Full text of lecture delivered by Chief Obafemi Awolowo at the First Lecture in the UNIVERSITY OF LAGOS ANNUAL LECTURE SERIES on Friday, 15th March, 1968.
CONTINUED FROM LAST WEEK
In the Sudan, the Gezira Scheme has also shown that natural resources which appear hostile and barren can be tamed and made abundantly fruitful when the right quality and quantity of the other productive agents are applied to them. Under the Gezira Scheme, not only has a once-barren like desert-land been converted into one of the most fertile and productive areas on planet, but also the nomadic population, which was once uneconomic ally thinly spread all over the place, is now being permanently settled into viable and lively towns and villages.
Secondly, it has been assumed that nature has so organised the affairs of this world that no country is deficient in or starved of natural or human resources. Those economists who speak of under-population or over-population relative to the natural resources of a country, are, like Malthus before them, only building far-reaching theories on a complete misunderstanding of man’s infinite resourcefulness in the face of difficulties. When Malthus enunciated his famous but erroneous theory of population, he had taken the qualities of the productive agents as given for all time, and had not applied his mind to the vast improvement which was possible and which has since been made in the inherent qualities of such agents. At this stage in human development, it should be admitted that the optimal concept of population is a measure of man’s incapacity to keep pace with his economic problems, as and when they arise. From the foregoing definitions and analyses, two inferences appear to me to be incontestable. First, a country is underdeveloped simply because it lacks the following indispensable prerequisites of development, namely: education, and good health; technical, managerial and administrative competence; and capital. Second, an underdeveloped country, by the very fact of its underdevelopment, is permanently exposed to the foreign exploitation and deployment of its resources, and hence to economic dependence, subjection, and what is now called neo-colonialism, even though it is politically independent and sovereign.
The goals which an underdeveloped country must pursue, therefore, are quite clearly two. There is the immediate goal of economic freedom, and the ultimate one of being counted among the developed countries of the world. The two goals can be achieved almost simultaneously, provided they are pursued in the order in which I have stated them. I hold the view, quite strongly, that in the pursuit and attainment of economic freedom, economic prosperity is inevitable. But not the other way round.
Because I am convinced that every attempt on the part of an underdeveloped country to achieve economic prosperity, without first of all taking steps to ensure its economic freedom, is not only patently doomed to failure, but would also make the country’s economic enslavement more certain and tighter. In order to attain to the goal of economic freedom, however, an underdeveloped country must do certain things as a matter of urgency and priority.
It must provide education and health facilities for the masses of its citizens. It must breed and constantly maintain an adequate number of technicians, managers, and administrators. It must ensure, from year to year, that the quantity of its available capital is sufficient for its purposes. Since the welfare of the people is the aim of all economic activities, it must foster and insist on a balanced growth in all the sectors of its economy. It must discipline its citizens to eschew all forms of ostentatious consumption, be they traditional or foreign-inspired, as they tend and are bound, in the long run, to distort the utilisation of resources, and generate endemic social disequilibrium, which will in turn encourage foreign exploitation and economic enslavement. It must exploit, mobilise, and deploy its natural and human resources in such a manner as to benefit all its citizens relatively equally, and without discrimination. It must seek to be self-sufficient in non-durable consumer goods. At any rate, it must endeavour to export enough to pay for all such consumer and capital goods as it has to import. It must avoid, like the plague, an adverse balance of payments on consumer accounts, because it is this kind of economic factor, more than anything else, that forges, with ruthless effectiveness, a country’s chains of economic bondage. Foreign capital should be admitted only for the purpose of executing capital projects which are designed to strengthen the country’s economic freedom and self-reliance, as well as its self-respect for itself and its citizens abroad.
In its march to this goal and to the attainment of these objectives, two paths or two systems, with separate and distinct polarities, are open to an underdeveloped country. They are: the capitalist system, and the socialist system. There are other paths. But they are, in my view, nothing but empirically ineffective adaptations of one or other or both of these two systems.
To the underdeveloped country, groping its way to economic freedom and prosperity, the capitalist system is very tempting. Its achievements are not merely a matter of theoretical exposition or of recorded history of a distant past: they can be seen everywhere around us, and particularly on the continents of Europe, North America, and Australia. The cardinal virtue of the system, which is naked self-interest or greed otherwise known as private enterprise, is tirelessly and eloquently extolled by its protagonists. But very rarely are we told that this virtue is at once capitalism’s greatest vice and doom.
In examining the capitalist system, therefore, it is important that we should, as briefly as possible, consider its virtues and achievements as well as its basic postulates and vices. This procedure is essential in order that its claim per se, and relative to that of the socialist system, which will be considered later, may be justly assessed.
Before the advent of capitalism, slavery and serfdom were the order of the day. But it is on record that it was the capitalists, not the poor, impotent, miserable slaves and serfs, who, at different epochs, struck the blow which shattered feudalism and manumitted the slaves.
In the Middle Ages, some of the prouncements of science were regarded as heretical. But since the advent of capitalism, science and technology have been sedulously encouraged, and research has been generously endowed. Indeed, from the latter part of the eighteenth century when, with the birth of the industrial revolution, capitalism truly and confidently came into its own, it has swept and carried practically everything before it. It has given unparalleled impetus to science, technology and art. It has built new cities and beautified old ones. Its conquest of time and space is almost complete, and all mankind of all climes and tongues are now one
another’s neighbours. It has modernised the tools of production as well as the means of locomotion. In the process, it has internationalised industry and commerce. It has reduced and weakened the strongholds of ignorance, disease and poverty. It has made the rich richer; and the poor better off than they ever had been.
At the overthrow of feudalism and the abolition of slavery, it placed emphasis on freedom of enterprise and of choice, and proclaimed the doctrine of laissez-faire. Under the steam of this doctrine, it advocated and introduced free trade among nations. In the inevitable struggle which ensued, among the then advanced nations, for wider markets and for abundant sources of raw materials, the countries of Africa and Asia became areas of colonisation, or imperialistic spheres of influence. Africa was divided; British rule in India was extended and strengthened; and both China and Japan were compelled to enter into business relations with and for the benefit of Britain and America.
Wherever it was necessary to wage war in order to impose business intercourse on any country, it was done without qualm of conscience. For instance, the Opium War was fought in China in the years 1840-42 in order to compel China to buy opium. The great Indian poet, Rabindranath Tagore, incisively described the opium trade as ‘Death Traffic in China.’
In the process of all these, the backward areas of the world were blessed with a new era of comparative peace and efficient administration. Their goods and resources were valorised. They received new enlightenment, and developed new aspirations. Such of the countries as were quick in the uptake, like Japan, made a tremendous leap forward. In 1868, three years after the United States, Britain, France and Holland had imposed trading intercourse on Japan, Meiji, Emperor of Japan, made a declaration which all underdeveloped countries must write in their hearts he said: ‘Knowledge shall be sought throughout the world, so that the welfare of the empire shall be promoted.’ On the spur of this declaration, Japan rose, in the words of H.G. Wells, from ‘a fantastic caricature of the extremest romantic feudalism’ in 1868, to be same’ level with the most advanced European powers’, in 1899. Other countries, which were not so resourceful and which did not pursue education with the same consuming fervour as Japan, have also benefited, but to a lesser extent, from their subservience to capitalist adventures.
So much for the achievements of the capitalist system. Let us now turn to the vices of the system.
As I have said before, the postulates of the capitalist system are false and untenable.
An examination of some of the causes of private property will reveal that it is unjust to recognise the right of the individual to private property without qualification.
Land is the gift of Nature, and was never at any time appropriated by Nature herself to any individual or family. Ab initio, the possession of land by a family or individual is the result of either forcible seizure or illegal and unauthorised appropriation. It is well known that uncultivated and unimproved or underdeveloped land does attract income or rent due to no efforts whatsoever on the part of the land-owner, but as a result, wholly and solely, of pressure of population, proximity to industrial or commercial activities, or some other causes to which the land-owner has made no contribution whatsoever. Even when a land-owner improves his land or builds on it, more often than not the building attracts rent out of proportion to the reward appropriate to the amount of capital invested in it.
Again, the entrepreneur who takes advantage of oversupply of labour coupled with short supply of the commodities which he produces, makes an extraordinary profit or an unjust gain which he is perfectly entitled to keep as his private property.
The extent to which a person may employ his energy and property as he likes depends on the state of supply and demand which is quite outside his control. In circumstances where the demand for any commodity is great under conditions of limited supply, it is absolutely idle to talk of equality of contract as between the sellers and buyers of such commodity.
Apart from being a contradiction in terms, the postulate of egoistic altruism has never achieved the laudable ends which economists, since Adam Smith, ascribe to it. On the contrary, the relentless pursuit of his own self-interest and greed by every individual or interest group, has led mankind to the realms of incalculable wastes and miseries. Adam Smith’s ‘invisible hand’ has turned out to be the blind umpire of a fierce and savage struggle in which the casualties in dead and wounded far outnumber recorded survivals. As a result, the entire productive paraphernalia of capitalist countries in Western Europe and America is today in the hands of a very few people who are the economic dictators of the capitalist world.
Besides, the capitalist system, under the guidance of the ‘invisible hand’, is always either breaking down or threatening to break down. From the birth of the industrial revolution in Europe, Britain has witnessed more than twenty-five trade cycles, and innumerable strikes and labour disputes and strifes; which means that those countries, with which she has trading intercourse, have also been afflicted by the same maladies to a more or less extent.
Various causes, beginning with Jevon’s Sun-spot Theory, right down to Keynes’s Savings/Investment Theory, have been assigned to explain the phenomenon of trade cycle. A careful examination of all the theories of trade cycles however, will reveal that its basic cause is economic MALADJUSTM ENT: maladjustment of supply of goods to demand, of supply of money to available goods, and of savings to investment. This maladjustment is endemic because of the inescapable lack of co-ordination (1) among the producers inter se, (2) between the producers and consumers, (3) between the producers on the one hand and the Monetary Authorities and Banking Institutions which handle savings on the one hand and the investors, or buyers of savings, on the other.
Furthermore, the injustices which arise from the processes of production, exchange, and distribution, are too inherent and deep-seated in the capitalist system for such injustices to be eliminated or even satisfactorily minimised.
Land and labour are the primary agents of production. In the beginning, all capital flows from the union of labour with land.
This was done by the combined processes of deliberate and inevitable abstentions from consumption.
CONTINUES NEXT WEEK
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