November 12, 2010

A Short History of the Political Economy

Part I: Welfare States in Coming

Not so long ago Kenyans woke up to the day of its “rebirth”, August 27th, that fateful day in which a new
(“civil” society led) constitution was promulgated. Well, Kenyans have no choice but to believe that the
country has become anew and the hitherto evasive glory days are just around the corner. In the bosoms
of many a Kenyan, it is now hoped that their lives will change drastically as the new constitution
somehow improves the economic welfare of their lot by leaps and bounds. This is the change Kenyans
are waiting for and not Obama’s kind!

The model of our new constitution seeks to emulate, procedurally at least, those of the so called
developed world, rightly or wrongly, on the premise that the adoption of a hybrid Anglo-American
political system will result not only in political mileage but also in economic progress. In other words, the
championing of democratic causes and the subsequent profusion of free expression will lead to an
expanded “free market” economy ultimately securing a better welfare for all and sundry.

It is worth noting that subconsciously there appeared to be a disillusionment with the Westminster
system that Kenya adopted from the colonial days in the sense that it did not assure the locals of a piece
of the national cake, rather their representatives ate the cake on their behalf! As the ruling class,
Westminster style, sat pretty at the feasting table, their “followers” became more impoverished and
desperate as population grew and rural economic activity failed to keep up with it. This state of things
attracted the attention of entrepreneurial sorts in the form of the NGO fraternity and lobby groups who
used the desperate rural situations to source for funds abroad in a bid to “alleviate” the welfare of their
kindred. Such enterprise led to the burgeoning of bank accounts and the bellies of those for whom the
spirit of enterprise had been bestowed upon. In due time their economic status grew, and with it their
thirst for power; they began to feel that it was their duty to challenge the aboard of Westminster. Not to
mention that their Western sponsors egged them on because, as they said, they were first and foremost
friends of Kenya who wanted to bring their junior partner up to speed with internationally accepted
governance standards; bringing to an end what they saw as a spate of corruption and bad governance
was their foremost priority.

When it was all said and done, the ruling class (political old guards) and the socially westernized nobility
cum “pressure” groups reached a “consensus”. The lobby class was to be co-opted into the mainstream
Westminster model through “decentralization” of power, which they had relentlessly advocated. This
would, as it were, bring power to their local level and ensure that they too had a taste of the national
cake. On the other hand, it will also serve to gain the West a foothold in policy making at the sub-local
level all in the name of bringing their kind of development closer to the people through “civil” society.

Time and time again we have been told how necessary it is to “clip the wings” of the Executive through
“decentralization” of power but must this necessary entail the creation of a minority welfare state – all
in the name of a new constitution? Any sensible person cannot fail to see that the cake will get much
smaller for the ever burdened common man as an additional bill for democracy is thrust into his hand.
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The proposed increase in the number of parliamentarians and the grafting in of senators and governors
could see recurrent expenditure on these agents of democracy top Kshs 15 – 20 billion annually, which
in current terms is about 2% of GDP. In short about 400 persons will control 2% of the entire national
income as entitlement fees for their role as guardians of a “sacred” rite, imported from “higher”
civilizations, called democracy. If we triple that figure, to take county representation into account, it is
probable that 5% – 6 % of the GDP will be going towards “servicing democracy”! This means that
economic productivity will need to grow at double digit levels to be able to absorb the non-productive
costs of increased political activity, failure to which a gradual economic decline will be in the offing for
the rest of the 38 million Kenyans.

It is either the constitutional planners did not know that the country is plagued with recurrent budget
deficits or they chose to conveniently ignore the fact all together or better still they were convinced that
this lottery approach to income redistribution will serve to enhance economic activity. The winners of
the lottery (read: elections) will earn a golden hand shake which they will then inject back into the
economy. But given the prevailing budget deficits, the allowances for the newly created posts of
democratic middlemen will have to be financed through domestic borrowing, funding from the donor
community or by way of raising taxes. It must be observed that the Government has done a good job of
ensuring that recurrent expenditures are catered for by internal revenue and external borrowing is
mainly channeled towards development expenditure meaning that the debts incurred can in the long
run be repaid by the income generating projects initiated through debt financing. With regard to the
new constitution, there is a slight hitch, the constitutional project is not revenue generating rather it is a
recurrent expense and as such it would not make sense for government to borrow funds to finance the
project. It is therefore more likely that taxes will have to adjust upwards to cater for the rise in deficits
arising from an expanded political economy.

The trifles of the taxman notwithstanding, many Kenyans have been led to believe this newly found
democratic space will ignite the spark of prosperity whose flame will light up the dark alleys of the
hitherto backward economy and catapult it to levels that match those of the “industrialized” nations.
But the course of social-economic history directs us to a different path. It indicates that politics flows
from economics and not the other way round and as such political settlements without the hindsight of
economic prospects do not resolve social strife they only delay it. The French “revolution”, which in
essence was a bread riot that took on heightened political overtones, came to fruition on the back of
decades of economic desperation. Those were the days when the Monarch largely lived on debts to pay
salaries and up keep for the ruling class and the “revolution” thus served to bring the impracticability of
its existence to an expected end. Subsequently, the post “revolution” period saw European states on a
war footing in a bid to slowdown their slide into bankruptcy through the confiscation of land and
treasures from neighbouring regions.

The focus changed somewhat with the discovery of what came to be (and still is) crown lands of Africa
and the setting up of expedition companies such as the Imperial British East Africa, which went out to
the farthest corners of the dark continent in search of loot for subsequent trading in the domestic and
regional markets. This coupled with the coming into being of industrial complexes quickened the
economic prospects of the respective ruling feudal classes in Europe but the ghost of the French bread
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revolt still haunted them in that poverty continued to subsist amidst the wondrous economic progress
that abounded. The persistent impoverishment brought about agitation by the peasantry for a fair share
of the spoils and a political settlement of egalitarianism through voting was reached on the back of a
basic welfare for all.

Given that the feudal lords were still the owners of capital (land), it was they who extracted rent income
giving them the means to run in an election and as a result the peasantry, who were the majority, would
merely be casting lots to determine who among the feudal class would lord over them. This of itself
would not have guarded against a revolution when the peasants run out of bread. Hence, the trick was
to introduce a welfare state similar to that in the heady Roman days where citizens were guaranteed
bread. It was Juvenal who once stated that “give people bread and circus and you will rule comfortably
over them” and this doctrine became the Western doctrine on how the feudal classes would rule over
their immediate subjects (the distant subjects would be ruled by a combination of military might and
what is termed as capitalism). It is also noteworthy that the Roman system of government was not a
democracy as we know it but a variant of feudalism whose internal make up held firm so long as
resources from subdued neighbours kept flowing to Rome thus giving the assurance of bread to its
peasantry.

To the feudal class in Europe, in the early 1900s, the electioneering process served for mere symbolism
of equality but it is the dole that they relied upon to maintain their reign. To the peasant class, welfare
was what they wanted and having been granted it, the ballot was to protect their “welfare rights”. It can
therefore be said that democracy in the strict European sense was a means of safeguarding the welfare
state. This was a political settlement to an economic quagmire that had bedeviled Europe for centuries
and in that sense Europe was able to move forward to greater heights in the 20th century by means of
their giant corporations, which replaced the institutions of plantation slavery as the centre of economic
production and by extension, ushered in new forms of slavery.

For some brief period, right up to the welfare settlement, wage slavery afflicted Europe as the new
industries paid a pittance to those manning the machines. Most of these wage labourers were recent
migrants from rural Europe in such of a less financially suffocating environment such as that in the rural
areas which was dominated by the feudal landlords. However, it increasingly became clear that these
less than optimum working conditions could not be sustained without political strife hence the ruling
class opted for a “win-win” situation through the introduction of a welfare state in which all citizens
were guaranteed a basic minimum wage whether they worked or not mainly using the income gained
from the industrialized corporations. To subsidize this fixed costs, the corporations needed cheaper
sources of raw materials and labour in other parts of the world and the protection of their Governments
to secure the same hence the scramble of Africa through military might and the subsequent re-scramble
by Western corporations.
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A Short History of the Political Economy

Part II: The Other Side of the Coin

In the Roman times the value of money was coinage with varying amounts of gold (silver and bronze
were also used), thus the value of money was determined by the weight of the coin which in turn
estimated the amount of gold in the coin. As a result the ratio of gold comprising the currency in
circulation was crucial in sustaining currency stability, minimizing food inflation and enhancing the
ability of the state to provide bread for its citizens subsequently ensuring political stability. Whenever
the coins became lighter this meant the gold ratio, which in essence was the exchange rate, had
decreased; the Romans had to look for gold beyond their borders by invading their neighbors and
looting their treasures and on retrieving the gold currency stability would then be restored for a while
until the gold currency ratio was severely destabilized again. In those days of weighing coins, lighter
coinage meant loss of purchasing power and rising inflation, although at some point the officials would
add lead to compensate for gold and things perhaps went smoothly until the public got wind of it. In a
state of high inflation Rome could not provide free bread to its citizens, the result of which would be a
backlash from the masses and a collapse of the state. The Romans had no option but to look for the gold
and silver wherever it would be found by whatever means necessary. Precious metals were not the only
reason for occupation, among other things; labor also played a major role as heightened aggression
against its neighbors demanded more manpower join its military ranks and these numbers were sourced
from subdued regions. Unwittingly, the larger the military grew the more it fed the flame of inflation
subsequently paving way for the demise of the Roman Empire.

A fast tracking to the 18th century and latter day “Romans” (who previously were the slaves in the real
Roman times) demanded slaves for plantation farming rather than military purposes. Unlike their
Roman predecessors they dealt with the problem of inflation through importing forced labor which they
did not have to pay for unlike the Roman predecessors. This was the epoch that saw the transatlantic
slavery trade flourish as the slaves, of mainly African descent, were converted into cotton, coffee,
cloves, sugar and other foodstuffs which were then sold in European markets further enriching the
feudal class. Slavery served as the processing factory which only needed a bit of food fuel and a leash to
keep it running. However, the age of industrialization increasingly rendered plantation slavery irrelevant
as machines, to a large extent, replaced plantations as the centres of production. Thus, the corporations
no longer went out into the world to take in slaves but used the local inhabitants to extract, if not extort,
resources from the “dark underworld” of the Southern hemisphere. They would then take these
resources back to Europe for processing using home labor and would then sell them both to local,
regional and global masses. The “loot” (read: profit) was then shared with domestic governments via
taxes for onward allocation to the welfare system. At this juncture, the role of European governments
was to make the work of the corporations easier by seeking safe passage for its corporations in return
for larger tax revenue. This turn of events had the effect of bringing about the rapid demise of
transatlantic slavery and ushered in the era of occupation slavery.

The first phase of European occupation, also known as the scramble for Africa, on one hand involved the
escalation of military intervention in which European forces combed the hotbeds of resistance in
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occupied lands and gave the corporation sufficient protection to set camp and beginning extracting
resources. On the other hand, this era also witnessed an influx of “Christian missionaries”, as they were
so called, whose work was to bring the “civilization” to the “natives” and make them “educated” and
better suited to serve the needs of the incoming corporate European dominion. Thus the corporations
had military protection of their Governments and through it they could occupy and exploit local
resources without being answerable to the local inhabitants while at the same time they were being
furnished by the missionaries with cheap labor equipped with adequate communication and arithmetic
skills to run errands for the corporations. This government, missionary and corporate synthesis was also
known as the 3Cs – Christianity, Commerce and Civilization which roughly translated to bringing
“Civilization” to Africa through “Christianity” and “Commerce”.

The term “colonialism” was later coined to these, mercenary like, 3Cs activities on the part of European
feudal governments in concert with their missionaries and corporations. It is herein that the seeds of
Western economic dominance in domestic African economies were sown as it enabled the operations of
the European based firms to take root in a competition free environment (free markets must have
different meanings to different people). All measures, though not always successful, were taken to
ensure minimal operational costs were mainly borne by the local inhabitants. Land was expropriated
from the “natives” who were then huddled into “reserves” and taxes duly imposed on them. This left
them no recourse but to seek employment from their white masters in exchange for a monetary reward
that would enable them pay taxes. The taxes were not so much for the purposes of raising revenue but
for the extraction of forced labor to subsidize white-settler “farming” adventures and create
dependency on monetary wages from incoming Western corporations. The manual labor accruing from
this rather artificial dependency was then directed towards farming and other forms of resource
extraction at minimum costs to the Western endeavors and such were the beginnings of the
entrenchment of “foreign direct investments” and its attendant currents of wage slavery.

Missionaries from British based Churches had a head start in exploring East Africa mainly because it was
English territory and they could therefore draw on the goodwill of the English crown. Likewise, early
missionaries in Latin America were Catholic as a result of early conquests by the Spanish who also
professed Catholicism. The Church of England was a splinter group from the Vatican on account of the
Pope’s refusal to allow King Henry to annul his marriage and hitch a ride with some other new find. To
put it plainly, the role of the Church was to legitimize the Monarch in return it would receive recognition
as the state religion and receive all the fringe benefits that went with it including access to new
territories to as it were, spread its word.

Apart from spreading their word, missionaries came in handy not only with their brand of “education”,
but also with the psychological reinforcement and justification of European dominance as they
emphasized subservience to the “god” of the white man and utmost obedience to the crown and the
church which are more or less the same thing; as the “Supreme Governor” of the Church of England, she
is the one that the white god speaks to when his direct line to the Archduke of Canterbury is faulty. This
additional attribute to her aura supposedly gave her supreme authority over the colonized territories
and all the moving objects within them. The “pagans” (as they had not been “christened” they could not
be called subjects) were continually reminded by the missionaries that in grabbing their land, her
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majesty was acting on orders from “above” and it was up to them to submit to the “higher”
authority…as it is written in the book.

The “natives” had to endure the unending hymns of praise for “the empire where the sun never sets” in
addition to which the missionaries added a morsel of “education” to the Africans in form of reading and
writing skills just sufficient for them to be useful as clerks and bookkeepers in the White man’s perch.
The students who “excelled” in those “do and don’t ask” sessions were the ones who had a knack for
arithmetic, Queen’s English and could better conceptualize Lugard’s “great conquests” for the Imperial
British East Africa Company (which paved way for corporate exploitation), were catapulted to the lower
chambers of colonial Government and its corporations to serve as clerks and messengers; the rest of the
“native” herd was sent packing back to the reserves. These Western forms of social order in effect
became the new “god” which the “educated native” looked up to and was made to desire.

Accordingly, the missionary educational background did not equip the African forerunners of “progress”
with the intellectual capacity to avoid the fox holes that their colonial masters set them up to. Neither
did they have the financial nor military might to overrule and outgun their contenders… they signed on
the dotted line of Western demands. Having, by any means necessary secured, large tracts of land and
relegating the Africans to the reserves, the Europeans then demand compensation for the land that they
had forcefully taken away from the Africans at “market” prices. And since, the incoming African
administration did not have the funds; the European Governments “arranged” for the World Bank to
lend for this partial “buy back” activity for land originally in the hands of the locals. The missionary
education had wiped out the reason needed for the local leadership to see that they were being
defrauded and if they did then their missionary socialization had imbued them with an inferiority that
stifled their will to fight for the land of their ancestors. And what became of this wise leadership? A
gargantuan crowd of “native” mimic men and women whose educational and technical inadequacies
has led to psychological deficiencies that dilates into western style fetishism; they consume and adorn
anything and everything that symbolizes western progress from “democracy” to “luxury”.

Up to this day, the education system is, for all practical purposes, in a state of inertia, up until recently
the exploits of early missionaries were still being taught in schools. The current system of “higher
education” which was inherited from the missionaries only gives a form of mechanical learning that puts
a premium to obedience at the expense of reason and the fruits of it are evident in the fact that its
graduates lack the technical capacity required for them to attain higher forms of technical occupation. In
other words, the missionary brand of education ultimately reduces its students to clerks and artisans
without the capacity to attain a higher skills base required to generate the productivity needed to shift
gear from “jua kali” to “industrialization”. This to a large extent seems to be the main difference
between the Asian “cubs” (China is now the tiger) and the sub-Saharan colonies over the last four
decades. In other words, while the African students were tracing the path of the first white men to
discover African mountains and lakes, their Asian counterparts went down the path of technical
progress by means of their technical institutes. Several decades later, the difference is telling, the
Africans sell coffee berries, traditional dances, mountain views and lakeside retreats to the successors of
Stanley Morton; the South Koreans sell Samsung and the Chinese sell just about any tech device not to
mention the various infrastructure projects across Africa.
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