Exclusive Q&A With Marc Mealy Regarding International Trade, Economic Development And Africa

We don't know of anyone who has a more complete understanding of the confluence of forces that impact the world of international trade, particularly as it pertains to Africa, than Marc Mealy. An international economist, who has advised members of the US Congress while working for the House International Relations Committee, as well as serving as an advisor to the Government of Rwanda and the United States Agency For International Development (USAID), Mr. Mealy offers a perspective on the global economy that goes well beyond theory and textbooks.

Mr. Mealy recently discussed a variety of issues with BlackElectorate.com in an exclusive interview. If you have any questions or comments of your own, please feel free to send them directly to Marc Mealy at aadsc@africana.com.

Cedric Muhammad: You have had a wide and varied set of experiences in terms of your economic and trade analysis and consultancy work - for both the public and private sector. You have worked on these issues in numerous continents. If you could, please tell us what important lessons you learned from a few of those experiences - domestic and abroad.

Marc Mealy: Cedric, first let me say that it is a real honor to have a chance to dialog with you and your readers. Blackelectorate.com is providing an invaluable service to all of humanity, because it provides a means for people to explore real world issues in the context of principles and values. The beauty of Blackelectorate is that information and perspectives are presented in ways which stimulate thinking and honest discussion. The absence of this kind of discourse in the larger public domain and within our own community represents a fundamental constraint on our ability as human beings and us as people of African descent to pursue our long term strategic and security interests in the 21st century.

In terms of your question, I must truly recognize that I have been very blessed by God, our ancestors and my family and friends to have had so many opportunities to travel and work in different parts of the world. While much of my work has been related to Africa, I believe my experiences are applicable to the human experience. Some important lessons which have shaped my thinking about development and trade include:

1. The conditions which characterize the daily lives of the majority of humanity living in developing societies and increasing numbers of people in developed countries, (poverty, violence, hunger, illiteracy, disease), are not natural or from God. Poor people are THINKING HUMAN BEINGS and they know their conditions of reality are man-made and hence can be changed.

2. Growth and development are unique complex historical, political, social, cultural and economic processes. There is no such thing as the "best" model or single approach to socioeconomic development. It is impossible to have socioeconomic development without economic growth. However it is possible to have economic growth, without having socioeconomic development and it is also possible to pursue economic growth in ways which actually constrain socioeconomic development. Unfortunately, the latter two points capture what has been happening in most of the developing world since World War II and continue today under the development paradigm of neo-liberal economic thought.

3. There is a qualitative difference between a "market" society and a society with "markets", in terms of the structure and nature of the socioeconomic reality in terms of housing, health, education, poverty, violence, etc. which is produced.

4. Prosperity and poverty are structurally connected under the current modes of capitalist based wealth creation and capital accumulation in the world. Economic growth and socioeconomic poverty are simultaneously increasing in today's global economy. Why? Because under the current paradigm the tendencies of international trade and investment are one of the main factors contributing to a global divergence between developed (rich) and developed (poor) societies.

5. There are no such things as "free" markets, "free" trade and the alleged benefits they create, because many of the assumptions and premises which such concepts are based on do not exist in reality. In the real world where individual entities (people, companies, nations) pursue their interests via exploiting asymmetries in power to leverage the absence of "perfect competition" or "perfect information" to secure economic rents at the expense of others, the expected universal "benefits" from free markets and "gains" from free trade are a distortion of the facts on the ground.

6. The ideas of using one's comparative advantage and extremist ideas of economic efficiency as guides for pursuing development through trade have become some of the most mis-understood and distorted concepts in the world. Developed countries are not naturally better at making computers and developing countries are not naturally better at making coffee. These "advantages" and "efficiencies" are man made and they can be changed over time by any society developing its own unique competitive factor advantages.

7. If you examine the initial stages of development of today's wealthy (G-7) industrial nations, the recent newly industrialized countries, and emerging powers like China, none of them "developed" their economies by adopting the kinds of IMF and World Bank Neo-liberal policy prescriptions. The "tough measures" of fiscal austerity, trade and financial liberalization, privatization, and deregulation of economies inherently create a public policy bias towards deflation and private sector bias towards short termism and "rent" seeking behavior. Both of these biases constrain the development of productive capacity, employment and the structural transformation of societies.

Cedric Muhammad: In your work, what have you learned about the intersection of the public and private sector?

Marc Mealy: A very interesting question and I could answer it in many ways. One thing that I have come to realize is that the intersection of public and private sector decision makers is primarily a function of class. What I mean is that in both developed and developed societies, the elites (those with power, possessing access or control over resources) often control both the public and private sectors. However the ways in which the class dynamics play out, in terms of how the public and private sectors shape the economic systems, structures and subsequent realities differs in developed versus developing societies.

In developed societies, the degree in which they use their control for narrow self interest gains at the expense of the larger society is much less in developed societies then in comparison to developing societies. Hence in developed societies you have things like a "social contract", environmental and labor standards, separation of political powers and institutional checks and balances and public investment in housing, education, infrastructure and other public goods where strict market forces were insufficient to allocate resources for, which have not been created in most developing societies. Lets be clear, none of these are perfect and they were not simply provided by the elites. In fact they are the products of historical political and social struggles that in the end improved the average welfare of all classes and were good for the growth in all developed societies.

This aspect of developing a certain class consciousness by elites in terms of how they pursue their "national" interests, maintain control over their own markets, and protect their sovereign authority over decision making is in sharp contrast to the class consciousness to how elites in developing societies control their public and private sectors.

I often use the term "junior partner" mentality to describe a mode of thinking and behavior by elites in developing societies. It produces actions, which place a higher priority on gaining short-term control over the distribution of the political and economic crumbs of the pie for self-interests, as opposed to the long-term development and expansion of the economic pie, productive capacity and political power of the entire society. It encourages elites to use their political and economic connections secure economic rents, as the primary mode of capital accumulation and wealth creation as opposed to improving the productivity of Societies' labor and capital.

We all know how in some poor societies, the public sector is seen and used as the primary means for personal enrichment by elites or the private sector is dominated by those elites which have business activities that are externally oriented (mining, oil, exports) often at the expense of other elites whose businesses are domestically oriented. Very little is often done in terms of policy measures and the allocation of resources in ways which create incentives for building and protecting the domestic market for the production and consumption of goods and services, because the people in the society are not perceived as being potential future consumers and worthy of being invested in to improve their human productivity.

It is not surprising that over the last fifty years, most of the developing countries which were able to move away from that kind of elite class consciousness were the ones most successful in evolving their political systems so that the public and private sectors worked together to structurally transform and develop their national economic productive capacities. The best examples of this were in the 1st tier of Asian NIC's Japan, South Korea, and Taiwan.

In recent years, free trade and other multilateral and bilateral trade liberalization processes have created new challenges and opportunities for private sectors in developing nations. Today their governments face increasing external constraints on the range of policy tools that can be used to protect and support them in the global economy. It will be interesting to watch how the class dynamics in next generation of industrialized developing countries like Brazil, India, and of course China evolve and impact how their private sectors navigate the global economy.

Cedric Muhammad: What are some of the most important issues being discussed now on the international trade scene?

Marc Mealy: The 1999 Seattle WTO meeting will go down in history as the event, which moved the international trade component of globalization from the closed-door realm of trade technocrats into the public domain. What is interesting is that although over 140 nations are members of the WTO and everyone wants to expand world trade, each nation has their own priorities about what subjects they are willing to negotiate.

There are several key issues: Intellectual property rights on things plant and animal life forms;Removing trade distorting measures and liberalizing global trade in agriculture & services; Creating global rules for international investment; Implementation rules for existing agreements; Providing increased market access for developing nations to export the products they are globally competitive in to developed nations; Issues of trade linkages between trade and labor and environmental standards; Questions about competition rules, which deal with issues, related to anti-trust matters and policies to protect domestic industries from unfair practices.

Cedric Muhammad: What are some critical issues on trade being discussed beneath the surface?

Marc Mealy: The critical issues are the same above and below the surface. However what is different beneath the surface is that there are so many forms of new thinking, fresh perspectives and alternative conceptualizations of trade and development issues that are not wedded to the Neo-liberal paradigm. For example, developing countries are saying that it is insufficient to focus simply on expanding world trade. They suggest that what is important is that thus far the approaches to how trade expansion processes have been pursued have not been beneficial to all societies. This gets to the fact that in spite of the increases in levels of world trade and economic growth, there have also been increases in levels of world poverty. Thus, while developed nations are interested in bringing new issues into the WTO, developing nations want a global review of how existing WTO agreements have hurt their economies.

Another big debate is now centered around the fact that everyone knows that there has to be changes in the world trading system, but no consensus has emerged on what the nature of the changes should be. Will the changes simply reform the basic structures and power relations, which have created the existing trade paradigm or will the changes transform those structures and power relations? The simple reason is that in spite of the increased number and severity of economic crises in Asia, Latin American and Russia and the protests which have happened around the world, the global institutions and governments that helped to create the conditions and policies conducive for such crises still continue to wear teflon suits when it comes to taking the blame. They do this by maintaining a false "intellectual monopoly" on how the discussions are framed and the types of solutions which get generated. The goal here is to manage the process of change so that it will not transform the e structure.

Underneath this debate there are discussions about the role of trade in promoting development in the 21st century. Many of the trade policy tools nations like the US, Britain and Japan were able to use to support development in the 20th century have been outlawed under the current rules in the world trading systems. Things like "set asides" and "local content requirements", have now been labeled as things that distort markets and hence are inherently bad. Certain forms of government interventions like subsidies and financial supports to protect domestic workers and industries are also being outlawed, while some forms used primarily in developing countries are permitted. Wealthy nations do support the creation of rules that allow non-market distorting measures like providing financial adjustment assistance to workers who lose jobs. Of course such rules may not be of value to workers in poorer nations if their jobs are adversely affected by change in trade.

Cedric Muhammad: As someone who has seen the interaction between the US and Africa from various angles, what is your overall impression or evaluation of the relationship?

Marc Mealy: My overall impression of the relationship is that the benefits that are produced from the relationship are not shared equally between all segments of the US and African societies. This is not a surprise when you think about the structures and paradigms that shape the nature of the relationship. On the African side, the U.S. primarily has "relationships" with Africa's economies, gold, diamonds, oil and other strategic minerals and African elites. The latter group's activities inside of African societies are often "rewarded" by their external relationships with the global economy, at a cost to the development and transformation of African societies. In spite of the growing cultural ties with African-Americans, the interests of U.S. corporations, the Pentagon, the NGO and the intelligence communities continue to dictate much of America's policies toward African nations.

U.S. policy toward African societies is still primarily driven through the "national security" paradigm and apparatuses in the foreign policy formulation process. I believe this rationale is sub-optimal, usually produces ineffective policies, and is a major constraint on the intellectual growth in policy formulation for the future. It is a legacy of the mentality of cold war era and it gives the military industrial complex potentially new "missions and threats" to justify their peace time budget increases. Take for example America's desire to help African nations deal with the seemingly never-ending conflicts and wars. Clearly many African nations since independence have been plagued with civil wars and conflicts and hence on the surface "helping" Africa in this area is a noble idea. However, conflicts and wars are not the problems in African societies. They are the symptoms of complex internal and external derived political, social and economic structural conditions that African societies have yet to transform. If one accepts the above premise, how should one judge the primary help that America has offered Africa in the form of supporting the creation of an African military Crisis Response Initiative? Is a military response to the symptom of violence the optimal way to addressing the sources of conflicts? We all want increased stability in African societies, but stability can never be sustained if it is a product of military enforcement. Sustainable peace and stability in African societies can be achieved if it is a product of African societies structurally transforming the conditions (poverty, dictatorships, inequality, and other sources of the problem) that have been so conducive for conflicts?

The Clinton Administration did implement some reforms in the U.S. bureaucracy, as a way of implementing America's recent "objective" of integrating more of Africa into the global economy. While many think this is good for Africa, I believe it mistakenly assumes that many African societies are poor because they are being left out or becoming increasingly "marginalized" in the 21st century global economy. Experts usually support this idea by noting that Africa's share of world trade and investment flows are small and\or declining. From this mode of thinking, we saw the creation of the Africa Growth and Opportunity Act (AGOA) as a way to help Africa. The last few hundred years have proven that all the "help" that African societies have received to increase their exports of coffee, tea, cocoa, oil, diamonds, gold, etc. has not promoted the development of African societies Contrary to popular belief, I would argue that African societies are not poor because they are being left out of the global economy. They are poor because of precisely how their economies have been structurally connected to the global economy for over 500 years usually at the bottom of it! Africa's small share of global trade and investment flows don't indicate Africa being left out, they indicate the nature of how the human and natural resources of African societies are linked to least valuable and profitable segments of global trade and investment networks. In fact, I would also argue that African societies are not becoming increasingly "marginalized" in the global economy. Where would the global financial institutions be today without Africa's 100s of millions in annual debt service payments? What would happen if Africa's 20-30 percent average annual returns to foreign investors disapeared? What would the global information technology and transportation industries do without Africa's strategic natural resources? What would happen to global energy prices without Africa's oil? What would happen to great salaries of all the consultants and experts in global NGO, humanitarian, refugee, aid and development industries without Africa? As we enter the 21st century which some believe will be the biotech era, African societies posses the greatest amount of biological resources in the world. When you think about it, Africa has and continued to be an engine for global economic growth, at cost to the development of Africa's greatest resource her people.

Other then economic and financial issues, most political, social, and humanitarian policy issues involving Africa are still conceptualized in terms of threats to "national security". Historically, we must remember that the democratically elected prime Minister of the Congo Patrice Lumumba was seen as a threat to US "national security" during the cold war. Today whenever an Africa issue is declared important and worthy of US policy actions and resource allocations like the issue of HIV-AIDS, we must take note of the reason why the declaration has been made. Is the HIV-AIDS pandemic in Africa important because it is killing millions of African or is it important because the US has categorized it as a "transnational threat" to US security? Other issues such as infectious diseases (west Nile virus) and global narcotics trafficking are also conceptualized in that category because they are increasingly impacting America. While many celebrate that fact the US is showing attention to these issues, I believe the "reasons why" makes a huge difference in how the US approaches these issues and how those approaches impact the societies concerned.

So to answer your question, my criteria for assessing the relationship is based on a principle of mutual benefit. Based on that principle, when looking at the current realities in the US and African societies it is pretty safe to say that the distribution of benefits and costs from several hundred years of African relations with the US and the rest of the world are pretty one sided. Two final things I think are import to note: 1. We must always remember to look at US policy towards Africa in the context of the global US and European rivalry. I use the term "managed competition" to describe the ebb and flow of US and European levels of influence in various parts of Africa. 2. I believe that a real transformation in US policy towards Africa will depend upon African-Americans developing a self-identity that conceptualizes the links between our future reality here and the future of African societies.

Cedric Muhammad: What are your thoughts on US foreign policy toward Africa under a Bush administration?

Marc Mealy: Well, you can only really assess the Bush Administration based on their policy actions and subsequent impacts of those actions on African societies. I don't place a great deal of weight on words, nor the fact that President Bush stated that Africa was not a priority interest and Secretary Powell said he wanted to elevate the priority of Africa. However, what I do think is important is whether the Bush Administration perpetuates the same contradictory filled rationales, particular those used during the cold war era, that have guided US policy toward Africa? I also think we should watch how America reacts to a rebound in the levels of European engagement in Africa? We should always remember that part of the global strength of the European Union, depends on the degree of access and power they are able to use in Africa. I think both America and Europe will be closely watching how Africa's attempts to form an economic union could affect their interests and impact their global rivalry with each other.

In the public domain US foreign policy is always said to be based on: American unilaterally defined concepts of strategic and security interests and America's "democratic" principles and "moral" values. In reality however it is also critical to include the role of race and racism in US foreign policy if you want to fully explain the history of subjective applications of those rationales in shaping US policy decisions towards Africa. How else might we explain the history of US policies in Africa during the cold war, when in the name of "interests" and "stability" the US supported undemocratic dictatorships and brutally violent regimes? How might we explain the moral failure not to act against genocide in Rwanda, but to take action in Bosnia? It seems that interests always dominate values and principles when it comes to Africa.

I'll give you another example of the contradictions between the rhetoric of US policy makers and policy decisions regarding African societies. Prior to the election I attended a brunch with the current National Security Adviser Condoleezza Rice. During her talk, she articulated that she could never imagine it being in the "interests" of the US to put US ground troops in harms way in Africa. No one questioned Operation Desert Storm to protect US "interests" in terms of threats to the stability of the oil producing middle east region. Yet today, how many people know that America is receiving nearly the same amount of oil if not more from African producing nations and hence the stability of Africa societies should be perceived as equally valuable to US interest in terms of policy! More importantly, how many African-American's know this and would they challenge this double standard?

Of course the dichotomy is that narrowly defined Neo-liberal economic and "strategic security" based definitions of interests can be achieved in Africa and most developing countries without the presence of stability, development and democracy in those societies. For example, Angola has been at war for decades at the same time US interests in increasing Angola's oil export capacity has also been achieved. The Rwandan society imploded on itself and a genocide occurred in 1994. However, the US did not act to stop it and even blocked a UN intervention, because its strategic interests were not affected by the death of approximately one million Africans in 90 days. Putting aside morals and values, the question that remains in an increasingly globalized world is: Is this kind of paradigm (no matter how well it worked for some segments of America in the 20th century) still sustainable in the 21st century? Has it reached its limits? Based on what is happening globally, I would suggest that its potential to generate benefits for the developed world at the expense of the developing world is becoming less effective and harder to sustain.

Marc P. Mealy is an international economist and member of the Amala African Development (AAD) Strategic Consulting Network, a multi-discipline "virtual Pan-African network" of professionals of African descent.

The AAD network can be reached at aadsc@africana.com

Thursday, March 8, 2001