Capitalism in Africa: The Battle Within
Capitalism—a virtuous yet nefarious construct, perhaps even the ultimate exemplification of the bittersweet of human advancement—refers to … the social, political and economic organization of human life based upon the concept of private ownership of a society’s means of production and the aspect of free enterprise.
The world’s dominant economic system throughout the 21st century—and arguably for most of the 20th century—capitalism is founded on the ubiquity of, among others, the ideals of free and competitive markets and capital accumulation.
The origin of capitalism may be traced back to the structures established under two notable systems of human organization explicated in political economy literature: mercantilism and/or commercialism; and feudalism. Such literature, however, is inherently biased towards the blatant recognition of pre-capitalistic institutions only in the West, ultimately failing to give credence to similar institutional setups elsewhere, and especially in Africa.
Here in Africa, capitalism is widely treated as a foreign concept—an idea exported to Africa following the arrival of the colonialists after the economic and political bidding war over the continent at the 1884-1885 Berlin Conference.
The development of capitalism in Africa was majorly shaped by the Cold War, an epochal event that redefined the world’s and Africa’s politico-economic trajectory in more ways than one.
The majority of African states were granted or attained political independence at a time when the Cold War was escalating. Both the capitalist and the communist forces were after global dominance, and Africa would naturally serve as a frontier of ideological exploration and prowess even as the world’s leading powers battled it out. These powers sought to entice African governments with a number of goodies, such as foreign aid and various forms of technical assistance.
Some African states embraced capitalism, while others chose communism and/or socialism. Nonetheless, most African countries—aware of the perils associated with being openly labeled pro-West or pro-East—chose to play it safe, embracing the Non-Aligned Movement. It’s worth noting, however, that even as these countries sought to appease their colonial masters by embracing capitalism, it was actually crony capitalism that their leaders institutionalized.
Capitalism was further entrenched in Africa in the early and mid-1980s, at a time when the Cold War was at its peak—a time period in which the economies of African states were plagued by the infamous debt crisis. Following the crisis, African governments sought economic assistance from the so-called Bretton Woods Institutions—the World Bank and the International Monetary Fund (IMF).
To address Africa’s debt crisis, the World Bank and the IMF both recommended that African governments adopt the famous structural adjustment programs (SAPs), policies often identified with the Washington Consensus. These policies were based primarily on the capitalistic concepts of market fundamentalism and/or neo-liberalism—trade liberalization, the deregulation of markets, the privatization of state enterprises and decreased government spending, among others.
The fall of the Berlin Wall and the lifting of the Iron Curtain—both events that marked the end of the Cold War—were instrumental in ensconcing capitalism in Africa. The two events simultaneously gesticulated the collapse of communism and the triumph of capitalism. In fact, the Western zeitgeist since would require that foreign aid advanced to African states be pegged on the establishment of democratic governments and market reforms, both an exegesis and a protraction of the soul of the Washington Consensus.
Following their adoption of most of these capitalistic-oriented reforms, African countries experienced a 20-year period of economic growth that averaged 5.2% per year. There is no doubt institutions founded on capitalism have helped a significant number of Africans accumulate capital and raise the continent’s economic growth prospects.
However, there are valid concerns regarding the inadequate nature—and sometimes downright inability—of capitalistic thought to explain Africa’s gross economic inequality realities and the increase in the number of Africans categorized as poor over the years. A World Bank report published in October 2016 and titled Poverty in a Rising Africa indicates that as at 2012, 330 million Africans were poor, compared to 280 million poor Africans in 1990.
Furthermore, in a research article published by the Brookings Institution, Laurence Chandy notes that Africa’s growth only benefits the rich, and that the quality of such growth is pervasively and alarmingly deficient.
In light of these compelling revelations, one could argue there has never been a better time to examine how and interrogate why capitalism, as it’s practiced today, continues to engender misery in Africa. Perhaps it’s time for Africa to come to the realization that when it comes to socioeconomic prosperity, the supposed Midas touch of the quintessential capitalist might as well be a mere illusion.
Take corporatism, for instance. A fledgling continent, Africa’s economic landscape is, to a large extent, defined by an armada of multinational corporations firmly rooted in the developed world. These corporations continue to brandish immense power, and have been more or less a catalyst in the emergence and development of this precarious and noxious semblance of capitalism.
It has been proved, time and again, that powerful monopolies that feed off of cartelism are guilty of infiltrating government processes—sometimes even skewing government policy—often at the expense of public interest. Here in Kenya, Safaricom, the most valuable firm in East and Central Africa, is fighting to shake off allegations of espionage and abetting electoral misconduct.
And then there’s the thorny subject of crony capitalism. State capture finds its archetype in the recent political developments in South Africa which just culminated in the resignation of President Jacob Zuma. This followed widespread allegations of a surreptitious ploy between the president and a circle of his wealthy friends (notably the Gupta brothers) to conspire to loot the state.
The Gupta brothers are also accused of wielding undue influence over the president, particularly within the foray of cabinet appointments. Many a critic of capitalism would readily point to this as a clear manifestation of the dangers modern-day capitalism poses not just to government, but to the very idea of democracy as well.
The evidence is clear: capitalism has real and deleterious effects on the very institution of democracy. Both corporatism and state capture have served to prove that capitalism is no better than, say, communism at safeguarding individual liberties. This is because it (capitalism), by its very nature, tends to concentrate wealth and, with it, power. The end result is the erosion of individual freedoms, especially with regard to a people’s right to freely choose their leaders.
Quite bizarrely, capitalism—a system fashioned and flaunted as a panacea for the inherent flaws of communism—is now being censured for having engendered elitism and kleptocracy, the very vices it was meant to root out.
And things get uglier whenever one views the system through the lens of colonization. Saying that the so-called ‘invisible hand’ works for everyone is not just an anachronism; it’s emphatically inaccurate. There’s overwhelming evidence to show the free market only plays to the gallery of the rich, much to the detriment of the struggling.
Historically, colonialism furthered the concept of capital accumulation as the colonialists set up exploitative institutions that amassed Africa’s wealth and enriched the colonialists, at both the personal and national levels. The amassed wealth was exchanged among various countries via competitive markets.
The trend isn’t any different today, and globalization—a capitalistic construct—continues to favor the already wealthy, those that control capital and industry, while condemning those trying to prosper to something akin to an economic wild-goose chase. It is a reality manifested in the ever-widening economic differentials between Africa and the West over the years.
If anything, decades of aid and globalization have only worked to evoke sentiments of exploitation and neo-colonialism among Africans who can’t seem to help but question the efficacy of capitalism in helping Africa achieve the ever-so-elusive development milestone.
Unlike the often sanctimonious capitalists, proponents of government have always embraced the art of self-deprecation, opting—much to the chagrin of capitalists—to take on the bull of government failure by its horns. If the 2008-2009 Financial Crisis taught us anything, it’s that the relationship between government and the free market need not be one of mutual exclusivity.
The astronomical rise of China as an economic power, for instance, avers the irrevocable need for government to place itself at the center of the development matrix. Because we know for a fact that markets can, and do, fail—oftentimes with cataclysmic effects.
And so what we need is a system that draws upon the strengths of noble capitalism, while at the same time embracing the novelty of government; a system where the wealthy understand and appreciate their obligation to pay their fair share towards supporting the very society that has made their every success possible; a system based mainly on policy choices aimed at ensuring the greatest possible degree of independence, freedom, cooperation, equality and opportunity for everyone.