Academic journal article World Review of Political Economy

Africa and the Global Economic and Financial Crisis

Academic journal article World Review of Political Economy

Africa and the Global Economic and Financial Crisis

Article excerpt

Capitalism has indubitably proven that it is an economic system that creates a high-class conscious society, and also that it is fraught with internal contradictions and fundamental weaknesses. Periodic economic crises which are inextricably associated with the concept of market are among the inherent contradictions of the system that has proved incapable of transcending them (Rodney 1972, 13). Admittedly, global economy has severally been plunged into economic and financial crises since the emergence of capitalism as the predominant economic ideology. The most recent of these crises erupted in 2007 and has continued to plague global economy since then, leaving it in ruin, shambles and great devastation. African economies could not have been the exception owing to their coercive integration into and orientation to the international capitalist system since the European expansionism of the 15th century. By this ill-fated development, African economies have lost their hitherto self-reliance, self-sustenance and resilience. Thus, they have become highly vulnerable to externally engineered economic distresses. This article makes a dissection of the recent global economic and financial crisis that is torturing the capitalist world. Its emphasis will be on the effects that the crisis has had on African economies and what is responsible for their liability to this monstrous trend. The article also considers the impact of the policy responses to the crisis by various financial institutions and African governments. The Marxist perspective on international economic relations is the framework that guides the analysis of this discourse.

Theoretical Perspective

The Marxist perspective on international economic relations is very instructive and incisive in elucidating the economic woes that have seized developing economies inclusive of Africans. Generally, Marxism is often used in reference to "those socio-political and economic ideas of Karl Marx which in time formed the basis for comprehensive social theory and political doctrine" (James and Olu 2012, 105). The Marxists argue that international economic relations are dictated by capitalist imperialism. To them, these economic relations are characterized by inequality, domination and exploitation of states that are comparatively weak to those industrialized powerful states of Western Europe, the United States and Japan. Capitalist imperialism is responsible for the integration of African and all third-world economies into the international capitalist market system through trade, colonial domination and capitalist investment with the sole objective of ensuring their structural dependence (Rodney 1972). In this way, capitalist imperialism has transformed economies of colonized Africa and other countries of the global South by integrating their financial and productive structures into an international system of capital accumulation. Capitalist imperialism is "an institutionalized system of control which systematically shapes the institutions and structures of dependent, dominated (African) countries and limits their freedom of action" (Cockcroft, Andre, and Dale 1972). This substantive viewpoint corroborates and validates the position that capitalist imperialism has restructured African economies. Internationalization of the world capital market has been accomplished through the World Bank among other agencies of international ruling class like the International Monetary Fund (IMF). Again, capitalist imperialism has integrated the world capitalist economy into the structures of metropolitan multinational corporations (integrated conglomerate enterprises), most of which are based in the United States.

Being integrated and oriented towards the international capitalist market system, African economies, having lost self-reliance and self-sustenance, have become prone to the economic shocks and volatility of the capitalist system. The implications of this imperial conquest for African economies have been economic dependency, domination, and subordination of some by powerful capitalist states, which have also imposed endless financial ties of dependency upon the economic institutions in question. …

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