Related Stories By EC Ejiogu Published: 20120423

“Look at that wall,” he said, pointing at the far wall of his hut, which was rubbed with red earth so that it shone.

 “Look at those lines of chalk”; and Okoye saw groups of short perpendicular lines drawn in chalk… “Each group there represents a debt to someone, and each stroke is one hundred cowries.

“You see, I owe that man a thousand cowries. But he has not come to wake me up in the morning for it. I shall pay you, but not today.

“Our elders say that the sun will shine on those who stand before it shines on those who kneel under them. I shall pay my big debts first.”

And he took another pinch of snuff, as if that was paying the big debts first. Okoye rolled his goatskin and departed. — Chinua Achebe, in “Things Fall Apart”

 Orthodox economics prides itself as a science.

But one of its more glaring pitfalls is its inexactness, which its practitioners hardly acknowledge in their pontifications about human economic behaviour.

When it comes to debt, the orthodox economists often give the impression that it’s a bind that doesn’t abhor some manner of leverage to the debtor.

The foregoing excerpt is an encounter that took place between Unoka, the ne’er do well father of Okonkwo, the over-achieving main protagonist in the story, and Okoye, one of his several creditors in Achebe’s classic novel, “Things Fall Apart”.

It portrays the leverage that a debtor holds and can exact on his creditor.   

Anyone conversant with the storyline in Achebe’s novel would acknowledge that no one can deny that a ne’er do-well like Unoka has so much going for him there by virtue of his debt to Okoye, the wealthy titled man who paid him an unannounced visit that early morning and tried to use the anticipated big ticket title that he was gearing up to take to make Unoka pay up.

Anyone who takes a bet that Okoye will be constrained to protect Unoka’s life and limb as insurance for future collection of his debt from him will not run the risk of losing.

Notwithstanding the existence of this age-old debtor’s leverage, it’s often ignored by orthodox economists for reasons that can be attributed to perhaps intellectual laziness or political ineptitude emanating from selfishness on their part.

When it’s wielded properly, the debtors’ leverage can exact favourable terms of payment — competitive interest rates, payment reprieve, etc — and even debt erasure from creditors for debtors.

It can be handy at both the micro and macro levels.

The 1970s and 1980s were times when the efficacy of debtors’ leverage became quite handy in Third World societies — especially in Latin America — where proficient intellectuals held sway as managers.

If you’d recall, the formation of the OPEC in the 1970s by Third World oil producers led to almost an immediate oil crisis that delivered bountiful wealth from oil sales to Third World crude petroleum producers.

The West European and North American banks into which those OPEC members lodged part of that wealth wasted no time to embark on a quest to turn some of that into profit for themselves.

They peddled cheap loans to non-petroleum producing countries.

The Third World made the error of accepting those stringed loans and became entrapped in the biggest debt trap in modern world history.

The resultant debt trap brought the best out of progressive intellectuals in Latin America when they found strength in what translated to weakness in Africa south of the Sahara.

The responses that those progressive Latin American intellectuals charted for their debt-ridden countries helped save the latter from imminent collapse from debt peonage.

Aspects of those responses even came handy for Mexico and Argentina during the financial meltdowns that they experienced in the 1990s and at the onset of the current century, respectively.

Some of us were appalled when in the midst of the continuing decay in every facet of its hollow economy, Nigeria - under Olusegun Obasanjo - proceeded to dole out US$12 billion in debt payment to the Paris Club.

Some analyst alleged then that that repayment was inspired by Obasanjo’s ill-fated third term bid of the time. According to those analysts, that repayment was meant to curry favour from West European states whose support Obasanjo felt he needed to see himself through in that bid to award himself a third term as President.

The gurus (including Nigeria’s current Economic and Finance Minister, Mrs Ngozi Okonjo-Iweala), who prided themselves as Obasanjo’s economic advisors went on a spin-spree to portray it as a sound economic move.

But no one heard them outline how that unwarranted transfer of stupendous wealth to the gnomes who hold fort in West European and North American banks, would translate to the repair of Nigeria’s hollow economy.

Since I’m aware of the intellectual laziness that those gurus are known for, I can’t help calling their attention to the deftness with which US policymakers continue to manage their indebtedness to the Chinese who hold most of America’s treasury bonds.

It’s to the degree that China’s stupendous funding of US government deficit budget spending is bound to be one of the factors that will delay the much talked about decline of the US as a hegemonic actor in the capitalist world economy.

Although some analysts use slight heaves in China’s stock market and their ripple effects in the New York Stock Exchange and elsewhere in the West to infer the potential dangers inherent in the entire humanity being intricately linked to a single economic infrastructure, it’s still lost on many that the fact that the Chinese government has invested enormous amount of China’s national wealth in US government bonds makes it imperative for China’s leaders to wish for America’s continuing existence as a viable economic entity.

That wish translates to China’s reluctance to push or side world issues that could undermine US capability to redeem those bonds in the future for good.

The US is not unaware of that fact.

Hence, the arrogant resolve with which the US foreign policy establishment - particularly under George W Bush - pushed hard-nosed foreign policy initiatives at the UN and everywhere.

All of this would be music to Nigeria’s economic gurus whose sole pre-occupation remains the tabulation of crude oil sales.

 · Prof EC Ejiogu is a political sociologist.