3. INSTITUTIONAL ‘CHOICES’ State Formation, the Labour ‘Problem’ and Property Systems, C1500-present Gareth Austin 4/10/2012

Introduction: Institutional ‘choices’ in African history From resources (factor endowments) to institutions: a second broad perspective on long-term African development Conceptions & definition of ‘institutions Rational-choice ‘new institutionalist’ definition: rules, formal & informal (the structures surrounding economic behaviour) Context of SSA, well into C20th: low population densities; labour scarce/land abundant

Changing Assessments of African Institutions as Frameworks for Economic Development ‘Traditional’ view of African ‘customs’ as a hindrance on entrepreneurship & efficiency Post-Independence revisionism: indigenous institutions seen as efficient, pro-market, not a constraint on economic growth More recent ‘Afro-pessimism’: partial revival of pessimistic views

Especially the dominant one: Rational-choice Part One THEORETICAL PERSPECTIVES ON INSTITUTIONS IN AFRICA AND GENERALLY Especially the dominant one: Rational-choice

Changing Theoretical Approaches Older institutional perspectives Substantivism (Karl Polanyi, 1950s-e60s): discredited by the market historiography of 1960s-90s ‘Modes of production’ (French marxists, 1970s): died of exhaustion, c1981 The ‘New Institutionalism’: rational choice Entered African Studies via Robert Bates’s political science, early 1980s RC Political Economy has been the dominant framework in economics, pol sci, economic history studies of Africa as elsewhere since the 1980s Recent examples include Acemoglu & Johnson 2010

Basics of Rational-Choice Institutionalism Project: extending the economizing logic of relative scarcity from the purely economic to explain the structures (rules) conditioning economic activity Rules reduce ‘uncertainty by providing a stable (but not necessarily efficient) structure to human interaction’ (North 1990: 6)

Characteristic concerns of New Institutionalism Problems of making contracts in contexts (so common in reality, i.e. in history) where information is asymmetric, transactions costly, & property rights insecure How institutions change theory of induced institutional innovation (that they change in response to shifts in relative prices) in political context (there may be more than one equilibrium)

RC Institutionalism and the Study of African Development ‘Dominant’ approach, but a diversity of views possible within it Consider it in relation to each substantive topic we discuss Can we improve on it, empirically or theoretically? Now to some key substantive institutional issues in African development …

Part Two PROBLEMS OF STATE FORMATION & CAPACITY IN AFRICAN HISTORY

STATE FORMATION: DIFFICULTY Traditional argument that political centralization was difficult in SSA (Goody, Coquery-Vidrovitch, Herbst) Why? (a) Low population density, relative ease of escaping tax collectors (esp Herbst): (b) Lack of substantial agricultural surpluses Ethiopia the exception that ‘proves’ the rule (strong and enduring state)

Yet Longevity of Political Centralization in Certain Areas Ethiopia Great Lakes Niger Bend (Timbuctu, Jenne etc) Zimbabwe BUT the frequency and scale of state formation increased only gradually, if at all, over the centuries E.g. into forest zones Gradualness confirmed difficulty of state formation Large minority, at least, of Africans in late precolonial period lived in ‘chiefdoms’ or ‘city states’ or outside states; cf map of West Africa 1850

C20th Century States in Africa From demographic to International Relations constraint: at the beginning and just after the end of the colonial era (Herbst) Problem of limited capacity to raise revenue, and even to know how many subjects/citizens they had or have

Part Three MARKETS AMID LAND ABUNDANCE Historic Problem And Paradox Of African Economic History

Land abundance as a constraint on markets Self-sufficiency reduces incentive to produce for sale Universal access to land suggests labour expensive, even unaffordable, on a free market – the Nieboer-Domar problem

Yet Markets Remarkably Important in Precolonial Economies, notably in West Africa (e.g. 1600-1890) Albeit, not based on grain surpluses Ecological specialisation (as in salt, kola nuts, pastoralists/sedentary farmers) Based on ‘absolute advantage’ But comparative advantage mattered too And consumer taste e.g. cloth caravans passing in opposite directions Commodity currencies: regional differences Significance of the fact that currency materials imported during the Atlantic trade (cowries above all; also iron bars, certain kinds of cloth) were not re-exported Principal-agent problems in long-distance trade: overcome by religious-ethnic trading diasporas e.g. Hausa in ‘Central Sudan’

The Labour ‘Problem’: Coercive Solutions (a) precolonial Political as well as economic requirements for coercion Nieboer problem severe: Mungo Park, describing his travels in Senegambia and Mali in the 1790s: ‘Hired servants, by which I mean persons of free condition, voluntarily working for pay, are unknown in Africa ...’ Slavery (and pawning) in precolonial Africa: grew in response to derived demand from commodity production, especially in C19th grain on coast in C19 East Africa, cotton textiles within C19 West Africa, ‘legitimate commerce’ from C19 West Africa) Growth of internal slavery in WA facilitated by closing of external demand (see graph)

The Labour ‘Problem’: Coercive Solutions (b) Colonial Where slavery existed: frequently, a ‘Slow Death’ (Lovejoy & Hogendorn’s phrase) Where colonial administrations could not afford free labour: coercion, esp. French corvée system (abolished 1945) Settler economies: early C20th policies of trying to drive Africans out of the produce market and so on to the labour market

The Labour Problem: Post-Coercion(?) Eventually: migrant voluntary labour replaced internal slave trade in West & East Africa Population growth and constraints of labour ‘reserves’ generated supply of cheap labour moving (illegally, in case of apartheid South Africa) to the towns Labour and Decolonization: the feared costs of the ‘universal’ worker (Cooper)

Indigenous Land Tenure Systems: an obstacle to economic efficiency? Optimistic evaluations from 1960s-80s research: indigenous land tenure efficient and capable of change where needed Problem of colonial intervention: widely sought to freeze ‘customary’ land tenure Goldstein & Udry’s partial reassessment for Ghana, now that land is no longer abundant What about extreme land-scarcity, in parts of East Africa, e.g. Rwanda, parts of Kenya?

Part Four INSTITUTIONS AS A CONSTRAINT ON MARKETS Further Examples of the Debate

Attitudes to Individual Accumulation of Wealth Platteau revives this old issue Zero-sum view of wealth in equatorial Africa (e.g. Harms for C19th) But conditional approval (very strong) for individual economic success in much of West Africa, in all recorded periods Example of witchcraft accusations: the newly rich as accused or accusor

Family firms in Africa: institutional constraints upon them? How to interpret the rarity of trans-generational family firms?

CONCLUDING QUESTION TO THINK ABOUT How well does the rational-choice framework account for both the economic efficiencies and inefficiencies of institutions in Africa?