• Its risk-averse nature could explain why it limits its study to the allocation of scarce resources to unlimited human needs.
• It assumes human has no culture, political affiliation or history
National Treasury Cabinet Secretary Henry Rotich recently tabled the budget estimates in the National Assembly.
In his speech, Rotich observed that the annual percentage GDP growth of Kenya’s economy in 2018 was 6.3 percent. In fact, this is incredible. In the past 10 years, the only year that we experienced an annual percentage GDP growth of this nature was in 2010, when it was 8.403 percent according to the World Bank. Data from the CBK point to similar results.
However despite the growth in GDP, the cost of living continues to rise, for example, fuel prices were recently increased. People have been asking where the jobs and better living standards are if at all the GDP is growing.
It is important to point out that increase in GDP only indicates economic growth. It does not guarantee economic development. Economic growth is simply an increase in the total value of goods and services being produced within the boundaries of a country.
Economic development is economic growth combined with welfare and better living standards. Therefore, we can have economic growth without economic development but we cannot have the latter without the former.
In economics, a human being is simply labour or an entrepreneur. It is assumed that he/she is rational thinking, meaning that he makes decisions to satisfy his interests. This is the trend that originated from renowned economists such as Adam Smith and John Maynard Keynes.
The problem with using GDP as a measure of economic growth is that it ignores the gap between the rich and the poor. Therefore, we can have the total value of goods and services within the boundaries of a country being produced by a small group of people yet it is assumed that the whole population is engaging in and benefiting from the same. This makes economics imperfect.
The western models of economic growth and development that we have been using in Kenya, and Africa at large, have failed us as well, for example, Rostow’s stages of growth.
Whitman Rostow, an American economist, in his theory explains how a country is able to grow from being a traditional society to an age of mass consumption and beyond. However, up to now no African state has successfully followed this path. Dr Mary Kinyanjui, the brain behind the Ubuntu economic model, agrees that there is a gap in her book called Coffee Time.
The only economic models that can rescue us are those we have authored ourselves. We need more economic models of growth and development like Ubuntu coming up from our local economists.
The fact that economics avoids any confrontation makes it imperfect. It almost makes it a tool of the status quo. Economists are largely conservatives and apologists. Karl Marx and Friedrich Engels note this in their book The Communist Manifesto. This book was written before Marx himself was considered an economist.
As a result of their conservative nature, it is members of other professions who do the risky work for economists, for example, journalists. A good example is Kenya, where journalists are the ones who requested for the SGR contract between Kenya and China.
This was during the New Year round table interview with the President. Economists should have requested to examine the contents of the contract long before then. On the contrary, they were only available to be interviewed about Kenya’s debt situation at the comfort of their homes and offices, where there are no risks involved.
As a result of their conservative nature, it is members of other professions who do the risky work for economists, for example, journalists. A good example is Kenya, where journalists are the ones who requested for the SGR contract between Kenya and China.
The risk-averse nature of economics could explain why it opts to limit its study only to the allocation of scarce resources to unlimited human needs. It assumes that a human has no culture, political affiliation or history. In economics, a human being is simply labour or an entrepreneur. It is assumed that he/she is rational thinking, meaning that he makes decisions to satisfy his interests. This is the trend that originated from renowned economists such as Adam Smith and John Maynard Keynes.
Despite its imperfections, economics remains a line of thought and a lens through which the material well-being of humans can be explained and developed. It is up to economists in Kenya and Africa to develop economic models of growth that are practical in Kenya and Africa. They also need to be more involved in issues of economic concern happening around them.
Economist and founder of The Bizconomist Journal. [email protected].