In his mid-term budget speech, Zimbabwe’s Finance and Economic Development Minister, Hon. Prof. Mthuli Ncube identified rising inflation and currency depreciation as the major challenges requiring “the support of all stakeholders and citizens”. Zimbabwe is failing to ward off persistent inflation. According to Ncube’s mid-term budget report, headline inflation increased from 60.7% in January to 191.6% in June 2022.
In this post, I will argue that whilst price and the exchange rate have some importance, preoccupation with them can constrain economic development. I start off by giving a brief background of inflation in Zimbabwe as well as inflation targeting policies, before arguing that sheepishly pursuing currency and price stability equates to commodity fetishism. I then look at the real beneficiaries of price and currency stabilisation policies. Finally, I attempt to demystify value and price in Zimbabwe’s context.
The COVID-19 pandemic has swept across the global economy, causing havoc and leaving many economies teetering on the brink of economic and social collapse. Moreover, the arrival of a second and now third wave of infections and a further mutation of the virus is driving the economy further into peril and uncertainty. The announcement by Cyril Ramaphosa, back in March 2019, that two of South Africa’s wealthiest families and the pinnacle of big business, the Rupert and Oppenheimer families, would be donating R1 billion each was met with admiration from all corners of the country. These commitments have since been matched by the Motsepe group of companies and Naspers, donating R1.5 billion. To date, the fund has amassed over R3.22 billion in pledges from a wide array of private, public, and political donors.
Responses of this type are understandable when combining the already bleak outlook for the South African economy with a significant and potentially catastrophic supply shock. However, a question that may be playing on many South Africans minds is: why, given the fact that South Africa’s economy has long struggled with growth and several structural issues, is this response from big business only coming now in the face of a global pandemic? An easy answer may be that there has not yet been an event of this magnitude for big business to respond. However, a counter to this argument is that businesses should continuously be re-investing their profits regardless of the economy’s health.
South Africa has a long history of the inefficient use of profits, which favours hording cash and conducting unproductive investments such as mergers and acquisitions. These uses of profits are a direct result of the skewed incentives facing the agents of many large companies. For instance, many CEOs are incentivised through sizeable bonus packages to maximise the shareholders’ value rather than focusing on the long-term health and sustainability of the business. This short-term view causes CEOs to opt to retain earnings rather than embark on risky research, development, and innovation endeavours that often fail but may result in enormous payoffs if they succeed economically and socially. Short-termism is a result of a corruption of the idea of value creation where price is associated too closely with true value, nuturing an entrenched system of extraction that contributrs to worsening economic and social conditions. This is something the professor in the Economics of Innovation and Public Value at University College London, and director of the Institute for Innovation and Public Value, Mariana Mazzucato laments in her book The Value of Everything.
Working as a product designer in media for the past five years, I’ve witnessed the topic of “design ethics” raised at industry conferences, presentations, and meetups. Yet I’ve noticed that in our discussions, designers rarely mention the economic context within which we design. We hold up examples like news feeds promoting fake news and financial apps encouraging users to trade the riskiest stocks and we ask: how might we design better? Conventional discourse presents these unintended consequences of our work as technical problems: how might we design and code ethically, while maintaining profitability and growth? (Perhaps the most well-known example of this framing is The Center for Humane Technology’s “The Social Dilemma,” which confuses correlation with causation by attributing negative mental health and political trends to technology, with no mention of technology’s place in capitalism.)
We will not solve problems of authoritarianism, racism and xenophobia, misinformation and addictive technology, mental health and public health, or climate change with design ethics. While designers should thoroughly consider the consequences of our work, the problems facing the design and technology industry are not ones of individual bad actors (though some exist). Rather, we must acknowledge that design decisions are economic decisions––and in our current economic system, the economic interests of individuals often conflict with their social consequences. Technology firms are not cultural or ideological actors, but “economic actors within a capitalist mode of production…compelled to seek out profits in order to fend off competition” (Srnicek 2017, 3). If we truly want to design ethically, we must first consider how technology is embedded in capitalism. Our ability to make technology work better for society as a whole depends upon our willingness to reorder our priorities and redefine value as more than profit maximization.
Over the last few decades, African governments have liberalised and privatised their mining industries, attracting significant foreign direct investment. Transnational corporations (TNCs) have become the dominant forces. Their en masse arrival across the continent has been accompanied by the displacement and marginalisation of artisanal and small-scale mining (ASM). This has been a political process not just to create value, but to transfer value to foreign firms. In this same process, particular production modes are devalued. According to Jennifer Bair and Marion Werner (2011), this is a deliberate process linked to ‘everyday practices and struggles over value’, whereby certain forms and logics of value creation are prioritised and asserted over others.
Yet a consideration or even acknowledgement of these everyday practices and struggles is generally absent from the Global Value Chain (GVC) analysis which dominates the African mining literature (especially the more influential policy papers and flagship development agency reports). This literature is mainly preoccupied with how African firms can integrate into and ‘upgrade’ within TNC-led industrial mining GVCs. It remains largely blind to a consideration of how and from whom value is transferred when recently established TNC-led mines interact with pre-existing and more locally-anchored ASM economies.
Locally driven mechanisation and capital accumulation in the Congo (Sara Geenen).
In our recently published research in ROAPE’s journal looking at the case of South Kivu Province in the eastern Democratic Republic of the Congo (DRC), we redress this imbalance by documenting precisely these ‘everyday practices and struggles over value’. We demonstrate how a coalition between foreign corporate capital and the Congolese state has marginalised and held back locally-led processes of technological assimilation, capital formation and mechanisation in ASM. By so doing, we direct attention towards the developmental potential of domestically embedded networks of African mining production, and how these networks are disrupted by incoming TNCs.
But his work is often misunderstood, not only by orthodox economists but also by others – such as ‘greens’ – who seek inspiration in his writings. Economists, if they refer to his work at all, have tended to focus on the quantitative labour theory of value, ignoring what Marx called the qualitative theory of value: his critique of the economic categories of ‘bourgeois’ economics which mystify – and hence also justify – the reality of what is really going on. The concept of fetishism is crucial to this theory, but by economists this has been either ignored or treated as the work of Marx the philosopher or Marx the sociologist. Marx introduces the concept of commodity fetishism in the very first chapter of Capital Volume I, where he seeks to get to grips with the mysterious phenomenon of exchange value. Rather than simplistically equating value with price – as is the practice of the market system and mainstream economics – he delves deep into the beliefs and practices that constitute and sustain the capitalist system. In other works, he applies the concept of fetishism to capital, money and interest-bearing capital. By reference to what he calls the ‘Trinity Formula’ he shows how, by presenting profit as the return on capital and rent as the return on land, both profit and rent are taken for granted, and go unchallenged. That the surplus value generated in production accrues solely to capital is treated as somehow ‘natural’.
In my book, I show the continuing relevance of Marx’s theory today, especially with regard to finance and the environment. Both the financial crisis of 2008 and the continuing crisis of environmental destruction are related to the way in which the market increasingly extends its grip over our lives: through the financialisation of everyday life, and through the use of market instruments and market principles that shape our relationship with nature.