The Sunday Mail
Dr Tafataona Mahoso
At the peak of neo-liberal euphoria about the limitless powers of markets and free-flowing capital in relation to the alleged powerlessness and helplessness of states and their central banks, economic author Linda McQuaig asked economist Pierre Fortin: “Do we as a country [that is Canada] have any freedom in our economic policies, given the power of international markets?”
Fortin’s answer was emphatic: “We have full freedom.” The rest of his answer can be paraphrased as follows:
The real barrier to Canada’s exercise of its full freedom were stock market shareholders and bond holders who feared that Canada’s exercise of its full freedom might mean a lower Canadian dollar or a fluctuating one. “It’s a question of bond salesmen defending the interests of those they have sold bonds to.”
Canada could enjoy the autonomy to pursue economic policies aimed at full employment and well-funded social programmes.
The administration in office at that time pleaded powerless to pursue such polices because stock markets would not allow it.
“But…this failure to deliver on these policies is not because of any real powerlessness. Rather it springs from unwillingness on the part of government to allow the national currency to drop in value when necessary – for fear of angering the influential financial constituency. Thus, what we have now is not real impotence but a self-imposed variety.”
Zimbabwe has been groaning under the burden of such self-imposed powerlessness with regard to its need for a national currency.
Why the apparently inappropriate example of Canada is useful
I can almost hear my readers mumbling that the reference to Canada does not apply because Canada is a much bigger economy and because it is in a different class of states and at a different level of capitalist development. But that is precisely my point:
— First, Zimbabwe’s financial policymakers fear that once the country has a currency of its own they would have to actively make the choices which Fortin and McQuaig discussed in the case of Canada. Up to now these policymakers have avoided that responsibility by clinging on to someone else’s currency and refusing to adopt their own.
— Second, the economic terror of 2007-2008 and the ceaseless chorus about “lack of confidence” or “lack of credibility” are convenient bogeys in Zimbabwe because even in Canada where there was no 2007-2008 catastrophe and no similar “destruction of confidence,” the administration there still pleaded the same helplessness in the face of the same “market forces” which our financial policy makers have also pleaded since the currency debate began in 2009.
— In other words, the real barrier to the conceptualisation and launching of a national currency is the fact that all the providers of advice on this important matter are stock market economists, supermarket economists, and “bond salesmen.”
— The institution of a national currency would mean that our financial policymakers would have to make frequent fiscal and monetary decisions in response to external shocks and to take direct responsibility before the “bond salesmen” for most of the consequences of those decisions. So pleading helplessness has been convenient because it has deflected any direct blame for the dire financial problems from the policymakers.
All the major consultancy papers advising the same policymakers have avoided describing the Zimbabwe economy and its currency needs beyond the interests of the finance sector. Miners, farmers, workers, peasants, transporters and small manufacturers are nowhere to be seen in the long paper by Keith Jefferies, Gibson Chigumira and Erinah Chifumbo, which is entitled “A Review of Zimbabwe’s Optimum Future Currency Regime” under the auspices of Zimbabwe Economic Policy Analysis and Research Unit (ZEPARU).
— The reference to Canada is therefore useful here because officials and bond salesmen in Zimbabwe have decided to prolong the absence of a national currency in order to achieve the same goal of “zero inflation” which the Bank of Canada was pursuing in the late 1990s. In other words, minority interests, class interests, wrongly masquerade as prudent national policies. Those opposed to the immediate launch of a national currency in Zimbabwe can correctly be accused of enjoying differential access to the rare US dollars as a class or as individuals.
Neo-liberal Economics as Politics by Other Means
It is necessary to conclude with an analysis of the contradictions in the arguments so far made to deny the urgency of a nation currency:
— First, the ZEPARU study led by Jefferies was done in 2013 before the Referendum on the Constitution, before the 31 July 2013 elections, and before moves by China, Russia and other major states to start removing the US dollar from its pre-eminent position as the global currency and international store of value; yet policymakers in the Ministry of Finance continue to rely on the findings of that study as if nothing has changed since it was concluded. That study harped on alleged lack of confidence in national institutions and lack of credibility of national policies on every one of its 40 pages. That paper referred to uncertainties and anxieties prevailing then about the unknown outcomes of the Referendum and the elections of 2013. Surely, the results of both did not just demonstrate great resilience and high morale among the majority; but they also produced emphatic victory for definite policies and a definite national direction. Surely a study alleging lack of confidence and done before those results cannot be relied upon now.
— Third, the ZEPARU study and others summarised in it converged on “a predominant view” and recommendation whose implementation and success would depend on third parties, that is the option for Zimbabwe to join a Common Market Area.
Yet the need for a national currency is now a matter of economic emergency. How can any reasonable consultant recommend an option which requires convincing third parties that Zimbabwe should join their currency area? If those parties refuse, should the country continue to operate with no money of its own?
— Fourth, on Page 26, the ZEPARU researchers reached this weird conclusion: “The first issue to be addressed is whether the Zimbabwe dollar can or should be reintroduced … The ‘nationalistic’ argument – that it is necessary to have a currency to be properly a ‘country’ has been dealt with earlier; it is primarily a political argument and will not be considered further …”
This is wrong because it is a caricature of the nationalist position. This is also wrong because it presumes that only nationalism is political and that politics is irrelevant to economics. Yet the same authors, in reference to Greece, the EU and the Eurozone crisis, do in fact recognise the intertwining of politics and economics. ARU researchers glossed over the example of Botswana and the creation of the pula in 1974 on Page 20. In 1974 Botswana left what is referred to as the Rand Union (now being recommended in The Herald Business of 14 May 2014!) Botswana and Southern Africa in 1974 were very confident because they were highly politicised against apartheid South Africa which they were determined to overcome on as many fronts as possible.
Botswana in 1974 represented the “nationalistic” position being denigrated by Jefferies and ZEPARU in 2013! Botswana in 1974 did not have the diversified resource base which Zimbabwe possesses in 2014; but it had confidence that its one major resource, diamonds, would earn it sufficient foreign currency reserves to sustain its national currency, the pula. Geopolitically, African guerillas in Southern Africa in 1974 helped to liberate Portugal from European fascism by defeating the armies of Salazaar and Caetano in Mozambique and Angola. So politics, nationalist politics at that, was a factor in the birth of the pula. It is therefore absurd to hear so-called economists telling Zimbabwe to join the Rand Union in order to avoid a national currency without pointing out that all the four members of that union have each its own national currency!
