Mzansi Afrika

From Johannesburg South Africa, a window on the world

Friday, March 18, 2005

Capitalism, globalisation, privatisation etc

There are two main opposing views concerning the best ways to promote development. One view holds forth that unfettered global capitalism is the god to be worshipped, everything should be privatised, and the US and other multilateral institutions are a benign as opposed to harmful force promoting development and democracy throughout the world. Except of course for the United Nations - they're just a bunch of wankers who don't know their arse from their elbow. Oh and... fuck the poor.

The other view states that privatisation and globalisation in its current form is the mammon of our times. It's a bunch of double standards and all the multilateral institutions want to do is screw the poor so that the rich can get richer. Except for the United Nations which will be okay with a bit of reform and tweaking here and there...oh, I don't know, maybe by giving developing countries more decision making powers, and possibly to throw in a bit of transparency on the side. Transnationals actually rule the world and first world democracy is a thin veneer covering up greed and hypocracy.

That's putting it simplistically, but nevertheless. My political leaning falls somewhere in the middle, with a distinct leaning towards the latter of the two opinions. Just call me a cynic. I believe in capitalism as opposed to communism, but I also think that the social democratic model (not sure if I'm using the correct political terminology) of some of the Scandanavian countries might be a better system than pure outright capitalism - especially for the developing world. Perhaps in America and Canada, and the stronger European nations capitalism and privatisation are acceptable to an extent because most people can afford to pay for basic services. However in Africa, for example, where there is such a degree of widespread poverty, I think the government has to play a stronger role in subsidising development and stimulating the economy. I mean, how long can people wait for the trickle down effect to trickle down? Especially when there are so many factors in place to impede the trickling. Even in the US and Europe a certain basic amount of wealth hasn't trickled down to the bottom and it probably never will.

Privatisation was introduced to Africa in the 1980s and 1990s, usually as part of structural adjustment programmes - in return for loans from the International Monetary Fund and the World Bank, African countries were forced to implement neo-liberal economic policies, which included privatisation. So basically, do it our way, even if it's not the best solution to your problems, or no money. African countries were told by the IMF and World Bank that privatisation would lead to greater efficiency, better productivity and better service delivery. It was further assumed that privatisation would generate wealth, which would eventually trickle down to everybody. Hmmm....

Some of the negative effects of privatisation have included:

Privatisation led to the loss of over 60 000 jobs in Zambia and several hundred thousand workers were retrenched in Ghana. Privatisation has also caused an increase to the price of services. In Zambia, a privatised bus company dramatically increased the bus fares and closed down unprofitable - mostly rural - bus routes. As a result many Zambians now walk many kilometres to their workplaces and schools because they can no longer afford the bus fares or because the buses no longer service the areas where they live. In Nigeria the prices for Kerosene increased by 6 000% between 1985 and 1995. Postal and telecommunications services increased their prices by 2 500 - 5 000% during that period while electricity prices increased by 883%. In Ghana the introduction of cost recovery programmes were part of privatisation and resulted in increased fees for health and education services. As a result, they became unaffordable for the poor. In Zimbabwe, privatisation also led to retrenchments and increased prices for services. The Cotton Company of Zimbabwe, for example, reduced its workforce from 3 000 to 500 after privatisation. (Source: Labour Resource and Research Institute/Namibia)

There are now ten major corporate players delivering services to more than 200 million customers in 150 countries. The water industry’s annual profits of around US $1 trillion exceed those of the pharmaceutical industry and equal 40 per cent of those of the oil sector. Developing countries are giving in to pressure from the World Bank and IMF to abandon their public water delivery systems and to contract with the water giants in order to be eligible for debt relief.

The privatisation of water has been accompanied by large profits, higher prices, cut-offs to customers who cannot pay, lack of transparency, reduced water quality, bribery and corruption. Trade agreements are robbing governments of their control over domestic water supplies: with water now classified as a good, global trade institutions give transnational corporations unprecedented access to the freshwater resources of signatory countries. The WTO opens the door to the commercial export of water by prohibiting the use of export controls of any ‘good for any purpose’. This opens the door for quotas or bans on the export of water that have been imposed for environmental reasons to be challenged as a form of protectionism.(Source)

To deny people the basic human human right of access to clean and safe water, and to deny people the dignity that electricity provides, just because they can't afford to pay for it goes beyond cruel and unreasonable. I realise that poverty has always existed, it's probably part of the human social condition, and it would be utopian to believe that it could ever be completely eradicated. However, you can call me naive, or you can call me idealistic, but I can't help feeling that there is something terribly, terribly wrong with a world that has such incredible disparity between rich and poor. As far as I see it, the American style capitalism dominating the present day system of globalisation is doing nothing to improve the desperate lives of the poor.


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