[Originally published in the Vanuatu Daily Post’s Weekender Edition.]

For every action, there is an equal and opposite reaction.

When Isaac Newton first formulated his third law of motion, he codified a long-observed phenomenon. Wits have suggested a fourth law: ‘No good deed goes unpunished.’

At the Lowy Institute’s recent conference, The Pacific Islands and the World, attendees witnessed two contrasting views of Vanuatu. The gathering, timed to coincide with the Pacific Forum, was attended by dignitaries from major global institutions as well as government leaders from throughout the region. It was billed as an opportunity to discuss the impact of the global economic crisis on vulnerable Pacific Island nations.

By all accounts, though, Vanuatu has been less affected than the global economic giants. Mid-year numbers do indicate a slight slow-down, but in real terms, our economy’s still growing fairly well. In a recently published briefing paper by the Pacific Institute of Public Policy, Nikunj Soni and the Australian National University’s professor Stephen Howes point to tourism and construction as the leading drivers of this growth.

But they are quick to note that the environment is as critical to this success as the actual business opportunities. One noteworthy chart clearly shows the rise in economic activity starting in 2003, about the same time as major budgetary and macro-economic reforms began to take hold in Vanuatu.

The briefing paper goes on to highlight the fact that none of this growth would have been possible without social stability. That may seem like so much common sense to some. Civil disturbance and political turmoil are seldom on a tourist’s must-see list. Likewise with home buyers.

But what brings this stability about?

What is it about Vanuatu that has allowed it to avoid civil strife like that which recently wracked the Solomon Islands? How, despite the incessant game of political musical chairs, do we still manage to avoid the coup/counter-coup culture that has beset Fiji since its independence? How do we avoid the overtly racist violence and rioting that have left the business communities in numerous PNG cities in a state of siege?

There are a hundred possible answers, all of them partial.

The most coherent interpretation of the source of Vanuatu’s stability was presented at the Lowy Conference by MP Ralph Regenvanu. His talk discussed the Custom Economy. “The traditional economy,” writes Regenvanu, “constitutes the political, economic and social foundation of contemporary Vanuatu society.”

Regenvanu goes on to observe that the one of the reasons urban dwellers have avoided hardship is precisely because their meager earnings are subsidised by traditional family networks that provide access to “food and other resources and… provide manual labour, child care and aged care, [as well as] dealing with their disputes in the traditional way.”

The traditional economy is innately conservative. It rewards egalitarian behaviour and benefits the community more than to the individual. Free market capitalism, on the other hand, rewards personal initiative and the accumulation of wealth and resources.

As a recent World Bank report observed, land sales – one of the drivers of our recent economic boom – are usually conducted on a context that leaves traditional land-owners at a distinct disadvantage.
It’s tempting to say that Vanuatu’s economy is eating its children. The very conditions that make growth possible are being undermined by the growth itself.

Newton’s fourth law in action.

The increasing – but certainly not intractable – tension that exists between the traditional and modern economies needs to be reconciled. Before that can happen, though, a great deal more research will be required.

The process of understanding will be a messy, decidedly un-scientific affair. While Vanuatu’s economic managers have made great strides in systematising their economic analysis, their tools and metrics just don’t translate usefully into the custom economy. While the movement of cash can ultimately be tracked as closely as time and resources allow, the same cannot reasonably be said about the often intangible inputs and outputs of the kastom economy.

It’s one thing to draw up a spreadsheet of VAT revenues per sector and use them to extrapolate domestic business activity. It’s another thing entirely to track the movement of mats and yams between families and to infer from them the potential for employment stability brought about by renewed alliances.

But the situation is far from hopeless. This year’s census data, combined with the results of the agriculture survey, will no doubt provide some valuable insight into land use and agricultural activity. This is turn can help us begin to quantify the phenomenon that MP Regenvanu has been describing for years now.

But we will almost certainly find that scientific analysis will only get us so far. We know that a tension exists between the modern and custom economies. We’re going to need something more than a few spreadsheets and graphs to learn how to diffuse the tension between them and allow each to exert appropriate amounts of inertia and momentum on the other.

Vanuatu’s policy makers have no choice but to weave science and kastom together, respecting the laws of both if they want to be able to ensure both prosperity and stability in Vanuatu.