Chapter Seven
The State as Help or Hindrance to Market-led Economic Growth: West Africa in the Era of “Legitimate Commerce”[1]
Gareth Austin
There is a rich historiography on both states and markets in pre-colonial West Africa. Robin Law, in particular, has examined aspects of the interaction between the two, showing that trade was generally the most important ultimate source of government revenue, and, for the famous case of the kingdom of Dahomey, that rulers were unable, when they tried, to fix prices.[2] The aim of this chapter is to consider a further aspect of the interaction: the likely implications of the formation and actions of states for the prospects of market-led economic growth.
What economists and economic historians have come to call “Smithian” growth, i.e., economic growth deriving from gains from trade, both domestic and foreign, is perhaps the least dramatic category of economic growth. Unlike “Schumpeterian” growth, it need not involve technological advance but a more efficient allocation of labor among producers, within and between economies.[3] People may find new markets for what they can—and perhaps already do—grow or make; and reallocate their time and other resources to take advantage of this. Again, by definition, market-led growth is not the result of the government using its administrative power to mobilize resources. Precisely because Smithian growth may occur without being planned, and may require no new technology, it was probably the most widespread kind of economic growth in pre-industrial economies world-wide. Thus we need to inquire into the sources of, and obstacles to, such growth in pre-colonial Africa. The issue is doubly interesting in the perspective of the new global economic historiography, from E. L. Jones to Kenneth Pomeranz and others, which contends that economic growth per capita, sustained beyond a run of good harvests, was a normal if frequently interrupted feature of preindustrial societies, a claim documented primarily with reference to Asian as well as European examples.[4]
In principle, states can assist the operation of markets, and thereby of market-led economic growth, in a variety of ways. Currently the most influential theoretical approach to the issue is that of rational-choice institutionalist political economy (sometimes still called “New Institutionalism”). In this perspective, stemming from the early work of Douglass North, the most constructive role the state can play is to define and enforce property rights that align incentives to individuals with the interests of the economy as a whole.[5] Conversely, if states are weak or controlled by rent-seeking elites, the theory would predict that sustained economic growth would be inhibited, often effectively prohibited, because the incentives to individuals would diverge from those of the economy as a whole. Jones went so far as to generalize that “Economic history may be thought of as a struggle between a propensity for growth and one for rent-seeking.”[6] The latter phrase refers to “economic rent,” which is defined as the surplus of income over opportunity cost: the difference between the return actually obtained for the supply of a resource and the minimum return necessary to elicit the supply of the resource in its current use.[7] It is income above what could be obtained on a perfectly competitive market.[8]
The comparative and theoretical literature cited above has lacked detailed reflection on African pre-colonial history. This is basically because of source problems. Whereas observations of individual transactions—which the sources often contain—may reveal much about the workings of markets, to establish that a whole economy was or was not growing in principle requires aggregate data which are notoriously lacking for the pre-colonial era (and which remain gap-ridden even for contemporary African economies). Yet there are cases for which the evidence permits cautious conclusions at least about the direction of change in overall output.
For West Africa this applies particularly to the nineteenth century: albeit much more so for some states and localities than others. The next section outlines what we know about economic growth in the region in that era. This is followed by two sections which provide essential contexts: a sketch of the changing historiography of markets and states in sub-Saharan Africa as a whole, and a survey of the resource endowment within which states and markets operated in this period. Having established this setting, the chapter goes on to examine three aspects of the conditions for Smithian growth in this period: the significance of the markets that existed outside states; the implications of states’ structures and activities for the operation of markets; and the costs which states imposed on their subjects. The final section elaborates the central argument of this chapter: that states contributed much more positively to market expansion, and in that sense to Smithian growth, than has often been recognized; but that such contributions tended to be double-edged in that expansions of investment and output were commonly underpinned by the use of coercion to extract labor and natural-resource rents.
Economic Growth in the Pre-colonial Nineteenth Century in West Africa
This period saw two significant episodes of growth proceeding simultaneously, with some interaction between them. One, probably the larger, was based on the coast: the growth of production of agricultural or semi-agricultural commodities, especially groundnuts (peanuts) from Senegambia, and what is now Guinea Bissau, and palm oil (and later palm kernels) from the Gold Coast eastward to the Niger Delta.[9]For instance, average annual imports of palm oil to the United Kingdom from West Africa rose from 6,440 hundredweight in 1800–04 to 577,523 in 1850–54 and 903,052 in 1890–94. The annual average value rose from under £100,000 in 1820–24, to stand at over a million pounds a year in 1850–54; though it was barely more than this in 1890–94 because of price fluctuations.[10]The markets concerned were indeed mainly in Europe, and this “legitimate commerce” increasingly replaced the export of slaves to the Atlantic market. The other sequence of economic growth occurred in the interior, not of West Africa as a whole, but (roughly) of its eastern half: centered on the city of Kano, evidently the largest city in the region, and more broadly on the new Sokoto Caliphate, anempire of which Kano was the commercial capital. The Caliphate, created by a jihad of 1804–8, swiftly became the largest state in the region, controlling what is now northwest and north-central Nigeria, and ultimately territory to the west and south of this. Kano was already the leading centre of craft production in West Africa, especially of cotton cloth, which was among the commodities traded. The handicraft industry evidently expanded further under Caliphate.[11] In the 1880s and 1890s Kano producers were actually importing across the Sahara un-dyed calico from Manchester, which they then dyed and sold on.[12]
It is important to add that the Caliphate economy had a mutually beneficial relationship not only with the trans-Saharan caravan trade and therefore with parts of North Africa, but also with other parts of what are now the republics of Nigeria, Niger, and Benin, and, to the east, parts of what are now Chad and Cameroon. For instance, the Caliphate provided the major market for salt and natron from its immediate northeastern neighbor, Borno, and from the adjacent Sahelian and desert region generally. Paul Lovejoy has shown that several thousands of tons of salt a year were imported to the central emirates of the Caliphate (Katsina, Kano, and Zaria) on the eve of its conquest by British forces in 1903.[13] The commercial network centered on Kano extended beyond the geographical Central Sudan[14] to the forest zone, and not simply to the nearest parts of that zone. About 500 kilometers southwest of Kano, the major forest state of Asante (in what is now Ghana) benefited from the growing purchasing power within the Caliphate, which increased effective demand for the one dietary stimulant available and permitted to its Muslim inhabitants: kola nuts. Of these, Asante was a near-monopoly supplier for much of the century, importing return slaves, cloth, salt, leather goods, and other commodities.[15] The volume of kola exported rose several times between c.1830 and 1857,[16] and its value is estimated to have increased “at least ten times” over the century.[17]
Across much of West Africa in this period, increased output of goods for sale created a secondary demand for labor, which was supplied primarily by the purchase of captives generated within the region (mostly by wars and raids), and took advantage of the fact that the closure of the Atlantic slave market led to lower prices for slaves within West Africa. The fact that the sharp fall (by about half) in slave prices on the coast between 1807 and 1820, following British withdrawal from slave-buying, was largely reversed from the 1820s reflected, at least in part, the higher level of internal demand for slaves to fuel the growing output of marketed goods.[18]
None of this implies that all local economies grew between the first decade of the nineteenth century and colonization. The prolonged warfare in Yorubaland and Sierra Leone would make this doubtful, and the new or expanded production of goods for export ultimately replaced rather than supplemented the major overseas export of the preceding century: slaves. But from the end of the Atlantic slave trade in the locality concerned, most areas can be assumed to have experienced some degree of economic growth over the decades that followed. That, at least, seems a reasonable conclusion given evidence of multiplying exports, and, outside the most intense war zones, no general reason to expect that domestic output (principally foodstuffs) fell. An unusually detailed effort at the admittedly hazardous enterprise (given the lack of censuses at the time) of estimating per capita export earnings has been provided by Patrick Manning for Dahomey. As would be expected from one of the major centers of the export of slaves, estimated per capita revenue from exports as a whole fell from £0.21 in the 1800s to £0.13 in the 1830s; but then rose to unprecedented heights, such as 0.83 for the 1880s.[19] Manning concluded, “agricultural exports opened a sustained period of economic growth for Dahomey,” with slaves being captured as before but now remaining in Dahomey and contributing to the growth of export agriculture.[20]
A Sketch of the Historiography of Markets and States in Pre-colonial Africa
To place the present argument in context, it is necessary to attempt a summary of the historiography, at the cost of over-simplifying. The first post-colonial generation of historians of Africa challenged the stereotype of weak or non-existent states and markets, but in ways which often did not correlate the two issues. Economic historians found evidence that both market exchange and supply-response to price incentives were common in pre-colonial Africa, especially West Africa, as far back as could be documented.[21] Political historians emphasized that, across Africa, the major states of the period were precisely “state-like,” with power structures that were autonomous from, and dominant over, mere kinship-based entities.[22] For example, the kingdoms of Asante and Buganda were seen as undergoing a marked evolution, during the eighteenth and early nineteenth centuries, as centralizing monarchies consolidated their superiority over provincial chiefs.[23] The Zulu kingdom, emerging in the 1820s and 1830s, was seen as a new kind of polity in southern Africa, repudiating kinship-based allegiance in favor of personal loyalty to the ruler.[24] In this “Africanist” historiography, therefore, states were seen as both powerful and internally dynamic.
In this literature, however, state effectiveness was not strongly related to the promotion of markets, or at least of private enterprise. To take the leading example, Ivor Wilks’sclassic account of Asante in the Nineteenth Century: The Structure and Evolution of a Political Order (1975) drew a parallel between the policies of nineteenth-century Asante monarchs and the state-led, import-substituting industrialization strategy of Ghana’s first post-colonial government, that of Kwame Nkrumah. In this and in other studies, by Wilks and others, the state was seen as monopolizing or nearly-monopolizing trade, the output of marketable goods, and the inheritance of any wealth accumulated from private enterprise.[25] In a 1967 essay Wilks expressed the view that “The restrictions upon private Ashanti entrepreneurial activity . . . made possible the planned development of the national economy.”[26]
Subsequent economic historiography has, in general, reinforced—and refined, rather than compromised—the initial emphasis on the extent to which resources in eighteenth- and nineteenth-century African economies were either allocated through market mechanisms (albeit, imperfect and fragmented in many cases) or, by non-market means which, in context, were consistent with an economizing response to relative scarcities.[27] A case-study of price-making markets (i.e., markets in which prices were determined by the interaction of supply and demand) that stands out for the meticulousness and resourcefulness of the primary research, and for the analytical sharpness with which the issue was posed, is Law’s demonstration that the evidence contradicts the old proposition that prices were fixed in the pre-colonial kingdom of Dahomey.[28] Much of the corresponding literature on the state has been revisionist. It downplayed the novelty and extent to which the internal organization of nineteenth-century states represented administrative and political innovations (notably in the Zulu and Asante cases),[29]and/or showed that earlier claims of royal control over external trade and other aspects of economic life were exaggerated. Asante and Buganda were notable cases of this;[30]another was Dahomey.[31] A recent study by a rational-choice political scientist has re-emphasized the general weakness of state construction in most of pre-colonial Africa: where states existed at all, rulers were usually content to “narrow-cast” power along networks, rather than broadcasting it over whole territories.[32]
The Resource Base: Opportunities and Constraints for State- and Market-Making
The starting-point of the analysis developed in the rest of this essay is the observation that, in West Africa in the nineteenth century, as in most of the rest of sub-Saharan Africa during the same and earlier centuries, land was abundant in relation to labor, in the economic sense that the availability of unskilled labor was a constraint on the expansion of output, but the availability of cultivable land was not.[33] Elsewhere, I seek to qualify this widely-held generalization, arguing, for instance, that it overlooks significant elements of capital formation. The most important qualification is that the notion of labor-scarcity did not apply to the agricultural off-season. For those months, on the contrary, the opportunity cost of labor was very low. This facilitated mining and craft production, while reducing the incentive to devise means of substituting capital for labor.[34] An exception that “proves the rule” occurred in Kano city, probably the largest town, with the most densely populated rural hinterland, in nineteenth-century West Africa.[35] The largest centre of cotton cloth production in West Africa (or, it seems clear, anywhere south of the Sahara), nineteenth-century Kano was the site of a technical innovation in African handicraft production. Specifically, Hausa cloth-dyers achieved technical advances, notably the development of new, much larger dyeing pits, which, so their historian persuasively argued, reduced the unit cost of finished cloth.[36]
Land abundance and (for agriculture) labor scarcity affected the forms taken by markets and by states. It meant that the goods that were sold internally were primarily inedible. To be sure, there were important exceptions. Pastoral and arable farmers traded their respective products on the frontiers of their respective ecological zones. In northern Senegal, for instance, according to Philip Curtin, “Thousands of tons of foodstuffs were exchanged on the desert fringe.”[37]He was referring to the immediately preceding period, but there is no indication that this trade diminished after the ending of the Atlantic slave trade. Salt was a staple of long-distance trade routes over much of the continent, and foodstuffs embodying various forms of protein were sold in local markets (hunted meat, fish, snails).[38] It was not unknown for towns lacking a fertile hinterland to be dependent on purchased imports of food, as in the case of Timbucktu, which is on the river Niger but otherwise surrounded by little but desert.[39] But in general the easy availability of the means of subsistence massively restricted the opportunities for markets in agricultural products. Rather, cotton textiles, salt, currency media (such as cowries and metal bars) were the basis of most goods trade, along with weapons (horses, where applicable, and guns and ammunition).[40]