POLITICAL ECONOMY 30 YEARS INTO DEMOCRACY – WHERE IS SOUTH AFRICA HEADED IN THE NEXT 30 YEARS?

The Summit’s generic theme is about ‘policy and legislative instruments that affect overall socio-economic transformation and inclusive growth’.

I take it the Black Business Council (BBC) poses the task in this way because it recognises the significance of the 1994 quantum leap. This brings to mind the injunction of Ghana’s first president Kwame Nkrumah: Seek ye first the political kingdom, and all things shall be added unto you.

The statement has been critiqued as reflecting a form of politicism – that is, overemphasising the role of politics in social development. But Nkrumah was stating a truism that, without political power, the oppressed would not be able to determine their own destiny, across all areas of human endeavour.

As academic Ali Mazrui (General history of Africa since 1935. VIII. UNESCO. 1999) underlined:

Political sovereignty… was indeed a necessary condition before Africa could fulfil or realize any of her other fundamental aspirations. But by itself political sovereignty was not enough – it was not a sufficient condition.

This issue is profoundly relevant in the context of the coming general election. What would happen to the cause of social transformation in South Africa, some of us wonder, if those who were excluded under colonialism were to tempt fate, and surrender the political kingdom to forces nostalgic about apartheid, systemic corruption and state capture?

In current discourse on the country’s political economy, there is a tendency to throw data out of the window, and rational discourse is the poorer for it. Three categories of statistics illustrate the evolution of the South African political economy since 1994.

The first one relates to economic dynamics.

In the 20 years before 1994, per capita growth had declined by 11%; it improved by 33% in the 20 years thereafter before slackening after 2014. As we all know, in the decade of the 2000s, economic growth was in the region of 5%, and the unemployment rate was reduced from 31% to 23%.

There are many reasons for poor performance in the last decade, both objective (such as the global financial crisis) and subjective (represented by systemic corruption and poor management of infrastructure). As South Africa sought to emerge from these reverses, many of us did not fully appreciate how gruelling it would be to turn the ship around. Then, Covid-19 as well as natural and social disasters struck – slowing the recovery and taking us back many years across most indicators.

In other words, as we train our eyes on the horizons ahead, there are many positive and negative lessons to draw from.

The second category of data relates to the evolution of South Africa’s class structure.

From a small minority before, today the Black ‘middle class’ constitutes the majority among these strata, although the position of many is tenuous. Blacks now form the majority in skilled and professional categories, though the numbers remain low at senior and top management. There have also been improvements in Black asset ownership in terms of housing, land and capital. In mining, for instance, 39% of assets are owned by Black people; and as we heard at the Worker Share Ownership Conference last week, the share value of ESOPs is about R70.3-billion, with R3.3-billion of dividends paid last past year. But, as in many areas of social transformation, the glass is still less than half-full.

The third category relates to social policy, such as basic and tertiary education and other social services as well as free basic services. In other words, our society has avoided the worst impulses of a capitalist society by trying to ensure that no one is left totally destitute.

However, the fundamental weakness in the political economy, currently, is that the advanced section of the economy is chugging along, absorbing more Black people into its orbit. But there is a sediment of the majority, excluded and marginalised – and they are virtually all Black.

And so, access to the political kingdom has enabled important changes in the country’s political economy; but this has been inadequate. South Africa is capable of high rates of growth; but this depends on how the state guides economic activity; and how those who own capital respond to national imperatives.

Before elaborating on prospects going forward, two issues that we are often shy to articulate deserve reflection:

• The first is that social transformation includes, as one of its tasks, the emergence of what can colloquially be referred to as a ‘Black capitalist class’. In other words, a small elite will disproportionately benefit from empowerment. The challenge is how to extend this to broader society, including through decent jobs, a minimum wage, reduction of income differentials and Employee Share-ownership schemes.
• The second is that capitalist class formation is often an anarchic phenomenon. In the process, there will emerge, insidiously, a criminal stratum that seeks to cut corners, extract illegal rents and even engage in violence to attain a ‘good life’. We should therefore develop strategies to manage this negative phenomenon. Otherwise, such forces will become more brazen – and some will even try their luck in the political terrain, so they can capture the state and reduce it to a criminal enterprise.

On prospects into the next 30 years, what one can say is that the journey of a thousand miles starts with immediate catalytic actions. These are elaborated in the Economic Reconstruction and Recovery Plan: the infrastructure programme; Master Plans for sectors with potential; a strategic African pivot in economic relations; and focussed attention to absorption of the unskilled and semi-skilled through speedier land reform, low-end manufacturing and support for micro and informal enterprises.

There will be time lags before these reforms make a palpable impact; but the economy can climb towards 4% growth in the coming two to three years, if we are able to address the binding constraints.

Broadly, the Indlulamithi 2035 scenarios identify three probable directions for the country, with implications for decades to come:

• Firstly, a noisy Hadeda Home in which trust in political parties steadily declines. This results in a weak government with a patch-work of ineffective interventions. By 2035, mass mobilisation intensifies – in a noisy republic going nowhere slowly.
• Secondly, Vulture Culture in which a right-wing coalition seeks to reverse social transformation. This is challenged by a professed ‘left’ alternative which in reality is motivated by greed, dragging South Africa towards becoming a failed state.
• The last scenario, Weaver Work, starts with a decline of the major parties leading to a wobbly coalition in 2029. The big political players then change course, and a rational centre with social compacting results in a South African renaissance.

Which scenario actually plays out depends on social agency. The BBC must be found at the vanguard of efforts to attain a South African renaissance which includes deft utilisation of emergent technologies and management of such threats as climate change; and contribution to building a developmental state, an ethical society across the board and co-operation among all social partners in pursuit of social justice as enjoined by our Constitution.