By Shadrack Muyesu
Democracy is a better consolidator of industrialization and a very poor catalyst to such industrialization. In reverse, autocracy is a better catalyst of industrialization and a very poor consolidator of it. Far East regimes such as South Korea are deemed to have developed due to their dictator’s policy choices yet the invocation of such remains impossible with the continued presence of the Constitution.
Having started out on the same platform, we suddenly find ourselves more than fifty close years behind the east. Pointedly, our mercantilist policies are to blame with the biggest symptom undoubtedly being the land problem. As a young nation we distinguished ourselves as capitalists, yet only in theory. Far beyond subscribing to market ideals, the independence government sought to nationalize and regulate state resources and when it had to distribute them, it did so only to a few government friendly individuals. Recovered crown land was for instance shared out to a handful of Kikuyu henchmen who never developed it leaving a large number of Kikuyus, the original landowners, landless. Public investment in state run corporations was consistently preferred over private ventures. Such entities emphasized providing cheap services over making profits. Run by unqualified politically correct personnel, the result was lax. Riddled with corruption, these entities degenerated to the fallen institutions we know today.
Continuing the sins of the old, Vision 2030 Economic Blueprint has in its 1st Medium Term Plan (MTP) catastrophically preferred public expenditure on infrastructure to agriculture by placing infrastructure amongst the foundations for national transformation. Indeed, the implementation of the first MPT is already been a major catalyst of our increased external debt. To successfully realize phase one, we needed money. This money can only be raised by adopting one of two choices. We can either multiply production, create surplus and thus improve our export revenues or we can just borrow and bank on returns from wise investment. The former route means restructuring our goals to make food security and tourism our immediate priority. The blueprint seems to have favored the latter route by actually providing external borrowing as development driver.
But should it be so? Unlike the west, our society is predominantly rural with agriculture accounting for more than 30% of our net foreign income. And as Robert Bates argues, when a society is predominantly rural then the surplus necessary for industrialization must come from the rural sector. This means the commercialization of agriculture and the export of finished products as opposed to raw materials. Cheap pricing and adequate production can however, not be achieved naturally since we still suffer from an acute lack of technology, which condemns per unit production costs to remain high. We can only achieve this through coercive means. While the application of such coercion was used so successfully to catapult industrialization in later industrials, African and indeed successive Kenyan regimes have been reluctant to invoke it fearing the risk of political incorrectness and urban revolt- a phenomenon best captured by Michael Lipton’s urban bias theory.
In his book Why the Poor Remain Poor, Lipton correctly observes shortage of quality affordable foods to be the overriding concern for the city. Containing a higher population of educated persons, the city forms policy and enjoys a higher bargaining clout. This translates to a host of policies that prioritize city concerns while overlooking the villages.
Since food prices have to be affordable in the city, the cost of production is dumped with the rural poor- the farmers. Meanwhile, scare resources, instead of going into “water pumps to grow rice, is wasted on urban motor ways”. And Theodore Schultz (1990) agrees.
He notes that agricultural prices are highly distorted in Africa, why? To “ease the cost of living” the prices of goods are determined more by legislative action rather than by market forces leaving us with many subsidized commodities. But the reality is, subsidized consumer commodities means that the farmers cannot get value for their product. As such, they cannot produce enough for consumption and surplus for export, driving the cost of production upwards in the process. This is the reasoning behind the fall we are seeing for maize prices in spite of the heavy rains and the price wars between cane, tea and coffee farmers and factories. Instead of simply liberalizing the market, successive governments have consistently sought to plug dangerous cracks through bailouts!
We have consistently exported raw or unfinished product only to import the finished goods later at a price so much higher, condemning us to perpetually low returns from an agriculture industry with otherwise so much potential. So much is said about the Asian experience, but the one thing they did perfectly which has so far eluded successive Kenyan regimes is taking advantage a predominantly liberal worldwide market economy that allowed latter start ups to import technology, apply it and produce finished product hence competing favorably with the rest of the world. Francis Fukuyama assesses Asian success to be hinged upon five primary factors, all of which have been missing in our own system.
He talks about the need to import technology; the need to invest in sustainable human capital to apply this technology by exporting cheap labor to industrialized nations to learn then come back; the need to invest in technical education; the need to export finished products yet most importantly, the need to allow market forces to apply in a capitalist environment. But as already shown, our regime is mercantilist, a reluctant capitalist at best.
Developing the theory of coerced development I had mentioned earlier, it’s perhaps time we recognized that, socialist central planning catalyzed industrialization in a single generation for many 2nd generation industrial states. The Soviet Union realized this through squeezing its agriculture in a regime of, according Fukuyama, outright terror in the 20’s- a process that had taken early industrials centuries to accomplish through non-coercive means. Although “uncommunist”, Far East regimes were not immune to coercion either. Successive authoritative regimes consistently sacrificed social justice at the altar economic success. Successive governments applied draconian policies so as to reduce consumer demand and enforce a culture of saving. It is this culture though unpopular to start with, that guaranteed surplus and provided capital for public investment. China has actually enjoyed an average growth of 8% per year even though it’s a 1 party regime.
Josef Stalin used exactly the same system when he forced savings of the industrial working class after people moved to the city. He increased taxes as well as making mandatory the act of saving with saving schemes. The subtle wisdom in all this is that when people are allowed to earn their money, it’s easier to tax them more.
The role played by “benevolent dictators” in the economic resurgence of nations such as Ethiopia, Rwanda, Libya and Egypt means that the successes of authoritarianism haven’t been savored by the Far East states alone. Places such as Chile, Taiwan and South Korea actually experienced slower growth after they had democratized! Emergent western states were also not as democratic when they started out and grew so rapidly to gain 1st word status. In Indianomix – Making Sense of Modern India, Vivek Dehejia and Rupa Subramanya acknowledge this fact when they write: “periods of very high economic growth in the 20th century are associated with autocratic, not democratic regimes”. They go as far as invoking these principles as an explanation behind the slow growth of India relative to China.
Parallel to coercion, our proudest moment as a nation undoubtedly came with the promulgation of the new constitution. Beyond all else, this constitution affirmed our status as modern democracy by guaranteeing the rule of law and the protection of human rights. On this alone, we were elevated to the same pedestal as progressive western regimes. The latent features of democracy however, mean that we condemned ourselves to the slow industrialization of early western industrials. While good, democracy is not only deceptively slow, it is also quite counterproductive in multi layered cultural societies such as ours- a fact which Fukuyama himself acknowledges. Democracy is pillared on public participation.
Where, as in Kenya, the public remains primitive (poor, uneducated, uninformed and dominated by subsistence growers and workers as opposed to entrepreneurs) any participation from them is toxic. But that’s not all. Extensive democracies result in large governments, which are expensive to run. Money that should fund growth ends up in recurrent expenditure instead. Lastly, judging from the Kenyan experience, within a primitive society, democracy hardly punishes socio-economic crimes such as corruption- a dark hole that consumes more than a quarter of our budget!
It’s not the purpose of this article to denounce democracy. In any case an attempt at such denunciation would risk the wrath of our “constitutional elites”- a wrath I can’t possibly stem being so young in the field. The article only observes that democracy is a better consolidator of industrialization and a very poor catalyst to such industrialization. In reverse, autocracy is a better catalyst of industrialization and a very poor consolidator of it. Far East regimes such as South Korea are deemed to have developed due to their dictator’s policy choices yet the invocation of such remains impossible with the continued presence of the constitution. A clipped presidency and separation of powers means that even the democratic alternative power of “executive orders” is very hard to invoke. It’s too late to do away with democracy but we can at least modify it. For growths’ sake, amending the Constitution to reduce the size of government and increase presidential powers is not implausible. But first we need to have the right person in place lest we surrender national resources to an unworthy character.
The long and short of it is that, in so far as two very critical points are concerned, the investment module and the nature of government, Kenya has dropped the ball. We cannot continue to rely on external resources while we overlook rallying our internal resources. As history has consistently proven, agriculture ought to have been the focal point of our economic growth, maximum benefit from which can only be achieved through a faithful adherence to capitalist ideals not mercantilism. Market coercion can only be realized by an authoritarian regime, not the “robust democracy” in which we pride ourselves.
