Since the COVID-19 pandemic began, many of the fundamental tenets of the dominant economic and political systems in both the developing and developed world have come under fire. The laissez-faire, free-market capitalist mode of economic organization and its associated neoliberal principles of deregulation, privatization, and tax reduction, commonly described as the ‘retreat of the state,’ has historically been challenged by the far-left and far-right. However, these groups are now increasingly joined by the moderate middle—politicians, economists, and civil society organizations who in previous decades had themselves either supported this neoliberal model or were its architects. Due to the continuing hegemony of the developed world over the affairs and norms of the global system, their internal debate over their own futures serves as a ‘developmental opportunity’ for the developing world. African countries should retire the global neoliberal consensus in favor of an alternative development model, known as the ‘democratic developmental state,’ which combines state-led economic growth and democratic governance. It also serves as an opportunity for African leaders to reject the debate over the virtues of their own democracies by strengthening them, ensuring an equitable and just form of development.
To understand why the democratic developmental state is the ideal development model for African states to pursue, a historical understanding of the pre- and post-neoliberal moments is necessary.
Neoliberalism can trace its roots to far before the term was conceived of; to understand this, the work of Karl Polanyi is essential. In his groundbreaking book, The Great Transformation, he describes how the industrial revolution transformed societies by introducing the concept of embeddedness. To Polanyi, pre-industrial societies had been organized around economies which were subordinated to that society’s values, its politics, and other non-market factors. However, states after the industrial revolution had their economies dis-embedded from their societies, placing market forces at the center of life. This project came into its highest form in the post-70s ‘neoliberal turn’ when developed, Western economies implemented the ideologies of people like Milton Friedman, Ronald Reagan, and Margaret Thatcher.
Soon enough, neoliberalism would be adapted with a focus on reform for the developing world. With the advent of the 80s debt crisis in Africa, many countries on the continent were forced to implement the International Monetary Fund’s (IMF) Structural Adjustment Programs (SAPs) in return for debt relief. These SAPs pushed the core tenets of neoliberalism, but whether by ignorance or malice, they failed to consider the necessity of state institutions to bolster markets. By destroying state capacity, these reforms plunged African countries into two decades of stagnation; only a commodities boom in the 2000s served as a savior for many of them. Nevertheless, the state apparatus of many of these countries was hollowed out—neoliberalism had its grip.
Since the 90s, the developing and developed world have largely followed these development paths, with key exceptions. These exceptions are the source of inspiration for an alternative model, but also serve as a warning against authoritarianism.
When the global pandemic arrived, this status-quo was shaken to its core. The neoliberal model of placing the market at the core of societies, rather than societies’ non-market interests themselves, put the system on a collision course with its very subjects; all it took was a global pandemic to trigger it.
Increasingly, developed economies are considering alternatives to weather the pandemic, including protectionism, stimulus spending, labor market interventions, and most-importantly, industrial policy. Countries like the United States are increasingly considering industrial policies to bolster the country’s industrial base to create jobs and reduce dependence on foreign producers like China, while the European Union is engaging in its own industrial policy, with special consideration for energy independence from Russian oil and gas.
Key here is the rapid ‘ideological turn’ the developed world is making. For decades, they advocated against the very policies they use today. The developing world now has an opportunity to engage in their own state-led development mechanism, which is antithetical to the neoliberal dogma and compliant with Polanyi’s vision, by adopting the tenets and institutions of the democratic developmental state model.
The ‘developmental state’ was first coined by Chalmers Johnson in 1982 to describe the institutional structure of the post-war Japanese state. Later, the term was also used to describe the Four Asian Tigers, a grouping of East-Asian states which exhibited similar characteristics. The developmental state can be understood as a model of economic development which incorporates an ideologically determined elite who operate a “powerful, competent, and insulated” bureaucracy. This bureaucracy remains autonomous from corrupting forces with the intent of managing the economic interests of the country. In other words, the state may do things like coordinate investment, build market institutions, and manage conflict between economic agents.
The developmental state model has shown great success in East Asia, but some critique the possibility of transplanting this model to Africa. However, there are at least two key examples of developmental states in Africa which demonstrate not just its possibility, but its effectiveness: Botswana and Mauritius. Thandika Mkandawire, the late scholar of the African continent at the London School of Economics, analyzed not only these two states and their remarkable natures, but tackled the assertion of the impossibility of the model’s application in Africa: “’developmental states’ are not totally alien to African climates.” He rejects the broad, sweeping characterizations of the “irredeemably greedy, corrupt, and captured” African state. Rather, he acknowledges the successes of some African states while championing the worthy but difficult task of establishing this kind of state.
Thus far, the developmental state model has shown its promise and replicability as an ideal model for African states to target. However, this model alone is not optimal–the democratic developmental state is.
The key issue with East Asian developmental states, apart from Japan, was how authoritarian and repressive they were. South Korea under successive autocrats routinely violated human rights and massacred peaceful opposition. In Taiwan, the rule of the Kuomintang saw a period of brutal oppression during the so-called “white terror.” However, Mkandawire points out the encouraging fact that the two commonly cited developmental states in Africa (Botswana and Mauritius) are democratic. Here, democracy can be viewed from two approaches simultaneously, both being valid: Democracy is a virtue which by its very essence should be preserved and expanded, and democracy leads to more equitable growth. Firstly, democracy, according to Mkandawire, is rising as an established norm in Africa and continues to be embraced by Africans—thus, it should be protected. Secondly, democracy is essential for creating an equitable society where the benefits of growth are distributed widely among the population. Furthermore, social policy can more widely be implemented in a democracy, where the interests of a wider range of the population must be met by leaders. Again, Mkandawire stresses the essential role social policies like unemployment insurance and healthcare play in creating equitable societies. Here, Amartya Sen’s ‘capabilities approach’ elucidates clearly how empowering individuals through social policy can allow people to maximize their human welfare.
Only a democratic developmental state can produce the rapid economic growth African societies need while providing equitable outcomes for the majority.
Karl Polanyi argued that the efforts by neoliberals to disembed the economy and market from society would be a failed ‘utopian project’ since it violated the ‘natural substance of society.’ With the reaction domestic populations have had to the neoliberal project, his logic has been vindicated. The pandemic has even further disturbed the global economic status quo, so much so that developed countries are employing policies which they previously dissuaded developing countries from using. Now is the perfect opportunity for African states to implement the state-led, democratic developmental state model and generate a rapid and equitable growth for their societies.
William Gilbert is in his fourth year at McGill University, pursuing a B.A. Joint Honors in Political Science and International Development. He is a staff writer for Catalyst. He is particularly interested in structural transformation for economic development in Sub-Saharan Africa.