Saturday, October 31, 2015

Re: USA Africa Dialogue Series - Fw: Autopsy of Nigeria’s failed privatisation programme | Punch Nigeria

The broader question is irrespective of how one approaches it is: in what ways should policies be evaluated? What is the real essence of neoliberalism? David Harvey's book argues with evidence that neoliberalism was first experimented in New York City when it got into financial crisis in the 1970s if I remember. Here is Harvey's book: "A Brief History of Neoliberalism." 
 

Neoliberalism is an attempt to reform an economy using a narrow economistic criteria and the belief that certain kinds of reforms have to be implemented and even though they will have terrible consequences on the lives of the people, so be it. What made the neoliberal reform in Malaysia succeeded relatively is because Mahathir saw exactly what the Word Bank later asked people to do. Africa was not the only continent to face that kind of reform and the book and the documentary film COMMANDING HEIGHTS" highlight that clearly. The policies started in Britain and the U.S. and then were later exported.

Mahathir wanted his country to succeed in the global capitalist economy. He wrote several books that documented his ideas and vision. The first which brought him attention was "The Malay Dilemma". He was willing to get where he wanted to get by realistically using any strategy possible e.g., the LOOK EAST policy. 

Both Malaysia (and other Asian countries ( especially Southeast Asia) and other African countries faced a problem of too much state intervention in the economy and inefficiency. The way they were running their economies was not sustainable. There was to much wastage and inefficiency.d Here are some example of such problems in Africa which necessitated reform whether people call the reform needed neoliberalism or something else and what constitute the content of the reform is another matter that I cannot get into here. But looking below, the situation in late 1970s and early 1980s in Africa was not sustainable and so reform was necessary:

1.      Political Economy of Africa's Postcolonial Development Failure: The Spiral of Economic Decline

 

·         The more money is spent on patronage, the less there is for capital and social development projects.

·         Little sustained genuine economic development in postcolonial period because of draining of recourse to consolidate power

·         By 1970, over 60% of wage earners in Africa were government employees

·         By 1980, at least 50% of all expenditure by African governments was used just for paying salaries of government employees.

·         Inefficient parastatals drained away government resources.

·         Over reliance on profits from export of cash crops to run the government.

·         Rural farmers were used to subsidized urban dwellers leading to rural underdevelopment and migration.

·         Emergence of squatter settlements of unemployed and underemployed in cities.

·         Farmers started selling their crops in the black market: loss of tax revenue.

·         Elites did not use corruptly acquired money for investments increasing national productive capacity.

·         Almost all states were in economic decline by the early 1970s.

 

2.      The Crisis in Postcolonial African Development (Mid to Late 1970s):

 

·         Cumulative effects of poor decisions, misrule and mismanagement set in motion a crisis situation.

·         The growth rate of Africa declined in the 1970s and 1980s. (0.2% growth between 1965-1984).

·         GDP per capital felled on the average 2.3% annually from 1980-1985.

·         By Mid 1980s, Africa was in full blown crisis: domestic factors, declining terms of trade, high population growth, oil shock of the 1970s.

·         Poverty: By 1985 absolute poverty increased to 180 million people i.e., 47% of the population.

·         By 1998, the number of the poor increased to 111 million.

·         By the 1980s, most African countries lacked the money to pay for their budgets and so public services deteriorated.

·         Citizens withdrew into the informal economic sector and relied on informal social and economic support systems (no taxes to be collected).

·         Decay of state administrative institution started which increased corruption of government employees.

·         Increased relevance of community self-help groups.

·         Citizens disengaged from the state; refused to cultivate cash crops and no taxes are paid, and there were increased clandestine economic activities.

·         African governments borrowed heavily to maintain themselves, with high interest rates.

·         40% of export earnings was needed to service the debt. High indebtedness led to the drying up of loan sources except for the World Bank and IMF.



 So Malaysia embarked on massive privatization, and the cutting of many social services even before the World Bank initiated it. They had a leader that so The Sword of Damocles."  He almost lost an election because everyone felt angry with his social and human cost of the neoliberal reforms like that of Africa or Latin America.. The people who suffered most were the Malay people, the group he came from and the largest in terms of numbers, but relying more on the state. They are also called "Bumiputra" i.e., sons and daughters of the soil, if I may say so.

Based on my understanding and consistent with your brief analysis, the implementation of neoliberal economic reforms does not mean that the state cannot at all be involved in anything. How neoliberalism ends up being implemented depended on the social and political context of each country. In the U.S. for instance, because of his trust in the market, Donald Rumsfel at one point wanted to trade information about terrorism in the stock market because the general public will have more information about what is going on than the state, and the changes in values of shares can signal something to the government beyond what security agencies know. It was not implemented because there was well-organized opposition. Similarly, left to some neoliberals, public housing should have been since eliminated. But because of very well organized civil society resistance, this did not happen as some wanted.  Neoliberalism got its way in Africa because of so many contextual factors, one of which is that at that time, the degree of civil society organizations and political engagement was far lower than what it is today.

The situation in Malaysia in terms of the implementation of neoliberal economic reforms were the same as in Africa. The main difference being that Mahathir Mohamad was a more courageous leader and a person with extensive knowledge of the evolution of Western civilization. Once, he made a thorough critique of the British that Thatcher flew to Malaysia to calm to the storm. I interviewed the deputy speaker of their House of Representatives and former Senate Leader. Mahathir invites the leading scholar in the universities of his country to lecture him on the best that is known in any particular area of his interest. Once he grasps it, he will apply it in his public discourse and how he relates to Western leaders who sometimes feel like Third World leaders should be perceived like children.  He definitely love his country and I would say the Third World. He was an authoritarian leader just as was the late Prime Minister and founder of Singapore.  But neoliberalism for him was homegrown. And even public enterprises were seriously disciplined and given only a certain period of time to be on their own. There were limits to how far he could go because of the political landscape in his country. Given that Malays were lagging behind, they would mostly suffer from the full implementation of neoliberalism and they are the majority in terms of voting. So while there are general neoliberal policies, their implementation varied depending on context. It is unfortunate that some Americans feel there is only one way.

Even China had neoliberal economic reforms. The limits is just the political calculations but even with that, China neoliberal economoic reforms have had devastating consequences of the lives of ordinary citizens like in Africa or other parts of the world. A documentary that discusses the case of China in detail is: 


Neoliberal climate leads to a kind of silent takeover as states and governments while they continue to be in charge, they can only justify or legitimize their position through economic success and given the shift in the global community, there is a limit to how far  one can go without playing with neoliberalism. Interestingly the West seems not to care if the deviation produces results. But the West would harass nations that try other methods and if the leaders are not strong, they may not be able to make a case and be taken seriously. Most of department of economics in African universities do not engage in thorough discussion of neoliberalism the way we are having it. Or they discuss the ideas without the social context. As I highlighted in an earlier posting, Piketty provides the context of Kuznets' curve which is never discussed in economic text books. Thus we need to know the context of any idea.

It is fair to say that neoliberalism is not as coherent as it initially appears to be. For instance, both Thatcher and Reagan were champions of it. But theywere also nationalists. Nationalism / patriotism and neoliberalism tend to contradict each other. Nationalists or patriots want their country to be unique, to compete and succeed over and above others, not just for their private lives but for the nation. A contradiction in the Enlightenment state project is that we are all human beings with dignity but our dignity ultimately is contingent as part of a nation state and the nation states are supposed to compete in a dog eat dog world.  But neoliberalism pursues or promotes policies that if allowed, will ultimately reorganize the distribution of the population of he world since they want to match a person's skills with a spatial location  or businesswhere he or she will best fit, and the mediating mechanism is market forces which decide the most efficient way to allocate scarce resource worldwide for the benefit of "humanity."   To protect the workers of a country is to use Milton Friedman's language, an attempt by the workers of a nation or  people to constitute themselves into a labor union and extort money from their employers. That is not efficient because immigration or free movement of human capital will allow things to be produced at cheaper rate and that is more efficient and a higher return to the consumer.  Sounds good on the surface. But .... the devil is in the details.

Different countries try to resolve this contradiction in different ways. But what we see is that nations that have a strong nationalist commitment and project are the ones that push back on some excesses on neoliberal reforms either because of the love of their country or because of some deep values, or political expediency. Mahathir wanted his country to become the first Muslim nation to be fully industrialized and his desire then was this should happen by 2020; they used to call it WAWASAN 2020. In those days the nation was cruising fast. To get there, he extended the number of working hours per week. He made workers to come to office earlier than before. He insisted that all workers including he himself the Prime Minister must have a time card that they must punch it daily when they report to the office and when they leave. He had his own card and was the best example of such a discipline. He instructed all government officials including himself to have a name tag in the office. So if you go to any public office in Malaysia, even the Permanent Secretary has a name tag during office hours. The idea is that any visitor to the office does not need to ask the identity of the officer. And Mahathir Mohamad had his name tag. Each public organization was mandated to create a "Client Charter" which is the commitment they made to their clients and the client had the right to protest if he or she did not receive the minimum quality of service promised. An illustration of his commitment to his nation is once when I was there, and he received a delegation of Malaysian students who got government scholarship to study overseas. He said to them, he would not be alive when the mission of Malaysia becoming the first Muslim country to be industrialized is achieved, but that even in his grave if the younger generation betray this mission his ghost will hold them accountable. That is a very heavy statement to make. Of course I am not saying all these to indicate he was a perfect person. Not at all. There is a book about him titled "The Paradoxes of Mahathrism."

Nationalism is a major factor that modifies neoliberalism. Poitical variables and social cultural ones are also very important.  In many respects, neoliberals are naive to the extent that they start with some abstract vision of the market and world economy without paying serious attention to concrete contextual realities.  This as you have said contributed to the 2008 Great Recession. Two documentaries that expose the terrible mistakes and naivete of the simplistic neoliberal way of thinking are:

For the Love of Money (3 episodes) https://www.youtube.com/watch?v=chwWnUSmtmg  (I think I cited this before).


Money, Power, and Wall Stree (3 episodes) 


 In any case, people have reinterpreted even scriptures to fit their specific contexts, let alone neoliberalism which in many respects is incoherent, when carefully studied. Neoliberals treat economics as science but it is obvious that this is not the case. The following documentary debunked that argument: "Trillion Dollar Bet" available on Youtube.

To conclude, yes, I agree with you that neoliberalism is not written in stone but, for me,  whether Nigeria pursues state-led development or neoliberal approach, even though I will prefer the state-led approach, but I am sorry to say that I am not sure that the Nigerian ruling elites have the discipline and the strength of commitment and strong love for their country to lead the nation in that direction.  And we know that even with good intentions, works of scholars like Goran Hyden and Rayah Feldman on Tanzania show that such good intention, while very laudable, is not enough. 

Whatever development strategy African countries decide to pursue, they will have to deal with the fact that such development strategy is based on the assumption of a working modern system. Without squarely addressing the question of creating an effective and working modern system, they will be building a huge modern super structure on a weak foundation. This is why they have to decide what kind of modernity do they want? Is it an African modernity, or hybrid or whatever. They are free to decide what they want but there are certain realities they cannot escape.

 If they are going to be realistic about operating in the contemporary world, they have to invest a lot of time on how they can lay the basic foundation of a modern society, whatever they think of it.  In their works Atul Kohli (State-Directed Development: Political Power and Industrialization in the Global Periphery);and Peter Evans' Embedded Autonomy, there is enough evidence that not all political or ruling elites in developing countries have the sense of mission or discipline to pursue state-led industrialization. Alice Amsden discusses the disciplinary role of the South Korean state whose development goal is not to challenge capitalism but to pursue a different route to succeed in the world as it is, which is what China is doing also.  The states helped implementing policies that will enhance market efficiency even though their time horizon was longer than that of western nations who are influenced by election cycles. The human and social cost of such reforms are as painful as any neolibeal reform that was implemented in Africa. The unfortunate thing is that at least they got somewhere from there or in spite of that. For Africa, it is a different story. And there is no magic formula without addressing the question of effective institutions and initiating social-cultural changes that can enable the effective functioning of the institutions. This will not be an easy task at all. My hope is that one will see a viable pathway out of this in Africa during his lifetime.

Thank you.

Samuel


On Fri, Oct 30, 2015 at 11:07 AM, Emeagwali, Gloria (History) <emeagwali@mail.ccsu.edu> wrote:
I generally think of Mahathir Mohamed of Malaysia as a  classic defender of state capitalism
not neoliberalism. South Korea is also in that category and even Meiji Japan, 1868-1912,
employed state capitalist strategies.

But what the IMF tried to do in Africa with the SAPs
after  the 1980s was neoliberalism.

 The question is whether Nigeria wants to go in the direction
of state capitalism or neo-liberalism- or none of the above.

Neo-liberal globalization is not inevitable or cut in stone. In fact the entire edifice
almost came tumbling down in the 2008 financial meltdown.



Professor Gloria Emeagwali
History Department
CCSU. New Britain. CT 06050
africahistory.net
vimeo.com/user5946750/videos
Gloria Emeagwali's Documentaries on
Africa and the African Diaspora

________________________________
From: usaafricadialogue@googlegroups.com [usaafricadialogue@googlegroups.com] On Behalf Of Samuel Zalanga [szalanga@bethel.edu]
Sent: Friday, October 30, 2015 11:39 AM
To: usaafricadialogue@googlegroups.com
Subject: Re: USA Africa Dialogue Series - Fw: Autopsy of Nigeria's failed privatisation programme | Punch Nigeria

I did not read the original article and so I am responding to the comment below. Because of the complimentarity of factors that need to exist and complement each other before capitalist enterprises  can succeed, privatization as such, is not a panacea. In my work comparing neoliberal economic reforms in Malaysia and Nigeria, an important conclusion I arrived at is that as Max Weber's seminar work, "The Protestant Ethic and the Spirit of Capitalism" illuminates, there are certain cultural, institutional and social-psychological dimensions to successful capitalist enterprises. It is not just about money and investment. Inkeles and Smith too, in their book "Becoming Modern" discuss the institutional dimensions and social-psychological dimensions of modernity, in which capitalism is an integral part of.

Malaysia implemented neoliberla economic reforms at the same time that Nigeria did. But in Malaysia, the reform was not just an economic one. Prime Minister Mahathir Mohamad pushed very vigorously for, social-cultural, attitudinal and personality changes that he thought were necessary to make the new form of capitalist enterprises he envisaged succeed. What this means is that he was not hesitant to openly critique some cultural practices that would hinder his people from succeeding.  Some of the things he said will be considered racist if said by a White person. Whether public enterprises or private capitalist enterprises, there is a certain kind of human being, with certain kinds of attitudes, worldview and predisposition that is better fit for a capitalist market environment. Whether this is good or bad is another issue that is important but I do not want to get into that debate here.

Of course many economic anthropologists have argued based on empirical research that while Weber was right in his seminal work in arguing that there are certain personality characteristics, cultural practices, and institutional structures and modus-operandi  that are central to the success of capitalism, he was wrong in assuming that this only existed in the West. Anthropologists have dressed down the Protestant Ethic to its basic essence and concluded that there are many groups in the non-Western world that already have the characteristics that are functionally equivalent to Weber's Protestant Ethic.

That is why in many African countries, even private businesses have some serious problems  of excelling, which challenges the simplistic assumption that mere privatization will just create miracle of success. Without infrastructure and the internalization of the ethic of capitalism, such organizations will still perform poorly.

Moreover, Thatcher implemented similar reforms in Britain where the privatization process undervalued the value of public assets that were to be sold.  There is a documentary series by the BBC called "For the Love of Money"which demonstrates how privatization under the regime of neoliberalism created conditions for the 2008 Great Recession which can be veritably described as creating conditions for the "Tragedy of the Commons."

Many African countries and their leadership lack the commitment, vision and the discipline to deal with some of these problems. IN the first place, they could have resisted the adoption of Washington Consensus as a panacea to human problems. But in the great majority of universities in Africa, they teach economics in a traditional way. Without being grounded in economic history, they will just rely on the abstracts models in the text books which do not actually do justice in capturing the experience of even Western countries. The assumption that privatization through trickle-down economics will bring "universal opulence" or prosperity is not only naive, simple and simplistic but it assumes too much.

 Piketty in his book "Capital in the 21st Century" provided a thorough historical and contextual analysis of Kuznets' Curve which is considered as a gospel truth in economics, i.e., that initially as development takes off, inequality will widen but in the long run, things will level off. Piketty with evidence illuminated  the context of Kuznets' economic theory and the social conditions or atmosphere that led people to embrace it. i.e. Cold War ideological campaign and propaganda.  The goal was to persuade newly independent countries to ignore the Soviet campaign against capitalist inequality since even if inequality characterizes early effort at economic development in developing countries, in the long run, this will work out well. But as John Maynard Keynes said, in the long run, we are all dead.

As a sociologist, I recognize the difficulty of talking about the social-cultural dimensions of capitalism in especially African context. Africans love their heritage, there is nothing wrong with that. Although I question some reaction or resistance to the demand to change some aspects of African culture because the same Africans that are so much in love with their culture are in many aspects of their lives in the forefront of consuming the fruits of Western culture. This is why in his disappointment with them, Fanon in his chapter "The Pitfalls of National Consciousness" in his book the "Wretched of the Earth," lamented and ruminated on the postcolonial African bourgeoisie that is satisfied to consume western products but not intellectually curious enough to ask the means or process through which the West created the technology or other things that we Africans enjoy using. Even if we have a unique culture, Africans have no regret or ashamed of driving foreign SUVs, enjoying sophisticated cell phones, using foreign building designs etc. Sometimes cultural arguments are only used to  express the unwillingness to bring about meaningful change, otherwise, in many aspects of the lives of Africans, they are eager and without hesitation to adopt and adapt foreign or even western cultural elements. Often, many feel it makes them feel superior.

The bottom-line is: Africans or Nigerians, have to understand what the modern world is in its essence and real terms. And then they have to make a harder decision on whether they want to be part of it or not. It is their right to make that choice. If they decide to be part of it, they have to ask, in what way or manner do they want to be part of it. Some think of creating something uniquely African, -- call it African modernity or whatever. Then Nigerians and Africans have to ask what is the minimum level of competence that they need in order to become active players in the dog eat dog neoliberal global economy which they embraced, probably without thinking deeply about the social implications of Herbert Spencer's Social Darwinism as still the core ethic of capitalist system of production. Nigerians and Africans will have to decide what changes they need to make if they want to be active players that will thrive and flourish in such a global economy which frankly I am sorry to say does not care about Nigeria or other countries per se. In Haiti over 200,000 people died after the Earth Quake but it did not affect the value of shares in New York Stock Market, Asia or Europe. Given the logic of the system, a whole country can be buried in the ground and if the people are not central to the global capitalist system, it is not going to stop the system from functioning. It will for many only be an immediate issue of concern if it will affect shares and rate of return. Otherwise, just perform the funeral and cover the news for some weeks and then just proceed to business as usual.

The Beijing Consensus embraces the materialistic goal of Western development but the Chinese pursue different strategies to arrive there and many westerners are worried and surprise. They may criticize Chinese economy for not being orthodox but none of the current western nations grew under conditions that they systematized in economic text books. It is not easy to ask people to make cultural changes because culture defines people. Worse even, you are not even sure that if you make the cultural changes, you will automatically succeed. But one thing is sure, there are certain types of personality characteristics, cultural set up and social-psychological orientations that best fit with the current dog eat dog world or global economy. Westerners did not find it easy when they went through those transformations.

The painful thing for Nigeria or African countries is that even if they want to retrieve something original about their past e.g., precolonial, they cannot do so. It is gone, and their mindset if they observe carefully is no more compatible with such traditional set up in totality. But to move forward and embrace the new system is painful, sometimes humiliating, and creates feeling of ambivalence and nostalgia. But nostalgia that leaves millions in poverty. So whether Nigeria decides to move forward and embrace the changes that need to be made, or decide to do something Nigerian or African, either way, it is not going to be easy and will require discipline, wisdom and judgement.

China has made great success but there is widening inequality and they have embraced the predominant idea of conceiving development in materialistic terms. Their rich are falling into the same trap of copying western consumption, as if they are inferior. But then they talk sometimes with great pride. Obviously there is much cultural ambivalence in the country. They can go back to Confucius but at the end of the day, it is whether Confucius and his heritage can be adapted to neoliberal globalization which humanity has been so gullible to accept as the new secular religion of humanity. Exactly where this, even at its best  taking us to, no one knows. But we are too busy to have time to sit down and reflect. The culture and lives of people is controlled by the tyranny of the urgent.

Samuel

On Fri, Oct 30, 2015 at 6:17 AM, ayo_olukotun via USA Africa Dialogue Series <usaafricadialogue@googlegroups.com<mailto:usaafricadialogue@googlegroups.com>> wrote:

Sent from my BlackBerry® wireless handheld from Glo Mobile.

-----Original Message-----
From: Olayemi Folusho <offlinenspri@gmail.com<mailto:offlinenspri@gmail.com>>
Date: Fri, 30 Oct 2015 11:35:38
To: ayo_olukotun@yahoo.com<mailto:ayo_olukotun@yahoo.com><ayo_olukotun@yahoo.com<mailto:ayo_olukotun@yahoo.com>>
Subject: Re: Autopsy of Nigeria's failed privatisation programme | Punch Nigeria

No matter how policy will be good in Nigeria it's will be redesigned to benefit some individual and not the country. The privatization programme in Nigeria was hijacked to make those in power super rich by undervaluation of assets and sale to those in the corridors of power. If Buhari's administration is to look into privatization programme he may have no time to do any meaningful work. The corruption level was deep and wide in scope.

Sent from my iPad

> On Oct 30, 2015, at 1:27 AM, ayo_olukotun@yahoo.com<mailto:ayo_olukotun@yahoo.com> wrote:
>
>
> http://punchng.com/2015/10/2259
>
> Sent from my BlackBerry® wireless handheld from Glo Mobile.

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Samuel Zalanga
Department of Anthropology, Sociology & Reconciliation Studies
Bethel University, 3900 Bethel Drive #24
Saint Paul, MN 55112.
Office Phone: 651-638-6023

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