11 March 2010

Word of the Day: Zairianization

Knowing what you don't want is just as important as knowing what you want.

Here's why you do not want political power to become the primary means of acquiring wealth, or for the political elite to dominate the economy: Zairianization.

Zairianization involved the takeover and control of the economy by the ruling party and government elites. It was a form of patrimonialism.

Zairianization created a vast pool of goods and money for personal distribution to loyal family members and the political class composed mainly of government and army officials.

It was the final and clearest demonstration that political power was the primary means of acquiring wealth.

The entrepreneurial risk and initiative in building up business enterprises required to develop an infrastructure for economic development were thus not characteristic of the Zairian political elite that came to dominate the country's economy.

In practical terms, Zairianization represented a financial windfall for the country's political elite, which was to be allocated businesses, and which brushed aside any economic risks involved in such a takeover.

Zairianization was sold as helping the lot of the country's masses. In reality, the political elite used it as a tool for its own enrichment.

Ultimately, Zairianization resulted in asset stripping, liquidation of inventory, and capital flight. Many of the new managers had neither the expertise nor the interest to manage and to maintain their newly acquired holdings.

Their first impulse was frequently to dispose of liquid assets as quickly as possible and then to abandon the properties and enterprises to ruin. This lack of interest and expertise led to a devastating dislocation of the commercial infrastructure.

Zaire, one of the poorest and most corrupt nations in the world despite enourmous mineral wealth is now called the Democratic Republic of the Congo. I hope that one day this event is not known as Americanization.

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