The past two weeks have been dominated by the news of DSTv having made a decision to exit the Malawi market. This followed a misunderstanding between them and the regulatory authority, MACRA, as to how the latter is supposed to regulate the former. We have yet to know the final outcome of the issue and I will comment no further on it except to bring to the readers’ attention some of the issues that came to the fore as the public reacted to the development.
In the conversation that ensued in the country, some opinions were being expressed to the effect that provision of television services were not among the essential services or goods in Malawi, and therefore did not deserve the action that MACRA meted out on Multichoice. Commodities like maize were more deserving of an action of this type, it was reasoned.
When I last checked, many goods and services did not occupy the Malawi regulated space. I am not sure if any authority is mandated to regulate maize.
Malawi follows the market economy system. In such a system, businesses are owned by private individuals and prices are set by the interplay between supply and demand. At the time of composing this article, tomatoes were selling for close to nothing in Blantyre. This was despite the same commodity having been overpriced just a few months previously. I remember buying five tomatoes for K2,000 around June. Currently K500 will buy more than 40 tomatoes. This is so because there is excess supply of the commodity, which was not the case a few months ago.
If an economy is not a market one, it will be a command economy. This is one in which businesses are owned by the state and prices are set by state planners. Some people prefer to call such economies socialist, communist or Marxist. The last term is after a German philosopher, Karl Marx (1818-1883), who postulated that there would be a better distribution of wealth if people got rid of social classes. In the classless society that he envisaged, no private individual would own any factors of production (like land or factories). The state would, therefore, produce everything and set all prices. Russia, China, Cuba, North Korea, among other countries, have adopted this system of government to varying levels. Some African countries have also experimented with it, but Malawi is not among them.
Although we are a market economy, there are a few sectors that are regulated. Suppose I come up with a brilliant alternative fuel to petrol or diesel today. I cannot market the same to the public until I get the necessary license from MERA because fuel is a regulated product. They will even determine the price at which I can sell my product or will have to approve the one I set. That is the essence of regulation.
Regulation comes in to protect consumers from the bruises they would otherwise suffer if they were exposed to naked capitalism. Regulated sectors are, to all intents and purposes, pockets of socialism in a market economy. With regulation, an economy will have one leg in capitalism and another in socialism. It is effectively a hybrid economy.
To compare a regulated service or product to an unregulated one is an exercise in futility. It is like comparing apples with oranges. It will serve no useful purpose. Would Shorprite need to seek approval for them to raise the price of carrots? Would it be necessary for tomato vendors to obtain approval from appropriate authorities to raise the price of tomatoes? These and similar questions were asked by some commentators. These products, and many others, are not regulated, and, as such, are left to the dictates of market forces.
Continuing with the conversation, Malawians need to make crucial choices. The first choice is whether to maintain the market economy we have pedaled ever since, or to switch to a socialist one, where all products and services will be regulated and therefore Government will be expected to control prices. This many sound like an attractive choice but socialism’s pros and cons need to be studied carefully so that if that choice is made it will be an informed one.
The other choice would be whether to maintain regulation of some sectors or abandon it while we are still in a market economy. If the choice to maintain regulation is made, we will need to decide which sectors need to be regulated and how the regulation will be carried out. If we choose to abandon regulation altogether, we need to get ready for wild fluctuations in prices as supply and demand forces play out.