PERIPHERY CAPITALIST DEVELOPMENT-A CASE STUDY OF THE TANZANIAN ECONOMY* GERHARD TSCHANNERL" 1. INfRODUcnON The causes of continuing poverty and persistent unemployment in the Third World have occupied a large number of writers, among them Baran (1957), Jalee (1968), Frank (1969) and Rodney (1972). Some have concentrated on the flow of wealth from the underdeveloped countries to the metropole, others on the devastating effect that this continuing exploitation has on the internal development of the Third World. They all agree that the source of the problem is not to be found within the Third World-such supposed reasons being culture, climate, population growth, leadership, etc.-but with the interna- tional capitalist system. The stunted development of the Third World on the periphery of international capitalism has been analysed in some detail by Samir Amin. Central to his argument is the need for the capitalist system to combat the tendency for the rale of profit to fall. The process of capital accumulation has three ways to offset this tendency: (i) Increasing the surplus value of production at the centre of the system (through greater productivity, monopoly control over prices, etc.), which also increases the explmtarion of the working class, (ii) Extending capital production in new areas where, through un- equal exchange, the surplus value is relatively greater, and (ill) Squandering of profits and other unproductive expenditures' which cannot be profitably invested (1970, p. 197).2 The relationship between developed capitalist countries and the Third World revolves around the second alternative, the expansion of monopoly capital into new areas. Whatever form it takes-aid, trade investment, tech- nical assistance, "exchange of ideas", t~nol~v transfer-the relationship is permeated by the drive at the centre for new profitable investments. These comparatively greater profit margins are to be found primarily in agricul- • An earlJier draft of this paper was presented at the World University Service African Regional Seminar on the Relationship of Population Growth to Economic Growth, 2-6 May 1974, Dar es Salaam. I am grateful for the comments of several friends, particularly S. Rugumisa and Issa Shivji. They pointed to some fundamental weakness in my approach as regards the failure to deal with the process of periphery capitalist development as a whole. In spite of the subsequent revisions I made, the basic problem with the approach still remains. .. Gerhard Tschannerl is a Senior Research Fellow, Bureau of Resource Assessment 5 and Land Use Planning, University of Pllr ~ Salaam. ture and mining," aad also to some extent in light industries, but not in UTAFITI heavy industries. The "comparative advantage" of the periphery countries is fundamentally the lower cost of labour, while in manufacturing, particularly in the heavy industries, the advantage goes to the developed capitalist countries because capital and technical know-how are the decisive factors for those activities. Investment in the periphery countries gravitates towards production of exports in agriculture and mining to supply the manufacturing industries in the centre countries, and under some circumstances towards light industries for the manufacture of consumer goods. The speoific form that the domination by international capi'tal takes is a function of the social formation of the underdeveloped country. It is not correct, as is often done, to view capitalist development in the Third World countries as the gradual replacement of communa:lism and feuda:lism by the capitalist mode of production, a unidirectional movement from "ancient" to "modem". One of the characteristics of underdevelopment is that the capitalist mode, even though it is the most prominent one, continues to coexist and grows around the pre-capitalist modes. The function of the latter is thereby transformed, but not eliminated. (See Samir Amin, 1974b.) The introduction of market relations, which is a pre-requisite for monopoly capitalist penetration, is not synonymous with the replacement of pre-capitalist modes of production. It rather amounts to the creation of a social formation which can be typified as being periphery capitalist, in which the capitalist mode dominates but is intertwined with communalism, feudalism, and to some extent slavery, as the case may be. Thus the vital transformation required for capitalist penetration to take place is not the replacement of pre-capitalist modes but their encirclement, the object of which is to syphon off part of the meagre surplus that is generated under pre-capitalist relations. Once the now advanced part of the developed capitalist world-Europe, North America, and Japan-passed in their historical development the stage where the primitive accumulation of capital dominated, agriculture played a decisive role in their further advance. But there, unlike what is happening in the Third World countries today, the surplus generated in agriculture was re-invested internally, mainly to produce light consumer goods and capital goods. Better agricultural implements and machinery meant greater produc- tivity of labour and a higher income to the farmer. This in turn created a demand for mass consumption goods which stimulated the growth of industry. The agricultural labour force which had to leave the land was gradually absorbed into industry. The important characteristic of this development is that it was self- centered. The driving forces in that process were internal to the system. The central determining relationship of a self-centred system, in the past as well as now, is the interaction between the production of mass consumption ~oods and the production of capital goods. The difference between a self- 6 UTAFITI centered and an externalIy-oriented system, according to Samir Amin, can be shown by a four-sector model of the economy. (i) Exports, (ii) Mass consumer goods, (ill) Luxury consumer goods, (iv) Capital goods. The determining relationship in a self-centred system is between mass consumption goods and capital goods. continually raising the productivity of labour and increasing the ability of the masses to buy consumer goods. in an externally-oriented economy, however, the main interaction is between exports and luxury consumption goods. The driving force for development in the Third World countries is the need for monopoly capital to fight the declining rate of profit at the centre by seeking profitable investments in the periphery. These comparatively greater profits are found in export-oriented agriculture, mining and occasionally in light industries. because the produc- tion costs for similar products are lower there than at the centre due to cheaper labour. "This is therefore the framework for the essential theory of unequal exchange. The products exported by the periphery are important to the extent that-ceteris paribus, meaning equal productivity-the return to labour will be less than what it is at the centre. And it can be less to the extent that society will. by every means-economic and non- economic-be made subject to this new function: provide cheap labour to the export sector." (Amin, 1974a). But the low earnings of those engaged in producing export commodities do not provide the purchasing power which could stimulate the growth of a mass consumption goods industry. At the same time parasitic social classes arise within the periphery country which exert a demand for luxury goods. They perform an important function in this mode of development by ensur- ing the smooth flow of exports and by instituting measures which keep the wage rate at a low level. The demand for luxury goods is partly satisfied by imports, and partly by performing the final stage of their manufacture locally, known as import substitution. The growth of these relatively capital- intensive industries, which produce primarily consumer durables, not only absorbs a good part of the export earnings, but also a large proportion of local capital and other scarce resources (especially skilled man-power). An additional constraint on industrial growth is the imposed requirement that local industries must be able to compare with those making similar products at the centre, i.e.• show a profit within the price structure of the interna- tional market. This requirement, combined with the absence of a sizeable demand for mass consumption goods. results in the near absence of industries 7 producing mass consumption and capital goods. The growth of the national economy is severely hampered, leading to a further increase in inequality and UTAFlTI to impoverishment of the large majority of the population. The result is the marginalisation of the masses. The income of the peasantry and the proletariat remains low, and unemployment and under- employment tend to rise. Unlike at the centre where cyclical unemployment is an integral part of the economy and those out of a job are re-absorbed during an upswing, at the periphery the unemployment is chronic and 'permanent. This situation has led to the coining of the term "labour alistocr~Y" for those few who are able to get a regular job, but it is wrong to consider them as a class exploiting the peasants because they are workers l.and have no control over the means of production; they too are exploited by the bourgeoisie. The hope for better employment, education for their children, and a more attractive life in the cities makes many peasants leave .the land. This is compounded by the upheavals caused by the gradual transformation of agriculture from a subsistence to a cash economy and a land shortage in certain localities. Artisans, who previously manufactured most of the articles needed by the peasants, are driven out of business by the competition from imported goods or by locally established industries with a much greater capital investment than in the artisans' workshops. Instead of forming the nucleus for the growing manufacture of mass consumption goods, their skills cannot be utilised in the capital-intensive production methods, and they join the unemployed. The advocates of population control want us to believe that this situation is caused by over-population. Carefully avoiding an analysis of the socio- economic forces which are ultimately responsible for this condition, they produce simple calculations to demonstrate their point. The available resources in the country, they maintain, have to be divided by the population to find out how much each person can get. It follows that the smaller the population, the greater the amount available per capita! 4 This kind of argument rightly assumes (but does not state this assumption) that only a certain proportion of an underdeveloped country's population can be gain- fully employed, producing a surplus for investment in machinery, education, roads, etc. But as long as the country's economy is externally-oriented, un- employment and poverty will persist. The high rate of population increase is not the cause of these problems but can under some circumstances be a contributing factor. Although the underdevelopment of the periphery countries is the result of capital accumulation, the external orientation of their economy must be pursued by appropriate measures within. At an earlier stage of monopoly capitalist development this was achieved by military conquest, and religious and economic penetration, followed by colonial rule. During tbis phase of domination, the introduction of capitalist production relations in the spheres of agriculture, education, wage work, transport, trade, etc., was carried out by the colonial rulers. Through the power of the state they controlled all 8 UTAFITI vital aspects of the economic, political and social life of the colony. The attainment of political independence meant that the power of the state was taken over by the country's emerging petty bourgeoisie. By that time capitalist production relations had been introduced to such an extent that they formed the dominant, although not the sole, mode of production in the social formation of the ex-colony. The particular form of social relations varied somewhat from one country to another, but in all cases did the petty bourgeoisie play a decisive role not only in the struggle for independence but also in perpetuating and strengthening their relation- ship with the international bourgeoisie. This privileged class was thereby able to move into a position which allowed it to enjoy a "European" pattern of consumption. In the economic sphere this minority now continues to carry out the transformation towards production for the market, the streng- thening of the export sector, and the growth of luxury goods production. On the social front it further develops the superstructure in education, culture, ideology, etc., that corresponds to periphery capitalist development. The emergence of a "parasitic" class manifests itself through the inordinate size of :the service sootor5 in compariSOll1with the industry sector (manufacturing, public utilities, and construction). The contribution of the service sector to total Gross Domestic Product (GDP) is 40% in Europe, 50% in the U.S., and 30-60% in the underdeveloped countries (Amin, 1970, p. 215). For the developed countries the industry sector has about the same size as the service sector, but for the under-developed countries it is much smaller. A similar pattern can be found in the distribution of employ- ment. This points to the parasitic nature of the service sector which is mainly oriented towards exports and luxury consumption, including an emphasis on unproductive investments. An important element in the size of the service sector is the rapid expansion of the state bureaucracy. 2. TANZANIA'S ECONOMY: PERIPHERY DEVELOPMENT The Tanzanian policy as stated mainly by President Nyerere and the party, TANU, aims at a socialist society. The country had inherited a typical colonial economy at the time of independence in 1961. A good part of her agriculture had already been transformed into the production of cash crops and her manufacturing industry consisted almost entirely of the processing of agricultural products for export (Rweyemamu, 1973, p. 111). The location of towns, the infrastructure (such as the transport network), and private and government services were all geared towards the colonial economy. Through schooling, religion, and in other ways, a solid foundation had been laid for the country's transformation to a social formation in which the capitalist mode of production predominates, not as an equal to the colonisers, but as a dependent junior partner on .he periphery of the international capitalist system. 9 The shift in official policy towards socialism came in 1967 with the Arusha Declaration and the subsequent nationalisation of a number of UTAFITI companies, including all banks. Since that time the public sector of the economy has been growing at a faster rate than the private sector, and most of the large manufacturing companies are now either wholly or partly state-owned. Rural development is also given considerable importance through the formation of nucleated villages, the provision of water supplies, educa- tion, health facilities, and transport. Since then Tanzania has become for some people a model of a new non-revolutionary path to socialism for under-developed countries. The first step in this postulated transformation is a successful struggle by the weak: but growing petty bourgeoisie in alliance with the working class for national independence by democratic means. The second step is the gradual elimina- tion of the ties with monopoly capitalism and a simultaneous build-up of the productive forces within. Such a progression is historically impossible since the petty bourgeoisie, which led the independence struggle in the countries of sub-Saharan Africa., formed an alliance with the working class only for the specific purpose of overthrowing colonial rule. Once the petty bourgeoisie acquired state power the reason for the alliance vanished, and the contradic- tions between itself and the working class emerged in fun force. The struggle itself, and the parties that led the struggle, were never guided by a proletarian ideology. The introduction of certain measures by the state, which in the context of a social formation where the working class is in power would constitute a step forward in the socialist transformation, does not necessarily have the same effect in the independent countries of Africa, and is likely to have the opposite effect: to enhance the process of surplus appropriation by the exploiting classes. Measures such as checks on income inequality, nationa- lisation of private property, comprehensive economic planning, administrative decentralisation and small-scale industries, are necessitated by the peripheral nature of the capi'ta!list formation. Through a low surplus generation 'in com- parison with the central capitalist formations-due to the continuing back- wardness of production-and a flow of part of this surplus from the periphery to the centre, the dominant classes in the periphery are in a relatively weak position, serving the international bourgeoisie while at the same time standing in contradiction to it.6 This dual role of these classes which hold the state power lies aIt the heart of the confusion about whether there exist classes in the periphery countries. Related in part to the relative backwardness of the production forces, the role of the dominant classes at the periphery is of necessity markedly different from that at the centre . . The class relations in Tanzania conform in their broad outlines to those In the rest of su?-Sahar~ independ:nt Africa. There is a large peasantry, most.ly engaged m subsistence farmmg but increasingly drawn into com- modIty exchange, a small but militant proletariat, and a petty bourgeoisie. 10 UTAFITI The latter is composed of a number of segments, the most prominent of which-since it merges state power with economic power-is the bureaucratic bourgeoisie, comprising the top political, administrative, and economic func- tionaries of the state (Shivji, 1974, pp. 80-116). Lastly there is the metropolitan bourgeoisie which is the dominant class in the international capitalist system. It is geographticaHy located at the centre and exerts its power over 'the inde- pendent peripheryoountries through the respective petty bourgeoisie in countries where no nationatl bourgeoisie exists. The structure of Tanzania's economy reflects the prevailing class rela- tions. It will be shown that it is typical of periphery capitalism, with a strong emphasis on the export of agricultural and, to a lesser extent, mineral products, and with the virtual absence of domestically-produced capital goods. That this was the pattern during colonial rule is well known, but that it has continued since independence virtually unchanged needs to be empirically demonstrated. If some progress had been made towards disengage- ment from international capitalism, this should be apparent in the relations of production including the economic structure. To test whether such a shift has taken place, a time comparison is made for key elements of the economic structure: foreign trade, the determining relationship (according to Samir Amin's four-sector model), and the distribution between agriculture, industry and services, and their composition. There has been no significant shift of the economic structure away from a dependency relationship since the Arusha Declaration. Those changes which have occurred can be ascribed primarily to two factors. One is the tremendous fall in the world price for sisal and the resulting drop in production, which brought sisal down from the number one export crop at the time of independence to fifth position by value in ]972. The other is the large amount of assistance received from China for the building of the Tanzania- Zambia Railway (TAZARA). The loan agreement of 1968 was for 2,865 million shill'ings, including Zambia's part and local costs. But this project has so far not made a significant impact on the structure of Tanzania's internal economv. If the loan for TAZARA and the resulting trade with China are elimin~ted from Tanzania's foreign trade staJtistics, the pattern which existed before the introduction of TAZARA reappears unchanged. Another large aid project with China is the exploitation of the iron ore and coal deposits in the south-western part of the country. An aid agree- ment for 525 million shillings has recently been signed with China "to assist Tamania to construct complete projects, to render technical coopera- tion, to provide equipment and to supply general commodities, and to meet the local expenses which may be incurred in the implementation of the project" (Daily News, 2nd ;\pril, 1974). To establish stroh an industry would constitute an important step forward for the growth of a self-centred economy (in contrast to an externally-oriented one), but it cannot in itself lead towards 11 disengagement. This requires a parallel change in the class formation without which an iron and steel industry will fail to provide the required push UTAFm towards a rapid growth of the productive forces. FOREIGN TRADE The model of periphery capitalist development assigns a decisive role to foreign trade. The periphery countries carry out a vigorous trade with the centre countries mainly in the export of primary goods and the import of capital and luxury consumption goods. This constitutes the largest part of the trade for the periphery countries, and they trade very little among them- selves. The countries at the centre, on the other hand, trade primarily with one another, and less with the periphery. Thus 80% of the trade of developed countries takes place between them and 20% with the under-developed world, while only 20% of the latter's trade takes place within and the rest with the developed countries (S. Amin, 1970, p. 27). (i) Tanzwua's Exports The trade pattern of Tanzania is essentially the one of a country deve- loping on the periphery of the international capitalist system. Table 1 shows that all the main export items are primary products with very little, if any, processing before export. Such processing as does take place is required for export in order to reduce the bulk and to avoid spoilage in transport overseas: meat is tinned, tobacco is cured, cotton is ginned, etc. The biggest change from 1962 to 1972 in the relative importance of the various items has occurred with sisal, which was by far the most important export crop in 1962, accounting for 28% of the total value of exports, and dropping to a mere 7% by 1972. This is due to the fall in the world price for sisal and subsequent cut-backs in production. Other changes which occurred are the increase in ,the export of cloves from Zanzibar and the export of SOUle petroleum products refined frOllI imported crude oil since the building of the TIPER Oil Refinery in Dar es Salaam. In all other respects the pattern of exports has remained the same since the time of independence. The total value of exports increased rapidly in the years after inde- pendence but levelled off later on: it rose by 51% from 1962 to 1967, but only by 25% from 1967 to 1972. The five largest export items in 1972 were all agricultural products, and together amounted to 60% of total exports by value in 1972. Exports make up a large part of total GDP: the value of all exports amounted to 27% of GDP in 1962, 25% in 1967, and 22% in 1972. Total exports, in fact, constituted 46% of the value added in the agriculture sector in 1962, 58% in 1967 and 54% in 1972 (Table 1). The compari- son between the value of exports and the value added in the agriculture sector is, however, not fully valid since other sectors also contribute a certain amount to the value of exports. It is nevertheless evident that a large proportion of agricultural production is for export, somewhere between 22 and 54% of value added in agriculture.1 A similar result Was obtained 12 UTAFITI from the 1967 population census where 30% of the households on the Tanzanian mainland reported growing either cotton, coffee or cashewnuts as their main agricultural produce (Egero and Renin, 1973, p. 151). Table 1: Value of exports 1962-1972 (Per cent of total value of exports; includes E.A. countries) Commodity 1962 1967 1972 Coffee (unroasted) f1 14 18 Cotton 13 15 17 Cloves 4 5 11 Cashewnuts 4 5 7 Sisal (fibre and tow) 28 12 7 Petroleum products 0 8 6- Diamonds 10 \3 6t Tobacco (unmanufactured) 0 2 3 Tea 3 3 2 Oilseeds, nuts, and kernel 4 3 2 Meat and meat preparations 4 3 2 Hides and skins 3 2 2 Other 16 16 17 Total 100 100 100 Total value of exports Million Shillings 1,141 1,728 2,169 Per cent of total GDP (at current 27 25 22 prices) Per cent of value added in agricul- ture sector (at current prices) 46 58 54 -Figure for 1971 from Economic Survey 1971-72. tFigure for 1971 from Quarterly Statistical Bulletin, September 1973. Source: Economic Survey 1971-72, Tables 1, 11 and 13. Quarterly Statistical Bulletin, September 1973. A closer look at trends in the export of agricultural crops reveals great fluctuations over time (see Appendix C). The output ofa:llthe principal agricultural crops exported from the mainland-coffee, cotton, sisal, cashew- nuts, tea and tobacco-has been rising, except for sisal. The total value exported for the five crops increased by 27% from 1962 to 1967 and by 30% from 1967 to 1972. The increase in the second five-year period, how- ever, occurred only in the last year, with prices as well as quantity exported higher for most crops as compared to previous years (Appendix C). The slow rise in exports and the high fluctuations from one year to the 13 other is largely due to adverse terms of trade which Tanzania is confronted with. Other factors, such as rainfall, transport difficulties, disruptions due UTAFITI to the villagisation programme, also have a bearing, but they are not the main driving force. The index of export prices for the five crops, given in Table 2, shows that prices of several crops feH from 1960 to 1966 and did not improve substantially until 1971. A considerable rise in prices then occurred in 1972, which was also parallelled by a substantial increase in the quantity exported for aH five crops, except sisal (Appendix C). The index of consumer prices is added on the bottom of Table 2. We can see that consumer prices far outpaced the export prices vf the five main crops over the entire period, with the exception of cashewnuts from 1960 to 1970. Table 2: Export price index of main crops 1960-72 (At current prices; 1960=1(0) Crop 1960 1966 1967 1968 1969 1970 1971 1972* Coffee 100 91 93 101 91 92 98 122 Cotton 100 102 91 93 90 121 III 117 Sisal 100 80 67 57 63 56 57 64 Cashewnuts 100 122 114 112 127 130 109 116 Tea 100 99 100 94 89 85 83 82 Consumer Indext 100 III 114 118 119 123 127 140 *Estimated from value and quantity of exports. See Appendix C. tRetail price index of goods consumed by wage-earners in Dar es Salaam. Sources: Economic Survey 1971-72, Table 17. Quarterly Statistical Bulletin, September 1973. Two further characteristics of the Tanzanian pattern of exports, which is common to all under-developed countries, should be noted. One is the discontinuity between production to satisfy the domestic demand and the production for export. At least three-quarters of the marketed production of each of the five main export crops, except for tobacco, is exported,s which means that most Tanzanian export products have no, or only a very small internal market: domestic consumption is incidental to the produc- tion of the main export crops. Just the opposite is the case, however, in the developed countries: their exports are incidental to production for the domestic market and in general only the spill-over is exported. The other characteristic concerns the linkages between production of export commodities and other sectors of the economy. As can be expected given the nature of these commodities, the linkages are very weak. Domestic inputs into export production-aside from transport and construction-are limited to small miscellaneous items, such as agricultural insecticides and fertilisers, and cordage and ropes.9 Worse stiU,the production of primary goods for export creates a demand for other actiVities, notably transport, construction and services, which is incompatible with balanced development and channels the meagre proceeds from the foreign sale of these commodi- ties into expenditures which do not stimulate the rest of the economy. 14 UTAFITI (ji) Import.} A marked shift occurred between 1%0 and 1971 away [mm the import o~ consumer go:)ds and towards capital and intermediate goods. Table 3 shows that consumer goods dropped from 35% of the total value of imports in 1967 to' 27% in 1971. The absolute value af imported consumer goods, however, actually increased from 578 to 722 million shillings. while the import a: capital gODds increased 2.1 limes and intermediate goods 1.7 times in that period. The largest rise occurred for machinery other than transport, which increased by a factor of 2.4. Much of this change is due to' construc- tian of the Tanzania-Zambia Railway (TAZARA): imparts for TAZARA amaunted to 430 million shillings in 1971 (Economic Survey 1971-1972, p. 13). But even if TAZARA is excluded, a strang trend of imports away from consumer goods and towards capital and intermediate goods remains. Table 3: Composition of imports 1967-71 (Per cent of total value of imports; includes E.A. countries) Type of Commodity 1967 1971 Consumer goods: (including a portion of passenger cars) 35 27 Intermediate goods: Building and construction materials 14 9 Other 27 34 Total 41 43 Capital goods: Transport equipment 8 8 Other machinery 16 22 Total 24 30 Grand total 100 100 Total value of imports, Million Shillings 1,625 2,688 Source: Economic Survey 1971-72, Table 9. The composition of Tanzania's imports is in confonnity with the general model of periphery capitalist development. It places heavy emphasis an importing capital goods-in fact nearly all the capital goods are imported -while the import of consumer goods has declined, being replaced by local import-substituting industries. such as those producing beverages. tobacco products, and textiles. (iii) The Trading Partners One of th~ characteristics of periphery capitalist development is that the underdeveloped countries trade primarily with the .centre and very little 15 with one anather. This is also the case for Tanzama. aithough there has been a trend away from the heavy dependence on U.K. and on the develaped UTAFin capitalist world as a whole. Table 4 gives the destination of Tanzania's exports. The bulk of the developed capitalist world received 79% of the total exports in 1962-a reflection of Tanzania's colonial heritage. This had dropped to 64% by 1967 and went down further to 59% in 1972. It is hardly surprising that exports to U.K. showed the biggest decline, but the share of the other developed countries also decreased. Exports to socialist countrie's increased substantially from nearly zero in 1962 to 8% in 1972 on account of increased trade with China. TIle share of Third World countries including Kenya also increased, from 18% in 1962 Lo 27% in 1972, which was almost entirely due to' the spectacular increase af exparts to' Zambia. Table 4: Destination of exports 1962-72 (Per cent of total value of exports from Tanzania) Region 1962 1967 1972 Developed Capitalist coun tries U.K. 32.6 27.3 15.0 Western Europe (excluding U.K.) 22.7 17.8 17.9 North America 10.0 6.8 7.5 Japan 3.8 3.9 3.5 Hong Kong and Singapore. 6.9 6.8 7.4 Others 2.9 1.8 2.0 Total 78.9 64.4 53.2 Socialist Countries China 0 3.4 6.2 C.M.E.At 0.3 3.2 1.8 Total 0.3 6.6 8,0 Third World Kenya and Uganda 5.7 4.8 6.2 Zambia 0 7.1 8.4 India 7.4 6.2 7.9 Other African countries 2.4 1.9 2.4 Other non-African countries 2.8 4.0 2.4 Total 18.3 24.0 27.2 Others unspecified 2.5 5.0 11.4 Grand Total P.:r cent 100,0 100.0 100.0 Million Shillings 1,141 1,728 2,160 .Hong Kong and Singapore are included under developed countries because they serve as important trading centres for international capitalism. tCouncil for Mutual Economic Assistance comprising Eastern Europe and the USSR. Sources: Economic Survey 1971-72, Tables 12 and 13.E.A. Community Annual Trade Reports 1962, 1967, 1972. Quarterly Statistical Bulletin, September 1973. 16 UTAFITI The saurces af imports, given in Table 5, are similarly distributed. The developed capitalist world furnished 54% af all imports in 1962, 62% in 1967, and 56% in 1972. Even though their share of total imports remained nearly the same, the emphasis shifted away from U.K. to the other cauntries of Western Europe, to' the extent that the latter supplied 25% of all imports in 1972. The biggest change aver the ten year period was the emergence of China from no trade to the second most important source of imports in 1972. This raised the share af socialist cauntries from 1% in 1962 to' 19% in 1972. This isolated case af trade outside the capitalist system-trade with the other socialist countries is insignificant-is due to' Chinese assistance for the Tanzania-Zambia Railway and the related import of goods not directly linked to this project. The propartian of imports from the Third World has been falling from 33% in 1962 to 22% in 1972, which was due to a rapidly declining share of imports from the other two partners af the East African Community, (i.e. mostly from Kenya). Table 5: Sources of imports 1962-72 (Per cent of total value of imports into Tanzania) Region 1962 1967 1972 D£'velope£/ Capitalist Caul/tries U.K. 262 23.5 15 8 Weslern Europe (excluding U.K.) 12 5 23.1 25.4 North America 5.1 8.4 6.2 Japan 9.8 4.2 5.6 Hong Kong and Singapore. \.6 2.0 0.8 Olhers o 7 0.8 2.1 Total 53 5 62 0 55.9 Socialist Countries China 0 4.4 17.3 C.M.E.At 0.9 2.8 1.8 Total 0.9 7.2 19.1 7hird World Kenya and Uganda 21.5 17.2 11.3 India 5.4 2.7 1.4 Other African countries \.0 0.4. 0.9 Other non-African countries 5.0 7.8 8.7 Total 32 9 28.1 22.3 Others unspecified 102 2 7 27 Grand Total: Per cent 100 0 100 0 100 0 Million Shillings 1,127 1,625 2,929 .Hong Kong and Singapore are included under developed countries because tbey serve as important trading centres for international capitalism. tCouncil for Mutual Economic Assistance comprising Eastern Europe and the USSR. Sourus: Economic Survey 1971-72, Tables 10 and 14. E.A. Community Annual Trade Reports 17 1962,1967, 1972. Quarterly Statistical Bulletin, September 1973. Trade with Kenya and Uganda has been small compared to the developed DTAnn countries: their combined share of exports remained an the same level of about 6% of total exports between 1962 and 1972 (Table 4). Impoflts from the two partner states were very prominent in 1962, amaunting to 21% af the total. but had dropped to 11% in 1972 (Table 5). ,In ab~l~te terms the value of imports from Kenya and Uganda has been slIghtly nsmg Over this period. Kenya's c.ontribution to' Tanzania's imports is several times that of Uganda. This colanial division of production within East Africa stiB c.ontilll7cs taday, aided by Kenya's open-door policy far fareign investment. :THE DETERMINING RELATIONSHIP The faur-sector model, discussed in Sectian 2, distinguishes between a self.centred ecoilOmy where the determining relationship is between the production of mass consumption and capital goods, and an externally. oriented one where it is between expoT'ts and luxury consumption goods. TO' show the relative size of these four sectors, it is necessary to appropriately classify the relevant industrial activities taking place in Tanzania. The model is centred around the process of capital accumulation and, therefare, only cancerns productive activities in ,the sense that through them social wealth is created from nature, which also means that they have a potential for generating social surplus. This does not mean that a social surplus results from every productive activity. When the productive forces are at a low level and there is accordingly a small division of labour, no appreciable surplus can be produced. To be included in the four-sector model an industrial activity must, therefare. first meet the condition of being productive and taking place in the country, and secend af having developed to' an extent where it is capable of producing a social surplus. A third condition is that it must be in the monetary sector-in distinction frem the subsistence sector-which makes it possible fer the baurgeoisie either directly or via an intermediary class to appropriate all or part of that surplus value. A serieus drawback with the four-secter model is that it cannot incor- porate the vital role played by pre-capitalist modes of production which are present along with the capitalist mode in the social farmations of the periphery capitalist ceuntries. But when considering the process of capital accumulation-the heart af Tanzania's externally-oriented ecenamy- we cannot quantitatively include the se-called subsistence sector, which falls mostly under the communal mode of production. It generates very little surplus -the productive force i5 lew and so is the divi~ion ef labour-and is, there- fore. unable to produce a surplus large enough to' be transferred intO' the sphere of the capitalist mode ef productien and contribute to' capital accu- mulation:The subsistence. secter, hawever, is an integral part of the social !oI'1l1atiOl)~.. 9f under-developed countries. While the capitalist mode is continuously eroding the ether med~ of production that are. present as 18 'Ul'.\Fm remnants of previous social formations, its own peculiar' growth. on the periphery of the capitalist system is dependent on the continl,led existence of these other modes. The relationship is very intricate .and has many different aspects to it. Its specific form not only ..varies from one social formation to another, but depends also .on' local factors; Only two important ways in which the capitalist mode draws on the other modes will be mentioned here. One is as a reservoir for labour, to which the un- employed return and which a large part of the proletariat never leaves completely, maintaining a "home" base in agricU'lture through' dose relatives, somerimes even the wife, to supplement the satisfaction of the family's needs and to return to it if he becomes unemployed. The other is the ext~tion of surplus, even though very little is generated, from production under the pre-capitaHst modes through the supply of certain' commodities to the peasants which the latter cannot produce such as cloth, or have been persuaded to acquire such as electric torches. This exchange, which is in the form of commodiJties, money. or labour. power, and when on credit carries an exorbitant interest rate, is unequal. Table 6: The four-sector distribution in Tanzania 1970 Sector Value Million Shs. Per cent Exports 1,096 43 Mass Consumer Goods 981 41 Luxury Consumer Goods 307 13 Capital goods 16 1 Total 2,400 100 The results of 1he four-sector classification are shown in Table 6. Out of all productive surplus-generating activities in the country's mo~etary sector, which produced a total of 2,400 million shillings in '1970,45 per cejI1t was exported .. The capital goods sector, on the other hand." is virtually non- existent. Mass consumption is three times as large as luxury consumption, but the latter is obviously quite developed. Moreover, its share in tot!ll manufacturing is rising in terms of output as well as employment While in 1965 the output of luxury goods amounted to lLl.per cent of all manufa<;t~ring bYValpe, it was 15.7 ~ .cent in 1970. Its.share ill ~pJoJ- ment rose from 10.6 per cent in 1965 to 12.2 percent in 1970. (See:T~i'-'2. in Appendix. A). The most rapid increase occurr~ in the. manufacture ,of furniture and fixtures. : ;: SinCe' virtua.Jly. 00 capital goods are produced. the intemotion' which 19 determjnes the, growth of Tanzania's economy c~not be: ~tbe capital goods and the mass consumption goods sectors. The determining UTAFITI relationship is between the export sector, which is very large, and the luxury consumption .vector, which is small but pronounced. Thus the export sector stimulates the production of luxury goods. The growing luxury sector, in turn, creates a demand for more exports to increase the size of the surplus at the disposal of a privileged minority and to strengthen the ties of the na't'ional ruling dass to the metropolitan bourgeoisie. Some explanation should be offered about how the four-sector classifi- cation in Table 3.6 is arrived at. The handling of the export sector is con. ceptually easy. It is only necessary to find the total value of exports, regardless of their industrial origin, at producer value. Complete data for this are, however, not available, and have to be estimated from the to.b. value of total exports of 1,686 million shillings in 1970. This figure also includes the cost of wholesale, transport. public administration,. and in some cases profit which must be deducted to arrive at the value of productiOn. A comparison between the price paid to growers and the export price for selected crops shows a difference of around 35%, which when subtracted from the value of all exports gives a producer value of 1,096 million shillings. The different productive sectors contributed to the export f.o.b. value roughly in the following proportion: agriculture, hunting, forestry and fishing, 41 per cent, mining 13 per cent, and manufacturing 4.6 per cent (Input-Output Table, 1969). The classification of goods into the remaining three categories requires a breakdown of each industry of the productive sector into components and lifting out the contribution to .:onsumer and capitall goods. Starting with agriculture, hunting, forestry and fishing, the total output in 1969 was 3,874 million shillings of which only 2,080 million shillings was in the monetary sector. Of the monetary part 30 per cent consisted of unprocessed exports, 28 per cent were inputs to manufacturing, 21 per cent to private consump- tion, and 2I per cent to other activities, mostly contruction and increase in stocks (Input-Output Table, 1969). The only item which falls under consumer or capital goods is the part for private consumption, and the value of its output was 440 million shillings in 1970. Tbe next productive industry is mining and quarrying. It does not contribute any consumer or capital goods and besides, only 4 per cent of its output value was for domestic use (Economic Survey 1971/72, Table 60). The manufacturing and handicrafts industry is the principal generator of .consumer .'goods and capital goods and needs more detailed scrutiny. The larger part Of the manufacturing takes place in industrial establishments which are broadly speaking run under capitalist principles, and a smalter part is contributed by household and cottage industriei The second type consists of winemaking, wood carving, furniture making, tailoring, pottery, etc. Not aU those acrivkies fall into the monetary sector and would for this reason beexcIuded from our model. But a more important consideration 20 UTAFm is that they generate very little surplus, if any, and, therefore, do not play a significant role in quantitative terms for capital accumulation and are, therefore, omitted. As was said before this is. however, a serious limitation of this kind of analysis which cannot properly account for the vital role of pre-capitalist modes of production in the social formations of the periphery countries. It remains now to divide the output of the manufacturing establish- ments into mass consumer, luxury consumer, and capital goods. The classifi- cation depends a good deal on how the different categories are defined. The following definitions were applied. Consumer goods are finished commodities used by households or the state for final consumption (i.e., not producing other commodities). Capital goods are commodities which increase tije of labour ~j('h .£!..o.., forestry (7%>, fishing (3%>, hunting (nes!igible). National Accounts of Tanzania 1964-1970, Table II. Smtrcu: Economic Survey 1971-72, Tables 1 and 2. Quarterly Statistical Bulletin, September 1973. The decline of export prices in rdation to domestic consumer prices, which was discussed in Section 3, is also to be found for crops wbich are primarily produced fur the domestic market. Table 11 ,shows that the consumer prices paid to growers for many crop have fallen in relation to consumer prices paid by wage earners in Dar es SalaamY" Only the prices for beans and sunflower seed have increased appreciably in real terms while rice, groundnuts and cashewnuts remained on about the same. level. .The .~ UTAFITI ~ricespaid to gr~ers of,the main staples consumed in the country (except for nce) all dropped m relation to consumer prices: maize, millet, sorghum, and cassava were down in 1972 to 70-800/0 of their 1966 level. Ta?le 11: Prices paid to growers for selected cropS 1966-72(Index at constant 1966 consumer pnces-; 1966=100) Prices paid in Crop 1966 1967 1968 1969 1970 1971 1972 1972 Shs. per ton Staples Maize 100 88 87 88 78 72 71 263 Finger millet 100 95 83 80 92 81 81 516 Sorghum 100 72 75 73 86 86 81 387 Cassava 100 81 105 67 73 106 68 220 Rice 100 101 107 114 124 108 106 565 ugumes Mixed beans 100 88 110 135 138 127 128 660 Pigeon peas 100 101 97 92 94 100 85 S66 Oil seeds and nuts Sunflower seeds 100 104 106 104 124 114 165 564 Groundnuts 100 99 99 103 112 9S 103 1,115 'Cashewnuts 100 97 93 75 106 97 n.a. 877 (1971) Consumer price index- 100 102.6 106.2 107.4 110.4 114.7 126.0 -Retail price index of goods consumed by wage earners in Dar es Salaam (Quarterly Statistical Bulletin, September 1973).The 1973 consumer index (with 1966=100) is 132.2. Sources: Statistical Abstract 1970,Table 0.6. Quarterly Statistical Bulletin, September 1973. The crucial question in regard to prices for agricultural commodities is whether the productivity of labour has increased. If this was the case, agricultural prices could be lowered and at the same time the income of agricultural workers raised, provided the productivity increase was suffi- ciently large. This is how agriculture developed historically in the now advanced capitalist countries. It appears, however, that there has not been a subst01ltialproductivity increase in Tanzania's agriculture, This has been found in various field Iltumes on agricultural production, IS and is borne out by the low flow of capital and those agricultural inputs which would raise the productivity in agriculture, par1licularly agricultural machinery, fertilisers, pesticides. and improved seeds. The value of domestic production of fertiHsers was 5.5 million shillings in 1970 and that of insecticides 5.0 million shilHngs. The amount of agricultural machinery manufactured, including improved imple- ments, is negligible. (Survey of Industrial Production 1970, Table 19). The -27 value of imports of these commodities is much larger than the domestic production, as shown in Table 12. The item "chemicails and fertilisers" UTAFITI includes aU chemicals not used for final consumption, which means that the portion imported for agriculture is less than what is shown in the table. Table 12: Import of agricultural producer and capital goods 1963-69 (Value in million shillings; at current prices) 1963 1967 1969 Chemicals (for all industries) and fertilisers 59.3 48.8 88.3 Agricultural capital goods 83.8 108.5 91.2 Sources: Statistical Abstract 1970, Table E.11(a). These amounts, although much larger than the domestic manufacture of these items, are extremely small compared to the total value added in agriculture of 3.074 million shillings in 1969. But more important. their I'lIite of increase is quite slow. barely exceeding the slight rise in agricultural output. It should also be noted in passing that the performance of the state farms, which were intended "to increase rapidly ,the production of crops and agricultural commodities that offered scope for mechanized production and to show examples of better agricultural production methods to the surrounding areas" (Economic Survey 1971.72, p. 74). has not beensatisfac. tory. "Most of the State farms have not attained commercial viability." (Ibid). Without an appreciable increase in the productivity of labour in agriculture. the drop in the relative prices of many agricultural products implies a decline in the per capita income to farmers. This is accompanied by the failure of agricultural output-for export as well as for the domestic market-to rise according to plan19 and by a steady urban migration in spite of an unemployment problem in the towns. INDusny SECTOR As shown in Tables 8 and 9 the industry sector is expanding fastest both in value added and in employment, although its share of total GDP has remained very small: value added stood at 11% of total GDP in 1964 and at 16% in 1972. The increase was somewhat less in employment: from 20% in 1962 to 29% in 1971. This rise in the industry sector could represent a decisive move towards disengagement and a more balanced economy, provided it caused a shift away from the structural dependency relationship discussed above. This would imply plaoing less emphasis on export and luxury consumption goods. and more on mass consumption and capital goods. Otherwise the growth in the industry sector would amount mainly to import substitution for those consumption goods which can be afforded only by a privileged minority. To examine this situation it is necessary to look into the composition of the sector. 28 UTAFITl The first division of the industry sector can be made into industries: (i) manufacturing. (ii) public utilities (i.e., electricity and water supply), and (iii) construction. The expansion of value added in the three industries has been about equal, with construction slightly in the lead and public utilities slightly lagging behind. The details of expenditure on construction. given in Table 13 reveal a rise in residential and non-residential construction of buildings as well as non-building construction. One striking change from 1968 to 1971 has been the rising share of public expenditure, the latter mainly as a consequence of the nationalisation of buildings in ] 971. It is also of interest to see wbat proportion of newly added buildings are for productive uses and which for final consumption. Even if all parastatal and private non-residential build- ings are included in the category of productive use, the share of productive expenditure amounted to only 24% of total buildings in 1968 and fell to 200/0 in 1971 (see Table 13).20 Table 13: Expenditure on construction 1968-71 (Excluding TAZARA; milJion shiUinp) Type of construction 1968 1971 A. BUILDING S Residential: Public 32.2 92.7 Private 50.9 33.5 Total 83.1 126.2 Rural (estimated) 132.7 156.1 Non-Residential: Public 160.8 200.0 Private 25.3 23.9 Total 186.1 223.9 Total Buildings 401.9 506.2 B. NON-BUILDING CONSTRUcnON* 326 424 GRAND TOTAL CONSTRUcnON 728 930 Per cent of expenditure on buildings for productive purposest over total building 24% 20% .Roads, ferries, bridges, water supply, land improvements, and others. tIncludes all parastatal and private non-residential buildinp. Sources: Economic Survey 1911-72, Table 72. Turning nOW to the manufacturing industry. it has been shown in Table 7 that out of all consumer goods manufactured in 1970, 200/0 were for export, 33% for luxury consumption and 47% for mass consumption 29 by ..value added. Luxury COIlsumergoods, therefore, COIlstituted41% of all consumer goods produced for the domestic market. Looking back at UrAFITt the period from 1965 to 1970,the share of the industrial activities producing luxury goods in the total value added in manufacturing steadily increased in that period: it amounted to 11.3% in 1965 and to 15.3% in 1970. A similar, but less pronounced, increase relative to total manufacturing can be found in employment. (See Table A2). The value of domestically-manufactured durable consumer goods is quite small but rapidly increasing. Table 14 shows the products of machinery manufacturing in 1970, a good part of which are consumer durables: the combined value of cooking stoves, radios and gramophones produced is 3.2 million shillings, or 27% of all manufactured machinery.21.Machinery manufacturing was also the fastest growing industrial activity, constituting 1.1% of aN manufacturing in 1965 and 2.1% in 1970. (See Table A2). Table 14: Composition of machinery manufacturing 1970 Output thousand Shs. Non-electrical machinery (Old ISIC code 360) Cooking stoves 1,255 Engineering general 168 Others 998 Total 2,421 Electrical machinery (Old ISIC code 370) Radios 1,076 Gramophones 907 Batteries (dry) 7,124 Others 358 Total 9,465 Grand Total: all machinery 11,886 Source: Survey of Industrial Production 1970, Table 19. The value of imported consumer durables remained at approximately one-third of all imported consumer goods from 1966 to 1969. The import of consumer durables is much larger than what is manufactured domesricall1y: in 1969 it was 97.5 million shillings (Statistical Abstract 1970, p. 83). It is worth noting..o.-eventhough it has little bearing on the structure Tanzania's ecOl1'01lly-that the role of parastatal enterprises has sharply l of increased over the years. Their share of value added in total ODP has gradually risen from 3.2% in 1968 to 9.6% in 1972.22 A similar increase 30 UTAFITI occurred in employment. from 13.0% of all employment in 1968 to 20.4% in 1971. Employment in the private enterprise sector, in contrast, has fallen from 40.5% in 1968 to 35% in 1971. (See Appendix B, Table Bl). SERVICE SECTOR In an externally-oriented economy the service sector is mainly geared towards exports. Its expansion is consequently taking place without strong support for the industry sector. It also provides the employment fOF a privileged minority which wields the state power through administrative and economic organs. In Tanzania the share of the service sector in total GDP and employ- ment has been rising (see Tables 8 and 9). The proportion of vailue added by the different industrial divisions has remained nearly the same from 1968 to 1972. The fastest increase occurred in "transport, storage, and com- munication". The nature of the data available on the service sector makes it impossible to analyse its composition and its relationship with the rest of the economy in detail. Some indications of this relationship can. however, be found. 1. Transport was heavily oriented towards the construotion and improve- ment of roads from OaT es Salaam to the rest of the country. This, of course, has also been motivated by administrative and defence considerations, but Oar es Salaam's position as the country's main port cannot be overlooked. The predominance of motor cars and light commercial vehicles among all newly-registered government vehicles-together they constituted 53% in 1971 (See Table l5)-suggests an emphasis an costly means of transport far a few individuals and small quantities of goads, rather than buses (5%) and tractors (7!%). A breakdown of all vehicles newty registered in 1971 in the country shows similar proportions. 2. The report on trade and commerce in the Economic Survey puts heavy emphasis on exports. Under progress made in 1971/72 it mentions among other aspects of international trade that the "development of a cotd chain operation Will increase expoIits of perishables;" and that "export promotion activity has been explained by the posting of commercial attach~ to Zambia. Iudy, Egypt, India, and Japan" (p. 119). At dIe same time the report says that shortage of some commodities did occur in certain areas of the country (p. 118). 3. Tourism is another form of external dependency that distorts the economy towards extemally-oriented non-productive activities and provides further jobs and income for the "parasitic" segment of the population. This does not mean that tourism is undesirable under all circumstances: it can play an important role also in a self-centred economy. But its present orientation towards luxury facilities (certainly not portraying Tanzania as a socialist country) and its growth in the light d. the country's genern1 external 31 orientation make it deepen the noo-colonial dependency relationship. Table 15: New registration of motor vehicles 1971 (Per cent) UTAFITI Government All vehicles Type vehicles only (private and government) Motor cars 19 26 ,. . Light commercial (including Land-Rovers) 34 18 , Motor cycles 15 14 Lorries and- trucks 19 26 .DuileS @~ coaches 4 5 Tractors 7 6 Trailers 2 5 Others .Total 100 100 Total number registered 1,175 7,203 Source: Economic Survey 1971-72, Table 78. _ Finally, the average income of employees in the various divisions of lIte service sector lies above the national average. The average monthly wage for 1971 was 491 shillings in commerce, 539 in transport and communica- tions, 398 shillings for services in the enterprise sector, and 392 for public services. The average for total employment was 380 shillings per month (fable B3)~ 3. cONCLUSIONS .. Tanzania's -employment statistics also reftectthe dependent nature of the econOmy. -Total wage employment rose by 0.5% in the period of 1963 .to 1967. by 2.0% from 1967 to, 1970, and by 7.0% from 1970 to 1971. The aCcc;lerated rate of additional employment is evident, but one should be ~utious not to draw hasty conclusions from this. First, there are indications Utat the last year's growth rate has not been ,sustained (see Appendix B). ~Ond. ihe composition of employment does not show a shift away from the dependency relationship typical of periphery development; the proportion .emPloyed in, productive activities has been falling. Third, the published einploylnent figures are not a reliable measure because a high proportion of the total labour force is casually or seasonally employed. -' ,.Comparing the growth in total employment with that of population '(which is 2.7%), we find that the growth in employment. was below the '~pulation growth with the exception of 1970-71. the last year under review. The reasons for this must be further analysed . . Wage employment in agriculture dropped sharply since independence ('!Clb~e ?) .on account of the general decline in plantation agriculture. particuJarly sisal. This decline was, however, only partly ..offset by a rise 32 UTAFITI in subsistence agriculture, with the result that agricultural production has stagnated, while its share of GDP actua:i'ly decreased (Table 8). The reason for this lies primarily with the fail of prices paid to farmers for exported and domestically marketed crops in relation to consumer prices. At the same time there has been little, if any, increase in the productivity of labour in agriculture. It appears, therefore, that the proportion of the population engaged in agriculture, both monetary and subsistence, has been declining. The number displaced in agriculture is offset (and slightly exceeded) by increased employ- ment in the industry and service sectors. These jobs are found in the towns, and many migrate to urban areas in search of employment: the average growth of urban areas is 6.5% on the mainland. There are, however, not enough jobs for people in the towns, with the result that a good many are unemployed: 7.1 % of the urban population actively seeking work cannot find it. and an additional 4.6% have no work and are not looking for any. (Bienefeld and Sabot, Vol. II, p. 175). The result is continuing unemploy- ment and underemployment of the majority of the population. With declin,ing real income in agriculture, the peasants do not acquire the purchasing power to buy consumer goods, and the mass consumer goods industry cannot grow at a fast rate. The impetus for Tanzania's economic growth comes from a different direction. Roughly one-third of agricultural production is for export, about one-half of which goes to the developed capitalist countries. With a low demand for mass consumer goods and the virtual absence of capital goods production, the crucial interaction for internally-oriented growth between mass consumer goods and capital goods is absent. Instead, the large export sector is linked WIth a sizeable luxury consumer goods sector which diverts a good part of the surplus from export earnings away from invest- ments in productive (i.e., surplus-generating) activities and into consumption by a small minority. Employment in all branches of the service sector has been rising. Expenditures on housing, transport, health, etc. put heavy emphasis on a high standard of service for a privileged minority. This is also reflected in the salary structure: the increase in average real wage in the period 1966 to 1971 was primarily the result of a sizeable increase in the number of employees receiving more than shs. 450/- per month. The outlines of how a small underdeveloped country like Tanzania could develop a balanced economy have been discussed by Oive Thomas (1972, 1974). His "first iron law of transformation" is the need for domestic demand and resource use to converge. The extent to which those two are disconnected is a measure of structural dependence. His "second iron law of transformation" is the need 10 bring demand in line with resource use. The "European" consumption pattern which is enjoyed by those on the 33 upper end of the income distribution will have to become interna1ly-orien.ted ana be based on the locally available resources and the capacity to transform UTAFlTI these resources for human use. To accomplish this requires a break with the international capitalist system. Otherwise the forces which keep Tanzania in its present dependency relationship will continue to attempt by any means possible to retain the country on the fringe of the capitalist system. There are a few nations which have been able to break away and effect a total transformation of their societies. and their experience offers a valuable insight into how the vicious cycle of poverty and unemployment can be broken. 34 APPENDIX A CLASSIFICATION OF MANuFACTIJRING INTO EXPORT, MAss CONSUMER AND LUXURY CONSUMER GOODS Consumer goods industries are defined according to R weyemamu as those producing finished commodities for use by households or the state for finaI consumption, i.e., for non-productive purposes. This list of activities which manufacture consumer goods is taken from Rweyemamu (1973, pp. 166.168, 244-245) with the following modifications: (i) Printing and publishing (old ISIC code N6. 280) was removed from the consumer goods industries because it consists mainly of job printing which cannot strictly be considered a final product. (ii) Pharmace\lltica:ls and insecticides (old ISIC No. 3190), which seem to be included in Rweyemamu's list of consumer goods industries, produce s mainIy agricultural insecticides and fertilisers and is, therefore, not a consumer goods industry. (in) No separate data could be obtained on glass products (old ISlC No. 322); they were, therefore, removed from consumer goods. Most of the output is in the form of bottles for beer and soft drinks and is imbedded in the output of breweries and soft drinks. (iv) Non-electrical machinery (old ISIC No. 360) consists mainly of cooking stoves and was, therefore, added to consumer goods. Not included under consumer goods are the categories of (a) capital goods, (b) building materials, (c) producers' supplies, and (d) other industries that do not fit into any other category, mostly intermediate products and services. There is no generally accepted definition of what constitutes a domes- tically-used mass consumer good and what a luxury consumer good in the Tanzanian context. Rweyemamu (1973, p. 171) only considers those commo- dities which are most obviously consumed only by a better-off minority as luxury goods: brewery products, tobacco manufacturing. and miscellaneous manufacturing (i.e., smoking pipes, jewe1lery, foam mattresses, etc.). Other economists consider all consumer goods in Tanzania as luxury goods because they are not normally used by the large majority of the population, the peasants. The definition adopted for this study lies somewhere between these two viewpoints. An industrial activity was classified as producing for mass consumption or luxury consumption depending on whether the labouring masses-the workers and peasants-or the national ruling class-the petty bourgeoisie-use the greater part of the output by value in that industrial activity. Thus dairy products were classified as mass consumption goods because a large part of the milk which accounts for the bulk of the industry's output, is consumed by the working class.2I Other products listed under the 35 dairy industry, such as refined ghee and butter, constitute luxury items, but they are nevertheless included with mass consumption goods because the UTAFITI data on value added are available only for industria:! activities and not for individual items produced under each activity. Value added, Type of consumer thousand Shs. good Processed milk 14,934 Mass consumption Refined ghee 2,583 Luxury Butter 18 Luxury Others 1,214 Total dairy products 18,749 SOUTce: Survey of Industrial Production 1970, Table 19. The breakdown of manufacturing into export, mass consumption, and luxury consumption goods is shown in Table Al together with their gross output and value added. All exports goods produced in manufacturing. with the exception of certain chemical products, fali under the category of consumer goods, but this fact has no significance for the present analysis. The industrial activities are classified into the three categories according to the composition of the output of each. The product mix was obtained primarily from the Survey of Industrial Production 1970, Table 19, and the Directory of Industries 1970. The Table only includes domestically- produced items. REMARKS ON nm CLASSIFICATION Exports: -The classification of export industries is taken from Rweyernamu (1973, p. 172). -Miscellaneous chemical products consist primarily of pyrethrum extract. Moss Consumption: -Under dairy products the largest item is milk. -Bakery products consist mainly of bread. -More footwear is made of rubber and plastic than of leather, hence new ISIC codes 358 and 359 had to be included with code 330. -Paper products consist mainly of exercise books. -"Soap, perfumes, and cleaning preparations" consist almost entirely of laundry ~p. Luxury Consumption: -Under furniture, the largest items is wooden furniture, followed by metal beds and steel furniture. Furniture is bought by the workers and the petty bourgeoisie for private use. and also by the state. The 36 UTAFITI unnecessarily large quantity and lavish style of government furniture . decided the classification of this item as a luxury good. -Electrical and non-electrical machinery consists almost entirely of household appliances, radies, cooking .stoves and gramophones. - (in descending order of size of output) .. -Miscellaneous manufacturing consists mainly 9f smoking pipes and foam mattresses. Whether gross output (i.e., not accounting for depreciation) or value added is used to calculate the relative size of the three categories of consumer goods does in this case not make much difference (see Table 7). Value added is the preferred measure because it portrays accurately the activities taking place in the manufacturing industry, but is limited to that industry. Output of manufacturing, on the other hand, also contains' the value of inputs into manufacturing, and thereby reflects the orientation of the whole economy towards a particular mix of products fqr final~onsump- tion. A problem occurs, however, with double counting. where the output of one activity in the manufacturing industry is at the same time' an input into another manufacturing activity, such as "cotton ginning" delivering to "spinning and weaving of textiles". This has been largely correoted in Table Al by entering the value added in the column on output for four ',industrial activibies: bakery products (input: grain mi:lIproducts), cocoa, chocolate.a,nd sugar-confectionery (input: sugar factories and refineries), spinnmg and weaving of textiles, and knitting mills. Another problem arises when part q of the inputs into an industry are imported; they are then included in the value of ou'tput. No adjustment for this could be made ... The trend in the manufacture of luxury consumer gaods is given in Table A2. It shows that the share of luxury goc;xlsin total manufacturing has increased from 1965 to 1970 for both output and employment. Output in "furniture and futtures" has grown the fastest. "Beveragl:S" and "T()~a~ manufaCturing" combined amounted to: tWO"thirds of all luxury consumer goods by output in 1970. 37 Table AI: Classification of manufacturing into mass consumer and luxury consumer goods 1970 UTAFITl Old Value Gross NewlSI~ ISIC added output Code Code Industrial activity (Mill. Shs.) (Mill. Shs.) EXPORT 301 201 Slaughtering and meat canning 6.4 56.3 312 . 2093 Tea processing 23.4 72.6 311 2094 Coffee processing 2.3 10.6 310"\. 209S"\. Cashewnut processing and other food 313f 2097J products D.e.c. 26.8 36.3 321 2311 Cotton ginning 12.6 40.4 354 3194 Miscellaneous chemical products n.e.c. 15.9 23.9 Total 87.4 240.1 MASS CONSUMPTION 302 202 Dairy products 2.1 18.7 306 205 Grain mill products 28.3 165.3 307 206 Bakey products 4.8 4.8* 308 207 Sugar factories and refineries 34.0 88.0 309 208 Cocoa, chocolate, and sugar confectiOnery 0.3 0.3* 305 2091 Vegetable and animal oils and fats 5.9 79.7 320 1311 Spinning and weavina of textiles 83.5 83.5. 313 131 Knitting mills 8.3 8.3* 330,358,359 141 Footwear and rubber, plastic products D.e.C. 9.5 27.1 322,315,326 143"\. Mado-up textile goods, wearing 144f apparel, and other textiles, n.e.c. 9.2 9.2 336,337,338 272 Paper and paper products 1.3 4.4 327 291 Tanneries and leather finishing S.l 27.4 353 3193 Soap, perfumes, and cleaning preparations 8.0 23.9 Total 200.3 540.8 LUXURY CONSUMPTION 317 213 Breweries 50.0 66.3 318 214 Soft drinks 2.8 23.1 319 220 Tobacco manufacturing 45.3 94.2 335-371 260 Furniture and Fixtures 26.9 45.9 374-379 360 Non-electrical machinery 13.4 42.9 380-383 370 Electrical machinery 395-389 394"\. Jewellery and other miscellaneous 399f manufacturing 2.5 34.5 Total 140.9 306.8 TOTAL CONSUMER GOODS 1,428.6 1,087.7 n.e.c. not elsewhere classified. *Value added rather than gross output is entered here to avoid doublo-counting of inputs into these industries already listed elsewhere in the table (e.g. Bakeries use JI'8in mill products). SollrCe: Survey of Industrial Production 1970, Tables 18a, 19 and Summary Table UA. 38 UTAFm ° r- ~ I~~N r- - 00 -O-('f""jO\ ..... N tnN -_ "f'''' M r- - 00 00 N _ 0'" 00 8i _ r- N "f' r- ..., ..... V'\oo-"f'''' _ 00 N~N-- - 00 "'''f' 00.. - 00 -- 8i 00 N !; 0.. !; o -'" 8!:: "';.0 _ 00 - -'1. I~-: _ N r- 00 8~ - _ N. ...,r- "";00 _ 00 39 APPENDIX B EMPLOYMENT AND INCOME Table BI shows that the share of employment in the public service sector has slightly risen from 1967 to 1971. In the enterprise sector there has been a pronounced movement of employees from private enterprises to parastatals over that period. Total emplCJlyIllenthas risen quite slowly over the years, as Table Bl shows. The average annual increase amounted to 0.5% from 1963 to 1967, 2.0% from 1967 to 1970, and from 1970 to 1971 it rose by 7.0%. This shows that the rate of increase of employment has been rising, which could be an indication that the economy :is developing rapidly towards balanced growth since it is able to generate a growing number of jobs. There are several factors in the Tanzanian context, however, that would argue against this conclusion. 1. The spectacular rise in one year might not be sustained in subse- quent years; one has to wait for more recent employment figures. According to preliminary estimates of the Bureau of Statistics, employment in all parastatals which have shown the most rapid rise over the years (Table Bl) rose less rapidly in 1972; the increase was 9.4% from 1969 to 1970, 24.5% from 1970 to 1971, and 17.00/0 from 1971 to 1972 (Analysis of Accounts of Parastatals 1966-71, Table 2, revised). 2. The accelerated increase in employment is not paralleled by any significant structural change of the Tanzanian economy away from the dependency relationship. The proportion employed :in produc- tive activities has in fact been falling even up to 1972 (Table 9), which is not a healthy sign. 3. About 20% of total employment consists of casllail workers, and seasonal workers in agriculture are excluded altogether. One, there- fore. has to be cautious in using the published data. For example, regular employment (Le., excluding casual workers) increased by only 1.7% per annum from 1967 to 1970, while the increase in total employment was 2.6% (Statistical Abstract 1970, Table 5.1; Employment and Earnings 1970, Tables 1 and 6). The rise of the proportion employed in non-productive activities is also evident in the parastatals. Table B2 shows that the proportion in industry was about constant from 1966 to 1972, while the decline in agriculture was offset by a corresponding rise in the service sector. In 1972 roughly half the employees were in the industry sector, one quarter in agriculture, and the other quarter in services. Turning now to income. Table B3 shows the average wages for different categories of activities. The average real wage (Le., at constant consumer 40 UTAFITI Table Bl: Employment in the enterprise and service seCtors 1967-71 (Per cent) 1967 1968 1969 1970 1971 Enterprise sector Parastatal n.a. 13.0 14.3 17.2 20.4 Co-operative and nonprofit- making institutions n.a. 6.9 5.6 3.9 3.0 Private enterprise n.a. 40.5 39.1 37.6 35.7 Total 63.6 60.4 59.0 58.7 59.1 Public service sector Central government 23.1 25.1 25.8 25.4 n.a. Local government 8.5 8.9 10.0 10.5 n.a. EAC and EAC bodies 4.8 5.6 5.2 5.4 n.a. 36.4 39.6 41.0 41.3 40.9 All employment Percent 100.0 100.0 100.0 100.0 100.0 Number of employees 346,741 351,711 367,926 375,635 401,912 Index (1963=100) 101.8 103.3 108.1 110.3 118.0 Sources: Economic Survey 1971-72, Table 31. Employment and Earnings 1970, Table 3. Tobie B2: Employment in parastatal enterprises 1966-1972 Sector 1966 1967 1968 1969 1970 1971 1972 Agriculture 37.9 28.5 41.1 46.1 39.7 32.S 23.3 Industry 52.8 45.6 41.0 35.6 36.6 44.7 55.0 Services 9.3 25.9 17.9 18.3 23.7 22.8 21.7 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Tot8l no. of employees 19,890 26,292 34,690 49,925 54,613 61,988 79,540 &wee: Analysis of Accounts of Parastatals 1966-71, Table 2 (1972 filUm are provisional 4] estimates of the Bureau of Statistics). prices) has been steadily rising from 1966 to 1971 at an annual rate of 4.1%. UTAFITI It rose much faster in the enterprise sector than in the public service sector, but still the 1971 average was greater in the public services than in the enter- prise sector. Table B3: Average wages of adult male citizens 1967-71 (Shillines) 1966 1967 1968 1969 1970 1971 Enterprise sector Estate Agriculture 153 162 158 162 179 177 Mining 298 325 360 381 446 523 Manufacturing 293 328 331 351 370 427 Construction 262 306 343 308 307 267 Public utilities 329 335 408 398 464 454 Commerce 408 470 519 448 472 491 Transport and communications 402 472 462 538 469 539 Finance 820 846 835 Services 321 375 369 382 374 398 Total enterprise sector 242 277 298 313 329 376 Total public service sector 298 299 309 314 352 392 GRAND TOTAL 263 286 304 313 340 380 I"dex a/wages (1967=100) at constant 1967 prices Total enterprise sector 100.0 111.6 116.0 120.4 123.1 135.5 Total public service sector 100.0 97.8 97.6 98.1 10'7.0 114.7 GRAND TOTAL 100.0 106.0 108.8 110.0 117.1 126.0 Sources: Economic Survey 1970-71 (Table 29), 1971-72 (Table 34). Statistical Abstract 1970, Tables 5.11 and 5.12. There is a considerable variation among the industries in the enterprise sector. Agriculture had by far the lowest average in 1971 with 177 shillings per month, and finance the highest with 835 shillings. "Transport and com- munication," and "mining" were considerably below it. About one quarter of all employees are engaged in agriculture (Economic Survey 1971-72, Table 29). The figures on average real wages, however, do not reveal the distribution of income. The rise in the national average noted above, from 302 shillings per month at 1971 prices to 380 shiHings could, perhaps, be due to a decisive improvement for the low-wage earners, or it could be the result .of increase at the upper end of the income scale. The income distribution for 1966 .is compared with that for 1971 in Figure B1.24.To adjust for inflation, the 1966 money wage was adjusted to 1971 prices. The comparison is, there- fore, between the 1966 real wage and the 1971 money wage. 42 UTAFITI APPENDIX C Table Cl : Production and export of main cash crops 1962-72. (Excludes exports to Kenya and Uganda) 1962 1967 1968 1969 1970 1971 1972 Quantity, thousand tons Coffee: Total marketed 27 40 52 46 50 46 51 Exported (unroasted) 26 45 48 49 45 35 55 Cotton: Total marketed 38 11 51 69 76 66 n.a. Exported 33 61 63 58 61 55 64 Sisal: Total marketed 214 220 197 209 202 181 157 Exported 223 204 189 172 217 161 153 Cashewnuts : Total marketed 55 77 117 115 III 126 n.a. Exported 60 11 80 82 77 96 113 Tea: Total marketed 4 7 8 9 9 11 13 Exported 4 6 6 8 7 8 9 Tobacco: Total marketed 2 8 7 12 11 12 13 Exported (unmanufactured) 4 5 5 6 5 6 Value of exports, million Shs. Coffee 132 237 265 257 312 227 383 Cotton 148 251 283 235 247 245 336 Sisal 315 201 159 160 179 134 145 Cashewnuts 47 92 107 119 115 120 150 Tea 32 43 45 48 42 49 54 Tobacco 2 34 40 35 45 43 49 Total of six crops 676 858 899 854 940 818 1,117 Total of all exports, , million shillings 1,076 1,645 1,585 1,667 1,689 1,735 2,036 Sources: Economic Survey 1971-72, Tables 11, 18 and 48-52. Statistical Abstract 1970, Table 0.1. Quarterly Statistical Bulletin, September 1973. 43 FOOTNOTES UrAFITI I. A good portion of unproductive expenditure is made to ensure the long-term survival and expansion of monopoly capitalism. Under this category fall many of the state expenditures and private "philanthropic" contributions in the follow- ing fields: military, police, education. propaganda and entertainment, research. various subsidies, unemployment compensation, foreign aid, population control, etc. 2. The page references arc to be the original French text L'ammumulatioll tl /'echclle mondiale (1970). An English translation has recently been published (see list of references). 3. The argument that certain essential raw materials are only available in some underdeveloped countries and not at the centre has not much validity. It is the cheap labour cost which makes it worthwhile to extract the raw materials. Should these costs rise-as happened recently with petroleum in the Middle East-the advanced capitalist countries have the capacity to search for raw deposits and to develop substitute products. 4. This exercise has also been carried out for Tanzania by Henin, Mogil, and Westdahl (1973). A much cruder piece is the pamphlet on Tanzania by the International Planned Parenthood Federation (1970). 5. Consists of wholesale and retail trade, restaurants and hotels, transport and com- munications, finance and business services, and public administration. 6. See also the discussion on the role of the petty bourgeoisie in Shivji, 1973. 7. Mining can be neglected since it contributes only 3% of the value added in the agriculture sector. 8. The average proportion of quantity exported to quantity produced from 1962 to 1972 is as follows: coffee 97%, cotton 89%, sisal 96%, cashewnuts 76%, tea 80%, and tobacce 56%. (See Appendix C). 9. In 1970 the combined value added in the production of agricultural insecticides and fertilisers was only 10.6 million shillings, that of cordage and ropes 52.6 million shillings (Survey of Industrial Production 1970, Table 15). In addition a considerable quantity of insecticides and fertilisers was imported. 10. That is the making of iron, steel and other metals. II. Source: N.D.C. 1970, and Survey of Industrial Production 1970, (Summary Table IIA). Tho}sale of UFI were up to 5.5 million shillings in ]972 (NDC ]972) The Steel Rolling Mills Limited in Tanga is not included because it produces mainly for the construction industry. 12. The value added of manufactured export goods was 87 million shillings in ]970, which constitutes only 8% of the estimated producer value of total exports (Table 6), the remainder coming from agriculture and mining-the primary sector. 13. A comparison of the value of imports with domestic production is of some interest. Imported consumer goods amounted to 682 million shillings, 240 of which were for TAZARA (Economic Survey 1970-71). It can be assumed that the majority of consumer goods imports are in the form of luxury goods. ]4. This compares with 4,363 million shillings value added in the productive indus- tries as a whole (as distinct from the monetary surplus-generating part), and with 3,232 million shillings of total GDP in 1970. (Economic Survey ]971.72, Table I). 15. Their composition is as follows. Agriculture (Primary Sector): agriculture, hunting fishing, forestry, and mining. Industry (Secondary Sector): manufacturing (includ- ing handicrafts), electricity and water supply, construction. Services (Tertiary Sector): wholesale and retail trade, restaurants and hotels, transport and communication, finance and business services, public administration. The national accounts of capitalist countries list the activities in all three sectors regardless of ,44 UTAFITI whether they are productive activities-in the sense of exploiting nature for man's benefit-or not. 16. See, for example, the detailed structural analysis of developed and underdeveloped countries made by the patriarch of U.S. national accounting, Simon Kuznets (1971). 17. This appears to be the best available price index for the country as a whole. In spite of certain local variation in prices, the purchasing power of the peasantry has to be measured in the first instance against prices prevailing in Dar es Salaam and ultimately against the international market, due to Tanzania's dependency relationship. This consumer index is also used by the Central Statistical Bureau to adjust the value added of certain items for constant prices. (National ACCounts of Tanzania 1964-1970, p. 8); 18. See, for examples, Yoshida (1972), Angwazi and Ndulu (1973), and von Freyhold (1973). 19. The actual output in 1971 fell considerably short of the Second Five-Year Plan target for all six principal export crops. (Economic Survey 1971-72). 20. Many of these building serve, however, non-productive purposes, e.g., those of the University. On the other hand, all government buildings were excluded, although some of them are used for productive activities. Overall, the percentages shown are probably too high. 21. By far the largest item, however, was dry batteries, making up 60% of all manufactured machinery. 22. National Accounts of Tanzania 1964-70, and preliminary estimates by the Bureau of Statistics. 23. At least this was the case before the price increase in .oar es Salaam from 80 cents to 1 shilling per half litre of regular milk. 24. The graphs were arrived at by connecting points which are determined by the half-way mark for each salary interval plotted on the horizontal axis, and the per cent of wage earners in that interval on the vertical axis. This system was preferred over a histogram for the sake of a better visual comparison. REFERENCES AMIN, SAMIR, "Accumulation and Development: A Theoretical Model", Review of African Political Economy, Vol. 1. (1974a). ---, "Modes of Production and Social Formations", UFAHAMU (1974 b). ---, "Under-Populated Africa", Maji Maji 6, 1972. ----, L'accumulatioll a I' echelle mondiale (IFAN Anthropos, Paris, 1970). Recently published in English a:; Accumulation on a World Scale (Monthly Review, New York, 1974). The page references in the text are for the French Edition. ANGWAZI, J., and B. N.oULU, "An Evaluation of Ujamaa Villages in the Rufiji Area 1968-1972", East Africa Universities Social Science Conference, .oar es Salaam, December, 1973. BARAN, P., The Political Economy of Growth {penguin 1973, .first published 1957). BIENEFELD, M.A. and R.H. SABOT, "The National Urban Mobility, Employment and Income Survey of Tanzania", (3 Vols., Economic Research Bureau, University oD .oar es Salaam, 1972). EGERO, B. and R. HENIN (ed.), The Population of Tanzania. An Analysis of the 1967 Census, Vol. 6 (Statistical Bureau, 1973). FRANK, A.G., Capitalism and Underdevelopment in Latin America (Penguin 1971, first published 1969). HENIN, R.A., N. MOGIL and C. WESTDAHL, "Population Growth and Some 45 Aspects of Economic and Social Development in Tanzania", Proceedings of the ILO National SemiRar on Workers' Education, Population Change and Family UTAPITI Planning, Mwanza (Tanzania), 10-17 March' 1973. INTERNATIONAL PLANNED PARENTHOOD FEDERATION, The People of Tanzania (Nairobi, 1970). JALEE, P., The Pillage of the Third World (Monthly Review, New York, 1968). KUZNETS, S., Economic Growth of Nations (Harvard University, Cambridge, Massachusetts, 1971). NATIONAL DEVELOPMENT CORPORATION (NDC) , Annual Report 1970, 1972 (Oar es Salaam). RODNEY, W., How Europe Underdel'eloped Africa (Bogle-L'Ouverture, London and Tanzania Publishing House, Dar es Salaam, 1972). RWEYEMAMU, J., Underdevelopment and Industrialization in Tanzania (Oxford University Press, 1973). SHIVJI, I., "Class Struggles in Tanzania" (mimeo, University of Dar es Salaam, 1974, to be published by Heineman). ---, et aI., The Silent Class Struggle (Tanzania Publishing House, 1973). THOMAS, CLIVE Y., Dependence and Transformation; The Economics of the Transi- sion to Socialism (Monthly Review, New York, 1974). ---, "The Transition to Socialism: Issues of Economic Strategy in Tanzania Type Economies" (ERB seminar paper, University of Dar cs Salaam, 1972). UNITED REPUBLIC OF TANZANIA, Analysis of Accounts of Paraatatals 1967-1971. ---, Economic Survey 1970-71. ---, Economic Survey 1971-72. ---, Input-Output Table for Tanzania 1969. ----, National Accounts of Tanzania 1964-1970. ----, Quarterly Statistical Bulletin, September 1973. ---, Statistical Abstract 1966. ---, Statistical Abstract 1970. Survey of Employment and Earnings 1970. ---, Survey of Industrial Production 1970. YON FREYHOLD, M., "Rural Development Through Ujamaa Vijijini" (Mimeo, University of Oar es Salaam, 1973). YOSHIDA, M., "Agricultural Survey of the Lower Rufiji Plain" (BRALUP Seminar Paper, University of Oar es Salaam, 1972). 46