On my mind today, perhaps because I am doing some proposal writing, is something that has been nagging me for years, and perhaps explains a lot of the economics I study. Is there a separate economic theory for the poor, different from the rich? Is there a separate economic theory for Africans, different from that of Europeans and Americans?
Of course there have been many who have said that economics is different for different people. I just finished reading the many volume book by Gibbons “The History of the Decline and Fall of the Roman Empire,” the classic written in 1776 – great but extremely belittling of people of darker skin. I remember when I was at the University of Ghana doing my undergraduate work in Economics, I would browse through our Economics library, which had mainly very old books, and which seemed to suggest that economics is different for Africans. Because of the heat of the sun, I recall reading, elasticities of supply of labor for Africans are lower than that of other people – wages simply do not get Africans off their hammocks (which is interesting as I did not see many Africans in hammocks – that is in a different continent). It was suggested that Africans simply do not respond to incentives the way others do.
Interestingly, I often hear these arguments among African colleagues today. The expression is usually that of the “Mango Economy.” This taken to mean that life is relatively easy going in Africa – and that one can always find wild mangoes to eat so there is no real incentive to hustle for “real” jobs in the industrial sector which are hard to do.
Then there is the “subsistence economy” argument I often hear. This states that people in the villages are still in a subsistence economy mentality. They produce only for their own production. Even if the price of food is high, they will not produce more for the market. Trying to bring modern market economies into such societies, it is argued, is doomed to failure as these are simply not rational maximizing individuals. I hear this often from people in the cities of Africa talking about the people in the villages. This subsistence economy argument has permeated a lot of economics because of various interpretations of the reserve army of labor arguments in the work of Arthur Lewis (the only Nobel Prize Laureate of African descent – he is from Saint Lucia).
Anyway, needless to say, I believe all these interpretations are incorrect and miss the subtleties of the economic activities in Africa. There is an interesting dynamism in the rural economies and quite a bit of responsiveness to prices and other economic incentives. My proof of that? Well, that what my research is working on now. Stay tuned.