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Even though we have not yet counted the first month of the death of the late Prime Minister Meles Zenawi, we are still busy digging his bone. Very many people, leaders and ordinary people alike, are refreshing their memories on Meles’ leadership stamina and intellectual caliber. They have recognized his extra-special wit, fast learning and analyzing ability and the unwavering dedication and commitment to realize his clear but mostly very ambitious visions. As a result, they fondly described him, time and again, as a man who skillfully built his own eternal statue with similar words like that of the famous Francis Bacon.
Francis bacon in 1605 in his book entitled “The Advancement of Learning” wrote the following:
“We see, then, how far the monuments of wit, learning, clear vision and the dedication to realize it are more durable than the monuments of power or of the hands. For have not the verses of Homer continued twenty five hundred years or more, without the loss of a syllable or letter, during which time infinite Palaces, Temples, Castles, and Cities have been decayed and demolished?”
It is true that his legacy will remain intact for the many years to come both locally and internationally. Unlike his fellow contemporary African leaders, Meles brilliantly distinguished himself as a prominent pro-poor economic activist and formidable actor in the neoliberals’ discourse. In his well crafted arguments, adamantly opposed the economic principles and prescriptions of the neoliberal school of thought and held them responsible for the very many economic woes of Africa. In a nutshell, neoliberals argue that, the fundamental factor responsible for the economic crisis in Africa is the excessive state regulation of the economies of African countries, which among other things distorts the process of economic development and leads to inefficiency in the allocation of resources. They maintain that the problem can only be overcome through the peripheralisation of the state and the ascendancy of market forces in Africa’s political economy. International Financial Institutions have become the main instrument for the implementation of the neoliberal agenda. These neoliberal prescriptions are embodied in the Stabilization and Structural Adjustment Programs of these Institutions.
For the late Prime Minister Meles, the story is starkly different. For him, the economic crisis in Africa and the debt burden has put African countries in a miserable position and this has created the opportunity for the Western capitalist nations and the International Financial Institutions to collaborate in imposing their neoliberal policies on African countries.
He well explained that all over Africa, the ravaging effects of neoliberalism such as devaluation, trade liberalization, privatization, etc embodied in structural adjustment programs have become very apparent. They resulted to widespread poverty and misery. All these have not done any good to the depreciating situation that African economies have been facing over years. In the political scene, Meles stated the forces of neoliberalism through its structural adjustment programs have also been at work on the African continent. This has produced enormous impacts on African political life. For Meles, in fact a serious detrimental effect of structural adjustment programs is their implication for African autonomy.
As repeatedly stated, Meles argued that, the neoliberal paradigm is a dead end incapable of bringing about the African renaissance. To this effect, his recommendation is a fundamental shift in paradigm and the need for African states to move towards becoming developmental. For him, the state in the neoliberal paradigm is a night watchman state which is a non-activist and non-interventionist state conducive to economic growth. He explained the two pillars of the above conclusion as the assertion that competitive markets are both pervasive and partly efficient and the neoliberal political economy based on the theory of socially wasteful rent-seeking activities and the rational choice theory of solely self-interest maximizing individuals.
Meles argued that government created rent does not necessarily have to be socially wasteful. It becomes wasteful only if solely self-interest maximizing individuals use it to create wealth at the expense of society and only if the state is incapable of improving on the market. For Meles, the theory of solely self-interest maximizing individuals does not hold water. Meles argued that, the state, if it can exist in the absence of defined norms and as a coherent corporate entity for any period of time, becomes predatory. For him, a properly behaved night watchman state populated by solely interest maximizing individuals is thus a practical and theoretical impossibility. He stated that only individuals with a blend of self-interested and non-self interested behavior can create a night watchman state, and such people are equally capable of creating a state which intervenes in the economy in the larger interest of society.
For Meles, undermining patronage networks and promotion of fairness and equity, through the promotion of participation and democracy, and through appropriate sanctions and efforts at socialization is the critical role of the state in the accumulation of social capital. Inhibiting rent seeking behavior does not depend on the size of the state on the degree of its activism in economic matters but on the nature of the state without however defining the nature of the state, which can be an activist state at the same time as inhibiting socially wasteful rent- seeking activity.
According to Meles, developing countries face formidable market failures and institutional inadequacies which create vicious circles and poverty traps, which can adequately be addressed only by an activist state which is a developmental state. He explained that in the end, development is a political process first and economic and social process later. It is the creation of a political set-up that is conducive to accelerated development that sets the ball of development rolling. Only when there is a developmental state one can meaningfully discuss the elimination of rent-seeking behavior.
Meles strongly argued that in the absent of rent-seeking will be rampant no matter what the size of the state might be. Only in the context of such a political environment can one debate about development policy in a meaningful manner. In its absence all government policy and action however limited and timid it might be riddled with rent-seeking behavior. This particularly so in developing countries as these countries will be coming out of a social and political environment where vertical, patron-client networks are pervasive.
Meles explained that the neoliberal paradigm states that socially wasteful rent-seeking is the result of government activity and of the size of government activism. It does not distinguish between different types of state activism. This leads it to conclude that most if not all government intervention in the economy is detrimental to growth and hence to suggest that the night watchman state is the best state from the point of view of accelerated growth. Meles asserted that historical practice has shown that state intervention has been critical in the development process.
According to Meles, economic theory has shown that developing countries are riddled with vicious circles and poverty traps that can only be removed by state action. Thus, the theory of the developmental state completes the alternative paradigm by showing what type of state can intervene in the economy to accelerate growth while at the same time limiting socially wasteful rent-seeking activities.
Among his arguments on the discord of neoliberalism, the most critical and perhaps the most controversial one is not the issue of developmental state, rather the issue of democracy and development in the developmental state. The only divergence from the requirements for the establishment of a developmental state and the emergence of democracy the political rules of the game and building consensus on the rules of the game is not only consistent with the requirements of a developmental state but may also reinforce and consolidate it.
In dealing the concerns with the “hustle of democracy”, Meles argued that the developmental state should be single-mindedly focused on doing what is needed to accelerate growth. Moreover, if it also has to deal with democratic legitimization of its rule, not only will it be forced to spend a lot of time in doing so, but it may be forced to engage in patronage and socially wasteful rent-seeking activities. He explained that it could obviously be reasonably argued that democracy is so important that if this is the price to be paid for having it – so be it, a limited reduction in growth that may ensue is not too much of a price.
Patronage and rent-seeking is not a necessary characteristic of democracy, rather it depends on the structure of politics. Where patronage is low, where social capital is high and public spiritedness adequate, democratic politics can be relatively free from patronage and rent-seeking. If a developmental state to be solely concerned about accelerating growth, it should build the high social capital that is vital for its endeavors. For this effect, stamping out patronage and rent-seeking is mandatory. In this connection more subtle argument is how can the developmental state clean-up the mess of patronage and rent-seeking in the initial states of its establishment by anything other than undemocratic means?
As Meles explained, a related issue has been the need for continuity of policy. Developmental policy is unlikely to transform a poor country into a developed one within the time frame of the typical election cycle. There has to be continuity of policy if there is to be sustained and accelerated economic growth. In a democratic polity uncertainty about the continuity of policy is unavoidable. More damagingly for development, politicians will be unable to think beyond the next election etc. It is argued therefore that the developmental state will have to be undemocratic in order to stay in power long enough to carry out successful development.
Meles acknowledged that neither of these two related concerns could be dismissed off-hand. That is perhaps one of the reasons why democratic developmental states have been an even rarer species than developmental states in general. But those states that have played a developmental role and have done so in a democratic fashion, such as the social-democratic coalitions in some Scandinavian countries and the center-right coalition in Post Second World War Japan, the so called dominant partly democracies can point to one way out.
He further noted that studies have shown that stable long-term coalitions which stay in power for a long period but do so by democratic means can provide the needed continuity and stability of policy. The typical examples in these regard have been coalitions based on the labor movement and the middle classes in some Scandinavian countries, and coalitions between rural population and the right in Japan. The ruling coalitions in these countries have had regular, free, open and fair elections, and the basic political and human rights have been respected. They thus fully qualify as democratic regimes. But they have won elections repeatedly and have been in power for long-stretches. In the case of Japan the ruling coalition has been in power for almost 50 years.
According to the analysis of Meles, the private sector is singled out not to be part of the coalition. A critical issue is therefore can such a stable, democratic and at the same time developmental coalition be established in a developing country. He explained that one group that cannot be part of the coalition is the private sector. One of the defining characteristics of a developmental state is that it must be autonomous from the private sector. It must have the ability and will to reward and punish the private sector actors depending on whether their activities are developmental or rent seeking. It cannot do so if the private sector is in the coalition. In the end, what the developmental state does will strengthen and reward the value creating and punish the rent-seeking part of the private sector.
According to the explanation of Meles, the problem, however, is that without a developmental state, most if not all of developing countries will be stuck in the poverty trap and the substantial business and middle class will not be created. The question therefore is whether a developmental state can be firmly based in the rural areas and whether it can use this to establish a stable coalition that rules democratically.
The activities of a developmental state will not only be consistent with the interests of the peasants but also with their social transformation into a force of democracy. There will be the normal limitations of a dispersed rural population, but under certain circumstances it does not become an insurmountable hurdle for democracy. In his analysis, Meles identified resource flows from agriculture as the only other fly in the ointment and a source of tension between the developmental state and the peasants. Potentially, therefore, the peasant is the bedrock of a stable developmental coalition.
Dealing with the mechanisms of ensuring continuity, Meles stated that, with the votes of the peasants who constitute the bulk of the coalition, the developmental coalition will have what it needs to rule democratically to ensure continuity by democratic means and to stamp out patronage and rent-seeking activities. The urban middle classes and labor, however small they might be could also be members of such coalition.
A coalition that covers much of the rural and urban population in which they have very little to gain from patronage and rent-seeking, can guarantee continuity through the democratic process and would be a solid base for a state that is both democratic and developmental. For Meles, such a state would in effect be one form of the so-called dominant party or dominant coalition democracy. Such a state based on a solid and dominant coalition of forces who have no stake in patronage and rent-seeking would be able to avoid and overcome socially wasteful patronage and rent-seeking.
As Meles explained, technically policy stability and continuity could be achieved even when parties regularly replace each other in governing the country. However, this can be so only where such a solid consensus among politicians and the population on fundamental policy has been achieved and where politics is confined to dealing with trivialities and personalities. Such a situation is very unlikely to emerge in a developing country. Meles discourage politics based on personalities as it can easily degenerate to patronage politics. For him, the most likely scenario for a state that is both democratic and developmental to emerge is in the form of a dominant party or dominant coalition democracy.
Meles argued that if a developmental state were to be democratic the “hegemonic” nature of its development project would be achieved faster. Moreover, where the circumstances for the emergence of a developmental state do not exist, the circumstances for the emergence of a stable democracy in a poor country do not exist. Meles concluded his arguments and analysis that the prospects of a stable democracy in a poor country are intimately related to the establishment of a developmental state and achieving accelerated development. In poor developing countries, a developmental state, accelerated development and stable democracies appear to be parts of the same package. The chances of a stable democracy in a poor country are related intimately to the emergence of a developmental state and accelerated development associated with it.