It is now almost 30 years that the structural adjustment programs (SAPs) were introduced, and implemented as a new approach to deal with the economic crises of many Sub-Saharan African countries. Especially after the second oil crisis in 1979, many African countries were severely affected by balance payments of deficits, increasing external debts, and internal economic crises as a result of huge trade deficits. Because of decreasing raw material prices on the world market, many African governments were unable to finance existing projects, and were confronted by budget deficits. Before the introduction of SAPs, many African countries had practiced various economic policies which were not formulated internally as a result of lengthy debates by experts of the concerned countries, but all the policies were imposed by experts either from the IMF or the World Bank which are not congruent to the African realities, and do not reflect things on the ground. All previous economic policies could not help many African countries to develop a strong home market based on manufactured activities. Since many African governments had followed the advices of foreign experts, and were not in a position to formulate their own policies which were congruent to the needs of their own societies, and which could reflect their own internal human and material resources, the heavy reliance on foreign experts had at the end disastrous consequences on their economies, and social and cultural conditions in general.
The changing political landscape in England in 1979, which brought Margret Thatcher in power, and in 1980 Ronald Regan in America had inevitably ended the Keynesian revolution of the previous 30 or more years after the second world war, which helped many Western economies to successfully reorganize their economies on “new foundations.” Governments of many Western countries had massively intervened in the economies of their countries, and did everything to develop strong, and in all spheres interconnected economic and social structures from within. The upgrading of manufactured activities, and the reorganization of science and technology, and heavy investments in education which could support basic researches to develop new technologies, were not possible without massive state intervention. The economic crisis at the beginning and end of the 70s which were interpreted by the neo-liberals as a crisis which resulted out of massive state intervention, and not a crisis which was internally produced within the system, gave way to the neo-liberal paradigm and policy formulation. Neoclassical economists believe that economic crisis in such highly developed economies could only occurred as a result of exogenous factors, which jeopardize the performance of the system. For example wage increases can be one of the factors which reduce the profitability of the capitalist class. At the same time Neo-liberal economists believe that massive state intervention increases the volume of money which will induce inflation. On the other hand for Keynes and Marx, though both interpret the causes of the crisis differently; economic crisis in a capitalist economy is an inevitable process which cannot be only caused by exogenous factors. If exogenous factors play a role to cause crisis, the entire system cannot be put into question, unless the causes are drastic. The neoliberals believe that the crisis within the capitalist economy can regain its equilibrium when state intervention is massively reduced, and other exogenous factors are minimized at a lower level.
The belief in market fundamentalism and self-correcting of the system gave way to the neo-liberal ideology. The Chicago boys have won the upper hand, and could easily impose their ideology on the state. Free market ideology became the only accepted doctrine which must be implemented not only in America and England, but also in many other countries across the globe. The imposition of such ideologically motivated economic policy had and still has wide range consequences for those weaker economies which were not internally strengthened and connected like those of the capitalist economies by multiple factors and instruments. As studies show, the introduction of neo-liberal oriented economic policy in the African soil, where economic structures were not developed like those of the capitalist economies means that instead of creating a well-structured and self-reproductive economy, the creation of an economic system which is venerable to any kind of shock, is inevitable. In order to understand the consequences of this counterrevolutionary ideology, which has deepened the structural weakness of many Sub-Saharan African countries, and strengthened their dependence on foreign resources to survive, let’s try to examine the policy itself whether it is based on solid methodological foundation, which could reflect the socio-economic structures of the various countries that apply the program.
Interpreting the program
In order to understand SAPs, we must analyze the word structure. If we take Wikipedia as a help, the word structure means an orderly organized system, in which all the elements fit properly together so that the system as a whole functions properly. In the natural science, structure implies the logical order of the different parts of a system so as to perform certain function according to that specified logic. Again in physic, structure means the interconnection of different tiny particles and their relationships within a particular material which enable them to operate smoothly. Likewise, in sociology structure means the logical order of the different parts and their relationships within a given social system to coordinate and perform certain works. Interpreted this in any given society, any society must be organized according to a certain and scientifically validated logical order so that the system as a whole functions properly and smoothly. The organizational structure within a given social system must be a conscious act so that the system as a whole functions according to certain principles. If any society is not organized according to certain harmonious principles which could hold the society together, the society loses its compass, and the political, economic and social parameters will not have any clear direction.
If we also closely examine the meaning adjustment as is formulated by the IMF we will be having difficulties how such kind of an adjustment help the economy to grow. Two things can be adjusted together if they fit to one another. A totally different material which has a different logical structure cannot fit to another material which is structured differently. If one tries to fit two different structures by force or by any kind of manipulation the consequences are unforeseen; this may probably create chaotic social situations that cannot be easily corrected. As experiences in many countries show that they are not better than their previous conditions. The social and economic situations in many sub-Saharan Africa prove that after they have adopted the structural adjustment program they are confronted with new social and economic crises which cannot easily be overcome by simple macroeconomic policy.
When we analyze both the concepts, “structure “ and “adjustment, which are developed by the IMF and the World Bank as policy recommendations, it is not clear from the outset whether the two concepts are developed by considering the specific conditions of the different countries which apply them. For example it is not clear how they define the term structure. Since different societies have different structures, one cannot generalize such a scientific terminology as if it is valid for all societies across the globe. As a matter of fact, all societies of the earth had different experiences in the past; and they have different cultural and social constructions which shape their attitudes and handling. To assume that all societies of this globe have the same structure, the same thinking and handling is to make the greatest blunder one can make against humanity in general. It is just a war which is being waged against certain groups to dismantle the entire social and cultural setup which have been experienced and accumulated for generations.
If somebody applies the concept structure to any society, he must analyze the system of each individual country and how that country is organized. Since the degree of social structures vary from society to society, the position of different classes within a given socioeconomic formation also vary. In any society there are social hierarchies with various roles to play, which are reflections of the social relationship which prevail in a given society. Only under certain political systems, social systems can be consciously organized. Before any system reaches a certain mature stage the society in question undergoes ups and downs. It is therefore very important to study the nature of the social structures at various levels, and the degree of social consciousness, and the role of those political actors which control the system. And at the same time, it is paramount importance to examine and study the degree of technological development, and its role in creating general social wealth. Without studying the socioeconomic structures in-depth, and the cultural setup of the system to rush in order to formulate certain policies, and try to practicing them, is equal to social raping. This is what the IMF and the World Bank have been doing with many African countries over the last 30 or more years. Western governments are behind such kinds of crucial policies which have destructed the social and cultural structures of many African countries. As we have seen above, the name structure implies a well-organized and logically ordered relationship and interconnection of the different parts within a given system so that the different parts perform their works without any damaging interruption from outside which jeopardizes the performance of the entire system. In this case, and respectively, each element within a given structure plays a unique role and performs a certain function. On the other side, certain parts or one part of a given structure could negatively affect the entire performance of a given structure, if it does not function properly. For example, within a given socioeconomic structure, if the political part is suppressive and decision makers take arbitrary measures rather than well studied policies, the development of productive forces will be hampered, and thereby social and cultural transformation will be blocked. To overlook this and unnecessarily manipulate a given social structure from pure ideological motivation disturbs the entire setup of the system and the people of that system as a whole lose their orientation.
By developing `new concepts` and sell them as policies, organizations like the IMF and the World Bank, which have clothed the name international, misuse their omnipotent position and deceive the political elites in Africa and elsewhere, and apply economic policies which practically create disorder. Instead of studying the structure of the system thoroughly and scientifically, they choose some concepts and parameters which do not have scientific foundations, and try to manipulate the system via these instruments which are alien to African societies. From the outset it is not clear how the structure of a given society can be adjusted, and nobody knows to which system that given structure is being adjusted. Here again, there is confusion between structural change and structural adjustment; and structural change needs a holistic approach and touches every part of a given society and ultimately has a well-defined goal. In this case a holistic model is intrinsically dynamic, whereas structural adjustment does not have a well-defined aim, and therefore it is static by nature.
If we come to the general concept structural adjustment, it intuitively means the adjusting of a given economy to highly advanced economy. In other words, those countries which apply SAPs must adjust their economies to the needs of the international capitalist system. All the instruments of SAPs will inevitably compel those countries that apply the program to either neglect or suppress the needs of their societies and create favorable situations to the capitalist system of the west. In such a way the entire policy package blocks the development of a market economy on the basis of clear cut division of labor in the various countries which practice the program. Without clear definition and without a thorough scientific study of the nature of the supposed structure, one cannot formulate a policy. Otherwise it will have incalculable consequences for the society which applies SAPs. The program overlooks so many things which exist on the ground and which must be either changed or transformed by other means. In this case SAPs have worked and will work to make existing conditions more complicated and worsen them so that one loses the sight of how the problems can be solved. As experiences from different countries prove, SAPs will have devastating effects not only on one generation, but also on many successive generations to come. This is because the program is devised through and through from empiricist point of view and it is aggressive by its nature. The so-called shock therapy implies the aggressive character of the policy, and when the policy is put into practice those weak forces of a given social system will be negatively affected, and will become permanently jobless and disillusioned. The social and psychological impacts are also incalculable.
The macroeconomic policy, and its different instruments which are devised to implement SAPs will automatically compel governments to be more outward looking, and those scare resources will be allocated in sectors which generate enough hard currency to pay back the debt. That means scarce resources, and the money that is absorbed from other sectors will not be allocated in areas which could generate new wealth. Such a program which is more outward looking, will automatically suppress the systematic industrialization of the countries in question, and the development of a home market will be practically impossible. That means the program by itself has built-in mechanisms which create imbalances in all areas and instead of creating a well-structured economy, the economy of a given country becomes de-structured.
Methodological problems of SAPs
Initially macroeconomic policy dealt with unemployment issues and it was a combination of fiscal and monetary policies. It was developed as a policy after the great depression at the beginning of the 1930s of the last century. Since neo-classical theory and policy has discredited itself and could not explain the causes of the economic crisis of the 1930s and could not deliver a workable solution to overcome the crisis, Keynes thought that only government’s direct intervention will alleviate the crisis. However, if one looks at the interventionist policy of the capitalist state and especially from the experience of the German state, before the First World War, and after the Second World War, the intervention was not purely a fiscal and monetary policy alone. It was an active interventionist policy through direct instruments, such as easy credits, and actively supporting to organize the entire economy on firmer foundations. Prior to the formation of national state, and after, direct state intervention was the most essential instrument in creating favorable environments for small and medium size industries. Major infrastructure activities and well-designed city buildings could not have been possible without the conscious support of the state. This has been the case in all middle European countries. On the other hand the neo-classical or neo-liberal macroeconomic policy is purely a monetarist policy, and is against any kind of fiscal policy and direct state intervention. And yet fiscal and monetary policies were developed from the perspective of highly developed capitalist economies, and could not reflect the socioeconomic formations and real situations on the ground of many undeveloped countries. If we again examine macroeconomic policy in general, its theoretical foundation is empiricism, and does not have a transformative power. In other words, the policy is designed to `stabilize` existing social relationships by correcting certain imbalances which occur from time to time. On the other side the capitalist economic system is dynamic by nature, and is being manifested by destructing old technologies and creating new ones.
After it has been taught in all universities across the globe over the last 60 years, and has been propagated as the only theoretical paradigm which solves economic and social problems, the propagators are now questioning the validity of their theory. Over the last two weeks many prominent economists from different countries have met in Frankfurt a Main in Germany and discussed whether the macroeconomic theory as has been taught over the last 6 decades is capable of solving the present financial crises which hit many countries. Even many said the theory and the policy are responsible for the crisis. Among the participants was Professor Kenneth Rogoff who was once the chief economist of the IMF. Almost all have agreed that they have to reexamine their theories, and go back to the old school of thought which was developed by historical school of thought. The historical school of thought or as the German call it “dogmengeschichte”, considered that for any economic and social policy not abstract theory is needed but historical and cultural experiences what each country has practiced in its developments. As such there is no one general model which is valid for all countries, since each country has its own particular feature.
The entire concept SAPs was developed by assuming that all societies have the same economic features, or are governed by the same logic, and as such they are all alike. What does this imply when we properly interpret this assumption? All societies on this earth, though there are certain variations, all in all, are governed by the same economic logic. All human beings on this earth have the same rationality and the same taste, and as such all must pursue the same economic policies in order to be adjusted to one another. However, the economic and social realities in many countries contradict the view of the IMF and the World Bank. The economies of the capitalist countries are governed by different logic and laws. The sphere of the politics and the economic structures are separated entities. Competition and technological innovation are embedded within the system, and as such determine the entire economic, social and cultural dynamism of the entire system. On the other side, the economies of Third World countries are characterized by the absence of innovation, very law technological development and competition. Likewise, the degree of individualization and spirit of entrepreneurship in all societies are not the same. The process of individualization in many African countries is not as old as those of the Western European countries, and as such it is entirely different in its application in comparison to that of the capitalist west. The individualization process in Europe was backed by real material and spiritual transformation which has been going since the Renaissance. Only through protracted transformation of the material conditions and uplifting the power of thinking through proper education and intellectual activities, the people of Europe could alleviate their power of thinking. This enables them to freely think and become the master of their destiny. In Africa where material conditions and spiritual activities were hampered by slave trade, colonization, neocolonial policy and destabilization policy by the West, was not possible to induce individualization which helps to free the mind from traditional values. Though every human being is capable of becoming creative and ready for individual action to improve his/her livelihood, conditions on the ground must be improved through proper education. On the other side mere individualization brings alienation in all spheres, and this in turn will have negative social and psychological impacts. In this case one should differentiate between the empiricist view and the essentialist view of individualization. The first form focuses on a single individual alone and drives him to be self-centered, while the second one takes into account the individual and the social aspects together. Accordingly, individualization should not lead somebody to non-awareness towards a given society.
Again the concept of time in many so-called traditional societies has a different connotation. Whereas the concept of time in many capitalist countries is understood in linear forms, and time plays one of the greatest roles in organizing, planning and executing a certain program, in underdeveloped economies time is understood in circular forms. Likewise, the concept of money has a different meaning, and earning a certain amount of money, allocating the money for different purposes, and saving a part of it for different purposes in the future is not the same in all countries. Neglecting all these crucial aspects and to insist on certain macroeconomic instruments leads inevitably to gross errors. Why do the IMF and the World Bank omit all these aspects? It is because they have an empiricist world view and are not interested in going beyond the conventional wisdom. They only look at all societies through one prism. From the perspective of the IMF and the World Bank, and all neo-liberal economists, one should not try to study the complex structure of a given society; but solely look at certain parameters. What all societies need in order to correct some kinds of imbalances of the system is to apply the same kinds of economic instruments which ultimately create equilibrium situation in all sectors of the economy of all countries.
In the neo-classical/neo-liberal paradigm every society is the sum of its individuals. There are no social relationships, and it is assumed that every individual has equal access to scarce resources. Irrespective of its role within a given society, every individual lives for its own sake, and strives to get the maximum utility/ profit. Accordingly, the human being is egoistic by nature, and egoism is the driving motive which governs its thinking and handling. This is what the neo-liberals are preaching across the globe; and Leibniz, one of the greatest scientists of the 17th century had warned against such kind of ideological preaching, which cannot take into account the rational part of the human mind. If we look at social history, and all the scientific investigations of the 16th, 17th and 18th centuries, and all literary works of those genius people, we understand that all these works were made not out of egoistic motives, but to save humanity from the vagaries of nature, and to understand the secret of nature, so that human beings become the master of their destiny.
As we observe from the experiences of many countries, societies which have applied this simplistic macroeconomic model, which does not acknowledge space and time, have lost their inner compass. The macroeconomic model of the IMF and the World bank, instead of bringing individuals together and make them a force so that they could build their societies on a firmer basis, has disbursed and weakened their energy. Many Third World countries which have applied SAPs, and are forcibly integrated into the global economy without being competent in all areas, have lost their valuable resources and the thinking capacity which would otherwise enable them to build a well-organized society. Since the program was applied without considering all the necessary technological foundation which are essential for a coherent economic and societal development, de-industrialization become the inevitable consequence. Because of unchecked liberalization, existing industries could not any more compete against foreign products. By in large after three or more decades of macroeconomic policy practices in many African countries, one should realize that such a model is against nature and humanity in general. It is against science and technology. An economic model which cannot put human beings and nature at the center of its analysis, and is not based on science and technology cannot be called science.
First of all, as I said before, all societies have undergone certain kinds of transformational processes, which are unique in every society. While most societies could not develop further, due to various factors, some could build sophisticated social, economic and cultural foundations which could hold their societies together. What the capitalist west has experienced in its entire history is completely different form that of the African societies. Let alone, within one continent, even within a given country, there are variations in thinking and degree of development. To assume that all societies have the same kinds of rationality or behavior, and the same tastes is sheer nonsense. Since different societies have experienced certain kinds of social transformations, the ways they think, abstract and solve certain problems vary from country to country. Accordingly, existing social and political relationships determine how a given society would be able to solve its own problems. To be engaged in economic activities, and for the management of economic policy, the political structure and the power relationship which exist in a given society play decisive roles. In this case any economic policy cannot be practiced beyond time and space. Any economic policy cannot be practiced for its own sake, but to solve either existing problems, or it will benefit a tiny part of a given people. When the IMF and the World Bank formulate their macro-economic policies, and impose them on African governments, they firmly believe that only through the market, and only indirectly could existing problems will be solved. Not through direct observation, understanding the problems, and direct participation of the masses existing economic problems could be solved, but only through the allocation of scarce resources. This is only possible if all economic activities are left to the supposed market forces which are not developed as those of the capitalist countries.
This kind of methodological error that all economic problems can be solved via individual action leads to chaotic conditions rather than to well-structured and ordered economic activities. Instead of allocating the given scarce resources in a planned manner, resources are being shifted to the areas where economic performances are very weak. The fact that privatization is introduced as part and parcel of SAPs, as experiences prove that privatization does not lead to efficient allocation of resources. Those forces which have the chance to get access easily to wealth without hard work are not interested to widen their scope of economic activities which could create real wealth. The experience of SAPs proves that, instead of efficiently allocating scarce resources, resource plundering by the few becomes the rule of the system. That is why we witness that after the applications of SAPs in many African countries the situations become worse and more chaotic than before. Today the social conditions in many African countries are more polarized, and we witness that the political structure in many African countries is more aggressive and more militarized than before. This is because many African governments must keep the status quo, and are not ready or capable to create new wealth, so that they could raise the living standards of their citizens. School systems, kindergartens, sanitation, medical facilities and other social systems are not well financed and are not well organized in every community across many countries.
When we come to the general concept of private property, the IMF and the World Bank believe that mere privatization of certain targeted economic activities will induce the development of free market economy. The problem is that those factories which were installed in the 50s and 60s were not suitable for innovation and further investments. As many industries are dependent on outside resources and are not designed to become the basis of further investment activities, mere privatization only works to the contrary. That means those who allegedly bought the industries do not have the necessary managerial know-how to widen their industrial activities by studying the market situation at home. Secondly, most import-substitution-industries are not backed by another technology, which supplies all the necessary spare parts and other installments. Thirdly, as the industries were installed during the 50s and the 60s, the main aim of the planners was not to build a broad industrial structure on the basis of science and ever developed technology. The aim of such industrial activity was to satisfy the need of the new emerging petite-bourgeoisie which slowly adopts the European way of life. Brewery, Coca-Cola, meat fabrics, cigarettes and other industries which are not suitable for further industrialization become a model in many African countries. As such mere privatization of these kinds of industries could not create new wealth, and cannot be the basis of a genuine home market, which is again based on manufactured activities. Such a wrong and very mischievous policy of the IMF and the World Bank automatically leads to resource plundering and misallocation of the given resources. Instead of creating a new capitalist spirit, the expansion of the service sector in which one gains quick money and profit, becomes the rule of such a policy.
This is what happened in Ethiopia after the introduction of SAPs in 1993. In an atmosphere where the new political elite does not understand what market capitalism is, in a country where it has experienced one of the bloodiest revolution under a military dictatorship, in a country where clear cut social relations have not developed, due to the revolutionary process, the privatization policy has enriched the few and dispossessed the masses. Those forces which have good connections with the ruling elite, and the organization it has created during its war against the Military regime, could easily appropriate the wealth of the society. In order to get access to the industries, the new `economic elite` could get easily credit from the banks with the backing of the regime, and this has enabled the new emerging economic elite to systematically infiltrate in all economic activities where quick profits are promising. These new elite with the backing of the regime fought at the same time against those forces which it believes could compete against the government and its affiliate economic corporations.
When one looks at the devaluation policy of the IMF, they derive their policy from a pure technical perspective, and not from the conditions that are existing on the ground in the various countries that apply the program. First of all, money in such a backward and not commodity oriented economy like that of Ethiopia has not the same inner dynamism as that of the capitalist economy. Due to the non-connected nature of many economic activities, and due to the overwhelming nature of the so-called informal sector and subsistence economy, money cannot circulate as quickly as possible to become a social power. In such an economy, money cannot easily be transformed into money capital. Secondly, devaluation has the reverse consequence, and instead of generating new demands on the world market, the outcome will be the opposite. The country that has devalued its currency must export more to get the same hard currency as before. Since many countries export the same products, the country that has devalued its currency cannot export more. For such a non-competitive economy like that of Ethiopia, and for such a country which exports mainly agricultural products whose prices are not determined by the direct producers, devaluation will have negative impacts on the entire economy. At the same time importers will be compelled to pay more in order to buy one dollar, and likewise their import bills will increase. This in turn has inflationary impacts, especially in those sectors which are dependent on the importation of spare parts and machines. As a matter of fact, those who could not afford to buy more hard currencies will be compelled to lower their production activities; and in the worst case they will expel a part of the work force.
Negative impacts of SAPs
1. Economic Consequences
If we look at the industrial policies of many African countries, one observes that SAPs could not bring systematic industrialization. While existing industrial installments were privatized in areas where new investment has taken place, the new industries could not be the basis of further industrialization. It seems that it is a mere repetition of the old industrial policy of the 1950s and 1960s. Foreign companies and private investors at home are engaged in expanding and installing brewery factory, food processing industries and the like. As a matter of fact such kinds of industries are heavily dependent on foreign raw materials, and have very low linkages to the various sectors in the countries concerned. And yet many engaged in flower plantation and other agricultural activities whose economic effects are very negligible. Ethiopia now produces vegetables, fruits of all types to feed the Arabs and Europeans, while the food sector for home need is highly neglected. Such kinds of economic activities which are not planned for home market have undoubtedly produced a unique social relationship between the so-called foreign investors and those who work at low wages in those farmlands which are controlled by foreign companies. Since many governments in Africa and especially in Ethiopia, do not have social, ecological and other standards, so-called foreign investors can do everything they want.
The macroeconomic model of the IMF and the World Bank could not produce a new entrepreneurial spirit which can take risks, and plans from a longer perspective and become competitive in all areas at home. There is no research which enables many to be engaged in new and not yet exploited areas. In the absence of basic researches, and without constant efforts to innovate new technologies, the production of both durable and non-durable products is practically impossible. Since many African economies do not have a planned character, and the economies are characterized by the absence of a manufactured base which produces machines for further installments, the creation of true wealth is not possible. The creation of true wealth is only possible when the economy is organized on the basis of expanded accumulation. That means to build a strong home market and to create interconnected economic activities in all areas, the economy must be organized on the basis of planned accumulation. Only so, new investments and the production of new products are possible. In the absence of machine tool industries, any country cannot produce other tools and machines which are strategically important to protect the country from natural calamities. The fact that the IMF and the World Bank with their market economic policy have manipulated the African political elite to focus on few macroeconomic instruments, it is no more possible for African governments to look at other alternatives which will enable them to build their economies on wider and firmer bases. By applying a pure monetarist policy, African governments are brought up to a position not to think in terms of nation-building, and widen the sphere of activities so that the entire society can be interconnected via multiple mechanisms.
By and in large, SAPs could not foster industrialization in many African countries a process which is based on science and technology. Instead, Africa is turned again into a battle ground of European, Chinese, Indian companies to robe the natural wealth of the continent. After 60 years of so-called political independence, Western European countries and America, which proclaim to be promoting democratic values and the rule of law, are making non-transparent deals with African dictators to robe the continents precious minerals, and other resources. Many small farmers and small fishermen have lost their rights and are driven from their natural habitats. This is because international companies supported by their governments could easily get contractual agreements to fish in the waters of Africa.
2. Social Consequences of SAPs
As SAPs were promoted in many Sub-Saharan African countries, one thought that through the market miracle and through the instruments what the IMF and the World Bank have drawn as viable ways of bringing a dynamic economy in many African countries, social problems could also be tackled. However, before tackling existing problems, the program itself produces new social problems. Since governments must cut budgets for non-economic activities and since privatized industries fire what they believe to be a redundant labor force, this inevitably causes a new social situation. This is what happened in many countries, especially in Ethiopia after the massive privatization of many companies which were once run by the government. As a matter of fact, and due to the nature of the non-dynamic character of both the new investors and the industries themselves, new job opportunities could not be created. Those who could not find permanent job opportunities and those who were pushed from the rural areas to the cities in order to seek new opportunities, are compelled to engage themselves in the so-called informal sector. Others, who could not be part of the informal sector, must find other means to survive. As a result of the weak absorption capacity of the so-called modern economic sector, and because the informal sector is so saturated, those who could not find jobs must engage themselves in criminal activities, and other activities like prostitution.
Added to the effects of privatization, due to the liberalization of foreign trade, the Ethiopian market is overwhelmed by Chinese, Indian, South Korean, etc., products which undermine the existing industries. Many companies, because they could not withstand the competition from abroad, must reduce their capacity and expel the work force. This situation has inevitably swollen the reserve army, and compels many to live in very ugly conditions. Since the Ethiopian government does not have any social program, and since many institutions are very weak to allocate this reserve army for various purposes, millions are compelled to live in an abject poverty. In addition to this, since government affiliated companies become so aggressive in their attitudes, since they are eager to control all the main economic activities, they began pushing all those weak people from their traditional living areas. Building new hotels, sky-scrapers, shopping centers, villas and swimming pools inevitably produce slum buildings in other areas. Such kinds of uncontrolled and chaotic activities have inevitably become breeding grounds for all types of diseases, especially Aids, and other sexual diseases. All in all, the experimentation of a market oriented economic policy under the auspicious of the IMF and the World Bank, which is backed by the international financial oligarchy and Western governments, has produced a new social situation which cannot be tackled within the coming 50 years.
After 30 years of practices of the so-called structural adjustment programs, many Sub-Saharan African countries could not build a well-structured economy which could mitigate social problems. Instead of a structured and self-reproductive economy many Sub-Saharan African countries have to experience chaotic economic activities, in which social problems are more visible and cannot be solved any more by simple market economic instruments. The gap between the artificially created rich and the masses is alarming; and the new rich class does not feel any more that it belongs to its society. Its consumption appetite has developed to an extent that this new emerging economic elite has become one of the causes of rising inflation which has burdened the lives of the masses. As one Indian sociologist observed such kind of phenomena in the case of India, in Ethiopia too the so-called market economy which was imposed by the IMF and the World Bank and generally by the so-called international community has produced an omnivorous class. This class consumes most of the water resources, electrical energy, lives in sophisticated apartments which consume too much energy, drives high powered cars which swallow too much benzene, and at the same time spoils the environment, eat too much meat and butter, and imports very expensive clothes to wear, all in all to alleviate itself from the impoverished masses. This new omnivorous class cannot create wealth or bring new knowledge to the society. It has only a parasitical effect and drives the society to an unknown destiny. Because of its luxurious lifestyle, it can be easily bought and manipulated by outside forces, to sell the sovereignty of the country. Because it is intellectually very weak, and does not have time to articulate, it can engage itself in contractual and trade deals which bring damages to our country. The so-called international experts use the weak position of this class and do everything to culturally and economically destroy our country. If we see today a very weak Ethiopia and downtrodden people, this is because the so-called international community and its experts have done everything to exploit the weak position of our country. During the 18th and 19th century, direct military aggression was the method to directly colonize weak nations, in today’s highly globalized and sophisticated world, one does not need direct aggression, expect in few cases. Globalization has enabled those smart experts to easily manipulate the Ethiopian elite and control is mind.
In addition to this, those aid organizations which have offices in many African capital cities and which earn enormous amounts of money are heavily sharing what many African societies produce; and again they are one of the causes of inflation, especially in Ethiopia. After 20 years of massive involvement in the economic affairs of Ethiopia, the so-called international community and aid organizations have worsened the social, economic, ecological and cultural conditions of Ethiopia. Instead of teaching the masses how to become creative and innovative to develop new technologies, so-called aid organizations of all types misuse their privileged positions and are marginalizing the society. Due to the omnipresence of aid organizations, and their negligible contribution to the economy, the Ethiopian masses have lost self-confidence in themselves.
3. Ecological Consequences of SAPs
SAPs and the massive pressure of globalization have narrowed the attitude of the political and the economic elite in Ethiopia and in other African countries. In countries where economic, social and ecological standards are not the rule, where social and ecological awareness are not well developed, it is easy to turn such countries into dumping grounds of all non-recyclable products. Over the last 30 years many African countries have unconsciously imported second hand cars of all types, refrigerators which consume too much energy and produce too much CO2, electronic products of all types which entail poison and other second hand products become common in many African countries. With this the low income base of the society, has compelled many to buy second hand clothes which might have negative health consequences to the people.
SAPs and globalization have also compelled millions of Africans to change their food habits. The importation of processed and packaged foods will inevitably push traditional food habits. Especially, the new elite is eager to consume imported foods, since these have snob effects. The change in food habits has automatically brought new food related diseases, such as diabetes and others. In countries where specialized doctors and clinics are short, it is difficult for many to get proper medical treatments.
Globalization has also compelled many African countries to change their farming practices, not in a way to be more self-sufficient and ecologically aware, but to adapt their practices to the need of global capitalism. In many African countries the application of high breed seeds has become common. It is also reported that genetically modified seeds is holding foot in some countries. The wide spread of genetically modified and hybrid seeds has wiped the traditional seeds in many African countries. The consequences of the expansion of genetically modified seeds are yet to be evaluated. Experiences from Argentina and other countries show, the wide spread application of genetically modified seeds have wide range consequences on the environment and on health. The application of insecticide and unstudied chemical fertilizers will inevitably destroy the flora and fauna of the landscape. Since genetically modified and high breed seeds consume too much water, this will inevitably reduce the water table from the ground and causes dryness of the earth. In the long run this reduces rain falls.
4. Political Consequences of SAPs
One may think and believe that the main mission of SAPs is the introduction of new economic reforms. The introduction of such kinds of reforms in countries where clear-cut social relations are not developed, where economic class consciousness has not yet developed, and where an aggressive political class tries to control everything, such a program will inevitably produce a new political situation which is against genuine economic development. As SAPs do not have a mission of political enlightenment in a country where the state apparatus is very strong, and civil institutions are very weak, it is easy for the ruling class to strengthen itself, and thereby suppress political freedom. As SAPs have undermined existing social relationships and favored the production of a new consumer class, it is easy for the `ruling elite` to make this new omnivorous class as its social base so that it can govern for a long time.
Especially, in today`s Ethiopia where SAPs have been forcibly practiced there is no demarcation line between the political elite and the economic elite. The government, which is supposed to preserve the interests of all the people, vehemently defends its own interests by all means. In order to do this it must militarize the state apparatus, and build a huge security apparatus to control the movements of opponent forces. It fabricates everything to destroy independent newspapers and accuses some of the journalists that they are involved in terrorist actions. Critical journalists are being permanently intimidated, and if they dare to report about corruption and the social conditions of the country, they inevitably risk jail. Foreign forces team up with regimes like that of the Ethiopian government, as if the government is exercising democratic rights and guarantees press freedom. Without the support of the West, and without their military engagement, the regime could not have been strengthened.
The main aim of SAPs was not and is not to bring about real economic and social transformations in many African countries. Its aim is to create a new economic order so that Africa becomes more dependent and outward looking. SAPs are based on a neo-liberal ideology, and by its nature the ideology has a disharmonious character and inevitably creates a dis-articulated economy. In a non-articulated economy, the creation of new and vitally important wealth is not possible. Such an economic setup does not have an inner dynamism, and innovation of new technologies, and expansion of new investments in all areas is practically impossible. In such an economy, the creation of job opportunities for job seekers is not possible. The narrowness and the static nature of the system will again create new social conditions, which cannot be easily tackled by simple macroeconomic models.
SAPs are generally designed and must be implemented from above and not the other way around. That means the policy does not have any organic character and it automatically excludes the masses. It is not a system which slowly grows and expands from the bottom upwards and in every direction so that it ultimately encompasses the entire society. Any economic policy must be seen as a biological process, which must be consciously designed, and systematically cultivated so that growth in all direction will become possible. SAPs negate such kind of organic growth, which paves the way for complete mental praxis, which is the foundation of true human freedom and civilization.
As such the policy does not address basic human needs, such as proper diet, the supply of clean water, the organization of good sanitation systems and the establishment of a well-studied school system which supports economic, cultural and social development. SAPs are not suitable for the organization of a given social system on new scientific spirits to promote social well-being. SAPs are against aesthetics of all kinds and consciously or unconsciously create new social conditions that are chaotic and uncontrollable. That means, it violets basic human characters which inherently exist in all human beings, such as beauty, ethics and morality. Since the policy is limited in scope and has a strong utilitarian appeal, it is against all harmonious structures, such as beautiful buildings of all types, cities and gardens, etc. The policy is intrinsically a source of social conflict and permanent war. That means SAPs inevitably produce a new barbarian ethos, in which the political and the economic elite become very aggressive and lose any kind of social awareness towards the entire society.
It must be clear that the originators of SAPs, the IMF and the World Bank are working in the service of international financial oligarchy, and as such they are trying to integrate the political and economic elite of African countries within the international hierarchical system so that genuine economic development which benefits the majority of the people becomes impossible.
Last but not least, from a cultured economic perspective, SAPs suppress the development and expansion of diversified economic activities and their relationships with each other. By focusing on free trade at its core economic activity, and putting trade before production, it destroys human imagination and fantasy which are vital for practicing the free will of people in a given society.
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