Continuing Exploitation in a “Free” World

Part – 3 of “How Africa developed Europe” published in Frontline dated March 17, 2017 (Part 1|Part 2)

Postcolonial period

The end of colonialism in Africa only freed the continent politically. The international economic and political system after the Second World War, in the name of liberalism and free trade, pulled together all unequal countries (in terms of development in mode of production) to compete against each other in the open market. This in turn helped the continuation of the exploitative structures whose foundations were laid in Africa in the precolonial and colonial phases. Owing to a lack of access to technology, capital and skilled human resources, which colonialism stunted in Africa, the continent was not able to break out of the role of primary goods producer and supplier to the international market. The attempt at import substitution industrialisation (ISI) also failed and created more debt burden for African countries. Since colonialism never allowed the development of a strong bourgeoisie class in Africa, the state had to play a dominant role in the economy, and parastatals (public sector undertakings) became a common phenomenon in many states after independence (Ake, 1981, page 92). Developed countries, insisting on linear model of development based on modernisation theory, prescribed that African countries should open up their economies after independence to continue the trade relations.

The state took the dominant role in the economy because of the absence of a bourgeoisie class, and this laid the foundations for military rule or dictatorships in Africa as political control entailed control of economic resources. The struggle to control economic resources happened in the political arena among different social groups, further accentuating ethnic and other social conflicts. The oil crisis of the 1970s and its subsequent debt crisis have again opened up African economic, social and political spheres to the control of the erstwhile colonisers. Neoliberalism came to Africa in the form of structural adjustment programmes (SAPs) that insisted on trade liberalisation, investment deregulation, privatisation of public utilities, and reform in the agriculture sector, the labour market, pensions, and so on.

The Structural Adjustment Participatory Review International Network (SAPRIN) report titled Structural Adjustment: The Policy Roots of Economic Crisis, Poverty and Inequality (2004), which studied the impact of SAPs in Africa, Asia and Latin America, highlights that SAPs led to impoverishment and marginalisation of the local population and further led to an increase in economic inequality in countries where they were implemented. Small- and medium-sized enterprises were forced out of the market because of trade policies and financial sector reforms, which opened up the local market to international enterprises. Agriculture reforms affected the diversified cultivation and destabilised food security. Privatisation reduced real wages and further withdrawal of the state increased unemployment. Reduction in public expenditure affected the quality of health and education. The growth performance of many countries went below the level of growth they had in the 1960s. African debt since 1980, when SAPs were implemented, has increased 400 per cent. Poverty worsened, with more than 48 per cent of the population living in absolute poverty (Fisher, 2001, page 199).

The report titled “Honest Account? The True Story of Africa’s Billion Dollar Losses”, prepared by Health Poverty Action and others, points out that around $134 billion comes into Africa in the form of loans, foreign investment and aid every year and around $192 billion goes out in the form of profits of multinational companies, tax evasion, and so on, resulting in a loss of $58 billion every year for Africa (Sharples, Jones, & Martin, 2014). This shows how the surplus extraction from Africa that started in the precolonial period is continuing in a different form, keeping the continent underdeveloped. The weak local bourgeoisie in Africa is acting as comprador to international finance capital, which drains the surplus value (profit) out of Africa and deprives it of any reinvestment.

Inequality is a functional component of the capitalist political economy as it has to appropriate wealth from one section of the population or one region of the world to another section or region to accumulate profit. This process of accumulation at the international level created development in pan-European countries and at the same time created underdevelopment in Africa and other Third World countries. The exploitation and underdevelopment of the African continent for centuries have created a situation where different ethnic, religious and tribal groups fight each other to control political power, which gives them access to economic resources. This in turn has led to civil wars, which have displaced huge numbers of people and forced huge numbers to migrate to the West. Thus, by nature capitalism can sustain or grow only by exploiting weaker sections of the population at the national level, and weaker or underdeveloped nations at the international level. So, trying to find a solution for African underdevelopment within the framework of the capitalist political economy seems to be an oxymoron.

By S.V. NARAYANAN

S.V. Narayanan did his PhD from Jawaharlal Nehru University, New Delhi. He was earlier teaching political science and international relations in Eritrea. At present he teaches political science in Andaman Law College, Port Blair.

The article is a modified version of the paper titled “Capitalism as ‘Profit Chameleon’: The Political Economy of African Outmigration and Refugee Crisis” that the author presented at the International Conference on Eritrean Studies on July 20-22, 2016, in Asmara, Eritrea.