Africa needs localized market

 

Although Adam Smith is credited for having contributed colossally to the current world economy he missed a point, especially, when he postulated that the market will regulate itself while it actually did not as we will see.
Smith in his book The Wealth of Nations said, “The market price of every particular commodity is regulated by the proportion between the quantity which is actually brought to the market, and demand of those who are willingly to pay the natural price of the commodity, or whole value of the rent labour, and profit which must be paid in order to bring it thither.” Smith was right at his time due to the fact that business depended solely on demand and supply. Differently, to date business depends on sophisticated means of selling and buying, legally and illegally. For instance, some lucrative business such as gas and mineral extracted from Africa do not abide by Smith’s theory of demand and supply. There are some questions such as whom do you supply and what do you supply under what terms etc.

Currently, DRC, that exemplifies all African countries, supplies the west tonnes of precious minerals.  But it population is still living under a dollar a day. Where’s the rule of supply and demand in this case? It can be argued that some business, especially, those involving rich and poor countries, depends on the diktat of rich countries which set quotas and prices for these commodities. “The role of the US state in Africa – prior, during and after the Cold War – is invariably tied to corporate extraction of resources and backed by military might,” says Patrick Bond in, Looting Africa: The economics of exploitation . Where is “every particular commodity or whole value of the rent labour” in such transactions whereby the US sponsored coup makers with who to do business as it was under Joseph Desire Mobutu?

Before delving deeper into market and its role in regulating business, I must note that Africa, and other exploited countries need a new theory which I might call, the theory of Market localization in that, poor countries should go all-out to establish their own Localized markets so as to survive in the current capitalistic and exploitative fashion of doing business. If they control and supply their markets, they’ll be able to cause demand in the economies they used to supply. Therefore, those they used to supply will be forced to come to their local markets the same Africa’s always been forced to go to capitalist markets. Under Localization Theory, local markets should endeavour to discourage exporting commodities they can use locally such as gas and minerals which normally are processed abroad, and exported back to Africa. This was noted by Jensen and Gibbon in Africa and the WTO DOHA round: An overview saying that “Industrialised countries’ agricultural policies lower international prices and lead to dumping of surplus products in, among others, African countries.”  African countries need to form their own cartels of almost everything given that they are good consumers of processed goods they can process locally. For instance, Nigeria produces crude oil and imports processed oil at a very high price. Why can’t African countries raise capital under ADB to have their own processing plants in Nigeria that’ll supply them all as it pays back the loan? Why can’t say Ivory Coast, the world largest producers of cocoa, be the home of chocolate making factory? Essentially, African countries need to copy what western countries did in “cartelization of the market.” As noted by Arora Ashish in Patents, licensing, and market structure in the chemical industry, “Cartels used a number of instruments, including patent licensing agreements, to maintain market shares and deter entry.”  Under Localization of Market theory, just like the west, Africa needs to protect her markets as she “deters entry”.

When we talk about market, we must specify which market. For, the market set by imperialist countries in London, Paris and Washington will never protect poor countries they exploit. Smith was right when he said, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard of their own interest.” By localizing their markets, African countries will be protecting, “their regard of their own interest.”

Is the market operating legally or illegally? Smith didn't bother with such important questions due to being a racist and imperialistic thinker. Currently we've many exploitative and illegal markets operating almost everywhere in the world. We cannot talk about the commodity without probing if the said commodity is obtained legally or illegally.

Although Smith was right in many aspects of the market, he forgot or oversaw one important aspect which is the legality of the market. We have seen how rich countries install corrupt rulers and use them to rob other countries. Can we call what’s been going on market, and if it is, is it a principled one? I can argue that Smith was ill yearned against Africa. This is why is regarded as a Eurocentric capitalist thinker who did not bother about others. To do away with current exploitative market, Africa needs to localize her market in order to protect her commodities and attract other market to come and operate under her own rules and dictate as it is for western market. This way, Africa will practically be able to forge ahead.
Source: African Executive Magazine Jan., 14, 2015.