Revolutionary economist and author Dambisa Moyo asks why developing countries should aspire to Western-style democratic capitalism, when it has caused a global crisis.
by Manuel Heckel
Dambisa Moyo illustrates her unusual life journey with an anecdote. In Zambia, which gained independence from the United Kingdom only five years before her birth, black citizens were not issued birth certificates, she said. Now, as an international economist, her passport contains stamps from 75 countries.
Ms. Moyo, 45, leapt onto the world stage with her 2009 book “Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa.” In it she argued that foreign aid contributed to existing dependency and stifled every form of sustainable homegrown entrepreneurial ventures. She called for more trade and direct investment instead of financial handouts to unlock the continent’s potential.
Although critics pounced on her conclusions, she clearly struck a nerve as the book zoomed to the top of the New York Times bestseller list, alienating the world’s philanthropists in the process.
Even Microsoft co-founder Bill Gates weighed in with his condemnation. “I think that the book actually did damage the generosity of rich world nations,” he said in a 2013 interview. “I have read it and I think she didn’t know much about aid and what aid is doing.”
As far as Ms. Moyo is concerned, the criticism just shows how people continue to embrace the ideology of aid.
“I don’t worry about personal attacks,” she said. “The world has bigger problems.”
Ms. Moyo, who holds degrees from American University in Washington D.C., Harvard University, and a PhD from Oxford, calls for less government interference at a time when many see a lack of oversight as one of the main causes of the worldwide financial crisis.
Her views have also gained her many admirers. The World Economic Forum dubbed her a “Young Global Leader,” and in 2009, Time magazine ranked her among the “100 most influential people in the world.”
The economist spent some years working at Goldman Sachs and the World Bank before becoming a writer. She also sits on the supervisory boards of Barclays Bank, the international brewing company SABMiller and the Barrick Gold Corporation.
In her latest book, “Winner Take All,” she turns her attentions away from Africa and towards China. In an interview with Handelsblatt, she stressed that the Chinese nation and its leaders should not be demonized as it seeks to expand its market economy through commerce rather than state expansion.
“The Chinese view is less ideological that that of the West,” she said. “The clear goal is to improve the living conditions of the whole of the population. Once and for all, it must be recognized that our liberal democracies – the Holy Grail we all adore – don’t function exactly as we might like.”
The Western banks created the financial crisis, she added, and national debts are growing as bureaucratic machinery in many countries is expanding. Living in a fair and just nation no longer works as a global advertising pitch in the competition between economic systems.
“Why should developing countries look at the Western democratic capitalist system and admire it?” she asked.
Ms. Moyo argues strictly according to the principles of market economy
– and they sometimes leave little leeway for freedoms that are cherished in the West such as a free press and freedom of opinion.
Economic growth, she insisted, is the most important factor in reducing worldwide poverty. Prosperity will create a middle class that stabilizes the country, as citizens demand a say in how they’re governed. Thus, the first steps in the development of a healthy state are not the establishment of accountable governments, transparent legal systems and more overall freedom, in her opinion.
“Economic growth is the prerequisite for a liberal democracy, not the other way around,” Ms. Moyo said. “Democracy may not always be the most promising system when it comes to economic growth.”
The most important factor is finding most efficient system, not the most democratic, particularly in countries with low per capita income per capita. Ms. Mayo therefore argues for free trade, even with countries considered “rogue states” by the West.
She does concede that a few families do get rich and hog power in dictatorships, but sees little economic differences between the systems. “It is simply not the case that democracies are automatically better at distributing income,” she said. “They are often just as bad as other systems.”
Income inequality in China and the U.S., measured by the Gini coefficient, is roughly equal, she pointed out. Developing and emerging nations are more open when seeking solutions, while a fixation on ideology hinders intellectual speculation in the West.
Even when the democratic processes aren’t functioning properly, she said, efforts to fix them are often not considered. “Many accept it simply because that’s just the way democracy works. I don’t think much at all of this view.”
She has found a wide platform for her observations, including an investment slot on CNBC, and essays in the Financial Times and the Wall Street ]ournal. Her remarks last year as part of the TED series of online lectures have been viewed more than 1.6 million times.
“She is a market economist through and through,” says Barbara Kolm, director of the Friedrich A. von Hayek Institute, which last year awarded Ms. Moyo the Hayek Lifetime Achievement Award. “Dambisa Moyo draws a thin line between theory and practice. And she is able to navigate in both worlds.”
At the same time, Ms. Moyo doesn’t feel completely comfortable in the world she calls home. She views with growing concern the expanding influence of the state in some countries and advocates for a more open and impartial approach.
“When we blindly follow our ideological views, we weaken our ability to reduce poverty,” she said, acknowledging the difficulty of the task. “We still have a long way to go.”
Reprinted from Handelsblatt Global Edition No. 108