South Africa

Op-Ed: Ramaphosa in Davos – will he heed the lessons as Mandela did?

By Terence Corrigan 25 January 2018

Given the reasons for which South Africa’s State-owned Enterprises have been much in the news of late, we should be grateful that Mandela heeded the warnings on nationalisation. The land reform experiences in Vietnam and China are particularly instructive. Both of these fed on real grievances on the part of the peasantry – but were so overpowered by ideology that their outcomes, quite predictably, exacted huge costs. By TERENCE CORRIGAN.

Plus ça change, plus c’est la même chose. The more things change, the more they stay the same. This might have made a good title for Yonela Diko’s most thoughtful piece (Mandela’s Davos experience: will Ramaphosa face the same?, 23 January 2018). There is certainly an interesting symmetry between Nelson Mandela’s mission to Davos in 1992 and that of Cyril Ramaphosa this year. Mandela went to Davos with a belief in nationalisation, a position certain to draw the ire of global investors – but, in Mandela’s case, unexpected warnings from the nominally communist Chinese and Vietnamese helped to sway him away from it.

Will Ramaphosa, having expounded his intention to amend the Constitution and to proceed with expropriation of property without compensation, be persuaded to a similar change of direction?

That warnings about the consequences of doubtful policy positions should have come from countries that experienced them should come as no surprise. These were countries that had experienced the consequences of having done so. China and Vietnam are countries that underwent extensive economic trauma, and then turned to strategies that incentivised wealth creation (capitalism, in effect, if not in name) which in turn offered hundreds of millions of people a way out of poverty. It makes no sense to ignore their experiences nor the lessons that they can teach us.

Given the reasons for which South Africa’s State-owned Enterprises have been much in the news of late, we should be grateful that Mandela heeded the warnings on nationalisation.

The land reform experiences in Vietnam and China to which Diko refers are particularly instructive. Both of these fed on real grievances on the part of the peasantry – but were so overpowered by ideology that their outcomes, quite predictably, exacted huge costs.

A special place in human memory is retained for the consequences of China’s catastrophic agrarian reform process in the 1950s. An obsession with forging a “new” society off an ideological blueprint produced both political pathologies and economic failure. One sinister aspect was the assault on “landlords” – these being often no more than well-to-do peasants or simply ordinary folk who had incurred the displeasure of the authorities. An accurate tally of the deaths resulting from this will probably never be produced, but would amount to millions. Since many communist theoreticians feared that peasants had a natural inclination towards property ownership and capitalism, they needed to be forced into collectives. This destroyed the incentives that small farmers may have had to produce.

Unsound agricultural techniques – again, owing more to ideology than to science – such as “close planting” or “deep ploughing” stunted crops as they grew. Pest control programmes, notably the extermination of sparrows, produced an explosion of plant-eating rodents and insects. Poorly designed irrigation projects probably did more harm than good.

The result, in China, was famine. This claimed between 15 and 45-million lives, making it one of the largest – if not the single largest – famine in history.

It is noteworthy that many of China’s agrarian reform efforts drew inspiration from those in the Soviet Union. Both were conceived with intensely ideological questions in mind, and both produced catastrophes. Plus ça change, plus c’est la même chose.

On the other hand, successful examples of land reform – such as in Taiwan and in South Korea – demonstrate that the key was rather to empower and incentivise farmers in working their land. This involved challenging exploitative practices by landlords, certainly (both countries’ land reform initiatives took place under authoritarian governments, which were determined to have their way). But perhaps more importantly, they made land and land ownership available to farmers and redistributed state assets. They recognised the need to engage with the interests and aspirations of actual farmers and to provide targeted assistance (not least information) that enabled them more effectively to engage with the market. Increased agricultural yields not only improved living standards, but were instrumental in financing their industrialisation. Fittingly, The Economist ran a piece last year entitled For Asia, the path to prosperity starts with land reform; countries that did it properly have grown fastest.

Indeed, the failings of the land reform efforts undertaken in countries like China and Vietnam, and the land systems that they produced, have been recognised in these countries. Both have learned valuable lessons and have moved to grant farmers greater rights over their holdings and the ability to work them. Even Cuba, which takes its communist credentials more seriously, has moved tentatively in this direction. That a lingering hostility to private ownership remains (outright ownership is still restricted) does not invalidate this: the direction of play is clearly towards encouraging greater private initiative.

South Africa seems poised to move in the opposite direction. With this background, there is an uncomfortable familiarity about the prospect of a campaign of expropriation without compensation. Of course, South Africa today is neither the Soviet Union of the 1930s, nor the China or North Vietnam of the 1950s and 1960s – there is no talk of uniformed commissars or deportation for re-education. But there is no indication that the compensation requirement has retarded land reform efforts, and every likelihood that embarking on property seizures would severely damage South Africa’s economy. To focus on the issue of compensation is to misdiagnose the true cause of the malaise of land reform in South Africa and to undermine the prospects of its success. To embark on such a campaign would be to repeat in large measure mistakes of those countries who went before and felt that ideological conviction trumped observable reality.

Unheeded warnings are an intrinsic part of the most bitter tragedies. But this needn’t be the path South Africa takes. We need to change course. A Davos moment or not, Ramaphosa needs to find the resolve to match Mandela’s. Properly designed and rationally executed, land reform holds great promise for the country. Perhaps we might then put things differently: Plus ça change, plus c’est la même chose … mais c’est pas obligatoire. The more things change, the more they stay the same … but they don’t need to. DM

Terence Corrigan is a Policy Fellow at the SA Institute of Race Relations (IRR)

Photo: Deputy President Cyril Ramaphosa addressing media at the WEF in Davos, Switzerland (Photo: GCIS)

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