Political economy is back on the centre stage of development studies. The ultimate test of its respectability is that the World Bank has realised that it is not possible to separate social and political issues such as corruption and democracy from other factors that influence the effectiveness of its investments, and started using the concept.
It predates the creation of “economics” as a discipline. Adam Smith, David Ricardo, Thomas Malthus, James Mill, and a generation later Karl Marx and Friederich Engels, explored how groups or classes in society exploited each other or were exploited, and used their conclusions to create theories of change or growth.
Marx’s ideas were taken up in the 1950s by economists and sociologists of the left, such as Paul Baran (The Political Economy of Growth, 1957) and later Samir Amin (The Political Economy of the Twentieth Century, 2000) who linked it to theories of imperialism and neo-colonialism to interpret what was happening in newly independent African countries where nationalist political parties had taken power.
Marx and Engels in their early writings, and Marxist orthodoxy subsequently, espoused determinist theories in which development went through pre-determined stages – primitive forms of social organisation, feudalism, capitalism, and then socialism. But in their later writings Marx and Engels were much more open, and recognised that some pre-capitalist formations could survive, and that there was no single road to socialism. Class analysis, and exploration of the economic interests of powerful classes, and their uses of the technologies available to them, could inform a study of history, but not substitute for it.
That was how I interpreted what happened in Tanzania in the 1970s. The country was built around the economic interests of those involved, and the mistakes made, both inside Tanzania but also outside. It focussed on the choices made by those who controlled the Tanzanian state or negotiated “foreign aid” deals with Western governments—Issa Shivji’s bureaucratic bourgeoisie. These themes are still current today.
I am not alone. Michael Lofchie’s (A Political Economy of Tanzania, 2014) focuses on the difficult years of structural adjustment in the 1980s and 1990s. He argues how the salaried elite could personally benefit from an overvalued exchange rate. From 1979 on, under the influence of the charismatic President Julius Nyerere, Tanzania resisted the IMF and World Bank which urged it to devalue. But eventually, around the mid-1980s, they realised that they had the possibility of making even bigger financial gains if the country devalued and there were open markets, which would allow them to make money from trade or production. They were becoming a productive bourgeoisie.
Lofchie’s analysis can be contested. The benefits of the chaos that resulted from the extremely over-valued exchange rates of the 1980s were reaped by only a few. It is true that rapid growth followed from around 1990 to the present, but that is also due to the high price of gold on international markets and the rapid expansion of gold mining and tourism. There is still plenty of evidence of individuals making money illegitimately – corruption is ever present in the political discourse, and will continue to be so up till the presidential elections due in October 2015.
A challenge for the ruling class in Tanzania, leaving the 1970s, was would they be able to convert their economic strategies into meaningful growth and benefits for the population? By 2011 the challenge was even more acute, because very large reserves of gas had been discovered off the coast of Southern Tanzania, so money for investment would no longer be a binding constraint. But would those resources be used to create real assets which would create the prerequisites for rapid expansions in manufacturing, services, and especially agriculture? Or would they be frittered away through imports of non-productive machinery and infrastructure (such as the non-existent electricity generators purchased through the Richmond Project in 2006 in which several leading members of the ruling political party were implicated)? Or end up in Swiss bank accounts? The jury is very much still out. To achieve the current ambition of a rapid transition to a middle income country will require much greater understanding of engineering, agricultural science, and much better contracts than have been recently achieved – and more proactive responses to the challenges of corruption. It will need to take its own political economy seriously.
Headline image credit: Tanzania – Mikumi by Marc Veraart. CC-BY-2.0 via Flickr.