10-Apr-2010

A Short History of the Political Economy

Part I: Welfare States in Coming

Not so long ago Kenyans woke up to the day of its “rebirth”, August 27th, that fateful day in which a new
(“civil” society led) constitution was promulgated. Well, Kenyans have no choice but to believe that the
country has become anew and the hitherto evasive glory days are just around the corner. In the bosoms
of many a Kenyan, it is now hoped that their lives will change drastically as the new constitution
somehow improves the economic welfare of their lot by leaps and bounds. This is the change Kenyans
are waiting for and not Obama’s kind!

The model of our new constitution seeks to emulate, procedurally at least, those of the so called
developed world, rightly or wrongly, on the premise that the adoption of a hybrid Anglo-American
political system will result not only in political mileage but also in economic progress. In other words, the
championing of democratic causes and the subsequent profusion of free expression will lead to an
expanded “free market” economy ultimately to securing a better welfare for all and sundry.

It is worth noting that subconsciously there appeared to be a disillusionment with the Westminster
system that Kenya adopted from the colonial days in the sense that it did not assure the locals of a piece
of the national cake, rather their representatives ate the cake on their behalf! As the ruling class,
Westminster style, sat pretty at the feasting table, their “followers” became more impoverished and
desperate as population grew and rural economic activity failed to keep up with it. This state of things
attracted the attention of entrepreneurial sorts in the form of the NGO fraternity and lobby groups who
used the desperate rural situations to source for funds abroad in a bid to “alleviate” the welfare of their
kindred. Such enterprise led to the burgeoning of bank accounts and the bellies of those for whom the
spirit of enterprise had been bestowed upon. In due time their economic status grew, and with it their
thirst for power; they began to feel that it was their duty to challenge the aboard of Westminster. Not to
mention that their Western sponsors egged them on because, as they said, they were first and foremost
friends of Kenya who wanted to bring their junior partner up to speed with internationally accepted
governance standards; bringing to an end what they saw as a spate of corruption and bad governance
was their foremost priority.

When it was all said and done, the ruling class and the socially westernized lobby groups reached a
“consensus”. The lobby class was to be co-opted into the mainstream Westminster model through
“decentralization” of power, which they had relentlessly advocated. This would, as it were, bring power
to their local level and ensure that they too had a taste of the national cake to supplement. On the other
hand, it will also serve to gain the West a foothold in policy making at the sub-local level all in the name
of bringing their kind of development closer to the people through “civil” society.

Now that a political truce has been reached and democracy has come to the doorstep of upcountry folk,
it is just a matter of time before this newly found democratic space ignites the flame of economic
prosperity… at least that is what a section of Kenyans like to believe. But the course of social-economic
history directs us to a different path. It indicates that politics flows from economics and not the other

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way round and as such political settlements without the hindsight of economic prospects do not resolve
social strife they only delay it. The French “revolution”, which in essence was a bread riot that took on
heightened political overtones, came to fruition on the back of decades of economic desperation. Those
were the days when the Monarch largely lived on debts to pay salaries and up keep of the ruling class
and the “revolution” only served to bring the impracticability of its existence to an expected end.
Between, the French “revolution” and the late 1800s European states chose to slowdown their slide into
bankruptcy by going to war to capture their neighbours land and treasures.

The focus changed with the discovery of what came to be (and still is) crown lands of Africa and the
setting up of expedition companies such as the British East India, which went out to the farthest corners
of the dark continent in search of loot for subsequent trading in the domestic and regional markets. This
coupled with the coming into being of industrial complexes quickened the economic prospects of the
respective ruling feudal classes in Europe but the ghost of the French bread revolt still haunted them in-
that poverty continued to subsist amidst the wondrous economic progress that abounded. The
persistent impoverishment brought about agitation by the peasantry for a fair share of the spoils and a
political settlement of egalitarianism through voting was reached on the back of a basic welfare for all.

Given that the feudal lords were still the owners of capital (land), it was they who extracted rent income
giving them the means to run in an election and as a result the peasantry who were the majority would
be exchanging one feudal lord for another. This of itself would not have guarded against a revolution
when the peasants run out of bread. Hence, the trick was to introduce a welfare state similar to that in
the heady Roman days where citizens were guaranteed bread. It was Juvenal who once stated that “give
people bread and circus and you will rule comfortably over them” and this doctrine became the Western
doctrine on how the feudal classes would rule over their immediate subjects (the distant subjects would
be ruled by a combination of military might and what is termed as capitalism). It is also noteworthy that
the Roman system of government was not a democracy as we know it but a variant of feudalism whose
internal make up held firm so long as resources from subdued neighbours kept flowing to Rome thus
giving the assurance of bread to its citizens.

To the feudal class in Europe, in the early 1900s, the electioneering process served for mere symbolism
of equality but it is the dole that they relied upon to maintain their reign. To the peasant class, welfare
was what they wanted and having been granted the ballot was to protect their “welfare rights”. It can
therefore be said that democracy in the strict European sense was a means of safeguarding the welfare
state. This was a political settlement to an economic quagmire that had bedeviled Europe for centuries
and in that sense Europe was able to move forward to greater heights in the 20th century by means of
their giant corporations, which replaced the institutions of plantation slavery as the centre of economic
production and by extension, ushered in new forms of slavery.

For some brief period, right up to the welfare settlement, wage slavery afflicted Europe as the new
industries paid a pittance to those manning the machines. Most of these wage labourers were recent
migrants from rural Europe in such of a less financially suffocating environment such as that in the rural
areas which was dominated by the feudal landlords. However, it increasingly became clear that these
less than optimum working conditions could not be sustained without political strife hence the ruling

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class opted for a “win-win” situation through the introduction of a welfare state in which all citizens
were guaranteed a basic minimum wage whether they worked or not using the income gained from the
industrialized corporations. To subsidize this fixed costs, the corporations needed cheaper sources of
raw materials and labour in other parts of the world and the protection of their Governments to secure
the same hence the scramble of Africa through military means and the subsequent re-scramble by
Western corporations.

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A Short History of the Political Economy

Part II: The Other Side of the Coin

In the Roman times the value of money, mainly coinage, was pegged to its silver or gold value and as a
result the ratio of gold to currency in circulation was crucial in sustaining currency stability, minimizing
food inflation and enhancing the ability of the state to provide bread for its citizens subsequently
ensuring political stability. Whenever currency expanded faster than gold supply, the Romans had to
look for gold beyond their borders by invading their neighbours and looting their treasures and on
retrieving the gold currency stability would be restored for a while until the gold currency ratio was
severely destabilized again. But because in those days coins were weighed the reduction of the amount
of gold or silver in a coin led to loss of purchasing power of money culminating in inflation. In a state of
high inflation the Rome could not provide free bread to its citizens the result of which would be a
backlash from the masses and a collapse of the state. The Romans had no option but to look for the gold
and silver wherever it would be found by whatever means necessary. Precious metals were not the only
reason for occupation, among other things; labour also played a major role as heightened aggression
against its neighbours demanded more manpower join its military ranks and these numbers were
sourced from subdued regions. Unwittingly, the larger the military grew the more it fed the flame of
inflation subsequently paving way for the demise of the Roman Empire.

A fast tracking to the 18th century and the “Romans” of the latter times (who previously were the slaves
in the real Roman times) demanded slaves for plantation farming rather than military purposes. Unlike
their Roman predecessors they dealt with the problem of inflation through importing forced labour
which they did not have to pay for unlike the Roman military. This was the epoch that saw the
transatlantic slavery trade flourish as the slaves, of mainly African descent, were converted into cotton,
coffee, cloves, sugar and other foodstuffs which were then sold in European markets further enriching
the feudal class. Slavery served as the processing factory which only needed a bit of food fuel and a
leash to keep it running. However, the age of industrialization increasingly rendered plantation slavery
irrelevant as machines, to a large extent, replaced plantations as the centres of production. On the
aftermath of industrialization, the corporations that went out into the world not to take in slaves but to
extract, if not extort, resources from the “dark underworld” of the Southern hemisphere and take them
back to Europe for processing using home labour and would then sell them both to local, regional and
global masses. The “loot” (read: profit) was then shared with domestic governments via taxes for
onward allocation to the welfare system. At this juncture, the role of European governments was to
make the work of the corporations easier by seeking safe passage for its corporations in return for larger
tax revenue.

The first phase of European occupation, also known as the scramble for Africa, on one hand involved the
escalation of military intervention in which European forces combed the beds of resistance in occupied
lands and gave the corporation sufficient protection to set camp and beginning extracting resources. On
the other hand, this era also witnessed an influx of “Christian missionaries” as they were so called whose

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work was to bring the “civilization” to the “natives” and make them “educated” and better suited to
serve the needs of the incoming corporate European dominion. Thus the corporations had military
protection of their Governments and through it they could occupy and exploit local resources without
being answerable to the local inhabitants while at the same time they were being furnished with cheap
labour equipped with adequate communication and arithmetic skills to run errands for the corporations.
This government, missionary and corporate synthesis was also known as the 3Cs – Christianity,
Commerce and Civilization. This roughly translated to bringing “civilization” to Africa through
“Christianity” and “commerce”.

The term “colonialism” was later coined to these mercenary like activities on the part of European
feudal governments, their missionaries and corporations. Herein the seeds of Western economic
dominance in domestic African economies were sown as it enabled the operations of the European
based firms to take root in a competition free environment (thus the term “free markets” must have
different meanings to different people). All measures, though not always successful, were taken to
ensure minimal operational costs and maximum profits. Land was expropriated from the “natives” not
so much to use it but to create dependency on labour income from the corporations. The labour
accruing from this rather artificial dependency was then directed towards mineral extraction and
plantations at minimum costs to the corporations and such were the beginnings of the entrenchment of
“foreign direct investments” and its attendant currents of wage slavery.

In the “upgrading” of labour, missionaries came in handy not only with their brand of “education”, but
also with the psychological reinforcement and justification of European dominance as they emphasized
subservience to the “god” of the white man and utmost obedience to the crown and the Vatican. The
“natives” had to endure the unending hymns of praise for “the empire where the sun never sets” in
addition to which the missionaries added a morsel of “education” to the Africans in form of reading and
writing skills just sufficient for them to be useful as clerks and bookkeepers in the White man’s
corporate World. This corporate world in effect became the new “god” which the “educated native”
looked up to and was made to desire. These forms of “white” washing naturally involve the wiping out
of reason as the locals are made to denounce their former ways negating their lesser “native gods” and
therein the mental occupation sets in. Convinced of the inferiority of their “gods” the local inhabitants
attempt to replace all forms of their lifestyle from their religion to symbols of progress with those of
their domineering masters.

Those who had a knack for arithmetic, Queen’s English and could better conceptualize Lugard’s “great
conquests” for the Imperial British East Africa Company (which paved way for corporate exploitation),
were catapulted to the “upper” chambers of the corporate ladder to serve as clerks and messengers; the
rest of the “native” herd was sent packing back to the reserves. Up to this day, the education system is,
for all practical purposes, in a state of inertia. The current system of “higher education” which was
inherited from the missionaries only gives a form of mechanical learning that puts a premium to
obedience at the expense of reason and the fruits of it are evident in the fact that its graduates lack the
technical capacity required for them to attain higher forms of technical occupation. In other words, the
missionary brand of education reduces its students to clerical and artisan work without the capacity to
attain a higher skills base.

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Accordingly, the missionary educational background did not equip the African forerunners of “progress”
with the intellectual capacity to avoid the fox holes that their colonial masters set them up to. Neither
did they have the financial nor military might to overrule and outgun their contenders… they signed on
the dotted line of Western demands. Having, by any means necessary secured, large tracts of land and
relegating the Africans to the reserves, the Europeans then demand compensation for the land that they
had forcefully taken away from the Africans at “market” prices. And since, the incoming African
administration did not have the funds; the European Governments “arranged” for the World Bank to
lend for this buy back activity for land that was originally in the hands of the locals. The missionary
education had wiped out the reason needed for the local leadership to see that they were being
defrauded and if they did then their missionary socialization had imbued them with an inferiority that
stifled their will to fight for the land of their ancestors. And what became of this “wise leadership”? A
gargantuan crowd of “native” mimic men and women whose educational and technical inadequacies
has led to a psychological deficiencies that has dilated into western style fetishism; they consume and
adorn anything and everything that symbolizes western progress from “democracy” to “luxury”.

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A Short History of the Political Economy

Part III: The Development Drugstore

In Kenya, the die was cast against the idea of independence from the time Meinerzhagen and his rag tag
militia penetrated the Gaki region of central Kenya and the Nandi enclaves by 1908 through by use of
bullets. Yet again the fall of Gaki and Nandi can be attributed to their technical deficiency as spears were
no much for the guns and as such this tribal war led to the annihilation not only of people but also their
way of life; setting the stage for the initial wave of occupation by both settlers and missionaries who laid
the foundation for Western corporate domination and virtually ended any ideas of sovereignty the
respective communities may have haboured. After a brief Mau Mau resistance, by 1963 at the time of
handing over to “self rule” Western ideologies and aspirations reigned supreme in the minds of the
incoming ruling class. Having serious intellectual limitations, the new rulers could not see beyond the
Westminster political model and despite having paid several visits to Europe they could not discern that
the stability of Europe lay in the Welfare state, whose needs and wants had led to the occupation of
their territories by individuals and corporations from the West. Their succumbing to the intoxication of
western ideology was total in that it led to complete dependency on Western ideals for “cultural,
political and financial nourishment”.

In other words the era of corporate occupation had come of age after transitioning from its embryonic
stage in the first phase of occupation, which was largely military and psychological in nature. This was to
be augmented by both bilateral aid and World Bank – IMF aid so as to, as it were, speed up
development and bring these nations to similar levels of development as those of Europe and America.
Thus the victims have had to take the bitter pill prescribed to them in their state of continued
occupation. The treatment of their malaise involves what can be called the 3Ds – Democracy, Debt and
more Debt. It was the inability of the education system to equip its students with real technical capacity
that enhanced the pace of the second phase of occupation in the post “independence” era. Occupation,
had not only led to confiscation of land and loss of sustenance but it had also led to both a knowledge
gap and psychological deficit. By independence the effects of a basic missionary education had taken
their toll on the African leadership and they saw that they had no option but to incorporate Western
firms in their development agendas in a bid to reduce the technology gap that persisted and still
continues to do so.

Having swallowed the pill and gotten hooked to it, it was now for Western enterprises to bring about
the development that the western educated leadership yearned for. It was easy for Western
Governments to convince the Sub Saharan states, in general, of the need to create “conducive”
environment for the so named “foreign direct investment”. The local chiefs who took over the mantle
did not understand that domination was not through the crown but it was through the corporations and
that the crown was merely ensuring the entrenchment of the corporations in the event of which the veil
of the crown could be lifted and “independence” handed over to the “natives” leaving the corporate
based resource extraction system intact. This was, as it were, the Houdini moment that the European

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“magicians” managed to pull off! Going forward with the “development” propaganda hand-in-hand
with a new bout of psychological warfare in the media to exhibit the Africans as helpless and thus
needing all the foreign “assistance” they can get. The media replaced the missionaries constantly
juxtaposing the perceived progress of the Welfare states in the West and the backwardness of the
Southern hemisphere in general and Sub-Saharan Africa in particular. The constant display and chatter
about corruption, poverty and disease in the third world has the effect of reinforcing the necessity for
foreign assistance while at the same time giving the citizens of the Western nations the assurance that
their governments are taking good care of their welfare and their fate is not as bleak as that of Africans.
Which brings one to wonder whether the West is really committed to finding the cure for
underdevelopment in Africa if the decrepit state of Africa is what sustains the grip of feudalism over its
subjects?

It is increasingly the case that the issuing of loans to domestic governments to fund activities to be
carried out in the name of bringing “development” by the same corporations coming from the aid giving
nations while the burden of repaying the loans was borne by local governments. This enabled the
Western governments to widen their source of welfare income from corporate tax base to include
interest income. In this sense, the corporations enabled the Western governments to capitalize their
investment in the corporations and ensure a continuous “dividend” income stream from the loan issues.
Consequently, the loans issued to the developing world have a multiplier effect in that they assure the
developed world both a tax income and an interest income which in turn guarantees the economic
stability of their welfare states and by extension their political stability. Foreign direct investment (FDI),
on the other hand, served to expand foreign share of economic activity while restricting the expansion
of home grown economic entities partly due to the former’s advantage of size and superior knowhow.
Currently, external debt has a 39% share of the Kenyan GDP as of mid 2010 and it would not be an
unreasonable assumption to say that external debt combined with FDI means that at least 60% of the
economy is foreign owned and run. Could it be a coincidence that the poverty levels, those living under
say US$2 a day, is said to be hovering in the 60% range?

If the economy is foreign owned then it is likely that its political structure will be largely determined by
those foreigners who own it through the various levers be they FDI, bilateral or Bretton Woods.
Accordingly, the pace of economic and political activity in the periphery economies is largely determined
by “mainstream or international” social-economic policies from “developed” countries by virtue of their
economic and military might. Even for countries such as the US that did not for the most part,
participate in post world war colonialism; occupation through debt has been an attractive instrument of
policy. The World Bank has been the vehicle of choice through which the US disburses loans in exchange
for political influence in the so called third world which ultimately means enabling conditions for its
corporations in the respective domestic economies. In the long run, these loans subjugate the domestic
economies of the third world to Western economic interest and thus the conditionalities of free market
and enterprise more or less mean a free hand on the part of the Western corporations to extract, extort
and distort the local economic scene. Case in point – the Congo “Free” State! Thus it is not surprising
that after decades of schmoozing with “development” partners (read: underdevelopment partners) and
kowtowing to their whims and desires, the economic situation of the developing world is not developing

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at all. Rather, it remains underdeveloped largely because it is held captive to “foreign direct investment”
orchestrated by foreign loan conditionalities whose aim is resource domination for the benefit of the
welfare states.

Most importantly, a state of inertia has been created in which Western governments expect their
subdued subjects, the “natives”, to rely on them for “development” and the local ruling class to seek
“democratic” re-election by selling this “development projects” undertaken by western corporations to
the masses. The ruling class jostles amongst themselves to win the “democratic” right to be the ones
that “negotiate” juicy development contracts that will bring about “development” and hopefully line
their pockets. The funds will of course be sourced from that unending tap of foreign aid and foreign
direct investment. In the long run the economic effect of this is tantamount to auctioning the land and
other resources to the highest foreign bidder.

The other side of the coin is that it gives the Western regimes the avenue to financially sponsor those
political candidates who will auction off the resources at terms favourable to the interests of their
welfare states. But of late, this inertia has been disrupted by the coming into the scene of resource
hungry China. Given that it is offering better deals on both its loans and FDI the West, not used to
playing second fiddle, has sharpened the teeth of its increasingly reliable watchdog to meddle and to
muddle native governments that dare to abandon the colonial kinship – democracy or no democracy.
The chief ICC prosecutor has already signaled that he wants Kenya to serve as “a lesson for other
countries in Africa that will not adhere to the rule of law”…as laid down by Brussels! Nevertheless, one
has to sympathize with Brussels which has gotten its citizens addicted to the welfare drip and in the
event that it is turned off the consequences would be a severe political and economic depression. The
signs of this “clinical” depression are beginning to show on the faces of our “revolutionary” Frenchmen
as the economic footprint of the red dragon continues to send tremors within the castle walls of the
older caste of feudal lords in Brussels.

Mburu C Kahuki