The New Pattern of The World Economic Order: What Is Ghana’s response?

I am a very worried man. You see, I have reached that age when the plumbing in a man’s body clearly shows the results of years of boisterous carefree living, good times chumping on all kinds of beasts of the earth and drinking all sorts of ‘poison’. I now am preoccupied with deciding which natural remedy or potion to start each day with. Adding to my confusion is the fact that every natural potion, which is supposed to help ameliorate my condition, is supposed to be taken first thing in the morning. There are as many remedies as there are plants and herbs… not to talk of their various combinations. So my dilemma as to which combination to drink first thing in the morning for the best results is real? But this personal problem ranks a distant second to my number one concern …… the fact that after 62 years Ghana is still unable to extricate itself from the anaconda – like strangle hold of the post world war World Economic Order, which together with our ‘suicidal’ tendencies and attitudes ensures that as a people we remain poor and in economic bondage. I am yet to be convinced, given our fire fighting or piecemeal approach to economic redemption the past 62 years, that we fully understand the depth and complexity of our problem. I don’t think we know how to become a wealthy and truly independent country. We have not learnt from our own history or from the experience of other nations. I am worried about the fate of Ghana, and by implication my own quality of life, over the next 50 years (…yes I intend to live for another 50 years!!!)? I really am a disturbed and worried man indeed!!`

Please allow me to make two statements which lay the foundation for this article.

First, from my ‘street level real economy’ perspective I define and understand that the World Economic Order is basically the set of arrangements which capture and reflect the state, structure or architecture, institutions and mechanisms which govern the economic relationships between countries of the world. Specifically, these arrangements determine who, where, what, how, how much and even when regarding allocation of benefits, production of goods and services, trade, finance, technology, politics and migration etc. in the world economy and ultimately determines the wealth of participating nations. 

Knowing academicians and their penchant for not reaching consensus on any definition, given the slightest nuance, I am aware my non-expert perspective could be shredded to pieces any time soon. This not withstanding, please accept my ‘noble’ practical attempt at a definition of the World Economic Order for the purpose of establishing a common reference point for this article. 

Secondly, I agree fully with the assertion or assumption by economists that human beings are naturally rational in their decision making. Generally, given any practical situation, economic or otherwise, most people will evaluate the factors influencing the specific context and seek to maximize their benefits or utility. This is usually achieved at the expense of other stakeholders.

I start with a skeletal rendition of Ghana’s economic encounter with Europeans which started around 1471 when adventurous Portuguese sailors, funded by Portuguese nobility, arrived on the beaches of the Gold Coast ostensibly seeking new markets, gold and sources of raw materials. Historical accounts I have read indicate that they first set up temporal trading posts and sold their wares which included Congolese slaves to the Akan. In exchange they purchased gold, ivory, spices and raw materials etc. Business was so good they set up a permanent trading post, the Elmina Castle, in 1482.  Before long they recognized the huge potential for extraordinarily large profits through organized and forced large-scale export of captured indigenes as slaves. The new sugarcane plantations in North and South America and the Caribbean’s had an insatiable demand for cheap farm labor and the West African sub region provided an ample reservoir of healthy, strong men and women. In conformity with the prediction by economists the Portuguese sought to maximize their benefits or utility and quickly ramped up their original small scale trading in slaves, which they managed using Arab middle men, by developing the necessary supply chain. Old ships were retrofitted and redesigned to hold larger numbers of human beings. I am sure they augmented their fleet by purchasing new and larger ships in order to secure economies of scale. This is standard commercial progression. Thus commenced the organized commercial export of slaves from the Gold Coast which completely outstripped gold regarding profits. According to historical records, this extremely profitable business dealing in slaves eventually attracted other countries namely the Dutch, Swedes, Danish and the almighty British Empire. This business continued until the abolishment of the slave trade in 1807. Over 300 years!!!  The British Empire with its superior military power and organization out lasted the other European countries and was eventually allocated the Gold Coast by the Berlin Conference held in 1844 to partition Africa. This conference sought to prevent wars among the European nations. 

I have been told that Britain eventually conquered and colonized the Gold Coast in 1867 and with the aid of its indigenous collaborators (… yes, there are always local ‘snitches’) proceeded to establish an anaconda-like strangle hold on the resources and people of the Gold Coast. To cut a long story short, they successfully established the Gold Coast as supplier of cheap raw materials to the industrializing British Empire, no doubt buttressed by the logic espoused by the ‘popular’ comparative advantage (economic) theory, which promotes specialization based on relative opportunity cost ratios. Generally suggesting that it was better and cheaper for the Gold Coast to import finished manufactured goods from Britain instead of attempting to produce them locally. Selected logistical infrastructure (both road and rail) were constructed to link areas in which the extractive industries ie mining (Gold, Diamond, Manganese, Bauxite), forestry ie timber, cash crops like cocoa, grain and cotton etc were located or being produced to the sea ports. The transportation infrastructure also provided access to the urban populace and commercial centers which served as markets for products supplied by British manufacturers. They were our major channel to the external world and probably our only trading partner for a long while. Indeed, the Gold Coast for all intents and purposes was an extension of the British Empire. They controlled the volume and price of our exports and then turned around and dictated the high price of finished goods and equipment (produced with our cheap exports), which were imported into the Gold Coast. They were referee and player at the same time, so to speak. This economic arrangement must have provided a super surplus on the balance of payments ledger of the British Empire. No wonder they were so rich. We will never know how much money and wealth the Gold Coast generated for the British economy under this arrangement. It should be clear, even to the uninitiated, that even if the Gold Coast and later Ghana benefited in any way from this bilateral and generally uncomplicated economic relationship it was a spill over ( the carrot) necessary to ensure that local production of raw materials and commodities for export was sustained. This economic arrangement was forcefully secured by the superior military might of the British Empire. Right from 1471, the commercial interests of the Europeans were always paramount. Yes, their African collaborators must have made some cash but I doubt that this was in anyway significant or comparable to the profits which accrued to the Europeans in this woefully unequal partnership.

 I would be the first to concede however, that although I find their choice of business ie slave trading morally offensive I recognize that this was not illegal in that epoque. Just as the people of the Gold Coast had the right and duty to engage in legitimate activities in pursuit of their economic well-being so did the Europeans in equal measure.  Ignorance really is no excuse. After all the peoples of the Gold Coast had long-standing trading relationships with the Arabs who were no saints and should have known better.

The end of World War II in 1945 introduced a new and more complex world scenario. First, two new and dominant players, the Soviet Union and America, emerged effectively splitting the world into two distinct blocks (East and West) based on their political and economic ideologies with their associated economic and military alliances. Americans ‘swore’ by their laissez-fair approach to economic development whilst the Socialist Soviet Union championed a centralized command economy.  America exited World War II much stronger financially, technologically and militarily and subsequently unseated the British Empire as the dominant western power. This forced Britain to join the EU hoping it would act as a counterbalance to the super powers. With their increased influence and excellent planners America pioneered and successfully established the United Nations in 1945 with its own rules of engagement which reflected the financial and military dominance of leaders of both blocks. The smart American planners were at work ensuring that the world remained a big market for their burgeoning industries. Rational self-interest as always. They engineered and set up the Bretton wood institutions (World Bank, IMF, IBRD and their offsprings like IFC etc.) ostensibly to ensure increased, expanded and unencumbered free trade (which they would dominate) through increased capacity of all nations to participate. They however structured control of these institutions so as to ensure their perpetual dominance in the selection and control of their top management personnel.  Which nations were equipped to win this race? Certainly not the Gold Coast. We were still an appendage of the British Empire and technically and in reality still in a bilateral raw material supplier / industrial products consumer economic relationship with our colonial masters. We made  no effort to change the status quo. Despite The fact that Troops from the Gold Coast fought and died alongside British soldiers in the world war we did not receive any consideration when it came to our economic relationships. The war ended with the Gold Coast still in bondage and still suffering from the one sided economic relationship with the now weakened and limping British Empire. This, in my view, is the real reason Britain granted the Gold Coast independence in 1957. They were actually broke and economically weak. They calculated it was not in their best interest to spread themselves too thin. They had even more profitable colonies to superintend. After all, with the post war New World Economic Order they had a more efficient means of managing their economic relationship with the Gold Coast so as to maintain their extraordinarily high profit ratios. Technically, they handed us independence for free. No fighting. (Same for Nigeria …… they simply had no idea that this big nation had so much oil underground. There would have been a bloody independence war, I tell you!!). Yes, they deliberately took us through the negotiating process for independence, which we naively call a struggle. Believe me, all the emotions about political independence are clearly misplaced. Funny how up to this day we are actually still fighting about who secured independence for Ghana. Its all plain and simple politics. I am sure those six ‘big’ gentlemen knew clearly that none of them secured Ghana’s independence. Yes, we needed a leader after their tactical withdrawal and they, the British, allowed the people to choose one. It was all remote controlled despite the boisterous agitations by activists like Kwame Nkrumah. Clearly, World War II and the reported mistake by Britain not to have ended the terribly expensive war effort earlier sapped its resources and led to its weakened economic and financial status. Our people do not understand this? They cannot read through this? Even after President Nkrumah referred to this British condition ( ie …”Because of its own economic difficulties”) in a letter to US president Eisenhower seeking financial support for the construction of the Akosombo dam (Akurgo, Nkrumah: A Story From CIA Files). We had a really smart and experienced colonial master!! Is it any wonder that after 62 years we are yet to unravel the economic puzzle they left us with? Their planners have been doing a number on our sleeping leaders and us for 62 years. My problem is the next 50 years. Do we have strategic planners and thinkers who have the wisdom and cunning to unravel this economic puzzle?  To this day I see no evidence of this.

To borrow from mathematicians, we had moved from a simple bi-variate linear equation, in which Ghana only had the interests of Britain to contend with, to a more complex multivariate one (3 major variables plus 1 minor one ie the UK), possibly with exponential terms, tightly controlled by the interests of the superpowers. Worse, we still had Britain squeezing our economic throat. If we did not have the training, understanding or intellectual rigor to unravel a simple linear equation, what on earth could we do about a complex multivariate or exponential equation? You see the size of the problem!!!

America and Russia at the highest level of world politics were also not concerned with the interests of the Gold Coast. This is understandable. They were looking after their own interests on the bigger stage. After all, as I indicated earlier our interests i.e. political, economic or otherwise, are directly and solely our responsibility. Progress, as the wise ones say, does not come from above. Nobody relinquishes his or her privileges freely. You need to fight for each inch of territory gained. We need to clearly understand, at all times, that each nation engages us economically or politically only to the extent that their own best interests are served. This truth, based on the natural human rational approach to decision making and self preservation, will never change. The point of contact does not matter. Be it through aid programs, restructuring programs, unfair or fair trade, technical assistance, joint ventures, concessions or other commercial arrangements, short and long term loans, NGO activities for child, women and gay rights, security arrangements, disaster support, sports, war, religion, churches, mosques, trade facilitation programs, open or closed markets, structural adjustment programs, poverty alleviation programs, SDGs, MDGs, medical outreach programs, AGOA, Millennium Challenge Account, financial markets, when they praise us, when they condemn us and even grants. Any situation you can think of. There is simply no free lunch. I wonder how many ‘peacock’ African Presidents and their appointees understand this? They fall for every red herring thrown at them by our smart detractors. The same thing can be said about our legislators in parliament. How many Chief Executives appreciate this fact of no free lunch? How many decision makers in Africa understand that the planners of both the east and western blocks are constantly working to position their countries so they benefit dis-proportionately from political and socio-economic relationships with any nation. This piece is definitely not about the history of Gold Coast’s economic relations with the world. I am the least qualified to attempt that. I am desperately trying to ram home the fact that we cannot loose sight of this basic human truth. It is existential!!

From literature I have read, and my own personal experiences, I am convinced only President Kwame Nkrumah clearly understood the source of our problems and articulated the extremely difficult context and the effects of the economic arrangements, which constituted the back drop to our decisions regarding a choice of an effective development strategy.  Kwame Sanaa-Poku Jantauh in his book “Death of An Empire” recounts that Nkrumah actually decided to study law in England with a view to understanding the ‘dodgy’ mentality of our colonial master. He realized that the British were experts at “adapting to reforms without change”. They had the canny nature of riding every storm (just like cork on water) without conceding anything. Kwame Nkrumah clearly understood the shift in power from our colonial master Britain to the two new super powers, America and the Soviet Union. Yes, he would strategically still maintain his relationship with the dying British empire. He was smart not to turn them into an enemy or hurt their pride, weak as they were they still held Ghana’s economic throat in a vice-like grip. Remember they were our largest (unfair) trading partner after all. Ghana, a new republic, therefore retained its membership of the Commonwealth of Nations. However, President Kwame Nkrumah knew that to break the back of the strangle hold of Britain we needed to industrialize, modernize and rapidly grow the economy of Ghana. This required a major change in our position at the ‘world dining table’ where economic spoils were shared. We urgently needed access to the whole world, new trading partners, and players with a different approach to economic relationships. America abhorred colonialism it seems. After all unlike Ghana, they actually had to fight and win a tough ‘war’ in order to secure their independence from Britain. The Soviet Union, whilst not the best alternative given its excessive control of its peoples at all levels, clearly provided an example of dogged resilience. They, on the other hand were looking to spread their political tentacles anywhere which would give them the opportunity to counter American hegemony. In Nkrumah’s estimation the Soviets would bite his bait as a trading partner. So he worked hard to court the friendship of leaders of both super powers and tried hard to assure them of his neutrality.

Kwame Sanaa-Poku Jantauh recounts in his book “Death of an Empire: Kwame Nkrumah in Ghana and Africa” that in his desire to build a modern, economically vibrant and independent Ghana President Kwame Nkrumah chose a strategy of non-alignment in a bitterly bi-polar world consumed by a cold war and its corollary arms race. He envisaged that by implementing his policy of “positive neutrality’ (credit to A. Akurgo: Kwame Nkrumah. A Story from CIA Files) he could play the superpowers against each other and anticipated they would duel aggressively for his loyalty because they recognized his influence in Africa. A continent with huge God given resources and economic potential. This strategy secured him and Ghana the flagship VRA Hydroelectric power and VALCO projects as well as Russian financing for the Bui dam ( A. Akrugo,   Kwame Nkrumah: A Story From CIA Files) but lost him the game changing backwardly integrated bauxite mining project and its supply chain because he was considered untrustworthy by the Americans. They suspected he would nationalize the Aluminium supply chain at a future date when he was stronger. So as I have argued so far their planners were calculating future possible scenarios.

As captured by Tony Killick in his book, (Development Economics in Action: A Study of Economic Policies in Ghana), President Nkrumah whilst pursuing a ‘positive neutrality’ tactic succeeded in confusing and using the super powers. Meanwhile, he proceeded to make massive investments to change the basic structure of the Ghana economy by rapid industrialization, modernizing infrastructure and agriculture through large scale and technically advanced projects and quickly accelerating the education of the populace. Killick indicates that most of the money for these investments was raised locally through taxes and use of our reserves. Unfortunately, coupled with his resource guzzling African agenda, Nkrumah’s general failure to appreciate the critical need for careful planning and efficient execution of plans was his bane. According to Killick, Nkrumah underrated the need to have experienced, pragmatic and canny strategic planners who knew clearly how to achieve his dream of a Ghana free of colonial economic shackles. Terribly ‘criminally’ poor project evaluation and ‘criminally’ terrible inefficient integration, project management and co-ordination ensured his dreams were dead on arrival (Killick, Development Economics in Action). How can I end this section without mentioning ever-present, almighty corruption? Very sad indeed!!! 

It seems that President Nkrumah did not understand, or fully appreciate, that although the Super powers were engaged in an existential cold war they still had unspoken rules of engagement for their mutual benefit which ensured that they each possessed a certain minimum level of control over world affairs and territories. The same principle is used by hotel cartels which first illegally agree and set price levels for hotel rooms in a country (like in Ghana) and then proceed to engage in a ‘chicken’ marketing fight for market share. This explains why despite the increase in the number of hotels / rooms prices ridiculously remain high in Ghana. Our legislature does the same too. The parties, supposedly bitter rivals, come together quickly without acrimony to ratify any law which advances their individual and personal fortunes as parliamentarians. After which they proceed to fool the electorate with ‘chicken’ fights on the floor of parliament. Once any super power bristled with anger and set its sights on a non consequential nation (like Ghana) the other stayed aloof (a respectful distance) and left the victim state to its own devises. Nkrumah’s fight for the emancipation of Africa triggered this ‘gene’ in America with disastrous consequences. As far as they were concerned “President Nkrumah was doing more to undermine American interests than any other black African” (Credit Akurgo, emphasis mine). America won the cold war battle for soul of Ghana. The rest, as they say, is history. 

After the overthrow of President Nkrumah our multivariate and exponential equation was modified. It essentially maintained the same number of variables however, its complexity was significantly reduced as the Russians were bundled out of Ghana by the NLC military junta. But for a brief period during the tenure of the Rawlings led PNDC when we flirted with Cuba, America was clearly the dominant, and Ghana’s preferred, super power. We now had to deal essentially with only one block. Indeed, later with the break up of the Soviet Union, the Russians had their own economic and political problems and had little time for Ghana. Our puzzle became even less complex. We had only America as an option. However, none of our governments, and I repeat none, could launch an agenda for transforming our economy based on this new international political reality. I am talking about changing the structure of our economy, i.e. unravelling the colonial economic puzzle the British imposed on us, by exploiting the opportunities the new context presented. Our so called ‘strategic’ planners were busily engaged in the fruitless fight to mend and patch economic ‘holes’ presented daily by the flows and ebbs of the world economic system. Our heightened and desperate reliance on the Bretton Woods institutions was, and still is, instructive as we acquiesce to their various economic and political experiments. Even more ridiculous is our joy at achieving artificially induced macro economic stability. These short lived pyrrhic economic victories cannot, and have not, resolved the colonial economy puzzle. That explains our predicament why after 62 years as a politically free nation, we remain in bondage as hewers of wood and a willful market for goods and commodities produced in other countries. We are growing like free range yard chicken!!!

Before the advent of president Trump in 2018, we experienced the surge of Chinese activities in Africa. The factory of the world, as they are called, with an insatiable appetite for all resources invaded Africa even as they invaded the rest of the world. Their smart, no questions asked, approach to lending and international relations suited our corrupt and inept leaders. After all, they do not demand the discipline and interference necessary for the implementation of the overriding agenda of the Bretton Woods institutions. China has become an additional variable in the equation which grows stronger everyday as they execute their plan to ensure their long term survival and relevance on the world stage. 5,000 years of civilization, hard fought wars with imperial Korean and Japanese forces and finally their own civil war has taught the Chinese the art of survival. Using their population strength, the limited exposure of Africa to their language, and cash as a bait they simply ‘rape’ the continent whilst they masterfully execute a well thought out development plan. They want, and will get, a part of Africa at all costs. Politically and militarily, they are asserting themselves in the south China seas. They are working hard to edge out America and Europe from the general area in order to achieve dominance of their back yard. From there they will solidify their hold on the rest of the world. They will become largest economy soon.

Our multivariate and exponential equation now has 5 variables. Two strong ones ie America and China and two weak ones EU and Russia. Poor Ghana, we still have no game winning strategic plan. The economic patch work continues unabated.

Enter President Trump, his America first agenda and his protectionist army. As far as he is concerned the world starts and stops with American interests. And why not? After all he is American. Does the rational decision making theory not dictate maximization of self interest and self preservation first? He must press home his economic and military might and ensure that America is served more food at the world economic dining table. The idea of expanding global trade by the progressive removal of trade barriers is questioned and turned upside down. Old alliances do matter but they will be renegotiated in favor of American interests. America must get more from trade and any collaboration even as it gives less. They must get richer and become great again. The toothless EU block is being weakened further by the acrimonious exit of Britain and provides less of a counter balance to American hegemony. The dominant super power, under the administration of President Trump, is taking advantage of its monopoly position to change the status quo. Despite the best efforts of Russia and China they can only work to contain America in their regions and a few choice battle grounds. They do not have the resources for a long term, inefficient world wide battle. So now we have six players. America, Russia, China, Europe, Britain and Ghana. The equation is even getting more complicated as we are pulled in all directions by these 5 independent variables in an even more complex exponential equation. Please don’t forget we must account for the intensity of the new interest in Ghana generated by the discovery of oil in commercial quantities off the coast of the western region. Also factor in the newly formed African Continental Free Trade area and you see that we are in the milieu of a really complex situation which requires smart thinking and implementation of pragmatic long term solutions. Presently, we simply do not have the leaders or strategic planners with a clear understanding, know how and skill to unravel this conundrum and future machinations of the players in the equation. The pattern of world economic relations will keep changing and I doubt that we will have a credible response.

My guess is 50 years from now we will still be wallowing in the same pitiful situation. Absolute economic bondage and clueless as to how to take control of the commanding heights of our economy. Yes, we may have better standards of living and generally higher per capita income. But we would still be free range yard chicken. Albeit a little fatter because of our oil fueled economy but nevertheless technically still held under economic bondage by the same old colonial economic relations architecture.

I am begging our leaders to prove me wrong so my remaining 50 years are more exciting.  Of course there is a way out. But will our mediocre ‘peacock’ leaders listen to us? My worries increase each day!!