Globalisation has exposed a fundamental flaw, which is that there is no relationship between the nature of the political system and its ability to adapt to economic realities. China and Cuba are good examples of socialist countries that have survived capitalist isolationist policies. While China has been embraced as a legitimate trading partner when there is evidence of a poor human rights record, given its acceptance of a market economy within the framework of socialist political system. On the other hand, Cuba has continued to suffer all forms of sanctions and economic isolation, mainly to discredit the success of a socialist experiment at the backyard of the citadel of world capitalism, the United States.
This paper discusses the policies of neoliberalism in the context of Africa and argues that this economic paradigm has failed to provide the panacea to poverty and underdevelopment. It will be argued that neoliberalism exacerbates poverty and inequality and achieves the opposite of what it claims to do. Using the example of Zambia we argue for the relevance of Marxism as a robust theory and critique of capitalist development that points to a socialist future, a future which can be constructed based on concrete realities in specific countries and need not take a doctrinaire approach. We also suggest that Marxism can offer a counter discourse to neoliberalism in Africa and challenge the current view that there is no alternative (TINA).
Neo-Liberalism in Africa
The economic crisis which confronted African countries by the 1980s was blamed by the IFIs, Western creditor nations and neo-liberal scholars on factors internal to these countries. In the main the crisis was attributed to excessive state regulation of African economies which, as far as this argument goes, did not create the necessary condition for the proper operation of market forces. Others postulated that this situation contributed to widespread corruption and the inefficient allocation of resources, as the African political elite saw the state as an arena and source of power, status, rents, and other forms of wealth (Bayart, Ellis and Hibou 1998; Chabal and Daloz 1999).
The other reasons for economic failure of African economies identified by liberal scholars include, the over valuation of local currencies, state regulation of the import licensing system, subsidization of oil products and various social sectors of the economy, inefficient state-owned enterprises, and corruption. It has been argued, for example, that because African governments arbitrarily fixed the value of their currencies, they were overvalued and this led to a situation where imports were cheaper than exports. The outcome was that African economies were highly dependent on imports and this created serious balance of payments deficits.
Moreover, import dependency had the effect of promoting an excessive demand for import licenses by African entrepreneurs. Since the allocation of import licenses was often controlled by government officials, this resulted in corruption, bureaucratic red-tape and inefficiency. Issues like cronyism in the allocation of import licenses rather than the actual needs of the economy and over invoicing became the order of the day. This discouraged both local and foreign businessmen from investing in African economies and, in some instances, even resulted in capital flight. This practice which Bates (1984) refers to as a rational response by African states motivated by the desire to purchase votes and stay in power became the raison d’etre of economic policy making in Africa had dire consequences. Economic failure was attributed to excessive state intervention.
As for state-owned enterprises, the argument was that since governments were bad economic managers, the enterprises were inefficiently managed, riddled with corruption and constituted a drain on resources, given their reliance on government subsidies in order to continue operating. Also emphasized were various forms of corruption like bribery and outright embezzlement of resources by government officials. In short, it was claimed that the primary cause of the economic crisis was over regulation of the African economies, which did not allow the free interplay of market forces to efficiently allocate resources (Killick 1984; World Bank 1981).
3 III Conferencia Internacional La obra de Carlos Marx y los desafíos del Siglo XXI – Neo Simutanyi