Unravelling our economic contradictions

My friend’s wife refused to go to their rural home for Christmas. She says that for the last ten years all she has done at Christmas time is cook for hundreds of friends and relatives.

She argues that it is not healthy even for her husband who becomes an ATM whenever they go to their rural home, adding that it is expensive considering her children are going to college and need the resources. She concludes that this dependence syndrome is confining rural populations to poverty.

Her argument resonates well with that of Nirvana Cable, an American who has been working in Kenya to empower communities to transition from being a network of welfare groups to being a network of wealth realisation villages. She conducts workshops in several parts of the country to help people realise how their thinking holds subsistence in place.

The word subsistence may have emanated from the works of economist David Ricardo and expounded by Malthus. In the early 19th century, Ricardo came up with the subsistence theory of wage that is also known as the “iron law” of wage. Another related theory of population, expounded by Malthus was also based on this “iron law”.

According to this theory, wages tend to remain at the subsistence level, meaning that wages paid to workers are just sufficient to fulfill their basic needs.

Workers don’t have surplus income. If wages rises above this level, this leads to an increase in the population because the increased prosperity of workers will encourage the workers to marry sooner and increase the population. This will increase labour supply.

The increased competition among workers for employment causes wages to fall again to the subsistence level. Equally, if the wages fall below the subsistence level, there will be fewer wages and no prosperity.

It follows then that people would less likely be interested in marriage or having children early. Fewer children are born. This will reduce the supply of labour. The competition for employment is reduced and wages tend to rise to the subsistence level. Finally, the wages remain at the subsistence level.

Our dependency distorts this simple economic behaviour. In Africa, a decline in wage levels is associated with an increase in population. In other words as labour supply increases, population increases constantly such that wages are depressed in the long run.

Ms Cable observed that for most Kenyans, the subsistence lifestyle is business as usual – the social norm. People embedded in the subsistence culture cannot see the wealth they possess, as their wealth is inconsistent with their social norm of subsistence.

The Kenyan mindset that drives business as usual is made up of two key behaviours. These are the culture of silence and the culture of wanting something for nothing.

Within the culture of silence, Cable says, people are not free to sit and reason together, wisdom is not shared and, therefore, new solutions cannot be found.

Oppressed people have been trained to be risk averse. Even today, school children are caned if they get the “wrong” answer.

Elders recall the not-so-distant past when Kenyans were imprisoned, or worse, for being on the “wrong” side of the political divide. Communities have been conditioned such that women don’t share their wisdom with men, youth don’t feel elders listen to them, and children don’t feel free to question their parents.

In the culture of wanting something for nothing, Cable observed that the most effective way for one’s community to remain in subsistence is to wait for someone else to provide what is personally meaningful. It is up to the individual and his/her communities to co-create what is personally meaningful.

The Kenyan economy is made up of two business models that anchor wanting something for nothing, that is, International Development Business Model and Tribal Business Model. Kenyans have been trained to wait for someone to provide for them.

This dependency mindset is further held in place by Kenya’s second business model, the Tribal Business Model where the leaders’ job is to find and distribute community cakes. Cake distribution is not corruption, she says. Rather, resource distribution is the Kenyan Tribal Business Model.

Back to my friend. The local community considers him one of the community leaders and as such should participate in cake distribution. The wife, however, sees it differently and thinks that we should change for Africa to grow. Happy New Year.

Rose Eyben said, “Empowerment happens when individuals and organised groups are able to imagine their world differently and to realise that vision by changing the relations of power that have kept them in poverty, restricted their voice and deprived them of their autonomy.”

The writer is an associate professor, University of Nairobi and a former permanent secretary, Ministry of Information and Communication.