When I became involved in a venture in Zimbabwe in the late nineties the Zimbabwean dollar was at 12 to one US dollar. It soon went to 55 to 1 where the government tried to peg it but c0ntinued to print money forcing the black market exchange rate steadily upward. The last time in left Zimbabwe in late 2001 the rate was over 300 to one and the economy had noticeably slowed but was still functioning. At that time the streets of Bulawayo had become eerily quiet. Stores were open but had little custom. Today, with the exchange rate in the hundreds of millions (ignoring the 1000 to 1 devaluation of 2006), President Mugabe has finally changed policies and tried to stop the inflation by imposing price controls. This recent NY Times article summarizes the situation:

It appears, however, that not even an unchallenged autocrat can repeal the laws of supply and demand.

One month after Mr. Mugabe decreed just that, commanding merchants nationwide to counter 10,000-percent-a-year hyperinflation by slashing prices in half and more, Zimbabwe’s economy is at a halt.

Bread, sugar and cornmeal, staples of every Zimbabwean’s diet, have vanished, seized by mobs who denuded stores like locusts in wheat fields. Meat is virtually nonexistent, even for members of the middle class who have money to buy it on the black market. Gasoline is nearly unobtainable. Hospital patients are dying for lack of basic medical supplies. Power blackouts and water cutoffs are endemic.

For those of us who know, and love, Zimbabwe the consequences of the government’s economic ineptitude was not as bad for the middle class – black, white and brown – who have been able to avoid the starvation that was afflicting the poor and driven about a quarter (up to 3 million) of the population over the borders.

“The last seven years, I haven’t panicked at all,” said one Bulawayo clothing manufacturer who, like most people, spoke on condition of anonymity for fear of retaliation by the government. “Now,” he added, “I’m not so sure. I think there’s a real collapse coming.”

I know many Zimbabweans in similar circumstances and what they have been doing is surviving day to day and wondering when the end will come. The effect of the inflation has been like the overused analogy of the slowly boiling frog and those who have not gotten out are, like the clothing manufacturer mentioned above, beginning to feel the heat. Put another way, I suspect the suddenness of change in government policy might finally lead to a collapse drastic enough to cause a change of government. But don’t count on it. Mugabe has made certain that his opposition – the MDC (Movement for Democratic Change) is unlikely to win government and the ruling ZANU-PF (Zimbabwe African National Union – Patriotic Front) will do everything it can to cling to power after Mugabe is gone. The question they will face is how to recover from the economic disaster brought about by Mugabe’s policies. It is, of course, unclear what the thinking inside the ZANU-PF on post Mugabe policy will be.

It is worth noting that the ZANU-PF has always had links to China which has been propping up the Mugabe regime and supplying its military with new vehicles and weapons. It seems obvious to me that any debt ridden post Mugabe government will have to deal with its Chinese and other foreign debt and that the only currency it has to offer is the country’s natural resources. Ironically, the end result of Mugabe’s economic polices may be to swap British colonialism for Chinese colonialism.

In a future post I want to address the peculiar nature of Mugabe’s economic madness. In the history of Marxist governments there has been much economic failure, but Mugabe is unique. He is sometimes compared to Pol Pot and there is something to that comparison because of the extremeness of his policies, but Mugabe and his supporters are not addicted to blood, mass execution, and ideological purity the way Pol Pot was. They kill, but mass execution is not their style. Press freedom was reasonable during my time there and even though the government later put opposition newspaper out of business there was always a certain freedom of expression that told me that Zimbabwe fell far short of the paranoid secret police states of Stalin, Hitler or more recently Saddam, where a single sly joke could easily end in torture and death. People in Zimbabwe made private remarks about Mugabe much like they do about Bush in the West. The only difference was a certain care, but it was no big thing.

Instead, I believe it is Mugabe’s particular economic vision that is the key to understanding where he went so wrong. Although I find no evidence of it on Wikipedia, I am aware from my time there that Mugabe has often expressed the goal behind his policies as returning the Zimbabwean people to a subsistence agricultural lifestyle. Some Zimbabweans, his rural supporters in particular, have never left that lifestyle which prevailed before the British took over in the 1890s. The confiscation of farms is part of Mugabe’s vision and some farms have been taken over by subsistence farmers with the obvious – to us in the West – economic consequence of eliminating any surplus production from the economy and often the food supply. Unsurprisingly, Mugabe’s execution of his vision has been less than perfect and many farms have simply been given to Mugabe’s supporters in the government and military. But consistent with his return to subsistence farming policy he has also driven the urban poor out of the cities and back to the land not much caring if they found a place to practice subsistence farming or starved. The campaign was called (Operation Drive Out the Rubbish) and many of those displaced people have been among those who have managed to get across the border.

Mugabe’s vision is notably different from land reform in other parts of the former colonial world such as Latin America. The white farmers of Zimbabwe were among the most productive in the world and made the country one of the richest in Africa well after they lost political control in 1980. Mugabe was a successful African leader until he tried to improve his black countryman’s lot by intervening in the economy in ways that progressively destroyed it. His persistence in counterproductive policies has been breathtaking and is clearly driven by an agenda that is not obvious to the outside world which tries to understand it in terms of economics and post colonial politics. In my next post on Zimbabwe I want to make the case that Mugabe’s vision has to also be understood in terms of the combination local culture and Marxism.