Capitalism in Africa: Self Interest Can Disappoint

In a piece published in a local weekend paper recently, Hon. Prof. Anyang' Nyong'o argued that capitalism will always disappoint its proponents. His arguments caught my attention because I am in the process of writing a plan for a new global economic and financial order for a leading European newspaper. Capitalism thrives on drawing lessons from disappointment.

Indeed, the current global economic system that is skewed against African economies is a disappointment. It has sustained Africa in a “Gandhian trap”- one where poor countries are pegged onto primary level economic production as they sustain knowledge driven economies elsewhere.

As the good professor rightly pointed out, developed nations in the guise of practicing capitalism actually do the opposite when they subsidize their own industries and protect their markets against goods from other countries. When the U.S and Europe purchase excess wheat and milk respectively and send the goods over to poor countries as aid, they go against the tenets of capitalism (tenets such as government acting as a referee to ensure fair play).The same can be said of indexes and ratings designed to make poor nations suitable for foreign investment but not indigenous investment.

For Africa, the global capitalist system may have preached that the private sector keeps an “arms length away from government,” while in practice Western corporations colluded with their governments to benefit from the aid industry. The capitalist disappointment is godsend for Africans to understand how the game is played. That is, the game as prescribed to Africans and the game as - is played by those who have benefited the most from the current system. Africans must too set up their own tactics of survival in a capitalist world by studying keenly the failures of old players. Africans are cheering on the sidelines. They are yet to be active players in the capitalist game. The old players set rules with their interests in mind; the African joined in too late to have an effect on the rules.

For Africa, the economic recession and the ongoing European debt crisis are not a disappointment but an opportunity to participate in setting up fresh rules to govern the capitalist game. Capitalism is all about advancing one's self interest; this has its ups and downs. The cyclic nature of crisis in capitalism is a pointer that in the drive to achieve one's self interest, one can make mistakes due to ignorance, miscalculation, pride and even stupidity.

European countries popularly referred to as PIGS (Portugal, Ireland, Greece ad Spain) are feeling the pinch of credit rating agencies that can declare their economic status as junk in one single email. While visiting Spain recently, I met an exasperated resident who wondered how his productivity had turned to “junk status” because of some ill advised government decisions that plunged the country in debt. This could be a pointer to what will happen to any government that overstretches its mandate whilst suffocating productive aspects of society.

The ongoing global economic upheavals teach capitalists that the world has changed. The rules that were set by Europeans in the early 19th century have to countenance a new world that has people (individual citizens); Corporations (corporate citizens); International Non Government Organizations (INGOs); national governments and natural resources to be exploited. Whereas it was easier to manage individual interests vis-à-vis national interests; the new world has a corporate citizen and INGOs whose interests submerge individuals and even nation states.

The African continent is yet to field its own corporate citizen and INGO in the global arena. Without them, when the new rules of the game will be crafted, Africans will loose out yet again.

For Africa, the developments in the West simply point out that governments are the biggest customers that corporations use to launch their global initiatives. Disappointment is part of business; that is why producers must always follow the changing trends if they have to survive. Proponents of capitalism are aware that in a changing world, even self interest has to change periodically. That shouldn't be a disappointment.

Hon. Professor Anyang' Nyong'o should help Africa put on the table a plan for a new global economic and financial order that will leverage productivity on the continent through multilateralism and a regulatory framework for corporate capitalism. When it comes to self interest, we are all capitalists!

By James Shikwati
Mr Shikwati [email protected] is Director of Inter Region Economic Network.