IDTITED NATIONS · ..
RICAN IJ.'iJS'riTUTE FOR ECONOHIC DEVELOPMENT AND PLANNING
D A I:. . • '1. 1.1.
I.J:t<.:P S:,.]IIIJ. AR F'OR UlHVER3FrY TEACHBHS
COl\lllviENT on
IDEP/ECA-MA/SUT/64 IDEP/ET/VII/205
PROFESSOR LEDUC'S NOTES ON "OWNERSHIP JI..ND MAJ'JAGElVIENT OF RESOURCES
IN AFRICA"
by David Carney
Professer Leduc 1s notes on the subject of o-vmership and manE,Lgetr.ent of resources in Africa are obviously intended to raise issues9 not to discuss them. Nor is it the objective of this discussant to usurp the right of the Seminar to discuss the issues9 but to pin these dovm more specifically as a contribution towards the much 1-rider discussion tha t should follow.
It is clear from Professer Leduc1s paper that the three basic issues which have to be clearly distinguished are (1) ownersr.ip (2) use and (3)
management of resources1 although these three issues may overlap considerably.
The distinctions may be justified partly on pragmatic grounds and partly in terms of the basic philosophy by which a government approaches the treatment of these three aspects of resources in relation to economie development.
It has now become conventional for many Africari governments to describe their economie policies as tending in the direction of socialism9 and for many observers to take them seriously at their word. However, the expression
"African socialisrr " or "African roads to socialism" is empty of specifie meaning or content. It. represents n.o more than a vague general yearning on the part of most of the ro-called socialist and newly-independent countries
of Africa to exert ·sorne influence or control on the direction of their-econorrY•. Consequpl',l't1y9 sorne brands of African socialisrn involve no more than a
reassertion of traditional communal ownership of land and an extension of this form of ownership to simple business ventures by means of co-operation? for example, in the cases of farming9 agricultural credit or retailing of
merchandise. Other brands are revealed as participation of government or of individual poli tj cal leaders in joint ventUJ.'es vri th private foreign capi tal 9 and this often goes side by side with co-operatives. In practice9 there is nothing doctrinaire about these forms of so-called socialism9 for they are
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IDEP/ET/VII/205 _ · .. · page 2
examples of pragmatism rather than socialism in its proper traditional sense of State or collective ownership of the means of production. Few cotmtries in Africa practise socialism in its accepted sense or 9 indeed9 can afford to practise it9 for the means of production in an industrial sense are not internally generated but have to be imported - .:wen in the case of simple implements of agriculture like ho os and ma tchets. l'T'nere a cou11try is po or in skills? capital and technology the door is wide open to various forms of resource o-vmership and use7 dependint; on the terms on wl::.ich the foreign investor is wi+ling to contribute tho oxternal moans of prod~ction to aid its growth process.
Even so, a philosophy is a usoflü starting point. But in order to becomo effective in practice it ought to bo pragiT1atically applied to the various problems that arise and in their respective contexts? not the other way aroUl1d of making all tho problems fit into the philosophy. According as the one or the other approach is adopted the outcome may be success or failure9 as various experimonts in Africa bear uitness. For9 after all ? ever"J' -vrorth-vrile
philosophy must be justified by its results? and this holds for socialism as well.
To the extent that collective o1mership of the means of production may be desirable it 1~mst be justified on the groUl1d that? in the particular context of i ts application? i t coulèl be sholm to yield superi or resul ts to those of any alternative philosophy. Not only that ? it must also be informed by a desire to enhance collective as well as individual welfare. This latter9
however 9 is not a prerogative or monopoly of socialism. Every economie system that has been tried has exhibited elements of both types of welfare.
Starting therefore with the philosophy of socialism which9 apparently9 most African governments _believe9 at least say9 they want and bearing in mind the l imitation on a thorough-going application of socialism in Africàn
conditions today9 as already pointod out 9 by reason of the large irnport content of the means of production, we shall test his philosophy against the threo aspects of resources in Africa in rather pragmatic fashion and in the light of Professer Leduc1s paper.
First 9 o-wnership. Is collecti vo o1mership applicable in Africa and in what spheres ? In the case of natural resources socialism is often advocated as an aspect of the sovereignty of tho State. :But this should mean something more than just the sovereign right of the people through their government t o own these resm,.rces collectively. Tho prime justification7 indeed9 must rest in a more effective approach to coDs·e:rv a tian practices in mining9 farming, forestry and fi.shing than would other1>Tise ensue 9 for example under priva te ownership. The right to own9unless it ~1t?ans as 1..-ell tho Llüty· to eonsorve 9 has littl e to ~ecommonè. i t under any system of ownership whatsoever. It is ·on this score tha t absontoe landlordism is often· justly condemned. The absentee .
landlord is not a conserver - he does not ensure that his property remains
in~act and productive. He fails to improve his land by renewal through irrigation, so1l protect1on and drainage. He lots it run to waste.Socializati on would be
justified only if this leads tc more conservation-mindedness than private ownership.
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Unfortunatoly9 there i s nothing in tr aditional African society to indicate that collective o-.mership of naturel resourcos p•:Jr se is su:perior to or worse than priv::tte ownorship. This is becauso conservation, as such, becor.ws rel evant only in connoction with the E.~ of resource·s (and therefore i s usually shifted on to the user) since mmership per se is indentical lri th non-use under any system. Renee taxation is often emrJlo;yed as a means of compolling the mmer ( non-usèr) to becomo a user9 or at l Gast to talce cm active interest in the use of his resources.
It i s important9 therafore9 to keep clear the di stinction between O\morship and use because failing to make tho di stinction is often a soui·oo of much confusion. For i t is often said in connexion 1-Jith land tenure in Africa that collective o-vmer ship discouragos efficient use through l ack of socm·i ty of tenure 9 and the practice of shifting cul tivation undor com:ïmnal o-.mor ship i s often used as conclusive evidence. Noting could be further from tho tru th. The S·acuri ty of tc::nure of the large lcmdholder in Portugal or Latin .America i s no more conducive to use or propor use of land9 nor was private tenure a greater protection against reckless use of foreBt and sai l resou:rces in the early days of Ameri can coloni zation and economie devel opmont, than is tho insecuri ty from an individun.l point of viow of collective o-vmorship of land in Africa. For9 fundamentally? o1mership is synonymous 1-Ti th trj_~ _ _Eig'h.1 to n~n-use in possesion.
If we cxtend collocti ve o1mor ship from tho arca of natural re sources to tho industrial means of production (factorios9 machines and implements) tho samo arguments apply. Tho cri teri on i s not how tho L:md or the machine i s o1mod but whother tho type of o1mership is conducivo to an active intercs-G in cons'Grvation9 that i s9 in thi s case9 maintaining capital intact through covering maintenance and usor c est. ~Ti th all i ts philosq;hic conceJ:"n for tho wol faro of soci ety thore ·.i s no empirical evidence to support a vi ow thut collective o>mer ship of tho means of production is inhorontly suporior or inforior on thi s t est to privato ovmership, and African socialism i f regal'do::l as somèthing apart from traditional social ism has yet to justify itsèlf on this ground.
On ono aspoct of o1-mer ship ~ tho socialist approach indeed scores l ouor marks, that i s the right to <1n income from moro ovmorship . Unclor a system of privato o'imorship tho individu..:ü o>mor automatical ly has a right to Em incomo from his proporty once i t is usod9 undor social ism nono. If, thoroforo, one of tho tests of ocohomic devolopmcmt i s to ~;ridon tho range and incroaE>e the level of individual incomes the private o-vmorship system scores hi ghor marks ovor tho communal syst orir9 moral i ssues aside. One is theroforo lod to tho suspicion that tho opposition to com .• mnal hmd tenure in Africa by foroignors inurod t o tho system of privato ownorship i s basod on tho fact
that i t narrows tho rango of priva tG incomos for 1ifricans and non-Afrioans aliko ~·
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There is yet anothe1 aspect of private ownership, particularly in lan~
yhich lie serves serious consideration oy African Governmcnts ospeciall;y in the context of an underpopu+a ted continent and inaè.ec_y 2. te ma::.;kets in te:cns of pot ential demand and consumption. This is the stimulus v·rlüch the syste!ïl ma;y give to the "march to the frontier" the growth of po::;mlation9 a.nd. ~,;e
neral economie devel opment._ r.I'hus the Homestea.d Act, tho :Morill ~\ct and ~.b.e
railroad l egislation, al l passed by the United States Congress in 1862 during the Civil Ha,r 9 givirig free ~rants o:!: land to inù.ividu:ü ci t~~Z8~1;_·;.
_collages of atriculture and rnec~anical arts 9 a~d the transcontinental ~ail
+constructl53Bad+ companies ù.iù. rouch to encourage the settlement and e,rovrth of la:.'g-3
. .
rural :populations, to Gttract the poor+ lanJ.lesz erüe;rants frorr1 t'~1E: Ole~ 'V'Tc:c~.;:l9 and to promote general economie deval opment.
Since the conservation aspect has no~ teen a s~ron~ 8r uniquo ~eatu~n o~
any particular system of ownershiy9 especial ly in ~'·esar:::!. to natu'!:'aJ rer;our.:::es, the case for communaru ownership of these resources is indeed vJea!rencc1 and that for private ownership consiù.erably strengthened, within. the cc~~ext
of economie development, on account of the income9 population and ~ane~al
Jevel opment effocts of the latter system. The case for ono tJ~e of own0rship as against the other must obv:i.ou:.: ly stand or :faJ.:!. by these cri t e::-:!_c,. :Bu--:;
the incarne eff~ct? i: not the pop~latior affect, of private ow~arship i~
land shoulcl not9 even so? be talcen auto!lla ticaJ.ly for gràntE:d. Eve::.t from -:;ho population angle;; extreme })res sure on the land un;ler pr:L va t e as L.I::.t.lcr co::J- munal 01morship coulù. threaten t~l8 liveJ_jJ·wod of the mal'gj.r.al o;;~Er or us8-r coulcl be th:::.'e.:,t.~neJ. by a rapid incJ:eEJ.s.a j_n productiou th:'CL.~c,h -:;:1':: ;:,o::::c;
efficient use of land hy the supra-marginal prodv.ccœs.
Shifting our foc us? there:fore 9 to the u:::;a of r8sourc 'JG :L t rr::::.y be sai O.
tha t there is much grouncl for a difference of philosopLy ém.l opinion9 Eo.r a social ist a.nJ. a non- social ist use of resources. Communa.2. Ol·:nershil) i:1 not
inherently or technically a barrier to tha priva-te use cf rosources unQer
varici~s fo~ms of l ease arrangemonts9 nor is private ownership a11 obstacle ta communal use thr-ough the agency of government. Ac;ain7 ~,he c2.se for or against col lective or priva tc usG must bo m.:1J.e on t~10 be_s~_s of the :;:·esul ts .. An obvious c:ase in l)Oint is the mat ter of land l~e:Lorm in i ts 1vi·lest sem~e.
Redistribution of large esta tes to the peasants in ·che m:!.staken belj ef th:,~,-;·
o;mership i::; s;rnonymous "i'Ti th use and should convert laY'.d.less pea:.:;az.d;s irc·~o
pro duc ti ve farmers has oost many a government this cher-i shed ilJ.usio::, ~·;·::iJ o the move to consolida te smal l scat tered. hol dings into larger proclucti ,~,_;, ui:'.-:;s has frequently foundered Oi'l the same rock : lac~;: of technical 1.::-:o-:;-:---~10~{ in the use of land9 and lack of equ:i.pment, seed9 fertilizer and otl::.&r ::'::-:-::..~-~-·:,:i.c.B~
credit and marketing outlets. In the one case preoccupation '1:~_-:;h tho •n--:_,,_;_r-- ship problem, in the other -vri th the techl:.icaJ. :::;iz; of "~}w 1-~::-or_~<.:c-':.:_c"l ~~·~;_t,
has often obscured the fact that the basic nroblc;m was us8 and t~&.t -G~.!:'..c . boils down to technique9 equipmcnt, sced and fer:,~clizer";--.:-a·f:c.:::·., i:r:r·_i_p,·~.c-"c-::
and drainage ( or1·r~ter controJ.), credi t anci. ma:r1'::eJci.r.g faci l i tic~. . It follo-vrs, therefore9 that many apparent o-v:ncrship issus:::: 2j.':J r-.,a:;..l; .. r
matters of resource use and that the cure for unu-!iilized or undo:rv:t:'_15.':'.0d.
large private astates is not to sacrif~_ce the 2..dvn.nJu0,.çr:e o-f é-~n effir:,_i_r:··l'; technical unit and large saale of producGiml to the f;t::.;::;h of pec:.sc:J.t
landovmership but to supply ef'foc~i vo use t:irough the ;;;ubsti tu-~:~ en ci' .:;-,:o:~c
for private use wi thout necessarily cli sturbi:ng ·che ba,sis of o>morsiJ.:LT)~ Pc:>:·
i t seems far bettor to main tain p:ri va te inco!:'les fro~::~ mere OKnership ( taxed.
IDEP/ECA-MA/SUT/ 64 IDEP/ET/VII/ 205 Page
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appropriately as may be rcquired) and private self-respect than to expro- priate or nationaliz"l (with or without compensation) and :::'edistribute private vreal th and so run the risk that the expropriated may fail t·o ma:ke go6d in other a:vocations9 hoard or squander their compensation5 and eventually be come a burden on Sta te charity~ The net re sul t 9 income-1üse, may be the same either way9 but then again it may be different to the extent that State charity is likely to be less charitable than private income and 'the sense of individual worth may be destroyed.
Nor is the cure for small uni ts necessarily consolidation 'iri a physical sense wi th fewer ovmers 9 especially if population pressure on the land is not a problem.The advantages of an economie and technical unit ·could onsue through co-operative organization and use of the means of cul tïv:ation (inclu- ding credit) just as in industry the small producer could contri:oute to 2.n overall reduction of production costs if large-scale producers refrained from swallovring up or merging vù th small producers of auxiliary or complemen- tary inputs. In agriculture9 as in industry9 there is ample room for the small producer and for producers' co-operatives as for the large StatG- operated commercial farms. The essential point is to guarantee eÎfective use by arrangements appropriate to the size of the unit9 cnmership aside. Given this9 the general area of economie activity can accomoè..ate a broad spectrum of technical w"its of various sizes.
The opposite process9 desocialization of the use of resources9 is eq_ually val id. T:w right of use could pass from the communi ty through i ts goverr.Jiient to private operators Nith or without a change in the bas'is of ownersh~-:J;:;.
This i s a point vmrilhy of note in the African context w'herè shortage hf skills and capital may d.ictate the passage of exploitation from comrr.U~".al to private arrangements by foreigners who can bring into the country the ele- ments essential to effective use. The community through its gover:n.mont may then limit its role to taking the necessary safeguarcls connecied with incarne redistribution (taxation)~ growth of investment (limitation on profit tr;i,ns- fers abroad) and of local skills (training programmes by foreign enterprises and by government for local personnel).
vfuere ownership and use become corr.bined there automatically arises the insoluble question of >ihich type of management (in the microeconomie sense as opposed to the more relevant macroeconomie interpretàtion whi.êh is deal t with subsequently) is better , State or private. This is~u~ ~annot be empiri- cally tested because costs under both regimes are not sirriilérr. Yet costs, in the monetary sense 9 are not the only cri teri on fo::- de ci ding the ü;sue. The results must be judged partly on the basis of financial costs~ partly on the basis of non-measurable social costs and, in a dynamic context9 partly also
on the basis of changing ideas about the locus of social :responsÙ)ilit3'• Thus one recognizes the historical fact that certain tyjJes of enterprizes vlhich were at first entirely privatel;y managed9 for example edùcation in Britain and the United States or the production of coal in Britain before
19459 become 6Tad.ually (or suddenly) shiftGd mostly on to the State. The decision was made not on the basis of comparative financial costs ·and efficiency(there uere no State schools or coal mines against which to make the comparison) but in the belief and conV:i-ction that educatir:m v7aS prlmarily a responsibility of the State, not of privatQ 8ntGrprisc, ~nd that a s0cialist solution would. uulve th8 ·rc·!)lem of the co.::1l mines.
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rage 6
One also recognizes1 by contrast, cases where enterp~ises at sorne time taken over and operated by the State were subseq_uently turned cver to private o1mership and management, for example the nickel mines ü1 the, .· . United States after the Second 1-lorld 1-l'ar. This was the resul t of the tradi- tional philosophy of that .country that government 'should keep out of
business operations as much as possible under peacetime conditions. Yety in that same country after the Second World vfar1 the State entered into the management of power enterprises as evident in the case of the Tennessee Valley Authori ty. Then there are the intermediate cases >vhere enterprises apparently owned and managed by private effort nevertheless derive their main stimulus from the activities of the State as the major or only
coüsumer of their output and thus base their operations on the support a:r:à.
subsidy of the State ~ the defence industry9 for example, in the United States at the present time.
These are c lear cases which go to show the futili ty of assuming a prio:r·.i doctrinaire positions on the iss11e of the role of the State versus priv~to
cnterprise lÜ thin an economy. This concession to roalism is see::.19 to a
certain extent, in those cases where African govcrnrnents declare themselves as pacemakers and entrepreneurs in default of indigenous private business, and as being qui te 1-rilling to hand over State 01-med and operatcd œ:.treprises to private 01-mership and management as soon as indigenous entrepreneurs appeared who were willing and able to take over. It is9 of couxse9 a
different ma tterwhether or not thore would arise in the foreseeable future a sufficient number of such entrepreneurs and, if there did, whether the goverrirnent would implement its declared policy. The po±·nt? hmvevor 9 has beE-.::1 made that in a ohanging 1-mrld a flexible approach is required in such mattcc::O.,
In the màttor of resource management which9 for the purpose of these oomments is taken in its relevant macroeconomie sense of management of resources over the entire economy, the main concern is the direction in
>·rhich the use ôfresources should be channelled. One oould readily admi t in this connoxion the need for an overall control by the State of the charincls of resource use without committing onoself t o a doctrinaire view of the means of exercising such control. Again? tho reason for this position is both pragmatic (based on results) and philosophioal (human nature). In countries where thorough-going socialism is practical the various techni- ques of central planning are available for the exorcise and implementation of overall control. But fm,r African countries are in this position? and even for those that may so consid0r. themselves a caveat is necessary. Human nature being what is it9 from the history of human experience and observa- tion? people are not prone to endure for too long'a minute regulation of their economie and social affairs without the emergence of adverse patterns of character change and behaviour, or even of outright revol t , >iQ.ich rr.::<,y defeat the system of controls. One only has to follow the recent history of the Soviet Union to conclude that some relaxation of controls, ho~ever
gradual, is eventually inevitable. This rema~k9 incidentally9 does not imply any judgement as to whether a country should9 in tho fir;,t instance1 attempt such dotailed control or not. It merely irr.plies that after a peri6d of rigid control sorne relaxation is inevitable and should be e::q:iected.
" •
•
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Many African countries toda;y find themselves in a :position where . they have to combine bath direct and indirect methods of resource management. One of the most :popular of direct controls is taxation (incarne and sales). The essential factor is the objective behind the use of the tax mechanism.
Res.ource accumulation and al locatio:tl is a basic neeù. and here a strong case may be made out for strengthening the structure of taxation and impro- v:img i ts scope and caver age in many African couiltries. In come redi.s tri but ion through progressive taxation, holmver, is àn at tractive al tern.ative .use of
t.8<xation in socialist countries or countries under the influence of . social ist
philoso:phy. The rel evance of this use of taxation in Africa i s a mP,t,te:r of considerable doubt in present circurnstances.
Ohe .. may be forgiven for expressing the vie1-r that while income taxation · in Africa may be justified its use for redistri'bÙtional :pru:poses rests on
rat~er doubtful assumptions. In sorne African countries :progressive taxation is used to correct a condi t ion v<hich doos not exist and before i t had 'B.von ha&.
opportuni ty to G}:ist. The particular pattern of spending and saving behavi our on which the use of progressive taxati on is predicated does not at present exist in man;y African cou!J.tries where the gener ally l aw l evel of incarnes ? high marginal pro:pensity to consume and .traditional patterns of conspicuous
consUT!1p~ion cast doubt on the validi ty (again in pre?ent cirCUI!l§'tailees) of the Keynesian "lm< of consum:ption". In any case i t is difficult t o .t est the "law" empirically in Africa if no op:port\.mity is al lowed for incarne ineq_uality anù. its assumedhigh marginal propensity to sav8 to. e:x:ist in the first instanc8. I t may very vml l be tha t those who advocate :J?Çllicy measüros to increase the l evel of personal savings in African coQ~tries~ given 'i ts already l ow average level 9 are bar king up the vœong tree b;f apparcnt1y ignoring the fact that incarnes are l ow on the average and that -::onsumpti Œ19 ·
in such circumstances9 must incvi tably cons ti tute a rather b_lgh percsnt a_g<;:
of_.income. On the other hand9 one cdi.rld hold the view9 on the basis 9:f _ t2:e . facts of consumption and saving behavibur in many Afriean communities9. that i t is. q_uite :possi bl e for income ineq_uality to coexist with a pattern of
consumption and saving q_ui te the op:posi te of that predicted by the Keyües:Lan madel of incarne growth. In I'Thich case the Keynesian justification of incone redistribution through progressive income taxation would cru,nble. The co::::-oJ..-..
lary of applying Keynesian prescriptions for income policy in African condj_~ ..
tians at the pr·es·ent time9 namely9 that many Afriean governments a1·e in a posi t ion t o influence domestic investment patternG to a considorab~e oxtent by progressive taxation and govornment sponding is certainly a b. tt le far·- fetched.
Nevertheless9 a case may be made for a less steeply eraduated 0.11.d widely applied incarne tax9 for sorne measure of monetary control aml for
sel ective priee controls bath for revenue and for tbe pur:pose •)f influ~mciag
the direction of economie and social investment ui thin t~e econo:::~y in tho<?o cases where these measures have a chance to become effective.
Indirect (priee and monetary) controls - inducements in the form of preferential treatment for foreign investors and foreign investment in preferred lines9 placement of government ordor s9 State subGidies9 limita·t.io~
of external transfers of profits 9 regulation of interest rates 9 etc •.• fo:r:,:
a useful armory of overall economie controls which ma;y be applied in
African countries under appropriate circumstances.
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One aspect of the general topic not treated by Frofessor Leduc in his paper is the general area of intercountry collaboration in the use and management of resources. This important omission is9 no doubt, due to his implicit assumption that the problems of management and use of resources in
·Africa can be meaningfully resolved within each of the existing political
Q~its. This assumption is certainly not valid in the context of African eco- nomie development. This is not the place to discuss the various forms of collaborativo effort possible in development planning, production and trade in contemporary Africa. One would merely wish to stress the need for keeping integrative efforts very much to the fore in all discussions relating to resource ownership9 management and use. An important corollary is that in the light of this need for integrativo action between African countries9 doctri~
naire approaches to economie philosophy are likely to impede such action if there exists a serious divergence of philosophy among neighbouring countries •
. For the various reasons already given it is theref.ore very important· for African governments 1 as the develol)ffient pro cess ga thors momentum9 to make a careful and pragmatic distinction qetween ownership9 use and manage- ment of resources9 and an equally careful analysis of the methods of dealing
>fi th this various aspects. Too doctrinaire an approach to these matters
could hinder the development process, and eac:P. aspect has to be soparately examined and the results of applying thereto any particular philosophy carefully analysed. In regard to the frequently ann9unced };redilection of many African governments for a socialist solution to their economie problems it has been shown9 hopefully, that this philosophy cannat be universally applied to all African countries in present circu~stances9 nor for the rea~
sons given can it be generally applied, even within the same country, to each of thé separate aspects of ownership9 use and management of resources. ·
LD.E .P.
Dakar, 24 August, 1964
