THE GLOBAL CRISIS OF CAPITALISM AND THE REST OF US
By AKIN OYEBODE
The on-going crisis of capitalism which has since passed into popular parlance as “the global meltdown” is not totally unexpected by the cognoscenti in view of the trajectory of capitalism in world history. The Great Wall Street crash of 1929 and the financial thunderstorm of 1987 are pointers to the periodic turbulence inherent in the capitalist mode of development. While the West had been relishing in its victory over the much hated and vilified centrally planned economies, it is indeed ironical that the selfsame West has, at its moment of travail, discovered the necessity to borrow a leaf from the mechanism of the despised “command” economies.
It is instructive that only last week, President Barrack Obama was admonishing that all parties concerned downplay arguments on ideology in favour of a pragmatic approach to resolving the problems thrown up by the current financial crisis. Nevertheless, it needs be pointed out that workable solutions are difficult to prescribe without a thorough grasp of the nature and intensity of the affliction. That the destiny of the entire global economy is now on the line on account of the greed of a few would very much sound like an understatement. If the situation is to be remedied in a speedy and wholesome fashion, a correct and dispassionate analysis of the present conjuncture should be immediately undertaken.
As we are here gathered to interrogate the circumstances that led us to our current pass and elaborate possible ways and means of extricating ourselves from the quagmire, it is apposite that we all recognize that we are on our own. Expecting do-gooders from abroad to present us with the panacea to our predicament is totally misplaced and illusory. Under present circumstances, everyone is on his own while the devil takes the hindermost. Our ability to correctly apprehend the factors that shape the world would, to a large extent, determine the chances of our escape from the labyrinths of misery, poverty and underdevelopment. But first, permit me to re-visit the problematic of the current state of affairs in the world.
The Global Economy in the Post-War Period
The establishment of the Bretton Woods institutions as the formulators and guarantors of the global financial system in the post-World War 11 era ignited tremendous hope and confidence, especially in the western world. The collapse of the global colonial system, however, was a harbinger of the change in the balance of forces in the world necessitating a re-thinking of the paradigm of international relations. Admittedly neo-colonialism continued to hold sway in different parts of the Third World, the lopsided international division of labour and skewed terms of trade and unequal exchange of goods and services between the industrialized countries of the North and the primary commodity producers of the South which ultimately resulted in what became characterized as the North-South dialogue and the search for a New International Economic Order in the 1980s. Of course, we all remember that the encounter between the world’s rich and poor generated more heat than light and, today, aside from the newly industrializing countries, majority of countries in the South remain primary commodity producers in the face of dwindling prices of their produce and sky rocketing prices of their manufactured imports. It seems the more things change, the more they remain the same. It has proven most difficult, if not indeed impossible to create a new template of interaction between ragged economies of the world and the affluent societies of the West. It was against this backdrop that we were all hit by the current turbulence at Wall Street.
The Economic Meltdown and the Rest of Us
By the time it became public knowledge that some companies on the Fortune’s 500 were tottering such that much celebrated companies like Lehman Brothers, Merrill Lynch, Smith Barney, Wells Fargo, AIG and even General Motors, Chrysler and other big players were either going under or seeking a bail-out or financial transfusion, it became pretty obvious that the world was at the precipice of an economic conflagration which any country can only ignore to its peril.
Now, the way the world is structured is such that whenever Uncle Sam sneezes, the rest of us automatically catch cold especially, the peripheral, crypto-capitalist dependencies of the global economy. This is why it was so baffling to enlightened observers hearing our financial czar declare that our economy was immune to the cataclysm engendered by Wall St. Fancy a mono-cultural economy that depends on petroleum exports for over 90 percent of its foreign earnings and which imports nearly every necessary item, from jet planes to tear gas and tooth pick, claiming not to be affected by gyrations of the world financial and capital market?! As Claude Ake and Bade Onimode used to admonish, the bane of Nigeria is, and remains its ‘disarticulate’ economy, that is to say, an economy that produces what it does not consume and consumes what it does not produce.
What has been described in many quarters as a financial tsunami, is, quite obviously, a crisis of monumental proportions from which no nation can claim immunity under the present dispensation. The approach of the IMF/World Bank ‘one size fits all’ model of development which many developing countries had gobbled down without a thought for their own peculiarities and circumstances, has today become their undoing as their economies come crashing down in tandem with the misfortunes of western economies on which they are so heavily dependent. What’s more, self-preservation being the first law of nature, the governments of the West are obliged to think of themselves and their people first before considering any others. Accordingly, it is sheer wishful thinking and, a misguided one at that, to expect the industrialized world to remove our chestnut from the fire for us. We just have to put on our thinking caps in order to fashion a fitting response to a clear and present danger to our very existence.
The Fall-Out of the Global Economic Crisis in Nigeria
The Nigerian economy, as we all know, is a marginal player within the global capitalist economy. Although we brag as the world’s sixth( or, is it really eighth) largest exporter of crude petroleum, we still have to meet our needs in refined petroleum products through massive imports to the detriment of the sanity and well-being of our economy. Local infrastructure has largely collapsed to the extent that we cannot even guarantee 24 hours power supply at any point in time and at any location within our geographical space. Common drinking water is a luxury such that, at this time and age, the hawking of “pure” water on our streets has become as ubiquitous as “okada” riders who have now constituted an unavoidable nuisance in urban transportation. The health sector is in such a shambles that anyone who can afford it would prefer to be treated and oftentimes die in foreign medical hospitals while our public schools and universities have all but been abandoned by the rich and highly heeled, leaving their patronage to only those unable to procure local, private or foreign alternatives.
If all this sounds deja vu to many in this audience, the crash of the Nigerian stock market, the drying up of Foreign Direct Investment (FDI) and the resultant de-industrialization of the Nigerian economy, it can arguably be said, have become some of the most notable by-products of the current global recession. Time was when Nigeria’s was considered as one of the leading emergent markets but with the recent disclosure the Nigerian capital market suffered the most devastating effect in the world as a result of the global crisis, it would require a massive re-branding effort to restore confidence in the market among both local and foreign investors. Those who had put their life savings into stock or borrowed heavily at extortionate interest rates in order to invest in share and bonds are today gnashing their teeth and cursing the day they made such fateful investment decisions.
As is well known, the stock market everywhere is driven by greed and panic. In our own situation, many who did not really understand the workings of the stock market, plunged themselves into it in the belief that it was a unique casino where prices went only one way--up, up and up, never to come down, with everyone laughing all the way to their bank. So, when the market crashed, most players were unprepared for the consequences. Even the regulatory agencies have proven woefully incompetent and unable to provide much needed succour to anguished investors or a silver bullet to cure the manifold deleterious afflictions of the nation’s capital market. The government too, seems to have decided that the best policy in the circumstance was no policy at all, unlike in more discerning environments, where governments have been toying with a plethora of ideas ranging from bail-out arrangements to all manner of stimulus and re-financing packages.
Except for feeble attempts to put a lid on banks’ minimum discount and lending rates, little effort appears to have been exerted, in a proactive way, to stem the tide of a collapsing economy. In a situation of rising unemployment, stagflation and gravely reduced petroleum prices at the world market, there is a palpable need for imaginative policies and strategic sensing aimed at economic recovery and rescue of our financial and capital markets from imminent meltdown. The reduction in the pay-packets of some public office-holders should be seen as a mere drop in the bucket in the face of massive hemorrhage in both the public and private sectors of the national economy. The situation calls for a well thought-out framework for closing the financial leakages in the system instead of the band-aid which the powers-that-be seem to be applying. The crisis on our hands deserves nothing less than a wholesale re-consideration of the modalities of Nigeria’s nascent capitalism. In other words, Nigeria needs to review its privatization policies and giving full and free reign to the market. If some of the world’s leading capitalist economies are now making resort to neo-Keynesian interventionist tools, then it is not too early in the day for Nigeria to take a cue and reconsider its current approach of throwing every problem to the market.
Pursuant to the above, it is humbly suggested that Nigeria should immediately set in motion the process of buying heavily into banks, insurance companies and other financial institutions in order to establish a firm grip on the economy. Experience has shown the impotence of both fiscal and financial measures aimed at moderating an economy that is more mixed up than mixed. The ineffectual regulation of the economy based on the defeatist and self-serving shibboleth that “Government has no business in business” should be jettisoned immediately and replaced with the proven policy of placing the dominant sectors of the national economy in the hands of the State. If this can be good for America, I do not see any reason why it can be less so for Nigeria.
Corporate Nigeria and the Challenge of the Global Meltdown
The task confronting Nigeria as a result of the crisis in the citadel of capitalism calls for a new approach to corporate governance in the country. If hitherto the captains of industry have been behaving like buccaneer capitalists and setting themselves apart from the common people by their opulent lifestyles and generally uncaring attitude towards the poor and under-privileged, now is the time to change gear and come to grips with the reality that they have to factor the ordinary Nigerian into any recovery programme being envisaged for the economy. And, I am not talking here about Corporate Social Responsibility (CSR) but a sustained effort to infuse utilitarian principles into corporate planning, decision-making and actualization of corporate objectives. A situation in which corporate bodies evade custom duties and taxes, aside from adopting a generally care-free attitude towards the social consequences of their corporate actions is clearly not one that augurs well for the image of our entrepreneurs. What the late British Prime Minister, Ted Heath once described as” the ugly and unacceptable face of capitalism” should not be part of the profile of our own industrialists and businessmen.
Our companies have to be mindful of the pain and anguish that may be occasioned by whatever disengagement proposals they are contemplating as a reaction to the current crisis. This is especially so in a situation such as ours which lacks any social security system, unemployment benefits or health insurance for those that are caught at the wrong end of the stick as far as recession or depression is concerned. We might need to begin the lifelong caring policy of Japanese firms in order to elicit greater commitment of workers to the company even in the face of the vicissitudes of life. In other words, the time is ripe for innovative human resources management in a parlous economy such as ours. The example of some US corporate executives who have deemed it fit to refund bonuses and cut back on juicy severance packages is one that can be emulated by our companies in the context of challenges posed by the current situation.
In the final analysis, the Nigerian private sector would have to realize that as they make their beds, so shall they lie on them. While acknowledging that corporate executives have not sworn an oath of poverty, the profligacy of some of them who move around the country in their limousines and private jets portends incredibly cataclysmic consequences in terms of social amity and well-being. The obligation that rests on decision-makers, whether in the public or private sectors of the economy, is to ensure that life becomes more abundant for the generality of the population. If that objective is not achieved or trivialized in the scheme of things, I daresay that the consequences would be too grievous to contemplate. It is my hope and prayer that we would all escape the imminent apocalypse.