Socialism_in_Tanzania

MERITS AND DEMERITS OF SOCIALISM AND HOW SOCIALISM HINDERED DEVELOPMENT OF TANZANIA ESPECIALLY IN THE EARLY YEARS OF INDEPENDENCE Concise Oxford Dictionary defines Socialism as “a political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole (in Marxist theory) a transitional social state between the overthrow of capitalism and the realization of Communism”. While the definition of socialism emphasizes that the means of production should be owned communally. Capitalism is defined as “an economic and political system in which a country’s trade and industry are controlled by private owners for profit rather than by the state”. MERITS OF SOCIALISM Merits of Socialism are as follows, • Socialism tries to make each man equal by equalizing the rich and the poor, so as to provide everyone with enough to survive. Socialism works to evict poverty. • Socialism provides all citizens with their survival needs, creating a stable social environment. Members that cannot participate economically - due to mental disabilities, age, or poor health - are still cared for. • Generally the Market is determined by Demand and Supply and here as the Government decides the production allocation of resources it is having minimum role to play. • The main feature of Socialism is central planning which decides the basic problems like a) what to produce' b) How to produce' c) For whom to produce' (Answers.com) It is also argued that Socialism has greater economic efficiency, because the means of production are controlled and regulated by the central planning authority towards chosen ends. Economic efficiency is attained by utilising resources in producing socially useful goods and services which satisfy the basic wants of the people. It gives greater welfare due to less inequality of income. Monopolistic practices of exploiting consumers are absent in this type of economy. The business fluctuations attributed due to market forces are also not present and hence there is no problem of unemployment or depression (Tutors on Net) DEMERITS OF SOCIALISM • Control of Prices Socialism pricing of commodities and factors of production does not follow the market forces of demand and supply but they rely on central planners. In Socialism the role of pricing is to clear the market once the level of output in it has been determined through an official order or authorization from central planners, rather than the role of pointing out shifts in consumer demand. The socialist planner may congratulate himself on choosing high enough prices of goods and services to adjust quantity demand to match the supply which is available, but he/she should remember that consumer sovereignty means more than the passive acts of consumers to make the best of an unappealing menu of choices, it also reduces surpluses and shortages in the market. Economic democracy is not achieved unless consumers' preferences count in determining output in the first place. • Difficulties of Economic Coordination This would lead to the loss of overall direction of the economy but the danger that the quest for efficiency at lower levels may result in "sub-optimization," of resources which is actually detrimental to the total performance of the economy. For instance, the electric industry, in an effort to cut costs, might choose to generate power with coal as fuel rather than to develop potential hydroelectric power, thus limiting the supply of coal to other industrial uses. If the cost difference in power technology were small, the allocation of coal might not be optimal from a social standpoint. Likewise, maximum development of the trucking industry might create underutilized railroad facilities. • Morale and Competence Socialism creates an environment where there is a condition of low morale, inefficiency, and red tape. There is no inherent reason why a sense of pride and professionalism would not be found at all levels of administrative responsibility in a socialist government; indeed, during the transition phase the excitement of building institutions anew and perhaps the existence of a charismatic leader might provide the kind of intellectual ferment that challenges people to put forth their best efforts. The main question, however, concerns the staying power of ideological zeal as a motivating factor. Also passing that ideological zeal from one generation to another without the presence of the founding leader who pioneered the idea is difficult. In professional associations like Certified Public Accountants they may form standards of professional competence, which is one possible way of establishing norms within the civil service. This requires that government service itself must not be used as a social-welfare program to provide employment for excess workers or as a sinecure for those of mediocre talents. Evidence suggests that both socialist and capitalist bureaucracies face these temptations; the seriousness of poor performance in a socialist bureaucracy is compounded, of course, by the crucial role it plays in the total economy (Basic Criticisms). In addition in a socialist economy there are no material incentives to make an individual perform better or improve their skills, because everything is done communally and shared equally (Criticisms of socialism). HOW SOCIALISM HINDERED DEVELOPMENT OF TANZANIA ESPECIALLY IN THE EARLY YEARS OF INDEPENDENCE Economic Condition of mainland Tanzania immediate after independence Tanzania was and still is an agrarian developing country consisting of a large traditional rural agriculture sector and a small urban based commercial sector. The majority of its population were engaged in subsistence activities. Agriculture accounted for 50-60% of the gross domestic product (GDP), and about two thirds of exports. Thus, the prices of agricultural products in the world market played a significant role in economic development. The employed labour force, that is to say those who are in the some way connected with the market, was small, comprising only about 10% of the population. Industrialization was remote; The colonial rule concentrated on the development of cash/export crop production as well as on the building-up of the infrastructure that would facilitate their needs. For example, transporting cash crops from mainland to coastal areas so as they can be transported to Europe.. The indigenous people were discouraged to engage in export crop production, but rather encouraged to supply their labor to the plantations. Consequently, the spread of the modern economy into the traditional economy became limited. At independence in 1961, the economy was at a very early stage of development, with limited human and physical infrastructure, less stable infrastructures, less settled administrative institutions, and weak private institutions with limited capacity (Structural Adjustment Reforms in Tanzania). The inherited economy was a dependent economy, whose structure relied heavily on the production and export of a few primary products to European Markets. Apart from the diamond mining, a large part of the export sector was made up of either un-processed or semi-processed products. Industrial activities were at a very low and rudimentary level. Secondary activities, which included manufacturing, processing and construction, formed about 13%. The rest was tertiary activities. Communication systems linked a few towns to Europe and not to areas within the country. The only developed sectors equipped with infrastructure were enclaves of mineral, export crop plantation and production. The proportions of literate and educated people, was small. For example, in 1965 only 40% of those with age to attend school had access to primary education. Not to mention college graduates, who were extremely few(Structural Adjustment Reforms in Tanzania). Although Tanzanian farmers were obligated to grow cash crops for European industries by the colonial rule, the agriculture infrastructure, like technology, finance, transport, marketing, storage facilities and agricultural implements was poor. The Facilities in place did not cater for the requirements of the small-scale farmers, who consisted the majority but rather in accordance with the colonial requirements, i.e., to facilitate production and transportation of minerals and crops to the Europe (Structural Adjustment Reforms in Tanzania). The grounds for Tanzania to follow socialism and how socialism hindered development of Tanzania especially in the early years of independence Tanzania decided to follow socialism in the early years after independence, because the economy was designed to cater to colonial needs and not the natives of the newly independent country. For example, according to the journal of Development in Post Independence, states that “ In the years following independence the country continued to promote the capitalist economic system it inherited. The government's non-interventionist economic policy coupled with a belief that the role of the public sector was to support the growth of the private sector, (except where private investment to provide support or services could not be found) had resulted in increased foreign investment and provided the impetus for a significant increase in the economic performance of the country”. The table below shows economic performance from 1961 to 2004. | | | | |Tanzania: Performance of economy and structural change under | |  |different policy regimes | |  |GDP growth |Growth of Manufacturing |Share of agriculture in |Share of Manufacturing in|Share of services in | | | | |GDP |GDP |GDP | |1961-1966 |7.8 |15.5 |49.0 |5.0 |46.0 | |1967-1985 |2.9 |0.5 |45.7 |9.1 |45.2 | |1986-2004 |4.0 |4.0 |47.5 |8.3 |44.2 | Table shows the influence of policy regimes on some macro-aggregates. It can be seen that the period of controlled policies (1967-1985) can be associated with the low growth of the economy as well as low growth of the manufacturing sector. In terms of transformation of the economy, the structure has remained more or less the same, with the dominance of the agriculture sector, mainly because of its historical legacy. As a typical colony, Tanzania was designated an exporter of raw materials. Little was done by the colonial order to diversify the economy. As such, Tanzania inherited an agro economy at independence and had insufficient resources to champion industrialization (Productivity performance in Tanzania). The economic performance realized was not felt in all sectors of the economy and the leadership became frustrated because of the emerging new forms of inequality and frustration with an inadequate inflow of foreign resources to implement development programs which will favor the Tanzanians, the Government, on 5th February 1967, embarked on socialist policy through the “Arusha Declaration”, which was the country’s blueprint for socialism. The Government was to exercise effective control over the principal means of production, which included land, forests, mineral resources, water, oil and electricity, banks, the import and export trade, wholesale businesses, communications, transport, insurance, industries like steel, machine tools, arms, motor car, cement, and fertilizer, and large plantations especially those which provided essential raw materials (Productivity performance in Tanzania). The Arusha Declaration was a TANU’s Policy on Socialism and Self-Reliance and it intended to bring unity and to wipe out any forms of exploitation . It clearly states that The policy of TANU is to build a socialist state. The principles of socialism are laid down in the TANU Constitution and they are as follows: WHEREAS TANU believes: (a) That all human beings are equal; (b) That every individual has a right to dignity and respect; (c) That every citizen is an integral part of the nation and has the right to take an equal part in Government at local, regional and national level; (d) That every citizen has the right to freedom of expression, of movement, of religious belief and of association within the context of the law; (e) That every individual has the right to receive from society protection of his life and of property held according to law; (f) That every individual has the right to receive a just return for his labor; (g) That all citizens together possess all the natural resources of the country in trust for their descendants; (h) That in order to ensure economic justice the state must have effective control over the principal means of production; and (i) That it is the responsibility of the state to intervene actively in the economic life of the nation so as to ensure the well-being of all citizens, and so as to prevent the exploitation of one person by another or one group by another, and so as to prevent the accumulation of wealth to an extent which is inconsistent with the existence of a classless society. NOW, THEREFORE, the principal aims and objects of TANU shall be as follows: (a) To consolidate and maintain the independence of this country and the freedom of its people; (b) To safeguard the inherent dignity of the individual in accordance with the Universal Declaration of Human Rights; (c) To ensure that this country shall be governed by a democratic socialist government of the people; (d) To co-operate with all political parties in Africa engaged in the liberation of all Africa; (e) To see that the Government mobilizes all the resources of this country towards the elimination of poverty, ignorance and disease; (f) To see that the Government actively assists in the formation and maintenance of co-operative organizations; (g) to see that wherever possible the Government itself directly participates in the economic development of this country; (h) To see that the Government gives equal opportunity to all men and women irrespective of race, religion or status; (i) To see that the Government eradicates all types of exploitation, intimidation, discrimination, bribery and corruption; (j) To see that the Government exercises effective control over the principal means of production and pursues policies which facilitate the way to collective ownership of the resources of this country; (k) To see that the Government co-operates with other states in Africa in bringing about African unity; (l) To see that Government works tirelessly towards world peace and security through the United Nations Organization. Arusha Declaration’s economic pronouncements are in line with any project initiative that it has to put into consideration the overall project objectives, timeline, and cost, as well as the roles and responsibilities of all participants and stakeholders regardless of the methodology employed in its implementation (Project Management). TANU implemented Arusha Declaration unprofessionally, because in any project they had to have a plan that was guiding them and it had to be accessible to all individuals who will be affected by the plan. The people who were going to be affected by Declaration were all Tanzania citizens and majority of them they were not aware of the information in the Arusha Declaration. TANU’s project management team was not fully prepared to embark on a project as big as transforming the country’s economic system from market economy to fully fledged socialist economy in a very short time frame. For example, when TANU national chairman J.K. Nyerere was addressing his party during the inauguration of Arusha Declaration, he clearly stated that “TANU recognizes the urgency and importance of good leadership. But we have not yet produced systematic training for our leaders; it is necessary that TANU Headquarters should now prepare a program of training for all leaders – from the national level to the ten-house cell level – so that every one of them understands our political and economic policies. Leaders must set a good example to the rest of the people in their lives and in all their activities”. The leadership of TANU, from national level all the way to the bottom they were not aware of the direction the country’s economic system was about to take, until the day they were addressed by their chairman. To the surprise of many Tanzanians, state control of the economy followed within a day of the declaration, and nationalization was extended to large commercial buildings. Parastatals were created to run the newly nationalized units (Productivity performance in Tanzania). The effects of not planning and communicating to the Tanzanians their intentions on the course they wanted to take the country’s economic system from market economy to socialism were bad. For example, according to the journal Development in post independence Tanzania “Educational reform faced opposition from administrators, teachers, parents and pupils alike (Schadler 1968). Officials in the Ministry of Education strongly opposed the teaching of agriculture in curriculum time, arguing that, 'self-reliant activities in practical subjects would stifle the development of innovative and creative imagination, something that Tanzania's long-term development would heavily depend on' (Morrison 1976), but to no avail. Such capitalist qualities as innovation entrepreneurship, initiative and self-motivation were ignored and deplored, as they were contrary to the socialist ideology of the government. Some parents and teachers considered it to be a return to colonial values by the suppression of aspiration, while to others 'little more than a return to farming' (Morrison 1976). The outcome was hostility and defiance, many teachers were not prepared to learn either the theoretical or practical skills necessary to teach effective farm practice which consequently had a twofold effect on their pupils. Firstly, by displaying negative attitudes towards practical activities they were reinforcing the anti-rural culture, the very antithesis of government policy and secondly, through their own attitudes and lack of farm skills they were a very poor role model for instilling 'good-practice', i.e. effective and efficient methods in their pupils. Nyerere envisaged Education for Self-Reliance to be more than merely the addition of agricultural production to the school curriculum, but due to a lack of guidance and formal training, administrators, teachers and parents interpreted it solely as this”. It was not just teachers, pupils, and workers who were taken by surprise; it affected all sectors of the economy. For example, Wage band compression was done to a factor of nine from fifty which means that the highest salaried employee received only nine times what the lowest salaried worker received. This depressed the morale of skilled managers, some of whom left the country, thus compounding the skills shortage in the economy (Productivity performance in Tanzania). Five years After the inception of socialism in Tanzania, the reception and the reaction of the people towards it, did not match the expectations of the people who planned the Arusha Declaration. They thought that once people are educated according to their curriculum they will all reside in rural areas and help to facilitate development in their respective areas, because they thought the educated citizens will postpone the benefits of education so that they could develop their homelands and for gore Money. They thought the citizens will wait until development is realized that is when they will start to get money (Arusha Declaration). For example, in a journal Development in post independence Tanzania, it clearly states that “Increasing literacy rates and a poor rural economic structure provided little opportunity for progression to either secondary school or what the youth considered to be meaningful employment so urban migration was aggravated. Migration was not a recent phenomenon but with increasing literacy rates, ever greater numbers of educated young people were seeking employment in the towns. Mascarenhas (1976) suggests that in 1961, 33% of migrants had no formal education, by 1970 this figure had dropped to only 7% as a result of the expansion of primary education and by 1976, 'the migrants had two-and-a half times the average schooling of those who remained in the rural areas', data that was supported by studies carried out by Roy (1966) and Collier (1986) on the educational attainment of the rural population”. Also those who migrated into urban areas faced very difficult situations. For example, lack of job opportunities in formal sector therefore they had find ways that will enable them to generate income or to return to where they came from that is rural areas. They decided to self employ themselves in urban areas, in different lines of work, such as construction, service industries (e.g. fast food or maintenance), manufacturing and the supply of basic needs (e.g. footwear) and ironmongery and they succeeded to some extent. Unfortunately these entrepreneurs with their small businesses were not and could not be neither registered nor acknowledged by the government that they were doing their businesses legally. The government was ideologically against them, they considered them to be clandestine, exploitive, and subversive, therefore challenging socialism and its principles of egalitarian and classless society. In 1973 the government decided to eradicate informal sector operators by abolishing the issuance of urban trading licenses to self-employed traders in 1973, but with little success (Development in Post Independence). The lack of knowledge by the planners of Arusha Declaration, of what Tanzanians wanted resulted in conflicting ideologies. The state economic machinery assumed that most Tanzanians will be willing participants in implementing socialism. In 'Ujamaa - the Basis of African Socialism' Mwalimu Nyerere said that 'We, in Africa, have no more need of being "converted" to socialism than we have to being "taught" democracy.' (Tanzanian Ujamaa and Scientific Socialism). Nyerere claimed that, before the coming of colonialist agriculture in Africa was already somehow mystically socialist, then there would not have arise all the travail of physical transposition and social re-adjustment which took place during the implementation of socialism in Tanzania. Resettlement and collectivization proves how many aspects of the prevailing system were at odds with modern socialism: notably, the isolated production units, low level technology, stratification and narrow vertical divisions. 'African Socialists' formulated 'socialist agriculture' as an existing reality rather than a goal to be achieved by rescuing communal elements; so it follows that they had no socialist program (Tanzanian Ujamaa and Scientific Socialism). All nationalised companies were operated differently compared to when they were managed privately. According to the journal of productivity performance “ Tanzanians who were appointed to run nationalized entities had little experience in running such entities and relied instead on the ruling party machinery to make production and consumption decisions, most of which made little economic sense given the low level of skills during the immediate post-independence period, Tanzanians of low skill levels were appointed to man complex production units, and it did not take long to realize that a mistake had been made”. The management and workers did not bother whether the company was making a profit or losses, because they did not have any incentive to make them innovative and hard working. The company could either make losses or profit but their salaries and full benefits were assured. The system of hiring and firing was bureaucratic and rigid, underperforming workers were difficult to fire, this led to nationalized companies to have irrelevant workers who were all in the payroll regardless of the company’s performance, even when production was falling. Nationalised companies also had extracurricular activities like sports teams which were all under the company’s payroll thus increasing the cost of operations. This was able to be done because the government was giving subsidies to all nationalized companies so that they could still be functional regardless of their productivity performance in terms of efficiency, effectiveness and profitability (Productivity performance in Tanzania). TANU’s plan was to eradicate poverty in the rural areas where majority of Tanzanians resides by resettling them in government designated villages . The journal of Productivity performance in Tanzania stated that “Agricultural production suffered, following the resettlements in designated villages (within five years about 20% of the population had been resettled), pressure soon emerged on land, and farmers had to travel many miles to find farms, thus losing valuable working hours.” Most industries were located in urban areas and they were not considered important in the initial stages of the implementation of Arusha Declaration (Arusha Declaration). While rationing foreign exchange through administrative allocation instead of market forces, they did not allocate the manufacturing firms enough foreign exchange thus depriving them of essential imported inputs (Development in Post independence Tanzania). The Journal of Development in Post independence Tanzania added that “ The success rate for foreign exchange applications dropped from a high 59% for industrial raw materials and 29% for machinery and spares in 1977, for example, to 11% and 4% respectively in 1982. As a consequence, capacity utilization rates fell from high levels of over 70% in the early 1970s to as low as 26% by 1982, and labour productivity declined sharply from positive growth rates to negative rates, such as minus 11% in 1980 (Mbelle 1988). What discouraged productivity was that, as capacity utilization rates fell, more capacity was created thus leading to a thinner allocation of foreign exchange per firm. A good account of this is provided in the textile industry. In 1976, for example, total production capacity was 90 million square meters of cloth, and capacity utilization was 91.9% (actual production at 82.7 million square meters of cloth). Establishment of more state textile firms in the early 1980s increased capacity to 252.1 million square meters. Due to a thinner distribution of resources, actual output fell to 57.4 million square meters, representing a capacity utilization rate of only 22.8% (Mbelle ibid). The lower priority accorded to industry meant that innovativeness and ingenuity were deprived of the laboratory for improving technology, which is essential in increasing productivity. Further, the rationing of foreign exchange through administrative allocation deprived manufacturing firms of essential imported inputs. The success rate for foreign exchange applications dropped from a high 59% for industrial raw materials and 29% for machinery and spares in 1977, for example, to 11% and 4% respectively in 1982. As a consequence, capacity utilization rates fell from high levels of over 70% in the early 1970s to as low as 26% by 1982, and labour productivity declined sharply from positive growth rates to negative rates, such as minus 11% in 1980 (Mbelle 1988). What discouraged productivity was that, as capacity utilization rates fell, more capacity was created thus leading to a thinner allocation of foreign exchange per firm. A good account of this is provided in the textile industry. In 1976, for example, total production capacity was 90 million square meters of cloth, and capacity utilization was 91.9% (actual production at 82.7 million square meters of cloth). Establishment of more state textile firms in the early 1980s increased capacity to 252.1 million square meters. Due to a thinner distribution of resources, actual output fell to 57.4 million square meters, representing a capacity utilization rate of only 22.8% (Mbelle ibid).” Also Due to economic problems which were beyond their control which eventually delayed their intended results, TANU leaders became disoriented and lost focus of what they wanted to accomplish. For example, Small Industries Development Organisation (SIDO) and the Basic Industrial Strategy (BIS) represented two conflicting ideological strategies, SIDO was biased towards production by the masses, while BIS was for mass production. Politically, SIDO represented an ideological solution, but was not popular with either senior administrators seeking quick-fix, fast track development, or international donors who preferred to fund large turn-key projects. However, by their very nature such projects represented a significant commitment on foreign exchange deposits (if the capital costs are not subsidised by a donor) both in the short and long term, as to maintain the plant and equipment, requires further foreign currency demands to purchase spare parts. The final important factor to consider is that such industries are technology intensive rather than labour intensive and therefore tend to exacerbate rather than alleviate unemployment, which they wanted to reduce (Development in Post Independence Tanzania). Conclusion. The leaders of Tanzania had all the good intentions for the wellbeing of all Tanzanians. Their decision to follow socialism as a policy of choice was a well thought decision but they ignored the preparation that was needed in order to make its implementation successful. They were over optimistic about the results which were going to be attained by the Declaration that they overlooked key things. They did not put into consideration many variables that could have affected their objectives negatively. For example, the perception of ordinary citizens towards the changes they were about to face as far as their way of conducting their lives. Like reallocation of their villages, and that school leavers were expected to be employed in the rural areas in farming and related activities and restrictions on the things they were allowed to do in order to increase their incomes apart from farming, all these were ignored by the ruling elites of TANU. In addition the declaration had many things to be accomplished with very limited resources e.g. liberation of African countries that have nothing to do with development of an ordinary Tanzanian. They also encountered negative reaction from the educated, by resisting to move to the rural areas. Ordinary Tanzanians did not want the government to choose on their behalf there basic needs like food, shelter, clothing, type of education and where to work. The government found itself applying political solutions to economic problems. At the same time foreign currency reserves were depleted. Economic infrastructure that we inherited from colonialist were mismanaged thus dwindled, especially the plantations. Due to poor planning of the Arusha Declaration (i.e. the blueprint of Tanzania Socialism) and wrong assumptions about Tanzanians, the Arusha Declaration was doomed to fail thus hindered development of Tanzania especially in its early years of independence