Uses, abuses of monopolies
As a preamble to the subject, let us first linger on three anecdotes. Recently, someone telephoned me from one of the smaller radio stations and asked me what advice I would give to policy makers about the World Health Organisation’s (WHO) impending ban of tobacco sales in the world markets. My reply was that the policy makers have already chosen advisers on economic and other social issues.
Besides, during the past two or three decades, a number of people have been writing on the future of tobacco exports. Whether the policy markets have been taking note of the view of such freelance advisers, I do not know.
As our ancestors used to say, whatever happens or comes here will affect us all. This is the case when at last all markets for our tobacco are closed. Bearing this in mind, we cannot say to the policy market and their advisers ‘shauri yako’ it is our problem, because it is potentially a problem for us all.
My advice would go not direct to the policy makers but to their advisers. It is simply this, read every article on important issues like the future of tobacco. The contributors may have no credentials to give weight to their ideas such as professor or doctor of philosophy, yet they may be sources of a breakthrough.
We read of how Dr Edward Jenner, the 18th century inventor of smallpox vaccine. He heard milk maids saying people who catch smallpox never catch smallpox. Jenner’s investigation into this led to the discovery that wiped smallpox epidemic from the earth.
Galilee, the 16th and 17th century Italian astronomer heard of someone who had a glass instrument that enabled one to see distant objects. He pursued the idea, invented the telescope, the science of astronomy developed to the extent that later man landed on moon.
I have never fully pardoned myself for the day I used to scoff at simple villagers whom I heard say when you have malaria, do not go to sing’anga (herbalist) because his medicine has sukuluka (lost potency). I used to say if that person’s herbs used to cure in the past, why should they fail now, you lie. Those people would swear that they were telling the truth.
Twenty years later, I began to read in respectable magazines on health and disease that quinine, the wonder drug for curing malaria, was no longer effective because malaria had developed drug resistance and scientists were now searching for a new remedy.
I put my head between my hands and sighed. This is what those simple people were saying, that malaria had developed resistance to their traditional doctor’s concoction. Great inventors and geniuses built their achievements by observing what ordinary people did and said.
Malawians are tired of continuously hearing that their country is dirty, poor and has no future. They are on the lookout for men and women who can raise candle lights, point the way to wealth and welfare.
Now to the next point, this is the role of monopolies in an economy. A monopoly is a single seller of a product or a unique product. The monopolist is disliked because he or she is said to limit the production of a commodity or what he or she brings to the market so as to keep the price well above what it would be in a competitive market. In other words, a monopoly overcharges poor people.
Great economists like Joseph Schumpeter and John Galbraith, both naturalised Americans, attributed to monopolies advances in technology. They said the big profit they make enable monopolies to engage in research and development. Another economist, Sir John Hicks, Nobel Prize laureate, said monopolies have no motivation to engage in technological development. The debate is inconclusive.
As to our home experience when Admarc had the monopoly of buying smallholder cash crops, it used to accumulate large sums, which it later loaned to other organisations or bought shares in other companies. Admarc was no burden on the Ministry of Finance. We learn from the Far East that the ability to save at least 20 percent of what they earn is one of the secrets of the newly industrialised nations.
