UNIVERSITY OF ILORIN, ILORIN, NIGERIA

FACULTY OF ARTS
DEPARTMENT OF HISTORY AND INTERNATIONAL STUDIES

COURSE TITLE: EUROPEAN PHENOMENON

COURSE CODE: HIS 810

ASSIGNMENT QUESTION: CAPITALISM,

BY

OLAWOYIN JOHN O. 07/15CA082

LECTURER-IN-CHARGE:
Dr. A.S. Afolabi

September, 2017

1
Abstract

No movement has done more for mankind in such a short time than capitalism. Without doubt,
within a space of 100 years, it was discovered that life expectancy grew from 50% to almost 80%
in Africa and from 30% to almost 70% worldwide. More so, it has lifted millions out of poverty,
reduced mortality rate. It has fed mouths. It has educated people among others. Yet capitalism has
also created for itself a very poor reputation in Africa. Communism and socialism on the other
hand are economic and political structures that promote equality and seek to eliminate social
classes. Sometimes, the two are used interchangeably, though they are quite different. In theory,
socialism and communism sound appealing, with everyone doing their share and working together
to provide for the greater good. Each utilizes a planned production schedule to ensure the needs of
all community members are met. Thus, this paper relying essentially on secondary sources seeks to
examine the concept of capitalism, communism and socialism in the light of theoretical and
practical meaning and influence on the international community as well as other nations of the
world, with particular reference to Africa. An attempt was also made in the course of this work in
looking at the bodies such as: privatization, globalization and the engagement of Multinational
companies as a tool of these ideologies.

Key words: Capitalist, Communism Socialism, Ideology

2
Introduction

Capitalism is the world most prevalent and widely used economic system. This system breeds and

perpetuates inequality and depletes natural resources. This system has mostly benefited people in

positions of political and monetary power. It has also violated the human rights of many people in

weaker positions like the majority of people in third world countries. The capitalist system has

created unfair and insatiable profit-making conglomerates and converted the world value system.

It has structuralized the unequal distribution of wealth and the skewed ownership of the world

resources 1. More so, opponents and critics of capitalism such as Marxists and Socialist advocates

usually speak of capitalism as the worst thing that has ever happened to humanity and mankind.

Popular perception often portrayed capitalism as greedy, corrupt, exploitative, cold and

unconcerned about the ecosystem and society. 2

Capitalism is a system of economic and social relations marked by private property, the exchange

of goods and services by free individuals, and the use of market mechanisms to control the

production and distribution of those goods and services. Some of its elements have existed in human

societies for ages, but it was only in the seventeenth and eighteenth centuries, in parts of Europe

and its offshoots in North America, that they all came together in force. 3 The growth of market-

oriented households and what came to be called commercial society had profound implications on

every aspect of human activity. It is relevant to note that prior to capitalism, life was governed by

traditional institutions that subordinated the choices and destinies of individuals to various

communal, political, and religious structures. Hence, the focus of this study is to analyze the concept

of capitalism, communism and socialism. More specifically, it will discuss the emergence and

effects of these foreign ideologies in Africa.

3
CONCEPTUALISATION OF CAPITALISM

Capitalism is a controversial concept and as such many scholars avoid it. To them it seems too

polemical, since it emerged as a term of critique and was used that way for decades. Thus, capitalism

is etymologically referred to the word capital or capitale, the root comes from the Latin caput

meaning head, in Arabic, capitalism is ‫ رأسمالية‬or Ra’su Maliyyah which mean is the head of

fortune. The definition of head here means; the source of wealthy or in a simple way we can say;

the money or material that we need to make a profit.4 Let us take Germany as an example; the

concept of capital migrated from the language of merchants where it was frequently used by the

early sixteenth century into the terminology of the social and economic sciences that were emerging

in the seventeenth and eighteenth centuries. 5

Initially the concept meant money either invested or lent and then later assets consisting of money,

monetary values, commercial paper, commodities, and manufacturing plant, though always in

regard to the profit that it should yield, instead of being consumed or hoarded. Capitalism has been

around for about 500 years. It is difficult to specify an exact date, but it may range between the

fourteenth and seventeenth century. The transition from feudalism to capitalism is typically treated

as a Western European process. The collapse of the manorial feudalist system in Europe created a

class of tenant-farmers with more freedom to market their goods and thus, more incentive to invest

in new technologies. Lords who did not want to rely on rents could buy out or evict tenant farmers,

but then had to hire free labour to work on their estates giving them an incentive to invest in two

very different kinds of commodity owners; on the other hand, the owners of money, means of

production means of subsistence, who are eager to valorize the sum of value they have appropriated

by buying the labour power of others.

4
A British socialist Tom Bottomore defines capitalism as a term that referred to a mode of

production in which capital and its various forms is a major tool in the production 6. According to

him capitalism is based on free enterprise and individual rights. It rather benefits the selfish interests

of a few, the privileged elites of the developed world, and damages the interests of others. Another

standpoint comes from Max Weber, who stated that capitalism is an economic activity which

intended to the markets and endorsed in order to generate the earnings from the commuting

market.7 Capitalism is a way of organizing the economic activities of a society. Ideologically,

capitalism is an economic system which manages the process of production and distribution of the

goods and services. Capitalism discourages local production and encourages unregulated growth of

gigantic cooperation that exploits local labour for profits. This is justified by the fact that crime

capitalism supports the freedom to act as an absolute by right and the credo of the rational egoist

who recognizes no authority higher than his own judgment of the truth 8. Such a theory provides a

scapegoat for people who harm others in the pursuit of self-interests.

More so, Simon Blackburn defines capitalism as a mode of socio-economic organization in which

a class of entrepreneurs and entrepreneurial institutions provide the capital with which business

produce goods and services and employ workers, and in return the capitalist extract profits from

the goods created 9. John Down sees capitalism as an economic system in which private ownership

of property exists, aggregate of properties or capital provides income for the individuals or firm

that accumulated it and owns it, while individuals and firms are relatively free to compete with

others for their own economic profit motives is basic to economic life 10.

African encyclopedia agreed that capitalism is a name given to a political and economic system in

which capital is used to produce more wealth. The desire to make a large amount of money with a

smaller amount is the basic force of capitalism and people engage in work and enterprise in the

5
 11
hope of making profits . Immanuel Wallerstein, modern American sociologist and Senior

Research Scholar at Yale University, writes that capitalism is a system based on the logic of

intermittent accumulation of capital. As a social system capitalism prioritizes profit over human

need and will always be one that is predisposed to curbing human needs, oscillating between

dynamic expansion and lethargic stagnation. Capital does not only provide an incentive for social

exploitation but tends to strengthen economic leverages to the extent that will make them control

the entire society to the maximum. Capital is accumulated at the hands of a limited number of

people who gain an opportunity to decide on the fate of others, including through state

administrative institutions. Wallerstein views capitalism as a historical system, an overall

integrated reality. He also claimed that a capitalist system is in place when the accumulation of

capital takes priority over all alternative objectives. Of course previous historical systems involved

the accumulation of capital, but in such systems certain elements necessary for accumulation were

insufficiently commodified 12.

In the twentieth century, the economist Joseph Schumpeter expressed that, capitalism was

characterized by creative destruction, in which new products and forms of distribution and

organization displaced older forms. He focused on the role of the entrepreneur, an innovator who

introduced new commodities and discovered new markets and methods 13. Capitalism is a system

in which the individual’s rights to life, liberty, and property are under legal protection. This is what

legal philosopher Lon Fuller claims that, capitalism allows morality of aspiration to flourish. The

capitalist system is the most just system as it provides the institutions for self-directedness and

purposefulness. It is the reason behind Western Europe’s rise to world power Historical capitalism

involved the widespread commodification of processes, not merely exchange processes, but

production processes, distribution processes, and investment processes that had previously been

6
conducted other than via a market. Capitalists espouse trickle-down economics, in which providing

tax cuts and other benefit to businesses indirectly helps the rest of the population by increasing

investments in infrastructure and markets. Capitalism encourages corruption, economic disparity,

individualism, hyper-competitiveness and consumerism 14.

Adam Smith is often referred to as the Father of Capitalism. He described a system in which an

invisible hand would maintain the market without government intervention. The government exists

merely to protect individual rights, which include the establishment of an army to protect against

foreign invaders; a police force to protect against domestic criminals; and a court system to settle

disputes that arise, enforce contracts, and punish criminals according to objectively predefined

laws. Since the seventeenth century capitalist stood for the capital rich man who has cash monies

and great wealth and can live from his interest and rents.

More specifically, those designated as capitalists are: merchants, bankers, pensioners, and other

persons who lend money and broker or deal in capital. In the meantime, capitalist also stood for all

those engaged in the acquisition of wealth if they accumulate the surplus of their labour, their

earnings, over and above their required consumption in order to use the surplus anew toward

production and labour 15. Capitalists will refute that the poor are disadvantaged and unable to gain

any wealth because they have nothing to begin with and attest to that fact that rather those who are

poor are not opportunistic or capitalist corruption motivated. Capitalists often affirm that, those

who are poor are so willingly because the free enterprise system of capitalism is constructed so that

anyone with hard work can gain wealth.

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CONCEPTUALISATION OF COMMUNISM

The term communism did not come into existence until the 1840s, it is derived from the Latin

communis, meaning “shared” or “common”. Communist appeared as long ago as the fourth century

B.C. in the ideal state described in Plato’s Republic, the governing class of guardians devotes itself

to serving the interests of the whole community. Because private ownership of goods would corrupt

their owners by encouraging selfishness, Plato argued, the guardians must live as a large family that
16
shares common ownership of material goods, spouses and children. Communism is a type of

government as well as an economic system (a way of creating and sharing wealth).

In a Communist system, individual people do not own land, factories, or machinery. Instead, the

government or the whole community owns these things. Everyone is supposed to share the wealth

that they create. Communism is the political and economic doctrine that aims to replace private

property and a profit-based economy with public ownership and communal control of at least the

major means of production such as mines, mills, and factories and the natural resources of a society.

Communism is thus a form of socialism a higher and more advanced form, according to its

advocates.17

It is relevant to note that how communism differs from socialism has long been a matter of debate,

but the distinction rests largely on the communists’ adherence to the revolutionary socialism of

Marx. Like most writers of the nineteenth century, Karl Marx tended to use the terms communism

and socialism interchangeably. Marx identified two phases of communism that would follow the

predicted overthrow of capitalism: the first would be a transitional system in which the working

class would control the government and economy yet still find it necessary to pay people according

to how long, hard, or well they worked; the second would be fully realized communism as a society

without class divisions or government, in which the production and distribution of goods would be
8
based upon the principle “from each according to his ability, to each according to his needs.” Marx

held that human history had progressed through a series of stages, from ancient slave society

through feudalism to capitalism.18

In each stage a dominant class uses its control of the means of production to exploit the labour of a

larger class of workers. But internal tensions or “contradictions” in each stage eventually lead to

the overthrow and replacement of the ruling class by its successor. Thus, the bourgeoisie overthrew

the aristocracy and replaced feudalism with capitalism; so too, Marx predicted, will the proletariat

overthrow the bourgeoisie and replace capitalism with communism. Marx acknowledged that

capitalism was a historically necessary stage of development that had brought about remarkable

scientific and technological changes that greatly increased aggregate wealth by extending

humankind’s power over nature.

According to Marx, the problem was that this wealth and the political power as well as economic

opportunities that went with it was unfairly distributed. The capitalists reap the profits while paying

the workers a pittance for long hours of hard labour. Under capitalism, Marx claimed, workers are

not paid fully or fairly for their labour because the capitalists siphon off surplus value, which they

call profit. Thus, the bourgeois owners of the means of production amass enormous wealth, while

the proletariat falls further into poverty. This wealth also enables the bourgeoisie to control the

government or state, which does the bidding of the wealthy and the powerful to the detriment of the

poor and the powerless. Marx believed that capitalism is a volatile economic system that will suffer

a series of ever-worsening crises such as recessions and depressions that will produce greater

unemployment, lower wages, and increasing misery among the industrial proletariat.19

9
Other early writers of communism drew their inspiration from religion. The first Christians

practiced a simple kind of communism as described in Acts 4:32–37. Similar motives later inspired

the formation of monastic orders in which monks took vows of poverty and promised to share their

few worldly goods with each other and with the poor. The English humanist Sir Thomas More

extended this monastic communism in Utopia (1516), which describes an imaginary society in

which money is abolished and people share meals, houses, and other goods in common. Other

fictional communistic utopias followed, notably City of the Sun (1623), by the Italian philosopher

Tommaso Campanella, as did attempts to put communist ideas into practice.20

Perhaps the most noteworthy if not notorious of the latter was the theocracy of the Anabaptists in

the Westphalian city of Münster (1534–35), which ended with the military capture of the city and

the execution of its leaders. The English Civil Wars (1642–51) prompted the Diggers to advocate a

kind of agrarian communism in which the Earth would be “a common treasury,” as Gerrard

Winstanley envisioned in The Law of Freedom 1652 and other works. The vision was not shared

by the Protectorate led by Oliver Cromwell, which harshly suppressed the Diggers in 1650. It was

neither a religious upheaval nor a civil war but a technological and economic revolution the

Industrial Revolution of the late 18th and early 19th centuries that provided the impetus and

inspiration for modern communism. This revolution, which achieved great gains in economic

productivity at the expense of an increasingly miserable working class, encouraged Marx to think

that the class struggles that dominated history were leading inevitably to a society in which

prosperity would be shared by all through common ownership of the means of production.21

More so, in the twentieth century, about one-third of the world’s population lived under communist

regimes. These regimes were characterized by the rule of a single party that tolerated no opposition

and little dissent. Party leaders established a command economy in which the state controlled

10
property and its bureaucrats determined wages, prices, and production goals. The inefficiency of

these economies played a large part in the collapse of the Soviet Union in 1991, and the remaining

communist countries (excepting North Korea) are now allowing greater economic competition

while holding fast to one-party rule.22

CONCEPTUALISATION OF SOCIALISM

Socialism is a range of economic and social systems characterized by social ownership and

democratic control of the means of production as well as the political theories, and movements

associated with them. Social ownership may refer to forms of public, collective, or cooperative

ownership, or to citizen ownership of equity. Socialism is a range of economic and political theories

advocating collective or governmental ownership and administration of the means of production

and distribution of goods in the society. There are many varieties of socialism and there is no single

definition encapsulating all of them. Social ownership is the common element shared by its various

forms. Central to the meaning of socialism is common ownership.23

This means the resources of the world being owned in common by the entire global population. It

also means nobody being able to take personal control of resources, beyond their own personal

possessions. In socialism, everybody would have free access to the goods and services designed to

directly meet their needs and there need be no system of payment for the work that each individual

contributes to producing them. All work would be on a voluntary basis. Producing for needs means

that people would engage in work that has a direct usefulness. The satisfaction that this would

provide, along with the increased opportunity to shape working patterns and conditions, would

bring about new attitudes to work.24

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COMMUNISM AND SOCIALISM IN AFRICA

Twentieth-century Africa’s predominantly rural population, mostly subsistence cultivators, did not

offer a likely terrain for Communism, which saw the urban working class as the driving force for

political and socio-economic change. Moreover, the Communist International was far more

concerned with Europe and Asia, although it periodically chastised Communists in the imperial

countries for their inadequate attention to colonized peoples in Africa. Despite these seemingly

inauspicious circumstances, Communism gained a foothold along coastal areas where ports

ensuring links with European countries allowed the flow of ideas and where railways and roads

enabled the distribution of Communist literature.

The century saw a tremendous population surge from 142 million in 1920, the population rose to

over 200 million in 1950 and 600 million in 1990. Increased urbanization and improved

transportation would seem to have facilitated the spread of Communist ideas.25 Yet, despite its

foothold, Communism remained a weak movement in Africa although at times its influence was

greater than its numbers would suggest. Post-colonial independence saw some thirty-five African

states claiming to be Communist or socialist, but these were overwhelmingly the result of leadership

choices. This underscores the distinction between Communism as a movement subjected to state

repression and as a state policy to promote top-down development.

The continent’s externally-oriented political economy was doubtless the underlying reason for

Communism’s weakness as a movement, even though the relative neglect of Africa by overseas

Communists accentuated the problem. Colonial domination by European powers meant that

production became geared to overseas demand. Thus, West Africa’s regional economy developed

around the export of agricultural commodities and the import of manufactured products.

12
Its small holder production and capitalist farms did not provide fertile conditions for Communist

ideas; nonetheless, travel between West Africa and Europe allowed the diffusion of Communist

ideas. In East Africa, by contrast, Africans dispossessed of their land became farm workers on tea

and coffee estates geared to the international market, but there was less African contact with Europe

and correspondingly less Communist influence. In central Africa colonial powers allocated land to

foreign companies, which established plantations producing for the export market.

Communism made virtually no headway in the continent’s interior. Southern Africans were

subjected to widespread dispossession of their land. In South Africa, where close to ninety per cent

of the land was expropriated by white settlers, the mineral reserves facilitated industrial

development and the emergence of an industrial working class.26 North Africa especially Algeria

was also characterized by significant dispossession. On the north and south ends of the continent,

both political economy and contact with Europe favoured the spread of Communism.

Communism’s presence in Africa falls into two broad categories. First, were local Communist

initiatives to build movements reflecting anti-colonial and democratic agendas. These began in the

1920s and 1930s and continued into the post-war era; their success reflected their ability to forge

links with anti-colonial and nationalist movements. Second, were the state-led initiatives during the

period of post-colonial independence, when one-party states adopted Communism as a

developmental model. South Africa’s experience is distinctive. It has a long-standing Communist

and socialist movement, but its Communist Party never captured state power. Instead, the alliance

it formed with the leading nationalist organization during the Second World War continued into the

post-apartheid period giving some albeit very limited influence on state policy.

13
POST-COLONIAL INDEPENDENCE, AFRICAN SOCIALISM AND NON-ALIGNMENT

Independence opened up new possibilities for Communist influence in Africa. Capitalism was

tarnished by its association with colonialism, and the USSR hoped that independent African

countries would follow its model. It continued to offer education and training for people from

developing countries through bodies such as the Communist-aligned World Federation of Trade

Unions and International Organization of Journalists, both headquartered in Prague. Stalin’s death

had loosened Soviet dominance over the Communist world, which, after the Chinese Revolution,

was gradually becoming polycentric. Nonetheless, the six African communist parties represented

at the CPSU’s Twenty-second Congress in October 1961 still looked to the USSR for guidance.

These were Algeria, Tunisia, Morocco, South Africa, Sudan founded with the help of Egyptian

Communists in 1946. Communists in Africa faced harsh conditions Kolarz estimates some 50,000

Communists in Africa around October 1961. 27

Superpower competition intensified, as both powers sought to pull newly-independent countries

into their orbit. But if African states were often skeptical of capitalism, they did not rush to adopt

Communism. Instead, African socialism became the dominant left-wing approach of the 1960s and

early 1970s. Its proponents advocated an African path to socialism, one offering a non-aligned and

pragmatic approach to development. While they agreed that Africa’s pre-colonial communal values

and relative absence of classes and class struggle should form the basis for an African path of

development, they interpreted African socialism to reflect the varied needs of their countries.28

14
Although African socialism claimed to reflect pre-colonial values, it was applied to societies that

had been markedly transformed by the colonial experience in divergent ways. Ghana, independent

in 1957, became a beacon for African socialism, and George Padmore, long disillusioned with

Communism, moved there to work with Nkrumah. Padmore saw African socialism as part of a

threefold revolutionary movement encompassing national self-determination, social revolution and

continental unity. Nkrumah, in contrast to the rural orientation of most African socialists, stressed

the large-scale development of energy resources to promote rapid industrialization. But Ghana

quickly became heavily indebted, and Nkrumah became increasingly intolerant of criticism. In 1964

he declared himself president for life and banned opposition parties, only to be overthrown two

years later, bringing Ghana’s socialist experiment to a halt. 29

Tanzania’s Julius Nyerere promoted ujamaa or family hood, with the extended family as the

building block of African development. But Nyerere also believed that social differences could be

reconciled within a single party. He began the forced relocation of rural people into collective

villages, which proved politically unpopular and economically non-viable. A. M. Babu, an

influential Zanzibari intellectual-activist imprisoned by Nyerere, wrote a harsh critique of African

socialism, arguing that its architects pursued export-oriented strategies that perpetuated Africa’s

economic dependency. He advocated working-class organization and the development of Africa’s

productive forces. The doctrine was discredited both by its failed economic projects and by the

repressive one-party regimes wielding power in its name.30

15
THE SOVIET COLLAPSE AND ITS IMPACT ON COMMUNISM IN AFRICA

The Algerian events overlapped with the tumultuous developments in Eastern Europe. The popular

uprisings of September 1989, the fall of the Berlin Wall that November and the eventual collapse

of the Soviet Union two years later had dramatic repercussions across Africa. A succession of leftist

regimes Ethiopia, People’s Republic of the Congo, Benin, Angola, Mozambique and Zambia either

lost power or dramatically shifted their policies. But African responses to the collapse of

international Communism were varied and complex, reflecting the interactions of national and

global dynamics. By the mid-1980s IMF and World Bank structural adjustment programs had

already undermined socialist ambitions for collectivization and redistribution. Tanzania,

Mozambique and Algeria, for example, all yielded to international pressures for economic

liberalization. Moreover, Soviet aid dried up in the late 1980s; Gorbachev advocated reconciliation

rather than military confrontation to resolve local conflicts.31

While external economic pressure undermined left-wing regimes, domestic pressures were critical.

Ethiopia, Angola and Mozambique all faced significant internal dissent and guerrilla struggle based

on rival claims to power; as Soviet support dried up they were compelled to switch gears. In Algeria,

the PAGS dissolved in late 1992, in part a response to its electoral failure, in part to the collapse of

Communism; some of its members formed the left-wing Ettahaddi, which staunchly opposed the

Islamists. The Parti Algérien pour la Démocratie et le Socialisme [Algerian Party for Democracy

and Socialism] was formed in 1993 by more orthodox members of PAGS trying to retain the

Communist tradition. Civil society has revived in the twenty-first century, and there is an eclectic,

if fragile and fragmented, socialist movement.32

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The Eastern European events finally propelled the SACP to seriously confront its relationship with

the Soviet Union. It did so with astonishing rapidity. Slovo’s Has Socialism Failed? published in

January 1990, criticized Stalinism for bureaucratic and authoritarian leadership that restricted

power to a tiny elite and stripped socialism of democracy. But he nonetheless believed that

socialism could function democratically without the ‘distortions’ that characterized the Soviet

Union. With the Cold War ending, the prospects for a negotiated democratic transition seemed more

likely, and in February 1990 the South African government unbanned the ANC, PAC and SACP.

It stepped up pressure on the ANC to suspend armed struggle and to distance itself from the SACP.

The USSR’s collapse had been a traumatic affair for many members; the Party’s manifesto argued

that international conditions made the prospects for socialism unlikely and that the working class

had to maintain a ‘strategic initiative’ during negotiations.33

Despite enormous strains, not least the assassination of SACP general secretary Chris Hani, the

country’s first democratic elections took place in April 1994. The SACP is amongst the very few

Communist Parties to have survived the Soviet Union’s collapse relatively unscathed. It has done

so precisely because of its role in the armed struggle and its commitment to the ANC. The Party

retains its membership in the Tripartite Alliance in the hopes of influencing government policy. But

its close relationship with the ANC has left COSATU as the most vocal critic of the government’s

neoliberal policy. However, the SACP is playing a leading role in the African Left Networking

Forum, launched in Johannesburg in August 2008 with the aim of building a Marxist-Leninist

network in Africa. Its first conference took place in Johannesburg in August 2010 and included

representatives from the Sudanese Communist Party and from left-wing organizations in Botswana,

Chad, Ethiopia, Kenya, Mozambique, Nigeria, Rwanda, Somaliland, Tunisia, Uganda, and Zambia.

17
Africa has a diverse range of independent socialist groups, but Communists are striving to retain

the Communist tradition, while building continent wide links.34

CAPITALISM IN AFRICA

Africa is a continent with virtually all the resources it takes for development. The continent is also

characterized by hunger, starvation, armed conflicts, instability, displacement and abject poverty.

Politicians, jockeying for the little resources left by the capitalist class, display the politics of hide-

and-seek, repression and oppression. This is mainly because of the socio-economic system which

encourages capital accumulation and profit-seeking. The cumulative effect is corruption,

deprivation, wastage and impoverishment which intensify underdevelopment in Africa.35 Worst of

all, as Africa is helplessly dragged into the global free trade championed by the International

Monetary Fund (I.M.F.) and World Bank; Africa natural resources were further exposed for deep

exploitation by international capitalism, which deteriorates the woes of the already impoverished

African working class. This shows that the objective conditions of African socio-economic

formations do not favour capitalism. Capitalist development has tended to reinforce the exploitative

dependence that enables underdevelopment to persist in Africa.36

Western civilization and culture began to creep into Africa when foreigners, mainly Europeans

quest were aimed at imposing imperial ideologies and pilfering African resources. Since then,

African scholars argued that this practice continued even after independence in the continent. Some

African states during the early post-independence period saw capitalism from this position, that it

was: “To invest; to accumulate wealth is the name capitalism; we Africans must stop it advances”.

After independence, several African countries embarked upon state controlled economic

development policy, involving central planning and a large public sector.37

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Right after independence Ghana, Tanzania, Zambia, Angola, Mozambique, and later Ethiopia

embraced socialist ideology and embarked on centrally planned socialist development strategy. The

growing appeal of Socialism and the central planning model in general, and of public enterprises in

particular, arose from the recognition that the public sector is a very important instrument at the

disposal of the state for the achievement of sustainable development.

Moreover, nationalist African leaders embraced a state controlled development strategy because it

gave them the opportunity to control private and foreign enterprises, which they viewed as agents

of exploitation and domination. African leaders saw the colonial countries that clung on to power

as predominantly capitalist. This perception may not have been entirely accurate since England in

large measure and America more reluctantly were moving towards a welfare system of governance

in the sense that both had in place the social safety nets to protect workers, their families, and the

unemployed in an urbanized industrial economy.38

Historically, these were the long-term consequences of the eighteenth century industrial revolution.

The British economy had experienced intermittent crises after the Second World War due to the

wartime liquidation of much of Britain’s overseas assets, and a lack of flexibility in management

and labor practices. The Labour Party, after winning the postwar elections of 1945 and 1950, lost

ground to the Conservative Party, which remained in power for the following 13year. But while

cutting back on social services the Conservatives recognized that the country’s welfare system was

there to stay for a population dependent on its benefits.39

Thus, the essence of the welfare state remained intact. Britain domestic politics and European

models of welfare were understandably of less concern than the urgency of African nations to put

their own economies in order and move forward with decolonization. The same held true for

19
African leaders’ attitude to the United States. The misery of the Great Depression had a profound

impact on American society, and culminated in President Franklin D. Roosevelt’s New Deal

welfare policies. The federal government introduced two public assistance programs paid for with

matching state-federal funds. They were Old Age Assistance that in time was superseded by the

expansion of Social Security in 1950 and Aid to Dependent Children. But as might be expected,

America’s domestic welfare was by no means Africa’s main topic of interest.40

In the early post-colonial period after gaining independence, most sub-Saharan African countries

directed their attention aggressively to their economic and social development. Africa, like other

regions of the developing world, devised its own strategies for dealing with a changing international

environment. Pulled about, as it once was, by the geopolitics of the Cold War, when that thawed

because of the geo-economics of a global market, African leaders favored a communitarian

approach to national planning.

Nationhood was seen in terms of progress, with the aim of eventually bringing African countries to

a Socio-economic level, which other modern nations enjoyed with social service systems for health,

education, welfare, along with income maintenance for the poor and needy. The difficulty was

finding models applicable to a mainly agricultural region in contrast to the welfare systems of

industrial nations. To make the choices harder, the European and North American systems differed

in their social service delivery systems from those of Japan or Australia. The public service models

differed from continent to continent, and within continents. Europe’s post-World War II welfare

states ranged from the universalism of the Scandinavian model to more modest welfare systems of

Portugal, Spain, Turkey and Greece.

20
All European countries built into their legislation provision for medical and social welfare

assistance, and income maintenance through insurance or public support. Indeed, decades later the

1996 Revised European Social Charter, adding to previous conventions, protocols and charters of

the Council of Europe, laid down the obligations of present and future members of the European

Union to provide cross-border arrangements for the health, education, and welfare of citizens, a

network of support extending from country to country throughout Europe.

Recently, after the just concluded 22nd ECOWAS Summit in Abuja, Nigeria, one African president

identified division and the exposure of the region's economy market to the Western capitalist class

as the major source militating against the development of the region. Indeed, African conditions

have revealed capitalism in its harshness and brutality, inequalities are too glaring. In the face, of

extremities of want and a meager surplus, it is difficult to sell the idea that those who are in positions

to accumulate should take what they can and leave the rest to suffer what they must. Africa's ruling

class has run out of ideas for fashioning and inspiring a functional development strategy, limited as

it is by the constraints of working with ideas compatible with the maintenance of the existing

property relations. The evils of capitalism are conspicuous in Africa and Africans have lost

confidence in capitalism, exemplified by the renewed springing-up of working class consciousness

in South Africa, Gambia, Namibia, Kenya, Nigeria, Ghana and others but are choked by the external

forces of capitalism.41

NEGATIVE EFFECTS OF CAPITALISM IN AFRICA

Capitalism strives to expand the market and constantly find new raw materials to improve and

increase the supply to create greater profits. Expansion has led to exploration into Africa continent

to retrieve cheap or free labour (slavery) and cheap or free (theft) raw material and resources. When

labour is free or cheap and raw materials are free or sold by those who do not necessarily own the

21
material, the supply chain is corrupted and its foundations are grounded on exploitation and theft.

It is hard to find responsible supply chains that protects both the workers and the environment and

this is the major tendency and flaw of capitalism.

Often time, international division of labour by multinational corporations is used in order to lower

costs. Exploitation of the workers is what had led to many class struggles as can be observed

currently in South Africa. Trade Unions have therefore played an active role in representing and

protecting worker’s rights. More importantly, it is difficult for the poor, working class, black and

female, in most African countries to gain success outside of capitalist ideology because they are

more of poorer living conditions, lower suitability for good opportunities, no health coverage, more

likely to go to prison and more likely to get sick. Today, in order to create a profit, consumption by

the masses is often promoted through marketing and advertisements, even if consumption is

accompanied by debt on behalf of the consumer.42

Furthermore, this method of economic expansion in the past eventually led to the conquest and the

subjugation of other countries in Africa. Mercantilism set the tone for the onset of conquest; to own

the resources and people of foreign lands to make money and control the people by force and impose

euro-centric laws and worldviews upon unwilling victims. This process in the past was termed as

imperialism and continues today in a different form namely, economic imperialism, neo-

colonialism, etc. The expansionist and profit accumulating nature of Capitalism without the regard

for human rights and the environment is what makes the system inhumane. During the colonial

period it was accompanied by racism, slavery and cultural imperialism which have left a disturbing

legacy that still cannot be undone till today. Modern day conflicts have resulted from this former

system, such as the conflicts in the Democratic Republic /of Congo was a consequence of economic

22
and historical imperialism. Natural resources such as diamonds, Colton and timber for use by multi-

national corporations and other intertwining factors are the cause of the conflict in Modern Africa.

It should be added that economic development through the capitalist ideology has not improved the

well-being of all citizens in high-income countries talk less Africa. The quality of life of people has

decreased along with growing incomes under the capitalist system of economic growth, people

work long hours, are stressed and discrimination continues. This has also led to an increase in

suicide, depression, obesity and environmental degradation. A system that flourishes and believes

in constant and unlimited production and consumption in a world of limited resources will

eventually reach an impasse.

Capitalism has produced enough food to feed the world, yet people do not have access to this food

because of the lack of money. It has also perverted Modern African value system, implicitly and

explicitly relaying the message that money is more important than people and the environment.

Because of the desire to create more wealth with the lowest cost possible, capitalists will

compromise on safer and cleaner ways of producing products, by releasing more carbon emissions,

destroying and not restoring the environment.43

EFFECTS OF MULTINATIONAL CORPORATIONS IN NIGERIA

The clash between multinationals and host countries has been most intense in the less developed

economies. Individual critics and public officials have leveled vociferous charges against the

policies of international corporations and their alleged negative consequences for the economic

well-being and development of the host nations. In spite of the Nigerian Indigenization programme

in the 1970’s, the activities of the multinationals in Nigeria have sustained and intensified the

contradictions of underdevelopment in many ways such as the following:

23
PROFIT REPATRIATION: This theory argues that most of the capitals in the form of profits are

not invested in the country but sent to the home countries of MNCs for investment, thereby

rendering Nigeria industrially underdeveloped. The royalties or pittance paid to the government by

these MNCs cannot because of its meagerness be employed into heavy industrial projects. In brief,

the MNCs export abroad the capital that would have been used to develop Nigeria thus; the MNCs

distort the economy and the economic development in Nigeria because the capital needed for

development is no longer here in the country but abroad. 44

TECHNOLOGICAL BACKWARDNESS: It is in the area that the MNCs are regarded as the

worst culprits because it is in this section that the MNCs play their greatest trick imaginable. The

MNCs by way of purporting to help industrialize Nigeria create a branch-plant economy of small

inefficient firms incapable of propelling overall development. The local subsidiaries exist only as

enclaves in the host economy rather than as engines of self-reliant growth. These corporations

intentionally and deceitfully introduce inappropriate types of technologies that hinder indigenous

technological developments.45

These MNCs employ capital intensive productive techniques that cause unemployment. All these

prevent the emergence of domestic technologies. Before the advent of the MNCs, in Nigeria, there

were so many assorted types of technologies all over the country, though they were of low scale

type. The MNCs rather than help them grow knocks them off systematically through the

introduction of more advanced technologies. The MNC both retain the control of the most advanced

technology and do not transfer it to Nigeria or the rest of the developing economies at reasonable

prices. The negative impact of MNCs on Nigeria is most noticeable in this area of technology

transfer. Ozoigbo and Chukuezi noted that there are four reasons for this assertion;

24
  Most of the imported technologies came under the industrial property system of restrictive

patterns and license. This is a very sensitive barrier for Nigeria. The implication of this is

that Nigerians cannot copy and internalize these technologies even if they have the capacity

and willingness to do so because it is illegal for them to do so. Because of this, Nigeria has

to make do with dependent development, which has several deleterious economic

consequences.46

 The MNCs jealously guard the technological know-how of their technologies by way of

refusing to make use of competent staff. The MNCs instead use mere technicians who are

at the last rung of productive process and simply assemble together what they knew not how

it was produced. By implication Nigerians cannot learn from the technicians the intricacies

involved in the production of the material or product.

 Another point of skillful deceit by the MNCs is the fact that where qualified and competent

indigenous staff are to be exposed to the technological know-how of a type of production.

Sometimes the type of technology they are exposed to is so sophisticated that they are

mesmerized by it. In some cases, the high capital that may be needed simply embarrasses

the nation in that they cannot afford it instead she prefers to forget about it.

 The MNCs increase the mal-distribution of income in Nigeria and other less developed

countries. The case of oil workers earning in a month what some federal civil servants earn

in a year does not augur well with the development of the nation. This step creates a class-

conscious society, which does not help development as such. Therefore, the type of

technology that the MNCs imported into the country is the one that serves the few urban

elite because only they have the resources to get at it while the generality of the populace

continues to face stark underdevelopment.47

25
STRUCTURAL DISTORTION: The principle of industrialization in an open economy of the

Nigerian government in relation to the MNCs has given the MNCs the freedom to choose their line

of operations, the locations of their industry and other productive processes. The MNCs natural

base is usually in urban centers of the Nigerian society like Lagos, Kaduna, Enugu and Port-

Harcourt. The industries in these cities are mainly those of oil and consumer goods. This urban

concentration of MNCs distorted the structure of the society by enhancing an uneven

development.48

POLITICAL INSTABILITY: Because these corporations require a stable host government,

which of course is sympathetic to capitalism, they try as much as possible to cause directly protect

the existing government whenever a reactionary leader or group seems to take over the government.

The MNCs try to maintain the status quo that is, dependent development which encourages the

emergence of authoritarian regimes in the host country and go ahead to create alliances between

international capitalist and domestic capitalist elite. This exploitative alliance is sustained by the

intervention of the corporations’ home governments in the internal affairs of the less developed

countries. In this fashion foreign investment tends to make the host country politically dependent

upon the metropolitan country.

It is on record that the MNCs kept President Mobutu of Zaire in power for so long because he was

tutelage to them and with MNCs they sucked dry the economy of Zaire. The MNCs equally were

responsible for the early exit and assassination of Patrice Lumumba because he would not allow

their exploitative activities. The same story is true of Captain Thomas Sankara of Burkina Fasso

and so many others. So the multinationals in the third world and Africa in particular have gained

much from the political instability that exists here and there. Africa now has the greatest number of

26
countries experiencing one kind of political crisis or the other. In all these, the wicked hands of the

MNCs and their home governments are there very glaringly.49

CULTURAL DEGRADATION: The adverse effects of the presence and operations of MNCs in

Nigeria are also felt in the area of our cherished cultural heritage. Indeed, there are negative effects

of foreign direct investment on the cultural and social well-being of Nigeria and other fewer

developing countries. The domineering presence of the MNCs in Nigeria is characterized as

constituting a form of “cultural imperialism or coco-cola of the society”, through which Nigeria

and indeed, the rest of the developing countries lose control over their culture and social

development. These multinationals undermine the traditional values of the Nigerian society and

introduce through its advertising and business practices new values and tastes inappropriate to the

Nigeria nation. An instance of this is the introduction of foreign violent and crime-laden films and

videos as well as pornographic materials into Nigeria. It has been rightly observed that these foreign

values are not only bad in them but are detrimental to the development of the country because they

create demands for luxury and other goods that do not meet the true needs of the common masses.50

In considering the issue of the transfer of inappropriate technology, it should be noted that Nigeria

and other African countries economies want not only the most advanced technologies but also

labour-intensive technology, which will serve as appropriate technology, in order to maximize

employment. Furthermore, the transfer of capital-intensive technology by the MNCs is beneficial

to the less developing economies like Nigeria. This is true because what would have taken a lot of

time doing, machines do better in a lesser time and thereby save costs. The charge of cultural

imperialism, despite its veracity, has to be stated at the same time that the very process of economic

growth or development itself is destructive of traditional values, since it necessarily involves the

creation of new tastes and unaccustomed desires. MNCs are inherently exploitative. Stopford states

27
that advocacy groups often portray multinationals as globetrotting sweatshop operators, indifferent

polluters, and systematic tax evaders. Exploitation remains a problem. He claims that smaller, local

firms often can be much more exploitative than foreigners. Multinationals typically pay at or above

the going wage and provide superior training. But even if most MNCs are well intentioned, they

suffer from a credibility gap.

Perhaps unwittingly, MNCs can fuel public concern by being culturally insensitive, not honoring

promises made by their predecessors, and being inconsistent in other aspects of their "social

contract" with local society. With regard to the environment, international big business is both the

creator of pollution and the only resource available for its cleanup. The MNCs' record on pollution

pales in comparison with those of many local businesses and state-owned enterprises. The issue of

tax evasion continues to generate acrimonious debate, despite guidelines produced by the

Organization for Economic Cooperation and Development. Multinational corporations protest that

they pay their taxes responsibly. When many MNCs conclude that the host government had

abandoned its favorable investment climate. They cut back on capital spending, closed some plants,

and moved money offshore.

POSITIVE EFFECTS OF CAPITAISM IN MODERN AFRICA

Capitalism has however still been widely used and implemented, regardless of the harsh realities it

may have created. It has produced positive outcomes, as it is the most productive and efficient

economic system that has changed and improved the way many people live their lives. In many

ways, it has improved the quality of life for many people. Life expectancy has lengthened, more

food is produced, clothing and shelter can be produced using less labour and less time.

28
In terms of material welfare and gain, this system is very successful and has benefited those who

can afford to pay for it and take the opportunity to use it to their advantage. The system can benefit

the earth and its people if it is thoughtfully and diligently applied, so as not to harm people and the

environment.

The benefits of multinational corporations to an economy are numerous. Nigeria would have been

more developed than Malaysia, Indonesia and even Brazil if not for policy reversals and

inconsistencies. Multinational corporations transfer technologies, capital and the culture of

entrepreneurship. They increase investment levels and income in the host countries; they promote

improvement in their immediate environment; create access to high quality managerial skills;

improve the balance of payment of host countries by increasing exports and decreasing imports;

help to equalize the costs of factors of production. They stimulate domestic production and enhance

efficiency and effectiveness in the production process; they stimulate positive responses from local

operators.51

Most of the well-known Nigerian entrepreneurs started by working for the multinational

corporations, where they acquired relevant skills and knowledge that gave them the impetus to

launch out. Multinational corporations also acquire raw materials with ease from any overseas

source at competitive prices and can easily export components and finished goods for assembly or

distribution in foreign markets. They create several other opportunities in the host country that

create employment and improve living standards of the host communities. Looking at the fortune

of about 500 companies Nigeria, only very few play big in the Nigerian economy, although their

products are sufficiently visible. Nigeria is a big consumer of the products and services of

multinational and transnational corporations and deserves to host a good number of them at this

stage of our development.52

29
CONCLUSION

Communist movements in Africa have been weak, although they have periodically had an influence

far beyond their numbers, especially in Southern Africa. Nevertheless, Communists and socialists

have made episodic gains during socially turbulent periods, they have been unable to capitalize on

these gains in multiparty elections. With the exceptions of the anti-colonial guerrilla movements in

Angola and Mozambique. Communist movements have never gained state power. However,

Communism has been adopted by a significant number of states as an official ideology to promote

economic development and facilitate international alliances. While state-led Communist and

socialist initiatives have been undemocratic and repressive, the tendency towards authoritarian one-

party regimes in twentieth century Africa spans the ideological spectrum. Hence, if socialist

movements are to gain ground, they must address democratic demands.

Capitalism on other hand continues to produce remarkable benefits and continually greater

opportunities for self-cultivation and personal development. Now as ever, however, it is evident

that the current economic system is not sustainable and has directly and indirectly caused harm

upon people and the environment, jeopardizing the sovereignty of the state in national matters and

overriding democracy and human rights in Modern Africa. There may be positive effects of

capitalism, but the negative effects have outweighed many of the benefits from this system. It

favours only a few, and creates a system of winners and losers of which the majority are losing.

The implications of capitalism problem are a slow degradation of the environment and the

devaluing of people. It means slows destruction and increasingly evident depredation of the earth.

30
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35