HomeOpinion & AnalysisColumnistsINNERZELA: Institutions and you- part one

INNERZELA: Institutions and you- part one


Societies that go about their daily work without noticing the changes that are taking place in the lifetime of the inhabitants are in danger of collapsing.

Nations that do not have private and public sector think tanks fail to pause and reflect on their policies or actions with a view to planning a better future or applying corrective action to a disastrous course.

Successful nations have people who do not just show up for work but who plan, plot and prepare for the future.

The creation and protection of institutions that enable societal progress is key to lifting any society. Acemoglu and Robinson in their book Why Nations Fail give us an example of such an institution.

The patent system, which protects property rights in ideas, was systematised in the Statute of Monopolies legislated by the English Parliament in 1623, partially as an attempt to stop the King from arbitrarily granting letters patent to whomever he wanted-effectively granting exclusive rights to undertake certain activities or businesses.

This simple example illustrates how a society of ideas can be created simply by creating and publicising the institution that allows idea to grow and be profitable for those that generate them, if they take hold. Ideas are not the preserve of the rich or powerful. Ideas reside in every human being regardless of background.

Take Thomas Edison, the inventor of the phonogram and the light bulb and the founder of General Electric, still one of the worlds largest companies. Edison was the last of seven children.

His father, Samuel Edison, followed many occupations, from splitting shingles for roofs to tailoring to keeping a tavern. Thomas had little formal schooling but was homeschooled by his mother.

The book carries on: Individual talent matters at every level of society but even that needs an institutional framework to transform it in to a positive force. Bill Gates, like other legendary figures in the IT industry had immense talent and ambition.

But he ultimately responded to incentives. The schooling system enabled Gates and others like him to acquire a unique set of skills to complement their talents. The economic institutions in the United States enabled these men to start companies with ease, without facing insurmountable barriers.

Those institutions also made the financing of their projects feasible. The US labour market enabled them to hire qualified personnel, and the relatively competitive market environment enabled them to expand their companies and market their products.

These entrepreneurs were confident from the beginning that their dream projects could be implemented: they trusted the institutions and the rule of law that these generated and they did not worry about the security of their property rights. Finally the political institutions ensured stability and continuity.

For those who would lead Zimbabwe, this is the challenge for you beyond your election manifesto. Your challenge is not to feel threatened by the next Strive Masiyiwa or Kubi Indi.

Your role will be to govern correctly by enacting laws that allow the peasant farmer with his 99 year lease or title to be able to present him or herself before a bank manager with their dream project for the next harvest.

When the successful farmer makes a food donation to a community, your role will be to stand aside and bask in the glory of how well you govern the country and not to question the patriotic donor on what his motives are and whether he is launching a political career or not.

Your role is to set up institutions that observe society present and past so that you can accurately prepare a legacy for posterity. One way for you to do this well, will be to understand how and why great civilisations and empires such as Great Zimbabwe, The Roman Empire, The Kingdom of Axum and others prospered then failed.

It is not enough for a Minister to show up, read a speech prepared for him and head back home to his whisky. The new Zimbabwe Minister must have a sense of mission about them, a mission to restore the label Great to Zimbabwes name. You must act on the future!

Part of this plan must include the desire to go beyond extractive institutions that simply bring resources out of the earth for the benefit of a narrow elite. Acemoglu and Robinson argue that allowing people to make their own decisions via markets is the best way for a society to efficienty use its resources.

When the state or a narrow elite controls all these resources instead, neither the right incentives will be created nor will there be an efficient allocation of the skills and talents of the people.

Latin America is still recovering from colonisation: after an initial phase of looting, and gold and silver lust, the Spanish created a web of institutions designed to exploit the indigenous peoples.

The full gamut of encomienda, mita, repartimiento and trajin was designed to force indigenous peoples living standards down to a subsistence level and thus extract all income in excess of this for the Spaniards.

This was achieved by expropriating their land, forcing them to work, offering low wages for labour services, imposing high taxes and charging high prices for goods that were not even voluntarily bought.

Though these institutions generated a lot of wealth for the Spanish Crown and made the conquistadors and their descendants very rich, they also turned Latin America in to the most unequal continent in the world and sapped much of its economic potential.

Future governments of this country must not make the same mistake.

Recent Posts

Stories you will enjoy

Recommended reading