By Afam Nkemdiche (Opinion)
The ongoing discussions on Nigeria’s economic recession have been quite revealing. Most discussants now seem persuaded that it is time Nigeria abandoned orthodoxies, and resort to thinking outside the box. Nothing instructs better than firsthand experience.
Thinking outside the box is not an option for Nigeria in her present state, it is the only option. My reasons are contained in a 2014 article, entitled, “The Eclipse of Economics,” reproduced below:
“Surely, Nigerians still could recall the passionate debate over the International Monetary Fund Conditionality. Nigerians, both the educated and the not-so-educated had responded to the 1986 debate as a people who truly believe they shared “one nation and one destiny.” In a way, the debate debunked the myth that the game of football has the monopoly of exciting nation-wide patriotic passion in Nigerians. Evidently, they are many a topic about which Nigerians could be nationalistically passionate; the voices which had argued “N0” “No” “No” to the IMF conditionality had been just as loud and many as those which had said “Yes” “Yes” “Yes.” To date, I still wonder how the Federal Government managed to pick out the winning voices from the deafening cacophonies. However, it was good the debate happened.
If we tasked our collective memory further, we would recall that the principal argument against the IMF conditionality had been at once simple and compelling: No underdeveloped country has succeeded in joining the league of developed countries simply by implementing those controversy-arousing conditionality. Without a doubt, this is a thought-provoking statistic, to say mildly. It is on the cards that Nigeria’s 28 years experience with the IMF will not change that benumbing statistic. A number of leading intellectuals have put the blame on the doorsteps of the laws and assumptions that inform the policies of the IMF and other international financial institutions. Few excerpts would suffice.
In 1971, Arthur Burns, then Chairman of the United States of America’s Federal Reserve Board, had remarked that “the rules of economics are not working quite the way they used to. “The following year, Milton Friedman, another authority on the subject, in an address to the American Economic Association said, “I believe that we economists in recent years have done vast harm – to society at large and to our profession in particular – by claiming more than we can deliver.’’ Six years following in 1978, the cautious tone had changed to despair when the then United States of America’s Treasury Secretary Michael Blumenthal declared: “I really think the economics profession is close to bankruptcy in understanding the present situation, before or after the fact.”
Barely a year after, his cabinet colleague, Juanita Kreps, in relinquishing the commerce portfolio said rather bluntly that she found it impossible to go back to her old job as professor of economics at Duke University, because “I would not know what to teach.” These damning comments on the subject of economics by internationally distinguished members of the profession have continued.
In the 21st century one does not need to be an economist to know that “the rules of economics are not working quite the way they used to.” The seemingly intractable global crises engendered by grossly distorted distribution of the world’s commonwealth are the empirical evidence. What went so terribly wrong? We are naturally led to puzzle. Just as logically, we are led to look to history for possible answers. As early as in the days of Adam Smith had it been evident that economic rules were essentially bounded by time. Thus a set of economic rules that had served a generation of mankind well, may well prove counter-productive in another generation.
This inherent limitation in economic laws was conclusively demonstrated by Thomas Malthus’ Law of Diminishing returns on agricultural production. The famous economist had believed that the geometric growth rate of human population in relation to the arithmetic growth of food production of his day was given for all time! All wrong; thanks to technological developments. Today in some countries manufacturers are given huge financial incentives to limit their production output, while in other countries surplus food products are dumped into the oceans, or are treated with health-compromising preservatives to enhance their self-life. The resultant psychological and ecological consequences of these unwholesome acts have new reached emergency proportions.
Truth is, in an age of plenty economics as a tool for distributing a common wealth has been utterly eclipsed. Graphically stated, there now could never be an intersection between the effective aggregate supply/demand curves. Indeed, no less a personage than John Stuart Mill had made the point back in 1848 in his Principles of Political Economy.
Distribution of material wealth fell outside the bounds of economics, the great 19th century economics reformer had averred. Latter day masters like Thorsten Veblen, Joseph Schumpeter among others similarly concluded respectively: distribution of material wealth was determined more by expediency and less by the science of economics. Therefore, the continued application of economic laws in administering the world’s resources would guarantee three principal things, viz:
• Unidirectional flow of material wealth,
• Un-abating intra-national and international conflicts, and
• Huge environmental challenges.
Indeed, combating the trio is the greatest challenge of the present age. Goaded by the richest nations of the world, the United Nations Organisation had made, and is still making a great play of combating this challenge, except that the UN is acting in denial.The world body regards only the last two components of the challenge, viz: un-abating intra-national and international conflicts and environmental challenges as effective threats, while it looks to unidirectional flow of material wealth as a mere maladjustment in economics.
Afam is a Consulting Engineer in Abuja