GLOBAL ECONOMIC & POLITICAL CRISES : PERSPECTIVES

 By  AKIN OYEBODE

Introduction

It has become something of a cliché to say that we live in a globalized world. Yet, if the truth is to be told, globalization is merely a new word to describe an old animal. Imperialism having become a dirty word in today’s world, its promoters and defenders felt the need to devise a novel concept while the essence endures. Accordingly, we need to be on our guard whenever apologists of an unequal, lopsided world want to convince us that we inhabit a brave new world, paying no heed to the fact of ghettoes of mass poverty and underdevelopment within the so-called global village.

The current global crisis which, in reality, is no more than a crisis of global capitalism, has created a pall in the international exchange of goods and services such that anyone who decides to bury his head in the sand like an ostrich, declaring that he was immune to goings-on in the international marketplace, would be fooling no-one but himself. In the contemporary world, we are all victims of the greed and panic that characterize and actuate decision-making by the big players. It is on account of this that we need to come to grips with what is going on and take positions in order not to be worsted in the encounter.

Accordingly, it is intended in this presentation to re-visit how we got to the present situation before examining what the crisis portends to us and, finally, consider the options available under the present circumstances. It is hoped that Nigeria can learn one or two lessons from the coping strategies adopted by some economies to withstand the fall-out from the unfolding economic tragedy and its consequences for the peace and security of humanity.

Antecedents of the Contemporary Global Political Economy

The end of World War II saw the United States becoming the strongest power such that it not only bankrolled the recovery of Europe and Japan through the Marshall Plan but dictated the constitutions of its defeated adversaries. More important, the creation of the Bretton Woods institutions—the IBRD (World Bank) and the IMF signaled an economic and financial framework for international economic relations in the post-War world which held until the abolition in 1971 of the gold standard and its replacement with Special Drawing Rights (SDR) under the suzerainty of the almighty US dollar.

The consequence of all this was to firmly entrench US control and dominance of the entire global economy which became accentuated upon the collapse of the Soviet Union and the East European socialist economies in the early 1990s. This was the state of affairs before the attack on the World Trade Center towers on September 11, 2001 which resulted in the intensification of the global war against terror, the intervention in Iraq and eventual regime change in that country under the guise of a mythical search for weapons of mass destruction and intensification of the war in Afghanistan. The impact of the Iraq debacle as well as the war in Afghanistan has been colossal, running the US economy into an incredible deficit and causing a tottering financial and capital market.By the time the greed of the Wall St. operators unleashed panic on the trading floor of the stock exchanges with the reverberations felt across the world, it became obvious that the global economy was set for a downward spin the like of which the world had not seen for nearly a hundred years. Although the cyclical crisis of capitalism was well understood to cognoscenti and better analytical tools were now available to diagnose the unfolding crisis, the impact on the global economy has been devastating. The big players in the world market, the G-8 and G-20 have been meeting to coordinate plans and policies in the face of a crisis threatening to bring the roof down on everyone but the reality of the situation is that it is everyone for himself while the devil takes the hindermost! It is in this conjuncture that we are called upon to examine the nature of the impending cataclysm.

The Current Crisis and the Rest of Us

The structure of the global economy is not just split between the Center and the Periphery but between the center of the Center and the center of the Periphery, on one hand, and the periphery of the Center and the periphery of the Periphery, on the other. In other words, the asymmetrical structure of the global economy does not affect the coincidence of interests of the elites of both the North and South vis-à-vis those of the marginalized elements in both hemispheres. The implication of this is that a crisis in the leading capitalist economies is going to visit the poorer economies with greater intensity, especially in relation to the most vulnerable segments of the population.

The realty of the situation is that the economies of most countries of the South are basket cases so much so that the sneezes of the North usually result in the most severe cold in the South. This is more so, as in Nigeria, most of the economies of the developing countries are what Claude Ake and Bade Onimode characterized as “disarticulate economies”, that is to say, economies that produce what they do not consume and consume what they do not produce. Accordingly, their economies are so dependent and vulnerable to the vicissitudes and fortunes or misfortunes of the economies of the advanced, industrialized economies of the West.

The first casualty of the primary producing economies of the developing countries is a nose-dive in the prices of their exports and a reduction in the amount of imports of the industrialized countries from them. Furthermore, the national currencies of these countries suffer adverse effects in terms of exchange rate and balance of payments problems. When to all this is added massive loss of jobs and collapse of their financial and capital markets, it becomes quite obvious that they are perched precariously on the precipice of disaster. The social cost of the current crisis is, quite simply, mind-boggling. Aside from heightened insecurity occasioned by a drastic increase in the number of unemployed and the resultant upsurge in cases of armed robbery, prostitution and sundry anti-social acts, especially bearing in mind the lack of any unemployment insurance and the absence of a social security scheme in these countries, the global crisis constitutes a dagger to the heart of the economies of the poorer countries. Regrettably, however, not all the countries concerned have come out with a fitting response to the global financial tsunami. Aside from the well thought-out responses of countries like India and, especially that of South Africa which approximates, in fact, to a social charter for the recovery of the economy, many of these countries continue to pin their hopes on the hand-out recently promised by the G-20. At this juncture, it is apposite to evaluate the attitude of Nigeria to the on-going crisis.

Nigeria’s Perspective on the Global Crisis

The impact of the global crisis on the Nigerian economy, to put it mildly, has been devastating. Not only has there been a near total collapse of the stock market, the naira has taken a free-fall while we are in the grip of capital flight, de-industrialization, retrenchment and sky-rocketing lending rates and an escalating inflation rate. Yet, our financial and monetary czars had the temerity to declare that the economy was decoupled from the global economy and would, therefore, remain unaffected by the turbulence being experienced at the world’s financial and global markets! Although they have since had to eat their words and embarked on damage limitation, we are still expecting a blueprint for rescuing the economy from disaster. Only recently, we were informed that the Nigerian economy cannot and should not think of adopting the rescue package being implemented by the US and other members of the G-20.

We are then left to ask, what plan is there for mitigating the harshness of the consequences of the global financial squeeze? If Nigeria cannot afford a buy-back, financial stimulus or rescue package, what is our contingency plan to ensure that our economy does not go under? Should we just fall on our knees, supplicating for a deus ex machina?

Well, we have had a staccato of actions that fall short of a comprehensive recovery plan such as asking the banks to align their accounting years as well as a timid effort to put a cap on interest rates and a N200 billion agricultural credit scheme as well as a N500 billion employment generating programme, all of which amount to little more than a band-aid solution to a ravaging economic cancer. The panel appointed by the government to provide urgent solutions to the current malaise obviously has its work cut out for it but the nation is yet to see an all-embracing package as a response to what is, perhaps, the most virulent attack on the nation’s economy.

Admittedly the current crisis is a global one but we cannot close our eyes to the failure of our regulatory agencies in the face of blatant attempts by certain players to rig the stock market, insider trading and other acts of malfeasance that have soiled the nation’s economy. Besides, it is difficult to ignore the hemorrhage of the economy which has resulted in financial resources seeping to private pockets at the expense of the public good and national interest. Tax evasion and the compromise of customs personnel in relation to import and excise duties constitute some of the more deleterious aspects of the Nigerian economy. The poor state of corporate governance in the country coupled with rife corruption at nearly all levels of the nation’s political economy should confirm to doubting Thomases that we are really in dire straits.The paralysis that seems to have enveloped decision-making in the country has become most dysfunctional and counter-productive. There is a sense of drift and inaction across the country in the face of an endemic crisis in both the economic and political life of the nation. After all, as Lenin once observed, politics was a concentrated expression of economics and, therefore any government that fails to apprehend the nexus between politics and economics can only do so to its peril. A fortiori, when the situation is that of a neo-colonial, peripheral dependency such as Nigeria’s, it is most unpardonable. 

What is to be Done?

Nigeria needs to seize the opportunity of the current crisis to effect a turnaround in the country’s fortunes by elaborating an overhaul of the modalities of the economy. There is a crying need for a holistic programme that can rescue the economy from the abyss of disaster. All the on-going talk on the virtues of de-regulation, privatization and liberalization as the panacea to the multifarious problems afflicting the economy needs to be tempered by a realization that a free-wheeling capitalism might not be the answer, more so as the world’s leading capitalist country—the US—has since discovered the pluses that government part-ownership and control portend for a country caught in the vortex of economic collapse brought about by the excesses of greedy, self-conceited players in the financial and capital markets.

If Nigeria is able to put in place international best practices in relation to corporate governance and effective and efficient regulatory institutions, operating on the foundation of public probity, accountability and transparency, the jettisoning of the shibboleth that ‘Government has no business in government’ in favour of a vigorous state intervention in the marketplace this might just be the elixir for the current crisis in the nation’s economy. Pursuant to this, Nigeria would have to invest in sharpening its neo-Keynesian tools and nudge its technocrats toward a paradigm shift in their thought processes such as would enable the country to provide life more abundant for its teeming population under a proper mix of public ownership of the commanding heights of the nation’s economy and private initiatives informed by the larger needs of the nation and the collective interests of the masses of the people. However, all this is predicated on the installation of a compassionate government, wedded to the idea of ministering to the needs of the preponderant majority founded on utilitarian values instead of catering to a self-seeking, self-centered and self-perpetuating clique.

Robot  # 1 | 27.05.2009 20:20

GLOBAL ECONOMIC & POLITICAL CRISES : PERSPECTIVES ByAKINOYEBODE Introduction It has become something of a cliché to say that we live in a globalized world. Yet, if the truth is to be told, globalization is merely a new word to describe an old animal. Imperialism having become a dirty word in today’s world, its promoters and defenders felt the need to devise a novel concept while the essence endures. Accordingly, we need to be on our guard whenever apologists of an unequal, lopsided world want to convince us that we inhabit a brave new world, paying no heed to the fact of ghettoes of mass poverty and underdevelopment within the so-called global village. The current global crisis which, in reality, is no more than a crisis of global capitalism, has created a pall in the international exchange of goods and services such...Read the full article.