the contradictions of neo-liberal democracy

The Contradictions of Neo-Liberal Democracy

RICHARD SANDBROOK

Professor of Political Science, University of Toronto

The article explores three inherent contradictions of neo-liberal economicreform in sub-Saharan Africa, with particular reference to Ghana, Mali, Niger,Zambia and Madagascar. First, it examines the paradox that the groups mostdisadvantaged by economic adjustment have been the main champions ofdemocratic reform. Second, the article addresses the dilemma faced bygovernments that key areas of economic and social policy are determined byexternal agencies, thus undermining their legitimacy. Third, it analyses theconflicting economic and political logics of neo-liberal democracy. The articleconcludes by pointing to ways of reconciling economic adjustment anddemocracy in the sub-Saharan context and assesses the so far meagre results ofgovernments' and donor agencies' adoption of a social democratic approach toeconomic adjustment.

Neo-liberals contend that economic liberalisation is the best strategy forpromoting not only prosperity but also democracy in countries throughout theworld. Extending private property and free markets, they believe, buttresses civilsociety, fosters efficiency and disperses power by separating economic frompolitical power. In these ways, economic liberalism nurtures pluralism, well-beingand freedom. Critics, on the other hand argue, that neo-liberal economic reformsdilute and even undermine nascent democracies. Africa's recent experienceprovides support for the critics' case. The continent's prevailing poverty, weakstates, divided societies, and dependent economies present obstacles enough; thecontradictions between economic and political liberalisation compound thechallenge. The high social costs of structural adjustment policies alienate keysupporters of democratisation; externally imposed economic liberalisationattenuates democracy by removing important economic and social policies fromrepresentative institutions. Likewise, efficiency criteria and state shrinkageconflict with the political logic of clientelism. Neo-liberal doctrine has respondedto these challenges and to the disappointing results of structural adjustment byrhetorically embracing certain social democratic principles. Whether these

AUTUMN-WINTER 1999 VOL.XIII NO.l jfl

pragmatic modifications will go far enough to resolve the three inherentcontradictions remains to be seen, but appears doubtful.

I explore these contradictions by examining the experiences of six countries:Ghana, Mali, Niger, Zambia, Tanzania and Madagascar. The sample isgeographically diverse, with cases drawn from West, South-Central and EastAfrica, and includes both former French colonies (Mali, Niger and Madagascar)and former British colonies or trust territories (Ghana, Zambia and Tanzania).However, I cannot claim that these cases validly represent all of sub-SaharanAfrica's emergent democracies. Nevertheless, they reflect the experience of themany low-income countries which suffered the implosion of their economies inthe early 1980s, and consequently pursued structural adjustment programmes,and eventually transitions to democracy.

Contradictions of neo-liberaldemocracyI. The first contradiction of democratisation in the context of neo-liberal

economic reform ('neo-liberal democracy') is that those groups which championdemocratic transitions are the main losers from structural adjustment. Critics ofneo-liberalism in the western welfare states, Eastern Europe and Latin Americacontend that free market policies inevitably promote income and wealthinequalities, which in turn vitiate the liberal-democratic principle of politicalequality. Hence, the critics argue, laissez-faire dilutes the quality of democracyand undermines its popular support. This argument has less validity in the Africancontext. A careful study often sub-Saharan countries concluded that 'most of thepoor [...] are small net gainers' of economic liberalisation, especially in the areasof trade, exchange rates, fiscal policy, and agricultural prices and marketing.1 Onthe other hand, liberal economic policies harmed those who received rents whengoods or foreign exchange were rationed by governments. Similarly, itdisadvantaged those who held guaranteed public employment, benefited fromsubsidies, and profited from governmental intervention by means of price-settingin commodity and food markets. Yet, many of these urban working class andmiddle class losers were key supporters of democratisation.

Popular struggles for democracy derived impetus from economic decline andthe adoption of adjustment programmes. Most of the authoritarian regimes thatemerged in sub-Saharan Africa in the 1960s and 1970s depended heavily on thepolitics of distribution for their survival. They favoured strategic urban strata andethnic/regional allies in the allocation of public expenditures and the distributionof rents via client networks. Financial repression, widespread state controls andregulations, and a large parastatal sector ensured the availability of significantrents for many years. However, the economic mismanagement inherent in thismode of governance, combined with external and climatic shocks,2 brought manyeconomies to the point of collapse by the early 1980s. Decrepit economies couldno longer generate the surplus to maintain political support for autocratic leaders.This presented beleaguered governments with little alternative but to turn to theInternational Monetary Fund (IMF) and the World Bank for loans. The era ofeconomic stabilisation and liberalisation thus began. Structural adjustment,

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THE CONTRADICTIONS OF NEO-LIBERAL DEMOCRACY

however, was designed to redistribute income; this was inherent in the changes inrelative prices, the elimination of many controls and regulations, and the shifts inpublic expenditures. In Africa's agrarian economies, adjustment was supposed toshift resources from 'privileged' urban groups to the agricultural producers. Thisattempted shift inevitably disrupted political alliances.3

Authoritarian governments, no longer able to purchase political acquiescence,faced the anger and frustration of well-organised and strategically located urbangroups. Public employees, organised workers in general, students andprofessionals were adversely affected first by economic decline and then by(hesitant) structural adjustment. Devaluation, inflation and reductions in foodsubsidies shrank real wages. Planned privatisation and downsizing of the civilservice threatened existing public employees and those in educationalinstitutions aspiring to that status. A decrease in subsidies to secondary schoolsand universities produced higher fees and living expenses for students and a lowerquality of education. In short, public services deteriorated. Therefore, economicgrievances animated political protests as students, intellectuals, professionals,public employees and workers blamed the economic crisis on the corruption andincompetence of autocrats. Subsequent transitions to democratic governanceinspired public jubilation as democracy activists anticipated a return to betterdays.

Yet, elected governments had little choice but to continue with the adjustmentpolicies of their predecessors. Indeed, the IMF and the World Bank demandedeven more stringent implementation of stabilisation, liberalisation andprivatisation programmes than before. When such efforts failed to produceeconomic benefits expeditiously, some of the erstwhile elements of thedemocratic movements turned against the new governments. Governments anddonors erected social safety nets to cushion the effects of adjustment and reducepoverty, but these efforts have had a limited impact. By the late 1990s, publiccynicism, strikes, and demonstrations had thrown the very survival of somedemocratic experiments into doubt.

This scenario played itself out in Madagascar, Mali, Niger, and Zambia.However, neither Ghana nor Tanzania experienced such problems. The first threecountries adhered to a similar pattern. Although only a quarter or less of theirpopulations lives in urban areas, secondary and university students, civil servantsand organised workers have had a disproportionate political impact. Students, inparticular, have shown themselves to be organised, tenacious in the defence oftheir privileges, and capable of mobilising unemployed and disaffected youthoutside their own ranks. Students in all three cases initiated or spearheaded theurban rebellions that precipitated the transitions to democracy.4

Hence, the students and their urban supporters expected their electedgovernments to return them to their earlier privileged position. Yet, this was not areasonable expectation in light of economic crisis and adjustment. To makematters worse, economic reform has not generated a vibrant private sector toprovide alternative careers for unemployed students and displaced publicservants. Alienation of some of democracy's key urban supporters has thus ensued,

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at times resulting in civil protest and violent conflict. Meanwhile, the illiterate andisolated rural majority continues its largely passive role in national politics.

In Zambia, a far more urbanised country, a different pattern prevailed.Students played a less dominant role, and organised workers a more central one,in the oppositional coalition that prodded President Kenneth Kaunda and theruling United National Independence Party (UNIP) to submit to a nationalelection in 1991. Zambia suffered severe economic decline after 1975 as the worldprice of copper, the economy's mainstay, plummeted, and therefore had to borrowto offset the decline. In the 1980s, the UNIP's periodic adoption of stabilisationand liberalisation packages further strained the living standards of its formersupporters among copper miners, urban workers, public employees,professionals, and even businesspeople. The government's removal of asignificant subsidy on maize meal twice acted as a flashpoint for urban riots in the1980s, forcing the government to re-establish the subsidy. By 1990, people hadbegun to blame UNIP's corruption and mismanagement for their economichardships.5 A united Movement for Multiparty Democracy (MMD) harnessed thisanger to defeat UNIP in 1991. The new government initially pursued adjustmentwith greater zeal than its predecessor. However, after the initial 'honeymoon'period ended, some of the MMD's supporters became disillusioned withcontinuing austerity, high inflation, and declining services. As a result, a wave ofstrikes beset the new government. Not surprisingly, the regime then temporised inthe face of donors' demands that Zambia privatise state-owned enterprises andcut the workforce in the publicly owned copper mines by half, as well as lay off7,000 civil servants. Although some privatisation and redundancies ensued, thelargest state-owned enterprises remained largely intact.

In Ghana, the politics of adjustment unfolded rather differently than in othercountries. Flt.-Lieut. J.I. Rawlings seized power in December 1981, with thesupport of the lower ranks of the armed forces, radical intelligentsia, students andorganised labour. This alliance was united in a vaguely defined populist'revolution' against a corrupt and exploitative elite of politicians and 'capitalists'.Nevertheless, Rawlings changed course in late 1982 and entered into astabilisation agreement with the IMF in April 1983. By the mid-1980s, his formerurban supporters (except the army) expressed their anger at this turn of events.The PNDC, however, met this opposition head on.6 It ruthlessly detained andharassed union leaders, randomly closed universities and imprisoned middle-class opponents. In 1986, Rawlings obtained concessions in the adjustmentagreements to accommodate the interests of the protesters. Moreover, in 1988 helaunched PAMSCAD, a set of relief projects, to alleviate the distress of vocalgroups, especially in the urban areas. By 1992, when Rawlings managed atransition to 'democracy', his government could boast of some economic success.An 80% rise in government salaries prior to the vote must also have allayed someof the urban disaffection. Finally, he succeeded in rallying a large ruralconstituency behind his banner of continuity. Consequently, even the oppositionparties advocated (modified) adjustment policies.

Tanzania, in contrast to the other cases, has experienced neither a strong

44 CAMBRIDGE REVIEW OF INTERNATIONAL AFFAIRS


urban-based democracy movement nor sustained urban opposition to structuraladjustment. Public demonstrations against the single-party state were virtuallynon-existent between 1985 and 1988, but peaked several times in 1990 and 1991.Demands for the legalisation of opposition parties were voiced mainly byacademics and prominent lawyers in the pages of the independent press, and byformer President Julius Nyerere. President Ali Mwinyi nonetheless bowed to thecontinent-wide trend towards multiparty systems in 1992, probably confidentthat a small and divided opposition would pose little threat.

Certain features of the rule of the Chama Cha Mapinduzi (CCM) in Tanzanialargely explain this weakness of the urban democracy movement. First, thegoverning party had managed to monopolise all popular organisations since themid-1960s. Independent associations were co-opted into the party, or saw theirleadership dominated by party militants. Second, the party's socialist or ujatnaaideology had restrained the privileges of the urban minority in thisoverwhelmingly agrarian society. When real incomes halved between 1975 and1983, urban workers accepted economic liberalisation as a means of escape fromwhat they saw as the deadend of existing socialist policies.7 What encouragedpeople, therefore, was the party's embrace of economic reform policies in themid-1980s; political liberalisation appeared secondary.

The politics of adjustment, therefore, do not inevitably contradict theconsolidation of democracy. However, there is a strong tendency in that direction.

II. A second contradiction bedevilling neo-liberal democracy is that key areasof economic and social policy lie outside the ambit of duly elected representativeinstitutions. Elections and legislative debates seem to have little bearing on theissues that really matter. This sense of irrelevance seriously undermines popularcommitment to democracy in today's world. Critics in western democracies, asmuch as in the new democracies of Latin America, Eastern Europe and East Asia,lament the overwhelming political power of big business wrought by economicconcentration and the threat of capital flight in an increasingly global economy.8

Effectively, most governments have lost control of monetary and taxation policy.This in turn restricts the possibilities for framing social policy since capitalmarkets penalise countries running high deficits. However, in Africa, the threat topopular sovereignty stems not so much from transnational corporations as frommultilateral financial institutions. Adjustment programmes, covering the keyareas of economic and social policy, emerge from secret and top-downnegotiations between technocrats representing a government and aninternational lending agency. As Gerald Helleiner observes, '[t]he degree ofexternal intrusion into policy formation and the concomitant failure to developappropriate local research and decision making capacity is not found, and wouldnot be tolerated, elsewhere in the developing world'.9

On the one hand, the IMF, the World Bank and bilateral donors negotiateagreements with governments in camera. Donors believe that they must dealdirectly with governments on policy issues. They assume that electedgovernments have a mandate to proceed with adjustment. It will therefore be the


task of these governments to obtain a ratification of any agreements, including theconditions for loans, from constitutionally empowered legislatures. Donors alsoseem to presume that, since adjustment requires unpopular sacrifices, a top-down decision-making process is preferable to a participatory one in whichpopular demands can derail 'necessary' reforms.10

On the other hand, elected governments also eschew popular input intoadjustment programmes. They find themselves in a difficult position. Not only dothey have limited room to manoeuvre in negotiations with the IMF, the WorldBank and other lenders, but they are also expected to implement all agreementsas negotiated. Knowing that they will be unable to satisfy some demands,presidents and their lieutenants avoid consultations they cannot control, andignore or undermine articulaters of dissent and protest, such as opposition partiesand independent newspapers. Where governments rest on shaky legislativecoalitions, they will also avoid potentially divisive parliamentary debates onunpopular adjustment measures.

Donors have had recourse to the doctrine of local ownership to bridge the gapbetween the reality of external direction and the imperative of governmental andpopular commitment to reform. Only if this local commitment exists, donorsrealise, will adjustment programmes be implemented effectively. Yet, this doctrineis self-contradictory. Surely, local ownership can only emanate from extensivenational consultation and debate over appropriate policies. However, if suchdebates prompt governments to advocate a different mix of policies than thosewhich the donors find acceptable, the necessary loans and grants will not beforthcoming. So, it appears that the locals can own their programmes only if theseaccord with external priorities. Local ownership, therefore, is unlikely to squarethe circle. Why should citizens appreciate legislatures, parties, interest andadvocacy groups, consultative mechanisms and independent media when, ascurrently happens, the major decisions are made elsewhere? In any case, thereseems little justification for curbing public debate on the grounds of technocraticexpertise; the limited success of structural adjustment suggests that ample roomexists for debate over the proper mix, timing, sequence and scope of reforms.

III. A clash between political and economic logics constitutes a thirdcontradiction of neo-liberal democracy. This tension even exists in maturedemocracies where political parties practise 'machine polities'. In poor peasantsocieties, however, where ideological differences are muted and unlikely tocommand support, political success in democratic contests will depend evenmore heavily upon populist appeals and patronage. Yet, adjustment to the freemarket model requires the minimisation of rent-seeking and populist distributionof policies by governments, the efficient allocation of scarce public resources, andin general the predominance of a market-based economic logic. How willreforming governments survive politically? Neo-liberals hold that governmentshelped create the economic crisis in the first instance through heavy-handedinterventions that promoted rent-seeking and pervasive clientelist politics.Democratic politics, they believe, offer the advantage of building consent through



policy-based electoral majorities, respect for human rights, and the rule of law,rather than wholly through the mercenary linkages of rent-seeking and patronage.If adjusting governments succumb to populism and clientelism, it is contendedthat they will unravel their economic reforms, incompetence and corruption willcontinue to reign in the public sector, and appointments and promotions willserve as fodder for political machines. In addition, particularistic exemptions anddeals will whittle away the logic of stabilisation and liberalisation measures, andpublic investments will contribute only minimally to production if they follow apolitical logic of building support for incumbent politicians.

On the other hand, political competition and the instrumental expectations ofconstituents impel politicians to adopt populist stances and foster patron-clientpolitics. As persistent recession and stringent adjustment alienate strategicsupporters, elected leaders resort to 'machine politics' to repair the politicaldamage. Clientelism and a reliance on personal loyalties represent ingrainedpolitical habits in poor peasant societies. According to experts, such practices aredeeply rooted in the culture and history of the six cases under study.11 Moreover,the specific neopatrimonial characteristics of preceding authoritarian regimeshave been found to influence democratic transitions. The less institutionalisedand more clientelist the authoritarian regime, the more likely is the re-emergenceof clientelism, personalism and corruption in a new democracy.12 This suggeststhat a vicious circle may ensue. Intermediary institutions are weak; insecuregovernments weaken them further; and clientelism, personalism and corruptionexpand as a consequence, thereby exacerbating the institutional weaknesses.

This oft-noted contradiction between economic and political logics isineluctable in the democratic experiments of poor peasant societies. Yet, it isdoubtful that corruption and rent-seeking in the new democracies exceed thatwhich existed in the former authoritarian regimes. What changes is the extent towhich such practices receive public exposure and criticism through resurgentprivate media outlets, opposition parties, and civil associations. And thecontradiction is not actually as profound as often thought. Economic recoveryfundamentally depends upon political stability and the political support that areformist government commands. In heterogeneous peasant societies, whichhave been further fragmented by years of recession and austerity, patron-clientnetworks provide a basis - sometimes the only one - for governance. In this sense,clientelism and rent-seeking represent not simply waste, but a necessary cost ofadjustment. The real danger is that neo-patrimonial politics will becomeunrestrained and thoroughly corrupt, thus engendering the public cynicism andde-institutionalisation that will doom both democracy and adjustment.

Economic adjustment and democracyIs there a way out of these predicaments? Can popularly based democratisation

be reconciled with market reforms aimed at breaking through the limitations ofpatrimonial capitalism? Paradoxically, only a social democratic approach to marketreform seems capable of achieving this amidst the hostile circumstances of sub-Saharan Africa. A social democratic framework would involve, as a minimum, the


replacement of the prevailing top-down technocratic decision-making style by amore inclusive and consultative approach, and the extension of policies toenhance equity, alleviate poverty and buffer the living standards of those who loseout in neo-liberal experiments. Actually, the World Bank, donor agencies andreforming governments have moved a long way recently towards a rhetoricalembrace of these two principles. What is needed is a greater degree of consistencybetween declarations and the actual practice of economic reform.

But will governments and donors depart from their centralised and secretivemode of policy making? A more participatory mode will increase the risks ofmacroeconomic populism and policy paralysis, though these dangers were notabsent even in the authoritarian context. It may, on the other hand, improve theefficacy of, and support for, adjustment programmes and strengthen democraticinstitutions. To achieve this reorientation, elements of civil society, especiallyprofessional and employers' associations, trade unions, human rights groups andthe independent press, will need to persist in demands for more open andresponsive governance. Such initiatives may persuade reluctant governments anddonors to accept greater debate and consultation on economic and social policy.

If a more participatory style is to evolve, then intermediary institutions willneed to develop their capacities. Political parties, parliaments, interest groups andthe press all operate under onerous constraints. Parties tend to fragment, and lackboth ideological and policy coherence. Few parties boast sufficient financial andtechnical resources to sustain a capacity for policy analysis. With the possibleexceptions of Zambia and Ghana, and limited to the six case studies under review,parliaments lack experienced deputies as well as access to the financial andeconomic information and expertise with which to develop critiques oftechnically complex budgets and legislation. Legislators make do withrudimentary or non-existent parliamentary libraries. They miss expertparliamentary staff and the funds to hire consultants. Governments often refusetheir requests for information on adjustment agreements on the grounds thatsuch information is 'classified'. Interest groups do not have a capacity for policyanalysis and advocacy owing to decades of authoritarian controls and thecorrosive deal-making of clientelist politics. The press lacks the professionalexpertise and financial base to engage in in-depth journalism on the complexissues concerning economic recovery.

Yet, these weaknesses should not be used to justify the current top-downapproach to adjustment. Indeed, the weaknesses reflect the strategy of presidentsand governments to marginalise and sometimes subvert the intermediaryinstitutions, which can impose day-to-day accountability on them. Theseinstitutions are far from irreparable. It is not enormously expensive to buildparliamentary libraries, hire expert staff for legislatures, make official informationavailable, train policy analysts, establish independent think-tanks, and supportthe reorganisation of parties and interest groups. Donors are already assisting inthese areas, and scattered experience suggests that intermediary organisationscan build their capacities even in difficult conditions.

Consider the case of Ghana. Parties here have amalgamated rather than


THE CONTRADICTIONS OF NEO-UBERAL DEMOCRACY

fragmented. The 1996 elections saw the governing Nkrumahist NationalDemocratic Congress opposed by a fractious Great Alliance of Liberals andNkrumahists. A division between a conservative Danquah-Busia tradition and apopulist Nkrumahist tendency traces its roots to Kwame Nkrumah's split from theUnited Gold Coast Convention in 1949. Yet, Ghana's parliament not only lackedresources but was also dominated by the governing coalition until 1997, owing tothe opposition's boycott of the 1992 parliamentary elections. However, themembers of parliament were not ciphers. The two independent members ofparliament often raised embarrassing issues. Moreover, the Assembl"s FinanceCommittee launched incisive and well publicised reviews of economic policy.Since 1993, this Committee conducted lively hearings on the annual budgets, atwhich time opposition parties presented trenchant critiques. Associations ofemployers, trade unions and the Ghana Bar Association also made submissions.

Nonetheless, fora in which government consults interest groups on thedirection of relevant policies and programmes remain scarce in Ghana. Officials ofthe Trade Union Congress (TUC) have complained that the transition todemocracy has not opened channels by which they can bring labour's interests tothe attention of government. Indigenous non-governmental organisations(NGOs) do not have opportunities to make representations to government ondevelopment issues. A peak organisation, the Ghana Association of PrivateVoluntary Organisations in Development, exists on paper, but it is weakened byresource constraints and politically inspired factionalism. Women's associationsare grouped in the government-created and led National Council for Women andDevelopment; many are also affiliated with the '31st December Women'sMovement' which is led by the wife of President Rawlings. Key businessassociations have not yet succeeded in establishing themselves as effective policyadvocates on behalf of their members. Government-business relations have beenbedevilled first by Rawlings' periodic populist denunciations of 'exploitative'capitalists, and second by the support which prominent businessmen haveallegedly given to the opposition parties. Efforts by local business associations andIMF intermediaries to establish a forum for genuine consultations initiallyfailed.13 Only since 1995 has a private sector think-tank, the Private EnterpriseFoundation, established an influential relationship with the government.

Ghana's press has continued to show vitality despite its severe constraints. Itsuffers from the usual set of limitations: undercapitalisation, limitedprofessionalism, government intimidation, and restricted markets. Nonetheless,for several years, numerous newspapers, most notably the Ghanaian Chronicleand Public Agenda, have offered informed criticism of government actions andpractices. Furthermore, private stations have emerged recently to offer anotherforum for public debate.

In sum, the Ghanaian experience of institutional development gives somegrounds for hope. Intermediary organisations in some sub-Saharan countries canrise to the challenge of a more consultative and open policy processes.

Reconciling adjustment with democracy also requires that governments


address equity issues in their impoverished societies. Vocal and well-organisedurban employees will become alienated politically if they are left to bear the bruntof adjustment measures. Also, the rural poor must feel that they have some stakein the democratic system if they are to participate in elections. Most corrosive isthe popular belief that elected politicians are concerned only with self-aggrandisement, primarily through corrupt activities.

What, first, of the claim that adjustment policies on balance enhance equity bybenefiting the poor, who are largely rural based, at the expense of the 'privileged'urban dwellers?14 In theory, currency devaluation and increases in the locally paidprices of export crops should raise the incomes of rural producers, including themany small holders. Market liberalisation will probably also raise the price offood, but this will not affect the rural poor to the extent that they are self-provisioning, or were already paying black-market prices. Again in theory,adjustment should benefit rural dwellers by redirecting public resources to therural areas. Revenues should depend more on urban-based taxes, such as petroland value-added taxes, and less on taxes on primary exports, while expendituresshould favour primary education, health care and rural infrastructure that benefitthe rural majority.

In Ghana, adjustment does seem to have supported the redirection ofresources to the rural areas, as the theory suggests.15 Since the late 1980s,Ghanaian smallholders have benefited from a higher share of the world price forcocoa, shifting more of the tax burden to urban consumers, and decentralisationof the districts backed by central transfers for development projects and majorinvestments in rural infrastructure. The latter may include rural electrification,feeder roads and schools. However, the motivation behind this rural policy biasseems to have been as much political as economic: it enabled President Rawlingsto win elections by building a political base in the countryside, outside the AshantiRegion.

Elsewhere, adjustment's distributional impact remains controversial. It is noteasy to sort out the divergent effects which various policies have on incomedistribution. Relevant data are unavailable or unreliable; hence, deductivereasoning from economic models, anecdotes and hunches take the place of clearevidence. Critics have long maintained that adjustment does not help the poor.The former hold that such packages are 'defective' in design because they rarelyhave brought the sustained growth that poverty alleviation requires, haveincreased the burden on the poor, especially women, and they have providedcompensatory schemes that are too meagre and too urban-biased to be of muchuse.16 It was the World Bank's recognition of these sorts of problems that led to itsadoption in 1990 of poverty reduction as a separate goal of structural adjustment.

The new view was that the 'social dimensions of adjustment' (SDA)programmes should target not only the 'new poor' and other vulnerable groupswho had been adversely affected by adjustment, but also the 'chronic poor' whoselow productivity had condemned them to poverty long before the advent ofadjustment. SDA programmes would not simply compensate losers; they wouldreduce poverty in the targeted groups by raising their productivity. This would

CAMBRIDGE REVIEW OF INTERNATIONAL AFFAIRS


involve investments in human capital and household assets, changes in relativeprices to favour the poor, the promotion of wage employment and theorganisation of targeted groups within 'empowering' community organisations.

Practice has fallen short of these lofty aims. Although IMF and World Bankadjustment lending now includes provisions to address poverty and the socialcosts of adjustment, the anti-poverty programmes do not dispose of the resourcesneeded to make headway against widespread deprivation.

Social safety nets are of two types.17 Social Action Programmes (SAPs) are'regular investment projects', implemented in most cases by line ministries. SocialFunds (SFs) involve the formation of a more or less independent agency toadminister funds contributed by donors and the host government. The latteragencies respond to proposals for relevant projects made by NGOs and localgovernments, supervise their implementation and monitor their effectiveness.Both arrangements support similar projects. The most effective in assisting largenumbers of people are labour-intensive public works projects. They have creatednot only thousands of temporary jobs, but also usefully rehabilitated streets,drainage systems, sanitation facilities, water supplies, schools, health facilitiesand markets. Other types of projects include assistance to laid-off publicemployees, unemployed graduates of secondary schools and universities, andcredit and training schemes aimed at managers of micro-enterprises, in particularwomen. SAPs have also used their funds to restore basic social services used by thepoor, such as basic educational and health facilities, and the supply of essentialmedicines and (occasionally) nutritional programmes.

Those who have studied these initiatives point to their limited impact.18

Where the majority of the population is poor, scattered projects will not improvethe lot of very many. The urban bias of projects further reduces their poverty-reducing impact, as the bulk of the poor generally live in the rural areas. This biasdoes, however, address the political realities of adjustment, namely that the mostvocal and best-organised opponents of adjustment reside in the cities. Theseopponents must receive some compensation if adjustment is to proceed.

Finally, some governments redirect funds designed to alleviate hardship intopatronage channels. This further dilutes the anti-poverty thrust of socialprogrammes. However, such diversions are not inevitable. Studies undertaken invarious countries indicate that independent and politically insulated agencieshave administered SFs in some countries, and have succeeded in relievingdistress, especially through labour-intensive public works.19

Yet, these safety nets represent mere 'add-ons' to existing programmes; the'deeper' approach now propounded by the World Bank and others focuses onbuilding anti-poverty measures into the very design of adjustment programmes.This is to be achieved by promoting an efficient labour-intensive pattern ofgrowth, focusing on agriculture, shifting public expenditures from less essentialactivities to primary education and primary health care, directing credit to micro-enterprises and improving rural infrastructure and the marketing of agriculturalproducts.

If the World Bank actually adhered to these guidelines, then it would be within

AUTUMN-WINTER 1999 VOL.XIII NO.l 5i

reach of a social democratic approach. Growth with equity arguably demandsmore than a residualist concept of welfare, whereby the state erects safety nets tomaintain those who cannot fend for themselves in a market society. It requires themore activist role that occasionally appears in Bank reports. Here, governmentshave a responsibility to counteract market tendencies that perpetuate poverty andinequality. The Bank's emphasis on primary health care and primary education forall citizens, if consistently followed, would fit the more activist role. Other equitymeasures that aim to augment the productivity of the poor will, however, probablyprove impracticable. One such measure is targeted support to micro-enterprisesand small farmers in the form of credit facilities, research on appropriatetechnologies and marketing services. Such programmes assume a depoliticisedand administratively advanced governmental apparatus to implement themeffectively. Such apparatuses do not yet exist in the six country cases.

ConclusionTo reconcile democracy with adjustment where mass poverty prevails,

governments will have to disprove the adage that 'you can't eat democracy'. Peoplewill need to eat if democracy and adjustment are to endure. Social safety nets,though negligible in their societal impact, are nonetheless crucial in reconcilingvocal urban critics to continuing adjustment. If donors are serious aboutencouraging both adjustment and democratic governance, they must be willing tobuffer the inevitable tensions through long-term financing of such ventures.

However, a deeper problem will remain: building a state with the will and thecapacity to counteract 'inegalitarian' market tendencies. Such a state would seekto promote the productivity and opportunities of the poor without imposingcrippling regulations and controls. Although democratic pressure may enhancethe will to intervene, the building of the requisite capacities is a more problematic,long-term project.

The modest social democratic programme is unlikely to spur a rapideconomic recovery. High and sustained economic growth would be a miracle in acontext of unfavourable international trends, daunting external debts, poor initialeconomic conditions, and an absence of institutional preconditions forefficacious market relationships. However, deepening democracy, attending tosocial equity and rehabilitating the state may reconcile democratisation withmarket reform 'while laying the foundations for future prosperity. Enhancedlegitimacy for a reoriented and more effective state and more inclusive societyshould militate against the dangerous spiral of economic and political decay inwhich many new democracies are trapped.

1 D.E. Sahn, P.A. Dorosh and S.D. Younger, Structural Adjustment Reconsidered: Economic Policyand Poverty in Africa, New York, Oxford University Press, 1997, p. 247.

2 External shocks included two dramatic rises in the price of oil imports, declininginternational terms of trade, and soaring interest rates. Climatic shocks refer to thedevastating droughts of the 1970s and 1980s.

3 B. Grosh, 'Through the Structural Adjustment Minefield: Politics in an Era of Economic



Liberalization', in J. Widner, ed., Economic Change and Political Liberalization in Sub-Saharan

Africa, Baltimore, Johns Hopkins University Press, 1994, pp. 29-46.

4 C. Fay, 'La democratie au Mali, ou le pouvoir en pature', Cahiers d'etudes africaines, vol. 35,

no. 1, 1995, pp. 19-53; Z.K. Smith, 'From Demons to Democrats: Mali's Student Movement

1991-6', Review of African Political Economy, vol. 72, 1997, pp. 249-63; M. Gervais, 'Structural

Adjustment in Niger: Implementation, Effects and Determining Political Factors', Review of

African Political Economy, vol. 63, 1995, pp. 27-42; P.M. Allen, Madagascar: Conflicts of

Authority in the Great Island, Boulder, Co., Westview, 1995, pp. 64-7, 96, 105.

5 Michael Bratton, 'Economic Crisis and Political Realignment in Zambia', in J. Widner, ed.,

Economic Change and Political Liberalization in Sub-Saharan Africa, Baltimore, Johns

Hopkins University Press, 1994, pp. 101-28.

6 M. Martin, 'Negotiating Adjustment and External Finance: Ghana and the International

Community 1982-89', in D. Rothchild, ed., Ghana: The Political Economy of Recovery, Boulder,

Co., Lynne Rienner, Press, 1991, p. 243

7 M. Chege, 'Swapping Development Strategies: Kenya and Tanzania after Their Founding

Presidents', in D. E. Apter and C. G. Rosberg, eds., Political Development and the New Realism

in Sub-Saharan Africa, Charlottesville, University Press of Virginia, 1994, p. 276.

8 See, for example, J. Moran, 'Contradictions between Economic Liberalization and

Democratization: The Case of South Korea', Democratization, vol. 2, no. 4, 1996, pp. 475-80.

9 Helleiner, 'Adjustment to Development in Sub-Saharan Africa: Conflict, Controversy,

Convergence, Consensus?', in G. A. Cornia and G.K. Helleiner, eds., From Adjustment to

Development in Africa, London, Macmillan, 1994, p. 10.

10 This viewpoint emerged in conversations with several representatives of the World Bank and

aid agencies. See also C. Grimm, Increasing Participation in the Context of African Political

Liberalization: The Benin Budget Crisis of 1994 and Its Implications for Donors, Paper

Presented to the Annual Meeting of the African Studies Association, Toronto, 3-6 November

1994.

11 On Mali, see J.L. Amselle, 'La corruption et le clientelism au Mali et en Europe de 1'est',

Cahiers d'etudes africaines, vol. 32, 1992, pp. 629-42; on Niger, see R.B. Charlick, Niger:

Personal Rule and Survival in the Sahel, Boulder, Co., Westview, 1991, pp. 18-19 and 79-80; on

Ghana, see M. Owusu, Uses and Abuses of Political Power: A Case Study of Continuity and

Change in the Politics of Ghana, Chicago, University of Chicago Press, 1970; on East Africa, see

G. Hyden, 'Party, State and Civil Society: Control versus Openness', in J. Barkan, ed., Beyond

Socialism versus Capitalism in Kenya and Tanzania, Boulder, Lynne Rienner Press, 1994,

pp.78-9; on Madagascar, see L Fox and M. Covell, An Assessment of Politics and Governance in

Madagascar, Washington, D.C., Associates in Rural Development, 24 April, 1994, pp. 3-6.

12 Michael Bratton and Nicolas van de Walle, Democratic Experiments in Africa: Regime

Transition in Comparative Perspective, Cambridge, Cambridge University Press, 1997.

13 E. Hart, Structural Adjustment, the Private Sector and the Problem of Confidence: The

Development of Government-Private Sector Policy Consultation in Ghana, Paper Presented to

the Annual Meeting of the African Studies Association, Toronto, 3-6 November 1994.

14 See J.-P. Azam, 'The Uncertain Distributional Impact of Structural Adjustment in Sub-Saharan

Africa', in R. van der Hoeven and F. van der Kraaij, eds., Structural Adjustment and Beyond in

Sub-Saharan Africa, London, James Currey, 1994, pp. 100-13; T. Killick, 'Structural Adjustment

and Poverty Alleviation', Development and Change, vol. 26, 1995, pp.305-31; A. Pio, 'The Social

AUTUMN-WINTER 1999 VOL.XIII NO.l 53

Impact of Adjustment in Africa', in Cornia and Helleiner, eds., From Adjustment to

Development In Africa, pp. 298-314; and Sahn et al. Structural Adjustment Reconsidered.

15 For evidence concerning the rural-urban distribution of poverty in the early 1990s compared

to earlier surveys of household income, see World Bank, Ghana: Poverty Past, Present and

Future, Washington, DC, World Bank, 1995.

16 See, for example, F. Stewart, 'The Many Faces of Adjustment', World Development, vol. 19, no.

2, 1991, pp. 1847-64.

17 A. Marc et al, Social Action Programs and Social Funds: A Review of Design and

Implementation in Sub-Saharan Africa, World Bank Discussion Paper 274, Washington, DC.,

1995.

18 Marc et al, Social Action Programs; C. Graham, Safety Nets, Politics and the Poor: Transitions to

Market Economies, Washington, DC., Brookings Institute, 1994.

19 See Graham, Safety Nets.


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