By Olu Fasan
It is the age-old chicken and egg question. Which comes first: the economy or politics? That’s the question at the heart of this intervention, and it was triggered by two recent events. The first was President Bola Tinubu’s response to the call for a new Constitution. The second was Dr Ngozi Okonjo-Iweala’s speech at this year’s Annual Conference of the Nigerian Bar Association, NBA, in which she called for a social contract for Nigeria. Everyone knew about those events, but few detected their logical fallacies. So, first, let’s recall the events.
Recently, in August, the highly venerated elder statesman Chief Emeka Anyaoku led a group of eminent Nigerians under the aegis of The Patriots to meet Tinubu at the State House and asked him to convene a constituent assembly to produce a draft people’s constitution for Nigeria.
Tinubu said he would consider their request after he had tackled Nigeria’s economic challenges. “I am currently preoccupied with economic reform,” Tinubu said, adding: “That is my first priority.” It was a subtle brush off, hidden behind the economy. Around the same time, Dr Okonjo-Iweala gave her NBA speech titled: “A Social Contract for Nigeria’s Future”. However, although she called for a social contract, she never once mentioned political restructuring. It was as if a social contact could exist in a vacuum, as if it could exist without a negotiated political and constitutional settlement.Truth is, Tinubu and Okonjo-Iweala ignored some critical questions. For
instance, can any economy function well without the right political conditions?
And can any social contract work within a deeply flawed political and
governance structure? As I said, this is a classic chicken and egg question
about which of two things come first and which cause the other one. Clearly,
Tinubu thinks the economy comes first, and Okonjo-Iweala thinks a social
contract comes first; they both ignore the underpinning role of politics.
Well, they are wrong, and my aim
here is to show why. But let’s start with the theoretical context because this
is a long-running intellectual debate. For generations, economists and
political scientists have inhabited parallel universes. Economists see the
world through the prism of rationality, positing that homo economicus, or the
economic man, is a rational being who always weighs the pros and cons of his
actions and always makes rational decisions to maximise utility or profit. But
political scientists argue that while man is truly self-interested, he does not
always make rational decisions due to ignorance and biases. Therefore, it is
wrong to look at the economy through the lens of flawless rationality without
considering other influences, such as the political situation and political
institutions.
It is interesting to note that
in the 18th century, what we call “economics” was known as “political economy”,
and great economic philosophers like Adam Smith, David Hume and John Stuart
Mill were called “political economists”. Why? Because they were interested in
the interactions between economics and politics, that is, how politics affected
the economy and how the economy affected politics. However, in the 20th
century, the term “economics” emerged and took the form of mathematical or
statistical modelling or econometrics. The problem, however, was that
mathematical economics ignored non-mathematical factors, such as political and
behavioural influences. Rather, it wrongly assumed perfect rationality.
Recently, the Financial Times
remarked that economics suffered humiliation for “its infamous collective
failure to spot a global financial crisis in the making”. The financial crisis
engulfed the world in 2007-2008 and was blamed on economists’ fixation with
mathematical modelling which ignored the irrational herd mentality of millions
of investors. That’s why many believe that behavioural economics and political
economy offer a better way of looking at the world than quantitative economics
because people, and indeed nations, do not behave as economists traditionally
model them. Homo economicus is a mere theoretical abstraction.
So, what about politics? In
their famous book titled Why Nations Fail, Daron Acemoglu and James Robinson
argue that it is political process and political institutions that primarily
determine the success or failure of a country. The political process determines
how a country is run, the kind of constitution it has, whether power is
centralised or devolved, etc. Thus, the character of a country’s political
institutions shapes the efficiency of its economic governance. Politics
determines who gains power, and who gains power shapes the economy. Tell me,
what brought Muhammadu Buhari to power? Politics. What brought Tinubu to power?
Politics. So, politics determined the economic policy and failure that Nigeria
and Nigerians experienced under Buhari and are experiencing under Tinubu.
Well, politics matters in
another key respect: it affects investor confidence. When foreign investors are
considering whether to invest in a country, they do not think about its economy
first. Rather, they think about what we call “political risks”. Is the country
politically stable or not? Is insecurity high or low? Is corruption rife or
tamed? Are the political institutions strong or weak? For instance, are the
judges independent or corrupt? Is the bureaucracy competent or not? These are
what primarily shape how foreign investors view a country. That’s why political
risk analysts are among the most sought-after and well-paid experts globally.
All of which brings us back to
the internal inconsistencies in Tinubu’s and Okonjo-Iweala’s interventions.
Let’s start with Dr Okonjo-Iweala. No one can disagree with her call for a
social contract. But in any country where there is a social contract, it’s part
of a negotiated political settlement. For instance, South Africa has a social
contract under which state institutions are fiercely independent, citizens’
rights are protected under a Bill of Rights and the country’s diversity and
sensibilities are safeguarded constitutionally. But the social contract was part
of the negotiated post-apartheid political settlement. The key word in a social
contract is “contract”, and it must be negotiated as part of a political
settlement. Dr Okonjo-Iweala should have acknowledged the need for political
restructuring and political settlement in her sensible call for a social
contract.
Of course, Tinubu’s intervention
was mendacious. What did he mean by “economic reform is my first priority”? Can
Nigeria’s economy be transformed under the current deeply flawed political and
governance structure? Absolutely not. The World Bank said: “The political
settlement is central to all development.” Thus, Nigeria can’t have development
without a political settlement. If Tinubu understands that, he won’t kick the
request for a people’s constitution into the long grass under the pretext of
“economic reform”.
As president, Tinubu plays self-serving patronage politics. But he’s
subordinating political reform to so-called “economic reform”. That’s
disingenuous and misguided. He should heed the Patriots and kickstart the
process of giving Nigeria a people’s constitution.
*Dr. Fasan is a commentator on public
issues
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