Do not think about, write about or deal with human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.
Why socialism fails. That which is common to the greatest number has the least care bestowed upon it. Aristotle.
Agriculture is a perfect example of why the incentives in socialism are so wrong that failure is inevitable.
Lessons from Socialist Tanzania
Dr. Rydenfelt is a professor of economics at the University of Lurid in Sweden.
This article is an updating of a chapter in Dr. Rydenfelt’s book, A Pattern for Failure: Socialist Economies in Crisis.
Tanzania in eastern Africa became an independent nation in 1961, when it was known as Tanganyika. Its political leader Julius Nyerere, a confirmed socialist, was elected president in 1962. In his Inaugural Address to Parliament he declared:
Nyere’s socialism with an African flavor was all the rage with academics in the 60s and 70s. It could never work. If the “academics” who loved and love socialism knew anything about Human Nature, and they are supposed to be experts in that field, they would have known that “socialism with an African face”, or any other face, is doomed to failure. Since academics are never held to account, failure means nothing to them.
“When we were in the midst of our struggle for independence, I promised that after we had won our freedom, we would try to achieve in ten years most of the things which our colonial rulers had failed to achieve during the whole of the time they had governed our country. Today I want to renew that promise . . . All of us have agreed that we must establish a true socialist society in Tanganyika.”
Of course, the President believed in his optimistic vision, and fully intended to realize it. Good intentions, however, are not enough. If you want to implement your vision, you have to start with a realistic blueprint. And, as experience later proved, Nyerere’s socialist blueprint was a dream far removed from reality.
During its first years, Nyerere’s government was occupied with transforming the country from a colonial area under British hegemony into a fully independent nation. Not until 1967 did the government feel strong enough to issue the Arusha Declaration, which implemented a comprehensive socialization program. All important industrial enterprises, including banks, insurance companies, export trade companies, and even most of the larger plantations, were placed under government control.
In Tanzania, however, the great majority of the population earned their livelihood as small holders in scattered settlements. Of course, such a “primitive” agriculture had to be socialized, too. And so the Tanzanian government—following the Soviet model—decided to concentrate the multitude of small farms into large collectives called ujamaa villages.
President Nyerere was well aware of the importance of these small farmers. In a 1964 speech, he stated:
“Our future, in every respect, depends on our farmers more than on any other single group of citizens. They are the people responsible for using our one great national asset—our land. They constitute more than 90 per cent of our people.”
Some months after the Arusha Declaration, President Nyerere published Socialism and Rural Development, in which he spelled out his agricultural program. Among his promises to the nation’s small farmers, the following are significant:
• Respect for the individual.
• Voluntary migration into the collectives.
• The transition into collective production was to be effected gradually and quietly.
• The ultimate stage—a collective large-scale agriculture—was to be achieved by persuasion, not by force. Private plots were to be allowed.
Anyone who knows anything about socialism knows that “voluntary” is inimical to government control.
Although the peasants were enticed with schools, shops, medical care, and drilled wells in all the ujamaa villages, the voluntary resettlement made only slow progress. In order to speed up migration, the government made further offers: free transportation to the collectives, free building materials, free food until the first crop was harvested, free agricultural machinery, and access to credit on favorable terms.
But in spite of the government’s enticements and intensified propaganda campaigns, the peasants were reluctant to move into the collectives. By 1974 only 2.5 million people had settled in the ujamaa villages. The government had to choose between accepting a situation in which only 20 per cent of the resettlement program had been carried out, or abandoning the principle of voluntarism. The Tanzanian government chose to apply brute force—the same policy that all socialist governments have used against their peasant populations. During the two following years, more than 10 million peasants were forcibly moved into the ujamaa villages. In order to prevent peasants from returning to their homes, many of their old settlements were burned.
Despite the fact that fully 90 per cent of Tanzania’s farmers were moved to collectives, the plans for agricultural socialism remain only dreams. Today perhaps a dozen of the 8,000 ujamaa villages function more or less in accordance with the original plan. In the others, most of the land has been divided up, and each family now cultivates its own fields as if they were private property. This total collapse of the socialist plans in many ways corresponds to similar retreats in China and Vietnam.
The forced collectivization engendered distrust and bitterness among the peasants, which led to a sharp decline in workers’ morale. When the government further mistreated the peasants by instituting price controls on agricultural products, most peasants reacted by producing only for their own needs. Those peasants with surpluses tried to sell them on the black market. Such illegal markets, where consumers have to pay substantial premiums to compensate sellers for the risks of punishment, are the inevitable result of price controls. As Ludwig von Mises wrote: “Economics does not say that isolated government interference with the prices of only one commodity or a few commodities is unfair, bad, or unfeasible. It says that such interference produces results contrary to its purpose, that it makes conditions worse, not better, from the point of view of the government and those backing its interference.”
Price controls also led to smuggling. Peasants living near the border tried to smuggle their surpluses into neighboring countries, where prices usually were many times higher than the controlled domestic prices. In its efforts to stop the smuggling, the Tanzanian government closed the border to Kenya in 1977 (it was partly re opened in 1983). As a result, Tanzania lost a large part of its tourist trade.
Tanzania has a soil and climate extremely favorable for agriculture, and in 1961 the country was the greatest food exporter in Africa. The forced collectivization, completed in 1976, was a mortal blow to production. By 1980 Tanzania had to import no less than half its food. In a few years the country had gone from the greatest exporter to the greatest importer of food in Africa. (Similarly, Russia before the socialist revolution was the greatest exporter of food in the world; now it is the greatest importer.)
Tanzania’s socialist policies took a particularly heavy toll on its ability to produce export commodities. The production of sisal (a fiber used in twine) shrank from 226,000 tons in 1970 to 47,000 tons in 1983. Because of shrinking export incomes, and the need to import food, very little foreign exchange was left to pay for other needed imports—raw materials, machinery, fuel, spare parts. As a result of these shortages, only 25 per cent of industrial capacity could be used, and the lack of fuel and spare parts for motor vehicles caused a virtual breakdown in transportation. Without transportation, food surpluses produced in the countryside very often were left to rot. Electricity production, railway transportation, and telephone communications were also hard hit.
By the 1980s, the Tanzanian economy had collapsed. After a visit to Tanzania in 1982, a Norwegian radio commentator offered the following description:
“On days when bread was delivered to the stores, people had to line up for hours. Even commodities like soap, toothpaste, salt, flour, cooking oil, batteries and bandages were lacking. People starve, and starving people get desperate. When I visited Tanzania in 1974 many things were lacking, too, but people still had optimism and enthusiasm. They listened to President Nyerere: If they worked harder, the future would be better. Now the President’s calls have lost their magic; people are resigned. The brutal truth is that the policy of President Nyerere has completely failed. . . The Tanzanians are unable to manage the many state enterprises, and today production is only 30 per cent of its volume a few years ago.”
Seldom has the gap between rosy dreams and dismal realities been wider than in socialist Tanzania. For example, in the Arusha Delcaration of 1967, President Nyerere proclaimed:
“In order to maintain our independence and our people’s freedom we ought to be self-reliant in every possible way and avoid depending upon other countries for assistance . . . Because the economy of Tanzania depends and will continue to depend on agriculture and animal husbandry, Tanzanians can live well without depending on help from outside if they use their land properly.”
The truth is that no country ever has received more aid per capita than Tanzania. In the economic bankruptcy brought on by socialism, national begging bad to be substituted for national pride.
Socialist governments everywhere build their power upon support from the industrial and urban populations—a support that often is paid for with the promise of cheap food. And food prices are held down by price controls, which oppress and exploit the peasants, and lead to eventual shortages. These agricultural policies in socialist states have been analyzed and described by economists like Michael Lipton and Theodore Schultz.
Leaders in all socialist states maintain that their chief objective is to help and support the poor. In Tanzania this message was given special emphasis by President Nyerere.
In reality, however, socialists everywhere have pursued an opposite policy, favoring the prosperous and strong—the industrial workers, the police, the soldiers, the bureaucracy—and oppressing and plundering the poorest and weakest members of the population, the peasants. 
1. Julius Nyerere, Inaugural Address to Parliament on December 10, 1962. Quotations from Julius K, Nyerere. Freedom and Unity: A Selection from Writings and Speeches 1952-1965 (London: Oxford University Press. 1967.)
2. Ludwig von Mises: Human Action: A Treatise on Economics (New Haven: Yale University Press, 1949. p. 758).
3. Swein Wiel Jorgensen, Okonomisk Rapport, October 1982.
4. Michael Lipton. Why Poor People Stay Poor: Urban Bias in World Development (London: Temple Smith. 1977) and Theodore Schultz. Economic Growth and Agriculture (New York: McGraw Hill, 1968).
Successful socialism of any kind only exists in the fevered dreams of brutal, stupid people. Agriculture is particularly sensitive because crops and animals are time-sensitive. Hard work must occur over long periods. If you don’t benefit from this work, you don’t do it.
Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Days of Songs and Mirrors: A Jacobite in the ‘45.”
Cui Bono–Cherchez les Contingencies