Zambia: What really is neoliberalism anyway?

Zambia is a poor nation in Africa. After achieving independence in 1964, it was ruled by Kenneth Kaunda’s socialist UNIP party until 1991, when it was succeeded by the Movement for Multi-Party Democracy. Since then, the country has been far more democratic, and party control has changed multiple times.

Its GDP is dominated by copper exports. It goes up when the price of copper goes up, and down when it goes down. Note how similar the charts are.

Copper employs two percent of the population, and is about 14% of GDP, and 75% of exports, according to the World Bank. This compares favorably to the agricultural sector, which despite employing half the country, contributes 8.2% of the countries GDP. State capacity is very low, and the climate hostile to investing, such that only 10% of people are formally employed. The rest are either unemployed, or in the informal economy. The government also has a very large presence in enterprises - it owns the railroads, the electrical supply, the telephones, etc., and it is broadly agreed that it meddled in foreign exchange rates. The level of state ownership in the economy has decreased since 1991, however -

I am broadly describable as a neoliberal. I think it is best if the government is less involved with the provision of goods and services, and I support policies that accomplish this. Zambia would seem to be a country that would greatly benefit from neoliberal policies.

It was dispiriting then, at first, to read this report on neoliberalization in Zambia. They did not find it benefited the working man - on the contrary, they found it was little more than a giveaway to foreign investors. Assets were sold for pennies on the dollar, those companies were given wildly advantageous tax deals (which they evaded half the time anyway), and while nothing can be proven, everybody knows that a lot of people were bribed to make the sales happen. At the same time, social spending was reduced, user fees were introduced on all manner of products (roads, television sets, boreholes) fuel and fertilizer subsidies were dropped, and the insult to crown it all off - the government straightforwardly raised taxes on labor income. Meanwhile, the few companies let in (mainly in mining) abuse their workers, who are paid little, and have little job security.

“But wait,” I say, rising out of my chair slightly; then sitting back down again and feeling vaguely embarrassed to have actually said that aloud, I type - that’s hardly neoliberalism at all! That’s just corruption! Yes, it’s good to privatize - but only when it’s given out equitably, and not as a hand out to whoever gave the most bribes to the government. And instead of looking at the companies underpay workers, and saying that we need labor laws to protect them, we need to look at what the government does that discourages investment, and discourages other businesses from forming. 

But I feel very uncomfortable writing that. It feels very much like the old Marxist line, that “true communism has never been tried.” Am I to say that, when neoliberalism doesn’t come to the results I wanted it to? Is it always the fault of something else?

I thought about that for a bit. Was there a difference? Or are they both faith based? I think I’ve resolved that question to my satisfaction now, however. When I support neoliberalism, I am not supporting an end state. I am supporting very specific policy proposals as to what we should do. If those proposals are not done, I can very accurately claim that the failure of it was due to it not actually being done. When one says that true communism has never been tried, it is making claims about an end, not a means. One cannot say that an end has not been tried, as an explanation for why attempts to do so have failed. 

I’m still not an expert in Zambia. But I feel quite confident in saying, the mismanagement of Zambia’s economy is orthogonal to neoliberalism. It is bad to have a corrupt government hand out contracts to foreign investors at preposterously generous terms. It is also bad to have a corrupt government. That’s the root of the problem, whether it expropriates the copper industry for itself, or gets paid by investors to let them expropriate it. 

It is, however, a good lesson for the World Bank and the IMF &c. Governments should reform first what they can actually reform in a productive manner, not what would be best if the government were competent and not corrupt. Privatizations should not necessarily be the first item of reform, and it is paramount that they are done in a fair and equitable manner. However, that is not an argument for socialism.