Buhari: Moving Nigeria’s Economy into Growth-path and Accelerating Development (2) | Independent Newspapers Limited
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Buhari: Moving Nigeria’s Economy into Growth-path and Accelerating Development (2)

Posted: Jun 3, 2015 at 12:06 am   /   by   /   comments (0)

“Afren has delivered a solid first quarter result despite the continuing low oil price and additional NPI liftings from Ebok. We have already significantly curtailed immediate capital expenditure and are now working with our partners to optimise forward investment in development projects in Nigeria”

– Alan Linn, Afren’s Chief Executive Officer

By Francis Ogbimi 


Economics is probably the most popular of all the social sciences disciplines studied in the world today. It is the most popular discipline because it is principally concerned with material, especially money. Economists over the years have developed beliefs, values, methods, concepts, etc., which they teach to those who want to become economists. Economists and economics are concerned with money, urbanization and related institutions. The economists also claim to be concerned with promoting rapid growth, full employment and stable prices. So, economists have long tried to convince non-economists that they (economists) are the people who know how to manage our economies. Have they been successful in their attempts to achieve their claimed objectives? No, not at all! There are only few happy nations in the world today. Economists are the main cause of the unhappiness in most nations of the world today. Many European nations are crumbling under the crushing weights of debts. Most Western nations are also experiencing high unemployment and decreasing productivity. Asian nations, especially China, India, Malaysia and Indonesia are doing fairly well because they achieved industrialization recently or they are industrializing. Africa’s over 53 nations under the full management of economists and economics-based world financial institutions – the World Bank and IMF, have never done well. Nigeria and most other African nations would never be happy as long as economists and other social scientists continue to provide the intellectual framework for managing their economies. To a great extent, all the people who study a particular subject constitute a cult. In this vein, all economists constitute the cult of economists. The members of the cult of economists can never be the source of fundamental changes in the beliefs, values and practices of economics and economists. However, many influential individuals and groups of economists complain bitterly that economics does not address basic problems. Yet, no economist has the ability to address the debilities of economics. Students of economics have also challenged their teachers and professors to come from the autistic (imaginary) world in which they live to the real world and teach to them economics that is applicable to this world. This is the basis of the Post-Autistic Economics Movement. See the website: [www.paecon.net]. Economists and economics-based institutions cannot manage our economies well, because of the inherent inabilities of the discipline of economics. By this, I mean that whether the economist is one of the most famous professors of economics like Professors: Jeffrey Sachs of Columbia University, New York; Paul Collier of Oxford University; and  Adebayo Adedeji, former Under Secretary, the United Nations Economic Commission for Africa; or respected bank managers like the Robert B. Zoellick, the former President of the World Bank; the Managing Director, IMF, Christine Lagarde; Professor Charles Soludo, the former Governor, Central Bank of Nigeria; Ngozi Okonjo-Iweala, Coordinator of the Nigerian economic team; he or she is plagued by the inherent debilities of economics, which prevent him or her from being able to manage any economy well. What are the inherent debilities of economics?

The first inherent debility of economics as an area of knowledge is its methodology. Social scientists adopted the scientific method developed for the physical and biological science in an uncritical manner, believing that the application of the scientific method to economics, would transform it into social physics that would provide for students of society, the excitement which natural sciences were providing for the students of the physical sciences (DeFleur, et al., 1977). By conceiving economics as social physics instead of social biology, social scientists, including economists, made a fundamental error from the onset. The consequences of the methodological error are many and fundamental too. They should therefore be considered as the fundamental debilities of economists. The second defect of economics is that it is ahistorical and mechanistic. That is, economists’ understanding of the economy lacks a sense of history. The equations (laws) of physics and mechanics adopted by economists are about time-independent responses of solids like metallic rods, springs, wires, etc. By adopting such laws, economists claim that economies behave like iron wires, spring and rods subjected to small strains. Economists find it hard incorporating history into their analyses. Economists do not understand that nations grow and become transformed. They think that the human development process is like a once-for-all game such as a football march. They are not aware that European and American cultures were not counted as the Great Medieval Civilizations (GMCs). The Chinese, Indian and Islamic cultures were the GMCs. The third debility of economics is that it is unable to distinguish between trivial and sustainable growth. Economists measure growth as mere change in the Gross Domestic Product (GDP) of a nation. That is, the change in the goods and services produced in a nation in a year. Mere computation of GDP and the change in it does not describe the true economic situation in a nation. Nigeria now produces over 2.5 million barrels of crude petroleum per day. The production is done mainly by multi-national companies. Increase in the number of barrels produced and increase in the international prices of crude petroleum would swell the earnings from sales of crude petroleum and the Nigerian GDP. The increase in GDP this way would be growth without development (GWD) which cannot be a true reflection of the state of the Nigerian economy, because it has nothing to do with Nigerians. This explains why economists measure trivial growth or growth that makes no positive impact on the people or GWD. The fourth defect of economics is that it does not know the primary source of sustainable economic growth. Mainstream economists who parade the developing world claiming that African nations should provide favourable environment for the inflow of foreign investments to promote growth in Africa, do not know the development experience of the West.  Douglas (1948), Abramovitz (1956), Solow(1957), Gerschenkron(1966) and Ogbimi(2003), all demonstrated that capital investment is not the primary source of sustainable economic growth and industrialization. Those who claim that capital is the most important factor of production do not know that in the Middle Ages (450-1450), land was the most important resource in Europe. During the period, the lord of the manor owned the land and all those who did not own land were slaves (serfs) who worked for the lord. The claim about the special role of capital came during the industrial age. The claim has no scientific basis.

The fifth debility of economics is that it is based on equilibrium or static analysis. This defect is a very serious one.  Our research activities in Obafemi  Awolowo University, Ile-Ife, Nigeria, (Ogbimi, 1992), showed clearly that learning is the primary source of sustainable growth, not capital investment as economists were brought up to believe.  One who has learnt something is transformed relatively permanently. One who cannot read and write may learn to read and write and be transformed. So, true growth is a transformational process, not an equilibrium one as economists assume. It was through learning that agricultural/artisan European and Asian nations increased the knowledge, skills and competences they possessed over 2000-3000 years, achieved industrialization and became transformed into industrialized nations.  It was through learning and real growth, wealth creation and industrialization that Western and Asian nations solved unemployment and poverty problems.The intrinsic values of the learning-people increase in a compound-fashion with learning intensity and time. That is, they are Appreciating Assets (AAs). Consequently, the relevant variables for planning the transformation of an artisan/craft economy are five and are learning-related. They are: (1) N – the  number of people involved in learning and other productive works; (2) M – the level of education and training of the people employed in productive works and in the society as a whole; (3)  L – the linkages among the knowledge and skills in the society; (4) r – the learning rate or intensity of the people employed in productive work and in the economy as a whole; and (5) n – the learning history or how long the people of the nation have been learning. The higher are the values of all the five variables, the healthier is the economy. These suggest that employment in quantity (N) and in quality (M), is the blood of an economy.









So, real growth is a transformation like the growth of a baby into adult; babies grow up to become adult and never shrink to become babies again. Economists cannot promote sustainable economic growth and transformation and solve unemployment and poverty problems because they do not understand the concepts underlying these problems.

The sixth weakness of economics and economists is that economists do not understand the relationships among the fundamental variables of an economy. Economists do not say the truth when they report growth and inflation rates in isolation. This is really where they cause a lot of havoc. The fundamental variables in an economy are employment, productivity and inflation. The three variables must be reported together to understand the true state of an economy. The results of our research show that the employment level in quantity and quality determines the level of productivity and inflation. That is, the state of employment (in quantity and quality) determines the level of productivity and inflation in an economy. Our scientific theory of employment (Ogbimi, 1995; and Ogbimi, 2007) showed clearly that the proper characterization of any economy must state the levels of employment, productivity, and inflation co-existing in it.