STATE INTERVENTIONISM OR FREE MARKETS

 

Statism is a system that vests the control and use of a nation’s resource within the ambit of the government. There is minimal room for individual ownership of means of production in such a system. This is usually ensured by government’s machinery and agencies which are meant to propagate and further enhance government economic planning. In a free market, there is absence of government control. The resources of the state are owned by individuals who make decision to foster growth for their business interest. The underlying concept is how the market is a self regulating entity devoid of externalities. According to Adam’s Smith, "the individual who intends only his own gain is led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for society that it was no part of it. By pursuing his own interest [an individual] frequently promotes that of the society more effectually than when he really intends to promote it’’. This is the underlying presumption of a free market.

Having established the two concepts, it shows the extremes of a two edged sword each with its potency of destruction and construction. The principle of interventionism tends to provide a point of convergence for these two extreme philosophies. It tends to harmonize the constructive part of each system in order to accelerate objectives based on the benefits of both systems. In a bid to further examine the evolution of predominant systems in Africa and to ascertain the suitability of such systems to catalyze growth or its tendency to distort growth, it becomes imperative to fully understand the African environment.

Back To the Roots

The African traditional society could be described as a network. A network of different configurations which sustains the society we inhabit. The configurations could mean a host of individuals with diverse interests and aspirations but with single bedrock.  The bedrock could be seen as the core of the society. As the core, it is a system of beliefs that seems to guide individual interactions within the network. Brotherliness, morality, communality, etc. are components of the system that are well ingrained by the people and also what perpetuates the environment.

Human interaction within this network is beneficial both to the society and to the individual. Open mindedness and transparency, are principles that guide exchange among individuals, groups, societies, and the Government. The host in this network could be likened to Government that exists nowadays. Then, each society had a supreme head to which people paid obeisance to. As a result of this, there was social, economic and political order which was necessary for societal survival. This network catered for each configuration irrespective of class or status. The resource of the society was equitably distributed among the people with a central authority overseeing affairs. It aroused people’s consciousness and gave all a sense of belonging in a bid to propel societal goals. Over the years, the African society has been a shadow of this. Why?

Principle of Individualism

The principle of individualism was precipitated by the dark years of African societies. Western domination of African countries brought about a change as to what the people were otherwise used to. During this period, the terms of individual relations and exchange were on western principles or ideals. This reshaped the beliefs of the people towards individual gains rather than communal goals. Even after independence, most of these countries still depended on western economies for its subsistence. Because of the interdependency that exists among countries, the need for international exchange was highly essential to the global community and this gave rise to Globalization. Globalization is a new concept that has opened up new frontiers for states to trade among each other and to ensure increased integration of world markets. It cuts across production, trade and cultural exchange between the states involved. This has infringed on the sovereignty of the state in terms of making impact within its borders and has also seen the people adjust to foreign influences in their actions.

The Tunnel

Since independence, African’s have toed an endless path poised with obstacles. A long walk through a tunnel with no sign of light has inspired people yet some dampen in their hopes. Countries have engaged in either type of economic system. Some countries which have taken after the western economic system of free markets have come to realize the deficiencies inherent in the system. The markets have created an enabling environment for individual initiatives to thrive which have of often contrasted against public goals. Individuals in this market see their self interest as first and foremost and are ready to employ means to achieve same even at the expense of societal good. An example of this is oil exploration in countries. In Nigeria, oil exploration is vested in the hands of multinational corporations which are usually interested in means that would promote the company’s aspirations caring less for the environment which accommodates them. Environment which hosts such firms have become victims of environmental degradation which has led to loss of lives, properties, means of livelihood etc. and the companies have also failed in their discharge of social responsibility which is to protect and serve public interest. Some of the market deficiencies also include failure to allocate resources effectively, efficiently and equitably, degeneration of moral values, and the inability of the market to provide social services for the citizenry. These have made nations realize the ills of this system and a need to amend it for social good.

Meanwhile, countries that strictly vested management of economic resources in the hands of a central body, government, have often seen the benefits of the system being overshadowed by inefficiencies and crippled by mismanagement, corruption, political instability etc. This is the socialist system taken after the eastern countries like China, and the old Soviet Republic. This system is founded on the premise of public interest, promotion of an egalitarian society through investment in public goods which is undertaken by government agencies. Over the years, these agencies have deviated from its sole aim and the factors responsible for this ineptitude arise from administrative deficiencies. Some of the reasons for the poor performance of the state enterprises and other development projects generally have been poor project planning, lack of feasibility studies, improper siting of industries and projects, poor coordination, and implementation that emanated from defective administrative machineries (George Ayittey).  Is there a way forward?

Light at the End of the Tunnel

Having recognized the present state of African societies, charting a proper course that would foster economic growth with its multiplier effect on the whole activities of the state has never been direr. With statism and free markets been the predominant systems adopted by African societies and each with its positivity and negativity, it’s time we reach a compromise. Following the table below, we would better understand the relationship between these two seemingly distinct concepts:

Relationship between Socialism and Free Markets

Socialism	Free Markets
1.       Inefficient use of resources	Efficient allocation of resources
2.       Availability of public goods	Lack of public goods
3.       Public interest	Selfish interest
4.       Government regulation	Market monopoly
5.       Social education	Immorality

As can be seen from the above, there exist elements of complementarities between the two systems. This should not be taken as a motive towards Mixed Economic Systems. In modern times, some African countries (Nigeria, Ghana etc.) have adopted such approach and still the deficiencies of the two systems have resurfaced and perverted the system. The major focus of African societies must be to harmonize the benefits of both systems with a view to impart African traditional beliefs as highlighted from the foregoing. When, if ever, black people actually organize as a race in their various population centers, they will find that the basic and guiding ideology they now seek and so much need is embedded in their own traditional philosophy and constitutional system, simply waiting to be extracted and set forth (Chancellor Williams 1987; p.161).  Only then can we consolidate on the gains of both systems.

In an age where important decisions need to be made to sustain market, environmental changes etc. African societies must refuse to be the broadcast segment in terms of effecting change in their environment and this could be attained by making fundamental choices that would have a lasting effect on their economy. It is not a question of Statism or Free Markets but a system that would bring unprecedented changes.