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Crony Capitalism and State Capture 3: Uhuru Kenyatta’s Manufacturing Agenda

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Uhuru Kenyatta’s manufacturing agenda argues DAVID NDII is a protectionism policy regime that puts tariff and other barriers on imports that compete with domestically produced goods. But as he illustrates, a protected competitive industry is a contradiction.

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Crony Capitalism and State Capture 3: Uhuru Kenyatta’s Manufacturing Agenda
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Ever since it was pronounced as one of his “Big Four” legacy initiatives, Uhuru Kenyatta’s manufacturing agenda has been blurry but an extensive television interview given two weeks ago was very revealing; in a nutshell, it is protectionism. “We want to ensure that we protect our industries, work with our industries to ensure that they are competitive but we also encourage them not to take advantage and extort Kenyans by overpricing their products.”

Protectionism is a policy regime that puts tariff and other barriers on imports that compete with domestically produced goods. A simple definition of competitiveness is a company, industry or country that is able to produce goods and services that are comparable in price and quality with those traded internationally. Competitiveness is benchmarked against internationally traded goods and services. But the purpose of protecting domestic industries is to shield them from competition. Once they are shielded from competition, they do not need to be competitive.

Ever since it was pronounced as one of his “Big Four” legacy initiatives, Uhuru Kenyatta’s manufacturing agenda has been blurry but an extensive television interview given two weeks ago was very revealing; in a nutshell, it is protectionism.

We have a problem. A protected competitive industry is a contradiction in terms. Tea and sugar, two industries that have featured in this column on a number of occasions, provide a perfect case study.

As an export-oriented industry, the tea industry has to be globally competitive to survive. There is little the Kenyan government could do to help the industry if it was not able to produce quality tea at a price that its international customers are willing to pay. Consequently, there is no need to protect the local market from imported tea. Even though imported tea brands are available in supermarkets, they do not cause owners of domestic brands sleepless nights.

Sugar is a different kettle of fish altogether. It is the country’s most protected industry. Kenyan sugar costs $800 per tonne ex-factory, against a global price of $280. The only way Kenya’s sugar industry can stay in business is by being heavily protected. For the last twenty years or so, the country has sought and secured safeguards from the Common Market of Eastern and Southern Africa (COMESA) so that the country can restructure the industry, to no avail.

Why is Kenya’s tea globally competitive and sugar the complete opposite? Competitiveness is closely related to, and in fact, derives from productivity. Kenya has the highest tea farm productivity in the world, at about 4,507 kilograms of green leaf per acre, closely followed by Sri Lanka at 4,440. Unsurprisingly, Kenya and Sri Lanka are the leading tea exporters, each accounting for between 20 and 23 per cent of the world market. By contrast, of the COMESA trading partners, Kenya has the lowest sugar cane yields (see chart).

The only way Kenya’s sugar industry can stay in business is by being heavily protected. For the last twenty years or so, the country has sought and secured safeguards from the Common Market of Eastern and Southern Africa (COMESA) so that the country can restructure the industry, to no avail.

But the sugar cane yields are only part of the low productivity story. Kenya’s sugar cane also has less sugar content, and the state-owned factories are less efficient, i.e. they achieve lower extraction rates than those of the trading partners—low cane yields, poor quality cane, inefficient factories. To keep this industry alive, it is protected by a 100 per cent import tariff, or $460 per tonne, whichever is higher. At the price of $280 a tonne, the applicable tariff is $460, which is an import duty of 164 per cent.

Why are the sugar cane yields so low? We have the wrong model of sugar industry. Sugar cane is a capital intensive crop, that is suited to large-scale integrated farm and factory operations. Kwale International Sugar, which revived the failed Ramisi Sugar, reports obtaining 60 tonnes a hectare using a “state of the art subsurface irrigation system”. Smallholder farmers do not have the capital or knowhow to do this, and it probably would not make sense to invest in such systems on a small scale. Moreover, once the cane is planted, it requires very little labour until harvest time.

Tea, on the other hand, is a labour-intensive crop. It needs to be picked and tended meticulously by hand throughout the year. Smallholder tea farmers work in their fields every day. The economic law of comparative advantage predicts that a country’s competitiveness will reflect its factor endowments, that is, capital-rich countries will be competitive in capital intensive goods, and labour-rich countries in labour-intensive goods. Because we have relatively more labour than capital, the global competitiveness of our tea vis-à-vis the uncompetitiveness of our sugar reflects our comparative advantage.

Why are the sugar cane yields so low? We have the wrong model of sugar industry. Sugar cane is a capital intensive crop, that is suited to large-scale integrated farm and factory operations. Kwale International Sugar, which revived the failed Ramisi Sugar, reports obtaining 60 tonnes a hectare using a “state of the art subsurface irrigation system”.

It is instructive to compare sugar with coffee. Since the early 90s, Kenya has failed to reform the coffee industry to keep up with changes in the global market. Production and exports have plummeted from a peak 140,000 tonnes in the late 80s to just over 40,000 tonnes today. There is nothing that the Government can do to protect the coffee industry. It simply has to shape up or ship out. But the most important thing is that the resources that were producing coffee—land, capital and labour—have been redeployed to other products including macadamia nuts, avocado, dairy, bananas, real estate and so on.

The same would have happened in western Kenya if the sugar industry was not so heavily protected. The long-suffering smallholder sugar cane farmers would have long since switched to other products of which they would be competitive producers such as cereals, livestock, horticulture, oil crops and so on. Instead, protectionism misallocates 440,000 acres of some of Kenya’s best rain-fed agricultural land—a very scarce resource—to a crop that generates a mere $400 per acre, compared with tea, which generates $2,200 an acre.

Protectionists often bolster their case by observing, correctly, that the East Asian Tigers also protected their infant industries during the early stages. The best documented, and arguably also the most insightful case, is that of South Korea. South Korea’s industrialisation took place in two phases spanning two decades, 1955-65 and 1965-75. During the first phase, it pursued both import substitution and export promotion simultaneously, but with a heavy bias towards import substitution. By the early 60s it had run into the chronic balance of payments crises that have plagued all countries pursuing import substitution industrialisation through protectionism— including Ethiopia currently. The government realised that import substitution had hit a dead end, and changed course, as Larry Westphal and Kwan Suk Kim, of the World Bank and Korea Development Institute respectively, explain in their 1977 study, Industrial Policy and Development in Korea:

Policymakers came firmly to accept that rapid economic development depended upon an export-oriented industrialisation strategy. This view was predicated on the understanding that Korea’s natural resource base was very poor and on the realisation that further opportunities for import substitution were only to be found in intermediate and durable goods, where the limited domestic market could not justify establishing plants large enough to realize technological economies of scale.

The Koreans then embarked on trade liberalisation, devaluation and other policy reforms that the rest of the developing world was to adopt two decades later, and that we now call structural adjustment. These reforms were implemented between 1961 and 1964. Export-led manufacturing took off. By 1975, manufactured goods contributed a third of the GDP, and 75 per cent of exports.

As noted, Korea’s industrial policy pursued both import substitution and export promotion simultaneously from the outset. The policy regime, referred to as the “export-import link,” pegged incentives directly to export earnings. Like most other countries at the time, Korea had a controlled fixed exchange rate that maintained an overvalued currency, as well as a rigid import control regime. Exporting firms were allowed to retain a portion of their foreign exchange earnings, which they could sell at a premium, or to import restricted consumer goods for sale in the domestic market. Another element was generous ‘wastage allowances” on imported raw materials. To illustrate, if garment exporters were allowed 15 per cent wastage on fabrics imported to make clothes for export, and the actual wastage was 5 per cent, this was the same as allowing them to sell 10 per cent of their products in the domestic market.

The effect of these incentives was to substantially offset the protection of the domestic market and to keep domestic-oriented producers on their toes. Other incentives included subsidised credit and discounted tariffs on utilities and railway transport, also pegged to export performance. As export manufacturing grew, the case for protecting the domestic market diminished, since Korean goods could compete both abroad and at home. The protection regime was progressively rolled back such that by the late 70s, South Korea was, by and large, an open economy.

Embarking on a protectionist industrial policy today raises a number of vexing issues. I will highlight three.

First, what is it in aid of? The stated objective is to increase the manufacturing share of GDP. I have heard a figure of 15 per cent of GDP by 2022 mentioned. The manufacturing share of GDP has actually been trending downwards lately—7.7 per cent in 2018, down from 10 per cent five years ago. How much can protecting domestic industry contribute? In 2018 we imported Sh.218 billion worth of finished consumer goods—excluding motor vehicles—accounting for 12 per cent of total imports, and 9 per cent of the value of domestic manufactured goods. If all these goods were to be manufactured locally, it would increase the manufacturing share of GDP from 7.7 to 8.5 per cent. But of course, whatever protectionist policies are envisaged will not constitute anywhere near total substitution and will at best have a negligible impact.

Tea, on the other hand, is a labour intensive crop. It needs to be picked and tended meticulously by hand throughout the year. Smallholder tea farmers work in their fields every day. The economic law of comparative advantage predicts that a country’s competitiveness will reflect its factor endowments, that is, capital-rich countries will be competitive in capital intensive goods, and labour-rich countries in labour intensive goods.

The most critical imperative that any industrial policy ought to address is jobs. We need millions of jobs. Kenya’s industry is capital intensive and not job-creating. A World Bank study from a decade ago showed that Kenya’s manufacturing sector was 50 per cent more capital intensive than China’s, and almost five times as capital intensive as India’s (see chart below). Although the data is old, the structure of the industry has not changed that much. This is of itself a legacy of an import substitution industrial policy which promoted the capital intensive goods that the country imported, as opposed to an export-oriented policy which would promote the industries that could utilise developing countries’ abundant labour.

Second, Kenya is a member of the East African Community (EAC), COMESA, and the new African Free Trade Area (AFTA) trading blocs, which agreements we have signed and ratified. Under the EAC in particular, Kenya is bound by a common external tariff (CET). Kenyan manufacturers are the biggest beneficiaries of these trading blocs. In 2018 Kenya exported goods worth Sh.90 billion ($1.9 billion) to EAC and COMESA, accounting for 30 per cent of total exports. We made imports of Sh.123 billion ($1.23 billion), thus running a surplus of Sh.67 billion ($670 million). Virtually all of Kenya’s exports to the region are manufactured goods. The country can ill afford to begin a trade war with the regional partners, who would only be too delighted to find reasons to lock Kenyan goods out of their markets. How is the government going to protect local industries without jeopardising regional integration?

Third, the case for protectionist import substitution regimes was predicated on the infant industry argument—protecting nascent industries until they were strong enough to compete. The problem arose because, like our sugar industry, and Pan Paper for that matter, there was no incentive to grow up, and the state lacked the political will to roll back the protection until economic crises compelled them. The industries that are now to be protected are not babies. What is the case for protecting grown-up industries, some of which are already dominant oligopolies in their sector? Until when will they be protected, and what new policy instruments are there to ensure that this protection regime will not go the route of the old one? Protecting mature incumbents translates to not just protection from competing imports, but also giving them more muscle to fight potential entrants into their markets. Essentially, it amounts to entrenching cartels, and Kenyatta’s statement—which makes reference to taking advantage, extortion and overpricing—demonstrates that Kenyatta is actually alive to this fact. Why is he contradicting himself? State capture.

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David Ndii is a leading Kenyan economist and public intellectual.

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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.

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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.

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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.

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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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