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also believed that the volatility of stratification along ethnic lines derived from the tendency for people to perceive this form of inequality as relatively permanent.¹⁹

      Colonial Tanzania exhibited one important element of this phenomenon. Members of Tanzania’s Asian community—persons of Indo-Pakistani descent—tended to be concentrated at the middle or upper levels of the Tanzanian social structure. They were prominent in Tanzania’s mercantile sector as the owners of the business enterprises that conducted much of the country’s retail trade. During the colonial period, Asians were also a conspicuous presence in Tanzania’s white-collar professions, in the middle levels of the civil service, and in the clerical and managerial levels of major private sector organizations, such as the country’s largest banks, insurance companies, and trading firms. The Asian presence as a predominant middle class seemed to represent a significant barrier to African upward mobility both in the public sector and in the middle levels of these private sector institutions, a goal that was at the heart of the Tanzanian nationalist movement.

      At the time of independence, the prominent Asian presence in the middle class gave rise to an intense debate among nationalists over whether their post-independence government should pursue an indigenization policy that would privilege Tanzanians of indigenous descent over those whose family backgrounds traced to different continents.²⁰ Within TANU, Nyerere favored a nonracial policy. A small number of party members favoring a policy of indigenization, however, split off and formed an opposition called the African National Congress (ANC). Nyerere and the nonracialists won the debate between the two groups, ensuring that the government would not use its powers to create preferred social categories based on ethnicity or race.

      The success of this policy is at the heart of modern Tanzanian politics. It helps explain why Tanzanians were prepared to accept the failed economic policies the Nyerere Government implemented along with the conjoined problems of repression and corruption. Tanzanians never perceived the Nyerere government’s economic policies as an attempt to confer benefits on favored groups while depriving others. This also explains why Tanzanians have not reacted with greater vehemence to their country’s all-pervasive and seemingly intractable problem of official corruption. Although Tanzanians abhor corruption, they do not perceive it as a pattern of economic transfers that moves wealth from ethnic have-nots to ethnic haves.

      The limitations of an ethnically based approach to Tanzanian politics call attention to the need for a different way to understand the country’s post-independence trajectory. Political economy provides it. Regarding the relationship between ethnicity and politics, Tanzania has little in common with other independent African countries. Regarding its post-independence economic trajectory, however, it has almost everything in common.

       Political Economy and Tanzanian Development

      In the field of political economy, Tanzania attracts attention because of the extended process of economic decline that began immediately after independence and continued for nearly twenty-five years, until the beginning of economic reforms in the mid-1980s. Tanzania’s post-independence policies failed in many respects. The socialist strategy of economic development did not lead to growth; it did not narrow the gap between the country’s urban middle class and the vast majority of the rural poor. It did not prevent the emergence of a privileged political-economic elite. The principal reason for Tanzania’s economic decline lay in its poor choice of economic policies during the post-independence period. This much is unsurprising: poor policies produce poor results. What remains is the need to answer Robert Bates’s enduring question: “Why should reasonable men adopt policies that have harmful consequences for the societies they govern?”²¹ The answer is that Tanzania’s choice of policies derived from a set of ideas about economic development that prevailed throughout the developing world during the generation following World War II. The ideas that had the greatest influence in Tanzania were those of the sub-field of economics its practitioners termed development economics.

      Post-independence Tanzania had two distinct economic philosophies, each important in its own way. The first was the socialist humanism of Julius Nyerere, a set of convictions that grew out of his long interest in the mild socialism of the British Fabian society. Nyerere’s ideas attracted global admiration and captured the attention of the Tanzanian people. Because they set forth the normative objectives of Tanzanian development, they attracted the respectful support of his fellow leaders as well as the admiration of students, scholars, and international organizations everywhere. The second set of ideas consisted of the analysis of the development economists. This intellectual framework consisted of a large body of scientific research about how developing countries with agriculturally based economies could best attain rapid economic growth. Although these ideas were less accessible than Nyerere’s because of their arcane terminology and daunting mathematics, they had a great influence on the government’s day-to-day decisions about development policy.

      The core of development economics was simple and compelling. The development economists believed that industry, not agriculture, offered the greatest prospect of rapid economic growth. Governments that wanted to attain economic growth should therefore find ways to launch industrial development. The fundamental challenge was how to go about doing so. Their answer was to create a set of infant industries that, until they could stand on their own, would require protection from competition by global industrial giants. The immediate practical question was how to finance these industries. The development economists’ answer was that these industries would require financial support from a variety of sources. One would be foreign public investment, through aid programs that would provide resources for infrastructure and improved public services. The second would be foreign private investment from corporations anxious to do business in a protected environment. The third would be the governments themselves, which would need to impose taxes on the agricultural sector to gain the revenues necessary to provide domestic capital for investment in the new industries. The vast majority of the world’s developing countries adopted this strategy, Tanzania among them.

      The development economists believed that their strategy for economic growth would enable developing countries such as Tanzania to transform themselves, within a short period from low-performing agricultural economies to higher-performing ones based on an expanding industrial base. The name they assigned to this strategy was import-substituting industrialization (ISI), and this approach prevailed in regions of the world as diverse as Latin America and South and Southeast Asia as well as in much of sub-Saharan Africa. Although Tanzania gained global acclaim because of the idealistic approach of the founder-president, its development policies during the decades following independence were closer to the framework prescribed by the development economists. The president’s ideas stressed rural development through communal self-help at the local level as a means of improving the socioeconomic conditions of the poorest Tanzanians, the small farmers. In reality, the framework Nyerere’s government adopted imposed higher and higher levels of taxation on smallholder farmers to extract the revenues that provided capital and other subsidies for urban industries. Urban Tanzanians, including industrial workers, technocrats, managers, and economic planners, were the winners; small farmers were the losers. There is no great mystery about why the Tanzanian government adopted this strategy: it was acting the same way as countless other governments throughout Africa and other developing regions.

      The ISI model derived influence from the scholarly prestige of the development economists as well as from the contagion effect. The development economists’ ideas gained additional influence from their prominence in the economics curricula of many of the most prestigious universities in North America and Europe. Students from the developing world were routinely channeled into courses on development economics so that they could better assist with the development of their countries. In addition, the ISI intellectual and strategic framework was operative throughout the major development institutions, such as the World Bank and numerous bilateral aid organizations. The influence of the development economists was so great that very few developing countries sought to give a higher priority to agricultural development than to industry. One of the most powerful sources of attraction was the belief that ISI offered a shortened path to industrial prosperity. Western history had taught that an industrial revolution might take several centuries to accomplish and that it would only come about with a high cost in social misery. The development economists sought to

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