Africa in a convergent multi-polar world

January 5, 2011 by Keith Hart

Today’s Financial Times has a global economic analysis of considerable historical vision by Martin Wolf. He takes his key terms from Ken Pomeranz’s The Great Divergence: China, Europe and the Making of the Modern World Economy (2000). Pomeranz argued that a major gap between China and the West opened up in the late 18th century. Certainly Adam Smith was impressed by the size and development of China’s economy around that time. Some put the divergence earlier. But everyone agrees that it became more marked in the 19th century after the industrial revolution and exploded in the decades leading up to the First World War. Wolf’s thesis is that the best way to understand the world economy today is as a convergence between the leading Asian economies and those of the West, a process that is taking place even more rapidly than the divergence that preceded it.

China and India, who had been powerhouses of global economy and technology not long before, by the mid-20th century — indeed by 1980 — had per capita real incomes 5 and 7 percent the level of the US. Between the wars and after, they were symbols of the direst poverty and subject to terrible famines. In the last three decades China’s ratio of output per head to that of the US rose from 6 to 22 percent and India’s from 5 to 10 percent. Rapid convergence in productivity had of course already happened after the Second World War in Japan, South Korea and some other small Asian economies. Japan’s output, 20% of the US after the war, reached 90% in 1990 when the bubble burst. South Korea’s, at a tenth of the US in the mid-60s, has reached two-thirds now.

Convergence then is not new. What is different now is its scale and the fact that rates of growth are so divergent, in the opposite direction from before. Aggregate real output in the ’emerging economies’ has increased by 40% in the last half-decade, by 70% in China and 55% in India, while Western growth has been 5%. “For emerging countries, the ‘great recession’ was a blip. For high-income countries, it was calamitous”, says Wolf. The West (W. Europe, US, Canada and Australasia) has 11% of the world’s population, India and China between them 37%. So the total impact of their rise, including the scope of their home markets, is that much more significant.

Catastrophes may intervene, but Asian economies will increasingly be able to rely on self-generated growth at home rather than exports. (This was the main theme of Lenin’s superb account of The Development of Capitalism in Russia: The process of the formation of a hiome-market for large-scale industry, 1899). The great convergence is irreversible. The world being born today, according to Parag Khanna in another FT article of last week, will resemble nothing so much as the multi-polar civilization of the high Middle Ages (12th century). Well, that’s a bit of a stretch given the distinctive forces making the 21st century world economy, but he has a point. My question is what significance does all this have for Africa’s place in the world?

The Asian manufacturers have been quicker that the US and Europe to realise Africa’s importance as the fastest-growing segment of world population, reaching a quarter by some estimates in mid-century. Whereas some Western intellectuals I know have said that the world economy would not miss Africa, with its 2% of global purchasing power, if it dropped off the map, the Asians are taking exploitation of the African market seriously. Again, all I hear in America and Europe is resentment over China’s ‘rapacious’ attitude to garnering Africa’s minerals; but this is to conceive of the continent in terms that were already old hat when Lenin wrote Imperialism (1916).

How might African economies orient themselves more effectively to the convergent multi-polar world of the 21st century? This requires not only understanding the possibilities of that world, but also developing a realistic appreciation of what African societies have become in the last century. In this latter regard, again we are more familiar with what Africa is not, that with what it now is. Everyone knows that — with the exception of South Africa — Africa failed to develop in the 20th century. In many cases it went backwards in the last half-century since independence from colonial rule. ‘Development’ meant embracing what I call “national capitalism”, the attempt to control markets, money and accumulation through central bureaucracy with the interest of the citizen body in mind. This was difficult for African peoples to achieve while they were part of colonial empires and also in the world economy carved out by the superpowers in the last half century.

So our first task is to discover what did happen in Africa during the twentieth century. The short answer is an urban revolution, the subject of my book, and I turn to the contours of that revolution in my next post. At the very least a convergent multi-polar world is not the North Atlantic-dominated version that brought Africa into the global economy over the last five centuries.