Throughout this year’s campaign season, we will hear talk of development. Our politicians will define development in terms of road, power, water and sanitation. Development will be termed as the building of hospitals and schools. Curiously enough, no one will talk about the need for social transformation as part of the “development” agenda.
The politicians will promise us bigger and better investments in physical infrastructure and ask very little in terms of social transformation. Somehow, they will expect that roads and power lines will magically turn us into a twenty first century economy. And on this score they will be wrong.
Why do I think they are wrong? Well, because economies are social systems. One of the great fallacies of the last two centuries has been the belief that economic systems are natural systems that operate according to the laws of physics. That human nature is to trade and batter, always with the end goal of making a profit. This is false. Yes, there are certain “economic laws” that drive human micro-behaviour. But to think that the economy can ever operate on autopilot is to live in denial.
Adam Smith himself never envisioned this to be the case. One of his core beliefs was that specialisation is defined by the extent of the market. And that the extent of the market was determined by the contours of existing socio-political forms of organisation. States or other organisational forms that could bring groups of people together — thereby at once facilitating and regulating their interactions — could extend the boundaries of markets. A Turkana herder would be wealthier if he could reliably trade his cattle with a farmer in Kilifi.
The bigger the market, the more individuals — acting in a self-interested manner — would be able to specialise in one line of activity, thereby increasing their productivity. And by productivity here I mean simply the amount of value created per unit time. The more value individuals created per unit time, the more wealthy society would become.
The implication of this observation is that in addition to protecting life and property, governments should immerse themselves into the business of creating markets. Especially governments of developing states, like ours. We cannot afford to sit back and hope that by simply building infrastructure we will solve the puzzle of slow growth. We must try harder.
We must implement policies that will commercialise the valuable assets in our economy — our people’s labour, our land, agriculture, housing, et cetera. Notice that I am not advocating for excessive government intervention. Instead, I am asking for smarter government involvement in creating an enabling environment for commercial activity to flourish.
The extent of commercialisation of our economy will determine the degree to which each of us can rationally invest in specialisation. Commercialisation will be facilitated by smarter urbanisation, smarter regulation, smarter property rights protection laws, smarter labour laws, and smarter policies relating to human capital development. We can keep building physical things and call that development. We must begin to think critically about how these much-needed physical things will interact with the real people and communities that are supposed to use them to improve their productivity. If we are not careful in this regard, we will become yet another country with pockets of world-class infrastructure but which is stuck in the lower middle income bracket.
All the malls in the world will not magically add to the number of sufurias in our kitchens. We must combine these developments with actual job creation in manufacturing and agriculture. We must endeavour to make things, not just to consume other peoples’ products, thereby effectively exporting jobs.
A bold development agenda would be one that combines infrastructure development with a complete re-think of the social make up of Kenya. How can we incentivise job-related urbanisation in order to fully commercialise our most abundant asset — labour? How can we make our farmers more productive? What kind of land tenure system would facilitate more commercialisation of this asset? We will only be able to achieve sustained development if we can answer these questions. Otherwise we will just have roads and malls, and millions and desperately poor people.