Economic Liberalization and the Need for Economic Morals
The Hon Minister for Karamoja; Mrs. Janet Museveni was quoted in the New Vision of 19th March 2009 asking universities to teach moral (see New Vision Universities should Teach Moral – Mrs. Museveni). This call for teaching of morals led me to reflect on some of the conditions that have led us where we are. I then remembered that indeed we should probably have more research and lessons on economic morals than any other kind of morals. To illustrate my point I return to the recent economic history of Uganda.
In 2001, two renowned World Bank Economist, Ritva Reinikka and Paul Collier edited a book on Uganda entitled; Uganda’s Recovery: The Role of Farms, Firms and Government. In this book they praised Uganda’s economic recovery as a major turn around for Africa. The fact that we had sailed through years of political tyranny to times that many considered political freedom and economic liberalization was seen as one of the best experiments in post conflict economic recovery in Africa. At the time any questioning of Uganda’s policy choice of economic liberalization as a macro policy was akin to questioning the recovery of Uganda from political tyranny. Indeed we all kept quiet and let things go by as we implemented some of the boldest economic liberalization reform policies.
The net-effect since then has included positive aspects like arresting capital flight which stood at over 60% in 1986 to a situation where (before the credit crunch) remittances from Ugandans abroad were a substantial part of the economy (5% of GDP which translated to about $300 million) – making remittances one of the highest revenue sources for the economy. Trade liberalization also led to the eradication of export taxation, coffee liberalization, privatization of public enterprises, introduction of an investment code to attract foreign direct investment and of course a generous foreign aid regime.
The basic argument at the time was that a private sector led economy was good for development and government should roll back its participation in business since government was a ‘bad businessman’. In fact the country was awash with serious economic defects in government business enterprises; from Uganda Airlines to the Coffee Marketing Board and several other defunct government enterprises.
Yet as we did all this, very few economists thought about the need to understand how business relations actually play out in a liberalized market economy. We all assumed that the market will fix itself when it got challenges, that indeed the basic economics of demand and supply will lead to healthy economic activity and healthy business relations, high revenue and indeed reduction in poverty levels.
What seems to have emerged today is the birth of brutal business relations laced with violence, corruption and destruction. At the global level, neo liberal economics had be put to death by the credit crunch. Questions on business morality are being asked about leaders who actually earn bonuses when their companies are making losses!
We now live in times when need to ask if the pursuit of private profit is our reason for existence. More importantly, are there any moral principles that should guide economic life? If indeed government and citizens are economic actors should there not be some norms, rules and values that should shape economic cultures?
Here in Uganda, research on business relations has always given some clues of the challenges that lay ahead and many dismissed these clues as ‘interruptions-in-service’ but not major symptoms of break down. Those who have read poverty studies back in early 2000s will recall how they pointed out some horrendous relations between business actors and local traders. Some classical examples included an example we saw in a poverty study by Ministry of Finance in a market in Jinja where the private tender-holder had introduced market dues like; a fine for quarrelling in the market, a fine for cooking in the market, a fine for wearing slippers in the market, a monthly ‘mabugo’ by all traders and many others. In another study in a tea factory, tea-pickers reported how they were not allowed to shout when they saw a snake lest the other tea-pickers run away and the private enterprise loses a day’s income. In a sugar factory in Eastern Uganda, there were stories of how sugar cane cutters from West Nile would drink themselves to death after realizing that they will never be able to make enough money to go back home. These stories seemed distant at the time.
Today it is clear that the liberal economy did create a certain type of moral economy that totally disregarded human relational values in the hot pursuit of private gain and primitive accumulation. When we see the senseless burning of markets, burning of schools and collapsing buildings, all because people are struggling to make a profit, we must be weary. All these are clear signs that we must rethink the way we do business and stop assuming that faceless demand and supply in the market will cater for people welfare. We must now more than ever take an interest in the moral business economy of people and how it structures the liberalized economy. Put simply we cannot leave profit to be the driving force of all economic activity. The search for profits in business enterprises should be based on a value system that first and foremost upholds ethical behavior and does not compromise the morality of the nation. The people who die at these shoddy building sites, shoddy roads, shoddy clinics, shoddy land deals are first and foremost Ugandan citizens and not statistics in the profit making game. The failure of our public servants to oversee the human relations that are produced by the liberalized economy is an issue that should concern all of us.
It should be emphasized that relations in the market economy also have a social and moral dimension. Just like anyone who wants to be stay in a stable marriage for a long time works on their morality, it is also true that those who want to stay in business for a long time should work on their business morality. A failure to work on business morality is to choose to be act like a prostitute – who lives on instant pleasure rather than a married person – who lives on sustained pleasure!
