socialist development and public investment in tanzaniaby w. edmund clark

Socialist Development and Public Investment in Tanzania by W. Edmund ClarkReview by: Lars S. OsbergThe Canadian Journal of Economics / Revue canadienne d'Economique, Vol. 13, No. 3 (Aug.,1980), pp. 500-503Published by: Wiley on behalf of the Canadian Economics AssociationStable URL: http://www.jstor.org/stable/134709 .

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Reviews of books I Comptes rendus

501 Clark Socialist Development and Public Investment in Tanzania by LARS S. OSBERG

504 Blackaby, ed. De-industrialisation by K.S. PALDA

506 Johnson and Johnson The Shadow of Keynes by PHYLLIS DEANE

508 Eisner Factors in Business Investment by M.H.I. DORE

510 Cagan Persistent Inflation, Historical and Policy Essays by DAVID

LAIDLER

512 Boadway Public Sector Economics by WALTER HETTICH

513 Weintraub Microfoundations, The Compatibility of Microeconomics and Macroeconomics by WILLIAM SCHWORM

515 Robinson Aspects of Development and Underdevelopment by G.K.

HELLEINER

517 Presley Robertsonian Economics by JOHN HICKS

520 Piva The Condition of the Working Class in Toronto - 1900-1921 by ALMOS T. TASSONYI

522 Lithwick, ed. Regional Economic Policy: The Canadian Experience by ATIF A. KUBURSI

525 Globerman U.S. Ownership of Firms in Canada by JAMES B. HARRIES

529 Economic Council of Canada One in Three -Pensions for Canadians to 2030 by LOUIS ASCAH



Reviews of books I Comptes rendus / 501

532 Hood and Young The Economics ofMultinational Enterprise by DONALD J. BREAN

534 Fine and Harris Rereading Capital and Desai Mcarxian Economics by GEORGE WARSKETT

Socialist Development and Public Investment in Tanzania by W. Edmund Clark. Toronto: University of Toronto Press, 1978. Pp. xvi, 297. Index. $25.00. ISBN 0-8020-5376-9

Dr Clark has written an excellent description of the process of Tanzanian development which should appeal to scholars interested in African economic development, students of the influence of bureaucratic elites on economic development, and the many who are interested in the problems and pos- sibilities of non-revolutionary socialism. Unfortunately, one can expect that the price of the volume and the specialized nature of its topic will be barriers to substantial sales. One can, however, hope that a paperback edition will be issued (if only for the East African market) and that in such an edition the author might take the opportunity to expand on the implications of the current study.

In chapter 1 Clark asks the question: What is a socialist investment strategy for a less-developed country such as Tanzania? He emphasizes that the distinction between a socialist investment strategy and one that is purely economic lies in (1) its acceptance of goals other than the purely economic (especially, equality and participation in decision-making), (2) its explicit consideration of the political and social context of its formulation, and the political and social repercussions of its implementation, and (3) its subservi- ence to a larger political strategy for long-term economic, political, and social development. Clark contrasts this to the one-dimensional approach of what he calls the 'broken record' of neoclassical economics and considers five key policy issues: the issue of equality and/or growth; the emphasis accorded agriculture versus industry; the choice of technology; emphasis on self- reliance versus integration into the world economy; and tensions between urban and rural development.

It is refreshing to read good political economy, but one wishes that there were more of it. Each of these topics is worthy of a monograph in its own right. The author compresses his discussion of these issues into twenty-four pages and fails to enunciate clearly his own view of the development process which lessens the appeal of his book to general readers. Presumably he feels that such a discussion would be redundant because his thesis is that

at this stage in Tanzania's development, a few simple indicators are all that are



502

necessary to decide whether or not a project is consistent with [socialist] strategy. The two main indicators are capital/labour ratio and import intensity ... Import-intensive industries tend to be capital-intensive, urban located and dependent on foreign technology. In contrast, local resource based industries are generally less capital- intensive, can be located in rural areas and have much simpler technologies. (21)

Clark argues convincingly that it is the latter sort of project that is consistent with a socialist investment strategy in Tanzania but emphasizes that there is no one true path to socialism. Nevertheless, some lessons surely can be drawn from the Tanzanian experience, and one wishes that they had been made more explicit.

Chapter 2 presents the economic history and the political developments leading to the Arusha Declaration of 1967 and the subsequent redirection of Tanzanian social policy. It summarizes the 'official ideology' of emphasizing agriculture, rural communalism (Ujamaa), the reform of education, and the decentralization of government decision-making. In addition, Clark provides a useful summary of economic development in Tanzania to 1972, the last year before the oil price rise. When one reflects that Tanzanian policy has shifted in stages, from the Arusha Declaration to the Tanu guidelines (1971) to the regional decentralization initiatives (1972), and that Tanzania has had to cope in recent years with a much more hostile external economic environment than that of the period under study, one can only wish that the movie ran a little longer.

Chapters 3 to 6 provide an in-depth analysis of the reality, as opposed to the rhetoric, of Tanzanian development decisions to 1973. The central thesis of this section is that while government ministries have to some extent moved to realign their policies in a more socialist direction, the important para-statal sector (which corresponds roughly to our idea of crown corporations) has not. To be sure, the inertia of existing programs and the difficulty of thinking along new lines has meant that the shift of services provided by government ministries has been substantially greater than shifts in the allocation of expendi- tures. Some movement, however, is better than none. Clark demonstrates conclusively that the para-statal sector has 'concentrated on building enterprises which are often large, capital-intensive, and outer-directed and which are not integrated in the rural economy. Far from mitigating the urban/rural dichotomy, they have exacerbated it' (98). The importance of such an orientation can be seen when one remembers that para-statals in 1972 contributed 12 per cent of monetary GDP and controlled 27 per cent of investment in Tanzania.

As part of his work in the central planning ministry (DEVPLAN) Clark was involved in the development of a planning information system, and in chapters 4 to 6 he presents a wealth of data, much of it not easily available elsewhere. In chapter 4 he demonstrates the continued capital intensity, import orientation, and urban bias of para-statal investment in aggregate. In chapter 5 he details this by sector with copious examples. In chapter 6 he discusses the financing of public investment, the transfer of resources from rural to urban areas, and



Reviews of books I Comrrptes rendus / 503

the shift in foreign financing from trade credit to official governmental aid. He argues that para-statal enterprises have been highly autonomous institutions which were not only attracted to areas of the economy characterized by large-scale capital-intensive firtns, but which also tended to enter each sector in the most large-scale, capital-intensive way possible. Inefficiency, use of the most modern equipment, continued dependence on expatriates, the creation of small, highly paid labour elites, dependence upon imported raw materials, and a continued location in the most prosperous regions of the country all characterize current para-statal operations - hardly a socialist investment policy. Clark engulfs the reader in data, but if anything he pulls his punches. His picture of the National Development Corporation, for example, 'an organization designed to attract foreign firms which had projects to build' (112), will seem understated to many. He demonstrates that para-statal investment patterns are so capital-intensive that their continuance would imply that present growth rates cannot possibly be sustained but buries this result on page 121 rather than emphasizing it.

Chapters 7, 8, and 9 analyse why investment in Tanzania has taken this course, what alternative strategies have been proposed, and Clark's own policy prescriptions for the future. He argues that socialism from the top, with a policy that has often been only vaguely enunciated, has left a policy vacuum. A lack of socialist commitment and innovation has meant that many of the managers of Tanzanian industries have filled such a vacuum with the models, and the turnkey projects, of western capitalist countries. In the debate on Tanzanian development, Clark rejects as unrealistic the calls sometimes made for autarky and emphasis on heavy industries. His own prescription is very similar to that of Nyerere: increased democratization and decentralization, which will imply political pressures to a continued orientation of expen- diture to agriculture and to rural areas. In addition, Clark makes an interesting case for the imposition of crude quantity targets for rural/urban proportions of investment, capital intensity of projects, etc. Clearly this is a policy tool that must be sparingly used; but, as I saw from the para-statal end, without such measures it is much easier to proclaim national policy than to implement it, even in a 'socialist' country. One hopes that Clark is right, that such institu- tional changes can forestall the development of a class of (inefficient) state capitalist bureaucrats. One hopes that he is right not to see 'Ujamaa' in rural areas as a continuation of the transformation approach and a lineal descendant (minus the capital inputs) of the earlier settlement schemes. One hopes that Tanzania can develop mechanisms to encourage 'socialist innovation' and parsimonious administration without threatening egalitarianism (an issue Clark ducks). Clark's book ought to be widely read, both for its detailed description of the practical difficulties of implementing evolutionary socialism and as an example of good political economy - a sort of book our profession has sadly come to lack.

LARS S. OSBERG, Dalhousie University



socialist development and public investment in tanzaniaby w. edmund clark

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