Effects of Capitalism on the Poor People I Zambia After 1991

MULUNGUSHI UNIVERSITY

NAME: MWIZA NYIRONGO

STUDENT NUMBER: 201404846

SCHOOL: SOCIAL SCIENCE

PROGRAMME: BACHELOR OF ECONOMICS

COURSE CODE: SSF 111

COURSE NAME: FUNDERMENTALS OF SOCIAL SCIENCE

LECTURER: MR LUNGO

TASK: UNDER CAPITALISM, WHAT WILL HAPPEN TO THOSE WHO ARE BORN WITHOUT THE WEALTH AND OPPORTUNITIES ENJOYED BY OTHERS? RELATE YOUR RESPONSE TO THE ZAMBIAN SITUATION PARTICULARLY AFTER 1991.

DUE DATE: 3rd NOVEMBER 2014.

INTRODUCTION

Before 1991, Zambia was a socialist state. Socialism is a political and economic theory of social organization which advocates that the means of production, distribution and exchange should be owned or regulated by the community as a whole. This means Zambia’s financial system was based on the public or cooperative ownership and administration of primary production capabilities. Such an economic system typically employs central planning and uses accounting systems based on the labor hours expended in production. But due to change of government in 1991, the economic system changed from socialization to capitalization. A capitalist is an economic system which is characterized by free markets and the absence of government intervention in the economy. In practice a capitalist economy will need some government intervention, primarily to protect private property.

EFFECTS OF CAPITALISM ON ZAMBIA (After 1991)

Zambia, born with a copper spoon in its mouth has enjoyed many great and hard times. At independence, as noted in the abstract above Zambia was the economic power house of the region due to its rich copper mines and their copper earnings. Despite this however, Zambia inherited from the colonial government a lot of social, political and economic ills an inequalities hence the new government faced major challenges in efforts to address and redress these inherited ills. Though Zambia was the economic power house of the region and a hive for employ for many neighboring countries such as Malawi, Zimbabwe, Botswana and the then Zaire, Zambia had a lot to accomplish in improving its socio- economic land scape. Domestically, Zambia had a critical human resource shortage with very few trained and educated Zambians capable of running the government. This presented a huge administrative personnel backlog filed by untrained individuals. Further, the economy too faced an expertise lack such that the industries were largely dependent on foreign expertise. The lack of trained human resource therefore presents a foundational problem for much of the errors in Zambia’s national administration and reforms which eventually presented a spillover effect to all other areas and sectors of the country.

This assignment is concentrated on what we call the third republic which is the MMD era. The MMD’s manifesto promised economic liberalization, social progress and greater political freedom which meant for most Zambians greater livelihood and opportunities and brighter future prospects. However, most Zambians understood little the price that had to be paid for economic liberalization as it meant now accepting the SAPs which Kaunda tried to protect them from. Structural Adjustment Programs (SAPs) are economic policies for developing countries that have been promoted by the World Bank and international monetary fund by the provision of loans conditional on the adoption of such policies. The highly indebted Zambia had to adhere to SAPs for more borrowing which included currency devaluation hence further increase in commodity prices, privatization of the economy which resulted in mass job losses due to liquidations of industries, retrenchments and collapse of most enterprise, removal of subsidies on industries and most sectors resulting in greater job losses and collapse of certain industries especially agricultural industries as well as public service wage freezes and retrenchments. This created an even greater socio-economic toll on the standards of living as the government became more and more unpopular each. The majority of the Zambians grew poorer the first five years. The agricultural subsidies which were remove made rural living impossible for most Zambians such that they moved into towns to find employment and opportunities resulting in very quick expansion of shanty and squatter compounds. The loss of livelihood for both the rural and urban population resulted into greater poverty and the current poor living conditions in Zambia’s peri-urban area.