African Americans in Tech: What the EEO-1 Numbers Reveal

How the Rainbow PUSH Coalition brought tech EEO-1 reports to light

In the winter of 1999, Reverend Jesse Jackson, head of the Rainbow PUSH Coalition, was in San Jose, California as the guest of the recently formed Coalition for Fair Employment in Silicon Valley. Concerned with discrimination against Blacks, the Fair Employment group had found that only 175 of 1,434 tech companies in the Bay Area had bothered to file the reports, required of all major federal contractors, with the U.S. Department of Labor.

Jackson criticized U.S. tech companies for importing workers from abroad on H-1B visas while neglecting the employment of qualified minorities in the United States. As part of its “Silicon Valley Project,” the Rainbow PUSH Coalition spent $51,000 to buy $1,000 in shares of each of 51 tech corporations in order to negotiate with the companies as shareholders to include more minority members on their boards.

In May 2000, the Silicon Valley Project held a Digital Connections 2000 Conference, with CEOs of AMD, Cisco, Hewlett-Packard (HP), and Intel reportedly in attendance. The Conference announced, “a three-to-five-year plan for the high tech industry to educate, train, prepare, and, employ 200,000 young people in local communities.” The Project held two subsequent conferences in April 2001 and April 2002. With the tech industry in a deep downturn in 2001-02, however, the Project did not push its agenda at any of the annual general meetings of the 51 companies in which it held shares.

By 2005, the Silicon Valley Project was in a state of suspension—but, as it turned out, far from moribund. After a hiatus of almost a decade, in March 2014 Rev. Jackson was at the annual general meeting of HP, as the Rainbow PUSH Coalition relaunched what was now called the Silicon Valley Digital Connections Project “to expand the participation of Blacks and people of color—commensurate with our consumer base and population—in all dimensions of the technology industry.” According to the New York Times’ coverage of the HP meeting: “Besides HP, both before and during the meeting, Mr. Jackson cited Twitter, Google, Facebook, Apple, among other companies, as places needing greater minority employment and leadership.”

In May, Jackson attended the annual general meetings of eBay, Google, and Facebook, demanding that these companies make public their EEO-1 diversity employment reports, which, since 1966, every company with 100 or more employees in the United States is required to submit annually to the Equal Employment Opportunity Commission (EEOC). At the Facebook meeting, Jackson asked: “Will Facebook voluntarily and publicly release [its] EEO-1 report?” Sheryl Sandberg, the company’s chief operating officer, gave an evasive and convoluted response: “We believe, as you do, that transparency is really important, and we're on a path to get there. We're looking at our numbers internally. We’re seeing growth already from what we’re doing, and we would like to be on a path to share them both internally and eventually externally.”

Sandberg’s treatment of the request for data contrasted starkly with the straightforward mea culpa that Jackson had heard at the Google meeting the week before. Responding to a pre-arranged speech by Jackson at the beginning of the Q&A session, David Drummond, an African American executive in charge of Google public policy, said: “Many companies in [Silicon Valley] have been reluctant to divulge that data, including Google, and, quite frankly, we are wrong about that.” Drummond promised the release of the EEO-1 report “next month.” Less than two weeks later Google made the report public.

This breakthrough won praise from Jackson, who issued a statement: “We believe it is time for other tech companies to follow Google’s lead. We challenge them to also voluntarily release their Equal Employment Opportunity Data/Reports.” Gradually, other tech companies followed suit. In June, Yahoo released its EEO-1 report, and by the end of 2014 eBay, Facebook, and LinkedIn had done so as well. In December, Jackson attended the Microsoft annual meeting, and a month later the company made its EEO-1 report public. Jackson was at the Apple meeting in March 2015, and in August Apple released its EEO-1 report for 2014. The process was repeated with Amazon in June.

As the result of this persistent activism, anyone who was interested could now see exactly how many people a company employed in ten different hierarchically ordered occupational categories by race, ethnicity, and gender. The Center for Investigative Reporting launched a project to monitor and encourage the public release of EEO-1 data for 2016 by “211 of the largest Silicon Valley tech companies”, and posted on its project website the EEO-1 reports of the 26 companies that complied.

Our own searches, through December 2021, have found EEO-1 reports, for 2013-2020 for the tech companies (most of them based in Silicon Valley) indicated in Table 1:

Table 1: Public releases of EEO-1 reports by tech companies, 2013-2020

How to make use of the EEO-1 data

How can we use these EEO-1 reports to identify the existence of employment inequalities at tech companies? This is a question that the three of us posed at a conference on the economics of race, held in Detroit in November 2016, organized by the Institute for New Economic Thinking (INET). At the conference, we presented an outline of our INET-funded research project, “Fifty Years After: Black Employment in the United States under the Equal Employment Opportunity Commission.”

Now, after years of research, analysis, and writing, the value of the EEO-1 data, utilized in combination with many other information sources, is evident in five INET working papers that we have produced from the Fifty Years After project:

#1 “How the Disappearance of Unionized Jobs Obliterated an Emergent Black Middle Class” (June 2020), in which we provide an overview of our findings on how from the early 1980s the rationalization, marketization, and globalization of corporate employment relations eroded the stable, well-paid blue-collar job opportunities in major U.S. corporations that a significant proportion of the Black labor force had begun to obtain in the 1960s and 1970s.

#2 “Employment and Earnings of African Americans Fifty Years After: Progress?” (July 2020), in which we compile data on trends in education, employment, income, wealth, and health that provide a quantitative picture of the derailment of the engine of equal employment opportunity for Blacks that the Civil Rights Act of 1964 had sought, with some initial success, to set in motion.

#3 “Employment Mobility and the Belated Emergence of the Black Middle Class” (January 2021), in which, after surveying the types of employment opportunities that African Americans found in the industrial North and Midwest in their Great Migration from Southern agriculture from the 1910s to the 1960s, we engage in a detailed analysis of the upward mobility in the 1960s and 1970s of Blacks with no more than a high-school education to well-paid unionized employment opportunities, epitomized by semi-skilled operative jobs in the automobile industry.

#4 “The Unmaking of a Black Blue-Collar Middle Class” (May 2021), in which we analyze how from the late 1970s, the impact of global competition and the offshoring of manufacturing combined with the financialization of the corporation to decimate these stable and well-paid blue-collar jobs.

#5 “Equality Denied: Tech and African Americans” (just published, in which we delve deeply into the EEO-1 reports that major tech companies have made public as a prelude to our analysis of how inequalities in K-12 education, the erosion of affirmative action in employment, U.S. immigration policy for STEM (science, technology, engineering, and mathematics) employment, and systemic social barriers to accessing employment opportunities have severely limited Blacks as a group in obtaining the well-paid, high-level jobs that the tech companies have to offer.

Requiring advanced education and cumulated work experience, these high-level jobs are most numerous in the EEO-1 “professionals” category (which includes scientists and engineers), as shown, for example, in this facsimile of Apple’s EEO-1 submission for 2014:

Apple’s 2014 report provides a snapshot of diversity in employment at the company at a point in time, while its release of EEO-1 reports for 2014-2018, and 2020 makes it possible to analyze changes in Black employment over time—albeit only over a six-year period (Apple has been submitting EEO-1 reports since 1978 or 1979). Table 2 summarizes Apple’s total U.S. employment by occupational category for 2014, 2017, 2018, and 2020.

Table 2. Apple’s U.S. employees by EEO-1 occupational categories, 2014, 2017, 2018, and 2020

Source: Apple EEO-1 reports to the U.S. Equal Opportunity Employment Commission.

Apple doubled its management ranks below the senior level from 2014 to 2020, as this personnel went from 9.9% of 59,869 U.S.-based employees in 2014 to 12.1% of 95,446 employees six years later. Much more important, however, was the vast expansion of “professionals” at Apple. They increased by 2.5 times from 2014 to 2020, rising from 25.9% to 40.5% of all Apple’s U.S.-based employees. At Apple, these two occupational categories have been providing tens of thousands of highly paid employment opportunities in the United States.

After professionals, Apple’s second-largest occupational category is “sales workers”—mainly consisting of the people who serve customers in Apple stores. In the Boston area, the base pay of an Apple “sales specialist” averages $19 per hour, or $39,520 full-time per year. About half of all Black employees at Apple over these years for which we have data were sales workers, a lower-paid occupational category

In 2020, the other large group of lower-paid workers was in “administrative support.” Note from Table 2 that from 2017 to 2018 there was a precipitous drop in “technicians” employed but simultaneously an even greater increase of employees in administrative support. For reasons unknown to us, Apple decided in 2018 to reclassify thousands of employees from a higher-level to a lower-level occupational category.

Table 3 shows that at Apple, African Americans are much better represented in lower-paid than in higher-paid occupations. For purposes of comparison, Blacks were 11.4% of the U.S. civilian labor force in 2020. From 2014 to 2020, Apple increased its total U.S. employment by almost 60%—a net increase of 35,587 jobs. Apple could have used the dramatic expansion of U.S. employment to improve the company’s Black employment significantly. Instead, African Americans secured only a very modest increase in representation among all Apple’s U.S. employees, from 8.0% in 2014 to 8.5% in 2020.

Table 3: Blacks in Apple’s U.S.-based labor force, 2014, 2017, 2018, and 2020

Note: Data for senior and mid-level officials and managers have been combined.

Source: Apple EEO-1 reports to the U.S. Equal Opportunity Employment Commission.

Even though the number of Black professionals at Apple more than tripled from 256 in 2014 to 849 in 2020, the Black share of this occupational category was only 2.2% at the end of the period. Meanwhile, the proportion of Blacks among “officers & managers” declined from 2014 to 2020. Blacks, therefore, were massively under-represented at Apple in the higher-level occupational categories, and the huge increase in Apple’s total U.S. employment over the six years did little to improve the situation.

The publicly released EEO-1 data also reveal that the meager share of Blacks as professionals at Apple also prevails at other leading tech companies. Table 4 provides EEO-1 data for professionals at the 12 tech companies with the highest levels of U.S. employment among those that made public their EEO-1 reports for 2016 and/or 2017 (see Table 1 above). The Black share of professionals ranges from a low of 1.8% at Apple to a high of 6.4% at Hewlett-Packard Enterprise (HPE). For nine of the 12 companies, Black representation was between 2.6% and 3.6%.

Table 4: Comparison of the employment of professionals by race/ethnicity/gender in the U.S.-based labor forces of 12 major tech companies, 2016 or 2017

Source: Company EEO-1 reports to the U.S. Equal Opportunity Employment Commission.

As an outlier with Blacks as 6.4% of professionals, HPE is of considerable interest. HPE, which is engaged in information-technology services, and HP Inc., which produces computers and printers, came into existence as the result of the breakup of Hewlett-Packard (HP) in 2015. As we discuss at some length in our “Equality Denied” paper, the relatively high proportion of Blacks as professionals at HPE in 2016 was a legacy of HP’s adoption of aggressive affirmative-action policies fifty years earlier in 1966, immediately after the launch of the EEOC.

Founded in 1939 at the heart of the industrial district that by the 1970s would become known as Silicon Valley, HP was a company that became extraordinarily successful by enabling and encouraging its employees to pursue a career-with-one-company (CWOC). Known as The HP Way—the title of founder David Packard’s best-selling book published in 1995—the company provided employees with secure internal career paths along with nonportable defined-benefit pensions based on years of service with the company. It was within HP’s “Old Economy” organizational structure that African Americans gained access to a larger proportion of higher-level employment opportunities than would subsequently be the case at “New Economy” companies such as Intel, Microsoft, Apple, and Cisco.

Even though from 1999, with the arrival of Carly Fiorina as Hewlett-Packard CEO, the company abandoned The HP Way, the legacy of Blacks in professionals employment persisted, as reflected in the 6.4% of U.S. professionals who were Black at HPE in 2016. In contrast, HP Inc., with its proportion of Blacks as professionals in 2016 at only 3.2% (as shown in Table 4) originated in large part from Compaq Computer, a New Economy company founded in Texas in 1982 and acquired by HP in 2002. Unlike the part of HP that became HPE, Compaq did not have a legacy of affirmation-action policies to employ African Americans as professionals.

Much the same story of the importance and persistence of the historical legacy of affirmative action can also be told about IBM. Founded in Endicott, New York as Computing-Tabulating-Recording Company in 1911 and renamed International Business Machines in 1924, IBM developed a CWOC policy under Thomas Watson Sr., CEO from 1914 to 1956, which was continued under his son and successor as CEO (to 1971), Thomas Watson Jr. Abiding by the principle of never laying off an employee involuntarily, IBM’s system of “lifelong employment” persisted through the 1980s, during which time IBM, like HP, adopted affirmative-action policies to employ Blacks as professionals.

Between 1990 and 1994, however, IBM cut its worldwide employment from 374,000 to 220,000, for the purpose of ridding itself of the system of lifelong employment. From top to bottom, employment at IBM became “marketized” as it transitioned from the “Old Economy business model” to the “New Economy business model,” as analyzed in William Lazonick, Sustainable Prosperity in the New Economy? Business Organization and High-Tech Employment in the United States (Upjohn Institute 2009). IBM has not released any of its EEO-1 reports in recent years. In doing research for his Sustainable Prosperity book, however, Lazonick collected (and preserved) EEO-1 data that IBM published for 1996 through 2008, much of it (now invisible) on IBM’s corporate website.

From these data as well as an important Wall Street Journal article on Black employment published in 1993, we know that Blacks did not do well with IBM’s transition to the New Economy business model. In 1990 IBM employed 20,222 Blacks in the United States, with that number declining to 18,677 in 1991. By then, IBM was in the process of dramatically slashing its labor force, and by 1996 U.S. employment of Blacks at IBM had been reduced to 12,412, a drop of 38.6% from 1990. Nevertheless, Black representation among IBM’s U.S. employees increased from 9.1% in 1990 to 9.9% in 1996. But thereafter it steadily declined, falling to 7.5% in 2008, the last year for which IBM has provided EEO-1 information.

As officials and managers, Blacks held 6.9% of IBM’s U.S. positions in 1996 but only 5.5% in 2008. In the professionals category, in 1996, IBM employed 3,641 Blacks, representing 6.6% of the occupational category; in 2008, the number was 3,347 Black professionals, equal to 6.8% of all U.S professionals. Compared with the sub-four percentages for the 11 tech companies other than HPE in Table 4, the Black professionals' proportion at IBM was high. Through the 1980s both HP and IBM had adhered to the CWOC norm, on the basis of which aggressive, and effective, affirmative-action policies were pursued, with enduring results, even as The HP Way and IBM’s lifelong-employment system ceased to exist.

From the 1990s, however, neither HP nor IBM offered significant employment to Black blue-collar workers. In 1984, HP employed 2,914 craft workers, of whom 594, or 20.4%, were “minorities”; and 12,605 semiskilled operatives, of whom 3,852, or 30.6%, were minorities. Two decades later, in 2004, HP employed only 18 craft workers in the United States, of whom three were Black and 15 were white, and only 239 operatives of whom 30 were Black, 38 Hispanic, 32 Asian, two Native American, and 137 white.

In 1996 (after considerable downsizing), IBM employed 1,628 craft workers in the United States, of whom 161 (9.9%) were Black, and 15,415 operatives, of whom 3,474 (22.5%) were Black. By 2008, the IBM numbers were 1,002 craft workers, of whom 84 (8.4%) were Black, and only 1,229 operatives, of whom just 78 (6.3%) were Black.

Most of the 12 tech companies in Table 4 do no manufacturing in the United States. One exception is Intel, which employs thousands of people in its U.S. semiconductor fabs. But of Intel’s 51,267 U.S. employees in 2019, only 405 were craft workers (13 Black) and none were operatives, laborers & helpers, or service workers. Semiconductor fabrication is not a source of blue-collar jobs in the United States.

In sharp contrast, as detailed in our “Equality Denied” paper, in 2020 Amazon employed 622,077 laborers & helpers in the United States, a 15-fold increase from 41,521 in 2014, as the company expanded its warehouses and delivery services. Of this net increase of 580,556 laborers & helpers jobs, 33.0% were filled by Blacks. As a result, among laborers & helpers, Black representation increased from 23.6% in 2014 to 32.4% in 2020, when there were 191,757 Blacks in this category. Laborers & helpers represented 85.9% of all Amazon’s Black employees in the United States in 2014 and 84.8% in 2020.

Nevertheless, at Amazon, there was progress for Blacks higher up. Among officials and managers, Black representation increased from 4.2% in 2014 to 10.8% in 2020, when there were 5,438 Blacks in this category. Among professionals, Black representation increased from 2.1% in 2014 to 3.9% in 2020, when there were 3,592 Blacks in this category. With Amazon’s dramatic increase in U.S. employment from a total of 77,179 in 2014 to 918,261 in 2020, Blacks experienced improvement higher up the hierarchy but obtained vastly more jobs in the low-paid laborers & helpers occupation.

Policy implications of our analysis of the EEO-1 data

EEOC provides industry aggregates for EE0-1 data in its annual Job Patterns for Minorities and Women in Private Industry publications, which we have put to use in our analysis of the rise and decline of Blacks as semiskilled operatives in automobiles and other manufacturing industries in the #3 and #4 Fifty Years After working papers, listed above. The most recent EEOC Job Patterns data are for 2018.

A confidentiality provision in Section 709(e) of Title VII of the Civil Rights Act of 1964 prohibits EEOC from releasing data with identifiable information on individual companies that submit EEO-1 reports. In our view, in an age in which most U.S. companies purport to have embraced diversity in employment as a corporate objective, that prohibition should be lifted. The corporations that have been voluntarily publishing their EEO-1 reports should be advocating this legislative change. Our project, and particularly our “Equality Denied” paper, demonstrates the value of these data, publicly disclosed, for understanding racial inequality in the United States. Moreover, the work that we have done has been confined to the African American experience. The company-level EEO-1 data can be immensely useful for studies along many different dimensions of race, ethnicity, and gender.

EEOC should also implement the initiative, put forward under the Obama administration, to add pay data to the information that companies submit in their annual EEO-1 reports. The requirement to report these data was canceled under Trump. Nevertheless, since March 31, 2021, the California Department of Fair Employment and Housing has required every company with 100 or more employees in the United States and at least one employee in California to submit these pay data annually.

To date, the only such data that has been made public is by Intel for 2017-2019 as part of the company’s “Early Resolution Agreement” with the U.S. Department of Labor to allocate $5 million in pay adjustments “to resolve allegations of systemic pay discrimination against female, African American and Hispanic American employees at its facilities in Arizona, California, and Oregon.” Our “Equality Denied” paper contains an analysis of the insights into employment and pay discrimination that can be derived from the Intel EEO-1 pay data for 2019.

Data disclosure, however, only permits us to identify a problem. The critical next step is to understand the sources of the problem. In “Equality Denied,” our analysis of Black exclusion from STEM employment focuses on a) stark differences among racial and ethnic groups in educational attainment and performance relevant to accessing STEM occupations, b) the decline in the implementation of affirmative-action legislation from the early 1980s, c) changes in U.S. immigration policy that favored the entry of well-educated Asians, especially with the passage of the Immigration Act of 1990, and d) social barriers that qualified Blacks have faced relative to Asians and whites in accessing tech employment as a result of a combination of statistical discrimination against African Americans and their exclusion from effective social networks.

Central to any improvement in employment opportunity in the United States, be it for members of the U.S. labor force generally or for under-represented racial, ethnic, and gender groups, in particular, is corporate investment in the productive capabilities of people and the rewarding of those capabilities with higher wages and benefits a well as more stable employment. As our research organization, the Academic-Industry Research Network, with the support of the Institute of New Economic Thinking, has shown in a growing number of studies, an overriding barrier to achieving stable employment and equitable living standards in the United States is the use of corporate cash to do massive stock buybacks as open-market repurchases. As, in his widely read Harvard Business Review article, “Profits Without Prosperity,” Lazonick puts it in the subtitle “stock buybacks manipulate the market and leave most Americans worse off.”

In the forthcoming conclusion to our Fifty Years After project, we will take up this problem of the financialization of the U.S. business corporation, as manifested by stock buybacks, as it relates to employment opportunity for Blacks. Suffice it to assert here that stock buybacks undermine employment opportunity and, given the large deficit in employment opportunity that continues to face African Americans, buybacks in practice function as an instrument of systemic racism.

As it happens, the U.S. corporation that is by far the largest offender in using stock buybacks to manipulate its stock price is also the worst performer among the tech companies in Table 4 in the representation of Blacks among its professionals employed in the United States. From October 2012 through December 2021, Apple gave away $484 billion in buybacks, equal to 92% of its profits while also distributing $118 billion as dividends, another 23% of profits. Lazonick and colleagues have subjected Apple’s financialized behavior to a series of critiques. We will end this article and look forward to our project’s concluding paper with one illustrative anecdote concerning Apple’s anti-social priorities in resource allocation.

On June 11, 2020, in the wake of the Black Lives Matter protests after the murder of George Floyd, Apple announced a $100-million “Racial Equity and Justice Initiative.” In a Twitter video, Apple CEO Tim Cook declared: “The initiative will challenge the systemic barriers to opportunity and dignity that exist for communities of color and [in] particular for the black community.” $100 million is a large wad of cash. But it amounted to only 0.14% of the $72.4 billion that Apple wasted on buybacks in fiscal 2020 and 0.02% of the $484 billion that Apple has used to manipulate its stock price over the past 8+ years. As a challenge to “systemic barriers to opportunity and dignity” by America’s most profitable tech company, Apple’s initiative was way too little and way too late.

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Francis Akindes : "We Africans Urgently Need a Different Approach to Economic Thinking"

French text is below

Professor Akindes is President of the UAO’s Science Council, and also Director of Programmes, UNESCO Chair in Bioethics. His research interests are diverse, covering political transitions, political violence, the political economy of inequality, public policy analysis, and policies for crises exits.

For nearly two years now, the world has been reeling from the impact of the pandemic. Based as you are in Côte d’Ivoire, how do you assess the pandemic’s economic and social impacts on the country, and more importantly, for the youth? How do you evaluate the measures taken by the Government to address the crisis, and have the country’s economists, or even the Continent’s economists, been involved in formulating these measures?

To begin, in Africa, in Ivory Coast, the pandemic started in March 2020. Like everywhere else, progressively, everything came to a stop in African countries, too. A catastrophe was predicted, and we were all urged to maintain strict sanitary measures. Among Governments, the politicians were faced with imposition of progressively radical measures, “Should we lock down our people?”. Every country had to decide on such measures, with undoubtedly heavy social, economic, and political consequences. African countries took varying paths, but those who established strict bio-security measures such as total lockdowns or curfews witnessed clear and immediate impacts when you consider that the informal sector employs around 80% of the workforce.

These self-employed people, when they stop work, they have no income. Asking them to stay at home because of the pandemic threat is not a lasting solution. Two or three days after the imposition of lockdowns, we saw protests like those in Senegal and South Africa. Clearly, lockdown as an approach to containing the pandemic had its limits. Then came measures aimed at reducing the spread, such as wearing masks: which were very expensive and difficult to find at the start; and social distancing: as I have said previously on multiple platforms, maintaining physical and social distancing in Africa is a luxury. Lockdown works for the wealthy who live in small numbers in large houses. For everyone else, in crowded housing and neighborhoods, the population density is just too high. You find 7 to 10 people under the same roof, it’s impossible to ask people to both stay at home and to maintain distance from others in the house.

So for a large proportion of people, these rules could not be applied. Some countries, such as Benin, refused to impose a lockdown. Benin’s President said he could not take the political risk of demanding people stay at home, given that the country had no resources to make up for the constraints he had imposed on them. Instead, Benin brought in measures such as face masks, hygiene improvement, distancing in public places, as have many other African countries. Most African countries have perhaps chosen this path - putting measures in place but not being stringent about them – which allowed them to be seen as following international guidelines, especially those from the WHO. These governments put measures in place but, strategically, left the responsibility of complying to these measures up to individuals. So, there is this farce of national measures and controls, but their implementation is laissez-faire which also speaks to the weak powers of these Governments.

These Governments made decisions not to monitor and punish those who flouted the rules since they didn’t have clear, credible alternatives which would compensate for loss of incomes from strict adherence to the rules. By these means, governments could avoid risks of protests and the political cost of forcing measures to be applied. In so many countries, there exist already pockets of fragility, frustrations, scarred communities from previous crises which would be badly stirred up and exacerbated by unpopular and damaging new controls over peoples’ lives. African peoples already have multiple reasons to be tired of their governments, so heavy-handed restrictions to deal with the pandemic could provide the political opportunity for old anger and resentment to boil over.

Governments really fear these kinds of unpredictable situations, so they did all they could do, with great caution, to apply measures but not be too stringent about them. From an economic point of view, in the beginning, there was a global shutdown like I pointed out, some sectors such as tourism were especially hit as they depend on international migration of people. The leisure sector, such as restaurants – whether indoors or outdoors - cinemas, nightclubs and other places people go to enjoy themselves, all these businesses had to close. You can well imagine the social and economic risks associated with the loss of employment in these activities, with most of these being informal enterprises. In a city like Abidjan, food preparation and sale are dominated by women, and their little cafes and roadside stalls, known as ‘maquis’, were all forced to shut.

During the curfew, everyone had to get home by 9 pm, whereas it’s the nighttime when so many clubs and bars do the best business, so you can only imagine the cost for small enterprises. In fact, it was all business, small and large, across the country which suffered, in spite of their own strategies to minimize the pandemic’s impact. The ports no longer functioned normally, affecting all import-export businesses. Remember that for a country like ours, 90% of its trade comes by sea. Those ships from countries badly hit by Coronavirus were not coming anymore. So we began to see shortages of goods, even of real essentials.

With the uneven spread and evolution of the virus between Europe, North America, and Africa, we did not experience the catastrophe that had been predicted. After six months, different governments in Africa could see it would be impossible to continue with tight measures and had to relax them for the sake of the economy. Increasingly, people began to ask themselves, why should we be following the same COVID policy route as Europe and North America, if we were not suffering the same health impacts from the pandemic. This question was especially pertinent given the inability of African governments to compensate businesses and people for their income losses, as had been possible in North America and Europe.

France, for example, was able to do a lot for those businesses damaged by the lockdown. In a number of African cases, states made such promises but they were not able to do much in practice. There has been a lot of criticism on social media regarding the criteria used by the government to decide who should receive relief. One year on, there is no more talk of government support, and every business has been working out how best to run their enterprise, adapting to the requirements. Today, we’re faced with mutations of the virus, but for many people there remains a fundamental doubt about whether the virus exists at all. In a city like Abidjan, when you go from better-off residential neighborhoods to low-income areas, you find a big difference in mask-wearing. It’s much more common in Cocody than in Abobo or Yopougon.

At the beginning of the crisis, I went around a lot of low-income neighborhoods because I was being asked by a number of media channels to give them news of how ordinary people were coping with the health measures. As a result, I spent a good bit of time listening to people in wards such as Abobo and Yopougon. There was almost unanimous agreement that the virus didn’t exist, and was an ailment of white people, and those who spend time with them, those who travel. None of the people in these neighborhoods went by air and thus did not think the health measures the government wished to impose applied to them. The public authorities were conscious of the need to avoid annoying ordinary people, by forcing measures on them, for reasons I mentioned earlier, and opted for communicating the risks of the disease rather than forcing adherence to sanitary measures.

In these neighborhoods, in spite of their denial of COVID, there are of course people who are employed for domestic work (driver, servant, cook, etc.) for those who they reckon are at risk, due to them living like Europeans, or being in close contact with them. They go to work in areas like Cocody, a well-off neighborhood, and may contract the virus at work as a result, and then bring it home. Sadly, they don’t always think about the risk of moving between these worlds of work and home, and the associated risks of infection, even for “those who never take a plane” as they like to say. Such connections between neighborhoods have not been part of the public outreach and messaging aimed at changing people’s patterns of behavior relative to the pandemic.

Another angle that I would like to explore is the lack of research on why the predicted catastrophe did not occur. Currently, we can only hypothesize. First, we have the youthful composition of Africa’s population. Second, there is the climate, which may have been in Africa’s favor. Third, is the widespread use of chloroquine (used as anti-malarial treatment). At the moment, we can only speculate about the importance of these and other reasons for the lack of impact such as that experienced by Europe or America.

Africa remains weak when faced with this kind of threat. We have not yet taken on board that we must try to understand what is happening, using rational methods, as is done by scientific research. We often retreat into a narrative that states that we don’t have the means to do the research ourselves because we are poor and have other priorities. But I would say we are poor precisely because we don’t tend to set aside some resources to generate the knowledge which would help map out and prevent these risks. It's as though we have chosen to live in darkness and uncertainty.

What role have economists played in shaping public policy to address the pandemic?

In almost all countries, there has been a culture of “omerta” (or a pledge of silence) as regards how the pandemic has been handled. There has been no debate amongst scholars about the measures taken, and no one knows how decisions were taken. Let’s take the example of air-travel requirements between ECOWAS member states when the land borders were shut. Some governments slapped a tax on COVID tests. Take the case of Benin. While some member states of WAEMU agreed to lower the price to FCFA 25,000, Benin decided to keep it at FCFA 50,000. They also chose to test all arrivals coming into the country, regardless of where they came from, and even when they had a negative test result from their place of origin. This meant that tests were re-done in Benin as though tests done elsewhere weren’t considered valid, as though each laboratory everywhere was not using the same testing kit. It wasn’t until February 2021 that Benin stopped this practice, and it's not only Benin that has generated contradictory and ambiguous COVID health rules. There are a whole range of political, economic, and financial issues at stake, which remain to be explored, in how certain countries have addressed the pandemic.

Lastly, you have to ask whether it is really a question of managing infection risk at the border and preventing wider infection of the population, or whether it’s the revenue associated with carrying out these tests. You see, you have to ask what is the logic of these tests being free within the country, whereas those traveling to neighboring countries have to pay. It's likely that air passengers are considered amongst the privileged few, with sufficient purchasing power, and hence they are targeted as a form of racket. When I read in the media that African governments responded promptly and effectively to the COVID-19 pandemic, I beg to differ. It is true the catastrophe did not happen, but the choices made by each and every government should be analyzed further.

In your written work, you speak of the need for African countries to develop a model of economic growth more rooted in the African context, in which less attention is paid to the policy prescriptions of the World Bank and IMF, and greater focus given to satisfying national needs. You talk about the huge importance of the informal sector, in terms of both production and employment. Is it possible for this sector to furnish the foundations for a different growth model in many parts of Africa? What would this imply for the role of government, given its reliance on revenue from formal sources? What might be better forms of education able to respond more adequately to the needs of people for the economy of today and tomorrow?

The informal sector provides the foundations for the real, tangible economy in almost all African countries. It's quite wrong to call this the “informal” sector since it is highly visible, it just escapes the attention of government accounts. Government attitudes towards the informal sector are influenced most of all by a reflex to impose taxation, to increase its fiscal revenues, by targeting any and all activity. It may seem quite normal that, as soon as you start up some business, you must start paying taxes. But as the informal sector sees it, they cannot point to any help that the state provides them, so what are they paying for? Rather, they tend to be targeted and harassed by the state. Countries have always looked outwards, since Independence, seeking to make themselves attractive to foreign investors, and promoting SMEs which can feed into global value chains, as urged by the Bretton Woods institutions. Recentering policy towards addressing local, national, and regional needs requires a very different approach.

Economic policy can be read as a continuation of the colonial model. It's been difficult to reinvent the system to better address national priorities set in a regional context. What might we mean by “reinvent”? If globalization can be seen as an opportunity for national economies to face outwards, responding to local, national or regional needs has to think about local demand, and how to meet it. This includes strengthening abilities within the economic system, in terms of education and training, and the achievement of some degree of autonomy, as a means to assure sovereignty. Africa’s population structure represents a significant asset. Despite the demographic transition, Africa today accounts for nearly 17% of the total world population. While demographic growth rates elsewhere have fallen since the 1960s, to around 1% p.a., the African continent has seen its number of people increase by 2.7% p.a. Rather than see this growth in the number of people in Africa as a constraint and challenge, you could re-frame such differential growth rates as offering great potential, and a great economic opportunity. This would be possible if well thought out public policy could transform this human material into human capital, by re-centering economic models to meet internal demand. However, now, such a demographic evolution increases domestic demand, and based on our current model, we must seek external help to respond to domestic needs. We are almost entirely external-facing, we produce what we don’t consume, transforming very little raw material, and we consume what we don’t produce which is mostly brought in from outside. To find work for Africa’s unemployed, the World Bank recommends investment in training. But we need to ask – what kind of training? They say: professional and technical, and private professional and technical training schools have opened their doors in many an African city. They each offer more or less identical courses, training people in particular skills which they think correspond to the needs of business. This is how the training is sold to parents and apprentices. But there is then an over-supply of young people with this training. There is a failure to clarify what is meant by training and expertise, and many African counties lack a clear vision for what is needed over the forthcoming years and decades. The kind of skills identified are usually those which multinational companies and local businesses involved in export-led value-chains have put forward.

These training needs will likely evolve rapidly, and do not necessarily align either with the opportunistic vision of private training establishments, or with poorly framed state policy for education and training, neither of which show much flexibility. Overall, we see that rates of employment in the professional field for the newly trained – those coming out of the private schools – are just slightly ahead of the performance in the jobs market for those with classical training coming out of the university sector. We can observe that the currently existing solutions for youth unemployment neither respond to the needs of local goods and services nor to the reorientation of the system to respond to the actual needs.

Notably, reinforcing the informal sector capacity, all activities included, to improve its ability to meet day-to-day demands for goods and services at acceptable quality standards. Raising the quality and performance of the goods and services generated by the informal sector, which represents - as we have said - 80% of the real economic life of most countries, could in itself constitute a significant training program to strengthen expertise, create value add, and improve revenues for enterprise, and additions to the country’s overall wealth. By pursuing such well-thought-out policies, the state itself could achieve positive outcomes, in terms of society and equity. And in return, it could see its investment pay a good return through rising tax revenue which would stem from improved economic performance.

Without turning away from the world economy, African countries would nevertheless gain from pulling away from the neo-liberal pretense, and become more sovereign in their choice of economic policy, less subject to the catechism of the Bretton Woods institutions. Remember their mission is to promote economic orthodoxy, which in the case of countries in the South demands that their economies must adjust to neo-liberal norms, at the heart of which is the retreat of the state. Despite this, it is clear from the last thirty years of experience in south-east Asia that, by contrast to the World Bank, low-income countries can only exit from the poverty trap with massive state intervention and protection.

The Bretton Woods institutions know that they operate in situations of penury, a context of long-standing and permanent asymmetry in power between them and the national governments, the latter which is in desperate need of financial resources, for a majority of the time, to manage crises. These are not situations in which alternative ideas can flower and prosper. Let’s compare Africa with Asia or Latin America, all with different political histories. When the World Bank and IMF get off the plane in an African country, they come with expertise and conditionalities which accompany the immediate offer of cash. Given the urgent need for resources, the policy recommendations are bound to be accepted by the government. Within most African countries, no thought is given to ways of responding to internal domestic needs. For African countries, the Bretton Woods institutions know there is no space for reflection to think through economic alternatives, there are no alternative models.

So, the domination of international capital keeps national economies dependent on financial markets through debt, in turn strengthening the persistence of international capital – the reason why in many African countries, you have two economies working side-by-side with no interconnectedness. We have the informal economy which responds to the needs of domestic consumers, while the so-called formal sector which responds to essential needs but is external-facing, heavily taxed by the state due to its visibility, and is limited in scale. The Governments are dependent on the formal sector for fiscal revenues, while the private sector remarks constantly that the high tax rates are a burden – both ignoring the fact that they could overcome these different challenges if they would reinforce the capacity of the informal sector. But African Governments only see how they can impose themselves on the informal sector and not how to support them – the informal sector in Africa responds to the real needs of Africans in every sector, including health. In any African market, you will find stalls with local remedies, alternative medicines and so much else. People very often turn to the informal health sector when they cannot afford the cost of modern drugs, which in turn denies them access to health services. They depend on alternative medicine to continue to care for their health. If Governments really cared about their people, why would they not bridge alternative medicine and the high cost of modern medicine, to ensure the inclusion of people from all walks of life in access to health services taking into account the ethics of both medicine streams? Why not support, for example, a series of research activities to explore the attributes of traditional medicine, and work out questions of dosage? Solutions from traditional medicine can be very effective, however, what stops us from using science to back up prescriptions that can heal ten distinct illnesses at the same time, and guarantee a more inclusive, caring health system for everyone? Why don’t we start work on this? Because we’ve been captured by the interests of large drug companies, who want to protect their markets, and have no interest in what we might term “neglected illnesses”.

In all aspects of life, we have this kind of phenomenon. I chose the example of the health sector, but, equally, you could find the same forces at work in the agri-food business or in the big socio-economic sectors. We ignore the part of the economy which responds to the needs of the large majority and focus instead on those dimensions which insert the African economy into international dynamics, guaranteeing the government a certain basic level of revenue. This is usually just enough to enable it to function, but which demands that it must go into heavy debt in order to invest in the social and economic infrastructure needed to address people’s most basic priorities. I find this discrepancy in our thinking totally incomprehensible.

Many analysts we have spoken to agree that the pandemic has opened up space for African countries to rethink their development choices, speed up regional integration, diversifying their economies, and pursue green growth…. Do you think that we are indeed at a real turning point for economic transformation in Africa and what route would you recommend?

I noticed, that at the height of the pandemic, it was as though the world had ground to a halt. Wherever we were in the world, we began to understand that a big event had happened, and we had to change how we lived. Equally, fairly soon, I noticed that as soon as the sickness levels started to fall, many people were desperate to get back to pre-pandemic “normal”, as though COVID was just a short, bracketed phase in our lives. While the airplanes were nailed to the ground, we had said that we would build a different, better future, more in touch with nature and the environment. Having seen how people have contributed so much pollution, and what happens when it stops.

During lockdowns, we all had generous ideas for changing our lives and bringing us into greater harmony with nature and the environment. It was a time of repentance for the pattern of life we’ve been living, whether in Africa, in Europe, or in America. The pandemic has not hit us as hard as in America and Europe but, in Africa, as elsewhere, our conversations held many promises about living simpler, cleaner lives, and being more respectful of Mother Nature. We all accepted and believed that we had been trapped in a pattern of life that was a dead-end for humanity. But, what happened once the pandemic started to retreat? We went back to our old ways of life! We forgot every promise we’d made a few months before, as though we’d never had this moment for deeper thinking. Despite our ongoing travails with new variants – delta and now omicron – I see no sign at all of people putting such promises into action and living up to the alternative visions we dreamed of at the height of the crisis. I come back again and again to the phrase – reflection on alternatives – because alternative reflections have a cost and demand engagement. It presumes there is some kind of support that makes such reflection possible since thought about a better future cannot come from nothing. But I can detect no shift in fields of research or public policy in Africa as a consequence of the pandemic. Imagine that this thinking is nurtured in closed circles, we see no sign of any shift in approach to our patterns of life or economic system. We seem to find it too difficult to shift our model because we, perhaps, find the current system sufficiently comfortable, with its existing chapels, and prophets. We have not seen new niches emerging in which people seek out alternatives. It’s as though we are face-to-face with a big wall which we have no way of scaling, and the existing model and powers-that-be are securely seated on top of the wall. There is effective propaganda to ensure we all carry on without blinking. If we are to get beyond our current impasse, we must create the space, the determination, and political will, to reinvent ourselves in different parts of the world. But I see absolutely no evidence of this happening. African countries are especially poorly served given their relentless cycle of urgent crises. Political decisions are made almost always in haste, with thoughtful consideration of options seen as a luxury for rich countries alone.

Côte d’Ivoire finds itself in a difficult neighborhood, with a number of northern neighbors – Burkina Faso, Mali, Niger – who are engulfed by jihadist insurgency. What practical measures might countries like yours, Ghana, Benin, and Togo take to push back the threat of jihadism?

Extremist violence and its growth is a persistent threat in coastal West Africa, with some countries like Benin and Côte d’Ivoire having already experienced attacks both in their northern parts, and Côte d’Ivoire experiencing attacks even in its southern parts. This means that this extremist violence is no longer confined to the Sahelian hinterland, and is now moving into coastal countries which are proving to be equally vulnerable. Both types of countries, those who are engulfed by the extremist violence, and those who are only now beginning to experience it, have something in common – social and political fragility as a result of intercommunal tensions and identity crises, linked to either access to land and natural resources in a context of climate change, or the inequalities in the distribution of access to these resources. The forced idleness of youth, due to unemployment, is a fertile ground for jihadist recruitment. The economy of violence and conflict offers an alternative way of life for those with no clear future, and jihadism proposes itself as a means to address some of the big injustices found in our societies. Islamic religious arguments are no more than a front for those who are mobilizing this violent extremism, profiting from recrimination against the government and capitalizing on the multiple and diverse frustrations felt by populations in these countries.

In the Sahelian hinterland, governments are so weak that they are unable to respond to the needs of their people, especially those in marginalized zones. Often with a strong sense of social injustice, and no evidence of government support, these populations are falling prey to those using narrative, political ideology, and violence to establish an Islamic state or a return of the caliphate. The insurgents aim to dislodge Westerners and overthrow the corrupt, puppet states put in place by the Western powers. They finance themselves through a range of illicit activities, the workforce for which are large numbers of young people who would find the formal economy less attractive in terms of compensations. Violent extremism is above all a response to failed development models. A military approach in these areas has not been successful so far, given the continued spread of jihadism. Our modes of governance have failed, and we have not integrated into our understanding the great weakness and fragility of our states. Jihadism can root itself very effectively in the fertile soil created by those forgotten populations, seeking revenge for decades of neglect.

Français

Dans cet entretien, Folashadé Soulé et Camilla Toulmin échangent avec Pr Francis Akindes sociologue et professeur à l’Université Alassane Ouattara de Bouaké. Pr Akindes est président du Conseil scientifique de l'Université Alassane Ouattara, et Directeur des programmes de la Chaire Unesco de Bioéthique. Son champ d'intérêt scientifique est varié et comprend notamment les transitions politiques, la violence politique, l’économie politique des inégalités, l’analyse des politiques publiques et des politiques de sortie de crise.

1 – Le monde subit les effets de la pandémie depuis près de deux ans. Vous qui êtes basé en Côte d’Ivoire, quel regard portez-vous sur les effets économiques mais surtout sociaux de la pandémie dans ce pays, notamment sur les jeunes et leurs conditions socio-économiques ? Quelle évaluation portez-vous sur les mesures prises par le gouvernement ivoirien pour adresser cette crise et est-ce qu’il y a une implication des économistes ivoiriens voire africains dans la définition de ces mesures pour adresser la pandémie ?

D’abord, la pandémie vue d’Afrique, vue de Côte d’Ivoire, a débuté en mars 2020. Comme partout dans le monde, tout s’était progressivement arrêté dans les pays africains. Surtout qu’on y prédisait un développement catastrophique de la pandémie. Nous étions tous appelés au respect des mesures barrières. Pour les Etats, il fallait prendre la décision politique de prendre des mesures de plus en plus radicales : « Est ce qu’il faut confiner la population ou pas ? » Chaque pays se déterminait par rapport à cette décision qui s’annonçait lourde de conséquences sociales, politiques et économiques. Les pays africains l’ont diversement appliquée. Mais ceux qui ont tenté d’appliquer les mesures bio sécuritaires, soit en imposant le couvre-feu ou le confinement ont vu ce que cela a produit comme effets lorsque l’on prend en compte le fait que plus de 80 % des emplois sont dans le secteur informel. Ces personnes qui s’auto-salarient, s’ils arrêtent de travailler du coup, n’ont plus de revenu. Donc leur demander de rester à la maison parce qu’il y a une pandémie menaçante dehors, ne pouvait pas être une solution qui tiendrait dans la durée. Deux ou trois jours après les tentatives de limitation des mouvements, l’on a commencé à assister à des émeutes comme au Sénégal et en Afrique du Sud. Cette approche de la prévention de la pandémie a montré rapidement ses limites. Ensuite, il y a eu les mesures barrières recommandées : le port du masque qui fut une denrée rare et chère en début de pandémie, et la distanciation sociale. Et comme je le disais à l’époque sur plusieurs médias, la distanciation physique et sociale en Afrique est un gros luxe. Le confinement ne recouvre pas les mêmes réalités pour les privilégiés qui vivent en nombre réduit dans des maisons sur des surfaces plus grandes que pour les personnes vivant dans les quartiers populaires. Dans les quartiers populaires, la plus grande partie de la population vit dans des habitats de forte concentration humaine. Sous chaque toit, l’on dénombre en moyenne 7 à 10 personnes. Il est très difficile, lorsque vous demandez aux gens de se confiner en restant à la maison, de ne pas être dans une promiscuité à risque sanitaire. Ce sont des mesures, qui pour une catégorie de la population, se sont avérées très contradictoires dans leur application. Certains pays ont par exemple refusé d’imposer le confinement à leurs populations. Ce fut par exemple le cas du Bénin. Le Président béninois s’est démarqué en disant qu’il ne pouvait pas prendre le risque politique du confinement de sa population parce qu’il n’a pas les moyens de répondre aux contraintes liées aux confinements. Il s’est en revanche engagé à faire respecter les mesures barrières, ce qui fut la position de bien de gouvernements de pays africains lorsqu’il fallait prendre des mesures. Vous avez une catégorie de pays, et ils sont les plus nombreux, qui adoptent ces mesures parce qu’il fallait donner une réponse nationale à des mesures qui sont internationales, portées par l’OMS mais qui fermaient les yeux sur le respect de ces mesures par leurs populations. Tout se passait comme si les États avaient adopté une posture de laisser-faire stratégique, laissant chacun face à ses responsabilités. On fait semblant d’implémenter ces mesures au plan national mais en réalité on reste laxiste face au non-respect de ces mesures en interne. Cette posture est aussi révélatrice de la faiblesse des États. Ces derniers ont fait le choix implicite de ne pas trop surveiller et punir le non-respect des mesures à défaut d’offrir des alternatives économiques crédibles et soutenables aux risques de perte de revenus que peuvent induire une véritable politique de prévention par le strict respect du confinement en période d’incertitude sanitaire. La plupart des gouvernements ont évité de gérer des émeutes que pourrait entrainer le forcing politique dans l’application de ces mesures. D’autant plus que dans chacun des pays, il y a des poches de fragilité, des frustrations structurelles, des plaies de crise mal pansées par endroits qu’une trop grande insistance sur l’application de mesures impopulaires pourraient réveiller ou exacerber. Car les populations africaines ont moult raisons d’en vouloir à leurs États. Et si en période de pandémie ces États se mettent à leur imposer des restrictions, certains peuvent y voir une opportunité politique pour exprimer le ras-le-bol sur fond de vieux ressentiments. Les États ont une crainte de ce type de situation aux issues imprévisibles. Raison pour laquelle, ils se sont tous essayés, avec beaucoup de prudence, à l’application de ces mesures sans trop de zèle. Au plan strictement économique, comme je le disais dans mes propos liminaires, tout s’était arrêté en début de pandémie. Certains secteurs ont été très touchés, notamment les activités liées au tourisme parce que les migrations internationales n’étaient plus possibles. Tout ce qui était lié au secteur du voyage a été touché. Les segments d’activité touchant aux loisirs ont également été affectés : la restauration extérieure, que ce soit dans des lieux ouverts ou fermés, l’industrie du cinéma par exemple et les lieux festifs, les boîtes de nuit qui utilisent beaucoup de personnes. Tous ces commerçants ont été obligés de fermer leurs portes. L’on peut aisément deviner les risques sociaux et économiques liés aux pertes d’emploi dans ces secteurs dont les actifs se retrouvent dans le secteur informel pour bon nombre d’entre eux. Dans une ville comme Abidjan, le secteur de la restauration, dominé par les femmes, beaucoup de ‘maquis’ (appellation locale des restaurants populaires) ont été contraints de fermer. Pendant la phase de couvre-feu tout le monde était obligé de se retrouver dans les murs clos de la maison à 21 heures. Or c’est à la tombée de la nuit que ces lieux de loisirs fonctionnent le plus. Vous vous imaginez donc ce que cela a pu avoir comme conséquence au plan économique pour les ménages des petits opérateurs économiques ! Toutes les structures économiques de la Côte d’Ivoire ont été touchées malgré les dispositions particulières qu’elles ont dû prendre pour minimiser l’impact du covid-19. Les ports qui sont un poumon de ces activités, ne fonctionnaient plus normalement. Du coup, le secteur de l’import-export a été touché. Rappelons que dans un pays comme la Côte d’Ivoire, 90% des échanges commerciaux se faisant par voie maritime et les navires en provenance des pays fortement touchés par le coronavirus à partir de mars 2020 qui chargent ou déchargent d’habitude à Abidjan ne venant plus régulièrement, l’on a pu noter dans tous les secteurs des pénuries de biens de consommation, allant même jusqu’à la pénurie de denrées de première nécessité.

Avec la progression asymétrique de l’évolution de la pandémie entre l’Europe, l’Amérique du Nord et l’Afrique, la catastrophe annoncée n’a pas eu lieu. Au bout de six mois environ, les différents gouvernements des pays africains ont compris qu’ils ne pouvaient pas tenir plus longtemps et qu’il fallait lever progressivement le pied quant aux mesures sanitaires les plus contraignantes surtout pour les économies. Partout en Afrique, la question sur toutes les lèvres était alors de savoir, pourquoi allons-nous continuer à suivre la tendance en Europe et en Amérique et à nous aligner sur des mesures sanitaires si contraignantes pour la survie des économies si nous n’avons pas relevé les mêmes conséquences de la pandémie ? Surtout dans les situations africaines où les États n’ont pas les moyens de compenser les pertes de gains des entreprises et suppléer le déficit de revenu comme cela a été le cas aux États-Unis et dans les pays européens. Je pense à la France qui a fait cet effort en direction de ses entreprises sinistrées. Dans quelques pays africains notamment la Cote d’Ivoire, la promesse du soutien de l’État a été faite, mais elle n’a été tenue que partiellement. J’ai vu voir passer dans les médias et sur les réseaux sociaux des critiques adressées au gouvernement sur la méthodologie du soutien apporté aux entreprises sinistrées et le critère de choix des bénéficiaires de ce soutien. Un an après, tout ce débat sur la question du soutien de l’État aux entreprises s’est vite estompé. Les entreprises, à coup d’adaptation à la nouvelle donne sanitaire, ont essayé de reprendre leurs activités comme par le passé. On en est aujourd’hui à subir les mutations de la pandémie avec les variants du COVID, mais toujours sur fond de réserve des populations quant à l’existence réelle de cette maladie. Dans une ville comme Abidjan, lorsque vous passez des quartiers résidentiels aux quartiers populaires, vous constaterez le rapport différencié aux consignes du port du masque par exemple. L’on porte plus souvent le masque à Cocody qu’à Abobo ou à Yopougon. En début de pandémie, j’ai fait le tour des quartiers parce que il y avait beaucoup de médias internationaux qui m’appelaient pour savoir comment les populations percevaient-elles et vivaient-elles les mesures sanitaires ? Étant ainsi sollicité pour donner des avis, il fallait que j’aille sur le terrain constater et discuter avec les populations, notamment celles des quartiers populaires comme Abobo et Yopougon. La perception de la maladie faisait quasiment l’unanimité chez les gens ordinaires : la maladie n’existe pas, c’est une maladie des Blancs, une maladie des gens qui côtoient les Blancs, c’est-à-dire la maladie de ceux qui voyagent. Ne prenant pas les avions, ils ne se sentaient pas du tout concernés par les mesures barrières que préconisaient l’État. Les pouvoirs publics, conscients du fait qu’ils n’avaient pas intérêt à les titiller sur la question du respect des mesures sanitaires pour les raisons évoquées plus haut, ne faisaient que sensibiliser en évitant de gérer d’éventuelles tensions sur l’acceptation ou non du COVID comme étant une pandémie qui nous menace tous au même titre. Sauf que, dans le déni de la maladie, parmi ces habitants des quartiers populaires, certains travaillent comme personnel domestique (chauffeur, servante, cuisinier, etc …) chez ceux-là même qu’ils estiment être exposés parce que côtoyant les Blancs ou vivant comme les Blancs. Ils vont travailler dans les quartiers comme Cocody, un quartier résidentiel, contractent la maladie sur le lieu du travail et la ramènent chez eux. Malheureusement, obnubilés par les différences de conditions, ils ne font pas toujours le lien entre migration entre les mondes pour raison professionnelle et les risques possibles de contamination même pour ceux qui ne prennent pas les avions, comme ils aiment bien le dire. Cela n’a jamais fait l’objet d’une réflexion systématique qui aurait pu informer la communication pour le changement de comportement face à la pandémie.

Une autre dimension que je voudrais souligner est que si dans les pays africains, la catastrophe annoncée n’a pas été observée, à aucun moment la recherche n’a été interrogée sur les raisons pour lesquelles l’hécatombe ne s’est pas produite. L’on est resté au stade d’hypothèses. La première étant la jeunesse de la population. La deuxième hypothèse étant qu’un effet climat aurait joué en faveur des pays africains. La troisième hypothèse serait l’accoutumance à la consommation de la chloroquine qui aurait produit une immunité collective même partielle. En termes d’explication, l’on navigue encore entre ces trois idées qui ne restent encore qu’à l’état d’hypothèses. Jusqu’à ce jour, l’on ne sait toujours pas pourquoi cette pandémie n’a pas eu la même ampleur qu’en Europe et en Amérique. Voilà par exemple un point de grande fragilité de l’Afrique face à ce genre de risque. L’on n’a pas encore pris conscience qu’il est important de toujours chercher à comprendre de façon rationnelle ce qu’il nous arrive. Ce qui est la fonction et le but de la recherche scientifique. On se réfugie en Afrique dans le discours selon lequel, nous n’avons pas les moyens de financer la recherche parce que nous sommes pauvres et avons d’autres priorités. Justement, nous sommes pauvres parce que nous n’avons pas une culture d’allocation d’une part de nos ressources à la production du savoir qui permet aussi de prévenir les risques ou faire de l’anticipation. Tout se passe comme si nous avons choisi de vivre dans l’obscurité et dans l’incertitude.

Est-ce que les économistes ont accompagné tout ce qui se passait, les initiatives en thème de politique publique face à la pandémie ?

Si cela a été le cas, je ne suis pas au courant. Parce que dans quasiment tous les pays, il y a eu une vraie omerta sur la gestion de la pandémie. Les plans de riposte n’ont pas fait l’objet de débat ne serais-je déjà qu’entre sachants. L’on ne sait jamais comment les décisions sont prises. Je prends tout juste la gestion des mesures aux frontières surtout aériennes dans les pays de la CEDEAO parce que les frontières terrestres ont été fermées. Certains États y ont trouvé l’occasion de surtaxer le test COVID. Je prends l’exemple du Bénin. Pendant que l’UEMOA décide de faire baisser le prix variable d’un pays à un autre à 25 000 F, les autorités béninoises ont maintenu le prix du test covid à 50 000 FCFA. Non seulement elles ont maintenu le prix du test pour voyageur à 50 000 FCFA , elles font tester les voyageurs à l’arrivée au Bénin même lorsqu’ils disposent d’un test négatif au départ, quel que soit le pays d’où ils viennent. Ce qui veut dire que le test est refait au Bénin comme si le test effectué dans les autres pays n’était pas valable au Bénin, comme si ce n’était pas les mêmes objets de laboratoire qui sont utilisés dans quasiment tous les pays. Ce n’est qu’en fin décembre 2021 que le Bénin a mis fin à cette pratique. Il n’y a pas que le Bénin qui soit concerné par de telles ambiguïtés dans les politiques sanitaires de lutte contre la pandémie du covid-19. Il y a là des enjeux économiques et financiers ou des enjeux politiques de l’usage du COVID non encore questionnés dans certains pays pour en comprendre les logiques.

Finalement on se demande si c’est vraiment de la gestion sanitaire aux frontières, la prévention ou encore la protection de la population contre la contamination qu’il s’agit ou si c’est la manne financière liée au test qui est visée. Vous voyez, à des moments donnés, je me pose énormément de questions sur la logique des tests pour les voyageurs précisément parce que, à l’intérieur des pays c’est resté gratuit. Mais les voyageurs par voie aérienne sont considérés comme des privilégiés qui ont un pouvoir d’achat, et on a l’impression qu’on les rackette systématiquement pour cette raison. Lorsque je lis dans les médias que les États africains, pour une fois, ont réagi comme il se doit en mettant en place des plans de riposte contre la pandémie du COVID-19, j’émets quelques réserves. La catastrophe annoncée ne s’est pas auto-réalisée. Mais les réactions diverses et parfois controversées de ces États face au COVID-19 doivent se prêter à l’analyse.

2 - Dans vos travaux, vous parlez de la nécessité pour les économies africaines de développer un modèle de croissance plus endogène, dans lequel moins d'attention devrait être accordée aux prescriptions économiques néolibérales de la Banque mondiale/FMI et plus de réflexion sur la satisfaction des besoins nationaux. Vous constatez l'importance prépondérante du secteur informel, en termes de production et d'emploi. Est-il possible pour ce secteur de fournir la base d'un modèle de croissance différent dans de nombreux pays africains ? Qu'est-ce que cela signifierait pour le rôle de l'État – étant donné sa dépendance vis-à-vis des revenus du secteur formel – et des formes d'éducation mieux à même de répondre aux besoins des personnes dans l'économie d'aujourd'hui et de demain ?

Le secteur informel constitue l’essentiel de l’économie réelle dans presque tous les pays africains. Cette part de l’économie réelle est qualifiée à tort d’informel parce qu’elle se développe sous les yeux de tous mais échappe à la comptabilité nationale. La réaction de l’État vis-à-vis de ce secteur informel, est déterminée avant tout par une logique de ponction fiscale. L’État cherche à l’imposer, à accroitre son assiette fiscale en taxant les activités économiques dont se compose ce secteur et qui échappent son contrôle. Il paraît tout à fait normal que, dans un pays, lorsque l’on exerce une activité économique, l’on paie les impôts. Le problème est que les opérateurs économiques du secteur informel ne se sentent pas du tout soutenus par l’État. Ils sont plutôt traqués par ce dernier. En posture d’extraversion économique depuis les indépendances parce que préoccupés par l’amélioration du monde des affaires pour attirer essentiellement les investissements directs étrangers et favoriser l’émergence et le développement de petites et moyennes entreprises locales s’inscrivant dans la chaine des valeurs tel que le veulent les institutions de Bretton Woods, ces États ont de la peine recentrer les appareils de production sur les besoins nationaux et régionaux. En cela, les politiques économiques peuvent être lues comme étant une reconduction du modèle colonial. Elles éprouvent du mal à se réinventer en replaçant au cœur de la dynamique économique les priorités nationales pensées à l’échelle régionale. Que voulons-nous dire par réinvention ? Si la globalisation constitue une opportunité pour toutes les économies nationales, les réponses aux besoins locaux, qu’ils soient nationaux ou régionaux, doivent être essentiellement locales. Toute économie nationale viable doit d’abord prendre appui sur les capacités de réponses internes aux demandes locales. Le renforcement de la capacité de réponse de ces économies, en termes d’éducation et de formation jusqu’à l’atteinte d’une certaine autonomie doit être un domaine prioritaire de souveraineté. La structure de la population africaine constitue en cela un atout. Car, malgré la transition démographique, l’Afrique compte environ pour 14% de la population mondiale. Pendant que la croissance de la population mondiale se divise par deux depuis les années 1960 pour s’établir à 1% par an, l’Afrique subsaharienne voit sa population croitre de 2,7%. Au lieu de ne voir cette évolution démographique qu’en termes de contraintes et de défis, ce différentiel démographique peut être envisagée comme une potentialité et une formidable opportunité économique. A condition que de bonnes politiques publiques favorisent une transformation de cette ressource humaine en capital humain. Une telle évolution démographique structure de fait une demande interne qui rencontre des réponses plutôt extraverties, d’autant que les économies africaines ont tendance à se tourner vers des réponses extérieures pour la satisfaction de leurs besoins intérieurs, au point de finir par organiser durablement leur propre dépendance vis-à-vis de l’extérieur. Ils produisent ce qu’ils ne consomment pas et ne transforment que très peu (matières premières agricoles) et consomment ce qu’ils ne produisent pas et qui leur vient de l’extérieur. Pour résorber les problèmes de chômage en Afrique, la Banque mondiale conseille aux pays de former aux compétences. Mais à quelles compétences ? Professionnelles et techniques, répond-t-on. Des écoles professionnelles et techniques privées ouvrent leurs portes partout dans les villes africaines. Elles offrent presque toutes les mêmes curricula de formation. Formant aux mêmes métiers et le plus souvent à ceux qu’elles pensent correspondre aux besoins des entreprises, idée le plus souvent vendue aux familles et aux apprenants, ces modèles de formation finissent par saturer le marché de l’emploi. Ce sont là les effets du manque de clarification du concept même de formation aux compétences qui, dans les pays africains, manque cruellement de vision prospective. Les besoins en compétences dont il s’agit sont la plupart du temps ceux exprimés par les multinationales et les entreprises locales inscrites dans la chaîne de production tournée vers les marchés d’exportation. Ces besoins qui peuvent évoluer rapidement entrent souvent en discordance avec les réponses opportunistes des écoles privées et politiquement mal encadrées par les politiques d’éducation et de formation professionnelle, le plus souvent peu flexibles. Et au bilan, l’on constate que le taux de placement des personnes formées - sorties de ces écoles privées - dans le monde professionnel dépasse d’une courte tête les performances des formations classiques dans les universités sur le marché de l’emploi. Des formations qui, elles, ont du mal à se réformer. En toile de fond, le constat global est que les solutions à l’épineuse problématique de l’emploi-jeune ne se focalisent ni sur les besoins strictement locaux en biens et services transformables en autant opportunités de formations dédiées, ni sur la réorientation des capacités du système de formation à répondre en priorité à ces besoins. Notamment en renforçant les capacités des acteurs du secteur informel, tous secteurs confondus, à améliorer leur capacité à faire face au quotidien à ces demandes de biens et services suivant les exigences des normes de qualité. L’amélioration de la qualité des offres de services et de biens dans le secteur informel qui représente 80% de l’économie réelle dans les pays africains peut en elle-même constituer un projet de formation aux compétences, de création de valeur ajoutée, de plus-value pour les opérateurs transformés et une opportunité de création de richesse nationale. A travers de telles politiques bien pensées, l’État lui-même se donne par la même occasion une justification sociale et distributive. En retour, il pourrait voir son investissement maximisé par l’amélioration de l’assiette fiscale qui en découlera. Sans se détourner de l’économie-monde, les économies africaines gagneraient à sortir de l’imposture néolibérale, à être plus souverainistes dans leurs choix de politique économique et moins soumises au catéchisme des institutions de Breton Wood dont la mission est bien de promouvoir l’orthodoxie économique dont la traduction dans les pays du sud est l’ajustement des économies aux normes néolibérales sur fond d’incitation au retrait de l’État. Pourtant, ce qu’il se passe depuis ces trente dernières années dans les pays d’Asie du sud-est, montre bien, contrairement à ce que défend la Banque mondiale, que les pays à faible revenu ne peuvent sortir de la trappe de la pauvreté sans intervention massive de l’État, sans protection de l’Etat. Mais les institutions de Bretton Woods savent qu’elles opèrent sur des terrains de manque c’est-à-dire qu’elles sont en asymétrie de pouvoir face à des États qui ont en permanence des besoins financiers pour, la plupart du temps, gérer des urgences. Elles savent que ce ne sont pas des mondes dans lesquels peuvent prospérer des idées alternatives. Je compare ici l’Afrique à l’Asie ou à l’Amérique latine qui a toute une autre histoire politique. La dynamique en Afrique n’est pas du tout la même. Quand la Banque mondiale et le FMI débarquent dans les pays africains, ils viennent avec une expertise et des conditionnalités qu’ils imposent avec une promesse de décaissement immédiat. Du coup, dans l’urgence, ces préconisations passent. A l’intérieur des pays africains, l’on ne réfléchit pas aux besoins internes et aux mécanismes de réponse aux besoins internes. Les institutions de Bretton Woods savent que dans les pays africains, il n’y a pas d’alternative en termes de réflexion. Il n’y a pas de modèle alternatif. Donc le capital international continue de dominer et surtout de cultiver la dépendance des économies nationales aux marchés financiers à travers la logique de l’endettement. Le phénomène se poursuit dans le temps. Raison pour laquelle vous avez, dans les pays africains, deux économies qui se côtoient sans beaucoup s’interpénétrer tout en ne s’ignorant pas : l’économie informelle qui répond, elle, aux préoccupations internes et puis l’économie dite formelle extravertie pour l’essentiel, mais qui subit la pression fiscale de l’État parce qu’elle est très limitée en taille. C’est sur elle que l’État compte pour améliorer son assiette fiscale. D’ailleurs, dans les pays africains, le secteur privé se plaint constamment de cette pression fiscale excessive des États qui n’ont pas encore intégré qu’ils gagneraient à renforcer la capacité du secteur informel. Or l’État africain ne lorgne du côté du secteur informel que pour envisager comment l’imposer. Comment soutenir ce secteur qui couvre pourtant tous les domaines de la vie réelle ? Le secteur informel en Afrique répond à tout, même aux besoins de santé. Dans les villes africaines, vous avez des étals de pharmacopées sur les places des marchés, des offres de médecine alternative et tout un tas de choses. C’est toujours vers le secteur informel de la santé que les populations courent lorsqu’elles se retrouvent face aux défis de cette médecine moderne très coûteuse qui finalement les exclut de l’accès au droit à la santé. C’est cette médecine alternative qui leur permet de continuer à se soigner. Pourquoi, au bénéfice des usagers, un État sérieux ne travaillerait-il pas à trouver un compromis entre ces offres alternatives et le coût exponentiel exclusif de l’accès à la médecine dite moderne, avec toutes les précautions éthiques qui s’imposent ? Pourquoi ne soutiendrons-nous pas plus sérieusement les programmes de recherche sur la pharmacopée, aider à résoudre les problèmes de dosage souvent opposés à la pharmacopée ? Les solutions proposées par la pharmacopée peuvent être efficaces. Mais lorsque l’on vous dit que les mêmes produits guérissent dix (10) maladies, il y a de quoi soumettre cette assertion au filtre de la raison scientifique pour espérer garantir aux populations une offre de pharmacopée plus rationnelle et bienveillante. Pourquoi ne pas le faire ? Parce que nous voulons protéger le marché des médicaments pour les grands laboratoires pharmaceutiques qui n’ont aucun intérêt par ailleurs à investir dans les recherches pour ce que l’on appelle aujourd’hui « les maladies négligées » ? Dans tous les secteurs de la vie, vous avez ce type de phénomène. J’ai pris le cas de la santé mais vous pouvez retrouver la même chose dans l’alimentation et dans les grands secteurs socio-économiques. Nous préférons laisser en rade la part de l’économie qui répond aux besoins de la grande majorité et nous focaliser sur celles qui insèrent les économies africaines dans une dynamique plutôt internationale mais qui finissent par garantir à l’État un minimum fiscal, lequel ne permet justement pas à l’État de fonctionner ; ce qui l’oblige de fait à s’endetter pour répondre aux demandes minimales en termes d’infrastructures économiques et sociales de base. C’est ce hiatus qui me paraît incompréhensible.

3 - Plusieurs analystes s’accordent pour dire que la pandémie offre une occasion aux pays africains de repenser les modèles de développement et d’accélérer l’intégration régionale, la diversification de l’économie, une croissance verte, …Pensez-vous également que nous sommes à un moment charnière pour la transformation économique du continent et quelles sont les pistes que vous avancez ?

Ce que je constatais, c’est que au plus fort de la pandémie, le monde semblait s’est arrêté. Et nous avions tous commencé par comprendre que, quel que soit l’endroit où nous nous trouvions dans le monde, il y a quelque chose qui ne tourne pas rond et que nous devons changer nos modes de vie. Aussi, quelques temps après, j’ai pu constater que nous étions tous pressés de recommencer comme par le passé dès que les premiers signes de reprise, dès que les premiers signes de recul de la pandémie ont été observés. Nous sommes repartis comme si la pandémie n’était juste qu’une parenthèse dans nos vies. Pourtant, on se promettait d’avoir un rapport plus sage à la nature, lorsque les avions étaient cloués au sol, pendant que les signes de la pollution se sont tassés et qu’on constatait nous-mêmes que nous polluons la nature, que nous sommes les destructeurs de cette nature. Dans les moments de confinement généralisé, on avait tous des idées généreuses vis-à-vis de la nature, vis-à-vis de l’environnement. C’était le temps de la repentance sur la manière dont nous vivions jusque-là. Il en était de même en Afrique comme en Europe ou en Amérique. Certes, la pandémie ne nous a pas touché comme elle a touché l’Amérique du Nord et l’Europe. Mais dans toutes les conversations, en Afrique également, nous nous faisions également les mêmes types de promesses : vivre plus sainement et simplement ; moins violenter la nature ; réapprendre à vivre de l’essentiel. L’on se rendait bien compte qu’il fallait sortir du style de vie trépidant qui était sans issue pour l’humanité. Mais dès que les activités économiques ont repris parce que on a observé un recul de la pandémie, nous avons recommencé à vivre comme par le passé. Nous avons oublié la promesse que nous nous sommes faites quelque mois avant, comme si cette réflexion n’a jamais eu lieu. Malgré la présence des variants delta et maintenant omicron, je ne vois pas de signe de mise en exécution de cette promesse, de cette réflexion qui appelait à vivre autrement au plus fort de la crise de la pandémie.

Je reviens chaque fois sur le mot ‘’alternative de réflexion’’ parce que la réflexion alternative a un coût et suppose un engagement. La réflexion alternative suppose qu’on la finance parce que la pensée pour l’action positive ne naît jamais ex nihilo. Je ne vois aucun signe qui marque la différence sur le terrain de la recherche en Afrique et même des politiques publiques. Supposons même que cette pensée se développe dans des cénacles fermés, je ne vois ni de signe ni d’engagement en faveur d’une autre façon de faire l’économie et de vivre. Nous avons du mal, ici et ailleurs, à nous fixer de nouveaux horizons parce que j’ai le sentiment qu’on est assez confortable dans le modèle actuel, qui a ses prédicateurs, ses chapelles. On ne voit pas émerger de nouveaux lieux de réflexion pour envisager un autre monde, une autre façon de réfléchir et de vivre. Tout se passe comme si l’on était en face du mur de l’impossible réinvention de soi parce que le modèle dominant est bien assis sur ses rocs. Il a ses supports de propagandes qui continuent de fonctionner et il laisse penser que l’on n’a rien à faire d’autre que de continuer à vivre sans sourciller. Maintenant pour qu’il y ait cette alternative dans la façon de penser et de vivre, il faut qu’il y ait une détermination, une volonté politique de nous réinventer dans les différentes parties du monde, ce que je ne sens absolument pas venir, de toutes les façons. Encore moins dans nos pays africains qui ne gèrent que des urgences, Dans ces pays dans lesquels quasiment toutes les décisions politiques se prennent dans l’urgence, il n’y a pas le temps de la réflexion encore perçue comme un luxe pour pays riche.

4 - La Côte d'Ivoire est dans un voisinage difficile avec plusieurs pays au nord – Burkina Faso, Mali, Niger – très gravement touchés par les insurrections djihadistes. Quelles mesures pratiques la Côte d'Ivoire et le Ghana, le Bénin et le Togo voisins peuvent-ils prendre pour éloigner le risque d'infection par ces groupes ?

Le risque de développement de l’extrémisme violent est grand dans les pays côtiers. Et d’ailleurs, certains pays côtiers comme le Bénin et la Côte d’Ivoire subissent déjà des attaques dans leurs zones septentrionales mais aussi dans la partie sud pour la Côte d’Ivoire. Cela veut dire que le phénomène sort du périmètre de l’hinterland et touche désormais les pays côtiers tout autant exposés. Ces pays qui sont sous la chape des mouvements extrémismes violents et ceux de la côte qui n’ont connu que quelques attaques ont quelque chose en commun. Ils connaissent plusieurs fragilités allant des questions identitaires aux tensions intercommunautaires liées, soit à l’accès aux ressources naturelles en situation de changement climatique, soit aux inégalités dans la répartition des ressources. L’oisiveté des jeunes, rongés par le chômage constitue pour eux une fabuleuse opportunité d’enrôlement. L’économie de la violence se présente dans de tels contextes comme une offre d’alternative aux vies sans projet et une réponse toute faite proposée par les mouvements djihadistes à la demande sociale de justice distributive. L’argument religieux islamiste n’est qu’une imposture que mobilisent les ingénieurs de l’extrémisme violent, profitant ainsi des récriminations contre les États et capitalisant ainsi les frustrations de diverses natures. Dans les pays de l’hinterland, l’on est confronté à des États affaiblis qui n’arrivent plus à répondre aux besoins de leurs populations, surtout celles qui vivent dans des zones de relégation géographique. Vivant avec un sentiment d’injustice sociale, et en situation d’absence de l’État, elles sont réceptives au discours et à l’idéologie politique de l’utilisation de la violence pour instaurer un État islamique ou rétablir un califat. Selon leur logique, il faut déloger les Occidentaux et fragiliser les États fantoches et corrompus qu’ils auraient, selon eux, contribué à installer à la tête des pays africains. Ils se payent sur les ressources glanées via les économies criminelles dans lesquels s’insèrent massivement ces jeunes qui accèdent par ce biais à un revenu parfois bien supérieur à ce qu’ils auraient gagné en travaillant honnêtement. On voit bien que l’extrémisme violent est avant tout un problème de développement. La réponse sécuritaire militaire qu’on tente d’y apporter montre tous les jours ses limites puisque le mouvement s’étend. L’on n’a pas encore assez intégré que c’est aussi le résultat de l’affaiblissement de l’État et de l’inadéquation des modèles de gouvernance qui le caractérise. En clair, le djihadisme trouve dans le besoin de revanche des oubliés de l’État un terreau fertile pour son expansion.

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Resource Limits to American Capitalism & The Predator State Today

James K. Galbraith discusses the shift of US capitalism from an industrial state to what he calls a predator state: a finance-led, military-centered corporate republic that continues to prevail. To overcome it, he lays out what is needed to focus on employment, stability, and adjustments to rising resource costs. Lynn Fries interviews Galbraith on GPEnewsdocs.

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Transcript

LYNN FRIES: Hello and welcome. I’m Lynn Fries producer of Global Political Economy or GPEnewsdocs with guest James Galbraith.

It is normally thought that large investments and technological developments can ensure fast economic growth and prosperity. In the book The End of Normal, James Galbraith argues that while fixed-capital and embedded technology may be essential in a capitalist system, rising resource costs can render any such arrangement fragile. [1]

As it is not possible to obtain cheap resources indefinitely, be it domestically or from the rest of the world notably the Global South, Galbraith argues that the US needs to design institutions and policies to cope with rising resource costs. Not doing so has been one important reason that explains the shift from the American capitalism as described by John Kenneth Galbraith in his 1967 book The New Industrial State to an economy shaped by crises, institutional breakdowns and predatory tendencies, as described by James K. Galbraith in his 2008 book The Predator State.

In today’s program, James Galbraith analyses this long-term transformation of the US economy, describes its current state as a corporate republic in which finance has gained the upper hand and co-opted democratic institutions to forward its narrow interests, and discusses solutions for the way forward, which will also re-shape the future of growth.

Joining us from Texas, our guest, James K Galbraith holds the Lloyd M. Bentsen Jr. Chair in Government/Business Relations and is Professor of Government at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin. A prolific author, James Galbraith’s published work includes The End of Normal, Inequality and Instability and The Predator State among numerous other books.

Welcome, James.

JAMES K. GALBRAITH: Thank you.

FRIES: Let’s start with some context on the analysis of American Capitalism presented in The End of Normal. In your words: “this is the economics of organizations developed by John Kenneth Galbraith modified to emphasize that large, complex systems are not only efficient but also rigid…”.[2] The economics of organizations is a concept developed in The New Industrial State and John Kenneth Galbraith of course was your father. Let’s start there. Tell us something about that body of work and related terms like technostructure and countervailing power that John Kenneth Galbraith coined in his analysis of American capitalism.

GALBRAITH: The New Industrial State was the culminating book of a trilogy essentially that my father started in 1952 and completed in 1967. The three books were American Capitalism, the concept of countervailing power, The Affluent Society and The New Industrial State.

And what he developed in that body of work was a portrait of how American capitalism actually worked. And it was clear that it was an industrial capitalism that was rooted in the functioning of large organizations of large industrial corporations. And not in this notion that really was a hangover from the 18th century of essentially independent, small businesses and farmers and so forth all transacting with the so-called market as the dominant institution.

You can’t do advanced production/advanced manufacturing that way, because you have to have a mastery of a whole raft of technologies. And in order to do that, you have to have specialists. In order to have specialists and use them, you have to give them very specific things to do. Someone does the chemistry, someone does metallurgy, Someone does the engineering, hydrodynamics and on and on and on. to bring this all together. And that has to happen in an organization.

And then when the organization actually masters the technology, it has to figure out a way to present it to the public so the public is interested in buying it. It has to manage a regulatory process. It has to manage the financial aspects. It has a whole range of functions that go beyond the pure matters of mastering the technical aspects of production.

So the technostructure, (which was by the way, not my father’s, um, most felicitous coinage. And he was somewhat ambivalent about it as well as a word), [the technostructure] is a group of people who make up as a group the functioning brain of a large organization. And one of the ideas in The New Industrial State was that this group of people were really the governing force.

They were the ones on whom the organization depended. That the top manager, the person, the CEO, the so-called entrepreneur was somebody who could be replaced generally speaking. The Board of Directors didn’t really do anything at all. It was a symbolic body. The shareholders had no role.

The people who actually ran the show were the people who knew how to fit the pieces together and could work together as a team. And that was the message of The New Industrial State.

And that was also the dominant feature of the whole American capitalist system. On the one hand you had the alternative, which was the Soviet Union which was an industrial and behemoth but very centralized and very rigid. And obviously at the end of the day, very fragile. And on the other, you had the developing world which hadn’t mastered the capacities that the American corporation mastered.

So the US system at that time was widely regarded as being a model toward which effective developmental strategies would be attempting to trend. All of that, of course, has changed. The world does not stay still and nobody captures it for any indefinite period of time.

FRIES: Give us more background on the development of the US system and so what were the decades spanned your father’s portrait of American capitalism.

GALBRAITH: Well, the development of the system does start really in the early 1930s. It starts with Roosevelt’s New Deal. I mean, you had an earlier system which was very unstable; which went through an explosive period of growth in the 1920s and then collapsed. And the collapse didn’t go away. It lasted for four very long and painful years in which the factories were idle and the people on the farms couldn’t sell their products and then there was mass migration and all kinds of ecological disaster.

Then Roosevelt in the New Deal created an entirely different structure within which the American economy could function. And that was a federal project and it culminated in the vast industrial mobilization at the time of the Second World War.

So the period my father is describing really picks up from I would say from the early 1940s, when he himself actually played an important role. He was the deputy administrator for prices of the Office of Price Administration. So he controlled basically every price in America for a period of a year. Then he went onto describe the system that he’d had to deal with and that was evolving in the forties and into the fifties.

It’s about managing the uncertainties associated with advanced technology. It’s about having organizations that are stable, that provide livelihoods that are stable. It’s about organizations that are responsive to multiple constituencies, the public sector, to the consumer sector, to various outside forces.

So it’s about the balance of things in society. That’s the concept of countervailing power. It’s about having essentially a world in which you have some economic predictability, not only for the organizations but for the people who work for them and for the larger community.

And again, all of that was certainly the way the system appeared to be functioning into sixties. And then into the seventies it began to run into the kinds of serious difficulties which have been a feature of life for the last 50 years.

FRIES: As you argue in The End of Normal, in the postwar era, economists were living in a kind of dream world because the dominant economic ideology basically obliterated the analysis of resource costs from economic growth theory. This vision then just assumed as you say that the rapid economic growth performance of that period could be pursued indefinitely and extended to everybody.

One of the consequences being the US postwar economic system didn’t get built to cope with rising resource costs. The implications of which did not surface until cheap resources that had enabled rapid growth in the postwar era were no longer so cheap in the 1970s.

GALBRAITH: A couple of distinct points here. The early 1970s were characterized by some epochal changes. The first one in 1970 itself was the peak in conventional oil production in the United States. Which meant that from that point forward, we were increasingly dependent upon imported oil Middle Eastern oil.

In 1971 the exchange rate system that had been developed after World War II broke down. It was dismantled by President Nixon. The dollar was devalued and you had the beginning of a period of substantial instability. This led in 1973 to a big increase in the price of oil. And that was the first energy crisis.

And what did that do? That meant that a great many American industries which had been built on high levels of of energy consumption now had very high costs compared to other industrial structures that were more recent. Or that were being built at that time which could be built to adjust to the higher levels of energy costs.

Which was true of the automobile industry in Japan, for example. Since Japan didn’t come out of the war with a great reserve of cheap energy, it always had to be conscious of that in building up the kinds of industry, automobile industry for example, that it built. And so it was, it was in some sense, better adapted to the new environment.

And here you had two different or two let’s say industrial systems which we’re organized by different corporations, under different governmental structures, which were in alliance with each other, but we’re also in competition. And from that point forward, you began to see this real incursion of German, Japanese and later Korean and then finally much later on then the Chinese industrial organizations and production structures send products into the American market.

And they tended to displace those parts of the American industry which were older, organized under the principles that had been advantageous in the fifties and sixties. And you got a kind of de-industrialization that occurred in the United States. And then greatly accelerated in the 1980s by the way economic policy was managed.

FRIES: I’ll just interject for viewers here that we cannot possibly do justice to the full breadth of your analysis not least of all the international dimension But I’ll just note here that as well as hollowing out the US industrial core, the way US economic policy was managed in the ‘80s set off a debt crisis that went around the world for two decades and was especially devastating for the developing countries in the Global South.

Talk now about the financialization of the US economy following this period of accelerated de-industrialization in the 1980s. So after the industrial core of the United States, so basically that means the agro-industrial middle class economy from the 1930s to the 1970s, was gone. So what then emerged in the 1990s?

GALBRAITH: I published a book in 1989 whose subtitle was Technology, Finance and the American Future that I think captured what was about to happen or what was already already happening at that point. The economy that returned in the context of the 1990s was a very different economy.

It was dominated by global finance which was headquartered, of course, in New York on the East Coast of the United States. Its major industrial element in the United States was no longer in the upper Midwest and no longer basic consumer goods manufacturing, but the technology sector, which is much more located on the West Coast. So, you had aerospace; you had information technology; you had armaments; you had the entertainment industry.

These things prospered under these conditions. They were highly oriented toward global markets. They were also strongly backed by the financial sector. So those two things became in some sense the controlling, the dominant elements in the American place in the world economy. With a great many of the consumer goods coming in from overseas in a way they had not done before.

FRIES: Well that gives us an overview of American capitalism as it evolved from the postwar era into the 1990s. So as further context to the 1990s, let’s bring the Soviet Union into the picture here.

Earlier in the conversation, you said the late Soviet Union was an industrial behemoth but very centralized and very rigid. And so obviously at the end of the day, very fragile. Notably because it was a single integrated high fixed cost industrial system which operated with very little flexibility.

So the question being, do you see any convergence between the late Soviet model and what happened in the United States?

GALBRAITH: Well, there was certainly in both systems a process of obsolescence. And let’s say the downfall of industrial systems that were built up in the first half of the 20th century were no longer effective under the conditions in the second half of the 20th century. So that’s certainly true.

The situation in the Soviet Union was much more dire because among other things, the entire country collapsed in 1991. And that broke apart industrial chains of production which had previously been within one country. They had to cross international frontiers. As national frontiers turn hostile in some cases, the system no longer works. The same thing happened by the way in Yugoslavia.

And the Soviet system was more brittle in important other ways and suffered a much more calamitous collapse. This was a system which, although it had many inefficiencies, it was designed to take advantage of certain kinds of efficiency, particularly very large-scale operations: steel plants, automobile plants, and so on and so forth.

And that was what generated the fragility that led to this breakdown at the end of the Soviet period. From which Russia by the way, over 20 years has substantially now recovered. But, that was the situation at the time.

But what happened in the United States was not of an entirely different type. It’s just that the US had elements that were able to recover and maintain their position in the world economy. And again, the dominant ones were finance, technology. But they were located in very different parts of the country. So you had essentially a large area of economic stagnation and decay.

And that of course, has its political consequences. It’s what led ultimately to what Donald Trump was able to seize upon in 2016 and carried him to the presidency. Before that these developments were what, for example again, carried bill Clinton to the presidency. His strength was on the East Coast, on the West Coast and bringing that into the Democratic Party. Each of these economic developments has a political corollary which you can trace very easily.

FRIES: Let’s turn now to the shift from the form of American capitalism described by your father in The New Industrial State to what you describe in The Predator State as a corporate republic. So talk now about your argument that when weakened by adversity, the US model was destabilized from within and made vulnerable to fraud, predation, and looting.

GALBRAITH: Here’s another case where we can talk a little bit about convergence between the late Soviet model and what happened in the United States. In the Soviet Union when it was no longer profitable or no longer possible to produce in the previously existing structures, the people who had control of the assets liquidated them.

It was called the privatizing nomenclature. They simply enriched themselves at the expense of they previous existing system at the expense of everybody who had been dependent upon it. This contributed greatly to the social distress and to the collapse of life expectancy and so forth in the late Soviet period.

In the United States what I described in my 2008 book, The Predator State, was something about essentially a parasitism on the public institutions that had been developed in the New Deal and the Great Society. The argument I was making was that we had very robust social insurance, social stabilizing institutions including Social Security, Medicare. One could go down the list.

And a certain politics emerged out of that. Free market conservatives might say we want to get rid of these things. We want to privatize them. We want to dismantle them altogether. That isn’t really what they were after. What they realized in this age of particularly George W. Bush and Dick Cheney was that they could make certain parts of their constituency quite happy by skimming. Essentially by taking some of the resource flow and directing it to the narrow constituencies that supported them.

So this was the case, for example of Medicare Part D, which is the drug benefit that was a major expansion of Medicare that occurred under the Bush administration. It became a very complicated system with a lot of private drug companies making a lot of money off of selling pharmaceuticals to senior citizens in the United States. They pay an enormous amount. It’s just unheard of certainly in Europe in terms of what these medicines cost. And that’s not accidental.

The whole idea here is that you get private sector support for the larger program by enriching a small group of people, at the expense of the larger public. It’s not a system, anybody who designed rationally, but from a political standpoint, it makes sense. And it’s understandable that any kind of, let’s say an administration with the ethics of the George W. Bush administration would pursue that road.

And so we saw quite a lot of that. Essentially, as I say, not undoing the public sector but converting it into an instrument that also greatly enriched private interests.

That said one also had in the strictly private sector, there’s nothing quite like… I wouldn’t call anything strictly private, but in the corporate sector, we also went through a period of basically the dismantling of going concerns in order to enrich shareholders and corporate executives who were able to self deal with stock options and buybacks.

The whole business of private equity is largely concerned with that. How do you load up an organization with debt in order basically to walk off with a great deal of the asset value. So you see a great deal of that going on as well.

FRIES: You distinguish between those nations that continued along the lines that once defined US economic success as described by John Kenneth Galbraith in contrast to those that like the US & UK, shifted to the opposing Friedman doctrine of the economics of markets.

Prominent examples of nations that continued along the lines of the Galbraithian the economics of organizations being Germany, Japan, South Korea, and China. So comment on John Kenneth Galbraith’s influence in that respect and specifically in the case of China.

GALBRAITH: Well to begin with it wasn’t my father who directly advised the Chinese. Actually, I did that. In the 1990’s I had for four years a position in a consultancy under the United Nations Development Program as chief technical advisor to the State Planning Commission for Macroeconomic Reform. It was mostly an exercise in providing training and exposure to the people who were working there, rather than direct policy advice.

The interesting thing though is that when I got there in 1993, I got a whiff of a fact that I’ve later confirmed through the work of a young economist named Isabella Weber who has written on this in a very important book about China. The people I was dealing with were very, very familiar, especially, with the American experience with price control in the Second World War. Which was my father’s doing.

And the things that they knew about it were what he’d written about it. And they had his books. They’d been translated internally. They’d studied them. And so this fed into if you like the historic Chinese economic management. Which has always been about stabilizing prices, agricultural prices and then the new problem was industrial prices. And that’s where they drew on my father’s work.

That approach is completely opposite to the idea in Western economics that the prices are supposed to adjust. And that the markets are supposed to, you know, let them go up and down and do whatever. Now that’s just not the way it works.

In the thousands of years of Chinese history, the emperor has always bought the grain when it was cheap and sold it when it was expensive in order to keep the peasants from rising up in revolt. And by and large, it worked. So this is a big difference.

I characterize the economies of a number of countries as Galbraithian. In Germany where you have co determination and strong unions. And you have a kind of collaboration between the industrial and the union and the government sectors. At least in the, in the traditional part of the German economy. In Japan, Korea, and I think China fits under this rubric as well. In which fundamentally the driving forces in the economy are industrial organizations, corporations; some of them State owned, some of them private, some of them joint ventures, some of them foreign. But they maintain long-term objectives. They’re not quick buck operations.

The government has been quite careful to prevent or to restrain the tendency for asset stripping that comes up in capitalist systems. And China has a very substantial capitalist system. The notion that it is a communist country is not something that’s recognized by anybody who knows it well.

This is the big difference. It’s not a country where the equivalent of Wall Street runs the show. It does have its own financial sector. The government has been quite careful to keep it from taking on the kind of overwhelming importance that the financial sector has in the United States or the United Kingdom. And that’s a big difference. That’s a Galbraithian feature, if you like, of the Chinese system.

FRIES: And how is China coping with rising resource costs?

GALBRAITH: Well, the Chinese have been planning for the resource issues and acting on those plans. That’s what the Belt and Road Initiative is largely about. It’s about building pipelines and rail lines and so forth that will supply ports and mines and so forth in resource producing countries. That will establish reliable supply lines so that China can navigate what they anticipate to be a period of rising resource costs because they know they have to reduce their reliance on coal. Coal is the cheap fuel.

But if you’re going to use a gas, you’re going to get it from Russia or from central Asia. And the other things that one needs are going to come from other parts of the world, Africa, notably. And so you see the Chinese going out there and saying: Hey, we’ll build you ports and airports and so forth, rail lines, roads. And making these deals.

They’re doing this very much in their own interest. And the interest of long-term stability of their supply lines. We accuse them of having lots of other motives but it seems to me that this is clearly the dominant motive of Chinese engagement in the developing world.

FRIES: In contrast then to a number of countries that you characterize as Galbraithian in the US, Wall Street runs the show. Your argument is that the US needs to move to a qualitatively form of American capitalism and a new approach to economics is needed for that to happen. And your own approach is to treat the economy as having the same form as a biophysical system. So tell us something about that.

GALBRAITH: This is an argument that I’ve developed in conjunction with a colleague of mine, Jing Chen. And it’s rooted in the most basic physical principles. That in order to extract resources efficiently, you have to invest. There’s no other way of doing it. And then the large scale investments are the most efficient ones.

And when resource costs are low, it just pays. It pays to build when you have a large free-flowing river coming through a canyon with a lot of energy available, it pays to build a big hydroelectric dam. And that’s a capital intensive enterprise. One can go down the list of things of that kind.

The consequence of doing that is that when the resource costs go up, then you’re in a dangerous situation. That’s in the nature of every physical, biological, mechanical system. It’s not accidental that the largest animals have the biggest range and the most diverse diets and so forth. But it is also not accidental that they’re the ones who are endangered. And that they’re the ones who at risk when the climate changes.

FRIES: Talk more about the basic physical principles in this approach that treats the economy as having the same form as a biophysical system [3]. In other words, what all that means.

GALBRAITH: Well, it means that you have to build the economy in conjunction with the environment of which it is a part. Both the resource environment and what’s available in terms of the biosphere for absorbing the waste products of economic activity. And those two things have to be treated as of really great importance. Which we haven’t been doing.

In terms of how economics should be taught and understood, it seems to me that giving everybody grounding in thermodynamics is vital. And understanding that the economics that is in the textbooks is a kind of 18th century idealization. It’s really pre-scientific. It has a theological aspect. It’s sort of Deist. That’s what Adam Smith was.

In some sense, it’s the intelligent design view of the economic world. Which was superseded in scientific understanding already in the middle of the 19th century by Darwin and evolutionary perspective.

So what I’m building on and suggesting is that once you really start with the essence of an evolutionary perspective and get people to understand what that entails.

FRIES: Explain more about that. So give us some context on what an evolutionary perspective entails.

GALBRAITH: First of all, we have to recognize we have some obligations to the planet. Those obligations are to move away from the cheap and dirty fuels. And to create systems that are sustainable over a long period of time. This is partly an engineering problem but it also is a question of resource allocation.

And you’re going to have to put resources into that to make it happen. Economists talk rather glibly about carbon taxes and say: Okay, we can get the price of using carbon up. But it doesn’t work that way. People who own a gasoline powered car cannot immediately switch to something else. It’s not as though they have a horse in the backyard that doesn’t emit carbon dioxide.

So, one has to build systems that are functional. And in order to do that, you’ll have to commit resources. In committing resources, you’re going to have a lot of things that are you’re using resources for that are not immediately consumable. And they will yield benefits down the road. And so you have to manage that transition.

Is it entirely new? No, nothing’s entirely new. This is part of the problem that was dealt with in the Second World War. It was part of the problem that was dealt with in the construction of the infrastructure of the country in the New Deal.

FRIES: Let’s talk more about your argument that in order to move to a qualitatively different form of American capitalism, a new approach to economics and so economic growth strategy is needed. By now most everybody recognizes the problem of boom bust economic growth. Your critique of finance driven growth and the role the wave of financial fraud played in the 2008-2009 Great Financial Crisis is also widely recognized.

Of special relevance to this conversation is your argument that these financial frauds were the culminating phase of efforts to preserve the post war rapid economic growth performance. So the culminating phase of decades of efforts basically from the 1970s when American capitalism ran into serious difficulties. As discussed earlier, the postwar era of easy growth enabled by cheap resources ended with the rise of resource costs in the 1970s.

So to have another stab at some of the underlying insights of your critique of efforts to sustain a high economic growth, I’ll very quickly cite from your book The End of Normal. In your words: A high-growth economic strategy favors capital investment, a substitution of capital and energy for labor, and fosters increased inequality in a winner-take-all-system. [4]

You point out that finance and technology, two sectors that dominate this winner-take-all-system simply don’t provide a large base of direct employment. So focus for a moment, on the issue of productive employment under this high growth model.

One thing we can all understand is a low use of labor compared with machinery and resources has implications for working people. Taking the case of labor saving technology, talk about how the advanced technology sector is accelerating a decline in the base of productive employment.

GALBRAITH: This is a feature of essentially the wave of technologies that we’ve been in the midst of for the last 25 or 30 years, at least.

I’ll put it this way, if you look at what happened in the early 20th century a great many things that were provided within the household were outsourced to machines.

Transportation was one of them. My father grew up on a farm where the the plowing was done by teams of horses and you don’t need a gas station and you didn’t need a mechanic. These were replaced by tractors and the carriage into town was replaced by the automobile. And a whole body of not just producing the employment producing these vehicles but in maintaining them and the roads and the fuel systems and everything else grew up.

So the system was adding employed paid jobs. And one could go through a lot of things that happened inside the house as well. That you know, cooking and cleaning and so forth. Where it became mechanized and became the objects of employment providing industries.

Now this is not what the digital world is doing. It seems to me. What the digital world is doing. And the digital revolution is doing is working out ways to reduce the labor content of a whole range of things. I mean, we can go down enormous lists. But a lot of clerical work, a lot of accounting work, a lot of communications, obviously the information and the entertainment sectors and all kinds of things.

What we’re doing right now, which is talking over a digital link would have only a few years ago required airfares, hotels, restaurant bills, all kinds of things in order to do this. And even though the underlying recording technologies existed for many decades.

So one can see that the ancillary labor requirements are being reduced. Which is not a bad thing. It means that lots of things are becoming accessible, simple, and inexpensive to do that were previously clearly quite expensive and difficult.

But it does mean that we have to adjust. We have to work out things for people to do that are not automated; there are many things. Life can go on in a very agreeable way. And in fact can be improved dramatically provided that the economy is able to give a means of subsistence; make incomes flow for doing those things.

And if the industrial model isn’t going to be providing a lot of jobs, then we have to have institutions that do. And cooperatives are an example and decentralized public sector structures of one kind or another. are an example. The tax system can be mobilized to assist this. We just have to put our minds to it.

FRIES: What you are describing basically means turning the prevailing high growth strategy on its head to what you call a slow growth strategy. Which is not a slowed version of the high growth strategy but instead as you explain, to quickly cite from The End of Normal once again: A slow growth model should instead foster a qualitatively different form of capitalism: based on decentralized economic units with relatively low fixed costs, relatively high use of labor compared with machinery and resources, relatively low rates of return, but mutually supported by a framework of labor standards and social protections. {5]

GALBRAITH: I stand by those words. I think one does need to recognize that some parts of that economy are going to be of a very high fixed cost variety. Entities that actually create the information networks, these are laying down fixed cost systems. The entities that will continue to provide manufactured goods may not be very large in terms of the scale of employment, but they will be very concentrated in their use of capital and technology, otherwise they won’t be able to do this.

They’re going to be complex, concentrated and effectively centrally organized. There’s no I think way around that in the modern world. You don’t want to have excessively duplicative network structures beyond what you need to have a certain amount of resiliency.

So there is an illusion, which I would associate with some of the people who are the advocates of this so-called new antitrust, that the problem is concentration per se. And that the way to deal with this is to establish competition, to have many, many units that are effectively all trying to do the same thing. And this is not an effective way to organize, for example, a communication network. If you had 10 Facebooks or 10 Googles 9 of them would not last for very long, no matter what you did.

So one has to really push back against the idea that the 18th century economic idea had it right That idea was already out of date with the Industrial Revolution. So, what is the right approach?

I think the right approach is, again, a Galbraithian approach. It is to recognize the need for countervailing power. To recognize the need for public purpose and for effective and autonomous regulatory structures that can make these large entities serve a public interest.

You have to recognize there is such a thing as a public interest. It needs to be defined in a coherent way. It needs to be respectful of individual rights and protected from abuse. But there is a public purpose and there is a public interest and some entities and institutions need to represent it. And so you really have to have people who are competent and who are trained, who are dedicated, who are imbued with a public spirit, who have enforcement authority setting a set of rules and making and trying to ensure that they’re actually respected.

By the way, this is most especially true with the financial sector. If the financial sector is controlling its own regulations then you’re going to end up with one financial crisis and disaster after another. And the only way to avoid that, that actually works, that has a demonstrated record of working, is to have a set of regulatory institutions that are fully independent and that have real authority over the behavior of the large financial institutions. And can keep them from essentially abusing the enormous control and authority they have over the extension of loans and what effectively has been the creation of money.

FRIES: So in The End of Normal you analyze the breakdown of law and ethics in the financial sector as one of four major obstacles to sustainable growth and full employment in the US. Two others being, as we discussed, the rising costs of real resources and the labor-saving consequences of the digital revolution. Talk now about the fourth. What in your words is: the now evident futility of military power.

GALBRAITH: A great deal, at least a strong part of the deep backbone of the American economy in the post-war period was furnished by the military position of the United States, by the security environment that emerged out of the war and then was built up in the Cold War. And then in the aftermath of the Cold War got completely out of hand.

There was an idea that the United States was the sole superpower. It was going to essentially provide the guarantee of world security. And an idea that the US military was the the hyperpower or one that nobody would stand up to.

It’s now 30 years down the road from the emergence of those ideas in the early 1990s. And we see that they are both in tatters. They both have been effectively refuted. The United States is not being accepted as the sole guarantor of global security. And in fact, strong powers have emerged which are not going to accept it and insist that the world be organized on principles that are multilateral.

And secondly, it has been demonstrated that for all of its professional commitments and so forth the American military was unable to prevail in Afghanistan and was unable to prevail on a sustained basis in Iraq.

It’s quite clear. And I actually was invited to give this presentation in 2004 to a group of military officers in Germany. And I made the point, which I developed in the book, that in the modern world the military advantage is with the defense. It’s with those who control their own territory. Because first of all, it’s technology. Secondly, it’s the expectation that at the end of the day, they’re going to be the ones who are going to still be there. That nobody’s going to stay on somebody else’s territory indefinitely.

And so we shouldn’t expect that the security arrangements for the world can be like what we imagined, what some people imagined they would be 30 years ago. We have to come to grips with this. It means we really should for our own sake and for the sake of our economy completely reconfigure our military posture; recognize lots of things that we have are not, not going to be useful.

And we need to build a global security framework which takes account of the power centers that have emerged which we need to accept and deal with. We did this in the Cold War when the Soviet Union was essentially the major security partner, adversary, however you want to describe it. Essentially a balance of power, not a particularly happy one, but one which kept conflict down, did develop.

We need to recognize that we’re not going to escape having to do that again. And maybe you don’t like the countries that you deal with, but that’s not the point. You have to deal with them. And you have to come to the best security arrangements you can achieve. We can’t pretend that it is within our power to prevent that.

I think that understanding that is as an element actually of a sensible economic development strategy. Because when you free up the resources that you’ve been putting unproductively into let’s say armaments technology and into the human parts of the military establishment and into the bases that we maintain everywhere. Then you have resources that you can mobilize for other purposes where they can be more effectively used for the benefit of everybody.

FRIES: This then as you say would be an element of a sensible economic development strategy. And as we are talking about the US, you use the word development strategy in the context of a high income, advanced economy. So this would be an element that is part of a constellation of policy advice that you’ve developed as the way forward for the US. As we’re wrapping up, give us an idea of the main thrust of all this. So, what are some main objectives of these policy solutions?

GALBRAITH: In terms of policy and I am by and large a policy economist and not so much a high theorist. In terms of policy, since you recognize that resource constraints are going to be there and you have to deal with them, one should orient consumption patterns as far as possible toward things that can be enjoyed collectively, toward public goods, in other words. The quality of the environment in other words is a substitute for the accumulation of privately held objects. And something which can be provided I think at considerably more resource efficiency than the current system does. That’s true of transportation networks, for example, that’s a very important element in this. So that’s one thing.

And the second thing I think we need to recognize is that in an economy in which material goods are produced by very small numbers of people and often not within the boundaries of the country consuming them, then you need to provide a strong and a very robust security: social insurance, personal security, security of food, of housing, of retirement, access to education and cultural opportunities to the broad population.

That was the great accomplishment of the New Deal to get that process started. It’s by no means complete. But it gives people the chance to lead fulfilling lives; to take a certain amount of personal risk. Because they’re insured against some of the worst outcomes. To be assured that they will get healthcare when they need it. To protect people essentially against the forces of financial rapacity that’s inflicted on them with student debt, with healthcare debt, with old age insecurity. These are things we ought to be trying to banish.

FRIES: James Galbraith, thank you.

GALBRAITH: Thank you.

FRIES: And from Geneva, Switzerland thank you for joining us in this segment of GPEnewsdocs.

(Visual content cited from The End of Normal by James K. Galbraith: [1],[2],[3] p237 & [4],[5] p252-253)

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