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A Question of Power: Why Ethiopia’s Economic Transformation Is a Cautionary African Tale

9 min read.

The arrival of reformist Prime Minister, Abiy Ahmed Ali, may have only given the ruling EPRDF a stay of execution. At the heart of the political crisis is an old problem: a command economy reluctant to liberalise. State-led infrastructure expansion fuelled a decade of miraculous growth, producing five times more electricity than the country requires. The returns on this investment are not forthcoming. Exports are falling, the Birr has been devalued; a severe forex shortage is underway. Is Ethiopia’s future as Africa’s premier power exporter viable? By DAVID NDII.



A Question of Power: Why Ethiopia’s Economic Transformation Is a Cautionary African Tale
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Something is stirring in Ethiopia. It began with the abrupt resignation of former Prime Minister Hailemariam Desalegn on February 15. After weeks of backroom dealmaking the EPRDF coalition which has governed Ethiopia with an iron fist since ousting the Derg, Mengistu Haire Mariam’s Marxist dictatorship in 1991, elevated youthful Abiy Ahmed Ali as prime minister. The new prime minister hit the ground running with a raft of political reforms.

Three years ago, students in the town of Ambo started a protest to oppose a metropolitan development plan that would have incorporated their town and seven others into the capital, Addis Ababa. Ambo is 120 kilometres west of Addis in the Oromia region. They accused the federal government of a top-down land grab that would deprive them of livelihoods and destabilize their communities and culture.

After the overthrow of the Derg, Ethiopia adopted an ethno-federalist constitution that even provides for orderly secession. But the EPRDF has sought to run a command-and-control developmental state. The Addis Ababa expansion plan was a head-on-collision between the two—the constitution’s federalist ethno-regional political bargain and the centralizing ideology and power politics of the EPDRF. While the EPRDF is a consociational coalition, it’s the late strongman Meles Zenawi’s Tigrayan People’s Liberation Front (TPLF), which led the liberation war, that wields most of the power in the coalition (and gets most of the spoils). The Tigrayans are a relatively small tribe (six percent of the population) from the north of the country.

The Addis expansion plan, which affected the Oromo and Amhara regions, ignited discontent whose depth the EPDRF clearly underestimated. The Oromo are the largest ethnic group in Ethiopia, accounting for a third of Ethiopia’s 100 million-strong population, with strong grievances of historic marginalization. The Amhara, who constitute just over a quarter of the population, are the erstwhile politically dominant ethnic group. Both Emperor Haile Selassie and Mengistu were Amhara (his father, originally Oromo, was adopted by an Amhara nobleman). Repression, including massacres, mass incarcerations and a state of emergency, a feature of both Emperor Selassie’s late rule and Mengistu’s Red Terror, returned under a beleaguered EPRDF.

Though unexpected, Desalegn’s resignation was preceded by a softening of the regime, including the release of political prisoners, which Desalegn said was meant to “foster national reconciliation”. The new prime minister is Oromo. His elevation was no doubt intended as an olive branch to the restive region.

The Addis Expansion Plan, which affected the Oromo and Amhara regions, ignited discontent whose depth the EPDRF had clearly underestimated…Repression, including massacres, mass incarcerations and a state of emergency, a feature of both Emperor Selassie’s late rule and Mengistu’s Red Terror, returned under a beleaguered EPRDF.

Hot on the heels of the tectonic shift in the politics have come equally momentous economic pronouncements. State owned Ethiopian Airlines and telecommunications and power utilities and other state corporations are to be partially privatized.

What exactly is cooking in Addis?

In his pronouncement speech, the Prime Minister Abiy spoke of a hard currency crisis. He is quoted in the media castigating his audience, Ethiopian businesspeople, for keeping their hard currency in Dubai and China and asking for their cooperation to resolve the crisis while also threatening unspecified actions on the hoarders of foreign exchange. Instructively, he also disclosed that the political crisis has dented diaspora remittances. Diaspora remittances are Ethiopia’s single largest source of foreign exchange, bringing in US$ 5.5 billion last year, almost double the country’s US$ 3 billion dollar export earnings.

The foreign exchange crisis is not new. In October last year, Ethiopia devalued the currency by 15 percent. While the recent government data shows foreign currency reserves equivalent to 2.3 months import requirements in December 2017, precarious but not dire (3-4 months requirements is the norm), some analysts say the reserves could have fallen below one month’s requirement, which is dire. Last week, the government announced that it had secured a US$1 billion foreign currency lifeline from the United Arab Emirates (UAE), part of a US$3billion aid and investment package. The UAE deal looks like a quid pro quo for Prime Minister Abiy’s de-escalation of tensions with Egypt over Ethiopia’s damming of the Blue Nile. The UAE is a strong ally of Egypt. This sequence of events begins to suggest that the foreign currency crunch is behind the softening of the EPDRF regime.

Prime Minister Abiy spoke of a hard currency crisis. [He castigated] his audience, Ethiopian businesspeople, for keeping their hard currency in Dubai and China and asked for their cooperation to resolve the crisis while also threatening unspecified actions on the hoarders of foreign exchange. Instructively, he also disclosed that the political crisis has dented diaspora remittances. Diaspora remittances are Ethiopia’s single largest source of foreign exchange, bringing in US$ 5.5 billion last year, almost double the country’s US$ 3 billion dollar export earnings.

Ethiopia has run into an old, mostly forgotten, economic development problem: the foreign exchange constraint. In the old days, it was caused by import substitution industrialisation. Import substitution industrialisation, the dominant development strategy for many sub-Saharan African states until the mid-seventies, entailed setting up industries to produce finished goods the country was importing, and protecting them from import competition with trade barriers, import and foreign exchange controls.

The new import substituting industries imported virtually everything from machinery, intermediate inputs, spare parts, technology and even management. The import substituting industry’s foreign exchange requirements ended up exceeding what the country was using to import the finished goods. Most of the import substitution industrializers relied on a few primary commodity exports. They soon found that their export earnings were insufficient to finance the industries.

Foreign exchange became scarce, and self-reinforcing. To circumvent foreign exchange rationing, businesses would hoard foreign exchange abroad through transfer pricing (over-invoicing imports and under-invoicing exports), compounding the primary motive for transfer pricing— tax evasion. One such scheme came to light not too long ago during the unravelling of the Nairobi Securities Exchange-listed corporate icon, CMC, which has since been delisted. It was revealed that the company had maintained a secret account in Jersey to which proceeds of over-invoicing were deposited and paid to its directors offshore. Remarkably, many of the beneficiaries of the scheme were the same bureaucrats who were responsible for enforcing foreign exchange controls.

The 1973 oil-shock and declining primary commodity prices in the ‘70s compounded the external imbalance that import substitution industrialization started. By the early ‘80s, most import substituting countries were on their knees. In some, Tanzania for example, manufacturing ground to a halt.

Ethiopia’s external imbalance and attendant foreign exchange crises emanate from over-investment in infrastructure. Ethiopia adopted an infrastructure-led growth strategy known as the Growth and Transformation Plan (GTP) in 2010. It has since doubled electricity generation from 1800 to 4200 MW, against peak power requirement of 2000 MW. There is close to 7,000MW of new power projects under construction. The Ethiopia Grand Renaissance dam alone has a capacity of 6450 MW. When these are completed, Ethiopia’s generation capacity will be more than four times domestic demand. The road network has been expanded two-and-a-half fold, from 44 km to 110 km of road per 1000 square kilometres. And there is of course the 670-km Addis-Djibouti railway, and a light rail system for Addis Ababa, operational since late 2015 .

The infrastructure building boom, described in a recent World Bank report as “one of the highest rates of public investment in the world”, turbocharged Ethiopia’s economic growth rate from a respectable 5-6 percent to an exceptional 10 percent per year. But close to a decade on, the anticipated private investment that would enable Ethiopia to pay for it has not materialised. Ethiopia was banking on export processing zones investment, and has built several industrial parks around the country.

Besides failing to attract investment, building booms of this magnitude have the effect of shifting incentives against “tradable” sectors of the economy. This phenomenon is more commonly associated with natural resource booms that economists call Dutch Disease. This is reflected in the decline of Ethiopia’s export to GDP ratio, from 17 percent to eight percent of GDP compared to Sub-Saharan average of 27 percent. Its export to GDP ratio is now the second lowest on the sub-continent after Burundi (6.2%).

Ethiopia has compounded its infrastructure-driven external imbalance with classic import substitution—a massive state-drivend sugar industry expansion. The state-owned Ethiopia Sugar Corporation is currently developing ten large-scale sugar projects that will put a million acres of land under sugarcane production. A capital intensive, low value product with distorted markets and a permanent global glut floating in the high seas, sugar is as bad as import substitution industries get. Yet there is no shortage of export-oriented agriculture investments Ethiopia could have chosen. Oilseeds are Ethiopia’s second largest export earner after coffee. It has a promising livestock and leather apparel industry. Maize even.

The Bretton Woods institutions spent the ‘80s and ‘90s preaching the free market economic orthodoxy known as the Washington Consensus. Ethiopia has done the complete opposite. But the World Bank has been nothing but effusive. In a 2016 report, Ethiopia’s Great Run: The Growth Acceleration and How to Pace it, the World Bank asserts confidently that Ethiopia was on course to become a middle income country by 2025. Astoundingly the World Bank goes ahead to give a thumbs up to the policy regime that its structural adjustment programmes (SAPs) dismantled:

“Heterodox financing arrangements supported one of the highest public investment rates in the world. Three less conventional mechanisms stand out: first, a model of financial repression that kept interest rates low and directed the bulk of credit towards public infrastructure. Second, an overvalued exchange rate that cheapened public capital imports. Third, monetary expansion, including direct Central Bank budget financing, which earned the government seignorage revenues.”

Ethiopia has compounded its infrastructure-driven external imbalance with classic import substitution—a massive state-driven sugar industry expansion. The state-owned Ethiopia Sugar Corporation is currently developing ten large-scale sugar projects that will put a million acres of land under sugarcane production. A capital intensive, low value product with distorted markets and a permanent global glut floating in the high seas, sugar is as bad as import substitution industries get.

Heterodox means unorthodox or unconventional. In plain English, it means distorting credit markets, overvaluing the currency and printing money.

 After all the cheerleading, the Bretton Woods sisters now find themselves in an awkward situation. In its most recent debt sustainability report, the IMF acknowledges that Ethiopia is now staring at a debt crisis. It has no advice to give. Ethiopia’s hopes, it writes, now rest on exporting electricity. The IMF posits that Ethiopia has the potential to earn US$ 1 billion a year from selling electricity.

In reality, Ethiopia is selling a little power to Sudan and Djibouti, and has signed power purchase agreements with Kenya and Tanzania. But these countries are ramping up their own generation capacity. Kenya’s installed capacity is presently 35 percent above peak generation requirements excluding the 340 MW Turkana wind power which is awaiting completion of a transmission line, 55 percent when it is included. There are several other projects underway, and Kenya’s government seems dead set on proceeding with a controversial 1000MW coal plant in Lamu. Ditto Tanzania.

After all the cheerleading, the Bretton Woods sisters now find themselves in an awkward situation. In its most recent debt sustainability report, the IMF acknowledges that Ethiopia is now staring at a debt crisis. It has no advice to give. Ethiopia’s hopes, it writes, now rest on exporting electricity. The IMF posits that Ethiopia has the potential to earn US$ 1 billion a year from selling electricity.

Ethiopia’s biggest electricity customer potentially is Egypt. This may begin to explain the reason for the olive branch. Prime Minister Abiy also made a quick visit to Somalia last week. He might be hoping to sell some electricity there. To flog a billion dollars worth of power, Ethiopia will need to make peace with all her neighbours, and then some. If truth be told, the electricity export bonanza is a fig leaf.

There is a cold reality that the Ethiopian government seems to be still in denial about. Its heterodox macroeconomic regime is now untenable Investors do not like putting their money in places where it is difficult to get out. And now that people know how precarious the situation is, hard currency hoarding and capital flight will get worse, not better.

The competing destinations for the export processing investment that Ethiopia is building industrial parks for do not have exchange controls. And Ethiopia has many disadvantages to overcome, not least, being landlocked, not to mention its byzantine bureaucracy and anti-capitalist instinct. Financial liberalisation is inevitable, a matter of when and how, not if. The Prime Minister talked of the foreign exchange problem being a long term problem. He is dead wrong. He has eighteen months—best case scenario. His options boil down to whether to do big bang or gradual – rather like choosing whether to do your root canals all at once or every other week.

The announced fire sale of family silver will not do it either. Deregulation should precede privatisation otherwise it substitutes public monopolies for private ones. In the case of the telecom monopoly in particular, deregulation will kill a whole flock of birds with one stone—bring in hard currency from license fees, investment, access (at 40% Ethiopia’s mobile penetration is the lowest in the region) and quality of services. The sugar factories I would sell right away on an “as-is-where-is” basis. A stitch in time saves nine.

Ethiopia is by no means the only country floundering on infrastructure-led growth. It is a foolish idea. Monuments, delusions of grandeur, cargo cults—this columnist has all but run out of metaphors. Last year, Zambia’s President called a national day of prayer for the Kwacha. Last week he suspended borrowing and instituted an austerity programme that includes freezing projects that are less than 80 percent complete. Kenya is surviving on speculative capital inflows and juggling debt as it negotiates an IMF bailout.

Ethiopia’s unravelling is a reflection of its macroeconomic policy regime. When demand and supply don’t balance, something must give. In a liberal regime it is prices that adjust (exchange rate, interest, and inflation). If prices are controlled then demand or supply must give, in this case, the supply of foreign exchange. Still, the crisis has provided an opportunity for transformational political and economic change. To quote economist Paul Romer, a crisis is a terrible thing to waste.

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David Ndii is a leading Kenyan economist and public intellectual.


Education in Rwanda: A Long Walk to the Knowledge Economy

If Rwanda is to attain its stated ambition to become of a middle-income country by 2035 driven by the knowledge economy, then it must inject significant investments in the education and related sectors.



Education in Rwanda: A Long Walk to the Knowledge Economy
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Rwanda has shown commitment to bring improvements to its education sector. The development of Human capital that involves the enhancement of the education and health sectors was one of the main pillars of Rwanda’s development programme launched in 2000 to transform the country into a middle income state driven by the knowledge economy by 2020. Many developed countries joined in to financially support Rwanda to fulfil its development ambitions.

But while Rwanda did not meet its target to transform into a middle-income state by 2020, it has nevertheless made progress in the education sector that should be recognised. The country has now near-universal access to primary education with net enrolment rates of 98 per cent. There are also roughly equal numbers of boys and girls in pre-primary, primary and secondary schools in Rwanda. Compared to other sub-Saharan African countries, Rwanda has made great improvements in the education sector based on the gains made in primary school gross enrolment, out-of-school and retention rates and considering that the country came out of a genocidal civil war in the 1990s. Those of us living and travelling across the country can also see that the government of Rwanda has built more schools across the country to address congestion in classrooms.

However, education in Rwanda is faced with serious challenges which, if not addressed, the country will not attain its ambition to become a middle-income by 2035 and a high-income by 2050. The World Bank’s comparison with middle- and high-income countries, to whose ranks Rwanda aspires to join, shows that Rwanda lags far behind in primary and lower secondary school completion levels.

The gains made in education are not equally distributed across Rwanda. There are, for instance, wide disparities in lower secondary education by income and urban–rural residence. Whereas lower secondary school gross enrolment ratio level is 82 per cent in urban areas, it is only 44 per cent in rural areas. Moreover, transition rates between primary and lower secondary education are 53 per cent in urban areas, and 33 per cent in rural areas. School completion is 52 per cent among the richest quintile while it is 26 per cent among the poorest. Any future development strategy is unlikely to succeed if it does not provide basic equality of opportunity for all in Rwanda.

The standard of education in Rwanda is another major challenge. At the end of Grade 3, 85 per cent of Rwandan students were rated “below comprehension” in a recent reading test, and one in six could not answer any reading comprehension question. In my view, the quality of education has been partly affected by the abrupt changes in the language of instruction that have taken place without much planning since 2008.

Any future development strategy is unlikely to succeed if it does not provide basic equality of opportunity for all in Rwanda.

Learning levels in basic education remain low in Rwanda.  Children in the country can expect to complete 6.5 years of pre-primary and basic education by the age of 18 years. However, when this is adjusted for learning it translates to only about 3.8 years, implying that children in Rwanda have a learning gap of 2.7 years. This is a concern.

Education in Rwanda is also impended by high levels of malnutrition for children under 5 years. Although there have been improvements over time, malnutrition levels remain significantly high at 33 per cent. Malnutrition impedes cognitive development, educational attainment, and lifetime earnings. It also deprives the economy of quality human capital that is critical to Rwanda attaining its economic goals and sustaining its economic gains. In 2012, Rwanda lost 11.5 per cent of GDP as a result of child undernutrition.

Because of low learning levels and high levels of malnutrition in children under 5 years, Rwanda has consistently ranked below average on the World Bank’s Human Capital index since 2018, the year the index was first published. HCI measures which countries are best at mobilising the economic and professional potential of their citizens.

If Rwanda is to develop the competent workforce needed to transform the country into a knowledge-based economy and bring it into the ranks of middle-income states, the government must put significant public spending in basic education. This has not been the case over the past decades. According to the World Bank, Rwanda’s public spending on primary education has been significantly lower than the average for sub-Saharan African countries with similar coverage of primary school level as Rwanda. This low spending on primary education has translated into relatively modest pay for teachers and low investment in their professional development which in turn affects the provision of quality education in Rwanda. The government recently increased teachers’ salary but the increment is being eroded by, among other things, food price inflation in Rwanda.

Malnutrition impedes cognitive development, educational attainment, and lifetime earnings.

Going forward, Rwanda’s spending on education needs to be increased and allocated to improving standards. Considering that the underlying cause of the high rate of malnourishment in children is food insecurity, the government needs to spend more on the agriculture sector. This sector employs 70 per cent of the labour force but has received only 10 per cent of total public investment. Public investment in Rwanda has in the past gone to the development of the Meetings, Incentives, Conferences and Exhibitions sector rather than towards addressing pressing scarcities. This approach must be reviewed.

Increasing public expenditure in education and connected sectors should also be combined with strengthening accountability in the government institutions responsible for promoting the quality of education in basic schools and in promoting food security and livelihoods in Rwanda. This is because not a year goes by without the office of the Rwanda auditor general reporting dire inefficiencies in these institutions.

Strengthening institutional accountability can be achieved if the country adapts its consensual democracy by opening up the political space to dissenting voices. Doing so would surely enhance the effectiveness of checks and balances across institutions in Rwanda, including in the education sector, and would enable the country to efficiently reach its development targets.

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No Imperialist Peoples, Only Imperialist States

Adam Mayer praises a new collection, Liberated Texts, which includes rediscovered books on Africa’s socialist intellectual history and political economy, looking at the startling, and frequently long ignored work of Walter Rodney, Karim Hirji, Issa Shivji, Dani Wadada Nabudere, A. M. Babu and Makhan Singh.



No Imperialist Peoples, Only Imperialist States
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Liberated Texts is a magnificent, essential, exciting tome that feels like a bombshell. This incredibly rich collection is a selection that is deep, wide, as well as entertaining. The book focuses on twenty-one volumes from the previous one hundred years, with a geographical range from the UK, the US, Vietnam, Korea, the Peoples Republic of China, the Middle East, Ireland, Malaysia, Africa (especially East Africa), Europe, Latin America, and the former Soviet Union, focusing on books that are without exception, foundational.

The collection is nothing less than a truth pill: in composite form, the volume corrects world history that Howard Zinn’s The People’s History of the United States offered for the sterile, historical curriculum on domestic (US) history. The volume consists of relatively short reviews (written by a wide collection of young and old academics and activists from every corner of the globe) but together they reflect such a unified vision that I would recommend Liberated Texts as compulsory reading for undergraduate students (as well as graduates!) Although the text is a broad canvas it speaks to our age (despite some of the reviewed book having been written in the 1920s).

Each review is by default, a buried tresure. The writer of this very review is a middle-aged Hungarian, which means that some of the works and authors discussed were more familiar to me than they would be to others. For example, Anton Makarenko’s name was, when the author grew up in the People’s Republic of Hungary, a household word. Makarenko’s continued relevance for South America and the oppressed everywhere, as well as his rootedness in the revolutionary transformations of the Soviet experiment, are dealt with here marvellosly by Alex Turrall (p. 289). In loving detail Turrall also  discusses his hero the pedagogue Sukhomlinsky’s love for Stalinist reforms of Soviet education (p. 334).

There is one locus, and one locus only, where death is given reign, perhaps even celebrated: in a Palestinian case (p. 133) the revolutionary horizons are firmly focused on the past, not on any kind of future. The entire problematic of Israeli society’s recent ultra right-wing turn (a terrible outcome from the left’s point of view) is altogther missing here. Yet it is difficult to fault the authors or editors with this (after all, they painstakingly included an exemplary anti-Nazi Palestinian fighter in the text, p. 152) but it might be in order to challenge a fascination with martyrdom as a revolutionary option on the radical left.

In every other aspect, Liberated Texts enlightens without embarrassment, and affirms life itself. Imperialism is taken on in the form of unresolved murders of Chinese researchers in the United States as a focus (p. 307), and in uncovering the diabolical machinations of the peer-review system – racist, classist, prestige-driven as it is (p. 305).

The bravery of this collection is such that we find few authors within academia’s tenure track: authors are either emeriti, tenured, very young academics, or those dedicated to political work: actual grassroots organizers, comrades at high schools, or as language teachers. This has a very beneficial effect on the edited volume as an enterprise at the forefront of knowledge, indeed of creating new knowledge. Career considerations are absent entirely from this volume, in which thankfully even the whiff of mainstream liberalism is anathema.

I can say with certainty regarding the collection’s Africanist chapters that certain specialists globally, on African radical intellectual history, have been included: Leo Zeilig, Zeyad el-Nabolsy, Paul O’Connell, Noosim Naimasiah and Corinna Mullin all shed light on East African (as well as Caribbean) socialist intellectual history in ways that clear new paths in a sub-discipline that is underfunded, purposely confined to obscurity, and which lacks standard go-to syntheses especially in the English language (Hakim Adi’s celebrated history on pan-Africanism and communism stops with the 1950s, and other works are in the making).

Walter Rodney, Karim Hirji, Issa Shivji, Dani Wadada Nabudere, A. M. Babu, Makhan Singh are the central authors dealt with here. Rodney is enjoying a magnificent and much deserved renaissance (but this collection deals with a lost collection of Rodney’s 1978 Hamburg lectures by Zeilig!) Nabolsy shows us how Nyerere’s Marxist opposition experienced Ujamaa, and Tanzanian ’socialism’. Nabudere – a quintessential organic intellectual as much as Rodney –  is encountered in praxis as well as through his thought and academic achievements in a chapter by Corinna Mullin. Nabudere emerges as a towering figure whose renaissance might be in the making right at this juncture. Singh makes us face the real essence of British imperialism. Nabudere, Babu and even Hirji’s achievements in analysing imperialism and its political economy are all celebrated in the collection.

Where Shivji focuses on empire in its less violent aspect (notably NGOs and human rights discourse) powerfully described by Paul O’Connell, Naimasiah reminds us that violence had been as constitutive to Britain’s empire, as it has been to the Unites States (in Vietnam or in Korea). An fascinating chapter in the collection is provided by Marion Ettinger’s review of Richard Boyle’s Mutiny in Vietnam, an account based entirely on journalism, indeed impromptu testimony, of mutinous US soldiers tired of fighting for Vietnam’s landlord class.

Many readers of this anthology will identify with those veterans (since the collection appears in the English language) perhaps more than with East Asia’s magnificent, conscious fighters also written about in the book. Even in armies of the imperialist core, humanity shines through. Simply put, there are no imperialist peoples, only imperialist states.

Zeilig’s nuanced take on this important matter is revealed in Rodney’s rediscovered lectures. Also, the subtlety of class analysis in relation to workers versus peasants, and the bureacratic bourgeoisie profiting from this constellation (p. 219) brings to mind the contradiction that had arguably brought down Thomas Sankara, Burkina Faso’s anti-imperialist president who nevertheless found himself opposing working class demands. Rodney’s politics in Guyana invited the same fate as Sankara, as we know.

Nabolsy’s review on Hirji’s The Travails of a Tanzanian Teacher touches on very interesting issues of Rodney’s role especially in the context of Ujamaa and Nyerere’s idiosyncratic version of African socialism. Nabolsy appreciates Nyerere efforts but analyses his politics with great candour: Ujamaa provided national unification, but failed to undermine Tanzania’s dependency in any real sense. The sad realization of the failure of Tanzania’s experience startles the reader with its implications for the history of African socialism.

On an emotional and personal level, I remain most endeared by the Soviet authors celebrated in this text. So Makarenko and Sukhomlinsky are both Soviet success stories and they demonstrate that this combination of words in no oxymoron, and neither is it necessarily, revisionist mumbo-jumbo. Their artificial removal from their historical context (which had happened many times over in Makarenko’s case, and in one particular account when it comes to Sukhomlinsky) are fought against by the author with Leninist gusto.

Sukhomlinsky had not fought against a supposedly Stalinist education reform: he built it, and it became one of the most important achievements of the country by the 1960s due partly to his efforts. The former educational pioneer did not harm children: he gave them purpose, responsibility, self-respect, and self-esteem. The implication of Sukhomlinsky and Makarenko is that true freedom constructs its own order, and that freedom ultimately thrives on responsibility, and revolutionary freedom.

As this collection is subtitled Volume One, it is my hope and expectation that this shall be the beginning of a series of books, dealing with other foundational texts, and even become a revolutionary alternative to The London Review of Books and the New York Review of Books, both of which still demonstrate how much readers crave review collections. Volumes like Liberated Texts might be the very future of book review magazines in changed form. A luta continua!

This article was first published by ROAPE.

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We Must Democratize the Economy

In the UK, prices for basic goods are soaring while corporations rake in ever-bigger profits. The solution, Jeremy Corbyn argues, is to bring basic resources like energy, water, railways, and the postal service into democratic public ownership.



Jeremy Corbyn: We Must Democratize the Economy
Photo: Chatham House, London
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On Thursday, December 15, the Royal College of Nursing went on strike for the first time in their 106-year history. Understaffed, underpaid, and overworked, tens of thousands of National Health Service (NHS) nurses walked out after being denied decent, livable pay rises. Hailed as heroes one year, forced to use food banks the next, nurses’ wages have fallen more than £3,000 in real terms since 2010; three in four now say they work overtime to meet rising energy bills.

People will remember 2022 as the year that the Conservative Party plunged this country into political turmoil. However, behind the melodrama is a cost-of-living crisis that has pushed desperate people into destitution and the so-called middle classes to the brink. We should remember 2022 as the year in which relative child poverty reached its highest levels since 2007 and real wage growth reached its lowest levels in half a century. (Average earnings have shrunk by £80 a month and a staggering £180 a month for public sector workers.) These are the real scandals.

For some MPs, this was the year they kick-started their reality TV careers. For others, this was the year they told their children they couldn’t afford any Christmas presents. For energy companies, it was the year they laughed all the way to the bank; in the same amount of time it took for Rishi Sunak to both lose and then win a leadership contest, Shell returned £8.2 billion in profit. SSE, a multinational energy company headquartered in Scotland, saw their profits triple in just one year. Profits across the world’s seven biggest oil firms rose to almost £150 billion.

Tackling the cost-of-living crisis means offering an alternative to our existing economic model — a model that empowers unaccountable companies to profit off the misery of consumers and the destruction of our earth. And that means defending a value, a doctrine, and a tradition that unites us all: democracy.

Labour recently announced “the biggest ever transfer of power from Westminster to the British people.” I welcomed the renewal of many of the policies from the manifesto in 2019: abolishing the House of Lords and handing powers to devolved governments, local authorities, and mayors. These plans should work hand in hand, to ensure any second chamber reflects the geographical diversity of the country. If implemented, this would decentralize a Whitehall-centric model of governance that wastes so much of this country’s regional talent, energy, and creativity.

However, devolution, decentralization, and democracy are not just matters for the constitution. They should characterize our economy too. Regional governments are demanding greater powers for the same reason an unelected second chamber is patently arcane: we want a say over the things that affect our everyday lives. This, surely, includes the way in which our basic resources are produced and distributed.

From energy to water and from rail to mail, a small number of companies monopolize the production of basic resources to the detriment of the workers they exploit and the customers they fleece. We rely on these services, and workers keep them running, but it is remote chief executive officers and unaccountable shareholders who decide how they are run and profit off their provision. Would it not make more sense for workers and consumers to decide how to run the services they provide and consume?

As prices and profits soar, it’s time to put basic resources like energy, water, rail, and mail back where they belong: in public hands. Crucially, this mold of public ownership would not be a return to 1940s-style patronage-appointed boards but a restoration of civic accountability. Water, for example, should be a regional entity controlled by consumers, workers, and local authorities, and work closely with environmental agencies on water conservation, sewage discharges, the preservation of coastlines, and the protection of our natural world. This democratic body would be answerable to the public, and the public alone, rather than to the dividends of distant hedge funds.

Bringing energy, water, rail, and mail into democratic public ownership is about giving local people agency over the resources they use. It’s about making sure these resources are sustainably produced and universally distributed in the interests of workers, communities, and the planet.

Beyond key utilities, a whole host of services and resources require investment, investment that local communities should control. That’s why, in 2019, we pledged to establish regional investment banks across the country, run by local stakeholders who can decide — collectively — how best to direct public investment. Those seeking this investment would not make their case with reference to how much profit they could make in private but how much they could benefit the public as a whole.

To democratize our economy, we need to democratize workplaces too. We can end workplace hierarchies and wage inequalities by giving workers the right to decide, together, how their team operates and how their pay structures are organized. If we want to kick-start a mass transfer of power, we need to redistribute wealth from those who hoard it to those who create it.

Local people know the issues facing them, and they know how to meet them better than anyone else. If we want to practice what we preach, then the same principles of democracy, devolution, and decentralization must apply to our own parties as well. Local party members, not party leaders, should choose their candidates, create policy, and decide what their movement stands for.

Only a democratic party can provide the necessary space for creative and transformative solutions to the crises facing us all. In a world where the division between rich and poor is greater than ever before, our aim should be to unite the country around a more hopeful alternative — an alternative that recognizes how we all rely on each other to survive and thrive.

This alternative is not some abstract ideal to be imagined. It is an alternative that workers are fighting for on the picket line. Even before the nurses went on strike, 2022 was a record-breaking year for industrial action. Striking workers are not just fighting for pay, essential as these demands are. They are fighting for a society without poverty, hunger, and inequality. They are fighting for a future that puts the interests of the community ahead of the greed of energy companies. They are fighting for us all.

Their collective struggle teaches us that democracy exists — it thrives — outside of Westminster. The government is trying its best to turn dedicated postal workers and railway workers into enemies of the general public — a general public that apparently also excludes university staff, bus drivers, barristers, baggage handlers, civil servants, ambulance drivers, firefighters, and charity workers. As the enormous scale of industrial action shows, striking workers are the general public. The year 2022 will go down in history, not as the year the Tories took the public for fools, but as the year the public fought back. United in their thousands, they are sending a clear message: this is what democracy looks like.

This article was first published by Progressive International

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