Economic Decolonization for the Global South
Discussion
Samba Sylla and Jason Hickel:
"To achieve unilateral decolonization and economic sovereignty, we identified six principles of action.
Countries that are dependent on imports from the global North are under pressure to acquire large volumes of foreign currency to pay for it. This means they must mobilize production around exports to the North (or take on external debt). But because Southern exports are cheapened compared to Northern goods, this arrangement entails large net transfers of goods from South to North. This should urgently be avoided, as it drains Southern countries of resources that are urgently necessary for development. This pattern of material-technical dependency, compounded by a transfer problem – the need to earn the foreign means of payment - can be reduced in the following ways:
(a) curtail imports of unnecessary luxury goods from the core (e.g., SUVs, private jets, champagne, etc) (b) for necessary goods, substitute them where possible with domestic production (e.g., food is a major import category, which in most cases can be reduced dramatically by pursuing a policy of increased food sovereignty) (c) for goods that cannot be provided domestically (e.g., rare materials or advanced technologies), establish swap lines to obtain these through trade with other global South countries (e.g., with regional neighbours and with China) in a way that circumvents the use of dominant currencies and promotes trade with national currencies. (d) for products that must be imported from the North, ensure they are long-lasting and repairable in order to reduce total import requirements.These steps enable a country to either reduce its exports to the core (thus making production available for other purposes, including for South-South solidarity trade) and/or increase its international payment possibilities
At present, foreign exchange earnings are generally controlled by private producers – often foreign companies – who send their profits abroad, or use accounting tricks to avoid taxes and steal real resources. The result is that foreign exchange earnings are not available to the state and cannot be used for development. Governments can increase control over foreign currency earnings in the following ways: (a) nationalize resource deposits and major export industries where possible, so that foreign exchange goes directly to the state (b) Coordinate with other global South producers to increase the prices of exports (e.g., OPEC) (c) introduce capital controls and other similar measures to prevent destabilizing profit repatriation and illicit outflows of foreign currency by private exporters (d) tax the foreign currency earnings of private exporters (and reduce taxes on the national currency earnings of firms producing socially necessary goods)
Foreign currency should be leveraged strategically. It should only be used for necessary imports that cannot be substituted domestically. As much as possible, it should be used in the following ways: (a) to import capital goods and technologies that are necessary to develop national industries that can help reduce dependence on imports from the North. (b) to increase value-add (e.g., to develop capacity to refine resources or to manufacture finished products rather than exporting raw materials or intermediate parts) (c) to finance industrial projects that will earn more foreign exchange than they require as inputs or that will have an import substitution effect.
Reducing dependence on imports from the North means countries can reduce their export-orientation (and therefore reduce the scale of drain through unequal exchange), thus liberating productive capacities (like labour, land, resources and factories) to be used for other purposes. This remobilization can be done by issuing the national currency to employ domestically available labour and resources for development. Because the state is the currency issuer, there is no limit to the state’s capacity to finance projects whose inputs can be paid in the national currency, so long as it is within the productive capacity of the economy (as Keynes put it: anything we can actually do, we can afford).
(a)establish a national public job guarantee, with a living wage, to employ people in necessary public works. (b)produce necessary goods and universal public services (nutritious food, good housing, water, sanitation, electricity, healthcare, education, public transit, recreational facilities, etc). (c)ensure that these are available on a decommodified or price-controlled basis to all, as this is critical to achieving rapid improvements in social outcomes. (d)initiate a state programme to achieve rapid decarbonization (by increasing renewable energy capacity) and ecological regeneration. (e)establish centers for research and innovation, to develop appropriate indigenous technologies that can further reduce dependence on Northern imports. (f)establish training centers to improve the skills of the labour force. (g)invest in building national industrial capacity (e.g., capacity to produce vehicles and pharmaceuticals) that can further reduce dependence on Northern imports.
The primary development objective should not be to increase aggregate GDP as such (i.e., just any form of production). The objective should be to increase the specific forms of production that are necessary to improve human well-being, meet ecological objectives, and achieve national development. Therefore it is necessary to establish an industrial policy to determine what new industries need to be started, what existing industries need to grow, and what industries are unnecessary and should be scaled down so that capacity can be diverted elsewhere.
(a)use subsidies and tariffs to support strategic industries in their early stages of development and protect them from being crushed by foreign competition. (b)use credit regulation to increase private investment in targeted industries and reduce private investment in unnecessary industries.
If the above measures are precluded by creditors or under the terms of a structural adjustment programme, those terms should be ignored and a managed default should be pursued if necessary in order to assert sovereignty over economic policy. This is best done in cooperation with other governments (a “debtors’ club”) in order to improve the negotiating position. Default can make it more difficult to access international finance for a time, but the steps indicated above can help to mitigate this problem by reducing dependency on foreign finance."