The return of recession, debt and structural adjustment

Abstract

As our editorial in Issue 173 argued, we are ‘witnessing the intensification of neoliberalism and an accompanying resurgence of its associated power and institutions, maybe above all the IMF in Africa and elsewhere’. A world recession induced by pandemic and war, a consequent boom in energy prices and a cost-of-living crisis with rising inflation, especially of food prices, is threatening to reverse the progress that many African economies made during the ‘commodity super-cycle’ of the 2000s and the first part of the 2010s. Indeed, there are strong echoes of the recession of the late 1970s and early 1980s, itself induced by a twelvefold increase in the price of oil and in Africa, by famine and war. In both cases, these appearances of crisis disguise the fundamental contradiction of capitalism – the relentless pressure to increase profits facing the limits of realisation as consumption is squeezed and the state is restricted in its powers of intervention, even in limiting the impact of the cost-of-living crisis on its already impoverished population. While much attention has been focused on the oligarchs of Russia and Ukraine, these plutocrats, as they should be called, exist all over the world. Their increasing influence is evident everywhere. They acquire their wealth by hoarding the economic rent they receive from highly valued products and paying as low wages as they can get away with to largely nonunionised labour. They then secure that wealth and economic power from any government intervention, first by capturing political parties – and not only of the right, but also the self-styled left – and then playing a crucial role in funding their election campaigns. Then, after those parties win elections, the government is captured and liberal democracies or countries moving towards such democracy morph into shades of oligarchy or even autocracy, as we observe most obviously in countries such as India, Hungary and Turkey, and in Africa, Uganda. Once again, the chief beneficiary of this war-induced recession is US imperialism and its dominant finance–security complex (if not oligarchy) based on oil, gas and arms. The US been able to benefit not only as an oil producer from the increase in the oil price but also from the increased demand for its liquid petroleum gas (LPG), as Europe reduces its demand for Russian gas following that country’s further invasion of Ukraine. The potential axis of Brussels–Moscow–Beijing, which would have been a serious threat to US global interests, has been averted. The US has been able to reassert its hegemony over Europe through its mobilisation of economic and military support for Ukraine and has also underlined its hegemony in the Far East with its clear assertion of its support for Taiwan’s independence, reaffirming its strategy of, and belief in, a unipolar world. For the countries of Africa, the last decade has seen a large increase in sovereign debt in the wake of the extremely low interest rates that followed the financial crisis of the late 2000s. The encouragement of African economies’ entry into global capital markets, mainly through issuing Eurobonds, was regarded as something to be celebrated as part of the ‘Africa Rising’ narrative. Not that capital markets treated African economies in the same way as