President Hage Geingob’s state visit to China is a great opportunity to not just hammer out new mutually beneficial bilateral ties, but also look at the model that China used to get to where it is today.
In 1978, after years of state control of all productive assets, the government of China embarked on a major program of economic reform. As Patricia Adams writes in the Financial Times, China is today heading for a degree of government ownership and central planning unseen since Mao’s passing.
Before 1978, China’s average economic growth stood at six percent. The post-1978 period saw the economy growing sometimes by more than 13 percent annually.
This is a result of the country’s years of central planning and strict government control of many industries. For many years, China has prioritised capital investment, an area that Namibia – understandably so – greatly struggles in.
In recent years, our social spending has dramatically increased at the expense of capital investment. This is not a sustainable model.
China has perfected the model of state monopoly, which is often criticised in the western world as it prohibits competition. Yet the British owned the East India Company (EIC) in the earlier centuries, a classic case of State-directed capitalism.
In Namibia, the attempt at state capitalism, rolled out though the establishment of public enterprises some of which are monopolies in their respective industries, has not taken off satisfactorily.
This is due to a myriad of reasons, some of them related to capacitation both financially and in terms of human capital. Not to mention the absence of a decisive policy stance on the part of the Namibian State, as to the once absolute direction to take with state-owned enteprises. The business models of most struggling SOEs are not effective, while there are others who have sound models but that are not funded adequately for them to be able to stand on their own feet. Even so, the State does not follow up the meagre funding with deliberate regulations to support the existence of such institutions.
After independence, most public enterprises were little more than government departments. The assumption at the time was that, as the economy matured, government would close or privatise them. Many of them have become a burden to the state.
But be that as it may, we remain of the conviction that state capitalism is the perfect model for an emerging economy such as ours. We stand opposed to liberal capitalism which, as proven elsewhere in the world, surrenders morality to the so-called ‘market’s invisible hand’ of greed and exploitation. All the wealth shipped out of the country today, disguised as incentives in the form of profit repatriation, witholding tax holidays and other remittances for foreign non-resident parties in Europe and tax havens countries, by multinational corporations operating on our shores, could have remained in the country if the state was in charge of such resources, as is the norm in China.
The crisis of Western liberal capitalism has caused enough destruction to the global economy, in which smaller nations have endured untold sufferings. It is this exact model that destroyed Lehman Brothers in 2008, and the impact of that hard fall is felt all over the world. The weakest countries, such as Greece, paid a heavy price as a result of that.
Namibia’s free-market approach is responsible for many problems experienced here today. It is the major contributor to emotive issues such as housing, from which many have been outpriced, and landlessness that has led to the formation of pressure groups such as Affirmative Repositioning and a political party like the Landless People’s Movement.
If advocates of State capitalism and their liberal capitalism adversaries come to a table for a debate, the former would flaunt China as a shining example of their model and point to Greece as a casualty of the latter’s model.