OPEN ECONOMY: Conscious capitalism and premature legislation

02 Aug, 2015 - 00:08 0 Views

The Sunday Mail

Last week, there were fantastic articles in The Sunday Mail focusing on implications of the Supreme Court ruling on employment termination.

I hail these writings for their informative posture.

Especially educating was Darlington Musarurwa’s narrative on the conflicting perceptions of hard-line capitalist versus similarly extreme socialist notions.

Globally, it’s been typical through history to position the capitalist profit motive interests of business as detached from those of labour, which found its concerns held more sacrosanct by the convictions of socialist ideals.

Early on, political economy expressed itself through philosophical guidance such as in the days Zanu-PF overtly pursued scientific socialism.

Nowadays, disquisition has been buried by factionalism and the likes, leaving many observers to wonder what philosophy guides our economic pursuits.

From observing highly-centralised and paternalist tendencies, let alone our esteemed impressions of the Communist Party of China, one gathers an uncertain desire for a command economy with pretences of capitalist competence.

I say pretence because while our Chinese counterparts have excelled in capitalist competence, we have struggled to do the same.

Trying to mimic their structural design has only left us much more captivated by the recurring opportunities for conflict of interest that such a structure of economic governance presents to a much more ill-disciplined incumbency.

Anyhow, that is a topic within itself and further exploration will only digress from the matter at hand. Since our political economic discourse has departed from philosophical or systematic narratives, we are a country left to assess each event uniquely, and not through a lens that captures their systemic relevance.

Thus, I am left to doubt whether we are in a position to really appreciate the narrative presented by Musarurwa’s article.

Are we as Zimbabweans, especially our economic governance, able to place the Supreme Court decision within the context of economic systems to find a significance of the decision to our economy?

If we are unable to do so, that would be evidence of my frequent accusations that Zimbabwe is a country functioning on political expedience alone, influenced by the economics of ballot boxes, instead of a nation with a clear systematic understanding of how to achieve its objectives.

To the very few within economic governance who still seek pragmatic philosophical and systematic guidance on how to manage the economy, my response to Musarurwa’s article is that Zimbabwe should find moderate ground between capitalist and socialist extremes.

Neither system is inherently more righteous than the other.

Also, interpretation of either one as adopted from how other countries may have misused a system would be inadequate.

By that, I mean capitalism, especially, cannot simply be evaluated by how we may perceive the West to have used it as a means of antagonist subjugation.

Allowing for time, one can show how exaggerated that sentiment is, though for now, it only seems incontestable due to our political endorsement of it in predominant discourse.

What is more precise is that our disparaging outlook of capitalism clouds our own failings within its functions.

On that note, I encourage Zimbabweans to embrace capitalism, though in a much more refined form than what is presently practiced in most of the world.

Particularly, it would be desirable if we took on what can be called “conscious capitalism”.

My capitalist convictions are derived from its emphasis on extracting economic value out of human potential.

Capitalism offers intrinsic reward for the hard work, creativity and innovation that is needed to avail desirable goods and services to demanding markets.

Capitalism incentivises human effort towards wealth-creation.

We often wonder why as a nation with abundant land and mineral resources, we have not been able to turn that into tangible economic welfare that uplifts living standards.

The reason is because we have not been able to extract economic value out of our human effort.

To paraphrase Robert Higgs, “Land lies virtually useless to men in its natural state, and it yields its fruits only after human effort has turned it into a productive resource. Virgin soil is lush with weeds, brush, and wild flowers, but the market for these is exceedingly limited.

“Before it can yield wheat, corn, or cotton it must be cleared, ploughed, cultivated, and often drained, fenced, or irrigated. Like other forms of material capital, the stock of improved land can be augmented. Even minerals are typically useless as they exist in nature; before they can assume a value minerals must be dug, refined, and then transported to markets.

“It is easy to exaggerate the significance of natural resources. Territories yield riches only in response to human effort. Ultimately, the influence of the natural resource endowment on economic growth must yield to the much greater influence of human effort and ingenuity.”

Capitalism, more than any other economic system, incentivises this kind of human effort.

However, it has not been without its flaws.

In many parts of the world, capitalism has not been managed in a way that creates inclusive wealth and sustainability in increasing social welfare.

This is where “conscious capitalism” finds relevance.

For an economic system that is dependent on the stimulation of certain human impulses such as consumption, risk, saving, investment — we must be conscious of controls to steer these impulses.

Conscious capitalism seeks to instil altruism as the control of impulses.

In effect, through altruism, our socialist concerns found within indigenisation and land reform are encompassed within conscious capitalism. What has been lacking in our transformational policies so far is they have struggled to place our fellow citizens into a situation of sustainable economic value.

That can only be done through a market economy which consciously functions to foster societal transformation.

As it relates to the Supreme Court decision, conscious capitalism views labour as not merely a factor of production, but unique marginal input of human potential into productivity.

Thus, under conscious capitalism, there is an extraction of economic value from the potential of each unique unit of labour.

In this light, labour is not viewed as a commodity which is the dominant critique of hard line capitalism.

This is favourable with what we call empowerment, as it places labour in a position where it derives greatest economic return for itself from its attained competencies.

This is in coherence with what Brains Muchemwa meant when he said that companies’ holding onto labour in unrewarding conditions is much more a loss to labour itself.

Hopefully, I am reinforcing what he subscribes to as an alternative perspective of the labour market.

He is being a conscious capitalist.

However, and this is particularly important, the Supreme Court decision was premature! It had to be sequenced within a planned programme of “flexicurity”.

Flexicurity is an integrated strategy to simultaneously enhance flexibility and security in the labour market.

It is basically socialist in concerns with the labour market, but it preserves the productivity and financial interests of business.

Flexicurity must have been applied in four stages. Initially, corporates and labour must design flexible and reliable contractual arrangements. Secondly, governance must introduce comprehensive life-long learning strategies for the labour market through agencies like Zimdef.

Thirdly, effective active labour market policies. Lastly, modern social safety nets providing adequate income support during employment transitions.

Flexicurity is the balanced approach sought out by The Sunday Mail’s Editorial comment.

Flexicurity would be a sustainable policy means of executing what Machadu highlighted as demand-driven employment based on company necessity.

It allows for companies to reorganise themselves based on their business models, and hire accordingly at their convenience.

However, the Supreme Court decision was ill-planned because it omitted our social concerns for labour.

Flexicurity, as I mentioned, caters to that transitional phase in between employment — through skills training and income safety nets. This is why the judgment was premature. It attended to the capitalist side of flexible labour markets without the planned socialist concern necessary to protect labour during the transitional phase.

Conclusively, my main premise here is that I came across excellent articles that if taken out of the context of an economic system, may not be as appreciated as they should.

We must start to capture our economic thought within systematic perspectives.

What we often call policy inconsistency, and premature legislation in this case, comes about so frequently because we do not manage our economy systematically.

Hence, we have haphazard, costly interventions that fail to attend to all economic stakeholders.

Likewise, our lack of home-grown strategy brings about misguided policy imitations and actions to appease external institutions – which some suspect the decision meant to do.

Zimbabwe needs to go back to finding its own guiding philosophy and systematic inquisition on how we are going to manage our economy.

We obviously have the ideas, but we undervalue them as they remain without necessary context.

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