Sunday, August 24, 2014

Open Economy: Talking About a Revolution
Zimbabwe industrial development needs investment.
by Chris Chenga
Sunday, Aug 24, 2014
Zimbabwe Sunday Mail

I am in favour of an economic revolution towards economic self-determination and free will. To acknowledge the necessity of a revolution, one has to realise the confines of our adopted economic methods. Neither Keynes, Smith, nor Friedman – Western economists whose work greatly influence our macro-economic methodology – were Zimbabwean.

Does that make their adopted methodology wrong? Not necessarily.

However, considering colonial history, at a point in time the local majority were not well-placed to benefit from proper application of this methodology anyhow.

Hence, our empowerment policies which aimed to put the local majority at the forefront of economic involvement.

I think we can say that at least by representation, this process of putting the majority at the forefront is largely achieved.

We find ourselves today with a local representation in charge of an economy working with adopted economic methodology.

It is important to appreciate that we as Zimbabweans, from an economic standpoint, are as free as any sovereign nation can be!

In a globalised world, the uppermost freedom any one country can attain is to have indigenous representation leading the economy. After the liberation struggle, this is the second revolution we have achieved.

Opponents will immediately point to sanctions or an uneven global financial system as forms of suppression or economic subjugation. They must chill out. These are dynamics of the new global economy.

Isn’t it all about who gets what and nations trying to secure their own economic interests?

What matters is that we now have an economy of our own and we fully intend on keeping it!

Our third revolution, then, would be to create a competitive economy set on economic methodology that caters to our unique being and aspirations.

Promptly creating such an economy is the single most important agenda in Zimbabwe right now. Anything else preoccupying our attention lacks national interest at heart.

That being said, Western economics does apply in the workings of our macro-economy, but in some cases it is impractical to our own ascent.

This is where our free will becomes a virtue.

We owe no loyalty to our adopted economic methodologies except pragmatic application.

Westerners themselves constantly move along methodology mindful that it is only experimental and fitting in given economic circumstances.

So why would we, adopters of Western methodology, eternally stick to experiments? That is how many free countries still feel enclosed within the cycle of Western economic hegemony.

It is because they are yet to conceptualise their own economic course; easier said than done.

So, where exactly should we reconsider Western economic methodology?

I have three areas.

First, financial aid and loan dependence.

Loans come with stringent conditions. These conditions are often inconsistent with our own economic aspirations.

We struggle sustaining International Monetary Fund and World Bank structural reforms as seen by the Economic Structural Adjustment Programme (Esap) in 1992.

Many developing nations as far as Jamaica, Bangladesh, Argentina, have found themselves in economic turmoil with insurmountable debt due to Western reforms.

Aid and loan defaults have become such a certainty that shrewd Western investors have decided to bet on countries like us defaulting on payments. And they make millions out of this.

Honestly, I would also bet on us defaulting. We have not proven our creditworthiness, let alone shown ability to create revenue to pay back interest.

Astute revolutionaries comprehend the perils of certain practices. We are oblivious to debt.

Financial aid and loans are short term solutions with long term consequences.

They are our greatest threat to economic sovereignty.

Second, we do not have to keep our institutional designs.

We have an adopted economic architecture. Public institutions are the core of our systemic structure. If we do not respect their imperative systemic function then we should create new institutional designs. Systemic decay keeps us dependent. We keep losing revenue to corruption and fund misappropriations.

Hence, we stay in economic bondage through borrowing. Economically inclined revolutionaries understand that nepotism and corruption are our greatest enemies.

Our fiscal policy is unsustainable because of systemic indiscipline. Monetary policy is non-existent due to systemic incapability to maintain our own currency.

As a result, a large share of our population is disempowered from economic activity, the youth especially.

Are these revolutionary ideals?

Third, we are not tied down to existing global economic governance.

Many countries are creating competitive economies outside of existing governance.

Brics formed their own development bank enabling them to pursue infrastructure projects at agreeable facilities between themselves. African Development Bank is making similar efforts for African countries.

Economic cooperation is a model for economic growth outside of existing hegemony.

This involves intra-regional trade, shared investment funds and economic partnerships.

It is timely that we have just been given Chairmanship of Sadc.

Opportunities include increasing competitiveness, investment and intellectual exchange with nations of familiar ideals.

Notice, however, prosperous economic unions are founded on the competence of individual member states.

We should not develop relationships out of dependence, but from respect of what we ourselves have to offer. These are three areas we need to challenge ourselves to think beyond the norm. That is the calling of today. We should be progressive in vision, and move on to this third revolution.

No comments: