OPEN ECONOMY: The real lesson from the ‘rich list’

31 May, 2015 - 00:05 0 Views

The Sunday Mail

Like many Zimbabweans, I came across Zimbabwe’s Top 50 Rich List in the last The Sunday Mail edition. I know for sure in Harare the list made for quite a lot of conversation, and under many different narratives, too.

My own opinion is that the list was off.

A Zimbabwe Top 50 without Chris Chenga in it? There must have been some foul play here guys!

Of course, I say that in jest.

In fact, I took a more serious narrative from the list, and I hope many of us do the same. It was a moment, which will, hopefully, make our national discourse overt in regards to the issue of wealth. At least to me, we have seemed a bit discrete in conversing about our notions behind wealth accumulation, its influence on our economic culture, and, ultimately, its influence on our economic system.

I am very much a proponent of free markets. I believe that in our current economic situation, if policy-makers and legislators become bold enough to push the right liberal structural reforms, there would be ample opportunity for enterprising individuals to make good returns.

As there are many market inefficiencies and factors of production that are grossly under-utilised, a lot of sectors are a few market reforms away from creating an attractive environment for wealth-creation.

With liberalised markets, we will see shrewd businesspeople notably increasing their personal wealth.

On this premise, I obviously conform to a culture that encourages citizens to develop ambitions of making themselves a fortune.

However, can the profit appetite of our best capitalists equate to widespread prosperity for the majority?

Conventional economic understanding assumes that with more profitable business, widespread benefit is an inherent occurrence. Admittedly, this is the understanding that informs my held economic notions. Notwithstanding, I do think that as a country, we would be short-changing ourselves if we committed to free markets without having conversations on self-interest vs widespread concern.

While free markets exploit profit motive to encourage productivity and innovation that lead to economic growth, it would be insincere to deny that such a system does not guarantee that the interests of the majority will be attended to. As such, this is particularly an important dialogue for us to have as a country.

After all, Zimbabwe’s economic struggles over the past decades have been conceived from a lack of clarity on this matter.

In too many instances, our economy is slowed down by conflicting mechanisms of free market capitalism and socialism. Contrary to what seems to be popular belief, neither system is inherently more righteous than the other.

Instead, success of either economic system is simply determinant on the dominant impulses in respective countries (self-interest v social consciousness), and how an economy manages to exploit these impulses.

A case study in our economic history would be the infamous Economic Structural Adjustment Programme we underwent in 1991. While it is commonly accepted that it did more harm than good to our economy, I think we have not really diagnosed what led to its inevitable failure.

I doubt that the policies themselves were universally incorrect, but the level of market liberalisation over-extended beyond what we were comfortable with as a country yet to define its own economic culture.

Consequently, from that time, Esap has left us cagey when it comes to free markets. However, I’d argue that Zimbabweans have become much more free market oriented in recent years.

Would a list of Top 50 Rich Zimbabweans be as tolerable in 1991 as it is in 2015?

I do not think that would have been the case.

So, perhaps it would be an opportune time to ask today; has our economic culture become more conducive for liberal markets? If so, is it a valid argument that by retaining certain socialist structures, resultant cultural and systemic incongruence is contributing to hindering economic growth?

To illustrate my point, consider that a relatively centralised economy such as ours, means of production and market regulation are leveraged on state institutional discretion. Yet, it is apparent that such an economic system cannot yield as much productivity and output as individual economic agents motivated by self-interest.

There is a cultural and systemic quandary. If you can agree with this presumption, then, perhaps, to solve our economic challenges, we must engage in dialogues that interrogate why our economic system is unable to exploit what has become our economic culture.

I believe there is room for in-depth discussions here. The majority of Zimbabweans have impulses to acquire personal wealth, which largely require free markets.

We cannot remain rigid as our culture transforms.

However, our history and empowerment concerns justifiably call for indispensable socialist principles that cater to widespread societal concerns.

I think the two can function together, but a lot of structural and systemic adjustments have to be made.

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