Capitalism Has Failed – And That Is Why It Is So Great: From Mother Africa Sweet Words For Free Enterprise

English: Yoweri Kaguta Museveni.

Strongman Museveni: Delivered economic reform in the past (Image via Wikipedia)

Ever since the global financial crisis, and the casualties it left in its wake – home and job losses, broken marriages, near-ruined nations, bankrupted pensioners and savers – capitalism (at least the “western” variety) has taken a bad beating.

It, and free enterprise, are considered a scourge, a terrible disease to be avoided, and the breeder of unbridled greed.

What makes it worse, according to critics, is that the capitalist institutions – the big banks, car companies – were up to their neck in red, the free market didn’t have an answer to their problems. Instead, the companies accepted a very socialist solution; a bail out by the governments using taxpayers’ money.

And there, I see the main problem. What the free market does very well is punish companies that cheat, whose managers make stupid decisions, and whose products become irrelevant. True capitalism’s harshest punishment is to run such companies out of business.

In that sense, capitalism worked perfectly. Leaders in the US and western Europe who bailed out banks and auto firms, went against capitalism’s verdict and defied its message to let those companies die.

In the fright that has followed, even staunch capitalist publications like The Economist are making oblique defences of Chinese-style state capitalism.

I am no expert on Europe and Asia, but state controlled economies of any kind would be terrible for Africa – and could well destroy the continent.

I was one of the founders of the most successful independent newspaper in Uganda’s history so far; The Monitor.

When Uganda was a one-party state (up to 2005), only The Monitor offered a muscular alternative narrative of the country’s story. We paid dearly with two shut-downs (both of which lasted a week), and I made the most trips to court of any Ugandan journalist over a seven year period, a record of nearly 130 times!

In 1995, President Yoweri Museveni’s government slapped an advertising ban on The Monitor because it had run too many stories based on “leaked government secrets”. We lost over 50% of our advertising revenues immediately.

However, in one of the most laudatory moves of the ham-fisted Museveni regime, in 1988 it had liberalised the economy in ways that no other African government, even “capitalist” Kenya, had even ever dreamt of. It also launched the most free spirited (although corrupt) privatisation initiative on the continent. Though so many things have gone wrong, one can argue that without the Museveni government being so bold and taking such a big risk on economic liberalisation, all the other African countries that eventually took the same route would not have gone as far as they did.

So, while the government banned state and semi-state institutions from advertising with The Monitor, private companies – most of which had come up or had flourished following economic liberalisation – slowly stepped up and filled the void.  Along with the advertising ban, state institutions were prohibited from subscribing to The Monitor. We lost about 20% of our circulation that way.

So, if Uganda still had a state capitalist economy when the advertising ban was slapped on The Monitor, we would have collapsed. The Museveni government, therefore, undermined its punitive actions against us through its earlier free market reforms.

The ban was also the wake up call that drove us to improve the paper and increase its circulation among free citizens, and making it more appealing to independent advertisers. Now if Uganda had been North Korea, the effort would have been in vain – no one would have bought more copies. But the Uganda economy had turned around, and an independent middle class was germinating, and attracted to the controversial and sometimes critical reporting of The Monitor. Again, Museveni’s capitalist reforms put most of that money in their pockets. Ironically, then, perhaps if Museveni  had left The Monitor alone and not banned state advertising and subscription to it, the paper might never have survived!

Without free enterprise, all independent and critical journalists and academics in Africa would go hungry, and be too poor to take their children to school and put a roof over their heads. That is because the state would squeeze all possible avenues for them to earn an income. There only solutions would be to lie down and die, flee into exile, or go to war.

One reason why Kenya became the first – and so far only – Eastern African country where in 2002 the opposition (led by now President Mwai Kibaki) defeated a sitting government, is because it also has the longest history in the region of some form of capitalism.

Autonomous business people, farmers, and traders, who have made their money through sweat and exploiting the free market, are great for African democracy because they offer critical support to the opposition that is ranged against corrupt governments that raid the Treasury to buy elections.

For that reason the opposition will never defeat a sitting government in Africa, in countries where there is no significant room for free enterprise.

Also, because many of our governments are cruel, ethnically prejudiced, and rotten, you cannot expect that they will allocate public goods and groceries fairly. If you are from a “wrong” tribe, you will get nothing. You won’t even get a job to be a cleaner.

Uganda, again, provides a good example. Go to private companies like Shell, Nile Breweries, MTN, and NGOs – especially the international ones – the people employed there are very representative of Uganda’s ethnic make-up.

Head to the government sector next, and you will not believe that you are in the same country, because in some departments and institutions nearly 90% plus of the employees are from one small corner of the country where the Power Men come from.

One could argue that while state capitalism might work in industrialised economies that are more impersonal and meritocratic, they would be a disaster in Africa which, to put it crudely, can still be shockingly tribal.

© Charles Onyango-Obbo / twitter@cobbo3

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