By Henry Kyambalesa
October 21, 2025
1. Introduction
There are basically the following four alternative socioeconomic systems:
1.1 The Traditional Economy: The term “traditional economy” refers to an ancient and spontaneous type of socioeconomic system that, in modern times, exists in rural parts of developing countries, and that is typically based on small-scale, subsistence-type of, farming mainly intended to meet the basic needs of families with little or no surplus output for sale, and that is accomplished by means of hoes, axes, sickles, and other archaic and less-productive forms of farming technology. It is alternately referred to as the “traditional economic system.”
1.2 The Free-Market System: The “free-market system”—also referred to alternately as the “capitalist system,” the “laissez-faire system,” or simply the “market economy”—is essentially a socioeconomic system that is generally characterized by the following features:
(a) Private ownership of such means or factors of production and distribution as land and the various forms of capital—including raw materials, financial assets and institutions, manufacturing facilities, assembly plants, machinery and equipment, transportation facilities, service centres, and retail outlets.
(b) Multi-party politics, including political parties whose platforms are based on a diversity of political, economic and other facets and aspirations of human endeavour.
(c) No government ownership or control of news outlets. And
(d) A pluralistic social system—that is, a social system characterized by a multiplicity of interest groups, including cultural, political, religious, environmental, and other non-governmental groupings.
The “free-market system” is founded upon the ideology of capitalism or the free enterprise ideology, whose core elements are individualism, freedom to promote and protect one’s personal interests, private property, profit, equal opportunity, competition, the work ethic, and limited government.
1.3 The State-Controlled Economy: Essentially, the state-controlled socioeconomic system is generally characterized by the following features: (a) state ownership of the means of production and distribution; (b) total ownership and control of all news outlets; (c) price and foreign exchange controls; (d) strict investment restrictions; (e) monopolistic, single-party politics; and (f) a monolithic or homogenous social system.
Such a system is characteristic of communist countries, examples of which include China, Cuba, Laos, North Korea, and Vietnam. It is alternately referred to as the “communist system,” the “command economy,” the “centrally planned economy,” the “centrally controlled economy,” the “centrally planned socioeconomic system,” or the “centrally controlled socioeconomic system.”
1.4 The Intermediate System: The term “intermediate system” refers to a socioeconomic system that generally possesses the following characteristics: (a) existence of both private and state ownership of the means of production and distribution; (b) limited or generally prohibited multi-party politics; (c) a pluralistic social system; and (d) total ownership and control of the national communications apparatus and allowance for continually censored locally based news outlets.
It is alternately referred to as the “socialist system,” the “mixed economy” or the “mixed socioeconomic system.” Examples of countries which portray characteristics of a mixed socioeconomic system include Great Britain, Canada, France, and Italy.
Note: Government coercion increases in the direction of the centrally controlled socioeconomic system away from the capitalist system, while political, social and market freedom increases in the direction of the capitalist system away from the state-controlled socioeconomic system.
And societal members’ demands on, and expectations of, business institutions are greater in socialist and capitalist systems than they are in centrally planned socioeconomic systems.
This should perhaps be expected considering the fact that people in centrally planned economies are mainly served by coercive governments and monopolistic, state-owned companies, which are generally insensitive to their special needs, demands and expectations.
2. The Zambian Context
From the time of its political independence on 24th October 1964, Zambia has been governed by four political parties; that is, the United National Independence Party (UNIP), the Movement for Multiparty Democracy (MMD), the Patriotic Front (PF), and the United Party for National Development (UPND).
Let us examine the nature of the country’s socioeconomic system during the reign of each of the four political parties.
2.1 The UNIP Era. In April 1968, August 1969 and November 1970, former president, the late Dr. Kenneth D. Kaunda, made policy pronouncements in his addresses to the National Council of UNIP—pronouncements which were aimed at nationalising and/or expropriating privately owned enterprises.
By the end of 1969, State ownership of business entities encompassed all industrial and services sectors of the country’s economy under the Industrial Development Corporation (INDECO), including agriculture, airline and bus services, baking, hotels and tourism, milling, mining, real estate (partly the construction of houses), the timber industry, and the supply of electricity.
Essentially, UNIP’s socialist policies barred both local and foreign private investors from medium and large-scale commercial and industrial sectors of the country’s economy from the mid-1960s to 1991.
Naturally, the monopolistic position enjoyed by State companies in the country’s economy culminated in complacence and gross inefficiency because, in the absence of competition, they apparently found it unnecessary to seek or use technological inventions and innovations that would have improved the quality and quantity of their outputs.
The culmination of such a state of affairs was a national economy that was characterised by rampant and unprecedented shortages of commodities, and, among other socioeconomic ills, an escalation of black markets for the commodities.
2.2 The MMD Era. The late President Frederick T. J. Chiluba (1991 – 2002) embarked on an ambitious privatisation program upon his inauguration in October 1991 in a deliberate attempt to boost competition in commerce and industry, among other rationales.
In making the transition, he summed up his thinking about the role his administration was going to play in the creation of an economic system in which commercial and industrial activities were the preponderance of the private sector in the following words: “Never shall the Government allow the selling of soap and foodstuffs to be its business” (E. Nyakutemba, 1992:32), and “We will privatise everything … from a toothbrush to a car assembly plant” (M. Ham, 1992:41).
As D. M. Chilipamushi (1994:16) has noted, privatisation was expected to stimulate private investment, give economic power to a greater number of people through stock ownership, promote competition and encourage efficiency in commerce and industry, beef up government coffers through the sale of government holdings in state enterprises, as well as ease the financial burden of state companies on the public treasury.
And, as C. Pitelis and T. Clark (1993:7) have maintained, the reduction of government involvement in commerce and industry that would follow the privatisation of State enterprises was expected to result in reduced public-sector borrowing and government spending.
Also, State-owned assets and enterprises, to paraphrase G. N. Muuka and B. Abubaker (2002:16), could easily become vehicles for embezzlement and bribery for personal aggrandisement, often at the expense of the implementation of aid-financed projects, and could also foster the development of cronyism through patronage at the highest levels of government.
Moreover, they could bolster the siphoning-off of public resources for party, political or factional purposes, as well as trigger the packing of public enterprises with supporters of the ruling political party without regard for genuine personnel requirements.
The following excerpts should provide some of the other worthwhile benefits associated with privatisation:
“Privatisation of state enterprises is an extension of democracy because it removes political interference from the running of businesses” (V. Chitalu, 1996).
And
“There are heavy costs associated with the conversion of a State-controlled economy into a free market system, such as increased unemployment; in the long run, however, the free-market system holds great promise for everyone” (L. Mwewa, 1996:36).
The next MMD administrations of the late Levy P. Mwanawasa (2002 – 2008) and the late Rupiah B. Banda (2008 – 2011) did not tamper with the country’s socioeconomic system introduced by the late Frederick T. J. Chiluba.
2.3 The PF Era. During the late Michael C. Sata’s administration between 2011 and 2015, the Zambian government changed course and reverted to socialist economic policies pursued by UNIP between 1968 and 1991 by creating the Industrial Development Corporation (IDC) in 2014—a corporation that was different from the Industrial Development Corporation (INDECO) that was established by the UNIP government in abbreviation only.
According to the PF administration, IDC was a state-owned enterprise (SOE) charged with the mandate to spearhead the country’s commercial investments agenda aimed at strengthening the country’s industrial base and job creation. It is wholly owned by the government through the Ministry of Finance.
And, like its predecessor, IDC’s operations encompassed all industrial and services sectors of the country’s economy, including agriculture and forestry, energy, financial services, healthcare, information and communications technology, infrastructure, manufacturing, mining, real estate, tourism, and transportation and logistics.
The next PF government led by the late Edgar C. Lungu (2015 – 2021) did not make any changes to the socioeconomic system introduced by the late Michael C. Sata.
2.4 The UPND Era. Zambia’s socioeconomic system has not changed under the national leadership of Dr. Hakainde Hichilema (2021 to date) and the UPND Alliance. The country’s economy is, therefore, still captained by the IDC established by the late Michael C. Sata.
3. Concluding Notes
Zambia was a single-party state between 1972 and 1990 under the leadership of UNIP and the late Kenneth D. Kaunda. From 1991 to date, the country has been a multi-party state.
With respect to the country’s socioeconomic system, its economy is, by and large, still administered through the IDC established by the late Michael C. Sata.
And, to date, the country’s major newspapers—that is, the Times of Zambia and the Zambia Daily Mail—and its radio and TV broadcasting services are owned by the ruling political party. Privately owned and community-based TV and radio broadcasting services, on the other hand, are deliberately designed and restricted to cater to the needs of citizens in districts across the country as provided for by the Radio Communications Act No. 25 of 1994 and the Independent Broadcasting Authority Act No. 17 of 2002.
Zambia is clearly not a capitalist country; it is still a socialist country.
Finally, there is a need for Zambia—and other developing countries as a matter of fact—to provide adequately for various kinds of guarantees, inducements and essential public services and facilities designed to incentivize both local and foreign private investors in order to facilitate the country’s transition to a more robust market-based socioeconomic system, such as the following:
1. A well-developed transportation infrastructure and adequate transportation services to industrial, commercial and residential areas to ease or facilitate the distribution of production inputs and finished products;
2. Adequate public services (including police protection, fire protection, public utilities, and decent housing), as well as telecommunications, educational, vocational, health, and recreational facilities;
3. Equitable sales, corporate, and other taxes, as well as tax concessions and inducements that are more attractive than those in alternative countries or regions which investors are likely to consider for investment;
4. A viable and efficient financial system, including the Lusaka Stock Exchange (LuSE) and all other financial institutions in the country;
5. Renunciation of both price and exchange-rate controls;
6. Assistance by the national government in nurturing entrepreneurial and management skills;
7. A reversal of the current emphasis on stabilizing inflation at the expense of job creation and economic growth by placing greater emphasis on job creation and economic growth through low interest rates and progressive reductions in taxes in order to stimulate investment, savings and consumption;
8. An ambitious program designed to lure private investments which can lead to the creation of new jobs, facilitate socioeconomic development, and create a more competitive economic setting that can promote efficiency, as well as compel business entities to improve the quality of their products, increase the quantity of their outputs, and charge relatively lower prices;
9. Political and civic leaders who are fair and honest in their dealings with private business institutions, and stable economic policies (including a formal assurance against nationalization and/or expropriation of privately owned business undertakings by the national government);
10. Political and civic leaders who are genuine and resolute in their fight against the scourge of corruption in both governmental and non-governmental settings;
11. Less bureaucratic licensing, import, export, and other procedures, and adequate information about investment and marketing problems and opportunities in the various sectors of a country’s economy and in cross-border markets;
12. A system of justice that is fair, impartial and independent in both word and deed;
13. Unyielding implementation of policies designed to protect the fragile natural environment, and to relentlessly address the various forms of environmental pollution, including air, water, solid-waste, aesthetic, and noise pollution; and
14. A social safety net designed to adequately cater to the needs of economically disadvantaged members of society that is not subject to political meddling or manipulation.
These inducements, services, facilities, and guarantees, among a host of other things, can enable economic units to operate more efficiently and eventually deliver economic and social outputs to society at reasonable costs and prices.
Long live the Republic of Zambia—61 years of political independence on October 24, 2025!
Disclaimer: Much of the content of this article is mainly based on material excerpted and adapted from Kyambalesa, Henry, The Size and Functions of Government (Lambert Academic Publishing, 2022), Chapter 10; and Kyambalesa, Henry, International Trade: Theory, Strategy and Challenges (Saarbrucken, Germany: Lambert Academic Publishing, 2019), Chapter 7.