In recent time, I wrote two articles which were aimed at appraising Liberia’s current economic model that is being used to quote on quote “lift thousands of Liberians out of poverty”. We argued that, the current economic system, in its crude and hybrid forms is anti-people.
It has no determination to minimize mass poverty. Instead, it is only meant to amass wealth for the false bourgeoisies (President, Vice President, Speaker, Lawmakers, Ministers, etc.), owners of the multinational corporations (Americans, Chinese, Western Europeans, etc.), huge commercialized companies that are dominantly owned and operated by the Lebanese and Indians.
The petit-intellectual bourgeoisies (some journalists, doctors, professors, lawyers, state bureaucrats, etc.) who are earning relatively huge salaries are also primary beneficiaries of this system.
They are stratified as the result of interventions from the false bourgeoisies who look up to them (petit-intellectual bourgeoisies) for the preservation of this anti-masses status quo. Consequently, they go at any length protecting the cartel and ensuring its imperishability.
We argued that in this state of economic affairs, the masses of the people who make up the vast majority of the population become the victims of the country’s economic paralysis.
The rural area that hosts the peasant masses becomes dormant due to lack of economic activities which should have predominantly been characterized by intensive agricultural practices among the people in the rural area. Thus, rural dwellers drift into the urban areas in search of economic opportunities and basic social services like healthcare and education. This leads to the “slumification” (West Point, Logan Town, Wroto Town, New Kru Town, Soneiwein, Buzzy Quarters, and etc.) of the urban centers.
Our siblings, fathers and mothers who struggled how to learn to produce materials (woolen clothes, gates, cooking utensils, and etc.) with their hands cannot progress due to the wholesale importation of finished products into the economy by foreign businesses. Our local Liberian entrepreneurs remain stagnant and are stooges of local financial institutions they borrow from as the results of huge competition from Lebanese and Indian businesses involved with retail trade in our economy.
The procurement of government’s goods and services prioritizes foreign businesses because of the owners of those businesses willingness to pay huge kickbacks to officials of government for procurement contracts and thus relegating Liberian-owned businesses.
This is evidenced by the lack of political will to implement President Ellen Johnson Sirleaf’s pronouncement of twenty-five percent (25%) of government’s procurement contracts going to Liberian-owned businesses. Our local furniture makers are languishing on the Gardnersville Road and other parts of the country, while the offices of the President, lawmakers, and other officials of government are dominated by “Salt Dust” office furniture imported from imperialist countries.
I can still remember vividly when my big brother now turned father who is a local Liberian entrepreneur bided along with some Indians and Lebanese in 2013 to supply stationery materials to one of the county’s education board.
Although his entity (M&Y Enterprise) met all of the public procurement requirements, but he was denied in favor of an Indian business only because he could not afford to give away 20% kickback to the county’s education officials.
Additionally, our university graduates who should be active in the labor force cannot be accommodated due to the country’s victimization by the “Dutch Disease”. Thus, our graduates have become pedestrian intellectuals, and compulsory Ataye centers’ participants.
The country’s reliance on the exportation of iron ore and rubber by foreign multinational corporations has led to only the extractive sector which employs less labour force to being economically attractive and other sectors such as the agriculture sector, and service sector that are determined to employ more workers in the labour market to remain lagging. Consequently, many Liberians in the workforce that are qualified and willing to work remain unemployed. They join ranks with the uneducated and unqualified masses that drifted from the rural areas to the cities in pursue of jobs and education but cannot find any.
So this is why we maintained that our economic programs (Poverty Reduction Strategy, Agenda for Transformation, etc.), drawn up by the Brenton Woods institutions (IMF, and World Bank), careless about the provision of the basic necessities of life for the average Liberian. All of the stage-managed economic theories and methods are passionate exploiters of our country’s resources and the chief architects of Liberia’s dependency syndrome, and mass poverty. And until we can make some necessary, some say radical economic adjustments in the economy,.
“We will remain a beggar nation and the people we consistently beg will think that something psychologically is wrong with us.” (Dr. H. Boima Fahnbulleh, Jr., Interview on the Truth Breakfast Show, 2012).
We postulated that in the midst of the abundant natural resources Liberia is endowed with, our streets should not have been the habitat of people we call “ZOGOs” (Street criminals who hijack peaceful and struggling citizens). In the cesspools of iron ore, gold, fertile land, tropical rain forest that hosts some of the best woods in the world, etc., Liberia should have been an economic hub in Africa where everyone would succeed because his/her talents and skills have been developed for everyone’s collective advancement.
The situation with the “Zogos” and other effects of economic dispossession in Liberia are the impetus for our generation to struggle for economic rights and freedom that will run parallel with the democratic rights and freedom that were fought for and guaranteed by members of the progressive forces in the 1970’s, 1980’s, 1990’s and the early 21st Century. This has been the basis for never running our ink and voices dry.
Many brothers read the articles. Some of them agreed with the assertions made in our argument; some disagreed, but we are yet so see their rebuttals. The brothers who agreed that indeed the system is exploitative, it is not people centered, and has no possibilities of economically transforming Liberia were left with no alternative to follow. In their engagement with me, they contended that I have provided a critique of the current economic system which they think is logical and represents the plights of the masses of our people, but they are yet to see and read my alternative analysis which will provide the roadmap for socioeconomic transformation in Liberia.
Brother Rahim Abraham Bility, the Director of Students Service at the African Methodist Episcopal University (AMEU) has been one of those on my back to come out with another piece which will serve as an antithesis to the anti-people status quo. This piece which is subjected to intellectual public scrutiny is aimed at settling scores with Brother Bility, and erasing the doubts of other conscious brothers.
You do not need an individual with a high credential in Economics to affirm that Liberia is a country that operates on a globally dominant private capitalist economic system. ”It is visible to the blind and audible to the death” that the status quo’s adherence to this global private capitalist system for the past decade is hostile to the progressive march of this space call Liberia. This is clearly seen worldwide.
There is no example of a country in the world which during its early development stage became industrialized by embracing this global capitalist system- which promotes market laissez-fairism, limited government intervention, privatization of both the means and factors of production and distribution, free trade, and etc. If we decide to dig down into the history of capitalism, we will get to the realization that all of the developed economies in the world today did not practice free trade, non-interventionism, privatization, etc. at their developmental stage.
The great United States of America and the United Kingdom (Great Britain) that are known as the fervent practitioners of the neo-liberal economic roadmap, during their early development stages protected their national industries by imposing tariffs and other measures which amounted to protectionism and government’s intervention.
This practice is still being used today by these developed nations as a mean of protecting their local industries, they go as far as taking over these private own industries through their stimulus programs doing periods of recession by financing them out of bankruptcy. According to Professor Ha-Joon Chang in his master piece “Kicking Away the Ladder: the Real History of Free Trade”, “America and Great Britain, are in fact the pioneers and frequently the most ardent users of interventionist trade and industrial policy measures in their early stages of development”.
From our studies, they remained on this path until they could get economically viable to compete with other foreign markets before embracing non-interventionism, privatization, free trade, and etc.
We have learned from the South Korean trained and widely read Professor Chang that Great Britain, through King Edward III banned the importation of finished woolen cloth in order to promote the manufacturing of raw wool by government and private industries.
We have flipped the pages of Daniel Defoe’s “A Plan of the English Commerce” which was referenced by Professor Chang and we understood that the “Tudor monarch especially King Henry VII transformed England from an ordinary raw wool exporter to the most formidable woolen manufacturing nation in the world”.
That milestone was not reach by adopting the now widely recommended global capitalist economic policies. It was done through infant industries promotion policies that many know is not part of the capitalist’s free trade model.
Beside Great Britain, we have learned from Professor Chang that “America is the mother country and bastion of modern protectionism”, different from what the IMF and World Bank recommend to least developed countries like my Liberia.
American policies makers, politicians, and intellectuals in post-colonial time rejected British classicalist economists like Adam Smith and Jean Baptist Say ideas of non-government participation and intervention in the economy. Reading from the First Secretary of the Treasury, Alexander Hamilton’s report named, “Report of Secretary of the Treasury on the Subject Manufactures”, Professor Chang discovered that infant industries were established and aided by American governments during the country’s economic catch-up period.
Such aids included but not limited to: low import duties on raw material, prohibiting the importation of goods produced by American infant industries, etc.
Finally, from Professor Chang’s piece, these words of Ulysses S. Grant, President of the United States of America (1868- 1876) were cited: “For centuries England has relied on protection and other radical economic policies, has carried them to extremes and has obtained satisfactory results from those policies.
There is no doubt that it is to this system that it owes its present strength. After two centuries, England has found it convenient to adopt free trade because it thinks that protection, government participation and intervention in the economy, etc. can no longer offer it anything. Very well then, Gentlemen, my knowledge of our country leads me to believe that within 200 years, when America has gotten out of protection and other economic interventions all that it can offer, it too will adopt free trade.”
The irony and tragedy at once is that these two countries are conservatively noted for reaching the peak of the world’s economic ladder by espousing the present global private capitalist agenda. For us, as conscious as we want to be, we regard this as a deliberate attempt on the part of these two members of the First World to accrue benefits in their own national commercial interests.
Through their Structural Adjustment Programs (SAPs) which was introduced after the Second World War, developing nations are advised to adopt private capitalism as a prerequisite to obtaining loans and other forms of aids from the IMF and World Bank in order to attain economic growth and development. This is the misrepresentation of the truth. From our understanding, no third world country has ever developed as the result of such recipe.
What is needed to be done in the case of Liberia as an emerging economy in order to achieve genuine economic growth and development which will be reflected in the material conditions of the masses of our people, as it in the case of Botswana, Ghana, Singapore, China, the Scanadavia countries, etc.?
The need to adopt a system of Social Democracy cannot be overe-mphasized. This system seeks to make both the society and the economy run democratically in order to meet the basic needs of the masses. This people-centered system runs contrary to the current capitalist arrangement in third world Liberia. Unlike the global capitalist system which prioritizes amassing huge wealth for a privileged few, social democracy places premier on making workers and consumers the chief architects of their economic wellbeing.
To reach this goal of a just society, where the masses of the people would be subjective actors in the economy, many sectors of our economy and government need to be fundamentally altered via greater and deeper economic and social democratic intervention to enable the ordinary Liberians to have a say in the processes that have the possibilities of affecting their economic and political welfare.
Many have claimed that in a social democratic governance structure, government will run and own everything. That is sheer propaganda meant to brainwash the oppressed people of the third world. We do not seek to create an all-powerful government bureaucracy. As social democrats, we frown on huge corporations controlling the societal order.
We cannot continue to sit and allow CEOs who are only answerable to themselves and few elite wealthy government officials to continuously make economic decisions that affect thousands of Liberians. In the current status quo, the factors of production are utilized to accumulate wealth for individualistic capitalists instead of providing and improving the basic needs of the masses of our people. So we are saying, the owners and controllers of Liberia’s resources should be the workers and consumers who are being affected by economic institutions.
Firestone Liberia will not provide better wage, better housing facilities, health care, subsidized education, strong labor union, and etc. for its workers. They will continue to manipulate our political system to continue the wholesale exportation of rubbers and other resources at internationally influenced prices, while finished goods from the rubber and other raw materials are imported back into our economy at a very high price. As a means of stopping this backward anti-human and imperialistic economic agenda from undermining the development of our Society we are calling for the following fundamental changes to the social organization of the state:
- Social ownership of the most important factor of production (Land) to allow for the legitimate state ownership of property that has been transformed into private capital, so as to allow domestics public capital accumulation for the purpose of providing public good and financing the development of the state,
- The non-commercialization of the fundamental tool of nation building (Education), so as to allow for equal access to all citizens irrespective of their economic status and social conditions, which is the foundation of nation building
- The creation of state own-corporations in the Agriculture, fishery and service sectors of our economy to compete with foreign private investors and play a major role in influencing pricing at the local level
- The creation of state banks with some commercial mandate to allow for the state influencing of interest rate setting on loanable funds to sectors of high economy interest that determine the wellbeing of the state
- Espousing policies that will protect Liberian-owned industries and businesses. These include but not limited to: exclusive retail rights for Liberians, prohibiting the importation of goods produced by Liberian industries, low import duties on intermediate goods, etc.
The social ownership of the leading heights of our country’s economy will enable the state to mobilize the requisite capital that can be allocated to our developmental projects such as education, health, security, infrastructure, etc. without principally always looking up to the IMF, World Bank , and other international financial institutions to fund our projects subject to some draconian terms and conditions.
This will also empower the state to throw its lot to state and cooperative farming where each county will have an industrialized farm own by the state, but not opposing private enterprises from engaging the agricultural sector.
The state will also have the capital to open industries that will be manufacturing finished products from rubber, cocoa, coffee, iron ore, etc. We will no longer be the receiver of taxes and rents from the corporations that only exploit our raw commodities and export them to the industrial countries at a low price, and import the finished products back to Liberia at a higher price.
With this, the fiscal culture of budget deficit and shortfall will be rare; we will have a positive balance of payment; more schools and hospitals will be built, roads and railways will connect the administrative cities of the country, farm to markets roads will be available, doctors, nurses, teachers will be trained with affordable housing and satisfactory income. Public finance will be given to Liberian entrepreneurs at a lower interest rate enabling them to expand their businesses.
Exclusive retail rights for Liberian entrepreneurs will require that only Liberians should engage into businesses that have to do with the retailing of goods and services. If any foreigner wants to do retail business such as stationery supply, furniture supply, ice cream sale, used clothes, electronic sales, and etc., a Liberian must own almost 50% share in such business. The Liberian must be the CEO; the general manager should also be a Liberian. We will not negate Foreign Direct Investment.
They will be brought under greater democratic control and mechanisms will be put into place to reflect the ordinary Liberian interest. Regulations and tax encouragements will be used to inspire companies to act in the interest of the Liberian masses, not less than 40% of state’s share, state’s support for strong labour unions, and etc., will be some of the mechanisms that will be implemented to seek the national interest of the motherland.
Botswana is a clear cut case study. As a landlocked democratic country in Southern Africa, Botswana predominantly depends on the mineral industry to boast its economy. The major mineral is diamond. The World Bank, in one of its countries briefing asserted that the mineral industry provides 40% of the country’s revenue.
According to Joe Nocera’s article "Diamonds are Forever in Botswana" which was published in the New York Times in August of 2008, Debswana which is the largest diamond mining company operating in Botswana, is 50% owned by the government.
The economy of Botswana is partially opened to foreign participation with policies put in place to protect the interest of the people. Strategic sector of the economy is reserved for only citizens of Botswana.
Today, Botswana, since independence in 1966, is one of the fastest growing economies in the world. The country has transcended from being one of the poorest countries in the world to a middle income country. By one estimate, it has the fourth highest gross national income at purchasing power parity in Africa, giving it a standard of living around that of Mexico and Turkey, according to Klaus Kästle’s 24 July 2009, "GNI PPP table" which can be found on the Nationsonline.org.
Because of the capital the country mobilizes from the mineral industry through state ownership and control, it has a negligible level of foreign debt. Private Banks are seen in Botswana, but the government is also involved in the establishment of state own financial institutions that provide loans to local entrepreneurs.
With this kind of economic progress, employment, education, health, welfare, etc. are least of the country’s worries. Botswana provides economic rights to its people more than any other country in Africa. In fact, because of the decentralization of wealth, only 10% of the country’s population lives in the capital city Gaborone. As an emerging economy, Botswana did not embrace global orthodox capitalism. The state has a deep involvement in the economy and the result is very positively empirical today. This is what we call Social Democracy.
Another country to consider is Singapore which is part of the Asian Dragons. Someone may argue that Singapore has the most open market in the world. They will have to consider that government-linked companies play a considerable role in Singapore's economy, which are owned through the sovereign wealth fund Temasek Holdings, which holds majority stakes in several of the nation's largest companies such as Singapore’s Airlines, ST Engineering, Sing Tel, ect. Extensive government intervention and planning are required to protect state own enterprises in Singapore.
This is because the state depends on those companies to manufacture electronics, chemicals and services to be exported for the purpose of mobilizing capital to purchase natural resources and raw materials which it lacks.
I could go on and on naming countries and going deep into their models of economic development to solidify my argument. Until we can realize this as a country, make serious radical economic adjustment, and take pragmatic steps to ensuring that our people’s live become transformed, we must continue to blame ourselves for the economic malady our country face today.
Moses Uneh Yahmia is a student of the University of Liberia. He studies Political Science major, Economics minor and with emphasis in International Relations. Brother Yahmia also plays a part in youth and students activism in Liberia and Africa. He is a militant of the campus-based Students Unification Party (SUP), and an analyst on the Press and Propaganda Bureau of the Liberia National Students Union (LINSU).