Development by Market

June Arunga and Billy Kahora of the International Policy Network have a new paper out about the cellphone revolution in Kenya. The tale is inspiring: the state having failed miserably in providing communications services, a market sprang up in cellphones without any idea of what customers wanted, what they were willing to pay or what benefits they would gain. The market provided the answers; as June and Billy say:

[B]usiness could be done, distant families could be supported and — anathema to the bureaucratic mindset — a lifestyle could be aspired to merely by the fact of ownership.

Over time, prices and service packages were adjusted as suppliers competed to find out the most advantageous way to serve their customers. In the process, they poured new capital into their systems on the basis of phenomenal growth in custom. Knowledge grew and everyone benefited.

And the ground rules of this revolution? Simple really: private property rights and the freedom to trade.

Government failed, markets succeeded. So often the truth.