In this episode, I had a conversation with economic historian Johan Fourie, who is a professor of economics at Stellenbosch University, and the author of one of the most enjoyable books on economic history called Our Long Walk to Economic Freedom. We spoke about the resurgence of economic history, particularly in Africa. Johan attributes this revival to multiple factors, including an interest in understanding past economic patterns, technological advancements enabling data analysis, and scholarly work drawing global attention to the field. We discuss Africa's economic development, noting the continent's reliance on primary goods and the impacts of political and economic policies on growth. Johan stresses the heterogeneity within Africa and warns against generalizing the continent's economic narrative.
The discussion then delves into the role of ideas in shaping economies, with a focus on industrial policy. Johan highlights the importance of empirical evidence in policymaking and warns against the potential misuse of industrial policy for political gains. He emphasizes the need for a more inclusive research ecosystem in Africa, advocating for better representation and the promotion of economic history as a vital sub-discipline.
Johan also addresses the importance of economic freedom, defining it in simple terms and discussing its implications in policy decisions. He touches on the challenges of racial history and representation in academia, emphasizing the need for diverse voices and a marketplace of ideas for better policy formulation.
Finally, Johan discusses the optimism inherent in economic history, acknowledging the significant progress humanity has made while remaining cautiously hopeful about the future. He advocates for policies that ensure the equitable distribution of the benefits of increased productivity, highlighting the potential of new technologies to contribute positively to Africa's economic growth.
Transcript
Tobi;
Welcome Johan. It's good to talk to you. I guess where I’ll start is economic history is enjoying a bit of a renaissance, I'd say. Personally, for me, I'll say in the last five years I've read more economic history books and papers than actual economics itself. So I just want to ask you, what was the turning point, at least in recent time, why does economic history seem to be having a moment or its moment right now?
Johan;
I think there are many answers to that question. I'll focus on African economic history because I think that's something, firstly, that I know a little bit of, and secondly, that the factors that affect African economic history might be slightly different than those that make economic history attractive to, kind of, global audience.Although I do think your sentiment is true also for for global economic history, that there's certainly been a resurgence in interest. Of course, they were previous episodes where this also happened in the 1960s there was a great interest in econometrics, but that kind of died down by the 80s and 90s. And certainly I think in the last decade or two that's made a comeback, but certainly in African economic history, also by the 60s and 70s, for different reasons, again, because of the end of the colonial period and many Africans being interested in their own economic pasts; it was, you know, certainly intended to improve the development outcomes of many of these countries. And so studying what had happened in the past became important. And then by the 80s, you know, for reasons like the shift in history towards more cultural aspects of African history and, perhaps, also, to some extent, the fact that economics became more technical, more mathematical.
The fields really, economic history really, had kind of dialed down interest in Africa's past, but perhaps also to some extent, the fact that many African countries were struggling to grow. And so there was little interest in understanding of why these things had persisted. But by the 2000s, of course, African growth turned around and, you know, this is a continent [where] there were several countries that were growing quite rapidly and you had this covers of The Economist and Time magazine and all that was talking about Africa Rising, all these things, but also, I think, an interest by scholars, often scholars based outside of Africa, to understand this resurgence or what Morten Jerven called the, kind of, recurring African growth. So we know actually in the past that this had happened, that there were periods of growth. But understanding why there are these fluctuations became quite important. And then that combined with the ability to transcribe large historical data sets. Find many of these sources in African archives and then transcribe them and analyze them. So access to computing power also.
So it was both from a demand side like interest in Africa's past and also the supply side, the fact that they were now tools that would help us analyze what had happened in the past, that really kind of created this resurgence or Renaissance as some might call it. Of course, you know, initially led by economists in some of the leading universities. Work by, you know, James Robinson and Acemoglu, Nathan Nunn who wrote a book on slavery that was quite prominent and really pushed interest into the field. And so various kinds of groups of people, you might kind of think of them as two types, the one with the economists interested in kind of causal persistence studies. So thinking of how past shocks still affect the present outcomes and others, who're more kind of classically more like an old school economic historians that are interested in actually understanding long term patterns. So thinking of wages or standards of living or trade statistics that are actually trying to collect them and rebuild them for many African countries, because we don't actually have long term series for many of the regions across Africa. So I think that's really the main reason why we see this kind of renewed interest. And you can see that in, you know, participation of African Economic History Network meetings where you see papers maybe 10 or 15 in the early 2010s. And now you have, you know, the most recent conference in Pretoria was about 100 people attending. So it's a really massive growth in the participants and researchers trying to study Africa's past.
Tobi;
What immediately comes to mind, and when I talk to people, ordinary Africans, I should say, is that how did Africa sort of missed the boat on prosperity? I mean, as you said in your answer, growth has been recurring in Africa, but it has not been sustained enough for Africa to really join that group of countries that had a sustained growth spurt for decades. It happened a little bit in Latin America. Of course, East Asia is the most famous example of this. I mean from history what happened in Africa?
Johan;
Yeah, I think the thing to stress is that Africa's experience has been quite different from, say, you know, a Western Europe, or if you want to take the kind of country where it'll started… this sustained period of economic growth - Britain or, you know, England more specifically. So what you find is you also find periods of quite rapid growth in Africa. But then, as you've just mentioned, there are periods of stagnation or even decline in many countries. I mean, that's a very valid question, is why is that? And again, there are, you know, a myriad of different reasons. I think one of the things that one should keep in mind is that Africa's economies are often tied very closely to kind of mineral resources, and even before that, before the mineral era, to cash crops. And these prices often fluctuate quite a lot. And so you would find periods when there's a boom cycle, you would find obviously countries doing quite well. But then when these prices collapse, then of course these countries suffer. So that's a very obvious reason. And of course there are other countries in the world that also are tied to kind of cash crops or minerals, and they seem to have experienced less of this. And that is also, of course, true.
But it's worth keeping in mind that for many African countries, they have a pretty short history of independence. So it's really only in the last 70 years or so that African countries are independent and where the economic policies are not determined by some, you know, European power. Of course, you can think of pre-colonial times before the kind of mid-19th century, but even then, these were mostly kind of subsistence based or focused on trade in commodities, cash crops and, even before that, of course, in slave individuals. So it's really only in the last 70 years that we can think really of kind of modern economic growth in many of these economies. And then, for example, think about industrialization, you know, growth of manufacturing and more recently, service industry. But many countries are still very much tied to primary sector exports and therefore are closely correlated to these international price fluctuations. So that's kind of one reason.
Of course, one could also think of political economy reasons that we see quite also large fluctuations in terms of political regimes. Often we find coups that undermine kind of longterm economic planning. Many people will also argue that, you know, there was involvement of international organizations setting certain rules for African countries, certainly in the 1980s and 1990s [that] put them on a different trajectory. But I think the kind of point is that actually many African countries were relatively young and therefore tied to very much primary goods exports and it's only really in the last 3 or 4 decades where we could see this kind of shift. And in fact, by the 2000, when we do see some growth, I suspect we do see lower levels of fluctuations than we did, say, 50 years earlier. So maybe we’re just too soon yet to think of African countries as echoing some of the trends that we would see elsewhere in Europe, maybe from the early 20th century.
Tobi;
I want you to, like, disentangle this for me a little bit more. So I'll give you one example. There is a famous graph. I think I've made my own versions of it as well of income per capita growth, say, for Nigeria in 1960 and, say, South Korea. And you could see this huge difference as time goes on.
Johan;
Yeah.
Tobi;
And you speak to an average African, and especially in today's world, what you hear is that why can't it be here? You know, what is so different about Africa, especially given the experience of other countries that started seemingly at the same level over the same time period, same 60 years or 50 years, or however it is you want to slice and dice it? So really, what are the factors that we can point at? Because, I mean, this leads to various speculative theories, whether it is culture, corruption or the kind of leaders we have, you know, so many things. So just disentangle for me, what makes Africa… I don't want to say different, but why has growth really been sluggish?
Johan;
Yeah.
Tobi;
Because people are impatient.
Johan;
Yeah.
No, no, and I understand fully the impatience. I mean, I'm also impatient. Right. And so when I was a student we had many of these issues and now we still have many of these issues and then, you know, you study economics often with the hope to help improve [the] living standards of people obviously in [your] own area, own country, but also across the continent. And yet, you know, it doesn't happen as fast as you hoped it would. I think the one thing to say, first up, is to say Africa is obviously a large continent. So there's also a large variation within the continent. And I think we tend to forget this.
You know, we treat Africa quite often and when I say we, I think scholars often treat Africa is a kind of homogeneous place when we talk about Africa or sub-Saharan Africa. But in fact, there are many, many lessons on the continent where different countries experience very different things at different times. They might be, you know, a stereotype of, in the 80s and 90s things were bad, in 2000 things were better. And so, you know, a generalization guess. But even within that, you know, the fastest growing country in the world in the 1980s and 1990s was Botswana. So there are exceptions to that rule. And I think those are the helpful exceptions, because they help us understand that perhaps these things are not kind of cross-cultural. Right. So it's not the Africa dummy, for example, the famous 1990s papers that try to understand this coefficient that was called the Africa dummy that you would always throw in in Africa coefficient and it would come out negative. And so it seemed to be this universal truth that there were something different about Africa. And the kind of underlying message was that it was something wrong with Africa. But in fact, you know, again, if you look at within continent variation and even within country variation, you find very different stories that there are certain places that are doing quite well and others that are not. And so it can't be just some unilateral thing that's true for the entire continent.
But you are indeed correct, right? So if you look at 1950, 60, South Korea versus African countries, that many African countries, cities, the labour, the average wage rate of unskilled labor in African cities were higher than those in South Korea or several other Asian countries. And so what has happened in the last 50, 60, 70 years that meant that, you know, South Koreans became much more prosperous versus Africans? I think the one thing leads back a bit to the earlier conversation we had about minerals in Africa, had minerals and focused on cash crops. Again, Africa's geography means that there's a lot of variation and so different countries focus on different things. In South Korea, what many thought was a disadvantage in that they weren't any minerals. agriculture is not a main export commodity for South Koreans, which meant that they we're almost forced to go the industrialisation manufacturing route. Right. So focus a lot on education, perhaps bringing in some imports that will allow them to disentangle those things and rebuild them much cheaper and then export them. So an export-oriented view of their industrial policy versus African countries that often try to do their own thing.
They say, well, we're going to substitute our imports. We're not going to import. We try and build our own factories here, produce our own cars here, models very similar to what had happened in Latin America, which, you know, clearly wasn't the kind of successful model that many had hoped it would be. And so it's in some sense a policy decision of what had happened, what was available, and the potential for growth choosing a sector that perhaps in Africa means some growth in some years. Right. So the minerals again, but in other years stagnation and decline, whereas South Koreans would shift their focus towards really building on the inputs that are necessary for an industrial society. So focusing on education, it's not to say that it wasn't education in Africa in the 50, 60s and early 70s. There was a lot of spending on it. To some extent perhaps too much almost on basic education and too little on the higher education, which is also like those incredibly valuable technical skills that you need mathematics, engineering, you know, to build a manufacturing base. So it's a policy choice. And it, again, kind of linked to the fact that there wasn't immediate successes, meant that there was always an opportunity for political rivals to make the case that change is too slow. Right. So we see in Ghana, for example, Kwame Nkrumah comes to power with promises of growth and in fact does.
In the early 1960s we do see some growth, right, with advice from leading experts, investments in infrastructure, big plant, you know, massive dam that is built, hydropower, but that comes almost too slow. And a few months after the dam is completed, he is replaced in a coup. And so it's the frustration with the slow progress that ultimately puts Africa in this… well, I make the same mistake, generalisation. But in many African countries, you see this kind of process of growth and then kind of decline, stagnation, either because of declining prices, international prices, or because of local politics that intervene.
Of course, there are many other things to also add to that story, but I think that kind of summarizes it quite well. And the idea now, I think, is by the 2000s, we, again, see this surge in mineral prices. We see a surge in many African countries’ economic growth. But, you know, can that be sustained? In some cases we see in the 2010s it has been sustained. You know, Ethiopia was shifting towards a manufacturing base. Of course, there were other political concerns that had happened since. But in other places like Angola, you know, quite rapidly growing country, but then when the oil price collapsed, again, struggling. So, again, experiencing that volatility that is so characteristic of many African countries. I'm not sure if that answers your question, but that at least is. So, you know, I will just end by saying it's not just something that's innately Africa. I mean, think that's exactly the wrong conclusion to come to because that doesn't help us. Right? So that doesn't leave us with any policy interventions that we can, you know, lessons that we can learn. It basically seems like it's deterministic, it's fatalistic. In fact, that's just, I think, the wrong approach. I think it's really trying to understand what are, in fact, in each country, the reasons that we see growth and then stagnation, and then trying to understand what could be done differently now to prevent that from happening again.
Tobi;
I mean, I will say that I am also guilty of generalization, and I do take your point on variation very seriously. So when I do say Africa, just know that there's a caveat to that. Um, so let's talk a little bit about ideas and the role of ideas. Ideas do not exist in a vacuum. They do have influences. And also in my own experience, I've seen situations where you have scholars making arguments that are highly contextual to their environment, and you see those same ideas being used either in policy or as justification for an existing policy here in Africa, I would say in Nigeria more personally to my own experience. So I'll take one example with industrial policy which is back in fashion right now, and you see arguments from … I mean also quite relevant to a recent blog post. Industrial policy is really, really, sexy right now. It's in fashion and many people are talking about it in the context of what is happening in the United States, in Europe, in China. But the point is, over here in Africa, in Nigeria specifically, we've been here before. Industrial policy works rather differently here. And what I mean by that is, it is very, very sensitive to capture, you know. But you do not get that carefulness when scholars are making such recommendations, you know, so it's always like industrial policy works and if you are against it, you are an ideologue. So the role of ideas, especially, also historically, post-independence, you talked about this a little bit in your book, how ideas influenced the trajectory of growth and social development generally in Africa, of course with variations, I know.
Johan;
Oh, yeah.
And I think that's a great point, is that ideas do matter. Right. And sometimes you do feel like you're swimming against the tide when you make a case for, you know, let's use the example of industrial policy, when you make a case for, well, we should be cautious for using certain industrial policies in countries like South Africa or Nigeria, when, you know, you're indeed right that everyone seems to be on the bandwagon of yes, industrial policy can work and should be implemented if you are at all concerned about, you know, development or growth. And that's very difficult. And I must also add that you're also right that politicians in a very rational way, from their perspective, abuse some of these ideas, right? So they choose which ideas suit them in a specific context. You can always find an economist that, you know, would be able to convince you of a certain policy. Right. If you think of kind of labour policy like minimum wages, you can find economists that will say, yes, minimum wages is a great thing. And then you would find someone that would cite the first year textbook saying, no, it's a terrible thing, right?
My hope, I guess, and I'm not sure this is in fact viable, but it is that we move increasingly towards a more empirically based, and certainly economics has done that over the last two decades. To focus on what can we actually prove? Maybe we've gone a little bit too far. But the idea that we can actually test whether, you know, something like a minimum wage works is a very useful way of saying, okay, well, instead of focusing too much on theory and making certain assumptions and thinking what might happen, let's see what has happened in the past and potentially then make decisions based on that. Industrial policy, in fact, as you say, that there's a new literature on this, and many of these scholars actually make the same claim and say that we haven't actually indeed tested the impact of industrial policies to any great extent. And the cases where it has happened, we find actually evidence that in some cases it worked and in others it hasn't. And so understanding when it works and when you know when to say works mean really leads to actually, you know, economic growth and where it really seems to have made very little difference.
We need to understand why that is. And this is really where history is very valuable, that you can construct the theory and test it in one setting, and it seems to have a positive impact. But if you use that same theory and test it somewhere else and it doesn't, then clearly we need something more in that theory, right? We need to have the factors that affect the success, the outcome of these policies. We need to understand what they are. And this is really where context, I think, is incredibly important. I think some of that just to, kind of, you know, make the point about industrial policy. One of the things that seem that these new authors, [when] I say new authors, they, you know, they are not young authors necessarily, but they’re returning a discussion on industrial policy that, perhaps, was lost for a decade or two. I think what they have now agreed on is that, [and] one of the things that I find striking is that actually it's more likely to work in big countries than in small countries, and that almost all countries in Africa are small. And so that's something very important think to take note of, which also to me is a signal that we should be more cautious than optimistic about the likely effect of these policies. But as I've just said previously, politicians tend to also abuse, you know, these things. And certainly from a political economy perspective, for a politician, an industrial policy seems like something that can sell to voters. So to say that I am going to build a, you know, special economic zone and we're going to attract X number of jobs. And, you know, I'm going to be at the ceremony where I can cut the ribbon and show you that this has been done. That is a very, very attractive thing. Whether that actually in 5 or 10 years down the line have any impact, that's a very separate thing. And by the end, the politician’s probably not really in the game anymore.
And I think, my sense is, I'm not sure this is what the authors have said, but my sense is that that is far more likely to happen in a small country than in a much bigger economy. So that's partly why I think in smaller countries, with smaller I don't necessarily mean, you know, few people, I mean low GDP per capita, I think politicians have a greater ability to exploit the weaknesses of industrial policy than in larger economies. And so that's why I am a little bit wary of these policies. That's, again, not to say that the state shouldn't have any involvement in the economy. Right. So they are certainly places where the state, of course, it should provide public infrastructure. Right. So, you know, no private sector should just have 100% authority on what infrastructure is built. The state has an incredibly important role there, and that inevitably does imply industrial policy. If you choose between an airport or a harbour or, you know, new a telecommunications cable or whatever, that's an industrial choice that you make. So it's inevitable that you're going to make industrial policy choices. But I think where it gets to policies here where you can have politicians exploit that for their own benefit, I think one should be very cautious, right, where it’s, you know, favoring certain industries with tax policies or these kinds of things that just seems like you're setting yourself up for failure.
Tobi;
I mean, still on that particular idea and the role of ideas generally, one could also come to my mind and that I'd like you to help me understand historically is the issue of state control. Because I mean, like the title of your book, and a theme that you consistently explored throughout the book, the importance of economic freedom seem to be something that a lot of African countries struggle with.
There is an overwhelming sense that the state has to be involved in everything, not just the political life, the economic life, the social life. And sometimes I find that very contradictory, especially given the history of repression that happened all over the continent with slavery and colonialism. So how has this evolved into what it is now? Why is economic freedom or the idea of freedom generally, but don't want to see freedom because no democracy is quite popular. You cannot struggle to find democratic movements anywhere in Africa. So, but, especially getting the government relatively out of the economic life, why is it such — sometimes you feel like it's a taboo idea. It's almost unAfrican to even suggest it. You’re labelled a libertarian or a neoliberal. You are someone that is bringing unrealistic ideas that is not African.
Johan;
Yeah.
Tobi;
So, where did that come from?
Johan;
Yeah. So I think that's a great, great question. It's something that I've thought about a lot. And sadly I don't think I have an easy answer. I think where economic history can help… So so let me start with economic freedom before I get to where history can help is, you know, there are many different definitions of what economic freedom is. Mine would be very simple. And that is that you've got the freedom to choose what you produce, how much you produce and what you consume, and how much you consume and from whom you consume. And so that's a very simple definition, but it's a very valuable definition when you think about any state policy or government policy. You know, if there's an increase in taxes, does that remove people's freedom to produce or consume, or does it add to their freedom to produce or consume? Almost always, when the state enacts a new policy, it seems like it removes people's freedom. If you raise the tax rate, obviously, so let's say you've got a value added tax, if you increase that, obviously you remove people's ability to consume, right? Because they now have to pay more to the government. And so prices increase and therefore they can consume less.
Industrial policy often means that it benefits one sector, but at the cost of others. Then you have to weigh up the freedoms to produce for different sectors in the economy. In my own country, of course, for very long, black South Africans before 1994, they were forced to live in certain areas. They were forced to own certain land in certain areas, they were forced to buy from certain retail stores and not from others. So it's a very, very clear limitation on their economic freedom and the, kind of, to some extent, ironies of post 1994 is that for the area that was considered white South Africa before 1994, these freedoms, well, these unfreedoms were removed. So they gained the freedom, black South Africans in those areas, but actually in many of the former homelands, the previous unfreedoms, right, so, because, again, there, you're not allowed to own private property in many of those places, there is traditional systems that stood in place, property owning systems, you actually see that those unfreedoms have remained.
So if you look at a map of South Africa today, a third of South Africans still live in the former homelands, the only way you really escape from those unfreedoms is if you move to the cities, right? And so it's a very useful way, I think, to think about the underlying things that allow you to prosper. The underlying factors, the ability to consume and produce what you want. You know, the kind of classic Adam Smithian invisible hand that should be able to be dictated by market forces. Now, again, that's not to say that the state has no role to play, but every additional policy that the state intervenes with does have limitations on freedom, and one should keep that in mind. Now, of course, you know, certain state policies promotes freedom, right? So in South Africa we have a large grant system. So we tax the very wealthy part of the population. It's actually one of the largest transfers anywhere in the world. We tax the rich and we provide grants, 350 rands a month, to the poorest of the poor. A very well targeted grant, I must add as well. So that lifts the freedom of the poorest, which is correct. Right. That's exactly what the purpose is. It provides them with some form of income which allows them to buy the basic necessities. So I would argue that actually a pro-freedom policy, even though it's a state policy, it's not determined by the markets. But in many other cases, we find where policies are actually doing the opposite. They actually promote coercive involvement in the economy. And actually that leads to inefficiency, which is, you know, terrible for promoting prosperity, for annihilating poverty, all of these kind of things that we actually care about.
And then to kind of get back to your question about whether this is, again, like, something very uniquely African, I don't think that it's something that is particular to this continent. I think even if you just look around the world today there are unfreedoms everywhere in many countries. But I also think if you just look in history and this is really why I think the study of economic history is so important, that this was true for almost any society before the 1800s. So, basically, the state was there to kind of coerce people into producing certain things and consuming certain things. And it's only through a very kind of slow process over decades and centuries that these freedoms were relaxed. Right? Often competing elites and, you know, the one elite will promote the freedom the other one wouldn't. And then ultimately, these economic freedoms were relaxed. It was combined with the opening up of democratic freedoms and political freedoms, which, as you have rightly mentioned, is something that is very valuable in Africa. Right. And that's exactly why we want to promote that further, right? That people ultimately have the right to vote against policies that limit their economic freedom. And so I am kind of optimistic that ultimately, you know, again, this won't happen next year or the year after, but that more democratic freedoms will lead to greater economic freedom. But of course, with kind of a large confidence bound. Right. So there will be some variations. Some countries will slip back becoming more authoritarian or coercive, and others will hopefully allow people their economic freedom. And then those should act as lessons for other countries who suffer from the poorer standards of living, to hopefully see what is happening elsewhere, and then learn from that and enact the right kind of policies.
Tobi;
My next question is a bit of a two part question. So the first part would be if you look at the policy circle today, I'll say it's been, you know, monopolised by the development industry or development community. So you do not get a sense that policymakers think that we can learn anything from economic history. So if you can just tell me a few things that you think economic history can teach us, especially on development.
Johan;
Yeah. I think you're right to say that there are many policymakers who don't even know about economic history. So maybe that's a good start, right?
Tobi;
Yeah.
Johan;
Ecause it's not a field, a subdiscipline of economics that is very well known. But I think to make the case for it is to say, we are all humans and often the only way we learn is by telling stories. If you're a politician and you cite statistics to an audience, no one's going to remember the statistics, right? Then certainly if you tell them something about economic theory, they're not going to remember that, but they are going to remember stories. I mean, I think politicians know this very well. […] has called this analogical reasoning. So you take some event in the past and you turn it into a story analogy for today, and you repeat that story, and then people tend to get on board. Right. And so the famous example, of course, is the Great Depression that was used as an analogy for the Great Recession in 2007. You know, Ben Bernanke, who had been a student of the Great Depression, could tell that story to policymakers, to the public, and convinced them that, actually, what happened in the 1950s, you know, there were these different policy interventions that were illthought through and ultimately had bad consequences, and we should do something different. So quantitative easing in 2007/08 was the, kind of, response to that. And, in fact, that was why it turned out to be a recession and not a deep depression for many years.
So those I think are valuable. So your question is about, you know, what do we learn about development? You know, this is massively broad. So but I want to return to the to the industrial policies of Latin America and to some extent many African countries. Where you find these import substituting policies that were implemented. This idea that, you know, we should make our own stuff, we should build our own cars, we should build our own manufacturing, our toys, our own manufactured goods. And then that will give us, you know, the factories that will ultimately lead to an industrial workforce and, you know, make us prosperous. That's a very attractive story to tell, right. And think, by the 1950s, many of the leaders in Latin America and in 60s in Africa could tell these stories because they could witness what had happened, say in the Soviet Union, maybe even an illinformed opinion about what was happening in China. And this gave them the stories to convince their electorate or their constituents that this was really the way forward. Right. And the attraction there that it's an active intervention, right, that we can do something about it as a state rather than just say, you know, laissez-faire and things would go on as normal. The sad reality is that, actually, agriculture in Africa was doing quite well by the 1950s and 60s. It would have been far more sensible thing to support those sectors - and these were African farmers doing very well, they were producing for the international market, they were exporting their goods - instead of taxing them.
So, what was the ultimate implementation of the policy was that agriculture got taxed with the intention to build these factories of manufactured goods that were clearly, you know, inefficient and failed dismally. But in fact, if agriculture had been supported, you could have imagined a very different outcome. And I think that's really a lesson that hopefully we don't see a repeat of what we did in the 1950s and 60s. But there are, of course, many, many other lessons as well. Education. You can think of health spending. You can think of various kinds of monetary policies and, you know, high levels of debt. With the expectation that they will be very high growth many countries borrowed excessively. And then when the growth didn't materialize, then, of course, they fell into massive debt and they had to cut back and there were all these structural adjustment programs.
So almost in any subfield of economics I think there are lessons from the past that you can learn. I think that the challenge that economic historians have is to sell those, right, to sell those lessons in a way that is attractive to a policymaker and to a broader public, because I don't think there's enough of us that's trying to do this. This is partly what I'm trying to do through the blog. But of course, you know, this is only one blog and I don't have any direct links to governments, but I hope that there would be a new generation of African economic historians who would be able to do that, that would be able to tell these stories. And so, you know, I've studied what happened in Ghana. There's great work being done by Emanuel [...], for example, at Harvard on this period. And so taking those lessons and saying, you know, what is it that we can learn from this for industrial policy today? I think that would be a wonderful contribution to economics, rather than simply saying, okay, you know, let's just look at what economic theory tells us. Not to say that that's unimportant, but I don't think that's how you sell policy interventions to politicians, because ultimately what they want is they want the narrative, they want the story - how do I convince my electorate or my constituents that this is the right thing to do? And so we need to be storytellers. And I think Africans are great storytellers. We just need to tell the right stories. So, hopefully we can see that happening in the next couple of years.
Tobi;
One of the things I like most about your work is not just the output itself, but the kind of research ecosystem that you're building around you, and how do we get more of that in Africa? How do we expand the research ecosystem? Not in an exclusionary way, but I think it helps bring the evidence, the practice, closer to the policy and the politicians and the other people of social influence that matters. So, what are the levers to pull to expand economic research, scientific research and other things in Africa generally?
Johan;
Yeah, I think there are multiple levels to answer that question. The first is, I mean, if there are any listeners that are keen, you know, that are economists or historians and keen on economic history, then signing up to the African Economic History Network, for example, where every year there's a conference and that network is supported by some of the leading economic historians of Africa, often based in Europe or the US, some also on African soil. And that is a scholarly environment where you can really get to the frontier of what is happening in the field. So that would be a great first step, I think, even for students, right, that are, you know, keen to follow this kind of path of economics or economic history and just to see what's happening at the frontier. So that would be. But of course, and I've mentioned before, there is quite a lot of, still, education spending and high levels of literacy in Africa. But often where we lack is the higher education level, and even at the higher education level, we don't really see this kind of broad-based approach rather than a focus on specialisation. So I do think that there's scope for African universities to expand their offering of economic history specifically, but also focus on economics.
And here I should mention, Leonard Wantchekon at Princeton, who is investing an incredible amount of time and resources in building what he calls the African School of Economics, right? So he started in Benin and then expanded to other West African countries and now he's also planning to do this in East Africa and Southern Africa, which is an incredible, you know, achievement to build these universities from scratch, to engage students in there, and then hopefully some of the best students, to send them to the US, to top universities. And to build, really, a cohort of new trained economists in some of the frontier fields of their disciplines. And hopefully those economists could either stay in the US and train more students or come back to Africa and become policymakers themselves, or at least interact with policymakers. So that's at the kind of the macro level.
At the micro level, I would say just getting more people interested in economic history, turning economic history into courses that economists can take. There's a wonderful textbook produced by the African Economic History Network that is freely accessible on the website that would serve an undergraduate course very well. I would also note that my book textbook, of course, would be able to do that. But there are resources available, and the hope is that more Africans actually access it. The wonderful thing is, if you look at the statistics of these textbooks, most of them do come from Africa. So that's really great, so it is already being used, but that's a very kind of at the undergraduate level. And the hope is that more graduate students in economics specifically would take up economic history, an interest in economic history, and then do their PhDs, you know, somewhere in Europe or the US, and then return.
And think at the macro level, Wantchekon’s African School for Economics is a great model that can be expanded across the continent, where you can have a large cohort of really excellent students. And I'm not saying that, you know, those are the only universities where you can study, of course, Stellenbosch and UCT and University of Pretoria, all are great universities to also study it. And then of course move to the US or Europe where you can do a PhD, but ultimately build up the capacity at that very high level of specialization, where you can interact with policymakers and say, you know, these are the lessons that I've studied or that my peers have studied, and that we can now replicate and ensure that the policies are at least not disastrous. I think that's almost often the best we can hope for, is that we just make sure that we don't implement terrible policies.
No policy, I don’t think, you know, a single policy will be able to turn a country around. But what it certainly can do is to destroy a country's economy. So we should just make sure that, at least, the lessons we learned from the past helps us to not implement those terrible ideas that often quite popular and can sell to an audience, but that we try and avoid them as much as possible.
Tobi,
Final set of questions. Um, so this question is motivated by a recent experience I had which is rather depressing, I should say. So I was planning a conference and I wanted to invite a very prominent scholar, I'm not going to mention his name, who is also South African, and the organizers basically said no, because he's a white South African. So I want to ask you, how have you being able to navigate that as a historian who ask and study the questions that you do, given the racial history of that country and apartheid?
Johan;
Yeah, that's a great question. So, of course, I understand something about the history of South Africa that allows me to acknowledge that, you know, I am fortunate to be in a place where I can do research, where many other South Africans who would have probably been equally or better researchers don't have that opportunity. So that's the first thing, is to say that in South Africa, it remains a very unequal place, often very clearly along racial lines, although not exclusively so. But understanding that it is a privilege to do research, that's a very important point to start from. And so that also allows me to set agenda, research agenda, where many South Africans who would probably be, again, focused on different things in doing research, are not able to do so. Right. So one, I think, important aspect of that is that I try and build a group of scholars and, at least, some of that at Stellenbosch, but but not exclusively at Stellenbosch, where we do try and make economic history accessible to a larger cohort or a more representative cohort of scholars. And that's difficult to do because, you know, as economists, we understand market attractions. And so, if you're a black South African student, to remain in academe is almost an irrational decision because the private sector will simply pay you much, much more certainly as an economist than what we can pay you at a university. So these are not easy problems to solve. If they were easy, we would certainly have done so already. But it is something that I tend to think about a lot. Right? We want to make the field as broadly accessible as possible, of course, with the focus on the exceptional. So we want to bring in the exceptional students from all across South Africa to do research with us.
I think in asking certain questions, I think there are certain topics where I certainly know that I'm not an expert in, and therefore I would make sure that I am not the one who try and write the expert pieces on this. Right? So I, for example, would not be the one studying Nigerian economic history simply because I think you need a lifetime almost of research to know the diversity of Nigeria's both current society and historical trajectory. And the same is true for many other West African countries. So much of my own research is focused actually on South Africa, and even in fact more narrow on the Cape Colony, simply because I do have a little bit of that historical awareness of the different influences of our own place, of our place here in the Western Cape of South Africa. So I think it's important to have that awareness that, you know, I'm not an expert on all aspects of African economic history. And certainly, I don't think anyone can be given what I've mentioned before about the diversity of the continent.
What I do think I can add is, again, this emphasis on making economic history an important subdiscipline of economics. So more than just the pure content of producing new research on a specific area or other specific time period, it is to emphasize how important understanding our contexts are and then making that accessible to a broader audience. And think there are wonderful scholars already doing some of that, historians doing great work in writing more broadly accessible histories of Africa. And of course, I would challenge some of my historian colleagues to say that I think more economic history should be included there, and some of the latest research can really help in doing that. But, you know, my position here at Stellenbosch is really to try and encourage as much, and a kind of inclusive, broad-based research endeavor, and in helping that research or supporting that research to become accessible to a broader audience, both public audience and policy making audience.
I mean to, kind of, you know, get back to your very sad example is, I mean, to some extent understand the response that they are representative claims in who should inform policy and given Africa's history for how long, you know, white scholars or European scholars have acted as if they, you know, understand exactly the local context and have a full grasp of local knowledge and how that was, you know, illfitted to the advice that they gave, just simply didn't fit the kind of local context. So I think one needs to be aware of that history. Right. It will certainly be wrong to ignore that and say, you know, this is a move that, for whatever reason, seems illogical. I don't think it's completely illogical. I think history matters in explaining this behavior. What I hope is that there will be multiple voices, so that people can interact with one another, that it's not simply only one group or one person or, you know, one ideology we can pick and the others are not allowed, but that there will be engagement. And, in fact, that’s exactly what you are doing now is a great example of that, that there would be engagement and that we could be able to listen to one another and think all… well, maybe not everyone's voice. It's difficult to incorporate everyone's voice, if we say that. But ultimately, I think there should be a market for ideas, right? And ultimately the right idea with the right empirical support should be the one that wins out. And the only way we establish that is to contest ideas in this marketplace. And if we don't allow that, then sadly, I think we are going to sometimes hit it lucky and we can have the right idea for the right time and great. But often, more than often, we're going to miss the right idea and then the consequences would be sad. So i think that's the way I would think about it.
Tobi;
Mhm. I mean, I realize I could spend another hour barraging you with questions, but I think market for ideas is a good way to close this out. So my last question would be: what's the one idea, it may be something you're working on, may be an idea from someone else, but what's the one idea that you think deserves to be more popular, deserves to be more influential? It could be anything. What's that one idea for you?
Johan;
Oh, it's a tough question. I guess if you asked me a week ago, I would have one, and the next week I would have another. But let me try. I think there's a really fascinating area of research and this is I mean, might even to some [seem] quite controversial, but I think it's the idea of beliefs, of how much beliefs matter in shaping our economic behavior, and when I say “our”, I mean both at an individual level and at a kind of group or society level. And there's some wonderful work that's been done on the DRC, on the Democratic Republic of Congo by some Harvard economists. And that's been expanded now to other settings also outside of Africa. But understanding why people believe certain things, so, again, this obviously has close ties to history. So, you know, to what extent, for example, does the slave trade affect people's beliefs today or colonialism affect people's beliefs today, or, you know, access to education that might have changed certain beliefs in the past and now is reflected still in the present. Simply because one belief, to mention a single, you know, there are many different kinds of beliefs across the world, but there’s something that I would call the monopoly mindset. It's actually a blog post that's coming out soon, but it's basically this idea that the world is a zero sum game. So for you to win, I need to lose. And this seems to be quite prevalent across the world, but also in Africa. And so I want to understand firstly, how prevalent is this? Because if that is true, right, if people think the world is a zero sum game, then that also means that they would be unlikely to be entrepreneurs because basically what then believe is entrepreneurs must exploit, you know, either their workers or someone.
You must basically obtain profits that you make from some other poor soul that then loses out. Which is, of course, you know, the world is a positive sum game that entrepreneurs are profit seeking, yes, but the profit is simply a signal that they’re doing something right. That the market really enjoys the product or the service that they deliver. Right. And ultimately, we've seen over the last two centuries remarkable increases in our material welfare. So the world as a whole has become fabulously rich, 18 times more prosperous than they were 200 years ago. And even in the poorest places in Africa, you see that the average person is almost six times as affluent as they were 200 years ago. So, you know, these are rough GDP per capita estimates, but in general, that is true, right? We live longer. We live with more access to various kinds of goods and services. So clearly the world must be a positive sum game and yet many people believe it isn't. So understanding how prevalent it is and then most importantly, what determines it. Right. So what causes people to believe that the world is a zero sum game? Or, you know, to have a monopoly mindset? And if we can understand that and then change that, we might open up a much larger and, hopefully, younger generation to the possibilities of progress. Right? So entrepreneurs, innovators, so it can unlock, in some sense all, of this and empower is probably a better word people with opportunities that the market society offer. And that really is to me a fascinating question. I'm not sure to what extent I would be able to contribute to that, but I think that's an idea worth studying, and especially if we then identify those factors. So it might be very difficult and intractable to study or to change. But if we do find those factors that can shift this mindset, then I think that's an incredibly powerful tool in the hands of a policy maker to build a prosperous society.
Tobi;
I realise I cannot let you go without asking you this question. And full disclosure, I'm trying to cheat because I'm currently writing a review of your book. So this is like me trying to cheat, in a way. So I find that attitude towards history, that is, speaking about beliefs and positive sums and zero sums… attitude towards history seem to be divided, in my opinion, between pessimism and optimism. And I like the strong opening in your book, especially with the metaphors of the monopoly game and Settlers of Catan. So do you think that history has an optimistic bias? Does history always favour the Optimist?
Johan;
So is the question whether it's historians that fail the optimist, or whether it’s the arc of history? So who… do the winners…
Tobi;
The long arc of history itself. Like, will things always be better?
Johan;
Yeah. No. Because, I think firstly, to answer the first one, I think historians are quite pessimistic people. So I don't think they’re necessarily…[laughs]
That's probably why often like we don't get to hear about economic history because it is an incredibly optimistic story to tell. Right. And so if you're a pessimist, you typically are not going to tell that story. But the point is that we have made incredible progress. Not to dismiss the fact that there are major challenges in the world today, of various kinds, but we are certainly living in a better world than we did 500 years ago. But the question is whether that will continue or not. And If I knew it, I would be rich. I don't know. The one thing I would say is that there were over the last two centuries, there have been multiple scholars, intellectuals, experts that have predicted the demise of societies or the end at least of this progress that we've seen. And they've been wrong every time.
So it would be a pretty bold move now for me here at the South of Africa to claim that, you know, progress is ended. Even though there certainly are a lot of people in the world that at the moment think that, you know, either progress is too fast or the consequences might be too negative and so we need a degrowth movement or something along those lines which which I think, you know, for someone living in any developing country would find quite strange. It would be very strange for me to go to a poor neighborhood in South Africa and convince people that your incomes shouldn't grow. That's a strange idea. So I think the one thing we have that's going for us is that most people, certainly in South Africa, would agree that we still need to grow. There's still a reason to have policies in place. We might disagree on the policies, but we still want policies that ultimately lead to economic growth. Yeah. So I think that's something worth keeping in mind.
And now I've completely lost track of what the initial question was. Oh, okay. This long arc of… whether we're going to make progress? At least we want still progress in South Africa. That's the point I wanted to make. And I think that's true for many other African countries. Whether we will achieve that, you know, I simply don't know. I hope so. I think they are major innovations that are fundamentally changing our productivity. In the book, I've mentioned Joel Mokyr’s two rules that we've learned. The two things that we've learned in history is the fact that we need to use our knowledge of science to make ourselves more productive. We are doing that at a rapid rate at the moment, we are learning things in bio sciences, in natural language processing. Between all of these things, we are learning things in robotics. And you know, we're flying to space at much cheaper rates than before. So we are learning in many different industries, things, and that will certainly make us more productive. So that's great.
The second rule is or the second lesson is that we should use those surpluses that we generate and ensure that everyone benefits from it. That might be more difficult. But again, the only way you do that is through kind of a democratic system, which again, even though there has been some coups and some shift back in political freedoms in Africa in the very recent past, I still am hopeful that, you know, ultimately we will implement policies that will allow those surpluses to be shared. But Acemoglu and Johnson in a very recent book, say that, you know, some of these innovations in AI are very limiting and they will only benefit a small few. I'm less pessimistic than that. I think the ability for every African, whether that's rich or poor to access these systems is incredible and so I certainly am of the view that they are massive gains to be had in productivity. And then my hope would be that we implement the right institutions that allow these surpluses, these benefits from this higher level of productivity to be shared more equitably across the distribution.
Tobi;
Thank you so much. It's been amazing talking to you.
Johan;
Thanks, Tobi. It was great being here.
History and the Future of Prosperity