Daily Trust Tuesday, August 20, 2002

Buharism: Economic theory and political economy

By Sanusi Lamido Sanusi

sanusis@ubaplc.com

.also visit http://www.gamji.com/sanusi.htm

 

I have followed with more than a little interest the many contributions of commentators on the surprising decision of General Muhammadu Buhari to jump into the murky waters of Nigerian politics. Most of the regular writers in the Trust stable have had something to say on this. The political adviser to a late general has transferred his services to a living one. My dear friend and prolific veterinary doctor, who like me is allegedly an ideologue of Fulani supremacy, has taken a leading emir to the cleaners based on information of suspect authenticity. Another friend has contributed an articulate piece, which for those in the know gives a birdís eye view into the thinking within the IBB camp. A young northern Turk has made several interventions and given novel expressions to what I call the PTF connection. Some readers and writers alike have done Buhari incalculable damage by viewing his politics through the narrow prism of ethnicity and religion, risking the alienation of whole sections of the Nigerian polity without whose votes their candidate cannot succeed.

With one or two notable exceptions, the various positions for or against Buhari have focused on his personality and continued to reveal a certain aversion or disdain for deeper and more thorough analysis of his regime. The reality, as noted by Tolstoy, is that too often history is erroneously reduced to single individuals. By losing sight of the multiplicity of individuals, events, actions and inactions (deliberate or otherwise) that combine to produce a set of historical circumstances, the historian is able to create a mythical figure and turn him into an everlasting hero (like Lincoln) or a villain (like Hitler). The same is true of Buhari. There seems to be a dangerous trend of competition between two opposing camps aimed at glorifying him beyond his wildest dreams or demonising him beyond all justifiable limits, through a selective reading of history and opportunistic attribution and misattribution of responsibility. The discourse has been thus impoverished through personalisation and we are no closer at the end of it than at the beginning to a divination of the exact locus or nexus of his administration in the ebb and flow of Nigerian history. This is what I seek to achieve in this intervention through an exposition of the theoretical underpinnings of the economic policy of Buharism and the necessary correlation between the economic decisions made and the concomitant legal and political superstructure.

Let me begin by stating up front the principal thesis that I will propound. Within the schema of discourses on Nigerian history, the most accurate problematisation of the Buhari government is one that views it strictly as a regime founded on the ideology of bourgeois nationalism. In this sense it was a true offshoot of the regime of Murtala Mohammed. Buharism was a stage the logical outcome of whose machinations would have been a transcendence of what Marx called the stage of primitive accumulation in his Theories of Surplus Value. It was radical, not in the sense of being socialist or left wing, but in the sense of being a progressive move away from a political economy dominated by a parasitic and subservient elite to one in which a nationalist and productive class gains ascendancy. Buharism represented a two-way struggle: with global capital (externally) and with its parasitic and unpatriotic agents and spokespersons (internally). This was a vicious struggle and thus required extreme measures. Draconian policies were a necessary component of this struggle for transformation and this has been the case with all such epochs in history. The Meiji restoration in Japan was not conducted in a liberal environment. The Industrial Revolution in Europe and the great economic progress of the empires were not attained in the same liberal atmosphere of the 21st century. The "tiger economies" of Asia such as Taiwan, South Korea, Indonesia and Thailand are not exactly models of democratic freedom.

To this extent Buharism was a despotic regime but its despotism was historically determined, necessitated by the historical task of dismantling the structures of dependency and launching the nation on to a path beyond primitive accumulation. At his best Buhari may have been a Bonaparte or a Bismarck. At his worst he may have been a Hitler or a Mussolini. In either case Buharism drawn to its logical conclusion would have provided the bedrock for a new society and its overthrow marked a relapse, a step backward into that era from which we sought escape and in which, sadly for all of us we remain embedded and enslaved. It is not enough to accuse Buhari of being a dictator (as his detractors are wont to do) or to pretend that he was never one (as his admirers so fallaciously claim). What is required is a dispassionate analysis of the true nature and source of such despotism and its problematisation within an intellectually vibrant political discourse.

One of the greatest myths spun around Buharism was that it lacked a sound basis in economic theory. As evidence of this, the regime that succeeded Buhari employed the services of economic "gurus" of "international standard" as the architects of fiscal and monetary policy. These were IMF and World Bank economists like Dr. Chu Okongwu and Dr Kalu Idika Kalu, as well as Chief Olu Falae (an economist trained at Yale) and the famous "Triple A" (Alhaji Abubakar Alhaji). At the time Buhariís Finance Minister, Dr Onaolapo Soleye (who was not a trained economist) was debating with the pro-IMF lobby and explaining why the naira would not be devalued I was teaching economics at the Ahmadu Bello University. I had no doubt in my mind that the position of Buharism was based on a sound understanding of neo-classical economics and that those who were pushing for devaluation either did not understand their subject or were acting deliberately as agents of international capital in its rampage against all barriers set up by sovereign states to protect the integrity of the domestic economy. When the IMF recently owned up to "mistakes" in its policy prescriptions all patriotic economists saw it for what it was: a hypocritical statement of remorse after attaining set objectives.

Let me explain, briefly, the economic theory underlying Buhariís refusal to devalue the naira and then show how the policy merely served the interest of global capitalism and its domestic agents. This will be the principal building block of our taxonomy. In brief, neo-classical theory holds that a country can, under certain conditions, expect to improve its balance of payments through devaluation of its currency. The IMF believed that given the pressure on the countryís foreign reserves and its adverse balance of payments situation Nigeria must devalue its currency. Buharism held otherwise and insisted that the conditions for improving balance of payments through devaluation did not exist and that there were alternate and superior approaches to the problem. Let me explain.

The first condition that must exist is that the price of every countryís export is denominated in its currency. If Nigeriaís exports are priced in naira and its imports from the US in dollars then, ceteris paribus, a devaluation of the naira makes imports dearer to Nigerians and makes Nigerian goods cheaper to Americans. This would then lead to an increase in the quantum of exports to the US and a reduction in the quantum of imports from there per unit of time. But while this is a necessary condition, it is not a sufficient one. For a positive change in the balance of payments, the increase in the quantum of exports must be substantial enough to outweigh the revenue lost through a reduction in price. In other words the quantity exported must increase at a rate faster than the rate of decrease in its price. Similarly imports must fall faster than their price is increasing. Otherwise the nation may be devoting more of its wealth to importing less and receiving less of the wealth of foreigners for exporting more! In consequence, devaluation by a country whose exports and imports are not price elastic leads to the continued impoverishment of the nation vis a vis its trading partners. The second, and sufficient, condition is therefore that the combined price elasticity of demand for exports and imports must exceed unity. These two conditions are known in neo-classical international economic theory as the Marshall-Lerner conditions for improvement in a countryís balance of payments through devaluation.

The argument of Buharism, for which it was castigated by global capital and its domestic agents, was that these conditions did not exist clearly enough for Nigeria to take the gamble. First our major export, oil, was priced in dollars and the volume exported was determined ab initio by the quota set by OPEC, a cartel to which we belonged. Neither the price nor the volume of our exports would be affected by a devaluation of the naira. As for imports, indeed they would become dearer. However the manufacturing base depended on imported raw materials. Also many essential food items were imported. The demand for imports was therefore inelastic. We would end up spending more of our national income to import less, in the process fuelling inflation, creating excess capacity and unemployment, wiping out the production base of the real sector and causing hardship to the consumer through the erosion of real disposable incomes. Given the structural dislocations in income distribution in Nigeria the only groups who would benefit from devaluation were the rich parasites who had enough liquidity to continue with their conspicuous consumption, the large multi-national corporations with an unlimited access to loanable funds and the foreign "investor" who can now purchase our grossly cheapened and undervalued domestic assets. In one stroke we would wipe out the middle class, destroy indigenous manufacturing, undervalue the national wealth and create inflation and unemployment. This is standard economic theory and it is exactly what happened to Nigeria after it went through the hands of our IMF economists under IBB. The decision not to devalue set Buharism on a collision course with those who wanted devaluation and would profit from it - namely global capitalism, the so-called "captains of industry", the nouveaux-riches parasites who had naira and dollars waiting to be spent, the rump elements of feudalism and so on. Buharism therefore was a crisis in the dominant class, a fracturing of its members into a patriotic, nationalist group and a dependent, parasitic and corrupt one. It was not a struggle between classes but within the same class. A victory for Buharism would be a victory for the more progressive elements of the national bourgeoisie. Unfortunately the fifth columnists within the military establishment were allied to the backward and retrogressive elements and succeeded in defeating Buharism before it took firm root. But I digress.

Having decided not to devalue or to rush into privatisation and liberalisation Buharism still faced an economic crisis it had to address. There was pressure on foreign reserves, mounting foreign debt and a balance of payments crisis. Clearly the demand for foreign exchange outstripped its supply. The government therefore adopted demand management measures. The basic principle was that we did not really need all that we imported and if we could ensure that our scarce foreign exchange was only allocated to what we really needed we would be able to pay our debts and lay the foundation for economic stability. But this line of action also has its drawbacks.

First, there are political costs to be borne in terms of opposition from those who feel unfairly excluded from the allocation process and who do not share the governmentís sense of priorities. Muslims for example cursed Buhariís government for restricting the number of pilgrims in order to conserve foreign exchange.

Second, in all attempts to manage demand through quotas and quantitative restrictions there is room for abuse because there is always the incentive of a premium to be earned through circumvention of due process. The reason for this is simple to understand. The only reason quotas are necessary is because the demand for the product exceeds its supply, which means it is priced below equilibrium (the level at which the market is cleared). In theory, if the price is allowed to increase some consumers will be priced out of the market and some producers priced in leading to a closure of the demand gap. Keeping the price low by fiat creates what is known in economics as "artificial scarcity". In the case of the foreign exchange market, this was addressed by the federal government through the system of import licensing.

Precisely because of the existence of a repressed demand, there will always be economic agents willing and able to pay a much higher price than the official one for scarce foreign exchange. Import licence becomes a "hot cake" and the black market for foreign exchange highly lucrative. The policy line chosen by Buharism could only succeed if backed by strong deterrent laws and strict and enforceable exchange rules. So again we see that the harsh exchange control and economic sabotage laws of Buharism were a necessary and logical fallout of its economic theory.

I have tried to show in this intervention what I consider to be the principal building blocks of the military government of Muhammadu Buhari and the logical connection between its ideology, its economic theory and the legal and political superstructure that characterised it. My objective is to raise the intellectual profile of discourse beyond its present focus on personalities by letting readers see the intricate links between disparate and seemingly unrelated aspects of that government, thus contextualising the actions of Buharism in its specific historical and ideological milieu. I have tried to review its treatment of politicians as part of a general struggle against primitive accumulation and its harsh laws on exchange and economic crimes as a necessary fallout of economic policy options. Similarly its treatment of drug pushers reflected the patriotic zeal of a bourgeois nationalist establishment.

On the other hand, the policy also has major drawbacks, particularly if not well managed. As happens in all such cases a number of innocent people become victims of draconian laws and sweeping policies. Some honest leaders like Shehu Shagari, Clement Isong and Balarabe Musa were improperly detained and treated like common thieves. Whatever the crimes Umaru Dikko was alleged to have committed, the humiliation visited upon his innocent father was totally inexcusable. The government also went overboard in its sensitivity to constructive criticism and, in cases like the Irabor case, took measures far out of proportion to the actual damage done by the alleged offence. The same can perhaps be said of the governmentís sanctions on two respected traditional rulers who went on a private trip to Israel. The reality however is that many of those claiming to be victims today were looters who deserved to go to jail but who would like to hide under the cover of a few glaring errors. The failure of key members of the Buhari administration to tender public and unreserved apology to those who may have been unfairly treated has not helped matters in this regard. Buhari owes it to himself, as a human being and a Muslim, to seek forgiveness from those who may have suffered injustice at the hands of his agents.

I will now address a question I have often been asked. Do I support Buhariís decision to contest for the presidency of Nigeria? My answer is no. And I will explain.

First, I believe Buhari played a creditable role in a particular historical epoch but like Tolstoy and Marx I do not believe he can re-enact that role at will. Men do not make history exactly as they please but, as Marx wrote in the 18th Brumaire, "in circumstances directly encountered, given and transmitted from the past." Muhammadu Buhari as a military general had more room for manoeuvre than he can ever hope for in Nigerian politics. I am not sure that sterling performance as head of a military junta translates into the same level of competence in a liberal environment where the tools are persuasion rather than coercion, and negotiation rather than suppression. There is also the reality that globalisation and liberalisation, which Buhari so correctly fought against, have swept across the third world and emasculated nation states thus reducing the scope for independent sovereign action. The agents of international capital are much stronger and far more pervasive than in 1984 and their international support has increased with the new arrogance of their patrons who still bask in the glow of their victory in the so-called cold war. The days of regulation are now history and the hands of the clock, as they say, cannot be turned back.

Second, I am convinced that the situation of Nigeria and its elite today is worse than it was in 1983. Compared to the politicians who populate the PDP, ANPP and AD today, second republic politicians were angels. My view is that Nigeria needs people like Buhari in politics but not to contest elections. Buhari should be in politics to develop civil society and strengthen the conscience of the nation. Everywhere you turn you see elements who have amassed wealth at the expense of the nation: be they legislators, local government chairmen and councillors, or governors and ministers. But these are the heroes in their societies. They are the religious leaders and ethnic champions and Nigerians, especially Northerners, will castigate and discredit anyone who challenges them. The problem is not so much that leaders are corrupt and useless, but that the followers refuse to recognise this fact. In the North in particular, illiteracy and ignorance is so widespread that almost anyone can use slogans of religion and ethnicity to gain mass support, which is in turn betrayed. My fear is that Buhari has greater potential for changing the North than is offered by the opportunistic tapping of this wellspring of primordial loyalty. Anyone can campaign on a platform of ethnicity and religion, especially if the political environment is ripe for it. Few have the courage to stand on a platform of principle, even if they risk alienating the majority in their own constituency. It is this minority, which is being gradually extinguished through blackmail, misrepresentation and outright elimination that needs to be strengthened by the likes of Buhari. Unless we start by educating our people and changing their value system, those who speak the truth will remain outcasts in their own society, castigated by the very people whose interest they seek to protect at great personal cost.

Having said all this let me conclude by saying that if Buhari does succeed in getting a nomination he will most probably have my vote (for what it is worth). I will vote for him not, like some have averred, because he is a Northerner and a Muslim or because I think his candidacy is good for the North and Islam. I am a Nigerian and I believe anyone who wants the presidency must be willing to serve all Nigerians fairly, without regard to creed and ethnicity. I will vote for Buhari as a Nigerian for a leader who restored my pride and dignity and my belief in the motherland. I will vote for the man who made it undesirable for the "Andrews" to "check out" instead of staying to change Nigeria. I will vote for Buhari to say thank you for the worldview of Buharism, a truly nationalist ideology for all Nigerians. I do not know if Buhari is still a nationalist or a closet bigot and fanatic, or if he was the spirit and not just the face of Buharism. I do not know if he can cope with a Nigeria (and a world) that has changed since he was last in office. I do not even know if Buhari himself has changed and if such a change was for better or for worse. My vote for him is not based on a mythification of the man, a fossilisation of his image in an ideal state. It is rather, and more fundamentally, a celebration of what his government was and what it gave to the nation.