Journal of Znternational Development: Vol. 8, No.

4, 553-573 (1996)

NATIONAL POVERTY AND THE

‘VAMPIRE STATE’ IN GHANA: A
REVIEW ARTICLE
GARETH AUSTIN
Department of Economic History, London School of Economics, Houghton Street, London,
WC2A 2AE

Abstract: The appearance of the first two syntheses of the literature on the economic
failure of ‘statist’ policies in post-colonial Ghana, to 1983, and the subsequent economic
liberalization, is an opportune moment at which to consider the state of the debate
about the political economy of the country since independence. This has focused on
the nature of the socially optimum combination of administrative and market methods
of resource allocation in this ‘test-case’ economy, and about the political conditions
which largely determine the extent to which it is achieved. Explicitly or implicitly, both
Frimpong-Ansah’s (1991) and Rimmer’s (1992) books combine the twin traditions of
rational choice thought that have been dominant in recent years in the literature on
African economic development, market economics and ‘new’ institutionalist political
economy. The paper considers, in turn, the economics and politics of Ghana’s econ-
omic decline and partial revival. It suggests that, while there is a consensus that ‘state
failure’ was the main cause of Ghana’s decline in relation to similarly endowed countries,
1950-83, the question of how far and in what respects the state should retreat from
administrative control of resource allocation remains relatively open. For example,
while the inconvertibility of the currency seems to have been irredeemably disastrous,
the much criticized marketing board system may yet prove worthy of reform rather
than abolition. There is also a consensus that the prolongation of what, for the
economy as a whole, were disastrously counterproductive policies was to a great
extent the result of the subordination of the public interest in economic growth to
the sectional and personal interests of governments and their members. However, the
paper argues that it is necessary to revise such explanations to take account of two
surprisingly neglected points: (a) that economic growth in itself is a major political
asset to governments in Africa as elsewhere and (b) that economic decline (as in
Ghana 1975-83) requires more explanation than economic stagnation (as in Ghana
1950-75).

1 INTRODUCTION
If Ghana’s pursuit of state-led economic development up to 1983 became ‘a model
of how not to develop’ [Roemer, 1984, p. 202 (his emphasis)], the country’s
subsequent economic liberalization has aroused similar international interest, this

CCC 0954-1748/96/040553-21
01996 by John Wiley & Sons, Ltd.
 554 G . Allstin

time as a test of whether a market-based strategy can do better. Frimpong-Ansah

(1991) and Rimmer (1992) provide full-length examinations of the dCbdcle and of
the beginnings of the recovery programme, and have sought to place the course of
economic policy firmly in its political context. Both books combine, explicitly or
implicitly, the twin traditions of rational choice thought that were dominant in the
1980s in the literature on African economic development and which, despite some
revival of criticism (Toye, 1993), remain so today: market economics and ‘new
institutionalist’ political economy. Although many of the points they make have
been discussed before in the literature on Ghana,’ the appearance of their
overviews is an important event, both in itself and because it demands reflection
on the state of the debate about Ghana’s post-colonial economic history. Arguably,
the debate has always focused on the economics and politics of the roles of adminis-
trative and market mechanisms of resource allocation. This essay will consider in
turn the economic and political dimensions of the subject, starting from the
accounts given in these books. But, first, it may be useful to recall the outline of the
story.
With the achievement of internal self-government (in stages, 1951 and 1954) and
independence (1957), the first post-colonial state in sub-Saharan Africa2 seemed
to have good prospects for developing further from its position as the world’s
largest producer of cocoa, with foreign exchange and revenue reserves to match.
President Nkrumah’s ‘big push’ of 1961-66, an attempt by means of planning to
achieve an industrial base, a welfare state and economic independence, excited
political radicals and development economistsaround the world as putting theoretical
prescriptions into practice. Nkrumah’s economic failure, leading to his overthrow
by military coup in 1966, disappointed not only Ghanaians but his former admirers
overseas -a feeling captured in the title of Fitch and Oppenheimer’s remarkable
instant history, Ghana: End ofan Illusion (1966). The military regime of 1966-69,
headed by the National Liberation Council (NLC), and Prime Minister Busia’s
civilian government of 1969-72 slightly shifted the balance back from administra-
tive to market mechanisms of resource allocation, but Colonel Acheampong’s
military coup in turn reversed their modest liberalization. Under Acheampong
(1972-78) economic stagnation turned into a free fall, which continued until 1983
under a succession of regimes: Akuffo’s reshuffled military government of 1978-
79, Flight-Lieutenant Rawlings’s ‘house-cleaning’ operation in 1979, President
Limann’s civilian administration of 1979-81 and Rawlings’s second government
following the coup of 31 December 1981. Rawlings took power again determined
to make the economic controls work by enforcing them honestly and strictly, while
seeking economic assistance from communist countries. This self-proclaimed revo-
lutionary regime was seen by its supporters and sympathizers at home and abroad
as another important experiment, though this time more in non-parliamentary,
grass-roots democracy rather than in applied economics. Unlike in 1966, this time
the leader himself concluded that his anti-market policies were unrealistic. By the

Besides the many studies of particular parts of the subject, and summary essays on the whole, Huq
(1989) stands out as the first full-length discussion of the period of decline. Unlike the books under
review, however, Huq’s does not deal with the political context or with the economic recovery pro-

: :?: ’Society. one counts Liberia, which before 1847 was a colony of the private American Colonization
 National Poverty and the ‘Vampire State’ in Ghana 555

end of 1982 Rawlings had not only accepted the advice of those members of his
government who wanted a U-turn, but was well on the way to defeating, militarily
and politically, others who opposed it (Hansen, 1991, pp. 91-129). Implementation
of the new policy began with the April 1983 budget and has been sustained since,
with assistance from the International Monetary Fund and the World Bank. For
the Bretton Woods institutions, if Ghana’s economic decline to 1983 epitomized
the disastrous effects of the drastic departures from market forces in many post-
colonial states, Ghana’s subsequent ‘structural adjustment’ has provided the hope
of a demonstration of the virtues of economic liberalization. Like Nkrumah in his
day, Rawlings is seen as putting into practice the current conventional wisdom.

2 ECONOMIC POLICY: BACK TO LEWIS

Both Frimpong-Ansah and Rimmer are economists with long personal histories in
this subject. As Deputy Governor or Governor of the Bank of Ghana under four
regimes until he was retired by Acheampong in 1973, Frimpong-Ansah seems to
have been one of the few ‘no-men’ at the centre of policy-making, repeatedly
warning the rulers of the dangers of fiscal and monetary profligacy. To him fell the
difficult duty of telling Nkrumah in 1965 that Ghana’s foreign exchange reserves
were almost e x h a u ~ t e dMeanwhile,
.~ Rimmer had been lecturing at the University
of Ghana, where he was a critic of ‘statist’ development policies well before this
became a fashionable position.
The books differ in style. Rimmer’s is an analytical narrative of economic events
in their political contexts, paying particular attention to the effect of macroeconomic
failure in deepening the plight of the poor, however defined. Whether or not
growth would have trickled down, on the whole decline certainly did. Frimpong-
Ansah gives less detail on the main story but offers additional features: he relates
post-colonial experience to the economic structures and development ideas of the
later colonial period, and gives an econometric analysis of Ghanaian cocoa output
in the long run. Both books are written clearly, and in both the text is interlinked
with a mass of statistics, conveniently assembled for the reader from various
sources. While Frimpong-Ansah gives some results from his own econometric
work, Rimmer provides a close, critical, reading of the official numbers.
Their analyses have much in common. Both reject external influences as a major
cause of the post-colonial disappointments and disasters. They argue that Ghanaian
policies were not dictated from outside, that direct foreign investment was declin-
ing (see, further, Price, 1984, p. 179), that debt service charges were never a big
problem and that, while the barter terms of trade fluctuated greatly during the
period, there was no adverse trend. Rimmer notes that, by 1982, while Rawlings’s
far left supporters advocated delinking from the international capitalist economy,
this had already substantially happened. According to World Bank estimates, since
1970 the share of exports in GDP had shrunk from 21 per cent to 4 per cent. Both
authors place the blame for the economic failures of 1950-83 on excessive govern-
ment intervention, especially Nkrumah’s radical shift of the balance between mar-
ket and administrative mechanisms of resource allocation in favour of the latter; on

As he related in an interview in the BBC film Pandoru’s Box: Black Power, broadcast in Britain on
BBC2,26 August 1993.
556 G. Austin

the fact that, as Killick (1978, pp. 299-327) showed, Nkrumah’s victorious oppo-
nents did little to shift the balance back; and, finally, on the intensification of fiscal
irresponsibility and government regulation from 1972 until 1983. Rimmer identifies
two particular sets of interventionist policies as the principal culprits. One was a
colonial legacy, the Cocoa Marketing Board, with its statutory export monopoly.
The institution was created as a wartime expedient in 1939, under another name,
and its tax-raising function was reinforced by Nkrumah in 1954, when the govern-
ment responded to a sharp rise in the world price of cocoa by legislating to freeze
the producer price at the existing level for 4 years. It sought to justify this measure
as counter-inflationary, but, as Rimmer shows, ‘The real issue was not whether
purchasing power should be allowed to expand but who should have the use of it’
(p. 60). The effects of the marketing board pricing policies in reducing the incen-
tives to producers were famously attacked by P. T. Bauer in the early 1950s (most
fully in Bauer, 1954), and Rimmer brings the story up to date. This issue will be
mentioned again below. Rimer’s other offender is the autonomous monetary
system, created by Nkrumah, whose printing of money produced both domestic
inflation and an overvalued, inconvertible currency.
Both authors agree on the main effects of the policies. Nkrumah’s mobilization
of foreign and especially public finance achieved only the ‘paradox of investment
without growth’ (Rimmer, p. 84, quoting Ahmad, 1970, p. 112), and Frimpong-
Ansah notes that the same happened again, on a smaller scale, under Acheampong.
Estimating output per head is made more complicated by the changing size and
direction of net migration during the period, but Rimmer concludes that real GDP
seems to have grown slightly faster than population in the 1 9 5 0 ~slower
,~ than it in
the 196Os, and then to have fallen sharply in the 1970s. By 1974 GDP per head was
barely higher than it had been in 1950, and it proceeded to fall by nearly 40 per cent
between 1974 and 1983 (Stryker et al., 1990, Table 2: cf. Rimmer, p. 5).’ It should
be noted, and with more emphasis than is given to the point in either book, that
such data, like those for the share of exports in GDP quoted above, may well
exaggerate the decline by not allowing sufficiently for the growth in unenumerated
activity. But abundant eyewitness evidence could be called to confirm the direction
and approximate scale of the changes suggested by the figures. Net emigration was
perhaps the most reliable indicator of the welfare effects of government policies. A
net inflow to Ghana during the 1950s was reversed in the 1960%partly because of
Busia’s expulsion of aliens without proper papers. Between 1974 and 1983 more
than two million Ghanaians seem to have left. Meanwhile, as Rimmer observes,
the economic structure was regressing with the previous trends towards occupatio-
nal differentiation and commercialization being reversed or sidetracked, as more
people shifted more of their economic activities into parallel markets and own-
account production. Finally, the government itself shared in the economic collapse.
The tax base crumbled: government revenue as a share of the shrinking GDP is
itself estimated to have fallen from 17.3 per cent in 1974 to 6.1 per cent in 1982
( R i m e r , p. 207), partly because of the spread of parallel markets.

This is a cautious finding, since real GDP data for the 1950s are discontinuous (Rimmer, p. 59). An
alternative set of estimates suggests a slight decline (Stryker et al., 1990, Table 2).
’ Rimmer’s conclusions from the same source are slightly different: the 1W4 figure being ‘no higher’
than the 1950, though Stryker et al. give them, in 1975 cedis, as 635 and 602 cedis respectively.
 National Poverty and the ‘Vampire State’ in Ghana 557

Both authors clearly regard the Ghanaian experience since 1950 as evidence that
the state is less efficient than the market as the principal institution for allocating
resources in economies that share Ghana’s general features such as relatively small
size (to which Rimmer, though not Frimpong-Ansah, would add a not especially
favourable resource endowment), low average income by world though not African
standards and possession of an existing comparative advantage in primary export
production. Both find it significant, for example, that savings in Ghana have come
largely from the primary sector during periods when world prices have been
relatively high and producers have been allowed much of the direct benefit. Forced
savings through explicit or implicit taxation have been used inefficiently, while
foreign investment has been relatively small. ‘Ghanaian economic history shows a
casual relationship from rising income to increased investment, rather than the
other way round’ (Rimmer, p. 216). Frimpong-Ansah emphasizes that government
must be active, but in a modest way, specifically concentrating on infrastructure
building, especially to stimulate higher productivity in food farming by reducing the
physical fragmentation of the food-growers’ market. In this respect he calls for a
return to the priorities set out by W. A. Lewis in his 1953 report on prospects for
industrialization in Ghana. It is worth noting that the same call has been made by
Professor Boahen (Boahen, 1989, pp. 71-72), who, representing the Busia tradi-
tion, was Rawlings’s principal challenger in the 1992 presidential elections. In view
of Dr Frimpong-Ansah’s strictures about Nkrumah’s policies, it may surprise readers
that he himself played an important role in one of the Nkrumahist parties that also
contested that election. But the point is that a consensus has emerged across most
of the Ghanaian political spectrum that the role of the state in the economy in
1961-83 was excessive (cf. Jeffries and Thomas, 1993, pp. 344, 346, 348, 360;
Nugent 1993, p. 34), even though the government’s critics argue, for example, that
it and its Washington-based partners have not given enough attention to encouraging
agricultural production for domestic rather than export markets.
Both authors put their economic cases carefully and persuasively. However, I
would point to four areas of unfinished business: the identification of the precise
mechanism of ‘government failure’: the significance of the long if uneven previous
history of Ghanaian economic growth for our understanding of the period of
decline; the nature and possible developmental implications of popular adaptations
to economic crisis; and the non-monetary costs of certain interventionist economic
policies.
If it is agreed that state intervention had assumed parasitic form by 1983, the
question is how far ‘rolling it back’ should proceed. For example, both books
contain plenty of evidence of the damage done by the marketing board to the cocoa
industry. On the other hand, both also contain evidence that could be used to argue
that the real mortal enemy of Ghanaian cocoa farming was the overvalued, incon-
vertible currency. Ghana’s cocoa output peaked in 1964-65, a quarter of a century
after the introduction of the state export monopoly. The timing of the subsequent
slackening in recorded and, undoubtedly though to a lesser extent, also in actual
output can be explained more easily by the introduction of an overvalued, incon-
vertible currency, in stages between 1961 and 1965. Further, the transition from
slackening to sharp decline in cocoa production after 1975 coincided with or
followed closely upon the start of a steep rise in the degree of overvaluation (see
tables in Rimmer, 150, 209; and in Frimpong-Ansah, 165). Indeed, in the early
558 G. Austin

1980s at the official exchange rate the producer price offered by the Ghana Cocoa
Marketing Board was generous by comparison with that available in neighbouring
CBte d’Ivoire and Togo, to which part of the Ghanaian crop was smuggled. In the
1980s Ivoirean cocoa output climbed beyond that ever achieved in Ghana, despite
the Ivoirean state also having a statutory monopoly of cocoa exports (see Crook,
1988, p. 132). Rimmer’s conclusion that ‘the Cocoa Marketing Board can be
recognised as central in the economic pathology of Ghana’ (p. 205) is true in the
sense that its existence was a necessary condition of the economic disaster: in that
the board’s explicit and implicit taxation of the farmers provided the framework for
the politicization of economic life, that is, the creation of a political economy in
which individuals’ chances of wealth were primarily a function of their political
relationships. But it was far from being a sufficient condition. Under the economic
recovery programme the board has been reformed (under the new name of the
Ghana Cocoa Board) rather than abolished. The changes include the elimination of
ghost-manning, drastic reductions in the ‘living’ staff and preparations for the
privatization of cocoa buying. Above all, the government and the board have
adopted the policy principle that in determining how much of the world price, net
of genuine marketing costs, is passed on to the producers, priority should be given
to the need to maintain incentives to the farmers, rather than, as under Nkrumah
and his successors, giving priority to the (immediate) demands of public finance
(Arhin, 1993).6 Though the marketing board was undoubtedly a cause of Ghana’s
economic decline, it is possible that, in a different policy setting, it could be part of
the solution. This illustrates a crucial point about ‘structural adjustment’ in Africa:
that the most socially efficient reaction against the socially inefficient ‘statism’ of
the first quarter-century since independence is not necessarily to minimize the sue
and role of the state in the economy, but rather to seek to ensure that the state does
those things in which is has a comparative advantage and not those in which it has
a comparative disadvantage.
The next point is one of perspective. Poor as Ghana was in 1951 and in 1983,
neither was an economic ‘year zero’, In particular contexts Frimpong-Ansah recog-
nizes this, but elsewhere he obscures it by defining the task facing Ghana at
decolonization and since as ‘ab initio development’. Use of this ahistorical concept
hides the structural change as well as economic growth which had occurred in the
economies of what is now Ghana not only during the colonial period, but also in the
nineteenth century following the ending of slave exports. Indeed, such simplistic
dismissals of previous economic history have been challenged in other historical
contexts in order to get a better sense of what is and is not empirically meaningful
about, for example, Lewis’s famous model (Arrighi, 1970).’ For the post-colonial
period it is important to emphasize a point noted in both books, that there were
social gains amidst the waste, notably the investments in public health, education

Admittedly, in the 1981-82 crop year the nominal producer price was actually above the world price
(net of marketing costs, which, albeit, were inflated by overstaffing and corruption). But domestic
inflation and currency overvaluation at the time were so extreme that the incentive effect on cocoa
producers was minimal. See Rimmer (pp. 151-52, 157) and, further, Stryker ef al. (1990, pp. 74, 89,
99-102).
’ A constructive discussion of this issue, focused on Ghana, is to be found in Herbst (1993, Ch. 6).
sThis is clear from works cited by Frimpong-An&, such as Hancock (1942), Hill (196% and
Szereszewski (1965), as well as from more recent work starting with hop kin^ (1973).
For further analysis of the substantive issues in that case, see Mosley (1983).
 National Poverty and the ‘Vampire State’ in Ghana 559

and transport, though by 1983these were tarnished by recent net disinvestment and
emigration of staff. Indeed, research largely published too late for Rimmer and
Frimpong-Ansah to take into account suggests that the gains went slightly further.
It seems that the numbers of people engaged at least part-time in the urban
informal sector expanded during the 1970s and early 1980s as earnings in cocoa
farming and the urban formal sector declined, For example, the numbers of motor
repair workshops increased. The import famine itself provided demand since it
meant that damaged vehicles could not be replaced and therefore had to be
repaired ‘by all means’, as Ghanaians say. Clearly, such desperate improvizations
do not in themselves represent ‘growth from below’ (Ninsin, 1991, pp. 56-58;
compare Kennedy, 1981). But certain branches of small-scale industry, notably the
vehicle repair and related engineering workshops of Suame Magazine in Kumasi,
responded so effectively to demand in the 1970s and early 1980s that they accumu-
lated profits, reinvested, progressively improved their technical capacities, and in
most parts of their market have successfully resisted the renewed competition from
imports since 1983 (see, especially, Dawson, 1991).”
The advances in Suame industry so far are small by comparison with the cocoa
‘take-off of c. 1890-1930, but they have in common the fact that they were largely
the result of private indigenous entrepreneurship. l1 Indeed, Frimpong-Ansah
overstates the contribution of the colonial government to the coma boom, both in
general and specifically with regard to the role of development planning. In
particular, he is mistaken in believing that the government bought all cocoa before
1902.l2 Again, while he has an interesting discussion of the development plan
introduced by the most interventionist colonial governor, Guggisberg, in the 1920%
he exaggerates the impact of the infrastructural investments made under the plan.
The ‘almost perfect’ match between the rates of increase in rail and road miles and
in the value of exports in 1920-28 (Frimpong-Ansah, pp. 21,60) is spurious, since
the annual volume of gold exports slumped during the period while the increase in
cocoa tonnages is accounted for overwhelmingly by the maturation of trees already
planted.13 If further planting in the 1920s was stimulated by transport improve-
ments, the most important of the latter was probably the proliferation of light
lorries operated by Africans, despite government attempts to divert traffic to the
railways (Hill, 1963, pp. 234-238; Hymer, 1971, pp. 158-162). But even if
Frimpong-Ansah underestimates the achievements of indigenous entrepreneur-
ship, both authors agree that they were considerable. The more recent develop-
ments in Kumasi underline the argument that the most fundamental task of
development policy in Ghana is to provide a framework which will encourage

lo See also Elleithy’s study of carpentry firms in Kumasi (Elleithy, 1992).

l1 In the Suame case the Technology Consultancy Centre of the University of Science and Technology,
.
Kumasi, had ‘a significant impact’ though ‘the number of firms affected was . . quite limited‘ (Dawson,
1991, p. 204).
l2 A convenient reference is Kimble (1%3, p. 34).
13For figures see Kay (1972, p. 336). The variety of cocoa which was planted during the period,
Amelonado, often took roughly 5 years before trees began to bear, and usually another 10 or more to
reach maximum yield (Austin, 1984, pp. 389-392). Nor did Guggisberg introduce taxation of exports
(Frimpong-Ansah, p. 58): it was begun by his predecessor,during the world war. Incidentally, the table
on p. 21 is internally inconsistent and contains errors in transcribing from the original source. Also, the
Asante-British wars ended not in 1903 (pp. 3,7)but in 1900. Finally, the statement that cassava ‘is not a
staple food’ in the forest zone (p. 121) has increasingly ceased to be true for various reasons (see,for
example, Austin, 1984, pp. 430-431; Dei, 1992, p. 65). .
560 G. Austin

socially beneficial private entrepreneurship. This is not to suggest a mere reversion

to the institutions of the colonial period. For example, if the real incomes of a large
part of the population recover towards the levels enjoyed by the better-off cocoa
farmers in the 1950s, this would raise the prospect of private savings recovering to
the relatively high rates of that period (Ingham, 1972). In turn, this would increase
the urgency of overcoming an institutional bottleneck, which arguably hindered
productive diversification during that decade of high cocoa prices: the imperfec-
tions in the capital market which hinder the private pooling of small savings and
their channelling into investments outside the sector in which the original income
was generated, including, where appropriate, into larger enterprises than most self-
employed, unsubsidized, Ghanaians currently operate.
The policies which created the generally catastrophic economic decline of 1975-
83 are well discussed in both books. What they leave to be examined in detail is
what felt at the time like a Ghanaian economic miracle-how people got by.
Rimmer identifies a general pattern: the search for multiple sources of income,
whether in cash or kind, as well as for administratively generated rents.14 Co-
incidently, the results of a small wave of systematic research on this issue have
appeared at the same time as these two books. l5 As noted above, part of this is on
small-scale industry, but some of it concerns how villagers adapted to economic
drought (Nugent, 1991; Dei, 1992). As with the urban studies, the question arises
of whether any of the rural adaptations had or have the potential to be more than
emergency expedients, and actually contribute to future development.
Relatedly, reading Rimmer and Frimpong-Ansah provides a powerful reminder
of the economic reasons why, whatever one’s views on the potential contribution of
the state to economic development in Ghana, economic liberalization was essential
in 1983. But, perhaps because they write as if from the policy-maker’s office, they
neglect to mention the day-to-day oppression inflicted on the public by intrusive
economic controls and rent-seeking officialdom. For example, the word ‘barrier’,
as in road block, does not appear in either account. Yet, like the government
offices to which citizens seeking official documents or assistance had regularly to
‘come back tomorrow’, preferably with a ‘dash’ (a tip or a bribe), the road barrier
was at the front line of the ‘vampire state’s’ interaction with the public in the late
1970s and early 1980s. Vehicles, especially privately owned passenger lomes and
buses, would be stopped every few miles and their occupants subjected to delay
and, in the case of drivers and traders, often extortion and sometimes arrest and/or
‘a few slaps’. During those years the state delivered less and less public service
while disregarding the costs in time, humiliation and irritation that it imposed on
the population. Though such costs were not new in 1975 (LeVine, 1975, p. 38), and
have by no means been eliminated since 1983, as of late 1992 it was clear that
substantial non-monetary ‘savings’ have been achieved in these respects since 1983.
Similarly, while transport fares have risen since then, we must also note that the
enormous increase in the number of passenger vehicles on the road has greatly
reduced the time spent in waiting for public transport, even if in the cities -though

l4 Administrativelygenerated rent in the sense of ‘a value in excess of the market value which has been
created by an administratively generated fixity in the supply of a commodity’ (Bates, 1981, p. 99).
l5 The standard early account was Chazan (1983, pp. 191-203), to which both authors refer and which
remains indispensable.
 National Poverry and the ‘VampireState’ in Ghana 561

not elsewhere -the delays once caused by frequent barriers are now partly repli-
cated by traffic jams.

3 THE POLITICS OF ECONOMIC FAILURE

Why were these self-defeating state interventions in economic life maintained for
so long in spite of accumulating evidence of their failure? Conversely, we need to
ask also what it was that finally led the state to change course in 1983, and what
hints may be drawn from previous experience about the political stability of the
economic liberalization programme. Rimmer and Frimpong-Ansah address these
questions, directly or indirectly, through a combination of analytical narrative and
the implicit or explicit formulation of theoretical models. R i m e r ’ s narrative is the
fuller of the two, and it is informed, cogent and concise. Frimpong-Ansah’s is at its
best with an especially well-informed and incisive discussion of Busia’s reluctance
to bring about a fundamental restoration of market forces. Here he uses internal
government documents as well as his own memories. He shows how Busia was
constrained by fear of urban discontent and by the continued domination of statist
ideas in the professional economic advice he received. In general, both authors
avoid monocausal explanations of government decisions and refer instead to mix-
tures of ideology, individual judgement (or misjudgement), individual venality and
sectional vested interest. In discussingthe last Frimpong-Ansah applies a theoretical
model of what he calls ‘the vampire state’, which is his own blend of ideas from
rational choice political economy. This ‘state’ or, more precisely, ‘coalition’, com-
prises various sections of the urban population. Rimmer avoids using any explicit
model for his political analysis, but he has an implicit contention that all govern-
ments tend to subordinate economic growth to other aims unless there is a counter-
vailing ‘growth constituency’ in the society concerned. Ghana lacked one, and still
does, though its functions are being performed by the IMF and World Bank, just
as, he suggests, they were once performed by the colonial regime.
It should be said that, despite the authors’ emphasis on ‘political economy’, both
devote substantially less space to politics than to economics. Moreover, neither
engages the literature on politics and political economy to the same extent as they
do that on specifically economic issues. This is particularly true of the left-wing
literature. Whereas both deal with economic contentions put forward by depen-
dency theorists, neither discusses class interpretations of the post-colonial state.
Such important works as Beckman (1981) and Konings (1986) are not in either
bibliography. Nevertheless, what Frimpong-Ansah and Rimmer have to say on the
politics of economic decline and recovery is interesting both in itself and because,
while working primarily within the rational choice paradigm, they feel it necessary
to supplement it with other kinds of explanation. This raises the question of how far
rational choice approaches work in this context, and whether the existing rational
choice explanations can be filled out to reduce the importance of exogenous variables
in the explanation. Before discussing this general issue, it is necessary to comment
on a specific element in Frimpong-Ansah’s analysis, shared in part by Rimmer,
namely the notion of a dominant coalition of largely unproductive urban groups
and the corresponding absence of politically effective organization among the much
more productive rural population.
562 G. Austin

Frimpong-Ansah describes the ‘vampire state’, ‘Nkrumah’ coalition as including

‘the enlarged bureaucracy, the military and police, the trade unions, students and
other urban pressure groups’ (p. 115). Its ‘hard-core constituents’ also included the
‘urban unemployed (p. 112). He attributes to it the overthrow of Busia (p. 111)
when he at last came round to the decision that a large devaluation was necessary
and imposed a 44 per cent one at the end of 1971. Frimpong-Amah also sees this
coalition as forming the ‘band with which Rawlings I1 took the stage in 1981’
(p. 112). There are difficultieswith this formulation, which recall general problems
with the concept of an ‘urban coalition’ (Toye, 1992, p. 185). First, Frimpong-
Ansah does not specify how the ‘vampire state’ ‘coalition’ mobilizes itself or is
mobilized, that is, what the political mechanisms are by which its collective interest
is translated into action. Second, if this force was so dominant until 1983, one has to
say that its pursuit of its self-interest was highly inefficient. Urban real wages fell
almost as fast as cocoa farmers’ incomes, as Rimmer shows, while in a society
without unemployment benefit it is hard to see the unemployed as constituents of
‘the vampire state’. Third, if all four regimes from Acheampong to Rawlings’s
‘second coming’ were based upon this coalition, the concept seems too broad to
explain the series of coups and other political conficts during that period. Why
should one part of the coalition overthrow another, and in any case what is the
meaning of such a fratricidal ‘coalition’? Finally, if it was so powerful, still more if it
‘has remained to this day . . . more potent’ than in the era of ‘its founder’, Nkrumah
(p. 113), how did Rawlings get away with his eventual repudiation of the policies
‘it’ advocated, in 1983? Frimpong-Ansah says that until then Rawlings’s second
government had ‘focused on protecting the vampire elements in the state’, with an
‘approach to governance . . . more destructive than that of any previous govern-
ment’. So much so, he adds, that ‘There can be little doubt that’ it ‘would have been
overthrown in 1983 if it had persisted in that strategy’ (p. 112). But both at the time
and in retrospect it seemed that if Rawlings was to be overthrown it would most
probably be by the far left, who were themselves amongst what Frimpong-Ansah
called the ‘vampire’ ‘band’ who had brought Rawlings back to power. Meanwhile,
the most plausible threat from Rawlings’s right came from another part of the
‘vampire’ ‘coalition’, especially from relatively senior ranks in the army and police.
The concept of ‘urban bias’ retains at least partial accuracy (Rathbone, 1978;
Gyimah-Boadi, 1989), especially as a description of the outcome of economic
policies before the general collapse of 1975-83. But the idea of the ‘vampire state’
coalition needs to be made more specific if it is to have much explanatory power.
A related contention of Frimpong-Amah’s is more tenable, namely that economic
development requires an influential rural presence in the ruling coalition. In this
respect he sees as crucial Nkrumah’s defeat of the federalist National Liberation
Movement (NLM) in Ashanti in 1955-56, which had campaigned on a platform of
higher prices for cocoa farmers. It is surely correct to regard the cocoa farmers as a
potential growth constituency. As these books show, their interest in avoiding the
penal rates of implicit taxation to which they were subjected, especially after 1975,
were conducive to national economic growth. Equally, taxation of cocoa farmers
‘was certainly defensible’ (Rimmer, p. 204)’ provided it was not so severe as to
remove the producers’ incentive to reinvest. Indeed, arguably, it was essential for
further national economic development. Nkrumah’s election victory in 1956 showed
that many m a farmers accepted this. Many cocoa-growing constituencies voted
 National Poverty and the ‘Vampire State’ in Ghana 563

for a party which offered public services to be paid for largely by a rate of cocoa
taxation that was high by previous standards but low enough to permit the massive
wave of planting that was taking place at the time. In this context, a full account of
the political conditions which permitted or sustained the continuation of socially
disastrous economic policies requires an explanation of how successive govern-
ments maintained what Bjorn Beckman called the political ‘demobilization’ of the
cocoa farmers achieved by Nkrumah (Beckman, 1976, pp. 242-43). The defeat of
the NLM was significant particularly because it marked the effective end of the
tradition of independent cocoa farmers’ associations, a point which goes unremarked
by Frimpong-Ansah and Rimmer. Far from having ‘remained unorganized’ in the
market for their produce in the period 1929-42, as Frimpong-Ansah asserts (p. 65),
those years saw the culmination of a tendency for Ghanaian cocoa farmers to
become increasingly organized to combat the attempts by the European coma
buyers to form monopsonistic cartels. Farmers’ associations held a series of ‘hold-
ups’ in which they boycotted the European cocoa buyers. Though the series began
in 1908, it climaxed in the 1930s. Consistently with his general argument about the
structural weakness as an interest group of large numbers of (relatively) small
farmers, Bates (1983) has noted weaknesses in the 1930-31 hold-up, notably
incomplete geographical coverage, but these were largely overcome in 1937-38
when the farmers’ associations held almost the whole crop off the market until the
London government had intervened and arranged a truce while a commission
investigated the dispute (Austin, 1988; Alence, 1990-91). l6 The non-reappearance
of independent farmers’ associations after the inter-party conflict of the 1950s
requires an explanation, especially after the ending of the relatively high producer
prices of that decade. Neither Frimpong-Ansah nor Rimmer offers one. Strangely,
although they cite Bates’s work in other contexts, they do not refer to his analysis of
the obstacles to effective self-organization by peasants (Bates, 1981, 1983). This
provides a persuasive starting point, although because - as noted above -it does
not allow for the strength which the farmers’ movement had in fact attained at its
peak, it is not by itself a sufficient explanation. If the political demobilization of the
cocoa farmers was a necessary condition of the adoption and retention of the
economically destructive policies of 1961-83, conversely, one wonders how stable
are the political foundations of the present economic liberalization. Despite the
benefits it has brought to cocoa farmers, the government has done little to organize
them as an interest group, and nor has an independent cocoa (or general) farmers’
movement emerged (Austin, 1993; Herbst, 1993, Ch. 5 ) . The most that can be said
is that in 1992 Rawlings had relatively greater electoral support in rural than in city
constituencies (Jeffries and Thomas, 1993, pp. 356, 360-61). It is arguable that
comparatively marginal differences in electoral majorities (Rawlings won every
region except Ashanti,17itself a major cocoa producer) are less effective than crop

l6 Moregenerally,Frimpong-Ansah’sneglectofthehold-upsseemstostemfromageneralproblemwithhis
accountof the colonial economy: that much of the specialist literature seems to have been hidden from him
by disciplinary bamers. He isagoodcompany, since this is not the first time a non-historianrighty wanting to
provide his or her analysiswith a historicalperspectivehas missed the journals in which most of the relevant
workis published,reviewedorat leastcited. On Africa theleadinghistoricaljournalistheJournalofAfrcan
History. On Ghana specifically, the Transactions of the Historical Society of Ghana, having suspended
pblication in the 197Os, is soon to reappear. For an introductionto the m a hold-ups see Miles (1978).
The opposition disputed the fairness of the official result. See discussions in Jeffries and Thomas
(1993) and Nugent (1993).
564 G . Austin

hold-ups as a means of putting pressure on governments dependent on agriculture.

Also, until the farmers’ ‘representatives’ on the coma marketing board are elected
by the farmers one may wonder how far the reforms of the board have been
institutionalized. Has the wooden stake missed the heart of the ‘vampire state’?
This will be discussed further below.
The standard non-Marxist models of the role of vested interests in the perpetuation
of socially unsuccessful economic policies in post-colonial African states in general ,
and Ghana in particular, are based on the assumption that there was a conflict
between the interest of society as a whole in economic growth and the sectional
interests of the government. These models may be divided into two basic cat-
egories, which might be labelled ‘outside-in’ (or ‘bottom-up’) and ‘inside-out’ (or
‘top-down’). The first comprises those which see governments as essentially repre-
senting a coalition of outside interest groups. Although officials (elected or
unelected, civil or military) may belong to this coalition, at least some of its
constituents existed before it gained political domination, and continue to be more
than simply creatures of the state, even though the purpose of the coalition is to use
the state to increase the wealth of its members. This approach is characteristic of
the ‘new institutionalist’ analysis developed by Bates (1981, 1983, 1988), and
pursued by Frimpong-Ansah. Such arguments imply that the self-interest of the
‘leadership’ lies in satisfying this primarily external constituency, whether because
the survival of the regime requires its support and/or because the leadership shares
the group’s aims, perhaps as a result of having originated within it. By contrast, the
‘inside-out’ school depicts the rulers as acting essentially for no-one but themselves.
By rulers may be meant specifically the boss, as with Sandbrook’s application of the
concept of ‘personal rule’ (Sandbrook, 1985; see also Jeffries, 1989). Alternatively,
the leadership may be a group, as in Jeffries’s (1982, pp. 314-15) view of a (pre-
‘Structural Adjustment’) Ghanaian ‘kleptocracy’, comprising ‘highly paid but
essentially parasitic bureaucratic and party or military personnel’ living off the
taxes paid by Ghana’s productive population. Rimmer’s view of the divorce
between political rationality and national economic interest, noted above, being
more general than that of Bates and Frimpong-Ansah, is consistent not only with
the ‘outside-in’approach but also with the ‘inside-out’ school, as long as individual
office-holders use their power to create personal patronage networks.
The general claim that a trade-off between economic growth and a government’s
own interests is the main cause of governments persisting with ‘failed’ economic
policies, as in Ghana between 1961 and 1983, will be referred to below as ‘the
trade-off argument’. I would put forward three qualifications to it.
First, it assumes that ideology as a determinant of policy choice was relatively
unimportant and/or endogenously determined, that is that decision-makers’ ideol-
ogies were at least heavily conditioned by self-interest. The latter implies that when
policy-makers pursued their own sectional or personal interest(s) at the cost of the
national economic good, either they did so consciously (cynically) or they believed
that the policies chosen were genuinely in the national economic interest, but this
belief was essentially a rationalization reconciling their consciences to their self-
interest. In the case of Ghana, my impression remains that belief in state rather
than market-based approaches to resource allocation continued to be dominant in
government, in the media and in the universities until Rawlings’s own apparent
change of mind in 1982. Even during the Limann regime, debate continued to focus
 National Poverty and the ‘Vampire State’ in Ghana 565

on such tactical issues as whether the currency should be devalued and whether the
producer price should be raised, rather than about the strategic matters of whether
the currency should be returned to convertibility and whether the state should be
setting producer prices at all. What people ‘learned’from experience was usually that
specific policies needed to be changed: rarely that the ‘statist’ paradigm from which
they were drawn was inappropriate. It is impossible to judge how far this continued
prevalence of belief in some sort of state-based economic policy was causally
independent of the believers’ sectional and personal interest. On the other hand, in
some contexts it is easier to assess whether changes in government behaviour can
be accounted for by changes in ideology. This will be considered further below.
Second, the trade-off argument is more persuasive if the time horizon with which
policy-makers were concerned was relativelyshort. In postulating this latter condition
I am re-emphasizing a commonsense assumption which, as implied above, has
become rather discredited in the literature on African political economy: that
government, as well as society as a whole, has much to gain politically from
economic growth, later if not sooner. Agreed, growth by itself is not sufficient to
ensure political survival. Agreed, too, that in the short run a government may well
gain less from achieving growth than from sacrificing growth to other aims. But it
may at least combine growth with other aims, even if it does not give it priority.
Other things being equal, the longer it fails to deliver growth the weaker its political
base will become, both because of the general lack of prosperity and because
increasingly it will lack the resources needed to ‘shop’ for support from specific
sections of the population. A comparison between Ghana and the country with the
most similar resource endowment, CBte d’Ivoire, illustrates the advantages to
government of the achievement of growth. In 1960 in both countries general
government consumption (GGC) amounted to 10 per cent of GDP. Between 1960
and 1979 Ivoirean GDP grew at an average of 7 per cent a year, which permitted
the government to raise the share of GGC to 17 per cent. During the same period in
Ghana, despite intensified efforts at government intervention in the economy,
GDP was stagnant and the share of GGC in it actually fell to 9 per cent (World
Bank, 1981, tables on pp. 144, 147). Meanwhile there was no change of regime in
CBte d’Ivoire, but six in Ghana. Thus, in this context, a ‘relatively short’ time
horizon means too short for the pursuit of growth-oriented economic policies to
have become politically rational or, more generally, to have become optimal from
the perspective of the personal interests of the policy-makers.
Third, the trade-off argument becomes less plausible the more severe the economic
failure. It is important to distinguish different kinds of economic failure, especially
between economic stagnation (zero or very slow growth of output per head) and
decline (falling output per head). It was noted above that in the Ghanaian economy
the period 1950-74 was, overall, characterized by stagnation; in contrast, 1975-83
saw rapid decline. It is one thing to show that it may be in a government’s interest
to follow policies which do not deliver growth but do provide or permit the
distribution of the existing stock of resources in a politically efficient manner.
However, the analysis surely needs to be developed further if it is to explain how
policies that produce decline in output, virtually year after year, can be politically
rational.18 The decline in aggregate output involved falling real incomes for all

Jeffries (1989, p. 75) made a similar point in different terms.

566 G. Austin

classes and all broad interest groups or clientage networks. It also involved a drastic
fall in state revenue. Can the role of policy in national economic stagnation and
absolute decline be accounted for by governments making rational, if selfish,
choices?
Thus, in the absence of a specific growth constituency within the society in
question, the notion of a trade-off between economic growth and other targets can
help to explain economic stagnation, especially while it is short term. Faced with
long-term stagnation, or with actual decline, even in the short term, models based
upon this concept allow governments two options. One is to continue the status
quo. The other, specified by Bates (1981, p. 132; Bates, 1988, pp. 357-58), is for
‘the dominant interests’ to decide to share economic gains with the producers in
order to preserve them. But what has not been sufficiently recognized is that when
stagnation becomes persistent over a long period, or when growth becomes nega-
tive over even relatively short periods such as a few years, there is at least one
strong political reason for reforming policy with the aim of moving the economy
closer to its maximum possible growth rate: the above-mentioned opportunities
which economic growth gives for winning political support, coupled with the
probable decline in opportunities to maintain political support by redistribution
without growth. This incentive for growth-oriented policies is complementary to,
but more widely applicable than, the logic for reform envisaged by Bates. One may
hypothesize fairly confidently that both kinds of calculation contributed, explicitly
and implicitly, to the overthrow of Nkrumah, to the modest economic liberalization
of 1966-71, and especially to the 1971 devaluation.
When it comes to drastic economic decline, sustained over most of a decade, the
trade-off explanation is more seriously strained. In the case of Ghana, the problem
is to account for the remarkable increase in the printing of money and in the degree
of currency over valuation from 1975. Why, to use Rimmer’s metaphor, did Ghana
leap from the slope into the abyss, and why did it take four more regimes before a
determined attempt was made to climb back? Ghana was not unusual in suffering
from the high oil prices of the period, and was not unusual among African countries
in experiencing drought. But Ghana was highly unusual in the degree of additional
damage inflicted by government policy during the same years, as the contrast with
neighbouring C8te d’Ivoire and Togo illustrates. Indeed, in the mid-1970s all three
economies had a welcome external shock, an all-time high in world m a prices, of
which those neighbours took full advantage.lg With the price of gold also high,
Ghana’s commodity terms of trade improved greatly between 1972 and 1977-78
( R i m e r , p. 143). Here was an opportunity for the government to fertilize both its
economic and political roots. Besides rewarding their urban or other supporters,
the rulers could share the windfall with the producers, encouraging them to
reinvest, which cocoa farmers had hardly done since the 1950s. It is instructive to
remember Nkrumah’s response to the 1950s cocoa boom: to channel much of the
gain to his supporters around the country, while leaving farmers with sufficient
incentive to reinvest on a scale which led to Ghana’s own m a supply boom of the

l9 Ironically, part of CBte d’Ivoire’s more recent economic difficulties is attributable to that m a (and
coffee) boom, in that it encouraged foreign commercial banks to lend, and the government to borrow,
on a scale which turned out to be damaging when interest rates rase, especially as much of the money
had not been productively invested. The Ghanaian government did not have the opportunity to acquire
this kind of debt burden, since the banks did not consider it credit-worthy.
 National Poverty and the ‘VampireState’ in Ghana 567

early 1960s. By contrast, under Acheampong the real price paid to cocoa farmers,
allowing for the exchange rate, was drastically reduced. In 1977-78 the real producer
price was only 41 per cent of its 1974-75 level, while the London spot price had
approximately doubled.20At the time it was widely believed that much of Ghana’s
receipts from this cocoa boom were misappropriated before they reached the Bank
of Ghana. Rimmer confirms this with evidence of massive underinvoicing of
Ghana’s cocoa sales during 1973-78 (pp. 143-44). Until the mid-1970s there was a
near-balance in government behaviour between the extraction of income from the
producers and support for the continued production of the goods which yielded the
proceeds from which this income was taken -whether this income was the official
public revenue of the government or marketing board, the swollen expenses of the
latter (inflated by overmanning and other politically based forms of inefficiency) or
the illegal private income of corrupt officials. But starting then, especially with the
armed forces commanders consolidating their power through the creation of the
Supreme Military Council in 1975 (Chazan, 1983, pp. 239-a), extraction from the
cocoa farmers decisively outweighed support for their maintenance.
This change cannot be explained by a change of ideology, except in the sense of a
relative shift from the values of public service to those of ‘kleptocracy’,21which
begs the question of what political changes allowed this to happen. This provides
some justification for the assumption that ideology was sufficiently unimportant as
an exogenous determinant of policy to permit the possibility that the trade-off
argument holds, at least in some form. For this specific problem the most promising
variety of the argument is that offered by the ‘inside-out’models introduced above.
It is easier to account for unrestrained rent-seeking within a personal rule or
‘kleptocratic’ system than by the power of a coalition of interest groups, because
the former allows for more extreme antisocial economic policies than the latter.
Even personal rulers need servants and supporters, but, though they may seek to
win the favour of particular interest groups or classes, their main mode of political
operation is to construct patronage networks. The subordinate members of the
network receive rewards for their loyalty, but, by the nature of the relationship,
they are not vectors by which outside interests as collectivities can exert influence
on government. Compared with a ruling coalition of interest groups the personal
ruler or autonomous ruling group has, by definition, much greater freedom to
distance himself or themselves from outside interest groups or classes. This, argu-
ably, allows for a greater distance between the interests of society as a whole and
those of the ruler of ruling group.22 It is pertinent to note an observation of Eboe
Hutchful, that since the 1960s the ‘broad-based patronage structures characteristic
of electoral mobilisation’ had been undergoing ‘progressive decline and collapse’.
u, Calculated from Rimmer’s tables on pp. 144 and 151.
Using the word in a different sense to that in which JefFries introduced it to the literature on Ghana
(noted above). In fairness it should be noted that even the most corrupt regimes in Ghana contained
individuals, including the late Joe Appiah, whose reputation for honesty survived rigorous investigation
uader their successors.
An opposite view has been offered by Price (1984, pp. 1&7-190), who has argued that, on the
contrary, the cause of Ghana’s counterproductive economic policies was that the state lacked autonomy
from society, that it was ‘permeated by every conceivable societal interest’ (Price, 1984, p. 188). This
view is open to empirical and theoretical objections. Empirically, as has been observed above, the
Ghanaian state was in fact not open to such a large and economically important interest group as the
cocoa farmers. Theoretically, if the state had been so open it is hard to see why its leaders would have
lacked the support necessary to pursue policies that benefited the economy as a whole.
568 G. Austin

Meanwhile, ‘gaining ground concurrently was an altogether different type of politi-

cal and economic interaction’, the appropriation of rents by partnerships of ‘entre-
preneurs’ and individual politicians or administrators (Hutchful, 1989, p. 124). Yet
as with the idea of an autonomous shift in values, the dominance between 1975 and
1983 of strikingly antisocial forms of personal rule, or of ‘kleptocracy’, does not
explain the change: whether the change was from another, less antisocial, form of
patrimonialism or from interest group coalition politics or from a combination of
the two.
Arguably, the change itself can be accounted for in rational choice terms by using
them to flesh out John Dunn’s observation that ‘Nothing . . . destabilizes like
instability’ (Dunn, 1978, p. 212). The coup that overthrew Nkrumah showed that
economic failure led to the risk of political defeat. The coup itself, as has often been
remarked, created a precedent which encouraged mere selfish opportunists as well
as reformers to seek power through the gun. Continued economic stagnation
helped to create the chance for Acheampong’s coup, but he himself seems to have
been motivated entirely by self-interest (Roemer, 1984, pp. 221-222). With the
reconstitution of the regime in 1975 the military leaders broke free of the civilian
allies that previously they had believed they needed. Their subsequent behaviour
can be accounted for, at least in part, by noting that the political incentives for
growth-oriented economic policy had been doubly weakened by the political insta-
bility that resulted from economic failure and the availability of the military route
to power. First, policy makers’ time horizons were shortened. This widened the
divergence between the public interest in economic growth and the private interests
of the individuals in office. Second, the relative impotence of the civilian population
reduced the incentive for rulers to share the rent widely, and to limit the size of rent
to protect its supply. It may be suggested that Acheampong’s response to high
world cocoa prices, in contrast to Nkrumah’s, illustrates the results of such a change.
Following Acheampong’s downfall, despite some reform, the same general
pattern of politics and policy continued under Akuffo. Rawlings’s first government
in 1979 expressed the popular moral and moralizing response to such abuse of
power. Though providing a disincentive to future corruption, this coup reinforced
the sense of political instability. The fear of a coup suffused the Limann regime, in
itself discouraging long-term thinking and encouraging rent-seeking, legal and
illegal, as long as the rentiers felt they could escape retribution.
The standard theoretical expositions of trade-off between economic growth and
government priorities in Africa do not distinguish sharply between stagnation and
decline, because they envisage the latter as the logical sequel to the former within a
single ‘downward spiral’ (Sandbrook, 1985, Ch. 6). Yet in the majority of African
economies in the 1960s and 197Os, stagnation or slight decline did not turn into
rapid decline, sustained over most of a decade, as it did in Ghana. Nevertheless, on
the argument above there was a causal link between the two episodes, albeit
through a mechanism that has perhaps not been spelt out in the literature. This is
that the social discontent generated by the economic stagnation delivered by
governments whose own short-term interests conflicted with the pursuit of economic
growth helped to create political instability. This in turn widened further the
divergence between the interest of society as a whole in economic growth and that
of the government. However, the transition from stagnation to rapid decline in the
1970s was not inevitable. There was still a politically rational argument for trying,
 National Poverty and the ‘Vampire State’ in Ghana 569

on the contrary, to shift to more growth-oriented policies. This was what Busia
tried to do with his devaluation in 1971. He might have survived the political crisis it
provoked had he been converted to the necessity for it earlier, or presented it more
skilfully, or not comprehensively antagonized urban interest groups in advance of it
(for example, dissolving the Trade Union Congress and removing subsidies on
army officers’ living costs). In that case, in the decade as a whole the Ghanaian
economy would probably have stagnated or grown slowly, with cocoa farmers and
other efficient producers being given enough incentive to maintain (but not signi-
ficantly increase) output within a still broadly state-led economic policy, where the
habitual response to balance of payments pressure would have remained the
strengthening of exchange controls. Again, it is often argued that Limann would
have reached a deal with the IMF himself in 1982, had he not been overthrown by
Rawlings first. It is also likely that, if Rawlings had been toppled in 1982-83, the
new regime would sooner or later have been obliged at least to ask for one. But it is
extremely hard to imagine either of these scenarios resulting in a fundamental,
sustained economic liberalization of the kind Rawlings in fact undertook. The
likely outcome would have been modest devaluations and minimum compliance
with IMF conditions, and a continuation of long-term economic stagnation.
If ‘muddling through’ with some market-oriented reforms within a statist frame-
work was a conceivable alternative to the unbalanced rent-seeking of 1975-83, can
a rational choice explanation account for Rawlings deciding upon and, to a large
extent, actually implementing radical economic liberalization? If so, what kind of
rational choice was involved? The decision may be partly explicable in Batesian
terms, as a tactical retreat, sharing rent in order to keep extracting it (Crook, 1988,
p. 119). But in view of the remarkably sustained and, in context, radical nature of
the liberalization (Toyle, 1992, pp. 187-189) it is more plausible to see it primarily
as a search for both short- and long-term growth, in the belief that this made
economic sense and that it was, therefore, the best chance of winning long-term
political support. The decision was made in a context where, though choice existed,
the scope for alternative policies had been narrowed by the spontaneous economic
rebellion by producers and others, in opting out of official markets or even
out of the country itself. Meanwhile, the hope of aid from communist countries
had proved unrealistic. Even so, if the Secretary of Finance, Dr Kwesi Botchwey,
and later Rawlings himself were converted from ‘statist’ to market solutions, while
the main architect of economic reform, Dr Joe Abbey, had no need of conversion
(Hansen, 1991, pp. 95-6, 110-12), nevertheless there was as yet no widespread
rejection of the former paradigm. ‘Social learning’ (Toye, 1992, pp. 187, 192)
did not go far beyond the few who mattered most. There was considerable opposi-
tion on the streets to the watershed budget of April 1983, from students and, in
Kumasi, from workers, plus a coup attempt in June. The fact that the opposition
was not even stronger owed much to the fact that, unlike in 1971, for most
consumers the cost of most imports already reflected the parallel market price of
the currency rather than its official value (Herbst, 1993, pp. 46-47, 71-72). It
was also the result of the way in which the reversal of policy was presented, which
obscured the fact that devaluation was involved (Herbst, 1993, Ch. 3) and that an
IMF deal was anticipated. Also, part of the opposition from the left was pre-
empted by the regime’s ‘anti-imperialist’credentials. Indeed, it seemed clear at the
time that those who defended the government physically did not see what it was
570 G. Austin

doing as the start of an economic counter-revolution, especially one whose political

implicationswould include not only closer links with the West but also the effective
abandonment of the notion of popular democracy through workers’ or ‘people’s’
committees. The ‘social learning’ at the top relied for its initial implementation on
confusion about what was at stake. This reinforces the conclusion that while, like
the abortion of Busia’s modest reform of 1971-72, Rawlings’s about-turn in 1983
was conditioned by the economic and political circumstances, it too was not
inevitable.
Since the trough of political support and administrative capacity in mid-1983,
Rawlings’s government has not only presided over economic growth but has greatly
increased its revenues and its administrative capacity, and has made the transition
to elected, constitutional, status. What has happened to the trade-off between
economic growth and the political interests of the rulers? Frimpong-Ansah warns
that the ‘vampire state’ coalition remains strong, while Rimmer sees only the
Bretton Woods institutions as fulfilling the role of a growth constituency. As noted
above, except in a patchy way in elections, the government has not mobilized a
rural lobby. Still less has it a business one (Tangri, 1992, pp. 99-102; Herbst, 1993,
pp. 54-56; Jeffries and Thomas, 1993, pp. 348, 358-359). Conversely, the state
retains an immense fund of patronage, the more so now that the state itself has
been strengthened financially, administratively and politically. The possibility of
using political power primarily for sectional ends remains open. On the other hand,
it has been argued here that in tropical Africa, as elsewhere, economic growth is
itself a major political asset to governments. Patronage tempts sectional interests,
but it can also be used by governments to consolidate support without necessarily
inflicting major damage on the operation of markets. Furthermore, the pattern of
infrastructural expenditure since 1983 seems to owe more to economic than to
patronage considerations. For example, Ashanti Region has been a particular
beneficiary despite being consistently a centre of opposition to the government.
The assistance for Ashanti may owe much to the influence of the World Bank, but
it is reasonable to assume that it also reflects the government’s awareness of its
strategic importance in the economy, and the priority the government has attached
to growth.

4 CONCLUSION

These books are essential reading on Ghana’s experience of the defects of ‘statist’
policies of economic development, and thus for the debate about what the most
economically efficient combination of state and market actually is, and to what
extent political conditions permit its delivery. Despite the similarities in their
arguments, the differences of style and content are sufficient for them to comple-
ment more than duplicate each other.
More generally in the academic debate about Ghana, while there is consensus
about many aspects of the economic causes of Ghana’s ‘staying poor’, the question
of how far and in what respects the state should retreat from administrative control
of resource allocation remains relatively open. For example, while the inconverti-
bility of the currency seems to have been irredeemably disastrous, the much-
criticized marketing board system may yet prove worthy of reform rather than
 National Poverty and the ‘Vampire State’ in Ghana 571

abolition. Further, most authors agree that the prolongation of what, for the
economy as a whole, were calamitously counterproductive policies was to a large
extent due to the subordination of the public interest in economic growth to the
sectional and personal interests of governments and their members. However, it
has been argued here that it is necessary to revive the assumption that economic
growth in itself is a major political asset to governments in tropical Africa as
elsewhere. It is also important to distinguish different kinds of failure of economic
growth: stagnant output (GDP) per head, as in Ghana to 1974, and the subsequent
sharp fall in output, as in Ghana during 1975-83. The established rational choice
interpretations are much more plausible as explanations for the former than for the
latter. This distinction between the political causes of economic stagnation and of
economic decline may be useful in explaining the differences in the economic
records of post-colonial states in tropical Africa: differences which are of as much
practical and theoretical importance as the similarities.

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