eBusiness Weekly
Clifford Shambare
The ethos of capitalism is; “To each according to his abilities”. That of communism is; “From each according to his abilities, to each according to his needs”. Sitting in between these two systems are other possible ways of distributing wealth. And economics claims to play this role the best of them all.
The interesting thing though, is that even though most economies use a mixture of capitalism and socialism – a milder form of communism – most Africans tend to assume that economics is synonymous with capitalism. This perception presents us with its own challenges, which we shall look at some other time.
So what is wealth? Here I am not giving the official definition of the term but the way I see the matter, for all practical purposes, wealth in its raw form, encompasses mainly natural resources including man himself, through ownership, skills and labour.
Man manipulates these natural resources by adding value to them, thereby creating more wealth. On considering natural resources, one finds their base to be made up of land, air and water – the stuff of life. And interestingly, even though water occupies the largest area of the earth’s surface at 71 percent, land is normally regarded as the major base of these resources.
Considered from the scientific perspective, air is also a part of land. (If in doubt of this claim, consider all the natural cycles of rain, oxygen, carbon dioxide and nitrogen). These are processes in which these substances usually in liquid and gaseous form – move from the land/ground into the atmosphere, and back.
On the other hand, when man developed capitalism, he made land its base. So without it, capitalism – itself, a concept that connects material and non material components — would not exist. Like I have pointed out in some of my articles, the concept of capitalism is one where these components have been carefully linked by those who first conceptualised the system.
Locke’s homesteading theory of 1690, that David Harvey went on to describe as ‘primitive accumulation’ in 1971 – is one of the early developments that linked land/property title to capitalism. It would seem that from there, land or property as it was letter known, was developed further, to the level of derivatives, mainly mortgage bonds – a form of currency that is a part of the equities market system.
Now, to make capitalism work, one needs to manufacture physical goods using natural resources, all of which are found on land. Farm produce – that is, crops, pork and beef, among the main ones – also become incorporated in the equities market through futures – another form of derivatives.
Manufacturing is a process where one needs to combine the said items with human skills in order to add value to them. And money has been created by the system to pay for the resultant goods and services. Overall, these connections – together with the combination of land, skills and money – are key to the conceptualisation and consequent success of capitalism.
This is where the matter becomes tricky for the Africans. But why and how so? As I have already alluded to above, it is all to do with material objects, concepts, value(s), systems and culture(s).
In this respect, we find that material objects can have different values for different peoples, systems and cultures. In this case, consider feudalism – a system in which land was and, in some cases still is, valued and allocated by rulers. This system, which took long to evolve (about 100 years) started in Western Europe in the 5th Century – was based on a system in which the land was under the custodianship of the monarchy.
Curiously in Africa, Zimbabwe included, feudalism is very much alive today.
But why do I make such an assertion, you may want to know?
You see, in quite a few areas in Zimbabwe, chiefs are currently settling ‘their people’ in areas which they claim were originally occupied by their ancestors, and the government seems to be acquiescing to this action.
It is in these circumstances that the former has emerged with much egg on its face. It has been accused of bungling on both the policy and operational levels of the land reform programme.
As can be expected, its accusers were initially the former land owners backed by the Western capitalists as well as ironically, the local business fraternity and the opposition politicians. Over time, the local urbanites came into the fray to lend support to these groups.
At this juncture, let us look at the pros and cons of this programme. First of all, the way I see the matter, there was and still is, nothing basically wrong with this programme. Such a view is backed by the Lancaster House Agreement. Although it is couched in much deception, this is an agreement in which the British inadvertently and tacitly admitted that Zimbabwe’s land belongs to its indigenes.
Furthermore, their attitude and behaviour in the Kenyan land case in which they paid as much as 200 million pounds as compensation to their former settlers in that country, attests to this assertion.
On the other hand, the way the Zimbabwe government has been implementing the programme leaves a lot to be desired. The said remnants of feudalism result in a situation that militates against the ethos of capitalism whose base is surveyed and titled land. (But as is well proven by Switzerland and China’s cases, this fact does not imply that capitalism only thrives under the freehold system of land management. How ever, this is a discussion for another day.)
Furthermore, in Zimbabwe’s case, where there is no other form of dispute, the legal framework is still quite confused. The so called ‘Offer Letter’ is still being used side by side with the 99 year lease, some nineteen years after the launch of the programme. The lease itself, is a document in which cronyism cannot be ruled out. And to make matters worse, the banks are resisting the use of this legal document.
The government itself, seems to be paralysed over the same issue, seeming not to know how to proceed to refine the laws and consequent documentation of same.
At this juncture, let us look into the effects of such a scenario on the concept of capitalism itself. In doing this, we find that capitalism has its own value system in which all its components –starting with land (property), are allocated a monetary value. In this system, property values can make or break an economy, witness the Japanese and the Seven Tigers’ cases, and latterly, the US dot.com bubble of 2008.
Then comes the issue of currency value. Like every other situation where the concept of value is central, one finds man being its determiner. In this case, we find that currency value determines to a large extent, how any economy performs since fiat money is part and parcel of both the material and non-material components of capitalism.
And if we remove the political element that was used to determine which currencies would fall into the hard currency category at the 1-22 July, 1944 Breton Woods Conference, we find that the currency valuation mechanism becomes universal.
In that case, if one trashes their currency as is the current situation in Zimbabwe, it losses value even before they have started to use it. In this realm, we find the values of property and money being connected in ways that are not obvious to most of us.
While mulling over this issue, I have observed that Africans often get flustered with the idea of land and its value. Consequently, I have argued that give a man a piece of land in the West, he immediately becomes rich, whereas if you do the same in Africa, he sooner or later, becomes poor.
If you ask him why he is poor with land in his hands, he will tell you that in order for him to become rich from land, he needs to borrow money with which to farm, from the bank. Now, under certain circumstances, this is a logical way to reason.
But consider that ultimately, it is the system and not the individual, that counts in these matters. Following this line of reasoning, in the West, they have all the components of the system – that is land/ property, skills and money – linked. Consequently, in such a system, if one has land (property), he can raise/borrow money using that land as collateral. And he can produce physical goods using the said skills.
Trading these goods and services, he can generate more money to pay back his loan and (to) earn a profit, which he can bank in the finance system(s) where it is recapitalised and lent back to him, thus completing the cycle.
In my yet to be published book; ‘Africa’s conundrum; Of capital, money and economic development’, I have argued that such a system can be viewed as the literal equivalent of land and a fruit tree.
The land in this case, is the literal anchor of the system. The tree trunk is the conduit through which capital is mobilised up and profits transferred down to the capital markets – that is, the roots. The tree canopy is the industries, made up of factories where the fruits are the profits, some of which can be paid as dividends. Some of these dividends can be banked, thereby (being) converted back to capital.
Now I am arguing that in order for one to become a true capitalist, they have to own the whole lot, starting with land.
And if we consider the thinking of the nationalists, we find it to be based on such an idea. This is the basis of the protracted Lancaster House Conference of 1979 in which the transfer of Zimbabwe’s land back to its indigenes made up the main theme.
And Herbert Chitepo, Zimbabwe’s first barrister and freedom fighter, articulated this concept in his two hour speech at the 1973 Commonwealth Conference in Australia.
The way I see the matter, if Africans cannot decipher these linkages, let alone implement them, there is no way that they can become true capitalists. Sadly, up to this day – Zimbabweans like most Africans – still think that an economy cannot run without FDI.
In this mindset, jobs and /or employment dominate their way of thinking. Under normal circumstances, this of course, is normal thinking for the man in the street. However, in the African context, the matter is not as simple as that, but why?
You see, in the Western system, FDI works in two directions. In that realm, countries trade with each other in goods and services. And the most critical items of trade in this case, are capital goods.
The strength of this system lies in the trading of machinery of all kinds. But the root of all these items is the machine tool. If one has a machine tool, they can make other machines and other capital items. And when they start to trade in these items, they become one of the fraternity of developed and/or emerging economies. Examples of the latter day comers here are China, India, Singapore, South Korea, Brazil, Belarus
Considered in its totality, this is an industrialization phenomenon. At this juncture, the next question to ask is this; Can Africans Industrialize in this era? If they could, they would likely be able to become true capitalists .
That said, there are some headwinds to contend with here. These are the developed economies which want to maintain the status quo where Africa continues to be the supplier of their raw materials. Then there is the issue of pollution, global warming and climate change.
Then there is the issue of the attitudes of some African leaders who want to stifle African inventors and innovators. There quite a few examples of these attitudes and behaviours to back this assertion, and Zimbabwe is not short of its own cases.
Be that as it may, Africans should not give up on such a critical matter to their efforts towards eventual economic empowerment and prosperity.
Clifford Shambare is an agriculturist cum economist and reachable on 0774960937
