Heterodox Economics is not for wimps

Complicated? Heterodox Economics is not for the faint hearted.

I slipped gently into a different pond last week - The Association of Heterodox Economics Conference.

Perhaps I can convey what it was like with a quote from an early un-illustrated slide?

‘Sub-imperialism indicates an average organic composition of capital and national production in a given periphery, and integration of relatively autonomous national production under the hegemony of imperialist production’.

It was going to be a long day.

However, although there were moments which reminded me why I hadn’t gone into academia, things brightened up with a discussion about the American Century (the one before this one) and mention of U.S. ‘techno-nationalism’ (illustrated by how the U.S. prevented top Dutch chip-maker ASML from selling its wares to China on pain of sanctions on Dutch exports to the USA).

The pleasant setting was in buildings of Kings College London on Stamford Street where Heterodox-heads were enraptured by talks such as ‘The Role of Manufacturing in Development of the Global South’ and ‘Imperialism and Dependency in the 21st Century’.

The Guardian, who I blame for my attendance, had carried an editorial a few days earlier quoting a thesis proposed by one of the speakers, Dr Andrew Fischer, about what he called the ‘large-scale looting’ of Zambian natural resources. His attention-grabbing headline was that the present U.S. administration's $50 mln cut in USAID was rather dwarfed by the $5 bln exported by foreign interests in 2021 (20% of GRZs then GDP).

Anything about Zambia usually has the power to grab my attention. But although Dr Fischer was present, the talk he gave was actually on ‘China and the Dialectic of Developmentalism and Dependency’.

Nevertheless, his Zambian point, as conveyed by The Guardian, had sparked my interest. With copper output in 2021 worth $8 bln (about 825,000 metric tons at $9,300 per metric ton) Fischer’s case was that, if $5bln of it left the country, this was plunder on an enormous scale. Certainly, if true, the figure was a thousand times more than the charitable $50 mln.

But, even as a philo-Zambian, I had to question how real the figure was.

We are up against the old structural problem associated with all mining in resource rich countries; costs of capital goods, wages, energy, and transport accumulated in the country of production, with profit only realised upon sales overseas. Capturing rightful tax from mining companies is as slippery as a flotation reagent on a shaking tray. In the case cited, the value of copper exported was 36% of Zambia’s 2021 GDP of $22 bln. Zambians see figures like this and just feel wronged. Their refrain is ‘our great wealth of resources leaves our country and ordinary Zambians do not benefit’.

However, after years of visiting and studying Zambia, I have come to almost pity the miners. Electricity supplied by ZESCO is sporadic, much of it sold to South Africa or Zimbabwe at a cost to domestic supply. Even today, as I write, locals in Mufulira are in despair - unable to run their businesses with electricity only supplied between 02.00 and 06.00 hrs - and none in the daytime. The knock-on effect to the wider Zambian economy is disastrous.

When tax is paid to government, it does not always flow, as it should, to schools, hospitals and roads. Medicine - even via the former goodwill of USAID, as one Zambian writer to The Guardian pointed out, is often looted before it reaches the poor and ill for whom it is intended.

The Fischer case is that the heavy hand of colonialism passed undiluted to multinational companies, leaving Zambians little say in the development of their country’s natural resources.

He is only partly right. The state, as metal people know only too well, had its chance when Zambian Consolidated Copper Mines (ZCCM) was founded in the 1970s under Zambia's first president, Dr Kaunda. It was ZCCMs failure to invest in its plant and equipment that in the 2000s ushered in the era of overseas private ownership of the copper mines - in fact, rescued by overseas interests. Today there are no private Zambian-owned mining companies large or experienced enough to take on the foreign entities - and so it is easy to paint a picture of rapacious foreign interests. But when will the Zambian state take some responsibility for its actions?

Trying to turn clocks back as President Edgar Lungu attempted when his government expropriated and nationalised MCM (Glencore’s Mopani Copper Mines) and Vedanta’s KCM (Konkola Copper Mines) in 2021 just didn't work. Bureaucrats, it seems, just aren't great at mining - and dereliction swiftly followed. If state ownership doesn’t work and private ownership results in apparent larceny, there don't seem to be many options left.

In 2021-22 I had telephone calls with the CEO of ZCCM-IHs Mopani, the state-owned entity acting on behalf of the Zambian Government. It was clear from my talks that the most basic knowledge of how to ship cathodes or hedge on the London Metal Exchange was lacking. It was also apparent that logistics companies controlled by the former mine owners were making it difficult for the state-owned miner to find independent routes to get the copper out.

State ownership of the mine in the end meant nothing and in MCMs case the $1bln or so of debt still owed to Glencore after expropriation (to be paid via delivery of copper) was no liberation. Who was going to price it? And then who was going to ship it?

A country without the systems to build independence was unable to realise value. Without management skills required to operate highly complex mine/smelter operations the whole enterprise was doomed to failure.

I have pondered these things for many years and wiser heads than mine are needed. My only hope is one day for better governance on Zambia’s side; some kind of technocratic government free from the cant of tribal politics. Perhaps only then the country would stand a chance of reining in some of the wealth that leaves the country.

A glimmer of hope came when Stillwater (the South African miner who had turned around Marikana in South Africa following the deaths of 34 miners shot by police in 2012) sought to purchase MCM. They were seriously interested to work with the Zambian government and community. (As Glencore had to some extent demonstrated by removing sulphur pollution and building roads and lorry parks.)

Instead, as I have related in previous articles on this subject, the present Zambian Government's decision under Hakainde Hichilema to sell 51% of the MCM complex to an unknown entity at COP 28 in the UAE in 2023 merely resulted in MCM losing 49% of its ownership while being saddled with over $400 mln of new debt.

Incompetence and corruption, poor financial management, loading the economy with debt by borrowing from the international market rather than collecting tax, is part of the cause of Zambia’s parlous position. With so many (now about 22 million Zambians) feeding from the same well – the oasis is now dry.

And hope, the thing that once sprung eternal, is running out too. Perhaps the one crumb of that stuff that might be left is that of a younger generation of Zambians (many bright and well educated) who, if weaned away from the El Dorado of almost useless resources, might perhaps be tempted into areas of earnings that do not require digging.

Most heterodoxites, from my limited experience, are locked into the idea that the global south is eternally condemned to exploitation by a form of multinational imperialism. Be that as it may, they tend to underestimate the way in which the corrupt leaders of the countries in question appear to aid the multinationals in their mission.

Many Zambians will tell you, at the first sign of economic or natural disaster, that ‘It’s all in God’s hands’, when in fact it’s in their own.

Now if that isn't heterodox thinking, I don't know what is.

by Anthony Lipmann 27.06.25

Published on www.lord-copper.com