Dr Rainer Zitelmann’s latest book, The Power of Capitalism, explores capitalism and its power to create growth and prosperity all over the world. In this extract, we hear why Capitalism is more effective against poverty than development aid.
“In 1990, the UN made a commitment to reduce global poverty by 50% within 25 years. That this ambitious goal has been achieved is largely due to China’s success. Within the same period, the percentage of the population living below the poverty line decreased from 56.8% to 42.7% across the African continent. however, with 20% of Africans suffering from starvation – a higher percentage than anywhere else in the world – there is still a long way to go.
The African continent has an unprecedented record for giving rise to distorted impressions. In May 2000, The Economist ran a cover story titled “The Hopeless Continent”. The cover image showed a heavily armed African male. Almost 12 years later, in December 2011, another cover dedicated to Africa showed an American flying a kite, with the accompanying headline “Africa Rising”. The magazine’s editor-in-chief ruefully admits: “people have gone to great pains to point out to me that if you invested in a basket of African stocks on the day we declared Africa ‘hopeless continent’, you would be doing quite well today.” In fact, investors who bought stocks on the NSE All-Share Kenia in 2012 would have doubled their money within five years.
Western ideas of African life tend to conjure up images of a different kind – majestic animals or humans living in abject misery. “Africans who are not animals, despots, or Nelson Mandela are portrayed as suffering under the heel of poverty, war, and disease. Recall the last two movies you saw with Africans in them. You will see what I mean,” says Africa expert Jonathan Berman in his book Succes in Africa. Western pop stars putting on huge stadium concerts to raise money and awareness for the fight against poverty in Africa have done their share to popularize this image – which, though not completely wrong, is misleading because it only shows part of the picture. Their agenda echoes the demands made by left-wing critics of globalization for more financial aid for Africa. This, they believe, is the solution to the continent’s problems.
Development aid has a nice moral ring to it, and in some people’s view, it constitutes a kind of quasi-religious atonement for the sins of colonialism and the ‘exploitation of the Third World’ by capitalist countries. But does it really achieve what its proponents hope it will? In 2002, the Senegalese president Abdoulaye Wade said: “I’ve never seen a country develop itself through the aid of credit. Countries that have developed – in Europe, America, Japa, Asian countries like Taiwan, Korea and Singapore – have all believed in free markets. There is no mystery there. Africa took the wrong road after independence.”
In Egypt, ‘Nasserism’ was introduced as an Arabic version of socialism. Eritrea started adopting an Albanian-style Marxism-Leninism in the early 1990s, while Ghana followed the Soviet model of a socialist planned economy and collectivization of agriculture. Congo was ruled by a unity party with a Marxist-Leninism unity party. Angola, Mali, Guinea, Uganda, Senegal, Sudan, Somalia, Zambia, Zimbabwe, Tanzania and other African countries also subscribed to socialist models. Many Africans dreamt of a distinct form of ‘African socialism’ that was based on indigenous values such as the notion of tribal communities and was supposed to offer an alternative to capitalism as much as to the versions of socialism practised in the Soviet Union and other Eastern Bloc countries.
The economic results were even more disastrous than in the socialist Eastern Bloc countries. A flawed economic system is only one of many factors causing poverty in Africa, where stable political institutions remain lacking in many countries, while wars and civil wars between enemy tribes or different ethnic groups continue to tear the continent apart.”
Interested? About the book
By taking the reader on a journey across continents and through recent history, Rainer Zitelmann disproves this call for greater government intervention and demonstrates that capitalism matters more than ever. The author provides compelling evidence from across the world that capitalism has been the solution to a number of massive problems. He compares developments in West and East Germany, North and South Korea, capitalist Chile v. Socialist Venezuela, and analyzes the extraordinary economic rise of China. For many people, “capitalism” is a dirty word. This book provides a timely reminder of capitalism’s power in enabling growth and prosperity, and in alleviating poverty.
Find out more here.
About the author
Rainer Zitelmann is the author of 19 books (his most recent being The Wealth Elite). He was previously a senior editor at Die Welt newspaper.
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