ECONOMIC THOUGHTS OF PROFESSOR SAM ALUKO

BY

Saidu Sulaiman

Department of Economics Saadatu Rimi College of Education, Kumbotso, Kano, Nigeria. E-mail: saisulaiman@yahoo.com

This piece is reproduced from Chapter Ten entitled Contributions of Nigerian Scholars to Economic Thought of the book The Making of Economics: An Introduction to the History of Economic Thought, 2nd edition, written by Saidu Sulaiman and published in 2012 by Samarib Publishers, Kano, Nigeria.

Alukos Biography Professor Samuel Adepoju Aluko, popularly called Sam Aluko, was born to Aluko Fagbohun on August 17, 1929. He started his education in his home town by attending St Mary's School, Ode Eketi from 1936-1940. From 1941 -1945 he attended Emmanuel School for some time and moved to Christ's School, all in Ado Ekiti. From 1948-1949 Aluko attended Nigerias premier higher institution, the Yaba Technical Institute, Lagos. From this institution he was given scholarship to study Economics at the London School of Economics between 1955 and 1959. He subsequently obtained a 2nd class honours degree in Economics. Aluko taught Economics at the University of Ife as well as University of Nigeria, Nsukka between 1959 and 1966. In 1962, he was a visiting scholar to the Massachusetts Institute of Technology and Havard University, both in the United States of America. In 1967, Aluko was appointed a Professor of Economics at the University of Ife (now called Obafemi Awolowo University). Aluko was the first Dean of the Faculty of Social Sciences of that university, (http://nigerianwiki.com/wiki/Sam_Aluko; Leadership newspaper, 2012) Sam Aluko became famous through hard work and determination. As a student on scholarship, he criticized the budget of the late Chief Obafemi Awolowo, who was then the Premier of the Western Region. This led to the temporary withdrawal of his scholarship until during the 1957 Constitution Conference in London when Chief Awolowo invited him to a dinner and restored the scholarship. Aluko obtained his PhD in Economics without support from anybody. Between 1979 and 1983, he served as Economic Adviser to the Government of Ondo State led by late Chief Michael Adekunle Ajasin. Aluko served this administration very well and was responsible for the establishment of the Owena Bank, the Ire Brick Factory and the Confidence Insurance (now part of Sovereign Trust). Later, Aluko was appointed as Chairman of the National Economic Intelligence Committee under the Gen. Sani Abacha-led military administration (Makinde, 2012; Leadership newspaper, 2012). Aluko was a devoted Christian and church man. Always punctual, always active, he preached on occasions at the Annunciation Chapel of Vinning College, (Ipinmoye, 2012). His economic philosophy follows that of the popular British economist, John Maynard Keynes ((http://nigerianwiki.com/wiki/Sam_Aluko). Economists are generally accused of not being direct and forthright when talking on economic issues. The former American president, Ronald Reagan, was said to have described economists as people who see something work in practice and wonder if it will work in theory. The 33rd American President was also reported as saying, in frustration, All my economists say on one hand . . . on the other! (cited in Haruna, 2012). Unlike such economists, Professor Aluko was known for his straight and simple talk. He says in a press interview, I generally put my case in a graphic manner so that people can understand (The News, October 9, 2000, cited in Haruna, 2012). Professor Aluko did not believe in organizations that are based on ethnic politics and sentiments. I dont believe in these ethnic organizations, he said. It is like going backwards. How can I, a professor be talking about Yoruba nation? What of my students who are not Yoruba? . . . If you narrow down yourself with a caucus, you are finished. You cannot see clearly (quoted in Haruna, 2012). As a detribalised Nigerian, Aluko married from Delta State, was against the neglect of the Niger Delta Region and defended the population of Kano State and other northern states. Even though his defence was unpopular in the Southern Nigeria, Aluko remained at ease (Makinde, 2012). Aluko died at a hospital in London on February 7, 2012 after battling with cancer. The veteran economist left behind a legacy of straight and simple talk and nurtured at least two sons: Gbenga, a former leading senator in the current dispensation, and Professor Bolaji, a prolific blogger, and presently the Vice-Chancellor of the new Federal University, Otueke, Bayelsa State (Haruna, 2012) . Alukos regrets about Nigeria included the prevalence of corruption in the country and especially in the civil service which he loved passionately (Makinde, 2012).

His Works Togonu-Bickersteth (2012) complains that he read a number of tributes and articles on the passing away of Professor Aluko but was left wondering if the late Professor had written any book in his life time because all he could get from the Internet was that Aluko had published three academic papers, made presentations to selected audiences in Nigeria and abroad and granted interviews to few newspapers and magazines. He says the fault might be with book publishers, both foreign and local; who were more interested in getting super profits than in development, and the best he could read about Aluko was that he followed the ideas of John Maynard Keynes. Togonu-Bickersteth then calls upon Nigerian Professors of Economics to write proper tribute to Sam Aluko or an article about his life and works. The academic works of Aluko include the following: 1. 'How Many Nigerians? An Analysis of Nigeria's Census Problems, 1901-63', The Journal of Modern African Studies, Vol. 3, No. 3 (Oct., 1965), pp. 371-392. 2. 'Population Growth and the Level of Income: A Survey', The Journal of Modern African Studies Vol. 9, No. 4 (Dec., 1971), pp. 561-575 3. Peace through Development: The Nigerian Perspective 4. Conflicts and Economic Development in Africa (Source: http://nigerianwiki.com/wiki/Sam_Aluko). Alukos Economic Thoughts As I could not lay my hands on all the works of Professor Sam Aluko, his economic doctrines and thoughts presented here come from his two conference papers, Peace through Development: the Nigerian Perspective, and Conflicts and Economic Development in Africa. He presented the first one in May 2001 and the second one March 2003, all at the Schiller Institute, Germany. His other economic thoughts are taken from Okenwa R. Nwosus article An Encounter with Professor Sam Aluko, which reports the discussions that Aluko had with some Nigerians when he visited the United States of America, and from the tributes written upon his death by Ayo Ipinmoye, Mohammed Haruna and Femi Makinde. The economic doctrines and thoughts of the late Professor include the following: a) African and European crises: In the paper, Peace Through Development: The Nigerian Perspective, delivered in 2001 in the heart of Germany where few great powers of the world, at the Berlin Conference in 1884, decided to partition and colonize Africa, Aluko courageously explains the nature of the African crisis, which is manifested by continuous economic decline, financial and moral crises. The European crisis is manifested by diminishing resources, insatiable appetites as well as financial and economic crises which defies solution. He reveals that the African continent has always been a "follower continent" because its leaders have always been blind followers of the West. He says, unless Africa finds faith and independence in its own peoples, action, and governments, Africa's continuing economic decline, its financial and moral crises, will not only increase and deepen, but will also ultimately constitute a threat to the peace and stability of the entire world. This is because the enormous economic and natural resources of the African continent will continue to invite the competitive exploitation and spoliation of today's world's most developed nations, as their diminishing resources recede further and further while their insatiable appetites grow more gargantuan by the day, and the financial and economic crises which are beginning to manifest in their countries deepen and defy solution (Aluko, 2001).

b) Main problems which Africa faces and solutions to them: In the paper Conflicts and Economic Development in Africa, Aluko identifies six main problems which Africa faces: (1) falling economic prosperity, (2) increased violence and crimes, (3) diminishing role of government, (4) pursuance of the policies of liberalization, privatization, globalization, which is the worst problem that led to the collapse of infrastructure, (5) greater insecurity and political instability, and (6) increasing inefficiency and poverty of the administrations. The solutions, which Aluko finds to the problems, include the following: i) Rejecting the imposition of the IMF, the World Bank, and the Paris Club. The Paris Club, as he explains, has 13 countries that call themselves Paris Club when they act as bankers, and London Club" when they act as governments; they are the same 13 countries. ii) Returning to planning as well as protecting the economies of Africa: The economies of all African countries started going down and down because they have abandoned planning in pursuance of free market economy. Aluko was not in support of leaving things to the market, he used to tell governments in Nigeria, that "Well, I did not vote for the market, I voted for a government." (Aluko,2003). He further requires that governments in Africa should reject free-market as they are not even part of it because it is only one-way... when Africans steal money in Africa, they put it in Europe. But when Europeans steal money in Europe, they don't put it in Africa. Europeans and Americans also steal but they invest the stolen wealth in their countries, Aluko calls this "productive corruption," and calls the corruption by Africans, "destructive corruption" (Aluko, 2003). iii) Fixing low interest and exchange rates: Japan's rate of interest for small business is 0.9%. The rate of interest in Nigeria is 35-40%. It's like that throughout Africa. This situation is certainly counterproductive. iv) Putting emphasis on production and not consumption. He says Our President has a new plane, a new jet; the MPs have free houses, free cars and so on, in a country that is continually getting down(Aluko,2003). c) The difference between the corruption of the West and that of Africa: Aluko distinguishes between the corruption of the West and that of Africa. The former is internalized and productive, while the latter is externalized and destructive. He also adds that there is no political system, democratic, oligarchic, dictatorial, republican, or monarchical, that had not been corrupt in varying degrees, Germany inclusive (Aluko, 2001). This means solution to corruption does not lie in adopting any of these political systems. d) Solution to Nigerias Economic Problems: Professor Aluko submits that Nigeria, like the rest of Africa, must return to itself: find its own views; chart a different economic path from deregulation, privatization, globalization, and liberalization, and use its government as the main engine of growth through planning and control of its exchange rate, its rates of interest, and the pursuit of full employment for its citizens, by mobilizing both the public sector and subsidizing the private sector in that direction (Aluko, 2001). From this statement, it could be seen that Aluko is not only asking for government to continue subsidizing goods and services produced by its corporations, but also for extension of subsidies to the private sector. e) Economic Recovery Programme for Africa: Aluko recommends that the Marshall-type programme for Europe, and preferably the Delano Roosevelt type of economic recovery programme for the U.S.A., needs to be formulated and adopted for Africa or else the gap between the rich and the poor

will intensify in the continent while growing tensions, crises, and wars will rise. This condition, as Aluko puts it, will increase the conflict between Africa and the West. Just as a country cannot remain at peace, half-slave and half-free, so the world cannot remain overdeveloped and under-developed, and hope to have and sustain peace (Aluko, 2001). f) Family finances: Prof Aluko taught that husbands should let their wives know how much they are earning. At a wedding in Lagos he was heard saying to the new husband directly, my wife knows exactly what I earn and what I have, so she cannot ask me for what she knows I dont have. Do the same; let your wife know your salary and you will not get into trouble with her (quoted in Ipinmoye, 2012). g) Privatization: Aluko criticised the position of the World Bank and the IMF that the African economy needs privatization due to the problems of corruption and inefficiency. When he was an economic advisor to the governor of his state, he says, they were able to establish about 22 small-scale industries; but later when the military took over they sold out all of them under the name of privatization. All of them collapsed, because, as he argues, there was no private sector to manage them. To him, there is no private sector in Africa because that sector cannot function due to the absence of adequate infrastructure such as good roads, water and electricity. The only sector that is viable in Africa is the government sector (Aluko, 2001). However, Aluko supports the arrangement where privately owned businesses are licensed to compete against the government monopolies, (Nwosu, undated). h) Lack of Production as a Cause of Inflation: According to Aluko, the argument by some Nigerian economists and other analysts at the Central Bank of Nigeria, that injecting too much money into the Nigerian economy causes inflation, which subsequently destroys economic value, is just rubbish. He was quoted as saying Money does not cause inflation. It is the lack of production that causes inflation. Not because there is too much money, but because (too) much money is spent on useless non-productive things . . . If you produce more goods and services, you can even be spending more money and prices would be falling (Comet, July 8, 2000 cited in Haruna, 2012). i) Resource Control: Aluko drew a sharp distinction between renewable and non-renewable resources. Renewable resources such as agricultural produce, come from the creativity and hard work of their owners, as such they can be controlled by the people that produce them. The extraction of nonrenewable resources, like petroleum, requires external input of manpower and finance, so in the context of the Nigerian society, Aluko says "we do not really have oil-producing states; what we have are oil-endowed states". He further explains that the oil-endowed states lack the financial and technical manpower to exploit these resources; as such they would choose either to leave them untapped or mortgage them to foreign multinational corporations which will use their jurisdiction in exploiting the resources. According to him, doing this will end up hurting everyones interest (Nwosu, undated). j) Interest Rate and Exchange Rate: Like John Maynard Keynes, Aluko was against high interest rate in Nigeria. He does not support a freefall of the naira based on open market pressures. For him, the apex bank should be responsible for pegging the exchange rate of the naira at a reasonable level because in Nigeria, industrial output relies on substantial importation of machinery and raw materials (Nwosu, undated). When he was given the opportunity to chair the National Economic Intelligence Committee under the Gen. Sani Abacha-led military administration, he introduced the pegging of the naira at N22 to one dollar and also introduced Value Added Tax (VAT) to generate additional revenue for the government (Makinde, 2012).

k) Monetary Policy: Aluko was against the policy of reduction of local currency in circulation to control inflation. His argument was that poor villagers could not understand the link between their inability to get the basics for life sustenance and the excess money in circulation. His view was that monetary control should be relaxed to enable businesses borrow money to increase output (Nwosu, undated). l) Community Participation in Tax Collection as Means of Resource Control: Professor Aluko believes that with the involvement of the affected communities in tax assessment and collection, more revenue will be realised because higher compliance rates will be achieved. To illustrate this, he adds that allowing local authorities to impose and collect of taxes and other tariffs from oil companies, as a means of local resource control is more certain than using any artificial revenue sharing formula initiated from Abuja (Nwosu, undated). m) Recognition of Nigerias Multicultural Society as an Asset: As a true nationalist, Professor Aluko strongly believes that patience, tolerance and willingness to understand the truth about the Nigerian polity, would lead to the amicable solution of most problems facing the country. He recognises the multicultural diversity of Nigeria as an asset that should be exploited for the betterment of all Nigerians (Nwosu, undated). To illustrate the point that cultural diversity is an asset to Nigerians, lets imagine what will happen if all Nigerians have one common culture, same productive capacity and method, same attitude to life and work, etc. Under these conditions, there will certainly be little or no basis for production, buying and selling of cultural goods such as crafts, books and films, and of services such as tourism and translation work. Apart from being a source of revenue and business opportunity, cultural diversity also adds colour to life, brings challenges, and facilitates competition and specialisation among people and societies. The difference in attitude to life and work is perhaps what makes, for instance, Hausas, especially in northern Nigeria, to specialise as car sellers, the Igbos as car spare parts dealers and the Yorubas as car mechanics. Cultural diversity is what influences certain people to exempt themselves from carrying out certain economic activities to the advantage of other people. The quest for cultural uniformity at a national level is simply unattainable because it is goes contrary to what God has planned for his servants. Evaluation Aluko was in 2001, able to identify the European crisis as one manifested by diminishing resources, insatiable appetites as well as financial and economic crises which defies solution. Ten years later (in 2011) it has become clearer that the financial crisis facing European countries is defying solutions. Europe, as Papic (2011) puts it, suffers from overpopulation -- of nations, not people. He says, among the continents of the world, Europe has the largest concentration of independent nation-states per square foot, with mountain ranges, peninsulas and islands that prevented large powers to dominate or conquer the smaller ones. The European financial crisis or specifically the debt crisis entails the failure of the European nations such as Greece, Portugal, Ireland, Italy, and Spain to generate enough economic growth to pay back bondholders. Investors in the bonds of the affected nations demand higher interest rates due to the higher risks involved and this creates a vicious cycle: fiscal strain leading to higher borrowing costs which leads to further fiscal pressure, and subsequently to demand even higher lending rates. A series of bailouts for Europes troubled economies have been the main course of action taken to address the problem. In 2010 for instance, the European Union and International Monetary Fund disbursed 110 billion euros (the equivalent of $163 billion) to Greece (Kenny, 2012). The country required a second bailout worth about $157 billion in 2011. Ireland and Portugal also received bailouts, in November 2010 and May 2011, respectively. On March 9, 2012, an agreement on debt restructuring was reached between Greece and its creditors to set the stage for another round of bailout funds. The European Central Bank also announced a plan to purchase government bonds in order to keep their yields from

escalating to a unaffordable levels. In December 2011, the bank provided 489 billion ($639 billion) credit to the regions troubled banks at ultra-low rates (Ibid). Up to this time (2012) the bailouts have not solved the debt problem. The precision of the bailout schemes, as understood by Friedman (2011) shows a deliberate and fundamental misunderstanding of reality by Europes elite, specifically the Germans. Europes elite all know that their precision rests on a foundation of uncertainty but are buying time hoping that prosperity will return to the continent. Friedman says a precise solution to a vastly uncertain problem is unlikely to return Europe to its happy past. Kenny (2012) concludes his analysis with an outlook on the crisis, he says Europe remains in turmoil while Greeces exit from the17 nations using the euro currency seems inevitable. Moreover, instability continues to affect the rest of Europe, French President Nicolas Sarkozy, for instance has lost power partially owing to his support for austerity measures, and Spain faces 25% unemployment with no clear path to growth. In addition, European policy makers, already lacking unity - face a difficult choice of either keeping the currency union or allow Greece (and possibly Spain and/or Italy) to exit (Kenny, 2012)). Alukos recommendation that husbands should let their wives know exactly how much salary they earn so as to prevent trouble arising from the utilization of family finances, may not go down well with many husbands especially of fulltime housewives. The experience of such wives in spending money judiciously or receiving and keeping large sums of money is usually inadequate compared to that of women earning salaries. Alukos views on privatization needs some modification. He did not like privatization but was in support of the arrangement where privately owned businesses are licensed to compete against the government monopolies (Nwosu, undated). Though it was true that Nigeria lost part of its wealth through connivances under the disguise of privatization, it is also true that the public sector in Nigeria is largely unproductive and wasteful of public wealth. If government can make those running its corporations sincere and just, there is no need to privatize them, but if this cannot be significantly achieved, the only option is to privatize or retain them as government corporations being managed by private entities with clear cut rules and agreement. Alukos argument that an increase in money supply does not cause inflation could be correct; it all depends upon what is done with the money supplied. Sulaiman (2008) expresses the same argument in the following words: an increase in money supply is a double-edge sword: it can cause inflation, it can as well cause rises in demand, productivity and employment. When money supply is increased with a view to boosting human capital, providing electricity, security and infrastructure, and subsidizing the acquisition of machinery and tools by farmers and local manufacturers, it will lead to increase in output. But when money supply is increased for ceremonies and unnecessary projects output may be low and inflation rate may rise. Alukos recognition of Nigerias multicultural society as an asset is a rare achievement among economists and other Nigerians because it is common to find people, including some educated elite, journalists, scholars and analysts calling for the breaking of Nigeria into smaller nations based on ethnic and religious sentiments. They fail to understand that solution to problems emanating or seemingly coming from ethnic and religious differences lies in social justice and promoting understanding, tolerance and respect for these differences. These differences exist even at the level of a community let alone a state or geo-political region, and they can never be eliminated. If, for instance, Taraba State or Bayelsa State is to become an independent nation there will still be clashes between its people and among communities because you cannot eliminate their differences. The greatness of Nigeria as the largest black nation on earth, the most populous nation and the richest nation in Africa in terms of ownership of diverse natural resources, and a premier source of labour

and market for goods and services, will banish the moment you break it into smaller nations. The United States of America remains great because it is still intact, China and India are also powers to reckon with because of their numerical size and productivity; in contrast, countries that formed the erstwhile Soviet Union which was divided into smaller independent states, have lost greatness enjoyed by the Union ( the USSR). Perhaps what needs to be added to Alukos recognition of Nigerias multicultural society as an asset is that diversity in the natural endowments found in different parts of the country is also an asset that brings more benefit when the nation remains one. This is because, if the nation is broken into smaller countries, economies of scale associated with large scale production of goods and services will be reduced. Tariffs and restrictions in trade to be introduced by these countries will have negative effect on their economies. Moreover, certain people may have to relocate their businesses to the other countries and this may lead to their collapse due to concentration of people doing the same business in one place or region. The vacated towns and cities may experience shortages of the kinds of goods and services supplied by the people that relocated their businesses unless new entrepreneurs quickly enter the market. In a nutshell, there is wisdom and great sense in the way Almighty God planned the coexistence of people of diverse culture in the geographical area called Nigeria. If He wished, they could have all been speaking one language, practicing one religion, wearing the same look and eating the same food just as they are living under one sun. Ones ability to live above sentiments based on ethnic, cultural and religious differences is a mark of genuine civilisation, an evidence of true fear of God and a sign of passing His tests coming in the forms of challenges, difficulties and tribulations associated with living with others. In conclusion, it could be said, a true scholar is characterized by two things: consistency in pursuit of truth and abstinence from blind copying of what other people say or do. Aluko had, in this sense, been a true scholar of Economics. He has been consistent in expressing his honest and frank economic views from the time he criticised Chief Awolowos budget, when he was a student on scholarship, to the end of his life on earth. Unlike most Nigerian economists, Aluko was not a blind follower of the Western economic theories. As Makinde (2012) was saying Aluko was not a man that would blindly follow the crowd, Haruna (2012) was also describing the late Professor as the man who always called a spade by its name while the Leadership newspaper portrays him as an embodiment of principled pragmatism.

References
Aluko, Sam (2001) Peace through Development: The Nigerian Perspective, an address delivered to a conference panel entitled Peace through Development in Africa: The Moral Challenge for Europe, (also published in the Executive Intelligence Review, June 2001 Issue) http://www.larouchepub.com/other/2001/2821_aluko.html accessed on August 2, 2012. Aluko, Sam (2003) Conflicts and Economic Development in Africa, a paper presented at the Schiller Institute/ICLC Bad Schwalbach Conference in Germany retrieved on August 3, 2012 from http://www.schillerinstitute.org/conf-iclc/2003/bd_schw/aluko.html

Friedman, George (2011) European Crisis: Precise Solutions in an Imprecise Reality Stratfor Global Intelligence http://www.stratfor.com/weekly/20111003-european-crisis-precise-solutionsimprecise-reality Accessed on August 9, 2012

Haruna, Mohammed (2012) Sam Aluko: the Man Who Always Called a Spade by its Name, http://www.dailytrust.com.ng/index.php/daily-columns/154748-sam-aluko-the-man-who-alwayscalled-a-spade-by-its-name accessed on August 2, 2012.

Ipinmoye, Ayo (2012) The Professor Aluko I knew, retrieved on August 2, 2012 from http://www.nigerianmuse.com/20120209165414zg/sections/general-articles/the-professor-aluko-iknew-by-ayo-ipinmoye/ Kenny, Thomas (2012) What is the European http://bonds.about.com/od/advancedbonds/a/What-Is-The-European-Debt-Crisis.htm Accessed on August 9, 2012 Debt Crisis?

Leadership Newspaper, Sam Aluko, 1929-2012: An Embodiment Of Principled Pragmatism Thurs,16/02/2012 , http://leadership.ng/nga/columns/16465/2012/02/16/sam_aluko_19292012_embodiment_principled_pragmatism.html accessed on August 3, 2012.

Makinde, Femi (2012) Sam Aluko: Between politics and economy, http://www.punchng.com/politics/sam-aluko-between-politics-and-economy/ accessed on August 2, 2012 Nwosu, Okenwa R. (undated) An Encounter with Professor Sam Aluko http://www.nigerdeltacongress.com/articles/an_encounter_with_professor_sam_.htm accessed on August 3, 2012

Papic, Marko (2011) The Divided States of Europe Stratfor Global Intelligence http://www.stratfor.com/weekly/20110627-divided-states-europe Accessed on August 9, 2012 Sam Aluko

retrieved on August 3, 2012 from http://nigerianwiki.com/wiki/Sam_Aluko

Togonu-Bickersteth, Augustine (2012) On Professor Sam Aluko, retrieved on August 2, 2012 from http://www.thenigerianvoice.com/nvnews/88125/1/on-professor-sam-aluko.html