The Marriage of Politics and Economics

I have not been political for most of my adult life; like many young people, I did not care about politics, I stayed deliberately ignorant about political issues, and I didn’t understand how politics shapes and influences the society, and, ultimately, myself. In fact, and to my credit, I became keenly observant of and concerned about economics and the role it plays in affecting and shaping people’s lives. I was determined to not let the concern of politics interfere with the ‘noble’ endeavor of understanding economics. It is astonishing now to realize how wrong and naïve this perspective was.

Politics is always in a perpetual marriage with economics. The political determines the economic, and the economic shapes the political. The fact that they are studied as separate disciplines in college creates the false perception that they operate distinctly in practice. However, it is the concept of Political Economics that more accurately reflects the reality. Human beings organize societies and exercise power through politics, and they extract and exploit resources within these political systems through economic systems.

Economic prosperity creates the means and opportunity by which people can thrive if they put in the work and effort for production. It is the possibility for positive outcomes congruent to effort; that people have the basic and rightful resources by the virtue that they are human beings. It draws from the fact that the earth and its civilizations has resources sufficient for every person to live and thrive on. Poverty, then, is implicitly unnatural insofar as it involves the deprivation of that which is essential to life and living. When society is organized effectively, there is enough to support human life and more to enable flourishing beyond the basic. Since the rules of power operand within a society influence individuals’ and groups’ access to resources, prosperity and poverty are likely to vary among societies. However, prosperity and poverty are not predetermined by genetic nor any other intrinsic factors inherent in individuals or groups; poverty is the logical outcomes of the systems and institutions of power at work within that society. This forms the basic rationale for statehood: that a group of people not necessarily having the same cultural and ethnic background contribute to ensure and protect their economic and political interests. Whether every person thrives within that society is ultimately determined by the institutional norms established and perpetuated within it.

How do institutions shape these outcomes? It is because of the power of institutions to shape incentives which in turn influence the behavior of individuals. Institutional norms and systems determine who and what is rewarded or punished and hence what individuals are willing and able to do within that context.

There is a peculiar character of the present regime in Kenya whereby the government is being run like a startup. It seems as though the government is up to one big experiment where seemingly brilliant and forward-facing ideas are being tried out on the economy in real-time. Why the political class thinks that they are fooling anyone by purporting to inject these funny antics in the name of economic innovation defeats all sense. It is an obvious fact that the dark and devouring beast eating this country is institutional corruption. Corruption has somehow been normalized, where those having or with access to political power manipulate economic rules to the disadvantage of the many. With heads buried in the sand, the regime wants to convince itself that dressing the government up with shiny initiatives and new plans can somehow make economic problems disappear.

Our state has what I would term as a decapitated democracy – it is just stable enough not to fail but extractive enough to remain poor. Kenya is not at a high risk of state failure, but it is equally far from true prosperity. It is no wonder, then, that whenever young people protest against failed policies, the political class retorts with the usual warning, “Do you want to burn down this country?” But who can blame them, for without state stability they would have no country to loot. Such relative stability based on a decapitated democracy cannot, however, be enough without true inclusivity and prosperity. It is the case in other countries such as Columbia and Argentina where the state is just at the precipice of failure but unable to produce prosperity for millions of its people (It is notable, however, that Kenya’s political landscape is still significantly decentralized in practice when the tribal sways of power are considered, especially as cemented by the infamous tyranny of numbers.) Remember, democracy is not inclusion.

The political class knows this and hence perpetuates a visage of democracy instead of true inclusion. Just to set it straight, there is a political elite in this country who intend to protect their economic interests through political power. They are not entrepreneurs, nor inventors, nor industrialists yet they are dollar billionaires. They like to hide behind the veil of ‘business people’ but we know who they truly are. Fundamental to their ‘business’ philosophy is that it is okay, and even necessary, to block prosperity and progress for the majority of the people in order to protect their interests. It bears repeating: the poverty in this country is not accidental nor destined, it is manufactured. It is the direct result of intentional and selfish decisions by a very small subset of people in the political class. They have the incentive and wherewithal to, in the words of Daron Acemoglu, ‘keep the playing field at an angle’, such that the norm of economic inequality is sustained across generations.

Make no mistake: it is not that the Kenyan politician is ignorant about the roots of poverty. Ignorance has never been a valid excuse for the delayed prosperity of this country. They know how to fix these problems but they lack the will to do it. They know that every progress into the future will inevitably involve a doing away of the status quo through the process of creative destruction. The businesses and cartels they have established through crony capitalism will be the first victims of innovation and inclusive prosperity. The beneficiaries of political sponsorship and corruption, therefore, have every incentive to keep things as they are even if that means leaving millions in dehumanizing poverty. And there is no doubting their ability to do so, because they wield political power.

We can acknowledge that, however, while corruption and impunity remain systemic in this country, at least we have them down to a crime, and that’s a positive thing when we compare to other openly extractive and autocratic nations like Bulgaria. In Kenya, at least we isolate and point out corruption rather than celebrate it. What’s needed next is the will to fight it.

The sustainable prosperity of a society depends not on how much the government can extract from the people through taxes but how well innovation and technology are applied to enhance production. The caveat is that the success of innovation is impossible without there being strong and inclusive institutions to provide the necessary incentives. The rule is that innovation that drives sustainable prosperity sits ever so delicately on the laps of inclusive institutions. The absence of such institutions is what keeps our country in poverty. This is because weak and oppressive institutions make it possible for politicians to create artificial barriers and roadblocks to innovation and investment such as unnecessary and expensive licensing, bureaucratic red tape, and the capture of financial institutions. Hence institutions fail in their basic duty of preventing the unlawful and unfair meddling by politics in economic policy and instead incentivize such interference. The end result is impeding progress and prosperity and enabling poverty.

How does a society break out of this vicious cycle of institutional capture and chart a path onto prosperity? Daron and Benson in their book Why Nations Fail suggest that this change depends on both intentional and unintended (contingent factors). We have seen how intentional institutional changes aimed at reinventing nd strengthening a society’s institutions are fundamental to economic transformation; however, such change is also shaped by otherwise incidental and accidental factors. Particularly key among these is the idea of ‘critical junctures.’ These are significant and unplanned-for events which unexpectedly alter the very trajectory of a society or a nation. Whether natural, social, or political in nature, critical junctures shake up the norm and set the society on a different path, for better or for worse. They serve as the catalyst to the intentional institutional changes already underway in that society and usher in the drastic economic and political change.

I wager that the storming of Parliament buildings on 26th June at the height of the Gen-Z protests, and the political climate of agitation and awakening following it, is a critical juncture for our country. That day was a symbolic manifestation of the awakening political spirit of young people which rides on courage and decentralized mobilization. As the demographic patterns in this country, and across Africa as well, shift ever more towards a youthful majority, that level of political consciousness is bound to have notable implications in politics, and hence economic policy.

What isn’t clear yet, however, is whether the Gen-Z led movement has developed a broad enough coalition across the country to tip the institutional balance and create a new norm in the country. Yes, the desire for change burns like a flame among the young people of this country; but fore actual institutional change to happen, we need more than a flame, we need a blaze. Thankfully, Gen-Z are cognizant of this, hence the significant efforts being put towards civic education by some. That is what will hasten the tipping point.

Furthermore, the echoes of a savior mentality can still be heard deep inside the voices of this movement. The notion that if only we get such and such a leader all these problems will be magically fixed. Let’s get it right: a nation does not need a savior to usher in change. Prosperity has a formula, and we know it: ensuring that inclusive institutions win. The prosperity of a people must not be wholly dependent on who is in power. I am not refuting the need for well-meaning and foresighted leadership. However, our economy and politics ought to be structured in such a manner that they hold and serve the people even when a fool sits in power because let’s face it, democracies are bound to produce fools and gluttons as leaders at any time. Institutional strength and integrity preserves economic and political health from such leaders.