We make so much about the usefulness of this tool, we who regularly angle for either their introduction, or their strengthening. If the central narrative of this perspective is to be believed, markets support society’s allocative processes, by ensuring an objective basis for the rationing of scarce items. Accordingly, suppliers of goods and services meet would-be buyers in markets, where the “costs” of producing these items often disappear. What remains of the often-considerable efforts expended by the supply in bringing these goods or services to the markets, is what buyers are willing to pay for them. Ideally, those economic actors who need these goods and services the most (and presumably are better able to deploy them more effectively/efficiently) pay top naira for them.
For a number of reasons, these idealised account of the markets’ functioning glosses over many imperfections in the system. True. However, arguably the most damning of the charges proper to markets, is that often times, those who pay top dollars for goods and services in a market economy are those who can best afford them, not necessarily those who know how best to consume the goods and services. Unfortunately, some times, this same cohort has had questionable access to the means with which they now bargain forcefully in the market.
Invariably, then, the charge against the market is not only that certain segments of society (the now proverbial “poor and vulnerable”) regularly return from negotiations in the market empty-handed. It is also that the basis for their continued failure as participants in such societies is an ethically flawed resource access asymmetry.
These failures of the market has over the years provided the intellectual context/nutritive medium for all strains of socialist/communist, national capitalist, autarchic, etc. economic advocacies. Anti-market, or post-market (depending on how complicated the arguments behind these alternate frameworks are) at essence, the point of all these systems is the striving to ensure a more equitable distribution of scarce domestic resources.
Unfailingly, however, each of these systems installs its own version of the “Presidium of the Supreme Soviets” — a cabal of supremely good and omniscient persons working in the interest of all. This combine of the great and the good fix how much of each good or service society must produce, the prices at which these may be sold, and how much of each good/service different cadres of society may legitimately consume without been charged for some economic crimes.
Straight away, in these examples, we confront restraints on the exercise of each individual’s freedom to choose. To choose not just the goods and services they consume, but also under what economic system they prefer to be governed. The much larger problem, though, is that the process by which a society cedes its powers of decision-making to a small college of the wise and prudent, presumes that in all societies the people will always find a sufficiently large number of its nationals who are prepared always to act above self, and in the interest of the collective.
Unfortunately, most humans act in their own self-interest. And without the freedom to choose, up to and including how they are governed, the danger of a college of wise men disintegrating over time into one of covetous men is a real and present one. What to do about this?
This is the point at which it helps to paraphrase Sir Winston Churchill and assert that without question, the “free market is the worst form of economic management, except for all the others”! This point needs to be bruited about, from the rooftops if necessary, especially at this point in our national life, when the preferred reaction to our straitened economic circumstances seems to be a retreat from the market.
Once we allow this argument about the markets’ imperfection and the need to protect a weak economy from such failings to mean that one or two persons now take key resource allocation decisions, then we run the risk that these folk may eventually prefer to privatise these scarce resources. We also are in danger, once embarked on this path, of failing to build up those institutions without which we all are agreed that we cannot run a decent country.
Put thus, the challenge before the Buhari administration is to strengthen those domestic institutions that disaggregate the making of choice to the smallest constituent unit of the state as possible, and to strengthen the ease with which individual Nigerians may make their choices. This is as much about reinforcing our democratic practices, as it is about improving the efficacy with which domestic markets function. It is in the end a question of how well we may strengthen the public sector — not as a provider of goods and services, but — as a regulator that constantly smooths out the wrinkles in the workings of the markets.
Ultimately, this is what our commitment to the private sector as the engine of growth means.