NEWS & ANALYSIS

Can we start the long haul now?

Charles Simkins on whether the ground can be prepared for economic recovery in this politically unstable environment

CAN WE START THE LONG HAUL NOW?

Gloucester: Now is the winter of our discontent
Made glorious summer by this sun of York;
And all the clouds that lour’d upon our house
In the deep bosom of the ocean buried. - Shakespeare: King Richard III

INTRODUCTION

We live in a vertiginous age, in a Dadaesque social and political world. Who would have thought that the American triumphalism of twenty-five years ago would dissolve into bitter domestic polarization, with half the population unable to come up with four hundred dollars in an emergency?

Or that the most advanced practitioners of evidence based policy analysis should find themselves in a post-truth environment? Or that the Greeks, having cooked the books to get into the Eurozone, could expect simultaneously to stay in it and avoid austerity. At least the political triumph of Beppe Grillo can be traced back to the (sometimes darkly) comic strand in the Italian state since unification.

These oddities have their domestic counterparts. Presently, a YouTube viewer might have a programme of classical music interrupted by a clip of black South Africans declaiming that they must get their culture, identity and rootedness back, only to find it is an advertisement for…Castle Milk Stout1.

A few years ago, we heard Jacob Zuma proclaiming three divergent economic plans as ‘equally important’, as though they were fashion accessories which could be mixed and matched at will, rather like Evita Bezuidenhout turning up for the opening of parliament in twinset and pearls, velskoen, and a large and brightly coloured turban.

And more: that the tsotsi mentality should have penetrated to the heart of the state: better the high life for a few years, even if it ends in a hail of bullets, as it did for Brett Kebble, than a lifetime in the shacks or enduring middle class tedium. Or that Cyril Ramaphosa, having won against Jacob Zuma’s preferred candidate by a narrow margin at the ANC’s conference, nonetheless feels obliged to continue his predecessor’s ‘radical economic transformation’ mantra, and maintain a very expensive student financing policy at the expense of support for much poorer people.

Or that he, as president, was obliged to curtail his visit to the British ruling class when the North West exploded, having no Hofmeyr to deputise for him. Or that, most recently, he has had to placate the Zulu king on the matter of the Ingonyama Trust.

CURRENT SOUTH AFRICAN REALITIES

Can the ground be prepared for economic recovery in this politically unstable environment? The answer must be no for two main reasons. First, there is no tradition in South African public discourse of debating the impact of economic rights claims on the economy. Three cases demonstrate the point. Very little of the material considered by NEDLAC during the minimum wage negotiations was made public.

The draft 2018 Mining Charter loads substantial new demands on an industry suffering a profits squeeze, as a result of a nearly 10% drop in the real rand price index for our mineral output between 2011 and 2017, without any signs that the government knows it. The draft National Health Insurance and Medical Schemes Amendment Bill have been published with a specific disclaimer of responsibility for discussing costs and financing, or even the services to be covered. The ‘it’ we must have is simply unspecified.

The preference is for material interest deals made behind closed doors. This style of decision making leads to a legitimacy deficit, a lack of discursive formation of political will. By contrast, the reaction of nineteenth century liberal capitalism to the socialist challenge took decades to work itself out, in the process leading to extensive public contestation and debate.

The process sometimes failed, as in 1917 Russia or the Germany of the early 1930s, but it often resulted in creative solutions such as the American New Deal, or the European welfare state, underpinned by a transformation in mentalities. The process is simply lacking in contemporary South Africa.

The result is superficial understanding and irresponsibility, leading to populist demagoguery which, as Barry Eichengreen puts it:

..[is] an approach to economics that emphasizes distribution while de-emphasizing the risks to economic stability from sharp increases in government spending, inflationary finance, and government interventions overriding the operation of the market.2

Which is why populist economic projects end in tears, as the constraints reassert themselves in disruptive forms. Some believe that economists invent constraints. No economists, no constraints. Oh, were it true! But the reverse is the case. Should scarcity disappear, there would be no need for economists. But the profession is unlikely to go out of business any time soon.

The second reason is elections are less than a year away, with intraparty tensions evident across the board, and particularly within the ANC, where the evidence suggests that competing interests are so precariously balanced as to make economic policy development uncertain and volatile. It is superficial and mistaken to conclude that change at the top has resolved the problem. Holding parties together has already become the key political imperative for all of them, and the search will be on for verbal conjuring tricks, sleights of hand, designed to draw attention away from intraparty strife.

Conjuring diverts and may amaze, in a world of illusion. Consider, for instance, the concept of ‘land’ which shimmers between the romantic incarnation of the soul of the nation and an asset whose value depends on its use and its insertion into a system of economic relations. Indeed, what ‘land’ was a hundred and fifty years ago (when the population was about 6% of its present size) differs from what it is in a predominantly market economy. Restoration of the status quo ante would require a reversion in the economic system, not to mention massive depopulation.

Moreover, corporatism, with ‘summits’ between ‘social partners’ has its limits. For instance, we have been promised a jobs summit in November. The problems with summitry are threefold. First, the constituencies which most need to be consulted are unorganized and absent. Secondly, everyone at a summit is on the best behaviour, at their politest, and willing to subscribe to a general call for co-operation, followed by a promise of negotiation of matters of detail.

But the negotiations break down because the appearance of unity is deceptive, and the same old positions re-emerge and confront each other unproductively3. Sweeping things under carpet for perceived short term advantage is much more common. Thirdly, the chances of follow through from a summit in November are particularly bleak, given the pending election.

The irony of the opening lines of Gloucester’s soliloquy is apparent by the end of his speech, and it deepens as the play proceeds. Expect ironic political developments and tales of wonder here, certainly during the next year and, quite possibly, beyond.

Charles Simkins

Head of Research, Helen Suzman Foundation.

This article first appeared as an HSF Brief.

Footnotes:

[1] The first known use of ‘stout’ as describing a type of beer is in the 1677 Egerton manuscript, written by the Earl of Bridgwater

[2] Barry Eichengreen, The populist temptation: economic grievance and political reaction in the modern era, Oxford University Press, 2018

[3] On this, see Michael Spicer, The business government relationship: what has gone wrong, FOCUS 78, Helen Suzman Foundation, April 2016, available at www.hsf.org.za