South Africa remains mired not only in corruption or the challenges to it, but also in past injustices and how to address them. In the process we ignore the looming transformations in the global and national economic order that will create a new set of exclusions and consolidate the existing ones. There is an urgent need for all of us to coalesce and simultaneously grow and transform our economy, address our social ills, and innovate and build new skill sets to meet the impending challenges of our time. This requires nuance and pragmatism without compromising on the principle of social justice. By ADAM HABIB.
Are South Africans not collectively experiencing a sense of deja vu? Does the South Africa of 2017 not resemble the South Africa of 2007? We have the same corruption scandals, even if the amounts are so much more exorbitant. We have the same systemic paralysis in the state. We have the same political rhetoric of “imperialism” and “third force” that only those in the upper echelons of the ANC are capable of conjuring. Even the actors are the same.
We still have Zuma, being Zuma, selling his soul to the highest bidder and then wreaking havoc on both party and state to try and survive. We have Malema, being Malema, creating spectacle and destruction but this time against Zuma rather than for him. Vavi too is around, this time also mobilising against Zuma. So too is Blade Nzimande and the SA Communist Party, all having found themselves defending the indefensible, and now, duly chastened, trying to oust him from the leadership.
There are of course some new actors – Mosebenzi Zwane, the Guptas, Brian Molefe, Hlaudi Motsoeneng, Dudu Myeni and a couple of others. All are really bit players replacing other cast members in the earlier drama, except for perhaps the Guptas. The audacity of their plan of state capture, and the astronomical amounts involved, suggest that they are truly in a league of their own. But overall, the plot, drama and the choreography are all the same.
The question that South Africans should be posing is why are we back at the same place ten years later? Is there something about our politics, our policy choices and our strategy that leads to this very outcome? Julius Malema can apologise for his role in 2007, as can Zwelinzima Vavi, but if their politics, and those of many others, do not change, we may all find ourselves back at this same spot in another ten years, again being confronted with a new round of apologies. This is the essential dilemma that we should be reflecting upon.
The Zuma faction have of coursed upped the ante in recent months by calling for radical economic transformation and making this their rallying cry. This, together with “white monopoly capital” (courtesy of Bell Pottinger) has become the new buzzwords for the party. This should not surprise us for in 2007 the same happened when a whole cohort of individuals suddenly became passionate advocates of the fight against neo-liberalism when none could even spell the word a few months earlier. At least then the party had the self-respect to develop its own jargon rather than rely on an international spin doctoring company to develop their slogans. But as was the case after 2007, when the jargon was merely used as an excuse for a cohort of individuals close to the President to simply enrich themselves, so to now is the plan for a narrow enrichment. At least we already have the evidence for it in the previous Public Protector’s state capture report, the academics Betrayal of the Promise: How South Africa is being Stolen and in the Gupta emails. No one today can plead ignorance about the true agenda underlying Radical Economic Transformation.
Of course there are sincere groups on the margins of the “feeders” who really hope that this time would be different. But even if this were the case and radical economic transformation was not a fig leaf for corruption and the plundering of the state, what truly is the path that is being paved? Radical Economic Transformation is seen to involve the change of the ownership patterns and decision making structures of significant corporate and public entities in the South African economy. It is effectively a call on government to use its legislative power to force through changes in ownership and representation in decision-making structures even if this dramatically distorts market sentiment and functioning. Often accompanying the call for radical economic transformation are proposals for land expropriation and nationalisation of the mines and banks.
But as is noted by radical economic transformation advocate, Chris Malikane, the consequence could very well be an economic meltdown as in Venezuela or Zimbabwe. He notes that we could be severely punished if we blatantly broke the global economic rules. Malikane does not say what we should do when we do have such an economic collapse. Should we just live in it because we at least now are all equal in poverty, a Pol Pot scenario if you like? Or is Malikane implying that somehow we are likely to get out of the economic mess after a period of time? I prefer the latter, more charitable, interpretation of Malikane’s view, especially given the fact that he also uses India as a case study. But to be frank, India is not a great exemplar for South Africa. On a two decade cycle, it performs below par in relation to its closest peer, China, even if its growth rates are now in the same ballpark. It is notoriously corrupt, and its economy is significantly organised on gross exploitation, much of it constructed on a degenerate caste system. Most importantly, it has the leverage to attract investment that South Africa can never have, namely a market of 1.5 billion people which prompts investors to make all kinds of compromises that they would never bother making in other contexts. In sum, Malikane is asking us to embark on an economic strategy that takes us down a path of national impoverishment and crisis, out of which we may not re-emerge and for which he has no exit plan.
To be fair, Malikane’s thoughts around radical economic transformation are perhaps the most polished there is. The EFF, for instance, has a similar if not identical agenda, but its macro-thinking in this regard is far more rudimentary than that of Malikane. They seem oblivious of the potential economic crisis that could befall South Africa, and so they do not seem to have even thought through a strategic plan in this regard. The same is true of the other advocates of radical economic transformation; the Black First Land First (BFLF), the ANC Youth League, and the forces that seemed to have coalesced around NUMSA, all of whom behave and speak in a manner that is dismissive and flippant of the Constitution.
Perhaps the most disappointing group in this regard is the newly emerging radical black intelligentsia emanating from the student movement struggles. Almost all of their writings are confined to a description of black pain and any suggested proposals seem emotively formulated, contemptuous of the Constitution and the rule of law, and effectively reflect a slash and burn strategy. Again let me use an example this time from a separate thematic area. Panashe Chigumadzi, perhaps one of the more talented of writers of this generation, recently authored an op-ed in the Sunday Times where she reflected on the scourge of gender-based harm. Reflecting on a conversation with her brother at Rhodes University, she recounts how she informed him that if he ever were to find himself on a list of alleged perpetrators for gender-based harm, she would condemn him even before any investigation were to happen. The article is a justification for naming and shaming of individuals, a practice that has become common among some gender-based activists in the universities. Angered by what they see as society’s and institutions’ failures at addressing the scourge, they are now advocating for a mob justice outside the rule of law. But herein lies the challenge: however emotionally satisfying mob justice may at first seem, ultimately playing fast and loose with the law creates a culture of impunity that in the end can only work to the disadvantage of the poorest and the most marginalised. This is because they do not have the resources or leverage to operate in a rules-free environment where the strongest and fittest survive.
Panashe and her generation of intellectuals must realise this, or they are just simply not thinking through the issue sufficiently. More importantly, they need to note that anyone can string together a few adjectives to describe pain; the real trick is to think through a strategy to transcend it. But herein lies the problem. This generation of intellectuals, or even the Chris Malikane’s and Andile Mngxitama’s, and even the EFF, have all resorted to a “slash and burn” or “equality in poverty” strategy because they think that this is the only way to achieve fundamental change. But if they broadened their imagination, and investigated exemplars other than Venezuela and Zimbabwe, they would realise that it is possible to have fundamental change through a more considered structural reform strategy that is simultaneously compliant with the constitution and the rule of law. Scandinavian countries, some other European societies and Japan are examples where this led to significant economic inclusion and equitable growth within the space of a generation.
Moreover our own recent history has experience of such a strategy. Let me use two examples of this from the Mbeki era, one more successful, and the other less so. The great success story of the Mbeki administration was its foreign policy. This essentially involved the recognition of two factors; first, that South Africa’s and the continent’s economic prospects were in part dependent on an accommodating global order, and second, that we were collectively too weak to enable this outcome by force or on our own. This, however, did not debilitate the administration, but it instead developed a strategy to engage the international order with a view of subverting it. It essentially involved developing strategic alliances within Africa and with the developing world, to use these to build leverage and thereby negotiate economic concessions from a more accommodating set of world powers. Unlike Venezuela, South Africa did not seek an isolationist stance from the global order, but rather worked within it to create space for greater autonomy for the country and the continent.
Operationally the strategy involved building a Pax-Africana with Nigeria, invigorating institutions on the continent including the African Union and regional structures, enabling peace in conflict ridden zones through both the deployment of troops and the facilitation of political negotiations, and finally engaging and cajoling the Group of 8 and other international bodies for increased investment. The results were that Africa’s conflicts declined by two thirds between 1991 and 2007, investment in the continent increased multi-fold, and Africa hosted six of the ten fastest growing countries by 2007. The continent’s problems did not immediately disappear, and neither was Mbeki’s foreign policy free of controversy as the Zimbabwean case so aptly demonstrated. However, its strategic orientation from about 1996 to 2007 essentially reflected a structural reform strategy in which global configurations of power were contested, engaged, and ultimately subverted to the benefit of the continent and the country.
Mbeki’s economic strategy was very different even though it rhetorically claimed a similar philosophical approach. To be fair Mbeki’s economic achievements far exceed those of Zuma with having at least achieved relatively respectable economic growth rates and declining poverty levels. But economic inequality grew every single year of the post-apartheid era in part because of the administration’s pursuit of a relatively conservative macro-economic strategy that emphasised deregulation and market oriented reforms. It is true that these were accompanied by significant labour regulation and black economic empowerment, but neither eroded the conservative market character of our economic policy. The net effect of this is that while the Mbeki administration achieved growth every single year while he was in power, it simultaneously increased economic inequalities in the society, politically polarising it, and ultimately creating a political climate that enabled his ouster from office.
The difference between these two philosophical approaches, the first on international relations and the second on economic policy, is that in the former, Mbeki engaged the configuration of power with a view of subverting it, while in the latter our reforms were merely accommodated within these power relations. Moreover, while he initiated structural reforms in the former case that increasingly enhanced South Africa and the continent’s leverage and negotiating power, his reforms in the latter arena were simply accommodative of the international economic order. An alternative transformative strategy in this present era would be to apply Mbeki’s philosophical approach to foreign policy to the South African economy. This would entail engaging in structural reforms of the economy in a manner that still recognises and respects the dynamics that drive growth. The reforms would be designed to have a snowballing logic that not only enables growth and inclusion, but also has positive structural outcomes and increasingly leaves poor and marginalised communities with increasing power vis-a-vis other stakeholders in the economy.
Let me use the example of the recent Mining Bill to demonstrate the application of this philosophical approach. The bill insists on a 30% ownership in black hands. This is not unreasonable after more than two decades in the democratic era. But how this is done and achieved is important. To just simply ignore a company’s previous BEE initiatives is irresponsible. The Chamber of Mines does have a legitimate complaint in this regard because this enshrines a practice where effectively every new administration uses the mining companies to enrich themselves and their hangers on. Obviously the uncertainty this will provoke would be devastating for investment in the industry, and would undermine its viability. It is striking that despite having the best mineral reserves in the world, we are 74th in the list of preferred investment destinations for mining companies.
Yet there can be a solution if we just had a minister with a shred of imagination. Black shareholding can be ring-fenced in perpetuity to ensure that it is not diluted. If needed, the state can serve as a warehouse for these shares between their ownership by separate black investors. Black beneficiaries in preferential mining empowerment schemes must have one bite at the cherry, thereby broadening the empowerment and limiting the enrichment potential of the scheme. In subsequent transactions, a once empowered black entrepreneur must be treated as a normal investor, thereby forcing the development of an entrepreneurial, rather than a parasitic, capitalist class.
Community share ownership schemes must similarly prevent enrichment of politically connected local elites by ensuring that they are housed in independent trusts which are democratically managed and stringently governed, and all proceeds must be directed to social investment initiatives in the community including, among others, the establishment and operations of good schools and clinics. A further component of share ownership could be directed to national public institutions like universities, with an explicit mandate that any proceeds be directed to ensuring scholarships for poor students. Finally, transformation of decision-making structures must be mindful of the existing availability of trained personnel and could involve a training and deployment component that deliberately deracialises management structures of the companies within defined time frames. Otherwise we are likely to repeat the very mayhem that has become so common in the management and boards of public enterprises. All of this could be negotiated with the Chamber of Mines and be structured over a time frame that both enable empowerment and inclusive development, without the disruption and uncertainty that could jeopardise the industry.
Similar transformative reforms could be initiated in other economic sectors. Julius Malema, for instance, recently recommended that all malls should have rent free “spaza shops”. I am not sure about the wisdom of this strategy given the existing clientele of malls, but you could apply the same thought to a slightly different property arena. In many European societies there are regulations that stipulate that in new housing developments, a proportion has to be set aside for low income housing. This legislation is meant to enable a mixed class community thereby promoting social cohesion within the society. Edgar Pieterse, a professor at the African Centre for Cities at the University of Cape Town, has long advocated policy in this regard, and could be drawn upon to assist in developing legislation that both enables the development of the property industry while still facilitating inclusion in the city.
Both examples are meant to highlight that enabling inclusion need not necessarily lead to industry destruction and economic decline. The idea here is not to destroy the market but to reform it in a manner that enables inclusive development. The same philosophical approach could be applied in multiple other areas. In a book published in 2013 entitled The Suspended Revolution, I advocated for a series of pragmatic progressive reforms that allowed for growth and the competitiveness of our economic sectors, while simultaneously addressing our structural challenges and promoting inclusive economic development. These included, among others, allowing for special economic zones, specifically defined minimum wage provisions in some economic sectors like agriculture, and distinct provisions for a wage subsidy for youth and newly appointed inexperienced workers. It should be noted that these reforms are not a call for the weakening of the Labour Relations Act, but rather for allowing special provisions in specific sectors, categories and economic zones to enable increasing employment and economic competitiveness.
These reforms are meant to promote employment of low skilled or inexperienced workers and would need to be accompanied by significant educational reform inclusive of declaring primary and secondary education a critical sector, thereby limiting strikes within schools, and ensuring teachers have adequate skills to teach the relevant subjects, even if this requires importing such skills from neighbouring countries and elsewhere. In addition, vocational training needs to be significantly overhauled by closing low quality public FET colleges and partnering with appropriate private companies with industrial and or service enterprises who could be offered tax concessions and subsidies to enable training both for their own company needs and for the broader market. All of these proposals would require a more pragmatic approach by unions and other progressive activists. Until now these stakeholders have approached economic inclusion through ideologically rigid formulae drawn from experiences in earlier epochs in this country and elsewhere in the world. Yet our world and economy has fundamentally changed, and if we are not going to think of pragmatic solutions to our challenges, we will continue down an exclusionary economic path that is marked by continuous crisis and perpetual decline.
Finally, much of our public discourse on radical economic transformation and economic inclusion seems oblivious of the technological innovations in artificial intelligence and robotics. These innovations, the essence of the Fourth Industrial Revolution, will fundamentally transform the workplace in the coming decades and is likely to require a completely different set of skills from both managers and white and blue collar workers. Yet considerations of these challenges have not even entered the public discourse and we are at a collective risk of once again merely being victims of economic forces and processes beyond our control. The only solution to this looming challenge is that we collectively become the architects of our own destiny, by recognising and acknowledging the technological innovations and proactively establishing an educational system and work regime that allows us to develop the skills and innovations necessary to compete in this globalised knowledge economy.
The debate of radical economic transformation must therefore not simply be focused on addressing past injustices, but must also enable a proactive response to the challenges looming in our collective futures. Government leaders, including most cabinet ministers, seem oblivious of this, but the same is true of left leaning and other progressive activists and the newly emerging black intelligentsia. We collectively remain mired not only in corruption or the challenges to it, but also in past injustices and how to address them. In the process we ignore the looming transformations in the global and national economic order that will create a new set of exclusions and consolidate the existing ones.
There is an urgent need for all of us to coalesce and simultaneously grow and transform our economy, address our social ills, and innovate and build new skill sets to meet the impending challenges of our time. This requires nuance and pragmatism without compromising on the principle of social justice. Ironically this collective agenda opens up opportunities for new alliances between capital, labour and other stakeholders, between public and private institutions, and between national and transnational actors. It also opens up the possibility for a new social pact or pacts that could bring together our diverse and fractured communities. But this is only going to happen if we have a leadership and an intelligentsia capable of learning from past mistakes, transcending their present divisions, and thereby rising to the challenge of our times. Ultimately it requires us to collectively transcend our sense of déjà vu. DM
Photo: Jacob Zuma and incumbent Thabo Mbeki in Polokwane, 18 Dec 2007. Photo: Greg Marinovich.