There is an interesting debate about whether or not President Muhammadu Buhari is a socialist. In a recent article in this newspaper, Gregory Kronsten questioned the description of the president as a socialist. “Where is the progressive taxation regime that marks socialism?” he asked. “Where is the social safety net that such a regime funds?”
While conceding that Buhari’s economic approach “is not free market”, Kronsten posited that the rationale for his administration’s statist programmes such as the oil subsidies “is less socialist than ‘pro-poor’”. This is fascinating, and, as someone who has often called Buhari a socialist, I would like to join the debate: Is Buhari a socialist or not?
But before coming to that, allow me to slay some shibboleths about socialism. Contrary to Kronsten’s assertion, progressive taxation and welfare spending do not quintessentially define socialism. What does is the stifling of free market. According to the Encyclopaedia Britannica, “socialism is a doctrine that calls for public rather than private ownership or control of property and natural resources”. Thus, socialists want to own, control and regulate economic resources rather than allow markets to allocate them.
Of course, a high-tax, high-spend regime can also indicate socialism. But progressive taxation and social spending are not totems of socialism. If they are, then the Scandinavian countries, such as Sweden and Denmark, would be socialist. Tax revenue and social spending as shares of GDP are relatively high in the Nordic countries; for instance, they are 46 percent and 28 percent, respectively, in Denmark, compared with 27 percent and 20.7 percent in the US, according to the OECD.
What about the UK? It has a large welfare budget and spends heavily on public services, particularly the National Health Service, NHS, which is free at the point of use. The last Conservative government under Theresa May budgeted £34bn for the NHS, and the current Tory government under Boris Johnson has announced additional £1.8bn!
Yet, Denmark and Britain would vehemently reject any suggestion that they are socialist countries. Indeed, in 2015, the then Danish Prime Minister, Lars Rasmussen, a right-of-centre politician, said bluntly that Denmark was not a socialist state. “The Nordic model is an expanded welfare state which provides a high level of security to its citizens”, he said, adding: “but it is also a successful market economy.”
And Boris Johnson recently said: “Like every penny of public spending, NHS funding derives from a strong and dynamic market economy”. Continuing, he said: “The Conservatives understand the balance and symmetry at the heart of the UK: between wealth-creating forces of the free market on the one hand and great public services on the other.”
So, here is the point. Most governments recognise the need to tackle poverty and inequality with more spending on social safety net and public services, but the question is: What’s best way to generate prosperity in a society? Is it through a competitive market economy or through social control of resources?
Well, socialist governments believe strongly in social justice, in tackling poverty and inequality, but not with the same passion in economic efficiency. They prefer statist or government-led approach rather than trusting free-market competition to generate growth and prosperity. They are happy, for instance, to create public sector jobs rather than engendering the environment for increased private sector growth and jobs.
By contrast, in a market economy, the fundamental premise, as Rasmussen and Johnson said, is that a strong and dynamic economy is the goose that lays the golden eggs. It is economic growth, propelled by a robust and flourishing private sector that creates the jobs and generates the taxes which enable a government to spend money on social safety nets and public services. So, what defines socialism is not necessarily progressive taxation or social spending, but a government’s attitude to free market, to individual freedom.
Thus, for instance, while Denmark generates high tax revenues and spends a lot on social welfare, it does very well on measures of market regulation and state control. According to the latest OECD data, Denmark’s score on market regulation is 1.2, where 0 is least regulated and 4 is most regulated. On state control, its score is 1.9, where 0 is least control and 4 is most. Furthermore, Denmark’s business freedom score is 92.5 percent, while its property rights score is 84.8 percent, according to the World Bank.
So, what about Nigeria? Well, let’s start with taxation and spending. Surely, with government revenue at 6 percent of GDP in 2017, the lowest in Africa and with government spending at 8 percent of GDP, extremely low by world standards, Nigeria is certainly not a high-tax, high-spend country. But does that make it less a socialist country? No. It simply means that it lacks the capacity to generate taxes and, thus, the wherewithal to spend on basic services.
I mean, take taxation. Wouldn’t it be better if Nigeria could raise more taxes from the wealthy billionaires who made their money through crony capitalism but pay miniscule taxes? What about spending? For a start, the $2bn spent annually on the fuel subsidies could be better spent on public services, such as schools and hospitals. But that won’t even be enough. Wouldn’t it be great if no Nigerian ever dies because he or she can’t afford the hospital bill? And if no Nigerian child is denied a good education because his or her parents can’t pay a school fee? Sadly, Nigerians are denied even basic amenities.
Truth is, increased taxation and spending wouldn’t make Nigeria a socialist country. What makes Nigeria a socialist country, or something close to it, is its command-and-control economy. It is Nigeria’s appalling records, evidenced by its rankings in global indexes, on market regulation, state control, business and personal freedoms, property rights – essentially on free market – that make it less a market economy and more a socialist one!
Which brings us to President Buhari. Is he a socialist or not? Of course, he is! As a military head of state in the mid-1980s, he pursued unremittingly socialist policies. In an article, entitled “Avoiding the mistakes of the old Buharinomics”, the former Central Bank governor, Charles Soludo, listed some of the elements of Buharinomics as: capital, exchange and price control, import licensing, indiscriminate bans on imports, government ownership and control of the ‘commanding heights of the economy’, such as refineries, airline and banks.
Of course, today, global economic realities have forced Buhari to moderate his old socialist views. But his approach is still very statist. For instance, in his first term, he floated the idea of resuscitating the moribund Nigerian airways. His re-election manifesto promised creating two government-owned banks and building 109 government-owned production factories. Buhari is an infrastructure socialist, favouring debt-fuelled infrastructure projects.
He has refused to undertake structural reforms, such as privatising state-owned enterprises like the refineries and allowing a flexible exchange rate. What’s more, his government is pursuing aggressive import-substitution policies, characterised by import prohibitions. Despite reluctantly signing the AfCFTA agreement, Buhari’s rhetoric remains protectionist. His government has effectively nationalised the agricultural sector, which is heavily subsidised and protected!
To be sure, Buhari cares about the poor, but his approach to “helping” them is statist. He said his government lifted 5m Nigerians out of poverty and created 2m jobs. Leave aside the questionable figures; they are all “products” of big-government initiatives, not of private-sector-led economic growth.
Slice and dice it any way you want, these are socialist policies, not those of a strong market economy. So, Buhari is a socialist. Q.E.D!
Olu Fasan
