IT is not all about price controls, but the intention here is to remove the artificial controls of the elites that wrongly exploit underlying weak market frameworks.
For clarity, having a price commission does not mean advocating price controls and might not even be part of the commission’s mandate.
The number one goal of the commission will be of the economy to reach true price signals, those that correspond to the correct forces of supply and demand, and allow the attainment of socially and economically responsible prices, in both the real and financial markets.
This implies removal of elites collusive power. Salaries, which is the basic source of income for many Zimbabweans, have remained flat or increased marginally but in real terms falling sharply due to a sharp rise in inflation, all a result of predatory pricing. Under such a circumstance, the guiding principle for the commission should be that incomes earned are enough to lead a respectable life at least. True development is progress that does not leave anyone behind. Most prices in the economy — be it real estate, financial and basic commodities — are unjustified. Businesses in the country are used to enjoying huge margins and profits, a system that needs to be addressed. Profits should be socially responsible ones, and not exorbitant. In this regard, the government through the price commission will have to evolve a consensus on this among all stakeholders so that responsible levels of profits are arrived at.
The quest for the US dollar has also seen businesses charging punitive prices when paying using the RTGS$, a situation that needs to be addressed. These prices are indeed not a result of the forces of demand and supply but a reflection of profiteering tendencies in the economy. If left unabated, they may result in the economy going back to dollarisation as there is evidence that the greenback is the most preferred medium of exchange and store of value in the country. It should be noted that neoliberal policy, which requires the government to mostly leave alone the markets and private sector to their affairs, to a greater extent leads to economic injustice for the large segments of the population, to the benefit of a few. Developing countries that blindly jump on the neoliberal bandwagon usually suffer from increased societal imbalances.
The price commission should, therefore, have the right kind of technical expertise, along with having all the required government authority — legal and administrative — behind it, so that the commission could reach correct prices and profits in the country. This will, in turn, go a long way not only in controlling inflation which is slowly getting out of hand, but in reducing the income inequality gap, and in improving distributional consequences of economic growth. Moreover, lower and stable prices will lead to better macroeconomic stability and will, in turn, lead to a lower cost of doing business and greater competitiveness.
This commission should also work towards rationalising the duty on imported commodities, so as to both reduce the level of inflation pass-through for the economy, and to re-direct import demand towards commodities that play a greater role in alleviating poverty, and in enhancing the level of sustainable growth, with good distributional outcomes in the country. In the same vein, the price commission should rationalise the taxation structure of domestic consumption and production, in favour of those items and services which allow economic sectors to receive focus according to the importance they hold in strengthening the overall base of the economy, and its consequences for sustainable growth and welfare.
Neoliberal policies may result in serious inequalities which may be very difficult to redress. As such, government intervention may be required to enable all sectors of the economy to reach the true price signals. There is indeed need for price correction which in most cases is doubtful in the absence of government intervention through a price commission. A price commission is indeed an essential must. Will this be formulated in this “new dispensation”? Time will tell.
Tinashe Kaduwo is a researcher and an economist. — email@example.com