Economic theories can be very impressive, especially where apparently universal principles of scarcity, competition, capital, labour, production, demand, supply, cycles, distortions, regulations, risks, interventions and so on are backed up by data illustrated by charts, graphs and seemingly complicated and color-coded formulas.
When many economists speak, they appear to suggest that they know how economies are created and run; and further, that if you could follow and implement their prescriptions, you too could create and run your economy as desired. Having taken my time to study and to understand how economies have been created and managed for thousands of years and globally, I have come to the conclusion that the most important economic foundation is not taught in economics or discussed by economists in their grand theories.
In order to properly understand how economies are created and run we must not spend too much of our scarce time reading textbooks or august publications on fancy theories. Let us turn our attention towards the factories, streets and homes of the worlds. When we do so what we see as the critical difference between the rich and the poor appears to be only one thing. That is, the ability to convert potential into reality and to get others to want, to demand and to pay for the new reality, makes the difference between wealth and poverty. It is not what you have but the ability to produce what you have not, that makes the rich or the poor. You may call this conversion-ability “creativity”, “innovativeness”, “technical expertise”, etc. What is important to remember however is that this conversion-ability is the engine of economies. Those who cannot make the “fictional” real, cannot create and run successful economies.
The remarkable thing is that the conversion-ability precedes process; it precedes production, analysis, profit-making etc. It exists as a unique and dominant trait of a people. It manifests as an inherent part and parcel of a specific language shaped by a dynamic imagination in a distinct network of people driven by an-economic super-identity and paradigm of themselves and of the world that works. This “pre-economic” trait that functions as the conversion-ability is the sine qua non of creating and running the successful economy. Those who don’t have it can only run errands for those who do. A learned imagination and spirit borne out of history, myths, pacts and even accidents, are the foundations for creating that faith, that spark, that character, that spirit, that courage, that discipline and the consciousness that enables the person and group of persons to know and to build the correct networks, environments, tools and processes that ultimately result in the conversion-ability.
Thus, to prescribe remedies for ailing, weak or failing economies without assisting them to acquire sufficient conversion-ability is tantamount to prescribing medicine without reference to the disease. This is not serious economics but toy-economics. We must never forget that those persons who create and run successful economies speak one language. They share one network, one culture and one discipline. They share one common law and one incentive system. We can call them a “can-do; will-do” tribe of sort. Only those who are useful and permanent members in this tribe succeed in creating and running successful economies.
When the tribe falls apart, the economy shatters. Thus, seek ye first thy creative-tribe and all other goods and services shall be added unto thee. Carrying bags of cash and jumping around applying this and that policy without first creating that conversion-ability will only lead to toy-economies that are at best playthings for children but unable to lead to real and sustainable development. The so-called development of nations that lack the conversion-ability is not real but fake. These economies are being propped up by third-party grants, loans, credit and a negligent or willful omission of other relevant factors such as opportunity costs, the disregard of losses to the environment and to future generations.
The benefits from those types of economies are short-term and they benefit only a minority. In addition, in so far as such developments are not native, but imported and third-party driven, they are properly characterized as fake-developments. One day, when the creditors choose for their own reasons, to call the loans and to stop propping up those economies, those economies will come crushing down like a pack of cards in a hurricane.
The conversion-ability is the main reason many nations in the world with divided languages, chaotic cultures and inconsistent incentives can never lay the foundations for competitive economies. The solution to weak, ailing and failing economics is not in the form but in the spirit of the men behind those economies. Change the imagination and you change the will of man. Change the tribe and you change the powers of the man. Change the spirit and you change the light of the economy. Therefore, what developing countries need above all, is not this and that adjustment programme or loan. Developing countries need a re-birth. Unless you are born again into the “can-do, will-do” tribe, you’ll forever remain estranged from the beautiful worlds of power.
By: Nana Oppong, President of the Distinguished Scholars of Africa.