Economic models define us

Jua Kali Artisans who specialize in making Jikos at the workshop located along Landhies Road on May 11, 2022. PHOTO | FRANCIS NDERITU | NMG   

By FREDRICK OGOLA More by this Author

Let us give credit where it belongs: President William Ruto, for the first time, made economic discussion take centre stage in the 2022 General Elections.

In his campaign, he proposed a ‘bottoms-up’ economic model as opposed to a ‘top-down’ model, and branded it ‘hustlernomic’, which, as expected, appealed to some Kenyans, many of whom were made to believe that it would lift them individually from the bottom of the pyramid by increasing the income of each of the ‘hustlers’.

Despite the many justified criticisms that this model is not practical in increasing individual incomes and lifting Kenyans out of poverty, methinks that the kind of economic model adopted by a Nation is not only about how much income it brings and jobs it creates but even at a deeper level defines who we are, both as a person and as a society.

Up till the 1970s, global economic architecture was bossed by several schools of thought. The classical school, which was popular before the Great Depression, held that the economy is free-flowing with prices and wages that freely adjust upwards at good times and downwards at bad times.

Neo-classical economics complemented it by focusing on supply and demand as the driving forces behind the production, pricing and consumption of goods and services.

Marxists then propagated communism with the aim of replacing private property with public ownership and communal control of the major means of production and of natural resources of a society.

Then came Keynesians with the belief that due to the rigidity of prices, fluctuations in any component of spending cause output to change.

Developmentalism, on the other hand, holds that less developed economies can develop better by fostering a strong and varied internal market besides imposing high tariffs on imported goods.

Then comes Institutional economics which views markets as a result of the complex interaction of various institutions and emphasises a broader study of the institutions.

Behavioural economics combines elements of economics and psychology to understand how and why people behave the way they do in the real world.

Lastly, the Schumpeterian growth model is based on the assumptions that long-run growth results from innovations; innovations result from inter-entrepreneurial investments motivated by the prospects of monopoly rents; and that new innovations replace old technologies.

Also read: Hustler Fund loans hit Sh16bn in two months

With all these many confusing economic models the question that arises in many people’s minds is, ‘as long as jobs are created, food is put on the table, school fees is paid and health bill is cleared, does it matter which economic model a nation adopts?

My answer to that question is that it matters - for the economic model adopted by a State has a direct and massive impact on its citizens.

It affects the government’s policies on taxes, welfare spending, interest rates and labour market regulations, which in turn affect individuals in their jobs, work conditions, wages, mortgage repayment and student loans among others.

In this, most countries have adopted the economic model of their colonizers. For that reason, it is a fact that French colonies struggle more than British colonies, for instance.

Beyond influencing economic variables, economics changes who we are. This happens in two ways: first, it affects our attitude towards human nature and secondly it shapes us.

The dominance of neoclassical economics, for example, assumes that humans are essentially selfish with self-seeking behaviour. As such, being altruistic in such a society is frowned upon as having hidden motives.

In Behaviorist and Institutionalist economic dominant societies, human beings are seen to have complex motivations of which self-interest is just but one of the many.

In other words, the economic model adopted informs what people see as normal, how they view each other and which kind of behaviour people exhibit so as to fit in.

Economic models also have an effect on the development of the economy and where we live and work, which in turn shapes us.

For instance, by voting in Hurstlernomics, Kenyans produced a nation of hustlers in which people believe in miracles such as true liberation that would make struggling Kenyans individually rich.

Now that life is getting more difficult and Kenyans are running out of patience, their hopes are being kept alive with prayer rallies.

Also read: Why Hustler Fund is a game-changer

I really don’t believe this is sustainable. The only way to get us out of this conundrum, I believe, is the proposed Solomonic economic model, which is a fusion of the previous economic theories that have been ‘tested and found worthy’ with a view of advancing our belief in the human person and our society.