By Pedro Ferrer Collados.
This post reviews Tom Burgis’ book The Looting Machine: Warlords, Tycoons, Smugglers and the Systematic theft of Africa’s Wealth (2015) analyzing its strengths and its weaknesses.
In his 2016 book, Tom Burgis provides the reader with a detailed analysis of the economic networks and social structures that cause the systematic theft of Africa’s wealth, impeding its development.
The book challenges Walt Rostow’s development ladder, where independent states achieve economic growth through different stages following a linear dynamic. Instead, Burgis draws on dependency theory: the unequal economic relationship between developed and developing countries. Dependency theory places division of labour on a global scale, where the systematic flow of natural resources from the global south provided accumulation of wealth for the global north at the expense of the development of the former. The author links dependency theory with what scholars call the resource curse: the failure of resource-rich countries to benefit from their natural wealth.
The Strengths of the Analysis
Burgis understands development as a project rather than a natural phenomenon, that is to say, the global economic and political system did not just happen, but rather was created. The book places African underdevelopmentas emerging from European colonialization. Colonial rulers such as Cecil John Rhodes or King Leopold II changed the economic and social structuresof the colonies through the setting of extractive institutions: “those that do not provide any rights [or services] to the majority of the population so that they [political elites] can extract resources or labour from them, or monopolize the most lucrative business”. This resulted in the international division of labour, where the Global South was forced to specialize on the export of primary commodities. This in turn created an economic dependency on natural resources, impeding economic diversification. For instance, oil accounts for 98 per cent of Angola’s current exports, while minerals account for 95 per cent of Guinea’s exports. Burgis offers empirical data which shows that similar numbers can be found across all sub-Saharan Africa; as noted by the author, “the colonial powers set up a machine to extract resources…. and it is incredibly difficult to change that structure”.
[Extractive institutions] resulted in the international division of labour, where the Global South was forced to specialize on the export of primary commodities. This in turn created an economic dependency on natural resources, impeding economic diversification.
The book illustrates in detail how these colonial structures based on unequal relations of power were maintained through the development project in the form of shadow states. For example, between 2007 and 2012, only 2.5 per cent of the $41 billion that the mining industry in the Democratic Republic of the Congo produced found its way into the government budget. This stems from the fact that corrupt governments use national oil and mineral companies to gain control of the economic rents extracted from natural resources. The consequences? The enrichment of an elite at the cost of the wellbeing of the population. Burgis offers to the reader names and empirical data of these shadow states from Angola to Zimbabwe, “It is like a virus, transmitted from the colonial regime to the post-independence rulers”.
The author is at his best when dismantling the fuse of politics and private interests in the form of these shadow states at the expense of the social contract. Multinationals, middlemen, warlords, and foreign companies operating above the law. Burgis’ detailed analysis of the dynamics that are ripping off the African continent and dooming it to underdevelopment easily enrages the reader: suitcases full of cash, concessions of mines in exchange for military support, obscure shareholdings, transfer pricings, tax havens and all kinds of dirty tricks in the name of profit.
The Weaknesses of the Analysis
Africa’s underdevelopment is not rooted only in an unequal division of labour, but also in an unequal ecological exchange. In his analysis Burgis never addresses that poverty is seen as the main agent of ecological degradation. The colonial legacy transformed African subsistence agriculture into an intense export-led sector to feed the Global North. The shift from traditional food sources to cash-crops, and the introduction of practices such as petro-farming have led to soil degradation, deforestation, pollution, loss of species, and degradation of the biosphere. Poverty often results in damaging environmental practices, which lead to fewer resources and less productive land, which leads again to poverty; a vicious cycle that impedes sustainable development.
Furthermore, although Burgis mentions natural resource dependency and its high vulnerability to price fluctuation, the author never remarks on the link between the boom-bust cycles of commodity prices and debt crises. When commodity prices are high, countries tend to borrow money from international institutions. When the prices drop these countries get caught in a debt crisis, as can be seen across the Global South during the 1970s and 1980s.
Furthermore, although Burgis mentions natural resource dependency and its high vulnerability to price fluctuation, the author never remarks on the link between the boom-bust cycles of commodity prices and debt crises.
Frustratingly, in his analysis of the political and social structures Burgis never takes on the insufficient investment in education as a cause of Africa’s resource curse. Natural resources provide shadow states with financial independence from other political and economic processes. This makes the governments forget that investing in education is a precious policy for development as it provides the means to create a skilled labour force that can diversify the industry, thus, avoiding dependency to natural resources and its vulnerability to price fluctuation.
Opportunities to Improve Development Outcomes
The countries analyzed by Burgis rank low on the Human Development Index (HDI). However, there are other resource-rich countries that rank highly on the HDI such as Norway, Brunei, Argentina, Mexico, therefore, the resource curse is avoidable.
Seen in the political and social structures that Burgis analyses in his book, it is arguable that the first step to achieve development has to come from good governance. Governments have to offer transparency and accountability. Moreover, governments could endorse economic policies that are viable within their scope to promote development. Ha-Joon Chang offers a list of interventionist industrial, trade, and technology (ITT) policies which he argues were used by now-developed countries during their catch-up stage. These policies range from tariff protections to state subsidies in strategic areas such as agriculture, infrastructures, manufacturing, and technological research. The use of these policies combined with certain levels of trade has proven to be effective for the Asian tigers. Moreover, social policies such as education could be implemented to create a skilled workforce that will diversify the economy and make them less dependent on natural resources. Furthermore, education will also provide the necessary skills to effectively monitor the accountability of the state.
However, Africa’s development requires cooperation between national governments and the international community. Burgis calls for the strengthening of international law and financial transparency, holding companies increasingly accountable for passive participation in corrupt or illegal activities. Furthermore, there are UN bodies that create north-south cooperation, such as the G-77 and the United Nations Conference on Trade and Development (UNCTAD), where developing countries can express their economic interests to the international community in issues such as commodity prices.
Threats that Could Impede Development
The chances for shadow states to be willing to give up power and corruption are quite slim. The economic rent provides them with the financial means and the incentive to stay in power, locking the way to democracy. As noted by Burgis, the rulers of Angola, Zimbabwe, Cameroon, and Equatorial Guinea are the world’s four longest-serving rulers. Moreover, the author analyses how the attempts to redistribute wealth in South Africa by the African National Congress (ANC) policies and the Black Economic Empowerment (BEE) ended up replicating the colonialist behavior, the enrichment of a few that lead to a massacre in order to control natural resources.
Additionally, it is fair to claim that the Bretton Woods institutions are highly shaped to meet the interests of the Global North. The loans to developing countries come with the conditions of meeting neoliberalist policies which would not allow Africa to follow some of the economic policies that may suit them better, in order to catch up with their development goals. Furthermore, globalization has opened new ways for financial investors and multinationals to loot Africa’s wealth without getting their hands dirty. As noted by Oxfam, the World Bank’s private sector arm, the International Finance Corporation (IFC), “invests in financial companies that lends the money to third parties, losing control of where and how is the money spent”. The book highlights how the IFC through third and fourth parties was involved in the massacre over platinum mines in South Africa and in the massacre over political power in the Congo.
Globalization has opened new ways for financial investors and multinationals to loot Africa’s wealth without getting their hands dirty.
In conclusion, Burgis’ book links dependency theory with the so-called resource curse. The author illustrates how the unequal relations of power that started with colonialism were maintained through the development project and exuberated with globalization. Burgis mixes an electrifying narrative with empirical data and offers the reader a privileged view of the most draconian economic mechanisms and social structures of Africa. Although there are economic and social policies that can be implemented to help Africa to achieve their development goals, the author is right in highlighting how shadow states have the financial means and the incentives to block the way to economic diversification and political empowerment; hence the emphasis on good governance. Although the author leaves some issues on the side, this is not an academic book intended to prescribe solutions, rather, it is a thrilling masterpiece that helps to understand the particularities of Africa’s underdevelopment.
By Pedro Ferrer Collados
Pedro is from Spain and graduated in International Politics and French. He has worked for the United Nations High Commissioner for Refugees in Valencia. He has also worked for First Aid Africa teaching first aid in rural areas in Tanzania. He is currently studying a Masters in Poverty and Development at IDS. His main interests are inequality, conflict, underdevelopment, and the global political economy.
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