Business and the State in Africa: Economic Policy-Making in the Neo-liberal Era (review)

This is a book with an ambitious agenda, a fine empirical case discussion, thoughtful comparative methodology, and a conceptual compass that orients us to South Africa as a political as well as economic model for the rest of Africa. While there are four case studies presented in this analysis of business and the state in Africa—Ghana, Mauritius, South Africa, and Zambia—South Africa is at the center of the author's identification of the path African countries might follow on the way to development success.

The primary thesis of this book is that despite popular claims to the contrary, ethnic diversity creates healthy and vibrant capitalist economies. Handley is impressed that in most of Africa there is no "political and economic capacity to constructively engage the state in economic policy issues" (259). In contrast, in South Africa, and to a lesser but important respect in Mauritius, the fact that the parallel lines of ethnic ownership of the state and of the economy were in two separate kinship and cultural worlds meant that such a capacity was created purposefully. In both of these countries economic success has been based in "the way that ethnicity had historically separated out their respective political and economic elites" (243). This separation has allowed for "contestation" between the business class and the state, resulting in efficient and effective economic decision-making.

There is some wrist slapping in this book. Ghana, Zambia, and most of Africa have passed up the historical opportunities to set a course for economic success. Ghana, Handley explains, might have followed a path similar to that of South Africa, but it "over-exploited [the economic] sector before it was strong enough to defend its interests" (131). In general, Latin America is in much better shape than Africa. Zimbabwe's economic elite was too "structurally weak" to take advantage of the possibility for contestation between the state and the business class (254). The Tanzanian state, with a seriously "checkered history," now appears to be on a road to reform (260). Neopatrimonial states are a major problem for economic development, and in some cases, are rooted in precolonial political culture.

One cannot really quibble with any of these claims, which certainly reflect the liberal or neoliberal approach to economic development in Africa. But because in this book they are rooted in a broader claim that South Africa did it right, many interesting avenues of theory and history are exposed. If economic success is equated with the concentration of resources in tiny but successful groups of economic and political elites—and if these elites then create a modern society in which the economic inequities are greater than in any other part of the world (including Brazil)—then frankly, what is wrong with the neopatrimonial state? Should we be championing a form of state building that marginalizes most of society, exploits labor successfully enough to build great wealth for some, and limits democracy to a well-defined few? The book offers us the chance to be historically honest about economic and political development in Africa. Whether we consider twentieth-century South Africa, South Korea, China, late nineteenth-century America, or the many centuries of European history in which the state was sculpted, we see that democracy, as we understand it in the twenty-first century, usually does not accompany the building of the state or early phases of industrialization. Contestation—economic competition and institutional dynamism—are necessary. However, they need not be rooted in ethnic diversity. The South African paradigm offers us a broader, more challenging, if also more disturbing, lesson for twenty-first century development policy analysts.