The Failure of Structural Adjustment? in a Twist of History, Europe Today Is the Epicentre of Global Economic Trepidation. Africa Tends to Be Recovering, Europe Seems to Be in Dire Straits! Nature Seems to Be Vegetating Its Cycle, Writes Professor Said Adejumobi
Adejumobi, Said, New African
EVERYTHING IN LIFE, THE ADAGE goes, has its time and season; so is the life of nations and peoples. Civilisations come and go; nations rise and decay. This is the natural cycle for all social creatures and human formations. Egypt and the old Roman Empire were once the sites of global power and influence, yet, they are both countries struggling to find their feet in political and economic terms, in the first half of the 21st century.
In the past four decades, the cycle of history has unfolded in remarkable, yet unexpected ways. Africa in the last two decades of the 20th century was the symbol of hopelessness, what Joseph Conrad calls the "heart of darkness". In a twist of history, Europe today is the epicentre of global economic trepidation. Africa tends to be recovering, Europe seems to be in dire straits! Nature seems to be vegetating its cycle.
To recount the cycle of history, in the 1980s and 1990s, many Sub-Saharan African countries were steeped in a deep economic crisis. Africa--a continent, where the people largely produce what they do not consume, and consume what they do not produce, courtesy of a distorted history, vulnerability to economic crisis was an enduring threat. In the early 198os, this threat manifested. Cash-strapped, many African countries had to go cap in hand in search of financial saviours. Their journey took them to Europe and America.
Like a young deviant child in default, Africans were tutored in the ABC of economic management, how to play the rules of the economic game, and how to live within their means! Structural Adjustment Programme (SAP) was the solution rammed down the throat of many African countries by Western institutions and countries.
Just as Africa did not have an escape route with colonial incursion, there was little room for political manoeuvring by many African countries, on the verge of financial bankruptcy and serious debt overhang. They therefore reluctantly acquiesced to the policy reforms of SAP. Those who were to pay the piper insisted that they must dictate the tune of the dance! SAP emphasised the diminution of the state and its capacity. SAP created a binary opposition between the state and the market, alleging that the state is the criminal culprit in the economic crisis in Africa. The state was regarded as being over-bloated, its bureaucracy inefficient and wasteful, its working-class over-pampered and over-paid, its currency over-valued through administrative controls, public expenditure inflated and leakages in the economy, too excessive.
The solution advocated was for African countries to adopt strict austerity measures in drastically cutting state budgets, trimming their workforces, selling off many government enterprises and corporations through privatisation and liberalisation, allowing exchange rates to respond to the forces of demand and supply, disbanding a wage legislation regime, and giving unfettered reign to the forces of the market to control the economy.
SAP was a painful political pill for many African countries to swallow. For countries with limited or underdeveloped private sectors, disengaging the state from the economy, social welfare and the employment/ wage regime was a difficult task. But with little choice, they grudgingly pushed on with the reform process.
SAP produced many casualties and much collateral damage. Funding of educational institutions suffered, with the quality and standard of schools deteriorating significantly, public health plummeted, many civil servants lost their jobs, and there was social discomfort and dislocation in many countries.
The good news about SAP was that in it lay the seeds of political change in Africa. The clamour for democratisation in Sub-Saharan Africa was largely prompted by the pains of SAP. Many Africans voted with their legs in public demonstrations, and violent outbursts agitating not only against SAP but also authoritarian and corrupt leadership, which could not prevent the inevitability of the SAP measures.
Two decades later, times have changed and the pendulum has swung 360 degrees. While African countries have recovered from economic crisis and are some of the fastest growing economies in the world currently, the same is not the case for those who once tutored Africa.
Those who prescribed SAP for Africa are now in the throes of serious economic crisis and swallowing partly the same pill they once prescribed for Africa. Iceland, Greece, Portugal and Ireland are apparently on life support, while Italy, Spain and several other EU countries are potential patients for emergency ward services!
To secure financial bailout support, austerity conditionalities have been imposed on European countries in crisis. They are to cut the size of their public service, reduce public expenditure, and reform the social security system. Greece was granted over $160bn in bailout by the EU but was still bleeding, and a new loan facility of 109bn euros was approved, which has made little difference.
Spanish banks secured over $170bn in order for them not to disappear and put the Spanish economy in disarray. The UK government gave over $40bn to some UK banks to keep them afloat.
And the Bush and Obama administrations in the USA have pumped over $1.4 trillion into the American economy in order to prevent it from drastic erosion. Times have changed; those who composed the songs, are now dancing to their own tunes!
While Africans voted with their feet, European citizens are now agitating for change with their legs and minds! They are resisting SAP through public demonstrations and the ballot box by challenging and deposing dire hard market fundamentalist political leaders and rewarding the "good guys".
In France, former President Nicholas Sarkozy, who was almost sure of another victory, lost to a little-known candidate, Francois Hollande, and the process was completed with parliamentary elections won by the Socialist Party. In Greece, it was intense political pressure that saved the pro-bailout party, the New Democratic Party, in the second round of elections. In the United States, Barack Obama's pro-poor and pro-middle class policies have earned him a second term in office, despite the ultra-right diversionary claims that he is a "socialist". The homeless and dispossessed in America seem to see in the Obama administration a "human face" and a hope for the future. Virtually everywhere, SAP seems to have hit the rocks, and the discourse is about growth and not only economic stabilisation, which SAP emphasises.
What are the lessons for Africa in the current crisis in which some European countries have found themselves? The first lesson is a philosophical one. No nation or people have absolute truth or wisdom; any nation can record progress and any nation can make mistakes. Humility should henceforth be the new currency in global economic dialogue!
Second, the state may be evil; but the state is a necessary evil. The dichotomy between the state and the market is false and a ruse. The state is a major actor in the economy, and must regulate, promote and sustain the economy in equilibrium, at all times.
Third, the private sector is not a saint as many apostles of market reforms project it to be. The current global economic crisis was mostly the handiwork of some criminally-minded private sector operators, many of whom are still walking free and healthy today.
Fourth, banks anywhere in the world, whether public or privately-owned are public trusts, and the state must never allow any cowboy private entrepreneur to drown them!
Fifth, capitalism is a class-based political system, and protects mostly the bourgeoisie class no matter their crimes. Those who collapsed many banks through blatant stealing and destroyed the lives of many poor people around the world, are still well and kicking and many of them are still collecting huge bonuses in financially distressed private firms.
The excuse for still paying fat salaries to many of these people is that if this is not done, the system will scare the market, stifle innovation, and create undue interference in the running of the market economy. But the misery of millions of ordinary people in Iceland, Greece, and other places around the world, which their actions caused is ignored by the political leadership in those countries.
Sixth, Africa needs to take a hard look at its economic policies and how to respond to economic crisis. When the economic crisis took place in Africa, the advice was to spend less and cut everything possible; but when it occurred in Europe and the US, the response was for the state to pump more money into the economy in terms of financial bailouts to banks, manufacturing companies, the auto industry, etc.
Were it to be Africa, the external policy advice may have been to allow the forces of the market to take their full course; for those private firms to die natural deaths. That was how the textile industry disappeared in Nigeria, and the dairy industry in Mali. The lesson is that economic management is embedded in rational political choices!
Finally, history reveals that wars and conquests are some of the most viable means of resolving capitalist contradictions and crises. The slave trade, imperialism, and colonialism were exports of the contradictions of a market economy. As such, the current context of a global capitalist recess provides opportunities and also challenges for the continent. As Africa is projected to be the new growth pole in the 21st century, it is important for African countries to seize their destiny and design their path to the future; China and East Asia did; Africa can also perform the same feat!
(Professor Said Adejumobi lives in Addis Ababa, Ethiopia, and here is writing in a personal capacity).…
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Publication information: Article title: The Failure of Structural Adjustment? in a Twist of History, Europe Today Is the Epicentre of Global Economic Trepidation. Africa Tends to Be Recovering, Europe Seems to Be in Dire Straits! Nature Seems to Be Vegetating Its Cycle, Writes Professor Said Adejumobi. Contributors: Adejumobi, Said - Author. Magazine title: New African. Issue: 524 Publication date: January 2013. Page number: 58+. © 2005 IC Publications Ltd. COPYRIGHT 2013 Gale Group.
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