CAN ZIMBABWE EVOLVE INTO A DEVELOPMENTAL DEMOCRATIC STATE?

 

“Global Politics and the role for CSOs/Trade Union in the efforts to transform into a Developmental State[1]

 While it is too early to say whether Zimbabwe can evolve into a Developmental Democratic State (DDS), these on-going debates are trying to understand whether this is a viable route for the country’s future development post-2018.  Over the last two decades, there has been a debate on whether Zimbabwe is a Failed and Conflict-Affected State (FCS), and the consensus seems to have been that the country exhibits some elements of FCSs, especially in its inability to meet social needs for most of its population (a Weak State); but that the Coercive State Apparatus and its operations does not exhibit the characteristics of a FCS (a Predatory State).  The result of these two contradictory State-typologies has been that Zimbabwe has over this period kept many scholars and analysts busy with trying to predict the future.  The prevailing ideas of a Command Economy (in Agriculture, Infrastructure, Fishing, and others), Plan to Restructure State-Owned Enterprises so that they can play a greater role in the economy, and the desire to Maintain State Interventions in the wider Economy as defined by the framework of “Zimbabwe is Open for Business and promise of Free, Fair, Transparent, and Credible Elections” all seem to provide a basis for concluding that Zimbabwe meets the criteria for a foundation upon which a DDS can be built.

A. Objectives

Trade Unions are interested in what role the State plays in regulating the relationship between Labour and Capital in pursuit of a fairer sharing of profits (giving rise to a Tripartite Engagement)

CSOs are interested in what role the State plays in providing social safety mechanisms to support and provide the poor and the vulnerable with more opportunities (based on principles of Social Protection within a Social Risk Management framework).

Both Trade Unions and CSOs are interested in what role a State plays in the distribution of power and wealth between the elite, ordinary citizens and the State in order to reduce social inequalities (giving rise to a form of Social Compact).

B. Context: Democracy and Economics

1. Three Democracy Types

1.     Liberal Democracy (emphasizes freedoms of the individual within a capitalist system).

2.     Social Democracy (modifies Liberal Democracy by supporting economic and social interventions to promote social justice).

3.     Democratic Centralism (where political decisions, taken by party leadership through its democratically elected bodies, are binding upon all members of the party with little room for dessent).

2. Two Economic Models

1. Washington Consensus

These are "standard" reforms promoted for developing countries in crisis by three institutions based in Washington, D.C. (the International Monetary Fund -IMF, the World Bank, and the US Treasury Department).  The specific Washington Consensus policy recommendations are:-

1.    Fiscal policy discipline, without large fiscal deficits relative to GDP;

2.    Redirection of public spending from untargeted subsidies towards the provision of pro-growth, pro-poor services like primary education, primary health care, and infrastructure investment;

3.    Tax reform by broadening the tax base with moderate marginal tax rates;

4.    Interest rates that are market determined;

5.    Competitive exchange rates;

6.    Trade liberalization covering imports, emphasis elimination of restrictions like licensing; removal of all trade protection by use of low and relatively uniform tariffs;

7.    Liberalization of inward foreign direct investment;

8.    Privatization of state enterprises;

9.    Deregulation by removing regulations that impede market entry or restrict competition, except for those justified on safety, environmental and consumer protection grounds, and prudential oversight of financial institutions;

10.   Legal security for property rights.

2. Beijing Consensus (sometimes called the China Model)

This gained ground in Southeast Asia as these countries shifted their development strategy “from one based on free markets and democracy to one based on semi-free markets and an illiberal political system.” Its main features are:-

1.     Replacing trust in the free market for economic growth with "a stronger state hand on the levers of capitalism";

2.     An absence of political liberalization;

3.     Strong leading role of ruling political party;

4.     Population control;

5.     A pragmatic concern with serving the people;

6.     Constant trial and error experimentation with an element of innovation;

7.     Gradual reform rather than neo-liberal economic shock therapy;

8.     A strong and pro-development State;

9.     A "selective cultural borrowing" of foreign ideas;

10.  A pattern of implementing easy reforms first, and difficult ones later.

C. Six contemporary forms of the State

1. Failed State

1.     Without control of its territory, or monopoly on the legitimate use of physical force.

2.     No legitimate authority to make collective decisions.

3.     Unable to provide public services.

2. Weak State 

1.     Has low or stagnant economic growth

2.     Its governing institutions are unable to implement policies or maintain autonomy due to corruption or conflict. 

3. Predatory State

1.     Seeks to maximize the profits of government, rather than seeking to maximize the welfare of its constituents.

2.     Players in the State enrich themselves through corruption and associated practices.

4. Dependent State

Follows negative experiences with Washington Consensus and:- 

1.     Examines the patterns of interactions among nations (divided into periphery and metropolis/centre).

2.     Argues that inequality among nations is an intrinsic part of these interactions because resources flow from a "periphery" of poor and underdeveloped states to a "core" of wealthy states (metropoles), enriching the metrople at the expense of the periphery.

5. Local Developmental State

Takes place at a city/municipal level, rather than at a state level where the City:-

1.     Places a great emphasis on tackling social exclusion.

2.     Uses profits from assets to fund municipal spending of infrastructure projects,

3.     Develops a program of cash grants that provide support for poor families.

4.     Supports the poor in developing business by providing many incentives (finance, loans, technical, etc.).

5.     Develops the local economy with new micro-enterprises

6. Developmental state

1.     Uses state intervention with extensive regulation and planning.

2.     A model of capitalism (often referred to as state development capitalism).

3.     Has more independent and autonomous political power.

4.     Has more control over the economy and leads macro-economic planning.

5.     Is primarily focused on economic development.

6.     Is charactaresitc of societies that come late to industrialization.

7.     Decides to lead the process and takes on development roles.

D. CHARACTERISTICS OF THE DEVELOPMENTAL STATE

1. Examples in the last Century

Japan after Second World War

East and Southeast Asia towards the sedond half of the Century

o   Thailand

o   Singapore

o   South Korea

Botswana since the early 1970s (Rwanda and Ethiopia not reviewed yet).

2. Evolution of Developmental State

Due to late industrialization, the State drives the proces and takes on developmental functions.  It has over the years exhibited two approaches towards private economic activities:

(a) Regulatory, and

(b) Developmental

This further leads to two different kinds of Business-Government relationships.

(a) Regulatory as in the USA

(b) Developmental as in Japan.

Regulatory state

Uses regulatory agencies empowered to enforce a variety of standards of behavior to:-

(a) protect the public against market failures of various sorts, including monopolistic pricing, predation, and other abuses of market power; and

(b) provide collective goods (such as national defense or public education) that otherwise would be under-supplied by the market.

Developmental state

Intervenes directly in the economy through a variety of means to:-

(a)   promote the growth of new industries; and

(b)  reduce the dislocations caused by shifts in investment and profits from old to new industries.

Industrial policies pursued by Developmental States include: 

(a)   Investing and mobilizing capital into the most promising industrial sector that will have maximum spillover effect for the society.

(b)  Fostering cooperation between State and major industries in order to maintain a stable macro-economics framework.

(c)   Intervening in the market system through grants and subsidies to improve competitiveness of firms.

(d)  Control of exchange rate, wage level and manipulation of inflation to lowered production cost for industries caused economic growth.

4. Examples of Developmentalism features

Some characteristics from ThailandTaiwanMalaysiaJapanSouth Korea, and Vietnam:-

1.      Able and willing to protect their people from the negative consequences of foreign corporate exploitation.

2.      Often have little government ownership of industry, with private sector guided by bureaucratic government elites.

3.      Leaders who can confront multinationals and demand that they operate to protect their people's interests.

4.      The Will and Authority to create and maintain policies that lead to long-term development that helps all their citizens, not just the wealthy.

5.      Regulated multinational corporations so that they may follow domestically mandated standards for pay and labor conditions, pay reasonable taxes, and by extension leave some profits within the country.

6.      Sufficient organization and power to achieve their development goals.

7.      Able to provide consistent economic guidance and rational and efficient organization,

8.      The power to back up its long-range economic policies.

9.      Able to resist external demands from outside multinational corporations to do things for their short-term gain,

10.   Ability to overcome internal resistance from strong groups trying to protect short-term narrow interests,

11.   Capacity to control infighting within the nation pertaining to who will most benefit from development projects.

12.   Ability use import substitution by telling multinational corporations wat goods will be imported, if at all,

13.   Used high tariffs  to prevent imported goods from competing with goods made in infant factories in the poorer country.

14.   Incentives to encourage foreign industries to create joint ventures with a local company (even 51% local owenreship) and thus hire local employees, pay local taxes, and keep some profits within the country

15.   Capacity to maintain more infrastructure investment that provides good transportation

16.   Ability to produce an educated labor force that enhances productivity.

5. Some results from State Developmentalism

1. China: the world leader in economic growth since 2001.

2. England: it took around 60 years to double its economy when the Industrial Revolution began.

3. United States: It took around 50 years to double its economy during the American economic take-off in the late nineteenth century.

4. East and Southeast Asian countries have been doubling their economies every 10 years; and while the rich are getting richer, the poor are becoming less poor.

 

[1] Based on a talk given to select leaders of the Zimbabwe Congress of Trade Unions (ZCTU) on 22 February 2018, at Kodzero House, 98 Baines Avenue (2nd Street & Baines Ave)