The Fierce Urgency of Now: Africa’s Capitalist Cul-de-Sac - ROAPE
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The Fierce Urgency of Now: Africa’s Capitalist Cul-de-Sac

The Fierce Urgency of Now: Africa’s Capitalist Cul-de-Sac

By John Smith

Mainstream academia and the liberal media in Europe and North America  propound the myth that, however slowly, Africa is ‘rising’ and converging with high-income countries; that capitalist development is lifting millions of Africans out of poverty; and that whatever obstacles African countries face in moving further along this path, they are either internal (poor governance, corruption, conflict etc.) or contingent (temporary ‘headwinds’ resulting from China’s deceleration, volatile commodity prices, ‘natural disasters’ – e.g. Ebola, droughts, desertification etc, whose connection with capitalist plunder of nature is not acknowledged) and have nothing to do with the unjust, exploitative and oppressive nature of their insertion into the global capitalist political economy.

This blogpost argues that these propositions are false; ‘alternative facts’ as distant from the truth as anything emanating from President Trump’s various orifices, even though they are promulgated by the sagest academics and the most respected liberal media. Our responsibility to the peoples of Africa and what Martin Luther King called the fierce urgency of now—the global, systemic crisis inaugurated by the 2008 financial crash is now sucking sub-Saharan Africa and other so-called developing regions into its vortex—don’t allow for mincing of words. Far from promoting development in Africa, capitalism is wrecking the continent; the owners of financial and non-financial transnational corporations based in imperialist countries and governments and international financial institutions under their control are guilty of plunder on a colossal scale and responsible for immense suffering; and the super-rich, westernised capitalist elite with whom they share power, from Pretoria to Rabat, have betrayed their peoples, are unfit to rule, and must be overthrown. This is not extremism, it is a statement of harsh, uncomfortable facts.

The first instalment of this three-part blogpost summarises evidence supporting the first of the above assertions, showing that, during the neoliberal era, African poverty has increasing both absolutely and relative to the income and wealth of the average person in Europe and North America, notwithstanding the much-hyped rise of Africa’s middle class. Future blogposts will examine the role of and relation between Africa’s capitalist elites and their imperialist patrons in producing these negative outcomes, before concluding with a reflection on the need for a return to theories of imperialism and neo-colonialism if the new generation of African youth and international solidarity is to achieve genuine national liberation and sustainable human development in Africa.

Is convergence being attained? Is poverty being overcome?

In her keynote address to the IMF’s ‘Africa Rising’ conference in Mozambique in 2014, IMF Managing Director Christine Lagarde said, “Sub-Saharan Africa is clearly taking off—growing strongly and steadily for nearly two decades and showing a remarkable resilience in the face of the global financial crisis. Economic stability has paid off. More than two-thirds of the countries in the region have enjoyed ten or more years of uninterrupted growth.”[1] This hyperbolic optimism was also evident in the IMF’s April 2015 Regional Economic Outlook a year later: “with growth at 4.5 percent, sub-Saharan Africa will remain among the fastest-growing regions of the world.”[2] Eighteen months later, in its October 2016 Regional Economic Outlook, the IMF struck a much more sombre note: “weighed down by 15 countries where per capita growth will be negative, including the three largest (Angola, Nigeria, and South Africa), the region’s average per capita GDP will contract, by 0.9 percent, for the first time in 22 years… these developments… adversely affect social outcomes, potentially reversing past improvements in living standards for a wide range of the population.”[3]

Yet even this newfound realism contains a generous dose of sophistry. What ‘past improvements’? How wide is the ‘wide range of the population’? Between 1980 and 2000, average per capita GDP in sub-Saharan Africa (SSA) declined by an average of 1.00% per year, according to World Bank data, compared to an average growth of 2.11% in ‘high-income’ countries. During the entire period from 1960 to 2015, per capita GDP in ‘high-income’ countries advanced by an average of 1.78%, but by 0.83% in SSA. This data, of course, takes no account of the grotesque and increasing income inequality in African countries, greater even than in high-income countries, which means that data on average per capita GDP conceals more than it reveals. For example, according to the African Development Bank, in 2010 60% of Africans were surviving on less than two dollars per day, or $730 per annum, yet average per capita GDP stood at $3237. [4]

Lending flimsy support to claims of convergence and of ‘Africa Rising’, between 2000 and 2015, SSA’s per capita GDP grew by an average of 2.25%, compared to 1.30% in rich countries. But, in the same way that rosy cheeks can indicate fever not good health, the high rates of growth experienced by African nations in the half-decades before and after the 2008 crash were less a sign of their own vitality than of the malaise gripping the imperialist economies. Well before the outbreak of the crisis, interest rates in the imperialist centers were already unusually low, causing ‘hot money’ to flow into African and other emerging markets in the quest for higher rates of return. The first years of the new millennium also saw the beginning of the so-called commodities super-cycle, an anomalous decade of rising world prices of oil and of metals, food and other primary commodities, partially reversing their long downward trend. The super-cycle was driven by China’s insatiable demand for raw materials, amplified by the speculative hot money flows mentioned earlier, and was extended for several years beyond the 2007-8 crash by Chinese leaders’ efforts to rescue their economy from its jaws, via an enormous debt-financed infrastructure investment programme, equivalent to 34% of GDP, that saw China pour more concrete in 2011 and 2012 than did the United States in the whole of the 20th century. [5] As The Economist in 2015 observed, “The credit boom in emerging markets was in large part a response to the credit bust in the rich world. Fearing a depression in its richest export markets, the authorities in China brought about a massive increase in credit in 2009. Meanwhile a flood of capital escaping the paltry yields on offer in developed countries took them to ever more exotic places.” But the wind has changed direction, and “The gush of global capital that flowed into their economies in the six years since the 2008-09 financial crisis is in most countries now either slowing to a trickle or reversing course to find a safer home back in developed economies;” in 2015 SSA’s average per capita GDP grew by 0.27%, compared to 1.15% in the high-income countries, and turned sharply negative (-0.9%, as reported above) in 2016. [6]

There are many reasons to be disdainful of arguments that reduce ‘development’ to economic growth and that measure this by gross domestic product (GDP). Two reasons, in particular, stand out. Data on GDP growth says nothing about how the fruits of this growth are shared: sharply rising inequality implies that those most in need of development get the least of it, and that many are in fact regressing. And GDP has an exceedingly narrow focus: it only measures the monetary value of goods and services that are sold, assuming this to be equal to the wealth generated in their production, and it ignores ‘externalities’, such as pollution, depletion of natural resources and destruction of traditional communities.[7]  We therefore make a big concession to capitalism’s apologists by accepting, to begin with at any rate, their criteria for convergence and poverty alleviation, yet we find that, even according to their criteria, capitalist globalisation has not brought any meaningful development for the majority of Africa’s people, and far from convergence, the already-extreme gap between Africa and rich nations is widening, both absolutely and relatively.

These conclusions are greatly reinforced when we move from examining the distribution of income to the distribution of wealth. According to Credit Suisse, in 2000 the median wealth of European adults was 11.2 times greater than the median wealth owned by African adults.[8] By 2016, this ratio had increased to 27.5. Comparison of the median wealth of Africans with North Americans reveals an even starker disparity: the ratio rose from 74.1 in 2000 to 120.3 in 2016. And this dramatic widening of the wealth gap occurred during a period when Africa’s economy was experiencing unprecedented growth! Closer examination reveals that the biggest contribution to the widening wealth gap between the average African and the average European and North American arose from sharply increasing inequality within Africa. It should be recalled that ‘median wealth per adult’ is the wealth owned by the average adult, whereas ‘mean wealth per adult’ is the average wealth owned by adults. If the richest decile of adults increase their wealth and other deciles do not, median wealth remains the same but mean wealth increases. So, if the wealth gap between the average European and the average African nearly tripled between 2000 and 2016, while mean wealth ‘only’ increased by nearly 50%, this means that a large part of the increase in the wealth of Africans during these boom years was captured by the elite. And so Credit Suisse reports (not shown in the table) that the ratio of mean wealth to median wealth in Africa jumped from 7.8 to 10.4 over this period, while this ratio slightly declined in both Europe and North America.

Credit Suisse’s data on wealth distribution brings the deepening inequality between Africa’s super-rich elite and their middle-class hangers-on and the mass of the people on the other into sharp focus, as well as revealing the wide and deepening inequality between the average African person and the average person in the imperialist countries. Unfortunately, World Bank data on income distribution discussed earlier does not make it as easy to unpack average per capita income, but we can be sure that the same effect is taking place here as well. In other words, even during the past one and a half decades of anomalously-high growth across sub-Saharan Africa, the lion’s share of this increased income has been captured by the elite while the wretched poverty of the majority has not improved and, for many if not most, has got worse.

Having established that Africa as a whole is not converging with rich nations, it is diverging, and that extreme poverty is growing, not diminishing, the next blogpost examines the agency of those in charge of Africa’s development—transnational corporations, imperialist governments and International Financial Institutions under their control, and Africa’s capitalist elites; while the final post moves from the criticism of facts to the criticism of concepts, and considers why we need to return to, and critically develop, theories of imperialism if we are to understand why the world is as it is, how it may be changed for the better, and who will be the agents of this change.

John Smith received his PhD from the University of Sheffield and is currently self-employed as a researcher and writer. He has been an oil rig worker, bus driver, and telecommunications engineer, and is a longtime activist in the anti-war and Latin American solidarity movements. Winner of the first Paul A. Baran–Paul M. Sweezy Memorial Award for an original monograph concerned with the political economy of imperialism, John’s Imperialism in the Twenty-First Century is a seminal examination of the relationship between the core capitalist countries and the rest of the world in the age of neoliberal globalization. 

Featured Photograph: Valhalla Park, in Cape Town, South Africa. Rising unemployment and the increasing gap between rich and poor is a dominant feature of life across the continent.

Notes

[1] Christine Lagarde, 2014, Africa Rising – Building to the Future, Keynote Address to the African Rising Conference http://www.imf.org/external/np/speeches/2014/052914.htm

[2] IMF, 2015, Regional Economic Outlook Apr 15 Sub-Saharan Africa – Navigating Headwinds, p2

[3] IMF, 2016, Regional Economic Outlook Oct 16 Sub-Saharan Africa – Multispeed Growth p8

[4] John Burn-Murdoch and Steve Bernard, 2014, “The Fragile Middle: millions face poverty as emerging economies slow,” in Financial Times, April 13, 2014. It is often forgotten that the World Bank’s $2 per day benchmark uses PPP-adjusted dollars; accordingly, I have used the PPP-adjusted figure for average per capita GDP.

[5] By way of comparison, Donald Trump’s much-trumpeted debt-financed infrastructure programme, which might take until 2018 to show up, is equivalent to 5% of US GDP.

[6] Kynge, J. and J. Wheatley, 2015a. Emerging Markets: The Great Unravelling.  Financial Times, April 1, 2015.

[7] See John Smith, 2012, “The GDP Illusion,” Monthly Review 64/3:86–102. http://monthlyreview.org/2012/07/01/the-gdp-illusion, and chapter 9 of John Smith, 2016, Imperialism in the Twenty-First Century: Globalization, Super-Exploitation, and Capitalism’s Final Crisis, New York: Monthly Review Press, http://monthlyreview.org/product/imperialism_in_the_twenty-first_century/

[8] ‘Europeans’ includes central Europeans as well as west Europeans; numbering 550 million adults in 2000.

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