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Disaster Capitalism in the Age of COVID-19

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The coronavirus pandemic, like other disasters, will no doubt provide opportunities to some people to make money. When many get killed, there are always a few that make a killing. This is the essence of disaster capitalism.

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Disaster Capitalism in the Age of COVID-19
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The current COVID-19 pandemic, originating in Wuhan, China, is just one in a series of pandemics that have characterised the epidemiological history of humanity over the centuries. Among the most notable pandemics in the modern world are the HIV/AIDS pandemic that peaked between 2005 and 2012 period, and which is estimated to have killed 36 million people so far; the 1968 influenza pandemic that killed one million people; the Asian influenza of 1956-58 that killed two million; the cholera pandemic of 1910-11 that killed 800,000; and the 1918-20 influenza pandemic (also known as the Spanish flu) that affected more than one-third of the world and decimated an estimated 20—50 million people.

Perhaps the Bubonic plague, also known as Black Death, remains the most devastating pandemic recorded in world history. Originating in China, it is said to have struck in Europe in 1347 and, in four years, it killed 200 million people. It is the Bubonic plague that led to the coining of the word and practice of quarantine. With knowledge that the plague was contracted through proximity to carriers, authorities in Venice, Italy, began holding newly arrived sailors in isolation on their own ships until they could prove that they were not sick. Initially, they were held for 30 days – trentino in Venetian law – then, over time, this was increased to 40 days – quarantino – and thus quarantine was born.

Whereas the Bubonic plague was caused by a bacterium, Yersinia pestis, COVID-19 is caused by a virus, coronavirus. There, however, is a parallel in the manner in which the two pandemics spread. The Bubonic plague was spread by maritime transport – by commercial ships sailing from one continental port to another. Similarly, coronavirus has apparently been spread across continents and countries by air travel. It is remarkable, for instance, that the most affected areas in the United States are big hubs of the international aviation industry. These include New York City, Seattle, Los Angeles, Detroit, Chicago, and Miami, among others.

Overall, the most devastating pandemics in human history have been the Bubonic plague, cholera, influenza, and smallpox. Smallpox was endemic to Europe, Asia, and Arabia for centuries and it killed one-third of those infected. It was spread to the Americas by European settlers and, without immunity to the new disease, the natives of these places were killed in the tens of millions.

Fortunately, smallpox was the first viral pandemic to be ended by a vaccine. The World Health Organization (WHO) declared in 1980 that smallpox had been eradicated from the face of the earth. The Ebola virus, which struck the three West African countries of Guinea, Liberia, and Sierra Leone in 2014, killed thousands. However, it was regionally confined mainly to the three West African countries and was thus considered an epidemic rather than a pandemic. By mid-April 2020, the coronavirus had killed more than 120,000 people, the majority of them in the Global North.

Overall, the most devastating pandemics in human history have been the Bubonic plague, cholera, influenza, and smallpox. Smallpox was endemic to Europe, Asia, and Arabia for centuries and it killed one-third of those infected.

One major impact of the COVID-19 pandemic is its demonstration of the extent to which the contemporary world has become interconnected. The idea that our world has become a global village is no longer hyperbole. Emanating from Wuhan, the sprawling capital city of Central China’s Hubei Province, in November 2019, the coronavirus spread by air travel to all corners of the world within no time. It has affected both the lowly and the mighty, from the ordinary citizens of this world to the most powerful political actors, such as the British Prime Minister, Boris Johnson, Prince Charles, US Senator Randy Paul, Prince Albert II of Monaco, Australian Minister of Home Affairs, Peter Dutton, French Minister of Culture, Franck Riester, as well as Sophie Grégoire Trudeau, the wife of the Canadian Prime Minister Justin Trudeau. At the beginning of the second week of April 2020, the top ten most affected countries in terms of sheer numbers of the infected and deaths as a percentage of the infected are as listed in the Table below.

Top Ten Coronavirus Infected Countries as of April 9, 2020

Source: Compiled from Worldometers, 2020

Second, the COVID-19 pandemic has laid bare the level of preparedness of governments around the world to deal with such a pandemic. Among the top ten listed countries in the Table above, it is evident that Germany has done very well in managing the pandemic. Ranking 4th in terms of number infected, it drops to 10th in terms of number of deaths as a proportion of the infected, at under 2%. The UK appears to be doing the worst, ranking 8th in terms of number of infected, but first in terms of deaths as a percentage of the infected, at 13%. The Netherlands has also done poorly, ranking 12th (not among the top ten) in number of infected persons; it ranks third in terms of percentage of deaths, at 11%. In terms of sheer numbers, Italy has the highest number of COVID-19 deaths, at 17,907, constituting 12.69% of the country’s infected population, ranking second to the UK. Arguably, there are great lessons to be learnt from how Germany and South Korea have handled the COVID-19 pandemic. South Korea, one of the first countries to be hit hard by the pandemic, quickly flattened the infection and death curves and is no longer among the top most affected countries globally.

Third, the COVID-19 pandemic demonstrated the tragi-comedy of the American presidency under Donald Trump. When the media started reporting on the emerging pandemic, Trump, as self-absorbed as ever, never took it seriously. Instead, with the help of his favorite conservative media house, Fox News, he dismissed talk of a coronavirus pandemic as “a hoax”, as another attempt by the Democrats to “impeach” him. At one moment the president remarked that the virus would simply disappear one day! He was more concerned with the impact of the coronavirus on his chances for re-election and thus sought to wish it away. Asked by journalist Yamiche Alcindor why the US’s testing for the coronavirus was far behind other countries in per capita terms, Trump’s response demonstrated that he does not even understand what “per capita” means! The initial response of the Trump administration was thus one of mismanagement, scapegoating, and missed opportunities. No wonder the country swiftly shot to the top of the infection table within no time. Unfortunately, this approach was replicated in Kenya where the government continued to allow flights to land in the country, including one carrying 236 passengers from China, the origin of the coronavirus, with a simple advice to arriving passengers to “self-quarantine”

Fourth, the COVID-19 pandemic has facilitated Cuba to stage a kind of diplomatic coup against the US. Cuba has one of the highest numbers of medical professionals in the world: 90,000 in a country of 11 million. Of these, 37,000 are deployed in countries around the world, some on medical aid missions, but most on official contracts with recipient countries paying Cuba directly. It is estimated that Cuba makes $6 billion annually from the export of medical and other public services. Whereas Cuba and the US reached some rapprochement during the Obama administration, with the two cooperating to help fight the Ebola epidemic in 2014, the Trump administration has, for two years, focused on obliterating Cuba’s deployment of medical personnel abroad, a great source of soft power for Cuba. Arguing that the medical professionals are exploited workers and agents of Communist indoctrination, the Trump administration scored victories when Bolivia, Brazil, and Ecuador cancelled contracts of thousands of Cuban medical professionals following the electoral defeat in the three countries of leftist governments allied with Havana by rightist ones closely allied with Washington.

The initial response of the Trump administration was thus one of mismanagement, scapegoating, and missed opportunities. No wonder the country swiftly shot to the top of the infection table within no time.

With the COVID-19 pandemic hitting hard, however, the fortunes of Cuba’s medical diplomacy have received a shot in the arm. In the midst of the crisis, Cuba deployed 593 doctors to 14 countries including Andorra, Belize, Dominica, Italy, Jamaica, and Nicaragua. In hard hit Crema City in the northern Lombardy region of Italy, 52 Cuban doctors and nurses set up a field hospital with 32 beds equipped with oxygen and 3 ICU beds to help manage the pandemic in one of the most overwhelmed areas of the country. In response to continued US discouragement of countries from contracting Cuban medical workers even amid the current pandemic, Andorran Foreign Minister, María Ubach is quoted as saying, “I am aware of the position of the United States, but we are a sovereign country and we can choose the partners with which we are going to have cooperation,” a profound testimony to the changing fortunes of Cuban medical diplomacy. Indeed, Cuban state officials have been proudly posting videos of Cuban doctors receiving standing ovations as they arrive abroad to begin work, and have been blasting the Trump administration for its criticisms. Josefina Vidal, Cuba’s ambassador to Canada, tweeted: “Shame on you. Instead of attacking Cuba and its committed doctors, you should be caring about the thousands of sick Americans who are suffering due to the scandalous neglect of your government and the inability of your failed health system to care for them.”

Fifth, and perhaps most poignantly, the COVID-19 pandemic has created lucrative opportunities for what celebrated Canadian author, Naomi Klein, calls “disaster capitalism”. This is an extreme form of capitalism created in the immediate aftermath of a disaster, whether a natural one like an earthquake, volcanic eruption, or hurricane, or a man-made one like a war, a financial crisis, or a terrorist attack. Klein note, in her seminal book, Shock Doctrine: The Rise of Disaster Capitalism, that many governments employ the brutal tactic of using the public’s disorientation during a collective shock from disaster to enact radical pro-corporate measures that would otherwise be impossible to pass through. These include: (1) privatisation of public property; (2) arbitrary elimination of laws, clinically dubbed “deregulation”; and (3) slashing democratically chosen programmes that help ordinary citizens, euphemistically called “austerity measures”.

This strategy, according to Klein, has been a silent partner to the imposition of neoliberalism for more than 40 years. Its application follows a clear pattern: wait for a crisis, or help foment one through identity conflicts and coup-making; declare a moment of what is sometimes called “extraordinary politics”; suspend some or all democratic norms; and then ram the corporate wish-list through as quickly as possible. Any tumultuous situation, Klein avers, if framed with sufficient hysteria by political leaders, could serve this softening-up function. It could be an event as radical as a military coup, but the economic shock of a market or budget crisis would also do the trick. Political and economic elites are acutely aware that moments of crisis constitute their best opportunity to push through their wish-list of unpopular policies that further polarise wealth by making the wealthy wealthier and the poor poorer.

For instance, the 2007-2008 financial crisis facilitated the US political and economic elite to sell a panicked population on the necessity for attacks on social protections and for an enormous bailout to prop up the financial private sector. Cheques worth billions of public dollars were made out to private financial institutions with arguments that failure to do so would lead to an economic apocalypse! No one was interested in questioning the role of the very institutions in causing the economic crisis through their greed and predatory lending, nor in questioning where the billions they made in annual profits were.

Similarly, one major response to the impact of the COVID-19 pandemic in the US has been the passing of a two-trillion-dollar stimulus package. The planned parceling out of this stimulus package is testimony to how corporations always benefit from such crises. Of the two trillion dollars, ordinary Americans, hundreds of millions of them, are set to receive a slice of only 30%; public services will receive 9%; state and local governments 17%; so-called small businesses will receive 19% while the few big corporations are set to get 25% of the pie – a whopping half a trillion dollars! In other words, 46% of the $2 trillion will go to private capitalist interests. Indeed, as The Wall Street Journal reports, the coronavirus stimulus package has fueled a boom for lobbyists as companies jostle to secure the biggest possible slice of the $2 trillion package for themselves.

Another aspect of the response to the COVID-19 pandemic has been closure of schools and recourse to online and remote teaching and learning. Clearly, therefore, the crisis wrought by the pandemic is turning out to be a boon for the providers of the internet tools needed for cyber-education, all of which are poised to make unprecedented profits. These include providers of “free” education apps, like Google, who end up reaping massive harvests of data that are critical to their advertising and marketing strategies. As Kline opines, this doesn’t mean that some of their solutions aren’t good; it means that they have to be watched carefully, and school authorities should be asking questions bearing in mind that they are not talking to philanthropists who just want to help out, but companies that are responding to a chance to profit from disaster. Indeed, it would not be surprising, she observes, if some virtual schooling businesses don’t see pandemic-related school closings as a chance to take over portions of the education sector permanently, whether they can actually provide quality education or not.

Similarly, one major response to the impact of the COVID-19 pandemic in the US has been the passing of a two-trillion-dollar stimulus package. The planned parceling out of this stimulus package is testimony to how corporations always benefit from such crises.

The idea of disaster capitalism has become the modus operandi of capitalism in our contemporary world. All manner of crises, both natural and man-made, are turned into lucrative money-making opportunities for corporate interests and an opportunity for political elites to implement otherwise unpopular policies that serve the special interests of capital. A number of other cases, including the September 2001 terrorist attacks and Hurricane Katrina in the US, the 2010 earthquake in Haiti, and the perpetual crisis of civil war in the Congo suffice to illustrate this.

9/11, Katrina, and disaster capitalism

Steve Fraser writes that the reconstruction programmes that followed the 9/11 terrorist attacks and Hurricane Katrina were skewed heavily in favour of the business community and the rich. In both New York and New Orleans, sites of the man-made and natural disasters, respectively, big business controlled the redevelopment process, and ipso facto, where the money landed and where it didn’t. Tax breaks and private sector subsidies became channels for federal aid. “Public benefit” standards, which once accompanied federal grants and tax exemptions to ensure that projects served some public purpose, especially to “benefit persons of low and moderate income”, were eliminated, leaving poorer people out in the cold, while exacerbating existing inequalities. Both federal, state, and city governments scurried around to invent ways to auction off reconstruction projects to private interests by issuing tax exempt “Private Activity Bonds”. These were soon gloriously renamed “Liberty Bonds”, though, as Fraser notes, the unasked question was: Whose liberty?

The lion’s share of government grants and exemptions went to the biggest corporations. In New York, more than 40% of all bonds amounting to $2.4 billion, went to a single developer, Larry Silverstein. Second to Silverstein was Goldman Sachs. Yet these institutions and their inhabitants represented at best a mere 15% of those affected, most of whom were low-wage workers who, in some cases, ended up getting evicted from their homes, thanks to those business-oriented tax breaks. “Federal aid, hypothetically tied to building affordable housing and the creation of living-wage jobs ended up as just that: hypothetical,” Fraser writes.

When Hurricane Katrina hit America’s Gulf Coast in 2005, it wrought major devastation in terms of human and property loss as well as economic cost. To the surprise of many around the world, Katrina also laid bare America’s shocking poverty. Most people in Mississippi and New Orleans who stayed put in the wake of the hurricane did so not out of choice but because they were too poor to leave. According to figures from the 2000 US census, close to 40% of the New Orleans population lived in poverty, with 27% having no access to a vehicle. Yet in the aftermath of the hurricane, disaster capitalists were the chief beneficiaries of the reconstruction efforts, not the poor victims of the horrific disaster.

Following Katrina, real estate mogul Joseph Canizaro said, in classic disaster capitalist attitude, that the clearing out caused by Katrina represented some “very big opportunities”. A Republican representative from Baton Rouge said, “We finally cleaned up public housing in New Orleans. We couldn’t do it, but God did.” In this event, as Rachel Riederer writes, “cronies of the Bush administration profited from post-Katrina reconstruction,” with Halliburton subsidiary KBR paying out tens of millions of dollars for no-bid contracts. Public schools and public housing were swept away in the redevelopment. Now, more than one third of tenants in New Orleans pay more than half of their monthly income in rent and the city now has more than 100,000 fewer African American residents whose annual incomes are 54% lower than those of their Caucasian counterparts. The largely privatised school system has achieved many of its test-score gains, leading to former Education Secretary Arne Duncan to famously quip that Hurricane Katrina was the “best thing” to happen to education in New Orleans. Notably this turned out to mean that the disaster swept aside the public school system and opened up opportunities for private operators to move in. These have achieved test-scores by excluding the city’s most disadvantaged students. It is on account of this that John Mutter notes that Katrina put the disaster in disaster capitalism.

The earthquake in Haiti

In his aptly titled book, Disaster Profiteers: How Natural Disasters Make the Rich Richer and the Poor even Poorer, John Mutter points out that, though we think of earthquakes, cyclones, floods and the like as “natural” disasters, the pattern and level of destruction they inflict are socially determined. Existing inequalities of housing, of land quality, or information asymmetry, are only part of the story. Natural disasters, Mutter shows, often make inequality worse, but that process is no accident of nature. In the 2010 earthquake in Haiti, Mutter observes, “destruction was indiscriminate; the homes of the rich and the homes of the poor were all targets.” But the homes of the poor were poorly constructed and much more vulnerable. Though the quake itself—what Mutter calls “the natural part of the disaster”—affected rich and poor alike, the relief process was not so even-handed. In a society already starkly divided by class, the elites were able to pay for private medical and rebuilding services, while the poor were relegated to crowded, dangerous tent cities.

Following Katrina, real estate mogul Joseph Canizaro said, in classic disaster capitalist attitude, that the clearing out caused by Katrina represented some “very big opportunities”. A Republican representative from Baton Rouge said, “We finally cleaned up public housing in New Orleans. We couldn’t do it, but God did.”

Within the context of the shock and crisis following the earthquake, the Haitian government was compelled to enact a legislation in April 2010 that created the Interim Haiti Reconstruction Commission (IHRC) to oversee post-earthquake reconstruction. The IHRC was empowered to do whatever it wanted, including approving policies, projects, and budgeting. The IHRC’s 26 board members were elected by no one and were accountable to no one. Half of them were foreign, including representatives of other governments, multilateral financial institutions, and non-governmental organisations. An international development consultant contracted by the IHRC, speaking with the Haiti Support Group’s Deepa Panchang and Beverly Bell, noted; “Look, you have to realize the IHRC was not intended to work as a structure or entity for Haiti or Haitians. It was simply designed as a vehicle for donors to funnel multinationals’ and NGOs’ project contracts.”

What followed the flood of donations that poured into Haiti following the earthquake was a classic case of disaster capitalism. John Mutter writes that the donations were “viewed as manna from heaven by the unscrupulous, a chance for new profit”. Citing a report from the Center for Economic Policy and Research, Mutter shows that of the nearly 1,500 contracts awarded as part of the Haitian relief project, only 23 went to Haitian companies, constituting a paltry 2.5% of the $195 million. Much of the rest went to US contractors based in and around Washington DC, often through no-bid contracts. In other words, to these US companies, the natural disaster in Haiti was simply an opportunity to make a killing.

Disaster capitalism and instability in the DRC

In Africa, nothing illustrates the case of disaster capitalism than the perpetual crisis of conflict in the Democratic Republic of Congo (DRC). The DRC is endowed with a rich and diverse natural resource base that is of vital significance to the global technological and electronic industry. Among these are gold, wolframite, coltan (columbite tantalite), and cassiterite, all of whose uses in the electronic and technological products make them precious and much sought-after commodities. Gold is highly conductive and resistant to corrosion and is thus used to make connectors, soldered joints, and connection wires, in addition to jewelry. Wolframite is the source of tungsten, an element that is used in applications like turning tools and milling, electronic devices including the vibration function in cellphones, cemented carbides, electrical, heating, and welding applications. Coltan is a metal ore from which the element tantalum is extracted and used to make high quality capacitors for applications requiring high performance, compact format, and high reliability. These include hearing aids, pacemakers, airbags, GPS systems, laptops, cellphones, videogame consoles, as well as video and digital cameras. Cassiterite is a metal ore from which tin is made and is used for producing cans, solder for electronic circuit boards, and plumbing.

The perpetual crisis of instability in the DRC is thus a kind of organised chaos that serves the vested interests of many actors at the local, national, regional, and international levels. Eastern Congo’s mines are controlled by militias and rebel groups that use profits from these minerals to perpetuate the DRC conflict. The conflict is estimated to have claimed more than 5 million lives since 1998, while trade in the minerals has continued apace with regular flights in and out of North Kivu’s Walikale in the conflict zone. Whereas miners make between one and five dollars a day working for either an armed group or someone who pays an armed group, the militias rake in millions of dollars. It is estimated that in 2009, militias made USD180 million while final dealers at the end of the chain made up to 50 times this amount.

According to British-based Global Witness’s 2009 report, the national Congolese army (FARDC) and rebel groups (especially FDLR – Democratic Forces for the Liberation of Rwanda), regularly cooperate with each other in Eastern DRC, carve up territory between themselves, and systematically use forced labour and violent extortion in mining areas. The conflict minerals then go through various middlemen from DRC through Burundi and Rwanda to East Asia where they are processed into valuable metals needed for electronic and other industrial products by companies such as Thailand Smelting and Refining Corporation (THAISARCO), the world’s fifth largest tin producing company. Incidentally, THAISARCO is owned by the British giant, Amalgamated Metal Corporation.

The perpetual crisis of instability in the DRC is thus a kind of organised chaos that serves the vested interests of many actors at the local, national, regional, and international levels…It is estimated that in 2009, militias made USD180 million while final dealers at the end of the chain made up to 50 times this amount.

Global Witness, an international NGO that campaigns to break the chain-link between natural resources and armed conflict, established in 2008 that the British-based Afrimex company was dealing in conflict minerals from the DRC. In its own investigation, the British government verified this finding that Afrimex was buying minerals from suppliers who made payments to rebel groups, a practice that was in breach of OECD international guidelines. Despite this finding, however, no concrete measures were taken by the government against Afrimex, not even a slap on the wrist. Other companies mentioned by Global Witness as partakers of trade in conflict minerals include Trademet and Traxys, both from Belgium, American electronic tech companies Dell, Hewlett-Packard, and Motorola, as well as Finnish telecom, infotech and electronics company Nokia. In their 2009 report, Global Witness concluded that the failure of governments to hold companies accountable, the failure of Rwanda and Burundi to restrict trade across their borders, and the failure of donors and diplomats to explicitly address the conflict minerals trade, have all contributed to the continuation of the endless DRC conflict.

Indeed, an effort to legislatively rein in the activities of American companies that profit from conflict minerals in 2009 came a cropper. In April 2009, Republican Senator Sam Brownback of Kansas introduced the Congo Conflict Minerals Act to require electronics companies to verify and disclose their sources of cassiterite, wolframite, and tantalum. The proposed legislation died in committee stage, perhaps a testimony to the lobbying power of the targeted companies that profit from the crisis of instability in the DRC.

Conclusion

Overall, the United States has perfected the practice of creating crises ostensibly to serve the interests of its capitalist class. These include waging unnecessary wars, engineering coups and regime change, and fomenting intra-state conflicts. The main beneficiaries of such adventures include military defence contractors, private security contractors, and energy and natural resource companies – a phenomenon that has come to be referred to as the military industrial complex. No wonder American elections are an exorbitantly expensive affair in which special interests finance politicians’ campaigns and, once in office, the politicians execute legislative agendas in the service of the said special interests. It is on account of this that investigative journalist Greg Palast describes the American system as the best democracy money can buy in a book of the same title and subtitled A Tale of Billionaires and Bandit Ballots.

At the end of the day, in the event of a disaster, whether natural or man-made, pandemic or war, hurricane or earthquake, flooding or volcanic eruption, whereas there are many that get killed, there are always a few that make a killing. This is the essence of disaster capitalism.

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Wanjala S. Nasong’o, Ph.D. is Professor of International Studies at Rhodes College, Memphis, Tennessee, USA.

Ideas

Another Now: Why the “Jerusalema” Dance Challenge Reveals a Longing to Re-Imagine the World

What then, is Jerusalema, if not the finest distillation of a global desire for another city on a hill? And not by simply turning to another great power as America’s ready replacement—China is not the world’s savior—but one that like the dance challenge itself believes in the possibility of collective subjectivity.

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Another Now: Why the “Jerusalema” Dance Challenge Reveals a Longing to Re-Imagine the World
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Forever condemned as its “heart of darkness,” the world remains baffled as to how Africa has seemingly avoided the worst of the COVID-19 pandemic. Earlier in the year, as the virus ravaged other parts of the world and prepared to make landfall on the continent, the projections were nothing short of severe.

It was widely anticipated that Africa’s poor and overcrowded living conditions, the prevalence of other diseases like HIV and TB and its lack of well-resourced health systems would make for the deadliest viral path on the globe. Despite their touch of catastrophism, these predictions were not unreasonable given the evidence of despair elsewhere.

What is strange, is the sense of perverse disappointment that this hasn’t been the case. Stranger still, that at the height of doom and gloom, little was done by way of international support to prevent the expected worst case outcomes.

On the flip side, the world is celebrating the lightness of this continent, albeit in the most cliched way—through its products of song and dance. Since the middle of this year, the gospel-inspired, South African house track “Jerusalema” by DJ and Producer Master KG featuring vocalist Nomcebo Zikode, has enraptured a global audience.

What made it especially take-off was its evolution into the #JerusalemaDanceChallenge, prompted by a group of Angolan friends recording themselves with plates of food performing a variation of the line-dance to the song. Following that, similar clips of people dancing to the song have been shared from all over— groups of ordinary people, nuns and priests, healthcare and other essential workers, police and soldiers, fuel attendants; you name it. Per the African Union, Jerusalema is “a song that has transcended its national boundaries and the continent, and has people across the world dancing to its vibrant rhythm.”

The South African government made sure to co-opt the dance challenge, transforming what was a mostly spontaneous and uncoordinated phenomenon to a state-sponsored feel-good narrative. As President Cyril Ramaphosa announced South Africa’s move to its lowest level of COVID-19 lockdown, he urged all South Africans to participate in the dance challenge as part of Heritage Day celebrations which happened in late September. (The holiday itself has a curious history; it replaced Shaka Day and is mostly now an excuse to BBQ.)

Suddenly, a country which had been a powder-keg of disaffection, traumatized at the injustices and suffering endured during lockdown yet divided on who was to blame, became united in cheerful performance as it seemed that at last things were back to normal. And for South Africans, “normal” means being able to repress the fact of normal being the problem; it means comfortably moving from being outraged about police brutality in June to applauding their renditions of the Jerusalema dance in September.

But perhaps Jerusalema is different, in that the hopefulness it expresses is not simply about a return to normal, but about a desire to go beyond it. The lyrics themselves (translated from isiZulu) include the lines, “Jerusalem is my home, save me, take me with you…My place is not here, my kingdom is not here.” Yet, the actually-existing city of Jerusalem, which means “city of peace” and is claimed by all of the Abrahamic faiths yet controlled by Israel, is anything but one.

There is a gap between the religious imagery invoked by the song and the state of religiously- motivated practice today, which makes the fact that Master KG himself isn’t particularly religious more telling of how the song speaks to a deeper yearning in the human condition, one beneath religious sentiment. And, when Zionists (not the South African version of African-inspired Christianity, but supporters of Israel) at one point tried to appropriate the message of the song as endorsing support for Israel, Palestine solidarity activists worked with Palestinian youth in Jerusalem and South African youth in Durban to produce two videos, which raised the profile of the African Palestinian community and solidarity between South Africa and Palestine.

Young Palestinian activists including Janna Jihad and Ahed Tamimi sent video messages inviting Master KG to come to Palestine, and there have been a number of awareness-raising engagements with the artist and his management on the politics of the Palestinian struggle.

That Jerusalema as an idea represents a longing for more than has come before, perhaps could also explain the curious absence of Americans, from the dance challenge crazing the world right now (something writer Michelle Chikaonda pointed out on a recent episode of AIAC Talk).

It was the Massachusetts colonizer John Winthrop who inserted the vision of a new Jerusalem in the gospel of St Matthew into the image of the United States; the founding exceptionalism upon which it would forever conceive itself as a beacon of hope and progress for the rest of the world. As the United States now decidedly proves itself to be a failed state, it renders the majority of the world—who by force or coercion adopted its version of liberalism—failed as well, with the global inability to handle a pandemic the surest testament.

What then, is Jerusalema, if not the finest distillation of a global desire for another city on a hill? And not by simply turning to another great power as America’s ready replacement—China is not the world’s savior—but one that like the dance challenge itself believes in the possibility of collective subjectivity. Of course, this subjectivity can collapse into forms which are reactionary rather than emancipatory.

As Zwide Ndwandwe writes, there is not much separating the rainbow nationalism of the kind uplifting South Africans through the dance challenge, and the xenophobia at the same time proliferating through social media demanding that the government #PutSouthAfricansFirst. It is not enough that there is widespread dissatisfaction about our society as it is underscored by a desire for something better—content must be given to what that better could possibly be.

In a recent episode of AIAC Talk partially devoted to talking through Malawi’s recent elections, Sean Jacobs and I addressed a question to the panelists which dwelled on how Malawi’s new leader, Lazarus Chakwera, is a theologian, one known to refer to citizens as being part of his “flock.” Our reason in asking this was to understand if this was a sign Malawi could possibly be headed toward more of the same demagogic and autocratic leadership that characterizes so much of the rest of the continent.

Yet, in the eyes of Chikaonda and media scholar Jimmy Kainja, this fact about the new president was unremarkable—much as Malawi is a religious country, this is not why Chakwera was elected. In Kainja’s words, “Malawi is a different place now.” Its people have no time for the usual nonsense of the political class that they’ve endured since gaining independence, and now trust in their competence as citizens. It is this spirit of self-determination which enveloped Malawi and saw ordinary citizens play an active role in monitoring and overseeing the elections without foreign observers, and going so far as tracking and giving hourly updates on the flights carrying the ballots.

And it is that spirit of self-determination which is quietly sweeping throughout the continent as citizens respond to the crisis of global capitalism exacerbated by the pandemic. It’s easy to take an isolated look at the successful management of COVID-19 as a public health crisis on the continent, and think that the worst is over and Africa has impressed—but the truth is, we are only just beginning to grapple with the socio-economic fissures that COVID-19 laid bare and worsened.

We are witnessing an ongoing wave of mobilisation on the continent challenging the excesses of neoliberalism—in NigeriaGhanaKenya, Zimbabwe, and elsewhere. South Africa’s trade unions and social movements are preparing for a season of nation-wide strike action, ones bringing together the largest trade union federation (which is aligned with the ruling party, the African National Congress) and its closest competitor. Of course, these efforts might fail and no doubt governments will continue to use COVID-19 gathering restrictions as a pretext for repression.

But, the sense you get is that for the first time in a long time, there is belief that self-determination can only be understood as a collective achievement—of creating institutions in our society by guaranteeing the conditions of life for all. These are achievements that have to be fought for politically, and no matter how bad things get they won’t come from the benevolence of an outside actor. The fate of Africa is determined not by the state of the West or China, but only by its people themselves. Maybe, what is becoming stronger as we search for a new city on the hill, is the conviction that we are going to build it ourselves.

This post is from a new partnership between Africa Is a Country and The Elephant. We will be publishing a series of posts from their site once a week.

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Populism and the Global South

In a major analysis of current developments at the level of the world and multinational market of late capitalism, Esteban Mora grapples with the phenomenon of so called ‘right wing populism’ not only in the West, but in Third World regions as well. He asks if Africa’s decades of trauma now confront metropolitan and central capitalist countries, as the road where they are heading.

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Populism and the Global South
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The origins and formation of ‘right-wing populism’ from the point of view of Marxist economics and their impact of these processes for Africa must be understood from observing the world market from an internationalist and multinational point of view.

The policies of ‘right-wing populist’ movements come from the big multinational financial and productive capitals, not from the local national bourgeoisie. This big financial and productive capital has as a goal the elimination of the fragmentation to the concentration and centralization of value, which is being caused by multinational production itself, at least as it has been functioning until now.

In addition, the international bourgeoisie has an understanding of East Asia’s economic ascension, right wing populists see these regions advance in the multinational market (where East Asia is now the centre of industrial production on the planet), as a result of the intervention of the state in the economy.  It is from this characterization (and these goals) that they define themselves as ‘nationalists’ or ‘anti-globalists’, but always within the frame of multinational capital and competition.

Let me illustrate this with a couple of examples.

Both Hungary and Poland, or even Austria, have intensified the economic activity of their sovereign wealth funds or equivalent funds, for the investment of state capitals within their economies. In the same way, Hungary and Poland are characterised by the nationalization of certain companies and assets, and by the great support of the state through state and public subsidies (coming mainly from the structural funds of the European Union, which are composed of state and public European budgets) to subsidize multinational companies and their operations within their countries, as well as social spending in general.

That means it is simply inaccurate to argue that they are ‘protectionists’ or ‘nationalists’ in the classic sense of the 20th century.

So, the convergence of the Viktor Mihály Orbán government in Hungary or the Polish government with certain multinationals is as great as any other globalised economy, but it is focused on state interventionism. It is worth restating the point. These governments see East Asia’s success and the ability to now compete at the multinational level as almost entirely due to their state-led or state-oriented support or intervention. Therefore, these ‘populist’ governments promote this economic perspective to prevent the fragmentation of concentrated and centralised capital.

It is also important to stress that multinationals arriving in different regions and countries, are producing growth and the development of mainly small and medium industrial enterprises. So, in East Asia the overwhelming majority of industrial companies are small and medium sized, instead of factory-scale, and they are vertically integrated through outsourcing or portfolio investment, which means part of the profits stays within those companies and is not automatically ‘repatriated’ to the multinational, in turn this benefits the host country and companies, and creates the possibility that the Asian Tigers, China or India, or even Turkey, Israel or South Africa, of developing multinationals themselves.

Trumps Tariffs and Brexit

Another example comes from Brexit and the trade war between United States and China, provoked by Donald Trump’s tariffs. None of these policies make the slightest economic sense for either the internal markets of England or the United States. The first ones to oppose and criticize Brexit or US commercial tariffs have been precisely the local big, medium and small bourgeois from those countries, for which inputs, raw materials and means of production, as well as exports, are all affected.

While multinational capitals who can produce anywhere in the world remain largely ‘immune’ from these policies. When production was located inside the nation-state, protectionism made sense, but with the internationalisation of the division of labour and multinationals, it can only affect the internal markets and not the companies with production sites all over the world.

Let’s look at these processes in a little more detail. Through tariffs (and Brexit, hard or soft, will produce tariffs for trade between England and the European Union) multinationals accomplish the deterioration of the conditions of production for their respective competitors and at the same time promote the movement of multinational production to regions more favorable to their interests.

This ‘movement’ of multinational production could stop the ‘spill over’ of productivity, knowledge and profits to those centres or possible centres of world production (for example, against China’s growth, in the case of the US trade war). So, we see in this process a way of preventing the fragmentation and competition at the level of the world market. From this follows that American multinationals are moving their productions sites from China to Vietnam or Malaysia, for example.

Again, it has to be stated that it is impossible to understand these policies (both Brexit or American tariffs) without appreciating that they come in part from multinational capital, as a form of intervention in the multinational market, not at the level of nation-states, but at the international and multinational level.

I would argue that we are seeing a shift from commercial freedom characteristic of the World Trade Organization, for example, and the extensive phase of the internationalisation of the division of labour in late capitalism to an intensive phase based on the intervention of the state at the level of the world market. From this follows the resurgence of the state by ‘right-wing populism’, as economic intervention increases the role of the state as a centre or point of concentration of power (which has come to be known as ‘neo-fascism’).

Contradictions, questions and solutions

As I have already argued, the world centre for industrial and high-tech production (in East Asia), is not composed of factory-scale companies or processes, but of small and medium sized companies. In the same vein, the biggest component in intra-regional trade in East Asia, as the industrial centre of the world, is not based on finished products, but intermediate parts and components, which come and go from Vietnam to Malaysia, or from South Korea to China, etc. On top of this, it is the state and sovereign wealth funds, for example, which allow this concentration of power to take place.  From Singapore to Vietnam, each has working mutual funds or wealth funds of different types, and they all have intensified their involvement in the economy in recent years.

All bourgeoisie economic analysis and research on the multinational market from recent years is questioning neoliberal policies, and describing not without surprise, the incredible performance of economies and multinationals where countries have state-led types of policies for their own multinationals (subsidies, trade barriers, lower interest rates, etc), like India or China, and how this seems to be working much better than Western non-interventionism for the growth and rise of those countries. This change in perspective is a change in bourgeoisie consciousness, in the face of the incredible ascension of Asia as a real competitor, and the possibility of reproducing the same success in the West through the same state-oriented policies (from which wealth funds are just one example).

Poland and Hungary are not the only European countries expanding production through state funds, but we see the same processes from Turkey or from Persian Gulf states, or even India and China. Turkey’s president Recep Tayyip Erdoğan recently formed the first sovereign fund in the country, under his own personal management. Similar processes can be seen in Gulf States, with funds under the control of their royal families, or under Hussein el-Sisi and the state-military elite who are in charge of Egypt’s industrial sector.

Even Jair Bolsonaro’s Brasil has immediately focused on pension funds reform, which would allow private investment through those funds, just as we have seen in Austria, Hungary or Poland where state funds are starting to invest in the private and multinational sectors.

We need to remember that even though the US and UK still maintain hegemony in terms of the financial control of assets at the multinational level (demonstrated in Gerard Duménil and Dominique Lévy’s 2018 book), it is the Chinese financial sector which surpasses the Triad in terms of revenue and profits; they may control fewer assets, but are producing the largest revenues of all and China is doing this through exactly these types of sovereign funds. By ‘Triad’ I mean the three historically dominate centres of the world economy from the late 1940s until the end of the 20th century: the United States, the European Union and Japan.

How do these wealth funds work? Wealth funds are very similar to bank capital, which is the definitive characteristic of financial capitalism. But the difference is that it is not based on dividends, and you don’t need to work around stocks and dividends from specific companies, but you can participate on the ‘pool’ of financial assets invested in different companies all at once, getting a percentage of total profits or revenues controlled by the wealth fund.

This allows for a faster way of diversification and centralization of profits and value, even more resolutely than bank capital in some senses. Instead of a stock which represents a percentage of the profits for a single company, etc, the percentage you own on a wealth fund is equal to a percentage of the profits not only for one company, but for all the profits from all companies the wealth fund finances all at once.

‘Right wing populism’ or ‘nationalism’ has meant a turn to the state and its financial assets and capabilities, in stark contrast with neoliberalism, where all talk was about a minimal state.  It is crucial to point out the historic discrepancy between neoliberal ideology (that states that the state should not interfere with markets) and the neoliberal political projects and practices (that actually reshapes the state, assigning to it clear fields of action, private property right protection, fiscal incentives, privatisation of the public etc.)

Alain Lipietz (1997) actually studies how job deregulation and reduction of the state’s involvement is stronger in the Triad, where the flexibilization occurs at the level of the job market and not the internal productive process, and the opposite happens in the Global South: the state is more involved comparatively (although there are also examples of privatization, structural adjustment programs, etc, in Africa or Asia!), the flexibilization occurs at the internal level of the production process, and not at the level of the job market which is highly organized and centralized, etc.

The same process where sovereign wealth funds from the Global South turn into competitors at the multinational level,is at play when multinational production fragments itself into small and medium companies through ‘spill overs’: state-led economies perform better in the world market by subsidizing their multinationals. Equally sovereign funds from countries with state-led economies have the biggest concentration and centralization of financial assets.

The consensus among bourgeoisie economists is that state subsidizing of multinationals is the reason for the Asian miracle, and the reason they even entered the multinational market in the first place. This means an intensified competition, both for the market and the state. The whole Huawei controversy or the trade negotiation between the US and China over state subsidies, show the motives and the purpose of ‘right wing populism’.

This explains the convergence of libertarianism with conservative statism in the United States, where Trump erases regulations at the same time as his administration applies tariffs.  It may also explain the United Kingdom’s Tory government’s announcement of the end of austerity, and the possibility of state planning.

Falling profit rates

These processes, I would argue, can only be explained by the fall in the profit rate (and its different multiple causes) within multinational companies, which makes it impossible for multinationals to simply buy up companies and integrate them vertically as their own. The companies are instead forced to reduce costs through outsourcing, in combination with ‘offshoring.’ The state, in this situation, turns into a point of comparative and relatively high concentration of capitals, compared to the reigning fragmentation throughout the rest of the economy, where the rate of profit keeps falling, or where the economy continues to fragment into small and medium companies.

This explains the historical rise of sovereign and wealth funds in peripheral economies of the South, allowing them to become real competitors at the multinational level against the Triad. It is these processes that force or propel the formation of this ‘right-wing populist, ‘anti-globalist’ or ‘nationalist’ movements.

Of course, state intervention or fragmentation are not the real causes of East Asia’s rise nor of the increasing competition at the multinational level. From a Marxist point of view, the historical fall in the profit rate hits the Triad and developed countries the hardest, in terms of its expanded reproduction. Why? In Marxist terms this is because of a bigger organic composition: more expensive equipment and raw materials (constant capital) compared to the labor component (variable capital), which causes the fall in the profit rate itself.

The process is relatively simple: if profit is derived from what is extracted from ‘the labour component’, it is in the economies of the Triad with a high concentration of constant capital that we see profit rates in a historical, downward spiral. The difference between the profit rate and the accumulation rate (gross investment) is considerably smaller than in peripheral or underdeveloped countries.

As the 20th century Polish revolutionary and Marxist economist Henryk Grossman explained, even if the profit rate falls immediately after the organic composition of capital rises, it can maintain itself above the accumulation rate and sustain expanded reproduction, but only for a while.  After a certain period, the profit rate will be inferior to the accumulation rate, and this is where troubles begin: expanded reproduction needs to be held back, which is precisely what neoliberalism is.

Instead of big investments and rising wages to augment profits and productivity, we see the opposite: the cutting costs rationale, and the reduction of real wages.  In peripheral or underdeveloped countries, constant capital was cheaper, and so organic composition was lower and profit rates higher. This allows for extended reproduction to have more space to develop in peripheral countries instead of in the Triad.

As it has been shown, the fall in the profit rate works with different causes, specifically the exploitation rate, the unemployment rate and the new value rate in conjunction with the financial variable (the reduction in the financial profit rate), to create crises (See Carchedi, 2017).

These issues are of such vital importance to capitalist development that they must be explained carefully. The difference between the profit and accumulation rate was greater, so peripheral countries were suddenly in the position of sustaining expanded reproduction, as we have seen in the Asian Tigers or China and India, while the Triad had to immerse itself in the cutting-costs rationale of neoliberalism to hold back expanded reproduction. This is the crux that explains East Asia’s resurgence against the West today, in Marxist terms. Just as neoliberalism is not the cause of the crisis, rather the reaction by the bourgeoisie to the reality of the historical fall in the rate of profit since 1973/4, so ‘right-wing populism’ is a reaction against the consequences (state interventionism and fragmentation at the multinational market level) of that very same historical process.

The processes at work in the Global South

The internationalisation of the division of labour of late capitalism integrated the bourgeoisie of the Global South not only into the financial aspect of imperialism, but into its multinational aspect, through the emerging industrialisation of areas of the South. This took place through the so-called ‘Taylorism’ and ‘peripheral fordism’, as Alain Lipietz’s described it in 1997.

This caused the political erasure of the so-called progressive bourgeoisie in the South, which also eliminated the conflict between anti-colonialist ‘bourgeois’ movements from the Third World and the Triad. It was a huge triumph for the Triad’s class project to have finally eliminated this faction al conflict between anti-colonial layers of the bourgeoisie from the South and themselves.

It eliminated reformist, social democratic and import-substitution programs in the South, precisely because industrialisation was now realised by multinationals, instead of their own nationalistic and anti-colonial projects and at the same time integrating them within the circuits of multinational capitalism.

The internationalisation of the division of labour of late capitalism first defined by Ernest Mandel, seems to have had two different stages: an expansionist stage, with the conglomerates boom of the 1950’s and 1960’s, and the industrialisation and vertical integration of productive processes all around the world.

Today we enter a stage where expanded reproduction shrinks or contracts (due to the fall in the rate of profit), and multinationals stop integrating vertically in the classic and strict sense, and decide to outsource or seek portfolio investments as the main way to diversification.

Portfolio investments are different from Foreign Direct Investment and vertical integration in the sense that they allow for the Southern bourgeoisie to stop being simply passive investors, and allows them to start to behave like active investors, integrated not only as minority partners of multinationals, but as members of the multinationals themselves.

The first stage of the internationalisation of the division of labour saw the Southern bourgeoisie’s integration into financial capital in a passive way, but the end of the expansive phase of late capitalism has allowed them to turn this relationship upside down: the Triad’s bourgeoisie turns into passive investor, and the South has taken charge and control of the multinational means of production.

These processes have seen the integration of the anti-colonialist class faction of the South, into the industrial and multinational class faction of the multinational Triad over the last forty years. This has also changed the character of the Southern bourgeoisie from a simple ‘comprador’ class, into a managerial multinational faction (not a new class, as Duménil and Lévy argued in 2018) which deals and controls directly in the businesses of the Triads multinationals.

The Southern bourgeoisie is still a ‘small partner’ of the Triad or what Paul Baran described in the 1960s as the lumpen-bourgeoisie, but instead of a nation-state bourgeoisie, which produces for its own internal market, or trades the imports and exports of its internal economy, or produces agricultural products, etc, it now controls the means of production of major multinational assets. In a word, the South’s bourgeoisie has stopped producing for its internal market only, and started to produce for multinationals.

If we follow Karl Marx’s work, The 18th Brumaire of Louis Bonaparte, there are two contradictory tendencies here: the absorption of the Southern bourgeoisie into a single international class (with all of the unevenness and dependency that continues to characterize this class), and at the same time, the revulsion based on the increasing competition this multinational integration produces.

This means the international bourgeoisie moves from away from the conflict that characterised 20th century anticolonialism and industrialisation/import-substitution, to act as a unified faction or class under the financially dominant faction of the global class. At the same time, it integrates heterogeneous factions into multinational competition, acting not as a dominant minority faction, but as an entire class.

This contradiction between governing as a faction or as a class, explains precisely the mixture of fascistic characteristics, and democratic and republican elements.  If you govern as a whole class, you govern through parliamentary and democratic dialogue on how to run society. If you govern as a particular faction among others, you will try to impose your faction’s view on the others, and rule above your own class. The internationalisation of the division of labour in late capitalism, eliminating the internal factional conflict between the Triad and the Third World, creating at the same time an intensification of competition and control from multinational capitals seem to be explained by this enormous historical development.

These processes explains the entire political climate and movement to the right, and the virtual disappearance of a progressive bourgeois element from Central America to Africa itself – the transition from progressive (bourgeois) struggles to the so-called neoliberal age. This represents an intensification of the class struggle between a more compact international bourgeois class, and a proletariat with a smattering of allies in parliaments or in mainstream political parties.

Finally, to Africa

For Africa, this divergence in expanded reproduction related to the fall in the profit rate – which produces the phenomenon I have just described – has enabled the economic ‘boom’, just as it facilitated peripheral countries on the continent attempting to transform themselves into Asian Tigers, or to see the so-called BRICS as a vehicle to their development and growth, etc.

It does not mean that profit rates have not fallen in Africa or other peripheral countries, it rather means peripheral countries, because of their own underdevelopment, can expand reproduction more decisively than their central and metropolitan counterparts.

This demonstrates how capitalism feeds off ‘backwardness’ itself.  We should remember as well, that the so-called economic ‘boom’ in Africa has not translated into the improvements in the lives of peasants and workers, rather the improvement of the economic figures for certain extractive companies on the continent. The boom in GDP growth rates has not translated into higher living standards for workers and the poor on the continent.

At the same time, Africa has something very valuable to teach to the rest of the world: Africa, more than any other continent, thanks to its fragmentation of land and smaller commercial integration, knows very well what it means when the state is in relative terms, a bigger point of concentration of capitals compared to private merchant or financial capitals. Just like in Asia or Latin America, the state in Africa turns into a great possibility for the bourgeoisie to accumulate bigger sums of capital quickly, and dispose of them in any way they want, if they have the state-power to do so.

Like sovereign wealth funds today, Africa knows what it means for the state itself to turn into a medium for capitalist enrichment and profit making, and not a neutral ‘people’s state’ which eliminates class contradictions. This turns the fight (even the electoral fight) for the state into a bitter struggle of factions, which, as we know, has already led to disastrous scenarios (from civil wars, to total state repression) or to apparently ‘progressive scenarios’ – until recently Ethiopia was the poster-boy of this ‘success’ – which hides exactly the same process of using the state and state-funds to finance private and multinational production.

At the beginning of his administration, Trump was accused of wanting to turn the US into a ‘Third World strong-man government’, which besides the racist undertones of the comment, was essentially correct. The concentration of power in the state, plus the concentration of specifically economic power in the state, which seems to be the characteristic of ‘right wing populism’, is indeed very common to us here in the so called ’Third World’ – with the fragmented character of agriculture, land tenure, and commercial integration, etc.

Africa understands this world better than others, since the continent has a long history of seizures of state power in order to control the economic concentration and centralization of state budgets, assets and capitals.

At the end of this short essay I should repeat myself: ‘right wing populism’ shows how capitalism feeds off backwardness. The cheapest solution for multinational companies is to control the state in order to stall falling production (a movement very similar to the international bank and state budgets bailouts that happened during the 2008 crisis). The world may now be facing Africa’s recent history. Do Africa’s decades of trauma confront metropolitan and central countries, as the road where they are now heading?

This article was first published in the Review of African Political Economy Journal.

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Kenya: A Question of Land

Kenya is moving inexorably in the direction of significant political upheaval and a long-delayed backlash unless reforms to address economic inequality are implemented.

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Kenya: A Question of Land
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Not too long ago, musician John Mũigai Njoroge was summoned by the National Cohesion and Integration Commission (NCIC) for uploading the song Ĩno Mĩgũnda to YouTube. Ĩno Mĩgũnda may be translated to mean “These Parcels of Land”, or, as translated in the song’s sub-titles, “This Land”. Increasingly, and amidst stifling economic stagnation at the citizen level, the spotlight is beginning to shine on the contentious matter of land. In this piece we to look at how economists have treated (or ignored) land, the economic dynamics of land in reality, the current status of our nation, and offer three possible solutions to the current state of affairs.

In one sense, land can be defined, as by Dr Josh Ryan-Collins et al in Rethinking the Economics of Land and Housing, as “space, and the occupation of that space over time”, and indeed this is the most common understanding of land as we have it. However, we would do well to include in the definition of land, as Henry George did in his seminal book Progress and Poverty, not merely the surface of the earth as distinguished from air and water, but also as, “. . . in short, all natural materials, forces and opportunities”. This definition would include mineral resources such as oil, natural gas and coal; water and related resources; the electromagnetic spectrum; etc. In fact, we can think of land loosely as “that naturally-occurring wealth that man cannot produce”.

Increasingly, and amidst stifling economic stagnation at the citizen level, the spotlight is beginning to shine on the contentious matter of land

Definitions are very important and as we shall see, defining or mis-defining land can lead to economic theories/practices that are either unrealistic, unjust or (as is often the case) both.

Is land important economically speaking? The French physiocrats and the classical economists such as Adam Smith, David Ricardo and John Stuart Mill all recognised the importance of land in understanding economics. Building on their work, Henry George wrote Progress and Poverty, a book that was second in circulation only to the Bible in the 1890s.

(Although he was not the first to state it, Henry George wrote that the factors of production are land, labour and capital. He added that, this being the case, the returns from production must necessarily be shared between/among these three factors. It seems to me that on this simple premise one could base/found the whole realm of economic study or even economic history (together with vast swathes of history proper): what proportion, if any, of the returns from production should – rightly, justly, properly – accrue to each of the factors of production: to land, to labour, and/or to capital?

We shall examine Henry George’s solution to the land problem later. At this point we shall merely state that so forceful was the power and the logic of George’s writing that, according to the late Professor Mason Gaffney, it generated a scholastic reaction that grew into neo-classical economics. Neo-classical economics chose to base itself on principles of free choice, rational actors, and “free markets” that naturally self-equilibrate through the forces of supply and demand. This brand of economics came to dominate learning, and still does. Eventually, it succeeded in conflating land and capital as factors of production. In this way, the importance of land as a factor of production was lost to the academic world and to the realm of economic theory. The results of this disastrous omission reverberate all the way up to the global financial crisis (which perhaps should more accurately have been named the North Atlantic financial crisis), but we are not on that today.

The truth is that land and capital are radically different factors of production. Crucially, the supply of land is fixed; i.e. the stock of land cannot increase as a result of rising demand for it. Only its price can rise – and it does. The market in land, therefore, cannot (justly) self-equilibrate via the forces of supply and demand. As we consider this, we stumble upon the reality that the private ownership of land, and indeed of all natural-occurring resources, is at once freedom and theft; while it is freedom for the owner of the land/resource, it is also theft from the public, because of what economists call economic rent.

(Economic rent is defined as any payment to an owner or factor of production in excess of the costs needed to bring that factor into production. In lay terms, we may define economic rent more simply as “unearned income”.)

As far as land is concerned, economic rent comprises: a) the capital gains that arise from the ownership of land and/or the private ownership of what Henry George called naturally-occurring “materials, forces and opportunities” and b) what the owner of that land can charge as rent simply because of the positioning of the land (or the value of the natural resource).

As Adam Smith stated, “As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed [i.e. become the recipients of unearned income], and demand a rent even for its natural produce”.

The result of this is a well-known phenomenon in the Kenyan economy: one buys a piece of land and hopes that soon the government will build a road nearby. The government builds a road and the land increases in value, sometimes by several factors. This increase in the value of the land is unearned income. It is economic rent. Further, not only does the land gain in value, but the rent a landowner can charge also increases without the landowner applying an iota of effort. This too is unearned income.

In fact, as Henry George points out, no government improvements are necessary in order for the value of a parcel of land to rise. The mere settling of a community in and around a parcel of land can in and of itself raise that parcel’s value – with not a stroke of work done by its “owner”. City centre land (or land in Upper Hill or in Westlands), for example, takes this to extremes.

The result of this is a well-known phenomenon in the Kenyan economy: one buys a piece of land and hopes that soon the government will build a road nearby

Any society/economy that allows a select few to earn an unworked-for income – of any form – is an inherently unjust economy. To see this truth is to begin to recognise a grave injustice: unearned income is the bane of socio-economic equity. Further, an unjust economy will naturally result in an unjust society. This is what it was about George’s writing that generated such a reaction in the halls of academe: it laid bare these inequities and proposed solutions to bring them to an end.

Without the equitable distribution of land, and without the extraction of unearned income from the hands of private interests into the hands of the public, inequalities in income – and very shortly thereafter inequalities in accumulated income, i.e. wealth – rapidly manifest themselves. Such a society very swiftly descends into that morass of wealth disparity characterised by vast differences in resources between the haves and the have-nots. There then arises that situation so succinctly described by Adam Smith, in which “Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all”.

To see this truth is to begin to recognise a grave injustice: unearned income is the bane of socio-economic equity

If all this be true, then it ought to be the case – empirically, not in abstract formulaic or merely academic terms – that a more equitable distribution of land should lead to more widespread prosperity. This is indeed the case, although other factors must necessarily support such a redistribution. We shall revisit this in the proposed solutions to our current situation. Suffice it to say at this point that that which we know in our bones to be true; that which causes our Luo brothers to call their daughters Nyar-Ugenya, or their sons Ja-Kisumo; that which inspired Wahome Mũtahi, in his Whispers column, to call himself “Son of the Soil”; that indefinable intuition! certainly is true: that we are from here; that this land – all of it – is rightly, justly, and collectively ours; that each of us deserves some of it; that none of us deserves disproportionately more of it, and that very certainly nobody deserves most/all of it. This truth, try as the crashing waves of fraudulent social science might to repudiate it, stands firm, and it is corroborated by that social science of the more honest variety.

Does everybody need land?
A captious economist planned
to live without access to land.
He nearly succeeded,
but found that he needed
food, water, and somewhere to stand.*

Having established in the foregoing section that the equitable distribution of land is critical for economic justice, we wish to more certainly determine: should everybody have land? The limerick above, in whimsical fashion, answers the question – showing that while land can be put to any one of a hundred uses, it is impossible to function as a human being – to live – without the use of some land. Therefore, everyone should have some land.

How much land is equitable?

In his important book How Asia Works: Success and Failure in the World’s Most Dynamic Region, Joe Studwell found that “Output booms [in China, Japan, Korea and Taiwan] occurred in conditions in which farming was essentially a form of large-scale gardening. Families of five, six or seven people tended plots of not more than one hectare”.

(Studwell does an excellent job of showing that large-scale, mechanised agriculture maximises merely profit, while small-scale, labour-intensive agriculture maximises output per acre, and thereby economic growth.)

Does Kenya currently have enough land?

While Kenya has an area of roughly 582,646 square kilometres (58,264,600 hectares), “only 20 percent of the land surface can support rain-fed agriculture (medium to high potential). About 75 percent of the country’s population lives in these areas, with population densities as high as 2,000 per square kilometre in some parts”. Further, even within this narrow arable area, the distribution of land is inequitable, for “more than half of the nation’s arable land is in the hands of only 20 percent of the population.” Such was the situation in 2006. By 2016, according to the World Bank, just 10 per cent of Kenya’s land was arable.

From the 2019 census, Kenya has a population of 47.6 million. We have a median age of about 19 years. From these figures, we can assume that the number of non-dependents requiring land for basic economic activity such as smallholding agriculture is 23.8 million people or (in a utopian situation) about 12 million families. Going by the World Bank’s statistic that 10 per cent of Kenya’s land is arable, that would leave 5,826,460 hectares (14,397,496 acres) of arable land, or about 1.2 acres per family.

While land can be put to any one of a hundred uses, it is impossible to function as a human being – to live – without the use of some land

Taking Studwell’s one hectare (about 2.5 acres) as the family unit for land, we see that there are two problems: i) that there is not enough arable land (i.e. 1.2 acres vs 2.5 acres), and ii) that what arable land does exist is not equitably distributed.

(The fact that our median age is 19 demonstrates that our unemployment situation – already utterly tragic – will only deteriorate with time. It is the single most significant problem we need to solve. Land reform – as shown below – would go a long way towards solving it.)

Which solutions are available to us to resolve these problems?

Land redistribution (land reform)

The Merriam Webster dictionary defines land reform as “measures designed to effect a more equitable distribution of agricultural land especially by governmental action”. In order to more meaningfully convey the object of land reform, this article uses the term land redistribution.

What problems would land redistribution solve? At present, the ownership of land is highly concentrated. This concentration of land ownership has a direct impact on the minimum wage. If land were more equitably distributed, so that each family unit had about 2.5 acres for agricultural use, then the minimum wage would not need to be set by government. The minimum wage would instead default to the return available to the average farmer for working their 2.5 acres of land. Any industrialist would have to offer better than that to attract workers from rural Kenya to the city. The absence of a fair distribution of land leads directly to the current “city dwellers” situation, in which we have masses of workers who walk daily from Kangemi to Nairobi city centre and back (or from Kibera to Industrial Area and back) to do back-breaking work – all for a pittance.

Joe Studwell traces the origins of the economic take-offs of Japan, South Korea, and Taiwan to the redistribution of land among citizens, noting that “In Japan, South Korea and Taiwan, household-based land redistribution programmes were implemented peacefully, and sustained. It was this that led to prolonged rural booms that catalysed overall economic transformation”.

Which leads us to: how did they do it? Japan, in particular, implemented land redistribution by imposing a maximum 3-hectare limit for farms in almost all areas of the country. This was implemented by creating land committees on which local tenants and owner-farmers outnumbered landlords. The local aspect of these committees was of critical importance – more centralised, authoritarian redistributions, such as those that took place in Korea seemed less effective. In addition, the composition of these committees was critical for ensuring that fair redistributions took place. A situation where land is redistributed to different, already-wealthy new owners (such as members of county assemblies), or one in which the wealthy generate proxies to “redistribute” their land to, is not difficult to imagine in Kenya. Ensuring that currently landless locals (or those locals with too little land) benefit from redistribution by placing local individuals of individual integrity and probity on the land redistribution committees would be critical to ensuring that land redistribution lasts.

In Japan, South Korea and Taiwan, household-based land redistribution programmes were implemented peacefully, and sustained

It is important to note that land redistribution, while monumental, cannot work on its own. It must in turn be supported by: i) strict restrictions on the future sale of land; ii) Investment in rural infrastructure (for example irrigation infrastructure, grain-drying facilities, roads to food-basket areas, etc); iii) the provision of agricultural extension services (it was once noted that Kakamega was twice as poor as Nyeri mainly because Nyeri farmers used certified seed); iv) the provision of low-interest credit; and v) marketing support (of a vastly different nature to that hitherto provided by Kenya Planters Cooperative Union, for example) – or liberalisation of marketing.

Lastly, within a society, the ownership of wealth naturally becomes concentrated over time. One-off land redistribution would not solve this perennial problem. Land redistribution must be done periodically – every 50 years being the prescriptive interval.

Land taxation

The taxation of land is Henry George’s elegant solution to the conundrum of allowing the private ownership of land while at the same time preventing the private individual from keeping to himself/herself the public benefits of this private ownership. To recap, George’s central premise is that people own the earth and its resources in common, and that returns to land (itself a metaphor for the earth and all its resources) should therefore be realised in common. This would appear to negate the concept of private ownership of land or property; Mr George’s elegant solution to allowing the private ownership of land while causing the returns to land to be commonly realised was a land-value tax – i.e. the taxation of privately-owned land based on the market value of the land alone (excluding any improvements and buildings upon it). This solution, he wrote, would take the enjoyment of unearned income arising from landownership (i.e. economic rent) away from private hands and place it in the hands of the public.

It might be worthwhile to think, for a moment, about just a few of the implications of this simple “remedy”, as he calls it. First, implementing a land-value tax would immediately make owning idle land unprofitable. Living, as we do, in a country where vast tracts of land are “owned” without being put to optimum use – indeed, to any use at all – taxing the ownership of such land would in short order cause the sale, or the lease, or the use of that land; anything to enable the payment of the land-value tax. All of these outcomes would be nationally, economically beneficial.

Placing local individuals of individual integrity and probity on the land redistribution committees would be critical to ensuring that land redistribution lasts

Second, if only land ownership were taxed, it would imply that labour and capital would not be taxed. Mr George states that to tax anything is to discourage it. This is one of the reasons why taxing land values would discourage private land ownership (unless the landowner was doing something with that land that would enable them to pay the land-value tax). Applying this principle of taxation to the other factors of production, to tax human endeavour (labour) is to discourage it, and therefore such endeavour should not be taxed. Imagine the effect on any economy of allowing people to realise the full benefit of their labour. Would this not be just?

Third, that the benefits from ownership of naturally occurring wealth, for example, should be publicly realised is another implication of Mr George’s remedy. Implementing this would mean that there would be no more private fortunes in oil, or gold, or diamonds, or the electromagnetic spectrum…

Fourth, implementing a tax based on the value of land, insofar as the value of land was determined accurately, would mean that landowners – including the owners of the most prime real estate in New York, or Nairobi, or London – would realise from their ownership of land only such benefit as accrues from their improvement of that land (e.g. by building upon it); they would not be able to benefit merely from “owning” it.

Fifth, Apple and Amazon and Google and Microsoft would not be able to evade federal taxes any longer by pretending to be operating out of Ireland, so long as they had offices (campuses!) in the United States. In other words, a land-value tax is not as easily evadable as many of the forms of taxation we have today.

Land value taxation as a single tax has not been implemented anywhere in the world, for political reasons. In as far as a land-value tax captures the economic rent arising from the private ownership of land, however, an example of the efficacy of this can be seen in Singapore, where the government owns the majority of the land and uses land-based taxes (leases and development uplift) to fund the development of that nation’s infrastructure.

Increase of arable land

Before we began to review our solutions, we noted that we have two main problems: a shortage of arable land, and an unequal distribution of what arable land we do have. The first two solutions we have looked at would redistribute what arable land we do have more equitably. We now look at how we can increase the quantum of our arable land.

Bishop Dr Titus Masika, father of the well-known gospel singer Mercy Masika, and founder of Christian Impact Mission, has done some work in this area that is at once illustrious and illustrative. Bishop Dr Masika launched what he called Operation Mwolyo Out (OMO) in the Yatta sub-county of Machakos County (mwolyo is Kamba for relief food). Yatta, home to about 150,000 people, is classified among the arid and semi-arid areas of the country. OMO saw families encouraged to excavate 20ft-deep water pan to harvest rainwater, and then use the water collected during the rainy season to farm year-round. As a result of these interventions, a community that once had food deficits now generates food surpluses.

Bishop Dr Masika’s OMO initiative demonstrates that we do not need to accept the World Bank’s “10 per cent arable land” as just another nail in our nation’s economic coffin. Amidst much injustice and inequality, we can start with what we have right now. Bishop Dr Masika emphasises the importance of changing a people’s mindset before you can change their outcomes . He states that a change in mindset is the most important step in bringing about permanent change. A radical change of mindset is as necessary in the way we think about economics, land and poverty as it was for the people of Yatta before OMO became a success. For water harvesting, while important, would not have been enough.

The late, great Prime Minister of Singapore, Lee Kuan Yew, once stated that the first job of government is to equalise opportunity. An economically undeveloped society with an inequality of opportunities is a society that is ripe for land reform. An economy/society that allows the accumulation – for a select few – of an unearned income arising from the private ownership of land is an unjust economy/society. Indeed, even where unearned incomes such as capital gains are shared quite broadly across the economy (as has happened through the democratisation of home ownership in the UK, for example), as this situation is allowed to persist, wealth concentrates among those who first had the opportunity to privately own land. Eventually this leads to inter-generational differences, where the young experience a “failure to launch” into their own homes because home ownership/tenancy becomes too expensive for young people working their first jobs.

A society that allows the accumulation of an unearned income arising from the private ownership of land is an unjust society

Typically, however, it takes moments of immense political upheaval in order for land reforms to be implemented. In Japan, land redistribution was carried out under General MacArthur’s reconstruction programme (on the advice of the great Wolf Ladejinsky) during the US occupation of Japan immediately after the Second World War. In South Korea, the US’s favoured political stooge, Syngman Rhee, enacted redistribution laws, but dragged his heels in implementing them. Matters came to a head during the 1950-53 Korean civil war; after the war, land redistribution was implemented.

In Taiwan, the Kuomintang, fleeing from mainland China, realised they would have to deal with economic inequality by implementing land reform, or perish politically. Songs like Ĩno Mĩgũnda, coupled with our current unemployment metrics (5.3 million of our young people i.e. 39% of our youth, are unemployed), and the fact that our median age is 19, are indicators that our own nation is moving inexorably in the direction of significant political upheaval.

It is incumbent upon us to implement these reforms before economic injustice is obliterated in excruciating fashion as the forces of economic inequality now acting upon our nation’s youthful population give birth to a long-delayed backlash.

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