The Contradictions of Neo-Liberal Democracy

The Contradictions of Neo-Liberal Democracy RICHARD SANDBROOK

Professor of Political Science, University of Toronto

The article explores three inherent contradictions of neo-liberal economic reform in sub-Saharan Africa, with particular reference to Ghana, Mali, Niger, Zambia and Madagascar. First, it examines the paradox that the groups most disadvantaged by economic adjustment have been the main champions of democratic reform. Second, the article addresses the dilemma faced by governments that key areas of economic and social policy are determined by external agencies, thus undermining their legitimacy. Third, it analyses the conflicting economic and political logics of neo-liberal democracy. The article concludes by pointing to ways of reconciling economic adjustment and democracy in the sub-Saharan context and assesses the so far meagre results of governments' and donor agencies' adoption of a social democratic approach to economic adjustment.

Neo-liberals contend that economic liberalisation is the best strategy for promoting not only prosperity but also democracy in countries throughout the world. Extending private property and free markets, they believe, buttresses civil society, fosters efficiency and disperses power by separating economic from political power. In these ways, economic liberalism nurtures pluralism, well-being and freedom. Critics, on the other hand argue, that neo-liberal economic reforms dilute and even undermine nascent democracies. Africa's recent experience provides support for the critics' case. The continent's prevailing poverty, weak states, divided societies, and dependent economies present obstacles enough; the contradictions between economic and political liberalisation compound the challenge. The high social costs of structural adjustment policies alienate key supporters of democratisation; externally imposed economic liberalisation attenuates democracy by removing important economic and social policies from representative institutions. Likewise, efficiency criteria and state shrinkage conflict with the political logic of clientelism. Neo-liberal doctrine has responded to these challenges and to the disappointing results of structural adjustment by rhetorically embracing certain social democratic principles. Whether these AUTUMN-WINTER 1999

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pragmatic modifications will go far enough to resolve the three inherent contradictions remains to be seen, but appears doubtful. I explore these contradictions by examining the experiences of six countries: Ghana, Mali, Niger, Zambia, Tanzania and Madagascar. The sample is geographically diverse, with cases drawn from West, South-Central and East Africa, and includes both former French colonies (Mali, Niger and Madagascar) and former British colonies or trust territories (Ghana, Zambia and Tanzania). However, I cannot claim that these cases validly represent all of sub-Saharan Africa's emergent democracies. Nevertheless, they reflect the experience of the many low-income countries which suffered the implosion of their economies in the early 1980s, and consequently pursued structural adjustment programmes, and eventually transitions to democracy.

Contradictions of neo-liberaldemocracy I. The first contradiction of democratisation in the context of neo-liberal economic reform ('neo-liberal democracy') is that those groups which champion democratic transitions are the main losers from structural adjustment. Critics of neo-liberalism in the western welfare states, Eastern Europe and Latin America contend that free market policies inevitably promote income and wealth inequalities, which in turn vitiate the liberal-democratic principle of political equality. Hence, the critics argue, laissez-faire dilutes the quality of democracy and undermines its popular support. This argument has less validity in the African context. A careful study often sub-Saharan countries concluded that 'most of the poor [...] are small net gainers' of economic liberalisation, especially in the areas of trade, exchange rates, fiscal policy, and agricultural prices and marketing.1 On the other hand, liberal economic policies harmed those who received rents when goods or foreign exchange were rationed by governments. Similarly, it disadvantaged those who held guaranteed public employment, benefited from subsidies, and profited from governmental intervention by means of price-setting in commodity and food markets. Yet, many of these urban working class and middle class losers were key supporters of democratisation. Popular struggles for democracy derived impetus from economic decline and the adoption of adjustment programmes. Most of the authoritarian regimes that emerged in sub-Saharan Africa in the 1960s and 1970s depended heavily on the politics of distribution for their survival. They favoured strategic urban strata and ethnic/regional allies in the allocation of public expenditures and the distribution of rents via client networks. Financial repression, widespread state controls and regulations, and a large parastatal sector ensured the availability of significant rents for many years. However, the economic mismanagement inherent in this mode of governance, combined with external and climatic shocks,2 brought many economies to the point of collapse by the early 1980s. Decrepit economies could no longer generate the surplus to maintain political support for autocratic leaders. This presented beleaguered governments with little alternative but to turn to the International Monetary Fund (IMF) and the World Bank for loans. The era of economic stabilisation and liberalisation thus began. Structural adjustment, 42

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however, was designed to redistribute income; this was inherent in the changes in relative prices, the elimination of many controls and regulations, and the shifts in public expenditures. In Africa's agrarian economies, adjustment was supposed to shift resources from 'privileged' urban groups to the agricultural producers. This attempted shift inevitably disrupted political alliances.3 Authoritarian governments, no longer able to purchase political acquiescence, faced the anger and frustration of well-organised and strategically located urban groups. Public employees, organised workers in general, students and professionals were adversely affected first by economic decline and then by (hesitant) structural adjustment. Devaluation, inflation and reductions in food subsidies shrank real wages. Planned privatisation and downsizing of the civil service threatened existing public employees and those in educational institutions aspiring to that status. A decrease in subsidies to secondary schools and universities produced higher fees and living expenses for students and a lower quality of education. In short, public services deteriorated. Therefore, economic grievances animated political protests as students, intellectuals, professionals, public employees and workers blamed the economic crisis on the corruption and incompetence of autocrats. Subsequent transitions to democratic governance inspired public jubilation as democracy activists anticipated a return to better days. Yet, elected governments had little choice but to continue with the adjustment policies of their predecessors. Indeed, the IMF and the World Bank demanded even more stringent implementation of stabilisation, liberalisation and privatisation programmes than before. When such efforts failed to produce economic benefits expeditiously, some of the erstwhile elements of the democratic movements turned against the new governments. Governments and donors erected social safety nets to cushion the effects of adjustment and reduce poverty, but these efforts have had a limited impact. By the late 1990s, public cynicism, strikes, and demonstrations had thrown the very survival of some democratic experiments into doubt. This scenario played itself out in Madagascar, Mali, Niger, and Zambia. However, neither Ghana nor Tanzania experienced such problems. The first three countries adhered to a similar pattern. Although only a quarter or less of their populations lives in urban areas, secondary and university students, civil servants and organised workers have had a disproportionate political impact. Students, in particular, have shown themselves to be organised, tenacious in the defence of their privileges, and capable of mobilising unemployed and disaffected youth outside their own ranks. Students in all three cases initiated or spearheaded the urban rebellions that precipitated the transitions to democracy.4 Hence, the students and their urban supporters expected their elected governments to return them to their earlier privileged position. Yet, this was not a reasonable expectation in light of economic crisis and adjustment. To make matters worse, economic reform has not generated a vibrant private sector to provide alternative careers for unemployed students and displaced public servants. Alienation of some of democracy's key urban supporters has thus ensued, AUTUMN-WINTER 1999

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at times resulting in civil protest and violent conflict. Meanwhile, the illiterate and isolated rural majority continues its largely passive role in national politics. In Zambia, a far more urbanised country, a different pattern prevailed. Students played a less dominant role, and organised workers a more central one, in the oppositional coalition that prodded President Kenneth Kaunda and the ruling United National Independence Party (UNIP) to submit to a national election in 1991. Zambia suffered severe economic decline after 1975 as the world price of copper, the economy's mainstay, plummeted, and therefore had to borrow to offset the decline. In the 1980s, the UNIP's periodic adoption of stabilisation and liberalisation packages further strained the living standards of its former supporters among copper miners, urban workers, public employees, professionals, and even businesspeople. The government's removal of a significant subsidy on maize meal twice acted as a flashpoint for urban riots in the 1980s, forcing the government to re-establish the subsidy. By 1990, people had begun to blame UNIP's corruption and mismanagement for their economic hardships.5 A united Movement for Multiparty Democracy (MMD) harnessed this anger to defeat UNIP in 1991. The new government initially pursued adjustment with greater zeal than its predecessor. However, after the initial 'honeymoon' period ended, some of the MMD's supporters became disillusioned with continuing austerity, high inflation, and declining services. As a result, a wave of strikes beset the new government. Not surprisingly, the regime then temporised in the face of donors' demands that Zambia privatise state-owned enterprises and cut the workforce in the publicly owned copper mines by half, as well as lay off 7,000 civil servants. Although some privatisation and redundancies ensued, the largest state-owned enterprises remained largely intact. In Ghana, the politics of adjustment unfolded rather differently than in other countries. Flt.-Lieut. J.I. Rawlings seized power in December 1981, with the support of the lower ranks of the armed forces, radical intelligentsia, students and organised labour. This alliance was united in a vaguely defined populist 'revolution' against a corrupt and exploitative elite of politicians and 'capitalists'. Nevertheless, Rawlings changed course in late 1982 and entered into a stabilisation agreement with the IMF in April 1983. By the mid-1980s, his former urban supporters (except the army) expressed their anger at this turn of events. The PNDC, however, met this opposition head on.6 It ruthlessly detained and harassed union leaders, randomly closed universities and imprisoned middleclass opponents. In 1986, Rawlings obtained concessions in the adjustment agreements to accommodate the interests of the protesters. Moreover, in 1988 he launched PAMSCAD, a set of relief projects, to alleviate the distress of vocal groups, especially in the urban areas. By 1992, when Rawlings managed a transition to 'democracy', his government could boast of some economic success. An 80% rise in government salaries prior to the vote must also have allayed some of the urban disaffection. Finally, he succeeded in rallying a large rural constituency behind his banner of continuity. Consequently, even the opposition parties advocated (modified) adjustment policies. Tanzania, in contrast to the other cases, has experienced neither a strong 44



urban-based democracy movement nor sustained urban opposition to structural adjustment. Public demonstrations against the single-party state were virtually non-existent between 1985 and 1988, but peaked several times in 1990 and 1991. Demands for the legalisation of opposition parties were voiced mainly by academics and prominent lawyers in the pages of the independent press, and by former President Julius Nyerere. President Ali Mwinyi nonetheless bowed to the continent-wide trend towards multiparty systems in 1992, probably confident that a small and divided opposition would pose little threat. Certain features of the rule of the Chama Cha Mapinduzi (CCM) in Tanzania largely explain this weakness of the urban democracy movement. First, the governing party had managed to monopolise all popular organisations since the mid-1960s. Independent associations were co-opted into the party, or saw their leadership dominated by party militants. Second, the party's socialist or ujatnaa ideology had restrained the privileges of the urban minority in this overwhelmingly agrarian society. When real incomes halved between 1975 and 1983, urban workers accepted economic liberalisation as a means of escape from what they saw as the deadend of existing socialist policies.7 What encouraged people, therefore, was the party's embrace of economic reform policies in the mid-1980s; political liberalisation appeared secondary. The politics of adjustment, therefore, do not inevitably contradict the consolidation of democracy. However, there is a strong tendency in that direction. II. A second contradiction bedevilling neo-liberal democracy is that key areas of economic and social policy lie outside the ambit of duly elected representative institutions. Elections and legislative debates seem to have little bearing on the issues that really matter. This sense of irrelevance seriously undermines popular commitment to democracy in today's world. Critics in western democracies, as much as in the new democracies of Latin America, Eastern Europe and East Asia, lament the overwhelming political power of big business wrought by economic concentration and the threat of capital flight in an increasingly global economy.8 Effectively, most governments have lost control of monetary and taxation policy. This in turn restricts the possibilities for framing social policy since capital markets penalise countries running high deficits. However, in Africa, the threat to popular sovereignty stems not so much from transnational corporations as from multilateral financial institutions. Adjustment programmes, covering the key areas of economic and social policy, emerge from secret and top-down negotiations between technocrats representing a government and an international lending agency. As Gerald Helleiner observes, '[t]he degree of external intrusion into policy formation and the concomitant failure to develop appropriate local research and decision making capacity is not found, and would not be tolerated, elsewhere in the developing world'.9 On the one hand, the IMF, the World Bank and bilateral donors negotiate agreements with governments in camera. Donors believe that they must deal directly with governments on policy issues. They assume that elected governments have a mandate to proceed with adjustment. It will therefore be the AUTUMN-WINTER 1999

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task of these governments to obtain a ratification of any agreements, including the conditions for loans, from constitutionally empowered legislatures. Donors also seem to presume that, since adjustment requires unpopular sacrifices, a topdown decision-making process is preferable to a participatory one in which popular demands can derail 'necessary' reforms.10 On the other hand, elected governments also eschew popular input into adjustment programmes. They find themselves in a difficult position. Not only do they have limited room to manoeuvre in negotiations with the IMF, the World Bank and other lenders, but they are also expected to implement all agreements as negotiated. Knowing that they will be unable to satisfy some demands, presidents and their lieutenants avoid consultations they cannot control, and ignore or undermine articulaters of dissent and protest, such as opposition parties and independent newspapers. Where governments rest on shaky legislative coalitions, they will also avoid potentially divisive parliamentary debates on unpopular adjustment measures. Donors have had recourse to the doctrine of local ownership to bridge the gap between the reality of external direction and the imperative of governmental and popular commitment to reform. Only if this local commitment exists, donors realise, will adjustment programmes be implemented effectively. Yet, this doctrine is self-contradictory. Surely, local ownership can only emanate from extensive national consultation and debate over appropriate policies. However, if such debates prompt governments to advocate a different mix of policies than those which the donors find acceptable, the necessary loans and grants will not be forthcoming. So, it appears that the locals can own their programmes only if these accord with external priorities. Local ownership, therefore, is unlikely to square the circle. Why should citizens appreciate legislatures, parties, interest and advocacy groups, consultative mechanisms and independent media when, as currently happens, the major decisions are made elsewhere? In any case, there seems little justification for curbing public debate on the grounds of technocratic expertise; the limited success of structural adjustment suggests that ample room exists for debate over the proper mix, timing, sequence and scope of reforms. III. A clash between political and economic logics constitutes a third contradiction of neo-liberal democracy. This tension even exists in mature democracies where political parties practise 'machine polities'. In poor peasant societies, however, where ideological differences are muted and unlikely to command support, political success in democratic contests will depend even more heavily upon populist appeals and patronage. Yet, adjustment to the free market model requires the minimisation of rent-seeking and populist distribution of policies by governments, the efficient allocation of scarce public resources, and in general the predominance of a market-based economic logic. How will reforming governments survive politically? Neo-liberals hold that governments helped create the economic crisis in the first instance through heavy-handed interventions that promoted rent-seeking and pervasive clientelist politics. Democratic politics, they believe, offer the advantage of building consent through 46



policy-based electoral majorities, respect for human rights, and the rule of law, rather than wholly through the mercenary linkages of rent-seeking and patronage. If adjusting governments succumb to populism and clientelism, it is contended that they will unravel their economic reforms, incompetence and corruption will continue to reign in the public sector, and appointments and promotions will serve as fodder for political machines. In addition, particularistic exemptions and deals will whittle away the logic of stabilisation and liberalisation measures, and public investments will contribute only minimally to production if they follow a political logic of building support for incumbent politicians. On the other hand, political competition and the instrumental expectations of constituents impel politicians to adopt populist stances and foster patron-client politics. As persistent recession and stringent adjustment alienate strategic supporters, elected leaders resort to 'machine politics' to repair the political damage. Clientelism and a reliance on personal loyalties represent ingrained political habits in poor peasant societies. According to experts, such practices are deeply rooted in the culture and history of the six cases under study.11 Moreover, the specific neopatrimonial characteristics of preceding authoritarian regimes have been found to influence democratic transitions. The less institutionalised and more clientelist the authoritarian regime, the more likely is the re-emergence of clientelism, personalism and corruption in a new democracy.12 This suggests that a vicious circle may ensue. Intermediary institutions are weak; insecure governments weaken them further; and clientelism, personalism and corruption expand as a consequence, thereby exacerbating the institutional weaknesses. This oft-noted contradiction between economic and political logics is ineluctable in the democratic experiments of poor peasant societies. Yet, it is doubtful that corruption and rent-seeking in the new democracies exceed that which existed in the former authoritarian regimes. What changes is the extent to which such practices receive public exposure and criticism through resurgent private media outlets, opposition parties, and civil associations. And the contradiction is not actually as profound as often thought. Economic recovery fundamentally depends upon political stability and the political support that a reformist government commands. In heterogeneous peasant societies, which have been further fragmented by years of recession and austerity, patron-client networks provide a basis - sometimes the only one - for governance. In this sense, clientelism and rent-seeking represent not simply waste, but a necessary cost of adjustment. The real danger is that neo-patrimonial politics will become unrestrained and thoroughly corrupt, thus engendering the public cynicism and de-institutionalisation that will doom both democracy and adjustment.

Economic adjustment and democracy Is there a way out of these predicaments? Can popularly based democratisation be reconciled with market reforms aimed at breaking through the limitations of patrimonial capitalism? Paradoxically, only a social democratic approach to market reform seems capable of achieving this amidst the hostile circumstances of subSaharan Africa. A social democratic framework would involve, as a minimum, the AUTUMN-WINTER 1999

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replacement of the prevailing top-down technocratic decision-making style by a more inclusive and consultative approach, and the extension of policies to enhance equity, alleviate poverty and buffer the living standards of those who lose out in neo-liberal experiments. Actually, the World Bank, donor agencies and reforming governments have moved a long way recently towards a rhetorical embrace of these two principles. What is needed is a greater degree of consistency between declarations and the actual practice of economic reform. But will governments and donors depart from their centralised and secretive mode of policy making? A more participatory mode will increase the risks of macroeconomic populism and policy paralysis, though these dangers were not absent even in the authoritarian context. It may, on the other hand, improve the efficacy of, and support for, adjustment programmes and strengthen democratic institutions. To achieve this reorientation, elements of civil society, especially professional and employers' associations, trade unions, human rights groups and the independent press, will need to persist in demands for more open and responsive governance. Such initiatives may persuade reluctant governments and donors to accept greater debate and consultation on economic and social policy. If a more participatory style is to evolve, then intermediary institutions will need to develop their capacities. Political parties, parliaments, interest groups and the press all operate under onerous constraints. Parties tend to fragment, and lack both ideological and policy coherence. Few parties boast sufficient financial and technical resources to sustain a capacity for policy analysis. With the possible exceptions of Zambia and Ghana, and limited to the six case studies under review, parliaments lack experienced deputies as well as access to the financial and economic information and expertise with which to develop critiques of technically complex budgets and legislation. Legislators make do with rudimentary or non-existent parliamentary libraries. They miss expert parliamentary staff and the funds to hire consultants. Governments often refuse their requests for information on adjustment agreements on the grounds that such information is 'classified'. Interest groups do not have a capacity for policy analysis and advocacy owing to decades of authoritarian controls and the corrosive deal-making of clientelist politics. The press lacks the professional expertise and financial base to engage in in-depth journalism on the complex issues concerning economic recovery. Yet, these weaknesses should not be used to justify the current top-down approach to adjustment. Indeed, the weaknesses reflect the strategy of presidents and governments to marginalise and sometimes subvert the intermediary institutions, which can impose day-to-day accountability on them. These institutions are far from irreparable. It is not enormously expensive to build parliamentary libraries, hire expert staff for legislatures, make official information available, train policy analysts, establish independent think-tanks, and support the reorganisation of parties and interest groups. Donors are already assisting in these areas, and scattered experience suggests that intermediary organisations can build their capacities even in difficult conditions. Consider the case of Ghana. Parties here have amalgamated rather than 48


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fragmented. The 1996 elections saw the governing Nkrumahist National Democratic Congress opposed by a fractious Great Alliance of Liberals and Nkrumahists. A division between a conservative Danquah-Busia tradition and a populist Nkrumahist tendency traces its roots to Kwame Nkrumah's split from the United Gold Coast Convention in 1949. Yet, Ghana's parliament not only lacked resources but was also dominated by the governing coalition until 1997, owing to the opposition's boycott of the 1992 parliamentary elections. However, the members of parliament were not ciphers. The two independent members of parliament often raised embarrassing issues. Moreover, the Assembl"s Finance Committee launched incisive and well publicised reviews of economic policy. Since 1993, this Committee conducted lively hearings on the annual budgets, at which time opposition parties presented trenchant critiques. Associations of employers, trade unions and the Ghana Bar Association also made submissions. Nonetheless, fora in which government consults interest groups on the direction of relevant policies and programmes remain scarce in Ghana. Officials of the Trade Union Congress (TUC) have complained that the transition to democracy has not opened channels by which they can bring labour's interests to the attention of government. Indigenous non-governmental organisations (NGOs) do not have opportunities to make representations to government on development issues. A peak organisation, the Ghana Association of Private Voluntary Organisations in Development, exists on paper, but it is weakened by resource constraints and politically inspired factionalism. Women's associations are grouped in the government-created and led National Council for Women and Development; many are also affiliated with the '31st December Women's Movement' which is led by the wife of President Rawlings. Key business associations have not yet succeeded in establishing themselves as effective policy advocates on behalf of their members. Government-business relations have been bedevilled first by Rawlings' periodic populist denunciations of 'exploitative' capitalists, and second by the support which prominent businessmen have allegedly given to the opposition parties. Efforts by local business associations and IMF intermediaries to establish a forum for genuine consultations initially failed.13 Only since 1995 has a private sector think-tank, the Private Enterprise Foundation, established an influential relationship with the government. Ghana's press has continued to show vitality despite its severe constraints. It suffers from the usual set of limitations: undercapitalisation, limited professionalism, government intimidation, and restricted markets. Nonetheless, for several years, numerous newspapers, most notably the Ghanaian Chronicle and Public Agenda, have offered informed criticism of government actions and practices. Furthermore, private stations have emerged recently to offer another forum for public debate. In sum, the Ghanaian experience of institutional development gives some grounds for hope. Intermediary organisations in some sub-Saharan countries can rise to the challenge of a more consultative and open policy processes. Reconciling adjustment with democracy also requires that governments AUTUMN-WINTER 1999

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address equity issues in their impoverished societies. Vocal and well-organised urban employees will become alienated politically if they are left to bear the brunt of adjustment measures. Also, the rural poor must feel that they have some stake in the democratic system if they are to participate in elections. Most corrosive is the popular belief that elected politicians are concerned only with selfaggrandisement, primarily through corrupt activities. What, first, of the claim that adjustment policies on balance enhance equity by benefiting the poor, who are largely rural based, at the expense of the 'privileged' urban dwellers?14 In theory, currency devaluation and increases in the locally paid prices of export crops should raise the incomes of rural producers, including the many small holders. Market liberalisation will probably also raise the price of food, but this will not affect the rural poor to the extent that they are selfprovisioning, or were already paying black-market prices. Again in theory, adjustment should benefit rural dwellers by redirecting public resources to the rural areas. Revenues should depend more on urban-based taxes, such as petrol and value-added taxes, and less on taxes on primary exports, while expenditures should favour primary education, health care and rural infrastructure that benefit the rural majority. In Ghana, adjustment does seem to have supported the redirection of resources to the rural areas, as the theory suggests.15 Since the late 1980s, Ghanaian smallholders have benefited from a higher share of the world price for cocoa, shifting more of the tax burden to urban consumers, and decentralisation of the districts backed by central transfers for development projects and major investments in rural infrastructure. The latter may include rural electrification, feeder roads and schools. However, the motivation behind this rural policy bias seems to have been as much political as economic: it enabled President Rawlings to win elections by building a political base in the countryside, outside the Ashanti Region. Elsewhere, adjustment's distributional impact remains controversial. It is not easy to sort out the divergent effects which various policies have on income distribution. Relevant data are unavailable or unreliable; hence, deductive reasoning from economic models, anecdotes and hunches take the place of clear evidence. Critics have long maintained that adjustment does not help the poor. The former hold that such packages are 'defective' in design because they rarely have brought the sustained growth that poverty alleviation requires, have increased the burden on the poor, especially women, and they have provided compensatory schemes that are too meagre and too urban-biased to be of much use.16 It was the World Bank's recognition of these sorts of problems that led to its adoption in 1990 of poverty reduction as a separate goal of structural adjustment. The new view was that the 'social dimensions of adjustment' (SDA) programmes should target not only the 'new poor' and other vulnerable groups who had been adversely affected by adjustment, but also the 'chronic poor' whose low productivity had condemned them to poverty long before the advent of adjustment. SDA programmes would not simply compensate losers; they would reduce poverty in the targeted groups by raising their productivity. This would CAMBRIDGE REVIEW OF INTERNATIONAL AFFAIRS


involve investments in human capital and household assets, changes in relative prices to favour the poor, the promotion of wage employment and the organisation of targeted groups within 'empowering' community organisations. Practice has fallen short of these lofty aims. Although IMF and World Bank adjustment lending now includes provisions to address poverty and the social costs of adjustment, the anti-poverty programmes do not dispose of the resources needed to make headway against widespread deprivation. Social safety nets are of two types.17 Social Action Programmes (SAPs) are 'regular investment projects', implemented in most cases by line ministries. Social Funds (SFs) involve the formation of a more or less independent agency to administer funds contributed by donors and the host government. The latter agencies respond to proposals for relevant projects made by NGOs and local governments, supervise their implementation and monitor their effectiveness. Both arrangements support similar projects. The most effective in assisting large numbers of people are labour-intensive public works projects. They have created not only thousands of temporary jobs, but also usefully rehabilitated streets, drainage systems, sanitation facilities, water supplies, schools, health facilities and markets. Other types of projects include assistance to laid-off public employees, unemployed graduates of secondary schools and universities, and credit and training schemes aimed at managers of micro-enterprises, in particular women. SAPs have also used their funds to restore basic social services used by the poor, such as basic educational and health facilities, and the supply of essential medicines and (occasionally) nutritional programmes. Those who have studied these initiatives point to their limited impact.18 Where the majority of the population is poor, scattered projects will not improve the lot of very many. The urban bias of projects further reduces their povertyreducing impact, as the bulk of the poor generally live in the rural areas. This bias does, however, address the political realities of adjustment, namely that the most vocal and best-organised opponents of adjustment reside in the cities. These opponents must receive some compensation if adjustment is to proceed. Finally, some governments redirect funds designed to alleviate hardship into patronage channels. This further dilutes the anti-poverty thrust of social programmes. However, such diversions are not inevitable. Studies undertaken in various countries indicate that independent and politically insulated agencies have administered SFs in some countries, and have succeeded in relieving distress, especially through labour-intensive public works.19 Yet, these safety nets represent mere 'add-ons' to existing programmes; the 'deeper' approach now propounded by the World Bank and others focuses on building anti-poverty measures into the very design of adjustment programmes. This is to be achieved by promoting an efficient labour-intensive pattern of growth, focusing on agriculture, shifting public expenditures from less essential activities to primary education and primary health care, directing credit to microenterprises and improving rural infrastructure and the marketing of agricultural products. If the World Bank actually adhered to these guidelines, then it would be within AUTUMN-WINTER 1999

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reach of a social democratic approach. Growth with equity arguably demands more than a residualist concept of welfare, whereby the state erects safety nets to maintain those who cannot fend for themselves in a market society. It requires the more activist role that occasionally appears in Bank reports. Here, governments have a responsibility to counteract market tendencies that perpetuate poverty and inequality. The Bank's emphasis on primary health care and primary education for all citizens, if consistently followed, would fit the more activist role. Other equity measures that aim to augment the productivity of the poor will, however, probably prove impracticable. One such measure is targeted support to micro-enterprises and small farmers in the form of credit facilities, research on appropriate technologies and marketing services. Such programmes assume a depoliticised and administratively advanced governmental apparatus to implement them effectively. Such apparatuses do not yet exist in the six country cases.

Conclusion To reconcile democracy with adjustment where mass poverty prevails, governments will have to disprove the adage that 'you can't eat democracy'. People will need to eat if democracy and adjustment are to endure. Social safety nets, though negligible in their societal impact, are nonetheless crucial in reconciling vocal urban critics to continuing adjustment. If donors are serious about encouraging both adjustment and democratic governance, they must be willing to buffer the inevitable tensions through long-term financing of such ventures. However, a deeper problem will remain: building a state with the will and the capacity to counteract 'inegalitarian' market tendencies. Such a state would seek to promote the productivity and opportunities of the poor without imposing crippling regulations and controls. Although democratic pressure may enhance the will to intervene, the building of the requisite capacities is a more problematic, long-term project. The modest social democratic programme is unlikely to spur a rapid economic recovery. High and sustained economic growth would be a miracle in a context of unfavourable international trends, daunting external debts, poor initial economic conditions, and an absence of institutional preconditions for efficacious market relationships. However, deepening democracy, attending to social equity and rehabilitating the state may reconcile democratisation with market reform 'while laying the foundations for future prosperity. Enhanced legitimacy for a reoriented and more effective state and more inclusive society should militate against the dangerous spiral of economic and political decay in which many new democracies are trapped. 1 D.E. Sahn,P.A.Dorosh and S.D. Younger, Structural Adjustment Reconsidered: Economic Policy 2

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and Poverty in Africa, New York, Oxford University Press, 1997, p. 247. External shocks included two dramatic rises in the price of oil imports, declining international terms of trade, and soaring interest rates. Climatic shocks refer to the devastating droughts of the 1970s and 1980s. B. Grosh, 'Through the Structural Adjustment Minefield: Politics in an Era of Economic CAMBRIDGE REVIEW OF INTERNATIONAL AFFAIRS


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Liberalization', in J. Widner, ed., Economic Change and Political Liberalization in Sub-Saharan Africa, Baltimore, Johns Hopkins University Press, 1994, pp. 29-46. C. Fay, 'La democratie au Mali, ou le pouvoir en pature', Cahiers d'etudes africaines, vol. 35, no. 1, 1995, pp. 19-53; Z.K. Smith, 'From Demons to Democrats: Mali's Student Movement 1991-6', Review of African Political Economy, vol. 72, 1997, pp. 249-63; M. Gervais, 'Structural Adjustment in Niger: Implementation, Effects and Determining Political Factors', Review of African Political Economy, vol. 63, 1995, pp. 27-42; P.M. Allen, Madagascar: Conflicts of Authority in the Great Island, Boulder, Co., Westview, 1995, pp. 64-7, 96, 105. Michael Bratton, 'Economic Crisis and Political Realignment in Zambia', in J. Widner, ed., Economic Change and Political Liberalization in Sub-Saharan Africa, Baltimore, Johns Hopkins University Press, 1994, pp. 101-28. M. Martin, 'Negotiating Adjustment and External Finance: Ghana and the International Community 1982-89', in D. Rothchild, ed., Ghana: The Political Economy of Recovery, Boulder, Co., Lynne Rienner, Press, 1991, p. 243 M. Chege, 'Swapping Development Strategies: Kenya and Tanzania after Their Founding Presidents', in D. E. Apter and C. G. Rosberg, eds., Political Development and the New Realism in Sub-Saharan Africa, Charlottesville, University Press of Virginia, 1994, p. 276. See, for example, J. Moran, 'Contradictions between Economic Liberalization and Democratization: The Case of South Korea', Democratization, vol. 2, no. 4, 1996, pp. 475-80. Helleiner, 'Adjustment to Development in Sub-Saharan Africa: Conflict, Controversy, Convergence, Consensus?', inG.A. Cornia and G.K. Helleiner, eds., From Adjustment to Development in Africa, London, Macmillan, 1994, p. 10. This viewpoint emerged in conversations with several representatives of the World Bank and aid agencies. See also C. Grimm, Increasing Participation in the Context of African Political Liberalization: The Benin Budget Crisis of 1994 and Its Implications for Donors, Paper Presented to the Annual Meeting of the African Studies Association, Toronto, 3-6 November 1994. On Mali, see J.L. Amselle, 'La corruption et le clientelism au Mali et en Europe de 1'est', Cahiers d'etudes africaines, vol. 32, 1992, pp. 629-42; on Niger, see R.B. Charlick, Niger: Personal Rule and Survival in the Sahel, Boulder, Co., Westview, 1991, pp. 18-19 and 79-80; on Ghana, see M. Owusu, Uses and Abuses of Political Power: A Case Study of Continuity and Change in the Politics of Ghana, Chicago, University of Chicago Press, 1970; on East Africa, see G. Hyden, 'Party, State and Civil Society: Control versus Openness', in J. Barkan, ed., Beyond Socialism versus Capitalism in Kenya and Tanzania, Boulder, Lynne Rienner Press, 1994, pp.78-9; on Madagascar, see L Fox and M. Covell, An Assessment of Politics and Governance in Madagascar, Washington, D.C., Associates in Rural Development, 24 April, 1994, pp. 3-6. Michael Bratton and Nicolas van de Walle, Democratic Experiments in Africa: Regime Transition in Comparative Perspective, Cambridge, Cambridge University Press, 1997. E. Hart, Structural Adjustment, the Private Sector and the Problem of Confidence: The Development of Government-Private Sector Policy Consultation in Ghana, Paper Presented to the Annual Meeting of the African Studies Association, Toronto, 3-6 November 1994. See J.-P. Azam, 'The Uncertain Distributional Impact of Structural Adjustment in Sub-Saharan Africa', in R. van der Hoeven and F. van der Kraaij, eds., Structural Adjustment and Beyond in Sub-Saharan Africa, London, James Currey, 1994, pp. 100-13; T. Killick, 'Structural Adjustment and Poverty Alleviation', Development and Change, vol. 26, 1995, pp.305-31; A. Pio, 'The Social

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Impact of Adjustment in Africa', in Cornia and Helleiner, eds., From Adjustment to Development In Africa, pp. 298-314; and Sahn et al. Structural Adjustment Reconsidered. For evidence concerning the rural-urban distribution of poverty in the early 1990s compared to earlier surveys of household income, see World Bank, Ghana: Poverty Past, Present and Future, Washington, DC, World Bank, 1995. See, for example, F. Stewart, 'The Many Faces of Adjustment', World Development, vol. 19, no. 2, 1991, pp. 1847-64. A. Marc et al, Social Action Programs and Social Funds: A Review of Design and Implementation in Sub-Saharan Africa, World Bank Discussion Paper 274, Washington, DC., 1995. Marc et al, Social Action Programs; C. Graham, Safety Nets, Politics and the Poor: Transitions to Market Economies, Washington, DC., Brookings Institute, 1994. See Graham, Safety Nets.
