Is there anyone other than me who suspects that this whole Gleneagles/Live8/Make Poverty History fuss will fizzle out and turn out to have been nothing but an occasion for politicians and rockstars to make some noise?
My skepticism is more radical even than that. I doubt whether outside action can seriously alter anything in Africa. Those countries that have become prosperous in the past, from Great Britain in the eighteenth century to South Korea today and apparently China in the near future, have done so through internal, "endogenous" processes - to use a big word. Sub-saharan Africa does not strike me as a very promising ground for swift economic growth.
In particular, I think successful economic growth depends on these factors: the presence of a previously established group of professional and trading skills in everything from banking to medicine to science; the presence of a functioning state structure (preferably but not necessarily free from corruption) capable of efficiently raising tax and spending on clearly defined objectives; and the visible potential for the growth of a middle class capable of developing into a large internal market - in particular, the potential for families to build up capital savings. It is the internal market that drives growth; no country ever grew rich only on exports, but it is easy to quote countries that have been receiving streams of capital for food and raw materials, and yet have grown poorer - think of Argentina - or which, conversely, had to import everything and still grew rich - think of Italy and Japan.
None of these things are visible in sub-saharan Africa, except in South Africa and perhaps Nigeria. These countries mostly entered the twentieth century in an Iron Age sort of social structure, with no such thing as professional or merchant classes - there were some in West Africa, but mostly from intrusive Arabs, Jews, Europeans, or freed slaves - and a state structure, where it existed, built on royal power based on the control of large estates or indeed of the whole country. When Africa was opened to trade, the trade structure was established by European, Lebanese and Indian in-comers; the very skills necessary to open a little shop in the bush were simply unknown to African culture. They have only bedded down in African soil slowly and with great disorder. I do not deny that these things have now gained some sort of purchase in Africa, but it is thin and weak, in societies still largely agrarian and tribal and still dominated by belief in witchcraft. The complete collapse of any sort of settled civilization in countries such as Congo, Liberia and Somalia shows how thin the pattern of a stable society is.
And that being the case, I doubt that even the complete cancellation of all debts will do much for Africa. It can, I suppose, relieve some of the more disastrous situations, where most of state income has to be paid in interest on capital debts that will never be repaid at all, and therefore cannot be reinvested in the country. But Africa will go on suffering from negative trade balance, because most of what it has to sell is food and minerals - raw materials - and most of what it wants to buy is finished materials and services. It will also suffer from a continuing brain drain, because those of its more gifted and educated children who have marketable skills will look for places where they can exercise them more profitably, make more of the profit they make - what is the point of building up savings in Africa if the banking structure is weak and corrupt, opportunities for investment few, and wealth always exposed to raids from bandits or corrupt public powers? - and, indeed, surrounded by less societal ignorance and backwardness. These are things that only the passing of time and the work of many millions of hands can cure; playing around with debt only scratches the surface.
I think successful economic growth depends on these factors:[...]
Don't forget raw materials - England would never have started the industrial revolution without her coal reserves. It worries me that politicians seem to think economic growth can come from pure trade measures, even when there is little to trade with.
No. England would never have started the industrial revolution without cotton - which it had to import. Coal only served to power the machines that wove the cotton.
I was thinking of the industries that grew up around Coalbrookdale, and wasn't intending my comment as a comprehensive analysis of all the factors contributing to the start of the industrial revolution (particularly the various social/religious factors of which I am sure you are more knowledgeable than I).
I'm curious that you say coal 'only' served to power the machines - isn't that massive increase in energy intensity precisely what separates industrial production from cottage industry?
But power as such does diddly. Otherwise Saudi Arabia would be the leading industrial power in the world today, with Russia and Lybia following. I repeat: look at countries like Italy and Japan, that have to import everything, and still are top industrial economies.
You might as well say that cotton as such does diddly. A manufacturing process requires the raw material to work on, energy required to do the work (food-for-people or fuel-for-machines), a means of converting that energy into useful work (tools or machines), and a working method that enables this to be accomplished efficiently. Take away any one of these factors and the process becomes either impossible or pointless.
While energy and raw materials do not necessarily have to be indigenous (or under colonial control), I find it difficult to envisage the early experiments with very inefficient foundries taking place in an area without sufficient local fuel sources - otherwise the speculative investment in buying and transporting the raw materials would be too risky. Once the basic technology has been proven, it becomes more commercially viable for others to invest in improving the technology or management systems, and to build an economy on adding value to traded commodities.
I suppose I'm wary of this strategy because it depends so much on external factors - the continuing availability of imported materials at a viable price; the continuing low cost of transport relative the the value added; the continuous improvement of skills so industry does not relocate abroad. (This last is possibly slightly less likely with a locally-based company serving an internal market, but in that case there needs to be something exported.)
And I'm not sure how feasible it would be to develop an internal market based on adding value to imports in a country where management and professional skills are inadequate to the task - I'd have thought it safer to build up those skills in a largely-internal market based on largely-indigenous resources.
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no subject
Date: 2005-07-01 12:04 pm (UTC)In particular, I think successful economic growth depends on these factors: the presence of a previously established group of professional and trading skills in everything from banking to medicine to science; the presence of a functioning state structure (preferably but not necessarily free from corruption) capable of efficiently raising tax and spending on clearly defined objectives; and the visible potential for the growth of a middle class capable of developing into a large internal market - in particular, the potential for families to build up capital savings. It is the internal market that drives growth; no country ever grew rich only on exports, but it is easy to quote countries that have been receiving streams of capital for food and raw materials, and yet have grown poorer - think of Argentina - or which, conversely, had to import everything and still grew rich - think of Italy and Japan.
None of these things are visible in sub-saharan Africa, except in South Africa and perhaps Nigeria. These countries mostly entered the twentieth century in an Iron Age sort of social structure, with no such thing as professional or merchant classes - there were some in West Africa, but mostly from intrusive Arabs, Jews, Europeans, or freed slaves - and a state structure, where it existed, built on royal power based on the control of large estates or indeed of the whole country. When Africa was opened to trade, the trade structure was established by European, Lebanese and Indian in-comers; the very skills necessary to open a little shop in the bush were simply unknown to African culture. They have only bedded down in African soil slowly and with great disorder. I do not deny that these things have now gained some sort of purchase in Africa, but it is thin and weak, in societies still largely agrarian and tribal and still dominated by belief in witchcraft. The complete collapse of any sort of settled civilization in countries such as Congo, Liberia and Somalia shows how thin the pattern of a stable society is.
And that being the case, I doubt that even the complete cancellation of all debts will do much for Africa. It can, I suppose, relieve some of the more disastrous situations, where most of state income has to be paid in interest on capital debts that will never be repaid at all, and therefore cannot be reinvested in the country. But Africa will go on suffering from negative trade balance, because most of what it has to sell is food and minerals - raw materials - and most of what it wants to buy is finished materials and services. It will also suffer from a continuing brain drain, because those of its more gifted and educated children who have marketable skills will look for places where they can exercise them more profitably, make more of the profit they make - what is the point of building up savings in Africa if the banking structure is weak and corrupt, opportunities for investment few, and wealth always exposed to raids from bandits or corrupt public powers? - and, indeed, surrounded by less societal ignorance and backwardness. These are things that only the passing of time and the work of many millions of hands can cure; playing around with debt only scratches the surface.
no subject
Date: 2005-07-01 04:06 pm (UTC)Don't forget raw materials - England would never have started the industrial revolution without her coal reserves. It worries me that politicians seem to think economic growth can come from pure trade measures, even when there is little to trade with.
no subject
Date: 2005-07-01 04:10 pm (UTC)no subject
Date: 2005-07-01 04:29 pm (UTC)no subject
Date: 2005-07-01 04:42 pm (UTC)no subject
Date: 2005-07-01 11:34 pm (UTC)I'm curious that you say coal 'only' served to power the machines - isn't that massive increase in energy intensity precisely what separates industrial production from cottage industry?
no subject
Date: 2005-07-02 04:07 am (UTC)no subject
Date: 2005-07-02 11:34 pm (UTC)While energy and raw materials do not necessarily have to be indigenous (or under colonial control), I find it difficult to envisage the early experiments with very inefficient foundries taking place in an area without sufficient local fuel sources - otherwise the speculative investment in buying and transporting the raw materials would be too risky. Once the basic technology has been proven, it becomes more commercially viable for others to invest in improving the technology or management systems, and to build an economy on adding value to traded commodities.
I suppose I'm wary of this strategy because it depends so much on external factors - the continuing availability of imported materials at a viable price; the continuing low cost of transport relative the the value added; the continuous improvement of skills so industry does not relocate abroad. (This last is possibly slightly less likely with a locally-based company serving an internal market, but in that case there needs to be something exported.)
And I'm not sure how feasible it would be to develop an internal market based on adding value to imports in a country where management and professional skills are inadequate to the task - I'd have thought it safer to build up those skills in a largely-internal market based on largely-indigenous resources.