bulletin of the AFRICA PROGRESS PANELVolume 5, Issue 2 — 26 January 2012
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Is Capitalism in Crisis?
Roughly two decades after Francis Fukuyama declared 'the end of history', capitalism is under the spotlight again. This time, though, it is far less triumphalist. Today, ‘capitalism in crisis’ is making headlines in newspapers such as the Financial Times and The Guardian, as well as at the World Economic Forum in Davos. Increasingly, people are calling into question the ability and sustainability of the wealth-making potential and fairness of this system.
Questioning the promises of Capitalism is not new, as such, but the concerted criticism from both intellectuals and the public at large in the past decade is, indeed, a fundamental shift. Who would have predicted a few years ago that people such as “shock therapy” proponent and Colombia University professor, Jeffrey Sachs, would talk with such assertiveness about ‘capitalism’s…self-destruction’ as he did in a recent edition of the Financial Times? Capitalism has created unprecedented amounts of wealth globally but even this is being questioned, not only because society at large has not benefitted from it, but also because it is not “creative wealth”, as Jean-Pierre Lehmann, Director of the Evian Group, noted this week in his latest newsletter.
Is capitalism today an obsolete model? Klaus Schwab, Founder of the World Economic Forum, refers to the ‘old model capitalism’ and makes the case at WEF 2012 for replacing it with a ‘new model of talentism’. In its first edition this year, the Economist acknowledged the emergence of state-capitalism as a new model despite concerns about its long-term sustainability and its potential to distort global trade. For many emerging economies, the question is not whether the state can intervene in the market, but how active this intervention should be. Thus, it might not be an exaggeration when the Chinese claim to have ‘redesigned capitalism to make it work better’, as noted by the Economist. In fact, this discourse is simply recognizing existing realities and practices including the bail out in the US and EU.
What does ‘capitalism in crisis’ mean for Africa? As a late starter, Africa is learning from the examples and experiences of the countries that are going, or have gone through, the same experiences. It is consolidating its economic progress with the state playing a critical role.
Furthermore, what does this ‘crisis’ mean for global institutions such as the World Bank and IMF, who many believe have supported a neo-liberal agenda? Capitalism is in ‘crisis not because we are running out of innovations, or because markets are failing to inspire private actions,’ remarks Sachs, ‘but because we have lost sight of the operational failings of unfettered gluttony.’ Many would say the multi-lateral institutions governing capitalism for the past half-a-century have been slow to adjust to the changing global reality.
So, is this about ‘ending the crisis or ending capitalism’, as Samir Amin of the International Council of the World Social Forum and Chairman of the World Forum for Alternatives starkly puts the options? Many believe that ending the crisis is doable and necessary. But, as Lehmann warns, ‘capitalism’s survival will need reforms not only to institutions and policies but also to culture and mindsets.’
Legatum Prosperity Index 2011
AFRICAN DEVELOPMENT BANK
- The AfDB president expresses optimism for African economies, despite the dire economic times and the on-going Eurozone crisis
- The AfDB supports a waste water treatment project for agriculture in Tunisia
- The AfDB provides $155.8 million to finance water and sanitation projects in Uganda
- The African Charter on Democracy, Elections and Governance, adopted in January 2007 will enter into force on 15 February 2012
- AU urges Sudan and South Sudan to reverse their unilateral actions that have led the two countries to the pointof breakdown
- EAC adopts two major instruments for regional peace and security
- EAC considering application of South Sudan to join the community
- Mrs Joyce Bamford-Addo, asks members of the ECOWAS to transform the community from ECOWAS of States to an ECOWAS of People
- ECOWAS Parliament deliberates on implemntation of regional argriculture policy
- IFAD will provide a $45.7 million loan and grant to Malawi to boost food security in the country’s rural areas
- IMF issues stark warning for world growth, predicting a recession in the eurozone and the EU and slower global growth
- The IMF finds most of Angola’s missing $32 billion
- IMF renews support for Burundi's Economic Reforms
- Angola’s minister of defence says that the country’s armed forces are prepared to counter the threat of piracy off the west coast of Africa
- A leading international law expert comes out strongly against the lack of public debate on when and how the judicial function of SADC will be restored
THE GLOBAL FUND
- Saudi Arabia donates $25 million to support the Global Fund in fighting against HIV/AIDS and tuberculosis and malaria
- FAO and the EC announces a new €5.3 million project aimed at helping Malawi, Vietnam and Zambia transition to a "climate-smart" approach to agriculture
- UNDP releases a video message aimed at highlighting a deadly ongoing famine in the Horn of Africa
- UN chief outlines five-year action plan-steps the global community must take to build ‘the future we want'
Capitalism in its current form no longer fits the world around us.
- Klaus Schwab, WEF Founder commenting on the ‘crisis of capitalism’
- A day before the presidential inauguration took place, Liberia's main opposition party, the Congress for Democratic Change, announces its recognition of Ellen Johnson Sirleaf as president after disputed polls. Mrs Sirleaf, sworn in for a second six year term, is under immense pressure to raise the standard of living of her people and tackling corruption has been identified as being key to this.
- Final results of the recently concluded parliamentary elections in Egypt that showed the Islamist parties in the lead, has left liberals and even some conservatives worried about the religious tone of the new legislature. Division remains as Egypt celebrates the first anniversary of January 25th revolution. For some, much has changed but not all of it for the better, and the free and democratic Egypt envisioned by almost everyone in Tahrir Square has yet to come to pass. Some political forces still believe that the demands of the revolutions have not been met and have called out for people to protest.
- As the Gambian President Yahya Jammeh is sworn in for a fourth term, he promises to ‘crack the whip on laziness and corruption and to turn his country into an economic powerhouse.’
- On Monday 23 January, the ICC ruled that four senior Kenyan figures will stand trial for allegedly being involved in the 2007 post-election violence that swept the country, leaving over 1000 people dead.
- The nation-wide strike in Nigeria against a cut in fuels subsidies hascome to an end, but the country is not yet at ease and the arguements offered by the government appear unconvincing. There are fears that unless something urgent happens, divisions within the polity and the rising discontent could lead to something more catastrophic.
In the blogs...
- The Guardian’s Poverty Matters Blog: AU leadership race likely to put other topics in the shade at summit, 25 Jan. 2012 – The author discusses how the contest between South Africa and Gabon to head the AU is generating more excitement than intra-Africa trade, the summit’s main theme.
- The World Bank’s Africa Can…End Poverty Blog: Landlocked or policy-locked? 23 Jan. 2012 Aaditya Mattoo, Research Manager at the World Bankwrites about ‘a new services policy database’ showing that landlocked countries (mostly in Africa) tend to restrict trade in key “linking” services.
- African Arguments: Goodluck Jonathan’s perfect storm, 23 Jan. 2012 – The author outlines Boko Haram’s role in Nigeria in light of the terrorist group’s bombing campaign and the recent national strike and what this all means for Jonathan Goodluck’s presidency.
- Open Society Blog: Why are world leaders turning their backs on Africa? 17 Jan. 2012 Stephen Lewis, co-founder of AIDS-Free World, argues that leaders in North America and Western Europe have the wrong priorities, stating that they would rather finance wars than contribute to fight the battle against HIV/AIDS.
- African Arguments: In the 2 Sudans: Where Separation Breeds Conflict, 16 Jan. 2012 – The author argues that citizenship concerns in the Republic of Sudan and South Sudan challenges recent theoretical commentary about the likelihood, merits, and unintended effects of re-drawing Africa’s colonial borders.
- The Seatle Times: Wealthy nations must step up to the challenges of world hunger, 24 Jan. 2012 – Bill Gates urges the governments of wealthy nations to invest more in agriculture and agricultural research in developing nations. He argues that if they don’t, soon we will live in a world in which one in seven people go hungry.
- Aljazeera: Egypt: The revolution that built shame, 24 Jan. 2012 –The author discusses the events that lead to the uprising in Egypt last year. The author argues that whatever the setbacks have been, especially in Egypt, and no matter who leads parliament when it is seated this week, the “sparks of inspiration” that ignited the uprising remains at the heart of the revolutionary impulse that still animates Egyptian politics today.
- BBC News Africa: Does Africa need an African Spring? 24 Jan. 2012 – Jimmy Kainja, a Malawian academic, argues that an African Spring would signify a step back rather than a step forward because the struggles in sub-Saharan Africa, which focus primarily on governmental accountability and service delivery, are different to those in the Arab world.
- The Atlantic: Should the world help break up Nigeria in order to save it? 24 Jan. 2012 –In light of the bombings and killings this past weekend in Kano, perhaps the best solution for Nigeria’s past and present crises might be to split back into three or more “organic” territories, writes Pascal Zachary, former foreign correspondent for The Wall Street Journal.
- Financial Times: Charity needs capitalism to solve the world’s problems, 20 Jan. 2012- Bill Clinton argues that private wealth can effectively advance public good when governments, businesses and non-governmental organizations work together to share expertise and implement lasting solutions.
- Thought Leader: What Africa’s promising youth need to succeed, 17 Jan. 2012 – Africa has an enviably youthful population, and in order to help them achieve their potential, it is crucial for leaders in technology and business around the globe to collaborate with young Africans to address their specific technical-education needs and provide them with regionally-specific and globally-aware career mentoring.
- African Development Bank: Michel Camdessus: Accelerating the development of the water sector in Africa, 17 Jan. 2012 - Panel Member, Michel Camdessus calls on African leaders to bring solutions to the problem of access to clean water in defining an Africa-led strategy that responds to population needs rather than to potential donor offers (Article in French).
- Australia’s Defence Minister says his country will contribute $2millionto assist AMISOM in their fight aagainst Al-Shabaab in Somalia
- Canada’s Africa Oil Corp began drilling an exploratory well in Somalia's semi-autonomous Puntland region, the first to be sunk in the country since civil war erupted two decades ago
- China calls on the UN to strengthen its partnership with the AU to support and promote Africa’s development
- Malawi risks losing more than €100 million aid from the EU this year if it fails to revert to the suspended IMF Programme
- The EU grants €6 million in support of sustainable development of the fishery sector in the Eastern and Southern Africa-Indian Ocean region. The Fishery sector, including aquaculture, constitutes a key economic sector and contributes significantly to economies of Eastern and Southern Africa-Indian Ocean (ESA-IO) countries
- Foreign Minister is concerned that arsenals in Libya are still a major risk far beyond the borders of the country. They will therefore support the second chemical weapons inspection in the country following the fall of Gaddafi
- Russia plans to withdraw its helicopters and personnel servicing the UN peacekeeping force in South Sudan, a move that will cause problems for the stretched mission
- Russia will support a bid by African countries for a permanent seat on the UN Security Council only if there is "consensus and unanimity" in the AU on which country will best represent the continent’s interests
- South Africa's mediator in Madagascar criticizes the Malagasy government for its continued calls for the arrest of the island's ousted president, Marc Ravalomanana
- Turkey's state-owned export credit agency Eximbank will provide loans totaling $750 million to Tunisia and Libya in connection with efforts to support reconstruction studies in these two civil war-torn countries
- The Human Rights Watch World Report 2012's introductory essay examines the Arab Spring, which HRW argues has created an extraordinary opportunity for change.
- The world faces the “urgent challenge” of creating 600 million productive jobs over the next decade in order to generate sustainable growth and maintain social cohesion, according to the annual report on global employment by ILO.
- At the launch of the OECD report: Starting Strong III: A quality toolbox for early childhood education and care, OECD Secretary-General states that “investing in human capital is essential to promote employment and employability, and to tackle inequality.”
|26 – 27 January||20th Ordinary Session of the AU Executive Council: Addis Ababa, Ethiopia|
|29 – 30 January||18th Ordinary Session of the Assembly of the AU: Addis Ababa, Ethiopia|
|31 January||Africa Progress Panel Expert Consultation “Framing the Issues”:Geneva, Switzerland. Follow us on twitter (@africaprogress)|
|31 January & 2 February||14 Annual Euro-African Conference“Africa- Destination of Choice for Investors:” London, United Kingdom & Munich, Germany|
|1- 10 February||50th Session of the UN Commission for Social Development:New York, USA|