Economic liberalization under political authoritarianism: Is it sustainable for Zimbabwe?

Briefing paper by the Zimbabwe Democracy Institute (ZDI)

Does the type of a government have a causal effect on economic performance? A number of scholars have written on this subject in an endeavour to establish a causal relationship between democracy and economic development.

There are various and diverse analytic propositions on the subject. Some scholars have attempted to downplay this correlation. However, prevalent view is that democracy as a type of governance has a positive effect on GDP growth hence the correlation between democracy and development.

Generally, it has been argued that states with authoritarian political systems are thus anticipated not to grow as rapidly as democracies. Democratic systems are believed to have positive influences on the economy, for example, greater stability, human rights and more extensive property rights.

On the other hand, there is China, a country that has experienced successive years of economic growth and rapid industrialization albeit under one-party and authoritarian rule.

This paper is written in the context of reforms towards economic liberalisation in Zimbabwe fashioned along the Chinese model. However, this economic liberalisation has not been matched with political democratisation.

The question then is whether or not this economic route, referred to as authoritarian capitalism, is sustainable in the Zimbabwean setting characterised by competitive authoritarianism.

What is democracy?

A democracy is defined as a people-form of government which is in contradistinction to monarchies and aristocracies. The mark of a democracy is rule by people.

While Held points out that Ancient Greek Athens‟ rule by the people was direct democracy, it was also marked by a commitment to the principle of civic virtue, dedication to the republican city-state and the subordination of private life to the affairs of the public, other scholars have pointed out its limitations.

Hyland, for example, argues that political rule could be conceived as democratic to the extent that people who are significantly affected by political decisions have equal rights of participation at all levels of decision-making, with the understanding that this effectiveness is crucially dependent on adequate access to the resources necessary to enable full and meaningful participation.

Tilly supports this view, contending that a regime is democratic to the degree that political relations between the state, or those who hold power, and the citizens feature broad, equal, protected and mutually binding consultations.

Despite different contested definitions, meanings, types and variants of democracy, as well as its application, it is generally posited that democracy is a desirable form of government, as scholars like Fukuyama (1992), Held, (1996) and Hyland (1995) argue.

However, the gap between democratic theory and practice is a matter of continuous debate. Scholars are also sometimes influenced by their own background and society, as seen from the radical African critiques.

However, in the absence of alternatives to democracy, Held (1996) and Hyland (1995) have both argued that democracy is significant as a form of rule because it celebrates diversity and tolerance.

Held (1996) points out that the idea of democracy is important because it does not just represent one value among many, such as liberty, equality or justice, but it is a value that can link and mediate among competing issues in society.

It is further pointed out (Held, 1996) that the other significant value of democracy is that it does not pre-suppose agreement on diverse values but, rather, suggests a way of relating values to each other and leaving the resolution of conflicts about different values that are open to participants in a public process.

Authoritarian Capitalism

From the onset, the notion of ‘authoritarian capitalism’ seems oxymoronic, since entrepreneurship in an authoritarian environment is contradictory?

However, if the term is understood as a hybrid model, and from the definition of authoritarianism, then one can perceive this as an environment that has a strong government that guides its people in certain ways, but that allows the people a certain measure of freedom in the deployment of their resources.

According to Laurence (2009), authoritarian capitalism is the introduction of a free market system into countries which are ruled by a non-elected and or usually autocratic government. Policies are introduced on a ‘top-down’ basis from a tight political oligarchy. Thus, an authoritarian capitalist setting would have economic control shared between government and the people, while the lion’s share of control held by government.

The Context of Authoritarian Capitalism in Zimbabwe

From the definition of authoritarian capitalism provided above, one can deduce that Zimbabwe is gradually descending or has assumed the status of an authoritarian capitalist state.

Authoritarian capitalism in Zimbabwe can be understood in the context of failure and or unwillingness to implement provisions in the constitution particularly those provisions addressing civil and political liberties and socioeconomic rights while attempting to address economic competitiveness of the economy at the behest of the International Monetary Fund’s Staff Monitored Programme.

The IMF Staff Monitored Programme seeks among other things to “improve Zimbabwe’s repayment capacity and demonstrate that it can implement reforms that could justify a Fund-financial arrangement, which could help tackle the country’s deep-rooted problems. The Zimbabwean authorities remain committed to implementing sound macroeconomic and structural policies.”

Efforts towards economic liberation were also articulated in President Mugabe’s state of the nation address delivered on 25 August 2015, which enunciated a 10 point plan focusing on; revitalising agriculture and the agro-processing value chain; advancing beneficiation and/or value addition to the agricultural and mining resource endowment; focusing on infrastructure development, particularly in the key Energy, Water, Transport and ICTs subsectors; unlocking the potential of small to medium enterprises; encouraging private sector investments; restoration and building of confidence and stability in the financial services sector; promoting joint ventures and public private partnerships to boost the role and performance of state owned companies; modernising labour laws; pursuing an anti-corruption thrust and implementation of Special Economic Zones to provide the impetus for foreign direct investment.

The 17 July 2015 Supreme Court ruling which led to the modification of labour laws can also be viewed in the context of economic liberalisation and the quest to improve ease of doing business.

The authoritarian nature of Zimbabwe is also manifest in its human rights record, which by all standards is in liability. The Freedom House 2015 index ranks Zimbabwe as “not free” on civil liberties, political rights and press freedom.

The 2014 Ibrahim Index of African Governance8 ranks Zimbabwe 42 out of 52 African countries for protecting human rights. The electoral politics of Zimbabwe also exhibit strong authoritarian nuances leading literature to classify Zimbabwe as a competitive authoritarian regime.

Competitive Authoritarianism

Levitsky and Way (2010); Przeworski et al. (2000); and Svolik (2012), argue that terms authoritarianism, dictatorship, and autocracy are used interchangeably to denote “a political system that concentrates power in the hands of a leader or a small elite that is not constitutionally responsible to the body of the people.”

Way and Levitsky (2010:5) define competitive authoritarian regimes in electoral terms as civilian regimes in which formal democratic institutions exist and are widely viewed as the primary means of gaining power, but in which incumbents’ abuse of the state places them at a significant advantage vis-a`-vis their opponents.

Such regimes are competitive in that opposition parties use democratic institutions to contest seriously for power, but they are not democratic because the playing field is heavily skewed in favour of incumbents. Competition is thus real but unfair.

 

Additionally, opposition forces used democratic institutions to contest for political space—and at times successfully—for power. However, these regimes are not democratic. Government critics experience harassment, arrest, and in some cases, violent attacks.

Electoral fraud, unfair media access, and abuse of state resources are rife. The electoral playing field is heavily skewed in favor of incumbents.

In other words, competition is allowed but the extent to which it is allowed is dependent on the incumbent who is both the referee and participant.

Will Authoritarian Capitalism Flourish in Zimbabwe

So, what explains why some autocracies succeed so spectacularly when others fail? Why would Singapore and China economically succeed while other countries dismally fail? Further, why is there a greater range of performance among the autocracies?

Kelsall (2014) candidly forwards that one of the more popular explanations hinges on the character of individual leaders. Since autocracy puts fewer restraints on the leader, it simplifies the transmission mechanism between his or her own characteristics and economic performance, so that benevolent leaders produce exceptionally good outcomes, and bad leaders exceptionally poor ones. There is a world of difference between President Hu Jintao of China and Robert Mugabe of Zimbabwe.

Kelsall (2014) also identifies the drivers of development under authoritarian regimes as broadly; one, the will to develop; two, sensible developmental policies; and three, effective institutions. Hence the sustainability of the authoritarian capitalism trajectory in Zimbabwe must be evaluated on these three canons.

The will to develop – Sustained developmental autocracies, according to Kelsall (2013a), have addressed the issue of leadership and the will to develop by embedding the leader in a wider leadership group, for instance a political party. Furthermore, if the party has clear provisions or guidelines for leadership succession, leadership changes may not be so destabilizing to investor confidence.

Svolik (2012) buttresses this point positing that some well-institutionalized autocracies such as China, even set term limits on their leaders. However, these succession guidelines and regulations are nonexistent in Zanu PF leading to internecine succession battles.

The succession quagmire in Zanu PF has had multiplier effects on the broader economy. It has necessitated deep-rooted nervousness in the market and has emerged as an oasis of economic policy unsustainably and uncertainty corroding the economic sector.

Sensible development policies – Authoritarian capitalism’s prospects of succeeding at a policy level in Zimbabwe are also limited due to inherent challenges that include rent-seeking by special interest groups that penetrate the open political process and use their influence to produce socially inefficient policies.

Thus the relationship in the structure between the agents and institutions militates against the development of sensible policies premised on sound economic reasoning. The absence of such policy- making initiatives in Zimbabwe will militate against the success of authoritarian capitalism.

Effective institutions – The most critical and missing ingredient in the economic development matrix of autocracies glaringly missing in Zimbabwe is the presence of effective institutions. According to North, “the fundamental role of institutions in a society is to reduce ambiguity by establishing a stable . . . structure to human interaction.”

In this nominal sense, institutions promote economic growth through positive impact on certainty. Although political institutionalization is difficult to demarcate, there seems to be general agreement that processes in a well- institutionalized society are “functionally differentiated, regularized (and hence predictable), professionalized (including meritocratic methods of recruitment and promotion), rationalized (explicable, rule based, and non-arbitrary), and infused with value (legitimate).”

Acemoglu and Robinson (2012:55) assert that as institutions influence behaviour and incentives in real life, they forge the success or failure of nations. Individual talent matters at every level of society, but even that needs an institutional framework to transform it into a positive force.

Conclusion

From the analysis on institutions provided by Acemoglu and Robinson, this paper deduces that Zimbabwe is rife with extractive political institutions which, “concentrate power in the hands of a narrow elite and place few constraints on the exercise of this power.

Economic institutions are then often structured by this elite to extract resources from the rest of the society. Extractive economic institutions thus naturally accompany extractive political institutions.

In fact, they must inherently depend on extractive political institutions for their survival. Inclusive political institutions, vesting power broadly, would tend to uproot economic institutions that expropriate the resources of the many, erect entry barriers, and suppress the functioning of markets so that only a few benefit.”15

Another factor that will curtail the success of authoritarian capitalism in Zimbabwe is the fact that the economic challenges in the Zimbabwean economic are not confined to economics but political in nature.

Challenges that are impacting on the economy are more political than economic so addressing the economic challenges ahead of political challenges is tantamount to putting the cart before the horse.

The World Economic Forum 2013 report highlights the major problematic factors of doing business in Zimbabwe as political citing policy inconsistencies and political instability.

The purpose of this essay was to determine the feasibility of authoritarian capitalism as an alternative to maximizing economic growth in Zimbabwe. Capitalism is a system predicated on voluntary trade in which individuals make their own plans regarding deployment of their resources.

An authoritarian capitalist system would be characterized by an economy in which individuals are allowed some discretion over the deployment of their own resources but the state still retains a pervasive presents in the administration of the economy. Individuals’ discretion would be limited according to an overarching plan created by the government.

Thus, people would have some freedom over their economic lives, but avenues of economic development would be limited by the government plan.

The success of the authoritarian capitalism path on the Zimbabwe context is thus bound not to yield the expected results due to the absence of the will to develop, sensible developmental policies and effective institutions. Authoritarian capitalism is thus not a sustainable economic trajectory for Zimbabwe.

The Zimbabwe Democracy Institute (ZDI) is a politically independent and neutral public policy think-tank whose vision is a democratic Zimbabwe.