BUSINESS LIVE / 05 FEBRUARY 2018 - 06:22 / MARIUS OOSTHUIZEN AND MOELETSI MBEKI
To resolve SA’s inherent contradictions we must tackle an entrenched elitist agenda of narrow and vested interests and move the country to the vision enshrined in the Constitution.
We are facing a mismatch between SA’s political economy and the society whose aspirations the system is meant to address. While democracy unlocked a path to political rights for all South Africans, socioeconomic rights have remained elusive for millions. This is not unlike the situation in other African countries with similar colonial histories.
Convergence: Former presidents Thabo Mbeki, Nelson Mandela and FW de Klerk, with business leaders Johann Rupert, back left, and Hasso Plattner, back right. Picture: RAYMOND PRESTON
The postapartheid economy is unable to deliver on the social contract enshrined in the Constitution — its structure makes socioeconomic inclusion an impossibility. The political economy cannot address the discrepancies between the society envisioned in the Constitution and the lived reality of citizens.
While SA has achieved a remarkable level of stability compared with its African neighbours and is democratically sound from an institutional perspective, the lingering socio-economic malaise has begun to undermine these gains.
There are is a challenge of legitimacy around President Jacob Zuma. There is a challenge around the validity of the pre-1994 settlement, which has not delivered on its initial promises. There is a generalised political challenge within the governing ANC and tripartite alliance.
There is a challenge in the labour movement and its institutions. There is a challenge of growing populism. There is a challenge of persistent low business confidence.
There is the challenge of rising unemployment, deindustrialisation and stagnating social mobility except for a small black elite and middle class that has joined the pre-existing white elite and middle class.
This has detached the black middle and professional classes from proximity to the common agenda with the black working class and black poor — the class in which the majority of
citizens find themselves. It has created a political leadership vacuum for large proportions of the electorate.
There is a growing population of unskilled youth. There is the challenge of low economic growth.
There is the lingering challenge of degrading poverty and social breakdown in communities, crime, the abuse of women and children, vulnerability and despair.
There is a deep systemic problem in all levels of education, where significant government resources are budgeted but where the situation for the majority of young people has worsened over time due to structural and systemic exclusion from opportunities for upward mobility.
This dire reality has been masked, for a time, by SA’s progressive state spending. Since 1994 social disbursements have favoured the poor in the form of social welfare programmes. The state has also financed the huge growth of black professionals employed by it and parastatals.
The private sector has also absorbed a large number of the new middle class. But none of this has translated into long-term economic upliftment for the poor. Instead, it has led to a massive growth of dependence and inequality within SA’s black population. The government’s approach to disbursements has meant that dependence on the state has ballooned in terms of direct cash transfers as well as rapid growth of the government wage bill. At the same time state efficiency has been degraded due to cadre deployment, corruption and lack of capacity.
South Africans have increasingly become frustrated with the slow pace of change. People have expressed their dissatisfaction in the form of mounting protests. And in the last local government elections, many withheld their vote for the ANC for the first time or voted for opposition parties, particularly in the major metropolitan areas.
Stubborn spatial divides precipitated by apartheid policies have meant millions of the most vulnerable are excluded from participating in the formal economy. Even if there were jobs, they would come at great personal expense in the form of travel time and costs.
While the informal economy has grown, the influx of migrants from neighbouring states and further abroad has introduced vigorous competition between traders.
In addition, growing competition from Kenya, Rwanda, Nigeria and Ghana has reduced SA’s claim as the investment destination of choice in Africa.
More recently, a destabilising youth bulge, a cohort increasingly indifferent to the pre-and post-1994 "rainbow nation" narrative, has come to the fore. This is manifest in the fallist culture on campuses. This groundswell has only just begun.
There are competing narratives of why the status quo has emerged. The one emerging from the ANC and its alliance partners, the South African Communist Party and Cosatu, is that corporate SA and big business in particular have not demonstrated a patriotic loyalty. This, they argue, would translate into investment and higher growth and more rapid racial transformation.
In turn, "big business" has argued that the failings of the political establishment and grotesque shortcomings of the executive have been at the root of its reluctance to invest. Big business blames the ANC for undermining confidence with unpredictable policies that destabilise property rights.
Narratives from civil society have included criticism of the middle class and previously advantaged communities for refusing to share the wealth of the country. Emerging on the left has been a narrative that SA’s negotiated settlement was a victory for white monopoly capital at the expense of the legitimate claims of the black majority.
Naturally, given SA’s exposure to global market forces, there is the view that the country is merely suffering from damped global demand in a post-global financial crisis. This does not, however, account for the gains made by the elite.
Private capital has consistently delivered returns to shareholders but not in an
inclusive, transformative manner to their broader stakeholder community.
The hard truth is that SA has limited options for developing its economy to tackle its social ills. This is because of the historical interdependence of the economy on its large industrial state-owned enterprises for cheap production inputs.
The economy has also depended on the super exploitation of abundant cheap black labour and of abundant mineral resources, which are increasingly become depleted and more expensive to extract.
These problems have been aggravated by the more recent openness in terms of foreign investment in securities and the currency, leading to declining competitiveness internationally.
The bulk of SA’s society is excluded economically and politically from the means to tackle their plight and often lack the conditions suitable to taking an entrepreneurial route to upward mobility.
During the 20th century and the 21st century, SA has had three political regimes — British imperialists, who ruled from 1902 to 1909; Afrikaner elite, who ruled from 1910 to 1993; and an African elite, who ruled from 1994. Their common objective has been to exploit the mineral resources for their benefit and that of their international partners through the use of cheap black labour.
SA needs a new, fourth political arrangement that will use our mineral wealth to industrialise the country and not just export primary products.
In addition, industrial expansion must be coupled with a larger services sector, particularly in outsourced business services, to absorb a new professional urban class.
For the country to industrialise and expand, a number of things must happen:
Education, healthcare, transport and electric power supply systems must be redesigned with decentralisation and deconsolidation in mind.
Public services — including the traditional leaders sector — must be reconfigured and professionalise to serve the people.
Economic relations with neighbours in the Southern African Development Community and Common Market for Eastern and Southern Africa must be renegotiated and restructured to create synergies and grow intraregional trade.
Trade and investment ties with non-African partners must be renegotiated to seek long-term development ties.
The economy must be restructured to be driven more by fixed investment than by private and public consumption and finance.
To understand why SA has not been able to fully industrialise since the British imperialists relinquished political control more than 100 years ago, we need to understand who has been controlling political power since their departure. By political power we mean control of the state and control of its embedded monopoly of violence needed to defend and advance the economic interests of the politically dominant class or classes and, especially, to tax society to finance the state.
The Afrikaner elite were a coalition of land owners who produced maize, wheat, fruit, wine, sugar and beef. They used the mining industry and the export of minerals to fund the state in its primary role to deliver cheap labour to agriculture and mining. This elite had only a secondary interest in the industrialisation of the country.
The African elite were a coalition of black middle class, organised labour and civil society. As this elite did not own land or other means of production, its priority in its control of the state was to be able to live off state revenues through taxing the economy and the wealthy.
Like the Afrikaner elite, it did not have a vested interest in promoting the further industrialisation of the economy.
The political conundrum of SA today is that under the political regime of the African elite, owners of capital are excluded from political power.
This is what accounts for SA’s perennial business confidence crisis, which fuels low fixed-capital investment as well as capital flight. Owners of capital do not have security of tenure in their property as it can be confiscated by the African political elite at the stroke of a pen.
What will distinguish the fourth political arrangement from the past two regimes is that it will incorporate the owners of capital into the democratic political system. A second distinguishing feature is that it will create the environment where today’s underclass and unemployed are more economically independent due to growing investment in the economy and in the former homelands.
Economic independence implies freedom of choice. The underclass and unemployed will therefore no longer be dependent on the state and feel obliged to vote for a party that controls that state.
• Oosthuizen is a lecturer in strategic foresight (Leadership, Strategy and Ethics) at Gordon Institute of Business Science, University of Pretoria. Mbeki is deputy chairman of the South African Institute of International Affairs, an independent think-tank based at Wits University.
LINK : https://www.businesslive.co.za/bd/opinion/2018-02-05-after-colonialists-and-elitists-sa-needs-a-new-political-package/
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER