Behind our economic decline

Russell Lamberti says there is a chronic ideological illness inflecting ever corner of ANC govt policy

It has been roughly a quarter-century since the end of Apartheid, but again there is something rotten in the state of South Africa.

The people at the southern tip of Africa find themselves languishing in economic stagnation and living with rampant state corruption, high and misspent taxes, persistent poverty, and growing political angst. After 23 years of near total ANC political control, economic progress hasn’t just ground to a halt, it has shifted into reverse gear.

Essential infrastructure is grossly neglected to make way for conspicuous consumption, rates of new capital investment are pitifully small, and billions of rand are conveyed daily via fiscal policy away from vigorous value-building activities into the financial Bermuda Triangle of a vast, sclerotic state bureaucracy. The net result is that South Africa simply has too little capital – the real stuff that makes production, progress and jobs possible – for its people to experience economic progress.

Over the past 10-15 years, the South African economic system has ceased to be an environment of widespread economic betterment and now is better characterised as a fiefdom for legal and illegal plunder by state technocrats and opportunistic cronies at the expense of vigorous, organic, inclusive economic dynamism. New employment opportunities are far too few to keep up with the demand and desire for work by the unfortunate many who lead lives detached from the dignity and sustenance of gainful employment.

Much ink has been spilt attempting to explain South Africa’s economic malaise, but there seems to me still far too little appreciation of the chronic ideological illness infecting every corner of state policy: Marxism.

Now, there are many among the country’s intelligentsia who scoff at the idea that South Africa is governed by Marxist ideology. I believe there are two kinds of Marxism denial in operation. The first kind is deliberately deceptive, where intellectual Marxists, Socialists and Fabian Socialists aim to deflect attention away from the radically collectivist agenda of the ANC’s National Democratic Revolution. “Marxism” and “socialism”, as ideological monikers, carry the baggage of great misery and abject failure, so the ploy is to deepen socialism within South Africa without naming it such to avert a loss of political and social credibility.

The second kind of Marxism denial among intellectual elites is naïve. It looks at present-day South Africa and sees nothing of what 1924 Russia must have been. There is no political dictatorship, no gulags, no ban on emigration, but rather ostensible constitutional democracy, private property and global financial and trade integration.

But I believe we deny the influence of Marxist ideology in South Africa at our great peril. If you’re expecting socialism to look like Soviet Russia, you’ve got it all wrong. Like any ideology, Marxism and socialism have evolved with a very shrewd 21st Century facelift. I call it “technocratic socialism”, underpinned by “Marxism 2.0.”

By the 1960s, Marxism 1.0 and socialism had been thoroughly discredited by Joseph Stalin’s heinous body count. Meanwhile, living standards of the ordinary man in the much freer West had surged ahead in the post-War boom. Many formerly committed Western Marxists abandoned ship, but some dug in and recalibrated Marxist thought in such a way as to repackage it for a new, gullible audience. There seems to have been at least two key pivots that helped create Marxism 2.0. Firstly it subordinated the idea of the class struggle in light of evidence from freer market systems of good class relations and unprecedented income, wealth and lifestyle upward mobility of the common man.

So Marxist postmodernist intellectuals promoted insurmountable social antagonisms and alienation instead – gender and race conflict as opposed to a surmountable class conflict. The supposedly dominant gender or racial identity group replaced the bourgeoisie, and the proletariat became all other identity groups who could claim disadvantage or oppression. Hierarchy of control over the means of production was arguably subordinated to the hierarchy of identity group oppression or power.

The second key pivot to Marxism 2.0 was that state ownership of the means of production was abandoned in favour of state control of the means of production. The new socialists realised they did not need to undertake the Herculean task of forcibly seizing the means of production from capitalists by violent force but merely needed to shackle those means of production within the state’s regulatory domain. They discovered that ownership is not a title deed but effective control.

Rather than take on the impossibly arduous task of seizing and running whole industries, technocratic socialists leave this up to private owners and then swoop in with taxes and regulations and declarations to skim off the lucre after the hard work has been done. These neo-socialists substitute the direct force of old-style socialism with the more distant but very real threat of force hidden behind layers and layers of arbitrary rules, ordinances, charters, regulations, taxes and general meddlesome paternalism.

This is the modus operandi of technocratic socialists derived from the intellectual base of Marxism 2.0. Of course, technocratic socialism has many features of fascism, which similarly aimed at state economic control through regulation and suasion and too promulgated a social hierarchy, furthered and entrenched by overt state power. In this sense, technocratic socialism merges the most insidious aspects of socialism and fascism while discarding their most odious such as the doctrine of racial supremacy (fascism) or the doctrine of seizing all private property (Leninism).

In this way, the ANC’s technocratic socialism is eminently more marketable than old-style fascism and socialism, which I believe has served to mask the true ideological goal and policy stance of the ANC. This ideology is fundamentally a form of totalitarian state control of the economy and society achieved patiently over a period of a few decades. We can see evidence of this totalitarianism in the roughly 220 pages of doctrine and policy that was issued for the recent one week ANC policy conference in June/July 2017.

These long and rambling documents envision the ANC as the sole ‘progressive force’ in South African society, on which the hopes and dreams of the majority naturally and inevitably rest and around which all economic activity must coalesce. In its documents the ANC speaks of South Africa as a “social experiment”, a “giant social laboratory”, and that ANC objectives are “informed by the strategic posture to build a new civilisation.”

The ANC does not see itself as occupying merely a passive, impartial governance role within which free South Africans can pursue life, liberty and happiness, but rather as the arbiter of first and last resort in economic, political, and social life. It is not satisfied with merely millstonesque, labyrinthine taxation and monopolising large, pivotal nodes of the economy. This is crippling enough. But it also cannot resist meddling in sport, arts, speech, hiring, firing, buying, selling, product standards, private schooling, private transactions, offshore transactions, personal consumption choices, charity, adoption, title deed, and sundry other things.

It is no surprise then that we see South Africa failing to advance up global economic freedom rankings, why labour markets are generally regarded as hopelessly unfree (and combative), and why the ease of doing business continues to decline year in, year out. These and other indicators of too much state control and too little private enterprise are to be fully expected in a noose-tightening technocratic socialist state. Also to be fully expected are the results.

South Africa’s economy is grossly underperforming its emerging market peers, all of whom also experienced the global financial crisis in 2008/09 and many of whom are also heavily exposed to the recent fall in commodity prices. The financial crisis and falling commodity prices are routinely trotted out by government policymakers as scapegoats for the economy’s woeful sclerosis over the past ten years, but this is shameless and spurious blame-mongering.

The fact is that many global peers have managed to perform well despite these setbacks. My own research has shown that South Africa’s inflation-adjusted disposable income per capita (in dollars) has fallen by 15% since 2007, whereas the average of an emerging market peer group comprising Brazil, Colombia, Chile, Turkey, India, Thailand and Mexico increased by about 40%. A gaping disparity.

Lest this underperformance get blamed on overly restrictive fiscal or monetary policy, we should note that South Africa government debt ballooned by almost 300% since 2007, comfortably more than most emerging markets. Also, monetary policy in the form of real interest rates over this period has been by the Reserve Bank’s own admission accommodative, and no more or less restrictive than the peer group.

Instead, the real culprit is a shackled economy. South Africa’s business freedom index as measured by the Heritage Foundation has fallen significantly since the 1990s, a decline which has worryingly begun to accelerate in recent years thanks to ever increasing layers of onerous company rules, regulations and compliance requirements.

It is time to place front and centre a conversation about the destructiveness of ANC socialism disguised in new clothes: technocratic socialism. This ideology, intellectually underpinned by the cunning and insidious pivot of Marxism 2.0, is grinding the South African economy into the dust. A structural, long-term recession has set in, signified by the long term decline in the average South African’s global purchasing power.

Moreover, this technocratic socialism is a feature of the ANC, not a bug. It is larger than President Jacob Zuma or any other individual or personality. It is the ANC’s core, its essence, rooted in the Freedom Charter, emotionally bound up with Soviet support during the Apartheid struggle, entrenched by racial identity politics and a racial alienation narrative, and enlivened by its members who preach, teach it, and believe it.

There are at least five important implications of the ANC as a Marxist 2.0 party:

1. Ridding the ANC of Jacob Zuma will not rid the ANC of Marxist ideology. In fact, it may entrench it, since the committed intellectual Marxists within the ruling alliance have mainly pitted themselves against Jacob Zuma. Moreover, there is a near-ubiquitous acceptance within party leadership and support structures of the tenets of technocratic socialism and Marxism 2.0.

2. Corruption and kleptocracy is a natural and inevitable result of Marxist ideology. Increasingly pervasive and heavy-handed state control creates innumerable nodes and opportunities for special favours, cronyism, and graft. The more the state controls an economic system, the more corruption you will find in it. Trying to disassociate alleged kleptocrats from the underlying Marxist ideology is like trying to disassociate flu symptoms from an influenza virus. ‘State capture’ is simply an inevitable result of the underlying ideology which fundamentally favours the rule of state whim over the rule of law.

3.  It is not obvious that the ANC will voluntarily relinquish power if it is voted out in a national election or that it will allow a free and fair election if it perceives this threat. The party claims to be a democratic party, but this is an easy claim to make when you are winning. In Leninist dogma, from which the ANC’s National Democratic Revolution (NDR) draws its breath, democracy is merely a front for a ‘dictatorship of the proleteria’ (which is really just a dictatorship by the state), not a process of pluralistic, peaceful democratic competition. In an NDR framework, opposition parties are seen as barely tolerable, subversive threats, not healthy, constructive competitors. Although lip service may be paid to it, the ANC mostly sees no distinction between the party and the state. If the ANC were to relinquish power peacefully in a free and fair election, this would be a tremendous victory for peace and liberty in South Africa and suggest that the ANC regards the well-being of citizens above party and ideological survival. The jury is out on this, however, as it has not been truly tested in the real world.

4. There is every indication that the ANC wishes to deepen and further entrench technocratic socialism in South Africa. This is what it means when it talks about the “second phase of the National Democratic Revolution.” This is extremely dangerous as it threatens to sink the economy further into a quagmire. An economic malaise raises the risk of social angst and discontent, deepening political divisions, and emboldening radical Marxists to try even more daring pig-headed, destructive policies. The threat of a long and disastrous downward socialist spiral is very real. Socialism begetting recession, recession begetting grievance, grievance begetting leftist populism, and leftist populism begetting more socialism, and so on.

5. Given 1-4 above, if the ANC prevails in the 2019 general election, by whatever means, then South Africa faces yet another five years of economic decline (at least). Adam Smith remarked, correctly, that there is much ruin in a nation. He meant that it is hard to destroy a country’s economy, but another five years of capital-destroying ANC rule will make it that much less probable that most people alive today on the southern tip of Africa will escape poverty and become prosperous in their lifetimes.

The spectre of a great and devastating economic calamity looms over South Africa. It is not inevitable, but to avoid it, we need to expose and undermine a grave threat in our midst. That threat is not business owners and entrepreneurs, who provide valuable products and services at significant risk under tremendous duress. It is not foreign investors, who provide the savings that South African’s are unable or unwilling to provide. It is not civil society organisations, which show the path toward peaceful, voluntary, organic community and social order.

It is not the ‘informal sector’ which is the holes through which the hyper-regulated economy breathes. It is not workers marching for more pay, who are merely pawns of union thug leaders and government cronies. It is not poor, rural-dwelling South Africans on social welfare who’ve been systematically marginalised, barred, and disempowered from participating in owning and using land, getting entry-level work, and gaining useful knowledge.

The grave threat is a small but powerful Marxist ruling class and its fawning bourgeois acolytes that wish to mould and shape South Africa according to their ideological image and whimsical desires by the ever tightening grip of stifling, meddling, exclusionary, dogmatic, insatiable technocratic socialism.

These totalitarians can do untold damage. Their ideology has no limiting principle and no regard for empirical feedback. It is a faith. A dogma. A religion. Their ousting or nullification would not only help avert a great disaster but would be a tremendous leap forward in the pursuit of life, liberty and happiness on the southern tip of Africa. Indeed, it should be the highest strategic objective of all who love peace and liberty.