By Moses Uneh Yahmia
Precedents have proven that tariffs suspension is not a sustainable way to tackle the general rise in the prices of commodities on the Liberian market. For example, On August 22, 2017, Former President Ellen Johnson Sirleaf suspended tariffs on the importation of rice through the issuance of Executive Order #87 – this was an extension of Executive Order #80.
Despite the tariff suspension, the price of the country’s staple food has kept increasing up to the time of writing this piece. Not even the intervention of President Weah earlier this year could help the situation. In fact, President Sirleaf, throughout her tenure suspended tariffs on major commodities like Cement, building materials and etc. Unfortunately, those tariff suspension did not lead to a decline in the prices of the targeted commodities on the Liberian market.
Hike in commodity prices has more to do with the inability of an economy to produce those commodities locally or the lack of efficiency in economic production in an economy. As the result, in the case of a neo-colonial capitalist country like Liberia, the economy depends on imports made by private businesses in order to have goods available for consumers’ demand. And because the economy is not a productive or an industrial one, but rather a raw material (commodities that are no longer valuable on the world market) export based economy, there is low foreign currency in circulation. And this creates a fluctuation in the exchange rate at the disadvantage of the local currency. This is why the country is currently experiencing an unprecedented rise in the exchange rate. Last year December, the exchange rate was 130LD to 1USD. It I now 140LD to 1USD. Importers have to strenuously get US dollars to go places like China, Thailand, and America and etc. and get goods for importation.
This alone leads to a certain degree of loss in importers’ purchasing power – a loss which is regained through the increment in the prices of the commodities imported into the economy. The remedy to the crisis is a record increment in capital investment not in the extractive sector but rather in the industrial sector that will create the capacity to locally produce basic commodities such as rice, assorted building materials, stationeries, food stuffs and etc. But apart from the global fatigue in capital investment which is a consequence of the global capitalist crisis of overproduction, Liberia does not have the material condition to usher in an industrial
economy that will tackle the crisis of inflation. The Liberia economy can be equated to a semi-feudal economy, due to its neo-colonial capitalist nature (the dominance of foreign capital in the mining, forestry, agriculture and service sector).
To create the foundation for an industrial economy in Liberia, there must be sustainable energy, vibrant road network throughout the country, quality healthcare delivery system, an education system that provides the qualified and quantified work force for the industries, a dependable security sector, other basic infrastructures such as air and sea ports etc. And this is where we come in and argue that the current model of organizing the fundamental levers of the country’s economy is unable to provide such a material condition for an industrialized Liberia.
The model is the neoliberal capitalist approach which advocates for the private ownership of our means of production and an unregulated free market. Consequently, our mineral and natural resources are given through concessions to predominantly foreign multinational corporations that earn millions in profits and returns but subject the Liberian working class to wage slavery, pay to government little in taxes and rent that are unable to widen the country’s revenue base in order to massively undertake public sector investments in energy, education, infrastructure, security, health care and etc.
Someone may ask: “So are you advocating Socialism? If so, didn’t Marx and Engel, in the Communist Manifesto which was published in 1848, due to the contradictions between capital and labor, predict a working class revolution in a highly industrialized economy like Great Britain? Don’t you think you are being a dogma to believe that Liberia has similar material condition as Great Britain, the US, France and etc. to allow through class struggle, the transition from Capitalism to socialism, as you are aware socialism is only possible where Capitalism has reached its limit? Will it not be doing justice to Marxism were we to allow Capitalism to develop the Liberian productive forces to its highest level before building consciousness for a working class revolution?”
These are genuine concerns. Firstly, before even analyzing how the technicalities in the global crisis of capitalism automatically deprives a third world economy from reaching the economic efficiency of Great Britain and other advanced capitalist countries, Liberia and any other third world African countries are incapable of possessing the ingredients that develop the capitalist mode of production in Europe and North America.
The Trans-Atlantic Slave Trade which colossally transported Africans to Europe from the 1600s to the 1800s provided free, not cheap, labor power to Europe which led to the accumulation of surplus profits and returns from the blood and sweat of African slaves. These profits were reinvested in European shipping, insurance,agriculture, technology, infrastructure and etc. Washington Alcott, argued in his article, “The Rise of Capitalism and the Development of Europe” that: “Great Britain would not have grown from being a mainly agricultural society to a mainly industrial society without the transatlantic slave trade.” Colonialism, the Europeans direct control of African, Latin American and Asian lands was another contributing factor to the development of Capitalism in Europe.
The colonial powers exploited the resources of those territories and the super profits made from the resources were used to industrialize Europe. In fact, the two world wars fought in 1914 -1918 and 1939 -1945 was all geared towards the fight over colonial territories for the exploitation of raw materials and the ownership of secondary markets for the export of manufactured goods. The British Historian Eric Williams asserted that “The colonial system was the spinal cord of the commercial capitalism of the mercantile epoch in Europe”.
Neo-colonialism, which Dr. Kwame Nkrumah defined as “The socioeconomic and political condition wherein the State which is subject to it is, in theory, independent and has all the outward trappings of international sovereignty. In reality its economic system and thus its political policy is directed from outside.” Teacher Nkrumah also taught us that the result of neo-colonialism is that “Foreign capital is used for the exploitation rather than for the development of the less developed parts of the world. Investment under neo-colonialism increases rather than decreases the gap between the rich and the poor countries of the world.”
For example, Liberia under Ellen Johnson Sirleaf witnessed a whooping 16billion foreign direct investment in the booming sectors of the country’s economy. Paradoxically, while millions of dollars were and are still being exported through surplus profits by the multinational corporations, the people of the West African nation are the fourth poorest in the world. The country has one of the appalling health, infrastructural and educational systems among over 180 countries in the world.
It is unarguable that Liberia and other third countries in Africa cannot practice slavery in order to accumulate similar feats such inhumane system attained for Europe. Factors such as fall in the price of slave, pressure from anti-slavery groups, constant slaves’ revolts and etc. led to the abolition of the Trans-Atlantic Slave Trade in the 19th Century. International laws and treaties including the Universal Declaration of Human Rights now bar nations from subjecting humanity to the act of slavery. Also, African countries do not have the military and economic might to capture territories in Europe, America and Asia to place them under colonial and neo-colonial rule. So, these factors make it impossible to allow Capitalism to develop the productive forces of the Liberian and other African economies before advocating for a working class struggle that will overthrow capitalism and usher in
Socialism. To think otherwise is an exercise in futility. Slavery, colonialism and neo-colonialism are the chief architects of the progress of capitalism in Europe and North America. Liberia and other third world countries are incapacitated to benefit from such feats.
On another note, the global crisis of capitalism also makes it impossible for the capitalist system to develop the Liberian productive forces to the level of the European countries. To think that capitalism will enable Liberia achieve similar feats it gave Great Britain, the US, France and etc., we might be waiting for the next two to three hundred years! The neo-colonial raw material (latex rubber, iron ore, timber, gold, cocoa, and coffee) exporting Liberian economy predominantly depends on foreign owned fixed and variable capital to purchase the commanding heights of the country’s economy.
According to statistics, seven out of ten businesses in the booming sectors of the country’s economy is foreign owned. And it will be a vulgar thought to think that the fall in capital investment in Europe, America, and Asia does not have a ripple effect on capital investment in the backward Liberian economy. According to Eurostats, capital investment in twenty-four (24) of the twenty-eight (28) EU countries have fallen by 3.1 percent over the last decade. According to the Global Economy, a think tank that provides economic indicators for over 200countries, Capital investment in China fell from 47.69 in 2011 to 44.31 in 2017. Peter Coy, in his 2016’s article “The Mystery of America’s Missing Capital Investment” published in the Bloomberg News, argued that “Companies in the US have no need to bulk up because nobody’s buying.”
These are clear indications that the contradictions between capital and labor has led to capitalism reaching its senile decay. When the advanced capitalist countries are not producing, a little raw material exporting economy like Liberia will definitely be affected. This, in addition to the barriers to capital investment in the industrial sector has led to no significant foreign direct investment in Liberia since 2012. The current investments in the mining and agriculture sectors are struggling due to the global fall in the prices of the raw commodities. Consequently, Firestone Liberia (Latex Rubber giant) layoff 500workers in 2016 while Arcelor Mittal (Steel giant), Salala Rubber Corporation and China Union also layoff off 148, 169 and huge numbers of workers in 2017 respectively. Russian owned Putu Iron Ore Mining Company in Grand Gedeh County ceased operation the same year as reaction to the decline in the prices of iron ore on the global market.
Accompanying these is the fall in corporate taxes pay to government. This fall in corporate taxes has led to a decline in the government’s revenue envelop since 2014. Thus, there has been massive cuts in public spending on social services in education, health, energy and etc. This is evidenced by the lack of little or no allocation in capital investment in energy, education, health and etc. in 2018/2019 Draft Budget. With these harsh realities, it is audible to the deaf and visible to the blind that Capitalism can offer nothing progressive to the Liberian economy.
The need for a game changer cannot be overemphasized. But the current regime in Liberia has not the revolutionary potency to introduce a radical economic agenda that will organize the country’s productive forces in the interest of the people, instead of the multinational corporations and their indigenous lackeys in the state bureaucracy. Recently, at a cabinet retreat in Buchanan, Grand Bassa County, Finance Minister Samuel Tweh asserted that “Privatization is the solution to Liberia’s over 3billion infrastructure deficit.” This is the same capitalist model which has failed to work for the third world country and we can now clearly see that the CDC-led government is prepared to carve its pro-poor agenda around this socioeconomic system.
This is why we have seen the need to organize a more viable left-wing revolutionary political tendency that will mobilize and educate the exploited layers (workers, farmers, petit traders, civil servants and etc.) of the Liberia society for the sole purpose of ushering in the public ownership of the commanding heights of our country’s economy, under the state and workers’ democratic control. This is the surest way we can exploit our mineral and natural resources and use the surplus profits to undertake public sector capital investment in education, agriculture, health, infrastructure, energy expansion, tourism, low income housing for workers, doctors, nurses teachers and etc.
Thus, paving the way for massive industrialized economic productivities which will resolve the increment in the prices of basic commodities on the Liberia market. The apologists of capitalism will lazily discredit this alternative but they will fail in telling the people how to get out of the mess that have been created by this exploitative socioeconomic system that creates wealth for the few and poverty, misery, and agony for the many.
Moses Uneh Yahmia is a student of University of Liberia and also a member, Movement for Social Democratic Alternative (MOSODA). He can be reached via [email protected]
https://www.africaprimenews.com/2018/05/11/opinion/president-weah-talks-poor-but-the-2018-2019-draft-budget-acts-rich-pro-poor-or-pro-rich/