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Tag Archives: Fiat money

Colonialism and Corruption:”Paper-ification” of Value,Deification of “Paper” and Bifurcation of Morality

Nigeria is renowned for corruption,and it’s people for a lack of work ethic.Not a day goes by,without some politician or government official being pilloried in the media for one alleged financial misconduct or another.The perception on the street,is that government officials work only to fill their own pockets.But not only public officials,private ones too.The impression has taken hold that every Nigerian sees his office as a prebend: a place to collect his share of the spoils rather than to work.This attitude to work is expressed in the “this is not my father’s work” syndrome,a malaise which afflicts a society with a work-culture that does not esteem commitment or responsibility.How did Nigeria come to this pass,Especially considering, that Nigerians are very hardworking and religious people? Colonialism.Colonialism heralded the bifurcation of morality into personal and public strands,whereby,in their personal dealings with family and friends,people are held to an absolute standard of morality,a standard that is not expected to be matched in their public roles.

This dichotomy  resulted from differences between traditional and western societies,in their perception and definition of work.Traditional Nigerian society subscribed to a value-system which was very different from that of the west,especially with regard to work.Traditional society judged hard work by the  amount of physical exertion involved.A man could not become wealthy,unless he was willing to put in years of hard work,farming or fishing.There simply was no short-cut,to acquiring wealth or riches.Absolutely none.The appearance of the white man and his paper money changed all that.Imagine the quantum leap.All of sudden a man could become wealthy,not by sweating it out on the farm,but by  “loafing” in some square building,called school,in the mission house for a few years.For spurning farm work, in favour of schooling,these lucky few were rewarded with the white man’s money,which enabled an exotic life style: white man’s house,white man’s car,white man’s authority.

Paper- or fiat-money is money that has value only because of Government authority.Unlike paper-money,commodity-money has value because it is made from a valuable commodity.Gold is an example.In the West,Gold was accepted as money because Gold was a valuable substance.Eventually when Gold evolved into paper-money,because people could relate that money to Gold,it was possible to tie the value of money to the economic process.In Africa,there was no such transition.People woke up one day to behold the colonial-master and his pieces of “paper”,with it’s tremendous purchasing power.Given that access to this “paper” was conditional on the possession of other papers,called certificates,which could only be obtained by “loafing” in the white man’s school,it became clear to a community steeped in superstition,that possession of the white man’s “paper” was the height of magic.White man’s magic,government magic.

Paper-money made it’s appearance,in Africa,in a way that did not suggest a direct relationship with the productive process.It was this seeming alienation from the productive process that people saw,and concluded that the possession of the white man’s “paper”,was part of a magical process: possession of this “paper” had nothing to do with hard-work or merit.If it had nothing to do with hard-work or merit,then it had to be completely divorced from traditional concept of morality.The message,to a  farming or fishing community with it’s traditional definition of hard-work, was simply that one did not have to work hard to become rich anymore.In addition,given that the the possession of the white man’s money was divorced from traditional notions of morality,the quest for it could not be subject to same morality.Therefore,it became justifiable to steal,cheat or kill in order to become rich.Thus developed a unique,autonomous “paper” morality,according to which the end justifies the means,which was distinct from,and contrary to,the traditional morality of absolute right and wrong.

The native mind,which denominated value in such tangibles as barns and fishing boats,was turned by the idea of the “print-ability” of value,the “paper-ification”of value;the native mind came to identify work with the generation of “paper”,not honest effort or creation of value. Thus began our obsession with,and deification of ,”paper”,whether as money or certificate.With the pursuit of “paper” based on the autonomous morality of “result only”,the principle of hard-work was duly overthrown.Henceforth,no one would really want to work,whether for money or certificate.This is encapsulated in the “this-is-not-my-father’s-work” syndrome.It is this syndrome that is responsible for our bureaucrats,civil servants and administrators being an army of file-pushers,dedicated to the generation of paper in the shape of office-files and -forms,rather than the creation of value.That paper again!!! It is this love of paper that explains why my village transformer in Atta,Ikeduru,cannot be changed without a paper-trail snaking it’s way all the way to Abuja.We do not work to create value,but to generate mountains of paper.

People love big positions,but are loath to take responsibility.Every body wants to go to school,but not to acquire knowledge.No.Just to grab those certificates,by whatever means necessary.This aversion to real-work,finds it’s fullest expression in the attitude of government workers,especially those in elective offices.Our politicians are the worst culprits with regards to the pretend-work malaise.Reprising the distance between the colonial official and the natives,but not the work-ethic of the white colonial official,our politicians show scant regard for the interest and well-being of the people.The impression given by most of them is that they are in office for the service of self.It is this contempt for the people,that perpetuates the distance between the government and the governed,and cements the impression,in the people’s minds,that our national and state capitals may as well be colonial London,Paris or Lisbon.So far removed are our governments from the legitimate aspirations of the people.And so alienated are the people from government.It is this mutual contempt that drives unaccountability,and with it political corruption.

Nigeria-The Road to Capitalism:Surplus Extraction,the Invention of Money as a Store of Value and the Monetization of the Barn.

Protesters Outside The World Bank Building

Capitalism is the economic system  in which the means of production are privately owned and operated for private profit; the means of production include the instruments of labour such as infrastructure,factories,machines  and other equipment,and the subjects of labour such as raw materials and mineral resources.The running and management of businesses are done by private actors in the free market;profits are shared by the owners  of businesses,while the workers  employed by the businesses are paid wages.A free market is one where government intervention is limited,to the enforcement of private contracts and the protection of property rights.

This is in contrast to socialism,based on common ownership and cooperative management of the means of production, a transitional stage leading to communism, a classless and stateless society,structured upon common ownership of the means of production, free access to articles of consumption, and the end of wage labour and private property in the means of production and real estate;as inspired and envisioned,by Karl Marx’ communist manifesto.The main difference between capitalism and communism,therefore,is that unlike capitalism,communism does not allow for economic freedom.Individuals cannot be independent economic actors,solely driven by the profit-incentive.The lack of economic individualism is a key difference.

In pre-industrial agricultural European society,where most people were engaged in one form of agricultural activity or another,the family barn was the only way to store the surplus,that agriculture had helped man to extract from nature.With the advent of feudalism,and population growth,a large section of society was dispossessed of it’s natural land.That way feudalism played a key role in the drive towards industrialization,and urbanization,as the dispossessed,having lost their lands and homes,migrated from the countryside to the cities,in search of work.Thus feudalism created a large pool of dispossessed people,without any means of support,who were as a result available for wage labour.The availability of wage labour set the stage for the rapid industrialization that the world has witnessed.With help from the entrepreneur or capitalist,who managed,organized and paid labour in order to extract surpluses from nature.

If the dispossessed had to sell their labour to live,the motivation for the capitalist was simply to make profit.The greater the surplus he could extract,the bigger his profit.But,would the drive towards industrialization have become so intensive,if the surpluses extracted from nature ,could not be stored efficiently?Imagine if the surplus had to be stored in some warehouse.How big would the warehouse have to be? Think about giants like General motors or Toyota.They would need cities to store their products.Eventually they would have run out of storage space,and been forced to stop production.The capitalist,unable to store his surpluses efficiently and securely,would have concluded that further entrepreneurial efforts were a complete waste of time,energy and resources.Industrialization would have ground to a halt.The industrial revolution would have been still-born,without an efficient means of storing value.And that efficient storage system is based on money.

Money is any object or record generally used as payment,for goods and services,or for for repayment,of debt. There are two categories:commodity money and fiat money.Commodity money is money whose value comes from a commodity out of which it is made. It has value in itself as well as for use as money.Examples are  gold, silver, copper, salt, peppercorns.Fiat money is money that has value only because of government regulation or law,like modern-day currency.Money can be used as a means of exchange,unit of account and store of value.As a store of value,money made it possible for the surpluses won by man to be safely and efficiently stored.As money evolved from the commodity phase to paper money,it accelerated the process of industrialization,as it made possible the safe storage of increasingly greater profit,the lure of which drove business investment.The point is that as soon as money made it’s appearance,society was placed on an irresistible  trajectory to capitalism.Once it became possible to store almost limitless value as a piece of paper,people became willing to invest time,energy and other resources,in order to create greater value.That is why General motors and Toyota are still producing cars.Capitalism is the natural and logical consequence of the invention of money.

But apparently,African intellectuals of the left disagree,going by their incessant and bitter carping against the Bretton Woods institutions,World Bank,IMF,and their mantra of free markets and  privatization.The main plank of their criticism,is that capitalism is inhumane.and somehow unAfrican.But this is not true.Any society that invented money,would in time have ended up capitalist.African societies already had the key element of capitalist societies:individualism.In most African societies,people enjoyed freedom of action with regard to economic activities.Lands and crops were owned and managed by families,not the public.Consider the Igbo society of southeastern Nigeria,virtually every adult had sufficient land on which to farm,the proceeds of which were stored in the family barn.Given the limitations of the barn,in terms of preservation of produce,and the fact that everybody else farmed,their was very little motivation for anyone to accumulate too much surplus.People produced just enough for their needs:immediate food-need and future seed-need.There would have been some trading with produce used as commodity-money.Imagine what would have happened if people could store excess surplus as a piece of paper.The drive for profit would have led to capitalism,eventually,independently of the western world.

Indeed,following the introduction of colonialism,and paper-money,our people abandoned farming,and embraced schooling.And all in pursuit of money,as the bank replaced the family barn.Even though,unlike Europe,where wage labourers had been dispossessed by feudalism,Africans had not been so dispossessed.Just shows that the pursuit of profit is a human instinct.We should stop seeing capitalism as a foreign ideology.No.It is a human ideology.Agreed that primitive capitalism breeds inequality,it also creates great wealth.It is up to the people to ameliorate inequality,by insisting on democracy,rule of law,education,infrastructural development and social security.With these tools,the poor today can lift themselves to great heights tomorrow.In such a socially-dynamic society,it can be argued that Karl Marx’s dream of the classless society,has been achieved.Capitalism is the way forward,if Africa should develop.The sooner we can achieve a consensus on this,the better off we will be.