Economic Demise in Liberia: Reflections on the Fallacy of National Sovereignty
By Tarnue Johnson, PhD.
July 22, 2005
This is invariably the case in Liberia as is in most failed states and economies. Thus, because of the minimalization of a vibrant economic life and other related infrastructures and processes, the parameters within which national sovereignty can be exercised in Liberia have become increasingly precarious. In the Liberian case economic decline has followed pervasive civil and constitutional crisis; and this is the backdrop against which a more considered and participatory discourse of economic governance and national sovereignty within the Liberian context must be conducted. For, there are many who might argue staunchly that a country of beggars cannot easily exact absolute claims on national sovereignty, especially in a world of interlocking power relations and intricate interdependencies. Evidently, and in contradistinction to this presumption, is an analogy that states that greater levels of economic sufficiency and efficiency beget entrenched national power and sovereignty. This article will consider issues of economic governance in Liberia and the recent debate regarding trusteeship and national sovereignty in that country.
The nature of economic decline and dependence in Liberia
Liberia lingers today on the periphery of the world economy as ever dependent and venerable in terms of its political and institutional values. There is an issue of sustainability (see Mikolajuk, 2005) which is often ignored in much of development discourse; but that is at the core of economic fragility in Liberia. Hence, institutional and cultural networks that helped to sustain communities in the sub-region that became Liberia have been greatly challenged by domestic and international pressures. Furthermore, patterns of economic decline and dependency can be traced in the very logic of economic modernization in Liberia in the period between 1931 and 1970. Burrowes (1996) has correctly hypothesized that this same period can be linked to an era marked by the lost of liberties; such as the decline of press freedom and the gradual decomposition of an earlier consensus around republican ideals. The 1931 to 1970 era could also be characterized as the era of clientelism (ibid). Robert Cole (1971) drew on elite theory to hypothesize that the failure of economic development in Liberia was due to the impact of political aristocracy. Thus, I am left wondering that there may have been certain positive trends in terms of governance and authority relations prior to and after the declaration of independence in 1847 that might have been conducive to long term economic growth and sustained development. But this is just a mere conjecture without the requisite empirical data to verify and unpack its underlying assumptions. The republican norms and Christian ideals that undergirded governance and authority relations in the republican era were reflective of the liberal American heritage of Liberia’s founders. That heritage had its most potent expression in the United States declaration of Independence in 1776 (cited in Appiah, 2000:305):
“We hold these truths to be self-evident: that all men are created equal; that they are endowed by their Creator with certain unalienable rights; that among these are life, liberty, and the pursuit of happiness. That, to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed; that whenever any form of government becomes destructive of those ends, it is the right of the people to alter or abolish it.”
In W.W. Rostow (1960) stage theory of economic growth, the take-off period (stage 3) is said to be accompanied by the evolution of new political and social institutions that support industrialization. There are many obvious limitations of this theory as a linchpin for modernization in non-western societies, which I will not go into here. However, I am generally interested to know if a correlation between long term economic development and democratic performance holds in certain cases. In Economic Development and Democracy Revisited, Foweraker and Landman (2004) have postulated that economic development has positive effects on democratic performance across diverse aspects of performance and also across regions.
But can one argue with reasonable degrees of certainty that the same postulation holds true when democratic performance becomes the independent variable and economic development the dependent one? This brings to mind a cluster of cases in South East Asia including China’s ongoing economic and structural transformation. A positive affirmation in response to the above formulated question/hypothesis would show that Liberia could have made uninterrupted economic progress had the cluster of ideals and republican norms such as decentralized government, checks and balances between branches of the government, and a general responsiveness of the evolving political system to participatory processes and demands that began to take roots after 1847, been preserved (see Burrowes, 1996). Had these ideals remained the driving force of economic and political change, perhaps we would have had a different set of empirical circumstances.
The republican period in Liberia was followed by an era of transition that saw a gradual shift away from republican roots such as a tradition of social criticism essentially manifested in the existence of a vibrant press and relatively free and fair elections (ibid). The era of clientelism which was punctuated by the long tenure of President William Tubman, saw a consolidation of patterns of economic dependency and institutional patronage. Lowenkopf (1976) has divided the Tubman regime into three main periods [1944-55; 1955-68; 1968-71]. It is the second period (1955-68) that particularly features prominently in terms of discussing the consolidation of the structure of economic dependency in terms of the patterns and nature of foreign direct investment in the Liberian economy. During this period the national government employment increased from a few thousand in 1941 to 22,247 in 1973. The rate of expansion of the economy during the decade preceding 1961 surpassed that of almost any other country in the world perhaps with the notable exception of Japan. A great number of Liberians were mobilized to work in cities, mines, plantations etc. (Dunn and Tarr,1988; Sawyer, 1992). Expansion of the modern sector took place with an unprecedented increase in the provision of health, education and social services. In fact not until the end of the 1940s, government revenue hovered around $3 million annually, with customs receipts and hut taxes as the most important sources.
But this situation was to change in the growth years of the 1950s and mid-1960s. Rubber production increased steadily in the 1950s and so did government revenue. By 1950, corporate income tax from Firestone alone accounted for about 26 percent of government revenues (Clower et al as cited in Sawyer, 1992:283). By the late 1960s 24 companies had invested in Liberia amounting to the tune of $800 million. President Tubman used the new income to tighten his grip on power and consolidate the patronage machine by financing his network of informants and expanding his security apparatus. The Liberian economy grew at a rate between 4 to 7 percent annually between the mid 1950s to mid 1960s; more than 80 percent of this growth was produced by activities connected with extractive industries such as the exploitation of iron ore, rubber, and timber. The greatest portion of this growth represented investment in capital equipment (ibid). The development of indigenous entrepreneurship suffered as it depended entirely on personal political connections to the extent that it may be plausible to argue that foreign investment contributed to the decline of local production (ibid). This in turn aggravated the classic symptoms of economic and structural dependency in Liberia. Stephen Ellis (1988:158) in his description of the accentuation of the patronage system under Tubman has intimated that
“Tubman’s centralization of patronage combined with the great increase in revenue which resulted from the commercial alliances with foreign companies inherent in his open door economic policy to produce a political system in which the leader was seen as the personalization of the nation”
Liberia stands at a major crossroads with new sets of opportunities and problems as the framing of an architecture for new institutional arrangements to govern economic development awaits urgent attention. One sees gloomy and challenging prospects on the horizon in a country that slowing emerges from the throws of national conflict. But the issue of economic governance and financial transparency is no stranger to any one with a keen sense of Liberian financial and economic history. Indeed, these problems have afflicted the country probably as long as the existence of the Liberian state itself since the 19th century. Liberia has had to confront issues of fiscal probity and international receivership on several occasions in the last century. However, one would argue that the discourse on economic governance and fiscal management issues should be delimited by the confluence of global institutional prerogatives and other factors. But what exactly are these prerogatives and institutional demands at the core of the international and regional power system that militate against economic governance and conflict management in Liberia? What is the nature of current economic governance and its discontents? I will shed some light on these questions in the remaining sections of this article.
Current economic governance and its discontents
There is enough blame to go around here in terms of how the current financial and management crisis could have been averted. The international community, particularly the ECOWAS leadership can not entirely escape blame for the current crisis of economic mismanagement in Liberia. Of course, this is not to excuse those who are the main perpetrators of financial mismanagement in the current interim administration. It should also be mentioned that the local political class in Liberia served as enablers in their tacit acquiescence in the commission of certain crucial and fundamental mistakes regarding the nature of conflict resolution in Liberia and the sub-region.
One would only wish that the international community and other principals in the sub-region had listened to what some of us were saying at the time of the Accra conference that culminated in the Accra peace accord of 2003. If this had happened, perhaps things would have turned up differently. I am tempted to conclude that the major lesson to draw here is that sometimes desperate situations do not require desperate measures, particularly if they have to do with the reestablishment of order and sustainability in a conflict ridden society like Liberia. In an article in the Perspective (see Johnson, 2003) titled The Imperatives of Lasting Security in a Shattered Nation, I made the following observations regarding the current power sharing arrangement in Liberia
“Most of the factional leaders are callous men that should not be heading a modern society of laws for all practical purposes save for the predicament which we have imposed upon ourselves. It is unfortunate that Liberians and Africans in the sub-region cannot see what some of us see, that power sharing as a model for peace building in Africa is inherently problematic; at worst it is a modus operandi for appeasement of criminals. It perpetuates the culture of impunity in Africa. It leads to the commission of more crimes, heinous crimes. Power sharing cannot be the best model for peace building under all circumstances; it is a demonstration of failure and lack of foresight.”
These warnings regarding the flaws in peace building in Liberia were indeed,
reminiscent of the famous British economist John Maynard Keynes (1920:1) instructions
to his fellow Europeans in 1919; regarding some of the perceived shortfalls
in the treaty of Versailles:
“But the spokesman of the French and British peoples have run the risk of completing the ruin which Germany began, by a peace which, if it is carried into effect, must impair yet further, when it might have restored, the delicate, completed organization, already shaken and broken by war, through which alone the European peoples can employ themselves and live.”
In my book (see Johnson, 2004:126-27) I intimated the following sentiments regarding the nature of the Liberian conflict and how to approach some of its roots causes
“Given the nature of the Liberian conflict, it would be difficult to
achieve lasting peace and national reconciliation without moral and legal accountability
for wanton acts of violence and crimes committed against the innocents. All
attempts to set up a war crimes tribunal in Liberia were fiercely resisted by
the sitting administration and its apologists for very obvious reasons. But
Liberians and the international community must now insist that there should
be appropriate legal and punitive sanctions against those found guilty of committing
crimes against humanity during the past and in the current conflict. This is
a more durable means of insuring that wanton acts of violence against the innocent
for any purposes will not be repeated...”
The monumental challenges of sound economic and fiscal governance can be gleaned through a careful assessment of the relevant macroeconomic and social indicators that demonstrate the nature of economic decline in Liberia in recent years. Looking at annual growth indicators shows a precipitous fall in real GDP- which fell by -31.3 percent and only slightly improved in 2004 by 2.4 percent. Records also show that total external debt hovered around 3.7 in 2004 in the face of steady population pressures. For example, the population grew by half a million people between 2000 and 2004. External assistance was 39.4 percent of GDP; the highest in recent post-conflict countries. This shows that most of the viable economic activities taking place in the country at the moment can be attributed to external funding and donor assistance.
It has been reported that the government currently owes 65,000 employees more then 18 months in salary arrears. An employee of the government earns between $10 and $20 per month. Meanwhile a bag of rice, the country’s staple, can be sold for between $22 and $30. There are 30 medical doctors serving over 3 million people. A UNDP household survey conducted in 2000 concluded that 76 percent of the population lives on less than $1 a day. In 2000 a third of the population suffered from tuberculosis. One fourth of infants died before reaching the age of five. There is also the problem of resettlement of internally and externally displaced Liberian refugees, which has hardly been completely addressed by the current interim administration.
These are some of the numerous challenges that the country has to confront. And it is against this backdrop that any plan for reconstruction and recovery in the short and medium term must be considered. This brings us to the much talk about Liberia Economic Governance Action Plan (LEGAP). The authors of the plan put forward a series of proposals to curb the recent wave of corruption and financial misfeasance (see www.theperspective.org, 2005). The plan was also put forward because of the perceived lack of good faith in executing the National Transitional Government (NTGL) mandate in most segments of the current interim administration. One is pleased to note that LEGAP has generated a more animated debate among commentators on Liberian affairs at an auspicious moment when the country is poised to face upcoming elections in October.
Many commentators and critics have claimed that the plan attempts to subvert
the national sovereignty of Liberia. The most important contention is that the
plan attempts to subvert Liberia’s sovereignty through the operational
concept of trusteeship and by placing international and regional advisors in
the judiciary as well as in key revenue collection and disbursement agencies.
These claims and counterclaims regarding colonial designs and prerogatives on
the part of certain interests in the international community are not really
new in Liberia’s economic and financial history. There were similar uproars
surrounding negotiations for other international loans and the series of conditions
that were attached to those loans including the loan of 1906 and 1912 (see Sawyer,
However, I would prefer to put forward a framework for macroeconomic and institutional analysis predicated upon the premise that the notion of national sovereignty in Liberia is a mere fallacy given the country’s prevailing economic and political circumstances. This has been the case because of the particular pattern of economic development in the past and particularly since the eruption of civil conflict in 1989. Added to the prevailing economic and political circumstances is also the nature and dynamics of globalization and interlocking power and authority relations at the regional and global levels. Other African countries in conflict or post-conflict situations have faced this situation when talk of national sovereignty had become all but superfluous. In Dynamics of Global Crisis, Samin Amin et al (1982) put forward a set of common premises in the investigation of the capitalist world economy that suggest that nation states must be viewed in total rather than in isolation.
What this presupposes is that LEGAP should be rejected or embraced on the merits of its suggestions for institutional and structural transformation; it should not be judged on the basis of any superficial ambivalence on grounds of national sovereignty; notwithstanding the tortured history of Western involvement in Africa and the rest of the developing world (see Allen, 2005). Thus, LEGAP is necessary in fighting corruption even though it has come very late in the game. What one should suggest is that it is not sufficient as a foundational and overarching approach to the long term problems of institutional and cultural rigidities that have slowed economic and social progress in Liberia. What this proposition suggests is that there are certain cultural and psychosocial assumptions about governance, individual responsibility and authority relations that undergird current Liberian society and, that must be addressed (see Sawyer 1992; Ellis, 1999; Johnson, 2004). These problems are inextricably linked to the current national accounting and fiscal crisis of the Liberian state. This suggests that at the core of the imperatives of economic change is cultural and social change.
Thus, ignoring these crucial questions constitutes the discontents of current economic governance that should be addressed as a matter of strategic priority. What this goes to say is that stop gap measures in economic governance must be anchored on a long term view. It should also be acknowledged that international and regional experts are not necessarily a panacea to curb deep seated problems of poverty and structural underdevelopment. Foreign technical experts can serve as development partners not absolute solutions in and of themselves.
Consequently, I do not concur with LEGAP that the IMF should be allowed to appoint an executive officer of the Central Bank of Liberia because that organization, like its sister organization the World Bank, has never really sought to enable a sustained program of structural diversification by building linkages between different sectors of the Liberian economy. If it had done so, we would have seen the evidence. Invariably, constructing an economic program that sustains structural diversification on the strength of the natural and human resources of Liberia has been one of the long standing demands of those interested in building a culture of local entrepreneurship and economic independence in Liberia. This leads me to the conclusion that an Executive Officer or Chairman of the Central Bank of Liberia and Judges of Upper Benches that are so vital for streamlining transactional relations and ensuring fiscal probity should be elected by popular mandates. The operational mechanisms for these elections could be worked out in due course. The World Bank itself in the late 1980s was forced to concede that grass roots involvement, culture etc. were important determinative variables that tended to be ignored in international development programming and interventions (see Mikolujuk, 2005). The Bank has since acknowledged that sustainability issues are as important as macroeconomic and short term fiscal issues. What this awareness goes to substantiate is that concerns about macroeconomic balance must be pitted against concerns about the sociology and politics of development.
I wish Liberians and their friends in the international community should have been more engaged in trying to elect the right persons to power this October so that the root causes of these problems can be tackle rather then investing all their energies in plans of action that serve merely as stop gap and cosmetic measures. Allied to this effort should be creating the conditions for democratic dialogue and the growth of civic consciousness. These problems are long term institutional and structural problems that required long term solutions. This is the extent to which the upcoming October elections must be taken very seriously. It doesn’t bore well for a healthy political atmosphere in the country when individuals are willing to switch parties just to become standard bearers of other political parties. Where are the core political principles and predispositions, and, a moral commitment that should govern participation in a democratic process? There have also been reports of mergers forged among politicians to promote opportunistic agendas and sycophancy, just as was the case in the 1997 elections. These acts make mockery of the democratic process and demonstrate a lack of foresight and national purpose on the part of those who engaged in them.
There is no doubt that the most important challenge on the economic front is to put forward a strategic vision that includes a program for structural diversification of the Liberian economy reflecting the lessons of existing growth and industrialization models. This approach calls for forming appropriate and long term partnerships for sustained growth and development. Liberians and their friends in the international community should be looking for such a vision and global strategy in the policy programs and aspirations of current presidential candidates. Thus, on this particular score I have indicated elsewhere that (see Johnson, 2004:113)
“Thus, the central challenge going forward is to adopt a strategic vision
to optimize output in the short and long runs. In effect this calls for an activist
and balanced developmental perspective. And, this is where United States support
will be needed to help design a strategic and development in postwar Liberia.
There must be financial and material support from the United States and other
donors to ensure the implementation of a comprehensive development plan for
each region and segment of the population to ensure a much fairer distribution
of scarce resources. This is the basis for the workable partnership I would
Summary and Conclusion
This article has sought to build a case that at the core of national sovereignty are reasonable degrees of economic independence which can influence the scope of that sovereignty even in an age of globalization. I have considered the nature of economic decline and how it has undermined institutional and political values. The article concludes that had the republican ideals of the immediate post independence years remained the driving force of economic and political change, perhaps Liberia would have experienced uninterrupted patterns of economic and social growth. Furthermore, I have argued that long term solutions to Liberia’s economic problems transcend the imperatives of achieving macroeconomic and fiscal balance.
They require structural shift in the economy and overarching social change predicated upon the mobilization of all segments of the society. In Liberia economic change will ultimately come from within. Change from within will come from a fundamental transformation in the structure of our national consciousness. Hence, it is behooved upon this generation of Liberians to do for their economy what- in the words of the Nigerian curator and art theorist Olu Oguibe-Chaucer did by reviving English pride in their native tongue or what Alexander Puskin did for the Russians when French was considered the language of “civilized” discourse. They must do for their economy what Dante did for the Italians in spite of Latin. Liberians must live up to the expectations of that ancient African greatness extolled by Hiliary Teage and reechoed by Joseph Jenkins Roberts (Burrowes, 1998:37):
Here science once displayed
And awful pharaohs swayed
Great nations who obeyed;
Here distant monarchs laid
Their vanquished arms…
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