1.1 Introduction
This book critically explores how globalization and democratization affect the economic, social, and political environment within which state and non-state actors operate in the Nigerian oil sector . In other words, it presents the political economy of deregulation of the Nigerian downstream oil industry. The book revisits the continued intellectual debate generated by the politics-economy nexus; hence, it is situated within the broad spectrum of political economy. At the core of the study of politics has been the relationship between the state, economy and society, hence prompting the emergence of the term “political economy.” Lenin observes that politics is economics in tablet form, but this proposition is only applicable to the capitalist epoch of history where capitalism represented a mode of social organization characterized by the hegemony of the economic dimension.
According to Marxist tradition, society is divided into a substructure and a superstructure. The substructure—the economic foundation of society—contains the means of production (the resources), the forces of production (the machinery to control the resources), and the relations of production (the owners of the resources and the machinery) (Rejai 1995, p. 12). The superstructure (politics) on the other hand, is “everything” that is not part of the economic system: art, philosophy, games, and religion. Based on the logic of economic determinism, the substructure shapes and determines the superstructure. Therefore, a re-integration of politics and economy enhances the study of political economy as a field of study, while globalization espouses the convergence of the twin concept of politics (democracy ) and economy (capitalism ).
Economic development and democracy are embedded in the discourse on globalization . Thus, the main question centres on whether economic development is a prerequisite or precondition to democracy and/or modernization of politics. There have been heated controversies over whether democracy or authoritarianism is the requirement for facilitating rapid socio-economic development in underdeveloped or developing countries. These debates have deepened due to compelling evidence of democratic failures recorded in many developing societies, especially Africa , and the adjudged development under autocratic regimes in Asia. According to Smith (2003, p. 277), three perspectives responded to this recurrent political economy debate. The conflict viewpoint argues that economic development needs an authoritarian government to instigate policies required for rapid economic growth in the face of resistance. From this perspective, democracy is intrinsically unstable and permits the expression of domineering pressures to redistribute and consume societal resources instead of ensuring their accumulation and investment.
A second perspective, the compatibility viewpoint, asserts that democratic states are more capable of aligning growth with distribution, which triggers market expansion, economic growth and development. This is based on the premise that democracy remains a requirement for a functioning market economy that accelerates growth, human development and social equality. The third viewpoint, the skeptical perspective, is unconvinced of the existence of any relationship between democracy (politics) and economic development (economics), and believes that economic development is attainable under any form of political system. From this perspective, the evolution of globalization has imposed an international order on the world; an order founded on the internationalization of capitalism and liberal democracy.
In Nigeria, the imposition of the liberal order by the state has had far-reaching implications on the country’s oil resource management and fuel price policies. The ideological distinctions of the development-regime type convergence were treated in isolation, without a critical exploration of the impact of external realities or global environment on regime types and national development.
1.2 Historicizing the Globalization of Deregulation in Nigeria
The collapse of communism in the Soviet Union in the late 1980s and through the early 1990s signified an end to well-orchestrated impediments to the spread of globalization, which invariably led to the triumph of liberal ideology as the only alternative for “good governance ” (Akinola 2009, p. 1; Adesoji 2006; Ojo 2004; Ake 2000, p. 1). Furthermore , Smith argues that:
The apparent globalization of political values and institution of political values and institutions represented by the dissolution of the communist regimes in the Second World and their replacement by systems of government broadly subscribing to liberal democratic beliefs and practices, has lend credence to the view that there is an inevitable trend towards a universal form of government on which all societies will eventually converge. (Smith 2003, p. 276)
Globalization was presented by the neoliberal school of thought as the most desirable socio-economic order for fast-tracking democratization and sustainable development in Africa , motivating the securitization of democracy in Africa (Akinola 2016). But it has not proffered solutions to the un-democratization of world political and economic order, as evident in the sustained underdevelopment of Africa (Ake 1981, p. 178). The convergence between globalization and democratization and its effect on economic development in developing countries remain at the core of intellectual exposition and passionate conversations since the 1980s (Aghion et al. 2003). It is thus necessary to draw a direct relationship between globalization and the “export” of market-based and capital-intensive democracy to Africa. The scramble for democratization in Africa was initiated by global financial powers as “conditionality”1 for developing countries like Nigeria to receive financial assistance (Stone 2007; Khor 2001; Larbi 1999; World Bank 1997).
Since the beginning of what Huntington (1991) refers to as the “third wave” of democracy across the world, from Southern Europe to Eastern Europe, and later from South Asia to Latin America, and now lately down to Africa , promoters of globalization continue to celebrate the globalization-democratization nexus. Therefore, it is important to examine the motivations for the worldwide acceptance of neoliberalism,2 and the “conditionality” clauses that characterized the International Monetary Fund (IMF) and World Bank dealings with developing countries, especially African countries (Stone 2007; Ake 2000, p. 128; Larbi 1999; Stein and Nafgizer 1991, p. 173).
Although promoters of globalization often highlight how the convergence of democracy, democratization and liberalization facilitates rapid economic development, especially in the Third World (Dunklin 2005; Kura 2005; Grugel 2003; Stiglitz 2002), the reality in many African countries, Nigeria in particular, contradicts this high optimism. Since the mid-1980s, successive Nigerian governments have found it quite challenging to institutionalize democratic principles and embark on sound socio-economic policy initiatives to facilitate socio-economic development in the country.3 Successive governments attempted to implement effective subsidy reform and deregulation of the downstream oil sector to no avail. This raises questions about the push for deregulation4 related to the need to ensure the effectiveness of the state, the utilization of its resources for the benefit of the masses, and government’s capability to effectively discharge its responsibilities, especially in relation to service delivery (Kura 2005). Therefore, it is imperative to explore how globalization would help enhance ...