Prime
Onyango Obbo’s blind, false faith in free markets
Author: Moses Khisa. PHOTO/FILE
What you need to know:
- It is because the idea of free markets is an illusion. The free market is fiction.
Sometime in June in Kampala, Mr Andrew Mwenda, Dr Golooba-Mutebi and I got into an argument about problems at the Law Development Centre. LDC has staggering failure rates.
There are allegations of misconduct and absence of transparency at the only institution in Uganda that qualifies graduates to enter legal practice as attorneys. It is an established norm, widely practiced in graduate and postgraduate education, to exercise uttermost transparency and accountability in teaching, examination and determining final grades.
Students must be taught but also properly examined and prudently graded. They are entitled to an explanation when a teacher doesn’t show up to teach, and it’s their right to know why they got a certain grade – the grade has to be justified.
This means a teacher cannot malice a student by failing them; there has to be room for redress. Apparently this is not the case at LDC. There are accusations of impunity and excesses.
During our trio-chat, Mwenda had a solution: privatise LDC, dump its monopoly. Problem solved. The market will cure the ills. I retorted to Mwenda that his blind faith in free markets was not only misguided, it betrayed lack of context and was ahistorical.
To be sure, Mwenda conceded that he has outgrown his past when he was heavily imbibed with neoliberal thinking about the magic of the market and sweeping liberalisation, privatisation as the route to economic growth and transformation.
But if Mwenda has tempered his views and reconsidered his stance, his teacher and mentor, Charles Onyango Obbo, has not. ‘Poor corrupt nations can’t afford statist economies. They are the ones that need the free market most’, he wrote in Daily Monitor, August 11.
Obbo conflates neoliberalism with capitalism and a market economy. Capitalism and markets have existed for hundreds of years, worked and failed in different versions in different places at different times.
Neoliberalism and free market fundamentalism, by contrast, is a very recent ideological conviction. It seeks a one-size-fits-all policy framework for poor countries.
From the 16th Century to the Second World War, capitalist systems were not under the sway of the kind of free market fundamentalism that Obbo is so enamoured with. Instead, in North America and most of Europe, under the ‘Protestant Ethic’ Obbo cites, the initial phases of capitalist development and transformation were built around state power and economic nationalism.
This system of mercantilism combined national economic accumulation and wellbeing with pursuit of national power. So, business interests were ensconced on the state, and the line between the state and the market was patently blurred.
After the Second World War, even when Western powers agreed to commit to more economic openness and liberal economic policies in trade, commerce and finance, the consensus included a principle called ‘embedded liberalism’ – a commitment to economic liberalism but with the proviso that national governments have to intervene in markets and right the wrongs of market activities.
Today, Western governments extend huge subsidies to farmers. They grant big bailouts to corporations. Why this government interference with markets to helping farmers and big companies when free markets should be at work?
It is because the idea of free markets is an illusion. The free market is fiction. In reality, markets do not exist in a pristine and pure state, rather they are made and remade, constructed and destroyed, and they function or fail depending on social conditions and the nature of the state.
The most successful story of contemporary capitalist transformation is China, but you cannot talk about China’s story together with Obbo fictitious free market. Same with the other Asian late industrialisers – South Korea, Taiwan, Singapore and Malaysia.
In Uganda, there is no doubt that liberalising the economy produced some positive outcomes, but this has to be evaluated in the broader context of our economic standing.
In a typical strawman strategy, a little disingenuous, Obbo throws up the scary image of centralised production and distribution to make the case for unbridled liberalisation and privatisation. That is scarcely the issue.
The issue is throwing everything to the hardy wings and whims of the free market where there is no accountability, no regard for the common good other than individual and corporate enrichment.
The kind of liberalised, privatised economy that Obbo believes in, and which Museveni implemented at behest of the IMF and World Bank, actually exists in very few countries. Uganda is one of them.
You won’t find that free market economy in China, India, not next door in Kenya, in fact not even in the world’s headquarters of Capitalism, America, where everything is left to the vagaries of the market. This is a debate we need to have. I challenge Charles Onyango Obbo to it.
