Kenya, the epitome of the capitalist state

While Kenya ranks lowly on the human rights record, the practice of democracy and equitable distribution of the national cake according to the latest Mo Ibrahim report on African governance, it is the epitome of the capitalist system of governance.

The concept of capitalism may not be so simple, but the long and short of it is that it works for a handful at the expense of the majority.

In general terms, capitalism is characterised by private ownership of businesses which, in turn are driven by the quest for profit. Some of the attributes of capitalism include the exploitative wage labour and capital accumulation; a system through which, in most cases, quality becomes a casualty as profits override any other considerations.

Experts acknowledge at least three forms of capitalism; State Capitalism, Welfare Capitalism and Free Market Capitalism.

Free Market capitalism is described as that form which is free of government interference in terms of regulation and pricing. State Capitalism is the opposite, where the government has its hands in almost everything.

On the other hand, Welfare Capitalism takes on board the welfare of workers where free market capitalism does not.
Since the advent of Structural Adjustment Programmes and the advocacy for liberalised markets as a condition for accessing World Bank (WB) loans, successive governments had no alternative but to develop a bias for a free market economy.

There has been little of state capitalism and even lesser of welfare capitalism; an omission that gives meaning to the existence of trade unions under the auspices of the Central Organisation of Trade Unions.

Further, the economic model Kenya adopted, however, did not only evolve into one of the worst forms of capitalism, it bred serious socio-political inequalities.

The conditions imposed on poor African and Asian countries left them little room to operate and attempt to regulate markets for fear of reprisals from the WB even where there was need to so.

In the end, because SAPs did not create safety nets for, say, those who lost jobs through restructuring, there were repercussions.

The negative social effects of SAPs are there for all to see. Homicides, broken marriages, unemployment, heavy taxation and increased cases of crime are just but some of the effects. In other cases, banks, taking advantage of the free market environment, came down heavily on borrowers.

While loans should ordinarily improve the lot of the borrower, the opposite has for a long time obtained in Kenya. Not a single one of Kenyans labouring under the weight of bank loans had anything positive to say about banks and the free market economy. That is, until the bill on capping bank interest rates became law. Opinion is divided on the impact of that action on the economy but, economics not being my forte, I leave that to the experts.

Shortly after the cap on bank interest rates, Aliko Dangote, the Nigerian business magnate with interests in cement manufacturing rocked the market with cheap cement imports that made long-time local suppliers look like pirates and robbers. Reaction on social media did not disappoint.

Many wondered why a litre of mineral water should cost almost as much as a litre of petrol despite the differences in production costs. Others wondered why a two-kilogramme packet of maize flour cost Sh130 when a 50kg bag of Dangote cement cost Sh370. The answer to these, and many other such questions is; Free Market Capitalism.

Capitalism has a way of feeding on itself. The lack of stringent controls easily translates into lack of protection. In the end, we find companies that had long became trademarks like Eveready folding. Others like Sameer East Africa opted to shift production to Asia because of unfair competition that robbed it of profit. Ultimately, this compounds the growing headache of unemployment.

But it is not just the fierce competition for markets that is driving many out of business. Corruption in Government and lax regulations that have allowed counterfeits in drugs, textile, electronics and anything in between are not good for business.

The Kenya Bureau of Statistics has come up with several measures aimed at curbing counterfeiting but they are more theoretical than practical.

Besides banks, one other area Parliament needs to take a closer look at and perhaps even regulate is housing. Millions of Kenyans of humble means reside in disease, crime-infested informal settlements devoid of amenities because of extortionate rents.

Kenyans should live in dignity. It is desirable too, that food prices be controlled to ease the pressure on the poor majority. Capping interest rates showed we can determine our own destiny away from WB controls.

Perhaps juggling between the three forms of capitalism, depending on need, could solve some of our perennial problems.