How does a state provide for its citizens? Approaching the 2024 general elections, and with the ANC’s track record of service delivery sorely lacking, this is emerging as perhaps the most critical question facing the governing party. How it answers this, and how compellingly it can communicate it to the electorate, could determine if the ANC wins a majority or is forced to cobble together the first ruling coalition in democratic South Africa’s history.
On this topic, there are broadly two schools of thought. After World War 2, the question was addressed by the unprecedently ambitious emergence of the welfare state. Across Europe and the UK (and in South Africa, for the white minority), big government was the salvation. Governments invested in state education, state-owned power utilities, national transport infrastructure and universal health services. Fixed retirement ages and defined benefit state pension schemes were expanded.
The social contract between the governing elite and the electorate was simple — keep voting for a capitalist economy, in the guise of liberal democracy, and with a welfare state the government will provide a safety net to all citizens, regardless of how much or how little tax one might pay.
With the welfare state, all citizens — regardless of their wealth — were entitled to equally good education for their children, healthcare for their parents and generous pensions when they retired in their mid-sixties. Needless to say, such lofty visions of universal welfare states were rarely attained in practice and collapsed, mostly under pressures to deliver or to fund, or both. The exceptions that have proved the rule that welfare states cannot deliver are the social democratic utopias of Scandinavia. Thousands of pages have been written as to why welfare states didn’t work, but this is not the place to expound on them.
By the 1980s, everything changed, and the second school of thought came to prominence. The most influential economists of this counter-Keynesian reformation were Milton Friedman and Friedrich Hayek, whose landmark text The Road to Serfdom became idolatrised by this group of monetarist market fundamentalists.
Perhaps the most extreme example was the “Chicago Boys” of economists in Augusto Pinochet’s Chile, who used “shock therapy” to push through extreme market reforms. Ronald Reagan famously said that the most terrifying words in the English language are, “I’m from the government and am here to help.” Margaret Thatcher duly followed.
What emerged was the “user pays” doctrine. If the state is not able to deliver, why not just cut taxes, shrink the state, and outsource it? Privatise, and whatever a citizen wants, make them pay for it. Lower taxes and a business-friendly environment would result in faster economic growth, theoretically benefitting all. Such was the policy of “a rising tide lifts all boats”.
Much has changed since those halcyon days, but if one lesson was learnt it is that “trickle-down economics” does not work either. Supercharged by globalisation, such policies unleashed 30 years of unprecedented wealth inequality. Neoliberalism, so said Gore Vidal, simply meant social democracy for the wealthy and capitalism for everyone else.
South Africa was, of course, an active participant in these economic debates and experiments, perhaps most prominently in the shift from the welfare state model of Nelson Mandela’s Reconstruction and Development Programme to Thabo Mbeki’s neoliberal Growth, Employment and Redistribution blueprint.
Indeed, one of the most tragic symptoms of the current malaise of SA is the sheer paucity of debate. Much has been made of the hollow man that is Paul Mashatile and the ANC as a whole. While never perfect (one only has to read Jonny Steinberg’s magisterial book Winnie and Nelson for glimpses of how flawed but simultaneously capable the party once was), now the party is like a snake eating itself, starting with its tail. Hellbent on rent extraction, the party is devouring its soul.
Political analyst Nic Borain is probably right; a poor showing in next year’s election followed by a coalition with the EFF “will be the last election [the ANC] ever wins, for two reasons: South African voters are not stupid, and it would hammer the investor and bond markets.” What is needed, therefore, is an ideological reset.
Instructively, the difference in trust in South Africa between the state and the private sector is massive. According to Bloomberg, it is the biggest across 28 countries surveyed. This paucity of faith in the public sector could be turned to the ANC’s advantage. To win the election, the ANC could define a vision of SA as not quite full-on “user pays” neoliberalism, but at least one in which the shortcomings of the state are recognised and the private sector is recalibrated from bogeyman to useful protagonist.
First, declare the days of bloated bureaucracies are over. If there is one thing almost all South Africans can agree on, it is that there are too many state employees getting paid too much.
Second, recalibrate Ebrahim Patel’s Department of Trade, Industry and Competition from being a hindrance to economic growth to being a hands-off facilitator for the private sector.
Finally, actively engage with the private sector in education, healthcare and infrastructure. Agree on common objectives and how best to outsource what is currently not being achieved.
This would take courage and would be unpopular with many. It would remove the feeding trough from thousands, but supercharge the economy. And it would, undoubtedly, be electorally palatable.
Desperate times for the ANC require desperate measures. As Bismarck remarked: politics is the art of the possible. The question is whether Mashatile is the man with enough courage and political skill to enable such a seemingly impossible ideological reconfiguration. We shall see. DM