The Oxford Handbook of Africa and Economics: Vol 1: Context and Concepts, edited by Célestin Monga and Justin Yifu Lin, 864 pp, £35, ISBN: 978-0198819707
Sub-Saharan Africa is generally represented as, to a greater or lesser extent, a place in crisis, a place where events regularly occur that should stir the conscience of the developed world. Images similar to those from the Nigerian civil war of the mid-1960s, the Ethiopian famine of the mid-1980s or the Rwandan genocide of the mid-1990s, reports of the ongoing political thuggery in Zimbabwe and the never-ending refugee crises are repeated regularly on television to give an impression of a place without a history, let alone an intellectual background. Ireland has been deeply complicit in this: at an official level, rock music with a conscience is drafted in to support the country’s bid to win a seat on the U.N. Security Counci, while various NGOs replenish their coffers with well-placed and well-timed appeals for emergency relief funds: complexity, as will become apparent, has always been shunned as part of one particular kind of Western representation of Africa.
Many Africans are deeply angry at this: many African states have achieved consistently high economic growth rates over the last twenty years, including twenty states that do not produce oil that have averaged 4 per cent growth per annum. New institutions have been established and innovations across all fields of learning and artistic expression have made their way onto the world agenda, yet none of this is acknowledged: could it be that vested interests have a reason to keep perceptions as they are, while themselves leading far from frugal lives?
The Oxford Handbook of Africa and Economics is a good corrective to the simple-minded view: it asserts complexity at every turn, not least on the good economic principle of the greater the challenge the greater the returns, and not least intellectually. It isn’t a handbook if by a handbook we mean something that is portable and practicable. It is in fact a whopping collection of forty-four chapters, some by multiple authors, attempting to give meaning to what a new economic approach to Africa might look like. Mainstream neoclassical economics, with its widespread failure to predict the Great Recession of 2007-09, has been having to re-evaluate its core assumptions and methodologies, while the sub-discipline of development economics also considers itself far from a success, despite high African growth. Africa has achieved growth, it could well be argued, despite the Western-sponsored economic policies enforced on the continent over three decades and more, while nobody can know if what is happening now is providing the basis for it to continue on into the future. The two editors of the handbook – Cameroonian and Chinese nationals ‑ have both held high positions within the World Bank, as have many contributors, a number of whom are Nobel laureates. The World Bank, a development bank, was set up as part of the Bretton Woods institutions designed to regenerate post-World War Two economies, along with its twin, the International Monetary Fund. As such, the Handbook, still by and large committed to orthodox market economics, comes from the perspective of some of the most powerful thinkers on economics and Africa on the planet: it does so in the context of how a discipline ‑ a science ‑ that claims universal application can come to terms with geographically specific knowledge, experience, and ways of doing things that contradict it. It is a question that has resonated through scientific practice on the continent of Africa for a century, but which economics is only engaging with in recent times. To understand its seriousness, it is necessary to put it in historical context.
It has been written that some time in the first half of the nineteenth century “modernity” arrived on the sub-Saharan African continent. But while the abolition of slavery, however unevenly temporally and geographically, and the opening up of markets in commodities besides people and ivory had profound consequences, both socially and politically, it did not lead to anything that approximated to what would now be called development. Rather it might be argued that it opened the way for the colonial division of Africa. Nor can the colonial era in general, prior to the end of the Second World War, be said to have been “developmental”, with the possible exception of the double-edged sword of rapid population growth from the 1930s on, in many places replacing the populations devastated during the first phase of the colonial subjugation.
If one is searching for the moment the development age was inaugurated, the inaugural address of President Truman, delivered on January 20th, 1949, is probably as good a candidate as any. Point four of the address laid out the benign US agenda for a post-imperialist ‑that is to say post- old-imperialist – world: the US would now make available its considerable technological resources, and in cooperation with other nations, ensure the provision of the capital necessary for the ending of underdevelopment across the globe: “a world-wide effort for the achievement of peace, plenty, and freedom”. It was not in itself an exceptional programme: there was no great financial commitment. But it set a rhetorically benign framework within which the US would conduct its foreign policy in parts of the world where the old European empires were shrinking. And it set out a rhetorical context in which America would combat communist hegemony in third world countries as they sought emancipation. Underdevelopment and development were not new concepts: they had been used by Marx and Lenin; what was new was that they were now being use to articulate US strategic aims.
In this context, the most influential text from which a policy framework was drawn was Walt Rostow’s The Stages of Economic Growth: A non-Communist Manifesto, published in 1960. It claimed to demonstrate how, drawing on European economic history (Rostow was an economic historian), developing countries could promote growth and in turn produce “development”. It also claimed to show how communism was a kind of disease that could befall such countries if they did not organise properly those elements in their society that were prepared to undertake the process of modernisation. Rostow identified five categories into which, at any one time, all societies fell: traditional society; pre-conditions for take-off; take-off; the drive to maturity; the age of high mass consumption. He bolstered his argument by reference to detailed historical comparisons across the globe. Development and modernisation, in the minds of many, were now inextricably linked; modernisation was what it was all about.
For American and European modernisers, the rest of the world had been drawn into the potentially progressive orbit of the developed world by the colonial conquest. Socially and economically, modernisation, as defined by one of its most influential advocates, David Apter, was the importation of the new roles provided by industrialisation into traditional societies .This would entail a massive transformation of the person: materially, socially, psychologically, a “new man” would be made. That, to some extent is what, at the end of its life, colonialism had been trying to do with its industrial and agricultural initiatives, with varying degrees of success. At the political level, modern national integration and concomitant state-building were to rely on the efforts of a small elite. Implicit in this modernisation theory is a belief in the near total autonomy of the political sphere, that is the ability of emerging political elites to shape their societies in their own image.
The life of modernity as the organising concept of Western (particularly US) development theory may be divided into two distinct periods. From the end of the Second World War to the mid-1970s, it equated approximately with a Keynesian economics, that is central planning of investment, state ownership, import substitution schemes behind tariff walls (protectionism), capital and exchange controls, welfare statism (however limited) and the transformation of mainly rural “traditional” societies into urban, industrial “modernised” entities. The military, organised in recognisable structures of power, conformity and deference, and technologically advanced, could provide a model and might organise society through the state apparatus accordingly. Other means, whether dictatorial in some form or other, authoritarian, or perhaps even democratic, might also suffice. Modernity was a response to the US’s new role in the postwar world: how to deal with the postcolonies coming into the world system as European empires expired; an explicitly alternative model to that offered by communism. It held enormous sway at very high levels of the US administration. The development path for the postcolonies (as they were known) was to be one of convergence with American liberal capitalism and everything that entailed, from appropriate psychological orientation (radicalism was symptomatic of a pathological disorder), family structure, Martinis, television, and a suitable respect for the capacities of well-motivated technocrats who would organise society, production and appropriate forms of governance. Frequently, it entailed supporting murderous regimes dedicated to plundering their own people while protected in the international arena by the US.
For much of the period, the US was primarily concerned with Asia (apart from events in Southeast Asia, keeping non-aligned India non-communist was considered vital) and South America, not technically postcolonies since the 1830s, but dominated by Britain in the nineteenth century, then in the US’s “sphere of influence” (domination) since the beginning of the twentieth century, and certainly, in US parlance, underdeveloped. Apart from Congo, where the US had installed Mobutu, former colonies in Africa remained, to a greater or lesser extent, under the tutelage (former ex-pat civil servants staying on for a time) of their former colonial overlords, not least through the British Commonwealth or Françafrique. Having harnessed peasant grievance at colonial agricultural policy to drive the move to independence, the leaders of such new states as Tanzania, Zambia and Kenya then embarked on modernisation schemes of their own, though marginally more sensitively than the former regimes. Instilling work discipline, increasing productivity, diverting the surplus to state ‑ and personal ‑ purposes, was not the exclusive prerogative of the colonial order.
The abandonment of Keynesian policies, however ineffectually implemented domestically, the reality of the Vietnam War, disillusion with the liberal project generally, all contributed to the demise of classic “modernisation theory” as it had been articulated by a complex of state-academic institutions in the US and disseminated by propaganda networks worldwide. For a time, it lost all credibility, deserted even by many of its long-term advocates as a way of understanding and controlling what was happening in the world. Yet it never entirely disappeared from the vocabulary: at a deep level, Western governing elites and technocrats viscerally regard themselves as modern, and the antithesis of modernity is everything that threatens them. Failed transitions to modernity represent a threat to Western security interests. Failed states give rise to Islamic radicalism, terrorism, international crime, ethnic conflict and drug-trafficking. So modernisation has been reformulated, but this time largely in accordance with neoliberal economic precepts and Western security needs (always paramount).
In this new formulation, the economic role of the state is ideally minimal and neutral; government failure begets economic failure and must be addressed; thereafter well-functioning modern markets do the rest. Some checks and balances were grafted on. Civil society acts as some check on any tendency to excess by the state. For true neoliberals, the sanctity of the contract and the courts outweighs democracy, though multiparty democracy was re-established in many African states. Neoliberalism may be understood as a paradoxical form of liberalism: one that is deeply intolerant of all other forms of thought ‑ including other forms of liberalism.
By the early to mid-1980s, many African states were under “structural adjustment programs”, the price, along with interest, the World Bank and IMF exacted for providing loans. Over the next two decades, ever-increasing conditionality with regard to governance would be a feature of the West’s relationship with sub-Saharan Africa. Neoliberal economic policies implemented by suitably organised governing apparatuses became the new template enforced by Western agencies. Social engineering and the active intervention of state agencies would be replaced by the invisible hand of the market (invisible, Joseph Stiglitz, among other things a distinguished African economist, has said because it doesn’t exist). Like its predecessor, neoliberalism offers a single path to the ideal world. But this time it would be achieved in accordance with human nature, as expressed through the unfailing mechanism of the market. However, unlike their predecessors, 1980s neoliberals were not interested in nation-building. A rhetoric of linking nationalist aspirations to development and security, thereby justifying US aid, was replaced by a policy of militarisation. The link between development and security has persisted, particularly since the “war on terrorism” was declared: new US bases abound on the continent of Africa.
It would be incorrect to unconditionally equate US modernisation theory and practice, as it has evolved over the last sixty-five years, with the theory and practice of the World Bank. But it has followed the vagaries of Western economic thought over the decades closely. Post-seventies, the World Bank outlook has rested on three essential principles: the introduction of liberal reform, most notably the norm of free exchange; the quest for parsimony, that is the avoidance of complexity in favour of simplicity in formulating economic rationales; the will to relegate the political, that is the separation of economics from its political context. And World Bank thinking does represent for many development practitioners an orthodoxy, a source of reliable information, the set of parameters within which development takes place. Equally, the bank has its, sometimes very vociferous, critics who at best see its position as ambiguous; sometimes little more than a cat’s paw for US and Western interests more generally, sometimes an institution seeking genuine humane redress to problems of poverty and economic underdevelopment. Others, old-leftists and eco-developmentalists, reject the bank’s reliance on market mechanisms as an endorsement of brute force, exploitation and power politics exercised in the interests of the rich..
However, it would be wrong to assume that, any more than modernisation as political practice was grounded in rigorous social theory, the World Bank’s policies are grounded in rigorous neoliberal economic theory. The most avowedly neoliberal developmental economist, and Margaret Thatcher’s favourite, Peter Bauer, rejected all aid out of hand and argued for unconditional Westernisation as the only way forward, while considering population growth an untrammelled good, policies that would effectively put the bank out of business. Rather, the World Bank’s policies are a product of a discourse. It is worth briefly considering, for purposes of clarity, the meaning of discourse here. A discourse is best understood as a system of possibility for knowledge: what rules permit certain statements to be made; what rules order these statements; what rules allow us to identify some statements as true and some as false; whenever sets of rules of these kinds can be identified, we are dealing with a discursive formation or discourse. What needs to be revealed are the sets of discursive rules that allow the formation of groups of statements, which may be seen as true or false because we can reason about them; that is why a discourse can be seen as a system of possibility: it allows us to produce statements; it makes possible a field of knowledge.
But these rules are not consciously invoked ‑ it is not a method or a canon of enquiry: rather they are they are the necessary preconditions for the making of statements, and may be said to operate behind the backs of speakers of a discourse. Thus, the place, function, and character of the knower, authors and audiences of a discourse are also a function of the discursive rules. It is the discourse that imposes certain conceptions of economic reality; it communicates the economic canon; it creates the language of political economy; thus, it may be argued, determining the language of the strategies of circumvention. In short, the discourse becomes “performative”.
It is worth setting out in broad terms what at least some of the World Bank’s discursive assumptions have been. Part of the institution’s discourse has been the quest for parsimony. This is the exclusion of all apparently complex measures, explained by the failure of previous complex measures: or, in the bank’s own words, a matter of “structuring the reasoning”, choosing a “simple and powerful model” and not putting too much – or any ‑ emphasis on complexity. This ends in the introduction of axiom and rhetoric: “Levels of protection must be decreased and simplified. The simpler the system the better.” The implementation of reforms must be simple; hence the exclusion of refined, selective, particular, partial measures and the preference for devaluation above all. Rhetorically, reform measures that are “selective” and “non-global” are “inefficient” and “sources of rents”. The state and distortion are synonymous. “Economic policy”, “state intervention”, “waste”, “inefficiency” and “non-productivity” are systematically associated while the counterposing of terms such as good/bad, natural/artificial further adds to simplistic thinking. The quest for simplicity at all costs has, it should be said, no basis in economics as a scientific discipline, and policies that follow the precept of simplicity for no other reason than bank injunction do so without theoretical underpinning.
It is in this context the World Bank has set out to circumscribe the political, while advancing the case for liberal norms and simplified views of political economy. For analytic purposes, political actors are reduced to their economic functions only, as is the state. Individualistic postulates are extended to all. Particularly, the state and countries are treated as individuals: contradictory forces or tendencies are eradicated. Political economy is a purely technical science that is politically incontestable. The Weberian precept that “the science of political economy is a political science” is rejected outright. Rent-seeking theory is made use of: rent seeking “translates competition that exists between different economic agents in one particular sector in order to capture ‘rents’ (or ‘premiums on scarcity’) that result from different forms of public intervention”. Resources used to this end do not generate wealth and lead to a waste of resources by transferring existing wealth between different groups or different economic agents. All public officials, political actors, behave according to the principle of profit maximisation. Economic inefficiency is attributed to bad state interventions; these interventions essentially result from interest group action which models the political system, thus reinforcing the rent-seeking system.
The international lenders then go on to focus on the idea of interest group formation, the cost being a function of the number of members of the interest group; the bigger the costlier and the greater the problem of free riders. In Africa, this is derived from the work of Robert Bates: economic inefficiency is caused by the increasing power of coalitions creating rigidities at the heart of the economy where also an imported colonial administration imposed organisational forms (the administration, bureaucracy) supposedly unrelated to indigenous institutions and thus lacking a local, juridical or political base. It is this institutional context that gives rise to economic difficulties in the areas of entrepreneurship and economic policy. Hence the need for “good governance” and “capacity building”: prices and subsequently politics need to be “put right”, while likewise being reduced to functional and technical aspects. African societies are interpreted through a suitably simplifying lens.
In order to evaluate The Handbook, it is necessary to look at some of the results of dominant Western economic thinking on the continent of Africa over past decades. We may conclude the consequence of liberalisation reforms there have far more often been less economic than social and political. Liberalisation and privatisation abet ruling shadow networks and structures of power. On the one hand this deploys reforming measures; on the other it supports existing power elites; the latter’s actions are criticised, but the bank will not tackle the political logic that keeps them in place (to be fair, it is bound by charter to remain apolitical, itself a form of politics). Meanwhile the bank’s own practices undermine the material bases of governments, and hence their capacity to implement reforms, thus enhancing the slide to illegality. Thus the bank also contributes to the loss of legitimacy of public power.
The World Bank never directly engages with analysis of the state, the mechanisms that produce the results which they describe. Once a country is deemed a “weak state” the World Bank knows what to do. In response, African states manipulate their position in the international economic order ‑ not least aid-dependence ‑ to enhance domestic control; resort to the use of violence for political and economic ends, while the reforms reinforce the tendency to social organisation around a merchant and rentier economy, while offering elites an opportunity to partake in an economy of plunder. What this all serves to demonstrate is the World Bank conditionality does not result from the strict application of a particular economic theory (neoclassical), or a rigorous analysis of African contexts. Even the claims to a scientific impartiality devoid of political or even moral contexts do not withstand serious scrutiny; rather there is evidence of the application of a priori assumptions and hypotheses derived from selective recourse to available scholarship.
It is not possible to give a single assessment of the contents of The Handbook. It is far too wide-ranging ‑ there is a separate section on North Africa, but it is only sometimes otherwise place-specific. Rather it is thematic and the chapters are sometimes written for the specialist. But there is enough material that is accessible to the general and interested reader that is very valuable: for once, history isn’t relegated to the single-page account explaining how important it is while denying just that. And the history is both the history of economic ideas and two chapters on colonialism and slavery, as well as a cautionary account of the scarce economic data available historically to the present: the invisible has to be a motif running through any account of Africa. But while the editors have been humanist in their range of subject matter (the contents pages are available online), they have been relentless in their adherence to economics as a discipline. State theory, as advanced by people such as Bob Jessop and Jean-François Bayart, does not get a look in. That synthesis waits to be done.
The editors specifically abjure any hidden agenda. They give an elegant and convincing account of the state of contemporary macroeconomics: the theoretical failings of Keynesian economics, the failure of neoclassical economics to anticipate the present crisis and an attempt at a recent synthesis between the two approaches, which they also find fault with. They acknowledge the very serious failings of mathematical modelling as representation of economic reality. They openly state their belief that the development economics that appeared after the second world war with the intention of helping developing countries industrialise their economies, reduce poverty and narrow the income gap between poor and developing countries has failed to meet its promises. Countries that blindly followed the policy recommendations inherent in the various waves of economic development thought did not achieve the intended goals. Their belief is that a new wave of development thinking is called for.
On the one hand there is Western, scientific thought, grounded in very particular intellectual traditions, and its acquisition of a normative status as theory. There is the implementation of this theory in the colonies and subsequently postcolonies by people raised in an assumption of their own cultural and intellectual inferiority (that used be an Irish condition). The subsequent failure of the intended consequences to materialise is of course a result of the inability of Africans to implement it properly. The relationship of superiority and inferiority inherent in development and underdevelopment is maintained.
In an innovative and ground-breaking opening chapter that ponders the question what an African economic science might look like, Fabien Eboussi Boulaga seeks to redress that imbalance. But let us start with a conclusion stated baldly by the great economic historian Paul Bairoch. He wrote at the end of his book Economics and World History: myths and paradoxes with no equivocation: “If I had to summarise the essence of what economic history can bring to economic science it would be that there is no rule or law in economics that is valid for every period of history or for every economic structure.”
Boulaga comes to a not dissimilar conclusion by way of a question: “Would,” he asks, “an empirical, pragmatic approach, based on activities and practices, selecting, keeping and organising those that are successful and lasting, striving to generalise and formalise them, lead back to economics as it has become established? Would it recognise, after using the theoretical tools of classical and neoclassical economics, the same ‘rational’ and ‘universal’ economic subject (the famous homo economicus)? Would the economic subject be identical to the one embodied in the ‘bedrock of truths about the human condition’ that constitute the ‘what we do know’ of dominant economists, designating what may be called the sphere of their ultimate motivations and justifications? Is greed, you might ask, and as has been so readily accepted by so many economists in recent times, a fundamental law of social nature, like universal gravitation?”
Boulaga seeks to restore the place of reciprocity, mutuality and gift in the action of useful exchange, an African economics, and to reassert that greed remains what it always has been in humanity: ‘a source of disorder and shame’. And in support he quotes JM Keynes, when faced with the aberration that greed might be considered normal and considering the possibility of what an alternative economics might look like: “I see us free therefore to return to some of our most sure and certain principles of religion and traditional virtue ‑ that avarice is a vice, that exaction of usury is a misdemeanour, and the love of money is detestable … We will once more value ends above means and prefer the good to the useful.”
Or as Fabien Boulaga has it, rather than greed, humankind is informed by a rational altruism inscribed in the autochthony of our species, “dictating the reciprocity of our perspectives and the supportive mutuality of our respective positions in view of the system of reference Earth, bearer of the absolute conditions of the emergence and reproduction of human life”.
Perhaps a rational, universal economics could be constructed, based on something like that.
Eoin Dillon works on the history and theory of the African state.