DEVELOPMENT VERSUS DEBT PEONAGE
BY HENRY BOYO
The above is the title of a paper presented by Brian Browne, at the celebration of the 90th Birthday anniversary of distinguished Prof Adetoun Ogunsheye at the Aboyade Policy Development Centre Ibadan, last month.
Browne’s observations on the fundamental causes of mass poverty, which subsists concurrently with stupendous wealth accumulation, by less than one percent of the World’s population, should provoke a deeper reflection on a plausible and realistic exit plan from eternal subjugation by well heeled financial predators.
Brian Browne is, by the way, co-author, together with Asiwaju Bola Tinubu, of “FINANCIALISM” an explosive exposé on the inherent danger in embracing the injustice of Mainstream Economics. The following narrative is the first in a 2- part summary of the presentation. Please read on.
“Ten of the world’s richest people hold more wealth than the 3.6 billion people who constitute the poorest half of humanity. Try as they might, African nations cannot break the hold that poverty and rich nations have on them, and invariably do as they are told by the economic masters. We are advised to adopt fiscal austerity, tight monetary policy, open markets, unrestrained competition, comparative advantage and free trade, while our Governments are cajoled to reduce social expenditure that will help the poor.
Conversely, the powerful nations that control the World’s prime International and Financial Corporations, run perennial budget deficits that funnel hundreds of billions of dollars to “some of the wealthiest institutions on earth”. Something is wrong. These unjust things befall us not by accident, but as conscious designs. Only if we change our economic module, can we change the wrongs that have relegated so much of humanity to poverty and despair.
How can an economic system claim to be a purveyor of rational and efficient allocation of resources, when it produces such awful results. We must understand the difference between social indoctrination and genuine learning. The World’s economic masters will teach us what they need us to know, but to arrive at the truth, you must begin to learn for yourself that which you need to know.
Going forward, I want to present an alternative perspective on Economics. What I say may hopefully encourage us to scrutinize the assumptions upon which the global economic system is based.
This is Economics first fiction – that a person, a firm or a nation makes economic and financial decisions based purely on reason and with perfect, complete information at their disposal. We know this as untrue. No one can perfectly forecast the consequences of his economic decisions. Mainstream Economics’ most dangerous lie asserts that it is the most efficient system for allocation of wealth and resources among the population. Thus, reform, any change to introduce the market outside the prism of Mainstream Economics, will produce an inferior social and economic outcome. This is one of the greatest lies ever told; it ranks with the infamous “earth is flat” falsehood which was promoted for centuries by the subsisting ruling class, because the truth did not fit their purposes. The story of mainstream economics and of human history is the tale of a well-heeled elite that willfully fashions social institutions to maximize accumulation of income, wealth and power at the expense of the people; seen from the average man’s vantage point, the history of mankind is the struggle to secure freedom and fair compensation for the labor of the many against the avarice of the few.
Historically, slavery was established as an institution that is integral to economic life; this means that with the ownership of one person by another, the very life force of the enslaved is sacrificed to the benefit of the master. The slave is reduced to a tool, an asset, not different from a “chisel or a goat.” However, slavery was abolished approximately 150 years ago in a manner that would allow its evil spirit to live and continue to influence the affairs of man. The British, for example, compensated slave owners, though they had already profited unfairly from stealing the wages that should have gone to the enchained black man.
In Florida were I was raised, a free black man could not leave a job without his employer’s consent. Such approval rarely came. When it came, the employer would charge a departure fee, so exorbitant as to defeat the reason for the move. Progress towards better equality is always also counterattacked by the powerful elite. Mainstream economics is a major barrier against progress.
Although significant social reforms became inevitable after the second world wars, but the 1960s proved a double-edged sword. The American Civil Rights Movement and the National Liberation movements in Africa and elsewhere sparked an elite backlash as they felt the non-elite were asking for too many rights too soon. Something had to be done. Since 1980 the device of modern-day debt peonage, induced by fear of inflation and recession, has become the choice instrument of the global elite to undermine the common person in order to return to the age-old practice of extracting utmost profits from the labor of others. This has been achieved through the device of modern-day debt peonage which the global Elite put together on three pillars. They first decimated organized labour; due to labour weakness, wages have stagnated for decades. While smashing labour, they also freed the banks to charge interest rates that would have been illegal in years past. They then promoted the growth of the Financial sector, as the most profitable economic sector. Speculation in real estate and exotic financial instruments is where the financial sector chooses to invest the bulk of funds. This is a radical departure from traditional capitalism, where the financial sector focused on investment in physical equipment and inputs needed to manufacture tangible products.
The financial sector is now dedicated to nothing but itself, and as it expands, it siphons more and more funds from productive industries; consequently, people lose jobs or wages stagnate. These people resort to borrowing to maintain their lifestyle. The more they borrow, the less their capacity to repay the loan and ultimately, people have become trapped in a cycle of increasing debt. This is debt peonage, and it is not surprising that in Western economies, most working families can’t gather $500 in a hurry. The world is burdened with high aggregate private debt; with too many loans outstanding, people and firms chase feverishly to acquire funds to repay loans. People cut costs and also purchase less; firms hire less and fire more and productive economic activity decreases. Everyone suffers except the financial sector, where morality or charity is not a badge of honour. I call this ‘FINANCIALISM’, the meaner offspring of capitalism.
Undeniably, increasingly wider inequality plagues most Western nations, so if the first world Economies so mistreat their own, we should not delude ourselves that they intend better for an Africa they have always despised.
Colonialism was the visitation of economic slavery to Africa while Africa exported raw materials to Europe in exchange for manufactured goods. Fifty+ years later, the trade pattern remains the same, except China has entered the joust. They still pay diminishing amounts for your commodities while you pay more for their products. Debt mounts. The IMF comes around periodically to tell you how to behave. They place conditions which are too grievous to bear on government spending. Yet, you still bear them only to find that your condition has worsened due to your obedient adherence to the proffered crackpot remedies.
Unfortunately, adherence to the dictates of mainstream economics, will keep us locked in poverty and debt forever.”
NEXT WEEK: Brian Browne’s ideas on growth and reshaping our economies equitably.
SAVE THE NAIRA,SAVE NIGERIANS!!