HomeOld_PostsIncoherence of neo-colonial institutions...role of economists and other ‘technocrats’

Incoherence of neo-colonial institutions…role of economists and other ‘technocrats’

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By Dr Tafataona Mahoso

ON February 28 2020, The Zimbabwe Independent published a piece by Brett Chulu (The Brett Chulu Column) titled ‘Dollarisation misconception unpacked’.  

What caught my attention was Chulu’s claim that: “Using classic grounded theory methodology, I was able right after the promulgation of Statutory Instrument 142 of 2019, banning the use of multi-currencies, to predict that the economy was not going to de-dollarise by diktat – the argument was published in this column last year (June 28 2019).”

The title of the article referred to was ‘New currency’ won’t stop re-dollarisation’. 

Chulu went on to say part of this classic theory called Gresham’s Law and Reverse-Gresham showed him that the new Zim dollar was not a currency and that its introduction, which in his view was premature, would not stop the inevitable re-dollarisation. 

Now, where does Chulu get his theory?  

Well, from England of course, at the time of King Edward VI!  

In his February 28 instalment, Chulu wrote that:

“(The Reserve Bank of Zimbabwe) took us to the Tudor times of England, where Sir Thomas Gresham was the financier who held the interests of King Edward the VI.  

The Tudors wanted to hoodwink the people that the debased new coins (they had just issued) were of the same value as old coins – that Tudorial act of mass deception backfired – people simply horded the more valuable coins and transacted in the debased coins.”

Now, besides the instalments for June 28 2019 and February 28 2020, there are at least two other relevant instalments for the same column in The Zimbabwe Independent: ‘Government re-ignites currency debate’ (June 14 2019) and ‘Government’s economic web of delusion’. (June 21 2019) 

Having correctly stated that effective theory links causes to effects, that theory explains causes in relation to effects, Chulu does not use his so-called grounded classical economic theory to explain how and why dollarisation should be inevitable in Zimbabwe or why and how de-dollarisation might fail or succeed.  

Examining the many contributions he has written for his column and the ideological stance of the paper which publishes them – it is clear Chulu is a committed ideologue, one who belongs to a small group of technocrats or specialists who happen to benefit or has relations with people and organisations who benefit from dollarisation and are committed to its indefinite continuation. 

But in order to dignify that committed stance, it became necessary to cite Gresham’s Law as, for instance, more relevant to Zimbabwe than say the Zimbabwe Democracy and Economic Recovery Act (ZDERA) and the ways it has been invoked to punish Zimbabwe since 2001. 

By the way, Edward VI lived from October 1537 to July 1553.  

He became King at age nine in 1547.  

Sir Thomas Gresham was Edward’s equivalent of our Minister of Finance or Reserve Bank Governor or what in England later became the Chancellor of the Exchequer.

The first thing to note from the articles is that there are too many critical things mentioned in passing but not explained in terms of the alleged classic theory or in general, including the following:

“(The) only way a fiat currency is accepted by citizens is the confidence and trust they have in the issuing authority… a currency is what people accept as a means of exchange not necessarily what is decreed by Government – that’s where confidence comes in.” (June 28 2019)

Now, this passage is loaded, not unpacked, using the chosen theory as promised by the author.  

Unlike the Tudor aristocracy, Zimbabwe has a democratic Constitution which The Zimbabwe Independent and other papers are defending against amendment, which they treat as almost sacrosanct.  

The Government won elections against many opposition parties and the constitutional body administering those elections endorsed the winners as duly elected, with the courts later concurring.  

So two questions arise for Chulu’s readers and for the newspaper:  

  • Where is the basis for analogy with England under Edward the VI?  
  • In terms of the real Zimbabwe situation, why would the same people who constitutionally elected a Government not believe in or trust that same Government and its efforts?  

Does Chulu dare to do an honest, really grounded, cause-effect analysis without importing the Tudors? 

Another passage is equally loaded: 

“The mechanics of how fiat money finds the level of its value relative to other sovereigns’ currencies are primarily the stability or trustworthiness of the issuing government, the stability of the economy and the demand and supply of the money… it is a stable economy that brings about a stable currency.” (June 14 2019) 

The unexplained phenomena so far include, confidence; trust; people; how money finds the level of its value; stability; trustworthiness; and stable economy.

A third passage is short but significant:  

“Zimbabwe’s production matrix is presently structurally deficient – – agricultural output is low in terms of quantity, variety and quality. This is the root cause of our huge current account deficit, not dollarisation.” (July 4 2019)

From the sample of passages, one would then expect that Gresham’s Law and Reverse Gresham would help answer the following:

  • What does ‘the people’ mean in terms of the Zimbabwe economy Chulu is writing about? After all, it is ‘the people’ who are blamed for making dollarisation inevitable and for possessing and hoarding wads and wads of US dollar notes just like ‘the people’ under King Edward VI also hoarded old coins.
  • Do the people of Zimbabwe right now in fact have enough US dollars to hoard?

By the way, it may be necessary for readers to remember that the very same Zimbabwe Independent publishing Chulu’s columns on the economy today also published an editorial and a feature on December 1 1996 and April 11 1997 respectively.  

The two pieces purported to be based on a scientifically conducted survey of ‘the people’ of Zimbabwe on African land reclamation, land redistribution and resettlement.  

Because The Zimbabwe Independent and The Mail and Guardian of South Africa were owned by the same publisher, the supposedly objective finding of the survey of ‘the people’ of Zimbabwe on the land issue was summarised in that South African paper as well, on November 28 1997 as follows:

“It is official. The people of Zimbabwe don’t want land.  

They want jobs in a market economy, and an opportunity to work for a decent living.” 

Contrary to that three times repeated position in The Zimbabwe Independent and The Mail and Guardian, more than 400 000 households agitated for land and agreed to be resettled, reminding us that when certain claims are made in the name of ‘the people’, we have the right to demand to know which people and how many.  

To-date, those 400 000 households have stayed put on the land despite sanctions against them; and they have forced the nation to adopt the slogan that ‘Land reform is irreversible’.

In Brett Chulu’s case, the following additional questions should have been explained using classical economic theory as alleged:

  • How is confidence earned or built and sustained? Whose confidence matters in the case of Zimbabwe and its struggle to relaunch and strengthen a local currency? How does Gresham help explain that?
  • How and under what conditions do governments and other institutions earn and retain people’s trust? How does classical theory explain that? What factors can weaken or even destroy that trust? Do we need Gresham in today’s Zimbabwe to explain the operation of such factors?
  • How and under what conditions is money able to freely ‘find the level of its value?’ How does classical theory explain why the Zim dollar has not been able, so far, to find that level?
  • How and under what conditions is national stability and economic stability secured and maintained? In what way is classical theory able to explain why Zimbabwe, since 2001, has so far been unable to secure and keep that stability?
  • In what ways is it critical, essential, to import King Edward VI and Sir Thomas

Gresham into the current Zimbabwe situation in order to understand what factors militate against confidence, trust, stability, market viability and the trustworthiness of key economic and financial institutions?

Finally, how and why is Gresham’s law critical for understanding why, in Chulu’s words, “Zimbabwe’s production matrix is presently structurally deficient – agricultural output is low in terms of quantity, variety and quality?”

It should be clear by now that not all of the questions arising from Chulu’s article can be settled in one instalment.  

It should also be clear that once we cast the question of the Zim dollar in terms of applicable contemporary history rather than classical economic history, the irrelevance of Gresham’s Law here is exposed.  

It should be obvious to the reader that once the problems of dollarisation and de-dollarisation are treated as solely internal, like in Tudor England, the role of illegal sanctions and the financial warfare based on sanctions becomes excluded and irrelevant.  

But is it irrelevant?

Let me start to answer some of the questions step by step.

Conflict and dollarisation

Many economists and other social scientists agree that the problems that lead to dollarisation are caused by conflict(s).  

Such conflicts give rise to social and political polarisation, high inflation, failure of markets (including financial markets), capital flight and currency devaluation.  

Conflict in Zimbabwe, since the beginning of the mobilisation of the African land reclamation and land redistribution movement, around 1992-1999, has been externally sponsored.  

The Zimbabwe Democracy and Economic Recovery Act (ZDERA) sought not only to internationalise that conflict but also to make it global by forcing global financial institutions to apply and monitor application of that US sanctions law on Zimbabwe.  

Former Reserve Bank of Zimbabwe (RBZ) Dr Gideon Gono termed ZDERA an instrument of economic and financial terrorism. What are the real issues on the ground, then?

First, when it comes to issues of currency, money and the economy, perception conflates and is deliberately conflated with reality. So the same platform or agency trying to turn an illusion into reality will not explain that it is doing this; rather, it will present its wish as manifest truth from the gods. On financial matters, a media-established perception is a self-fulfilling prophecy unless society deliberately employs counter measures including mass conscientisation to prevent it from becoming self-fulfilling.

Second, the very same Western powers that have maintained illegal sanctions on Zimbabwe have a fully developed doctrine of opinion manipulation and destabilisation which includes the deliberate and routine fuelling of media-driven hysteria. Here is what Joint Publication 3-53: Doctrine for Joint Psychological Operations of the US says about disinformation via media:

“Psychological operations (PSYOP) are planned operations to convey selected information indicators to foreign audiences (that is to us in Zim or elsewhere in order) to influence the emotions, motives, objective reasoning, and ultimately the behaviour of foreign governments, organisations, groups, and individuals. PSYOP are a vital part of the broad range of US diplomatic, informational, military, and economic activities. Strategic PSYOP are international information activities conducted by US Government agencies to influence foreign attitudes, perceptions, and behaviour in favour of US goals and objectives (including economic sanctions) during peace time and in times of conflict. These programmes are conducted predominantly outside the military arena.”

Since the US Government maintains sanctions on Zimbabwe, especially financial sanctions, its propaganda policies and intentions are relevant to any study of media manipulation and financial warfare here.

Third, where the agenda and the enemy pushing it are mostly external, the power of media platforms over organic sources of knowledge and information on the ground is deliberately magnified out of proportion. That was what happened in 1996 and 1997 when the world was told that ‘The people of Zimbabwe don’t want land; they want jobs’. But the people of Zimbabwe have never thought in either-or-terms concerning land and job creation. When they create jobs or seek jobs they do not exclude land.

Fourth, in the resulting climate of opinion where disembodied and cyber-based platforms shut out or eclipse grounded and organic sources of intelligence, nervous policy-makers are likely to find themselves mistaking their hecklers for their real constituency; they are prone to replacing their organic stakeholders and audiences with trolls and hecklers in pursuit of sectional or even foreign interests.

In the fifth place, once media platforms overshadow organic sources of intelligence or totally eclipse them in a platform-based ‘emergency’ or ‘crisis’, the same platforms are exposed for what most of them have become: primary sources of terror messages, half-truths and lies. North Korea will never be what US President Donald Trump tweets about it. But, given the mystique of digital platforms deliberately built over decades now, many US citizens won’t know better. The same is true of Zimbabwe’s city-bound lumpen touts and cash-drunk hustlers! 

They do not know the difference between the Zimbabwean economy and a platform called the Old Mutual rate! Nor do they know the difference between chasing foreign cash and creating value or wealth.

Indeed, one fact Chulu could have noted was that elites under King Edward and Thomas Gresham at least had their own old coins to hoard against new coins.  

The US dollar in Zimbabwe has never been ours to hoard.  

So the analogy is not applicable.

In terms of all this propaganda, ‘the people’ must exclude the masses.  

In India and China, when economists there speak of promoting economic growth, they think of mobilising huge masses of people; first as an internal market for internal production and, second, as a gigantic productive force constituting the ‘workshop of the global market’.

Here, in Zimbabwe, because of the nature of the sponsored dimensions of conflict and polarisation, ‘the people’ are meant to exclude the masses, to leave out the povo.  

In the words of the late MDC founder and former Prime Minister Morgan Tsvangirai:

“We can’t build a national economy on peasants. Having everyone going into farming is not sustainable. We have to move people from the farms to industries rather than removing people from industries to the farms because I don’t see that working.”

This is the meaning of ‘the people’ in Chulu’s articles on dollarisation and de-dollarisation.  

It also means the economy and the markets also exclude the povo.

Readers should not misunderstand what is at issue.  

The Ministry of Finance and Economic Development together with the RBZ have made serious mistakes in their handling of the currency issue.  

But those mistakes can never be corrected by the likes of Brett Chulu who represent a speculative elite which benefit from the currency confusion.

The interests which articles by Brett Chulu and Steve H. Hanke installed in The Zimbabwe Independent were explained by David Korten in The Post-Corporate World: Life After Capitalism, as follows:

“First, neo-liberal capitalism hides behind the ideology of the market, but the last thing it can do is to tolerate real market forces, to obey market rules and subject itself to fair competition at market prices. In the case of Zimbabwe, illegal sanctions are one of the grossest forms of violation of market rules.

Second, the most advanced of neo-liberal capitalism’s pathology is known as finance capital or finance capitalism. At this stage the ownership of capital becomes increasingly separated from its application to production as power shifts from entrepreneurs, inventors, and industrialists who are engaged in actual productive activity to financiers and rentiers who live solely from the income generated from the ownership of financial assets.”

Such a financialised economy is highly skewed in favour of landlords and speculators.  

Imposing a sanctions regime based mainly on denying capital flows to that same economy is indeed a recipe for implosion which has nothing to do with Gresham.

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