition to admire the rich and the powerful is necessary to maintain, in quotes, "order in society", it is nevertheless, in his words, " the great and most universal cause of corruption of our moral sentiments." By asserting the primacy of moral values and taking cognizance that man and society is engaged in a perpetual struggle of conscience, Adam Smith was expounding an ethical philosophy which echoed that of the great minds of the past, including Ibn Khaldun the Muslim philosopher and Wang An Shih the Confucian reformer. We believe that the challenge for us, both in Europe and in Asia, is to rededicate ourselves to this holistic approach towards growth and development. By going back to a common ground where economics and ethics are inseparable, we are laying the foundations for a new partnership -- a partnership cemented not only by interlocking economic interests but also by deeply shared moral and ethical values.

Thank you