to the continued survival of a ‘reform bargain’, especially one increasingly reliant upon infusions of foreign investment.
SLIDE TOWARDS MEDIOCRITY?
There is need to maintain perspective. According to the World Economic Forum’s Global Competitiveness Index for 2009/10, South Africa performed relatively well in a context of global economic crisis.9 South Africa was rated the 45th most competitive country out of 134 internationally, the highest rated country in Africa. Furthermore, South Africa jumped to 5th place overall with regard to trust in its banking system, and came in at 24th regarding intellectual property protection, 5th for accountability of private institutions, and 36th for business sophistication. Likewise, according to the Economist Intelligence Unit, South Africa was identified as the fourth most favoured site for investment amongst sixty-six ‘emerging markets’. In other words, the economy is internationally regarded as having considerable strengths, and will doubtless continue to be regarded as a gateway to the wider continent. In addition, South Africa remains a major player internationally in terms of its mining industry, and demand for its mineral resources will be sustained by global demand for commodities, especially from China.
Overall, therefore, it would be absurd to suggest that South Africa is about to undergo an apocalyptic decline. However, it can be argued that the country could be on the verge of a long-term descent towards mediocrity, largely because of issues of governance (political and economic) and human development. Worryingly, South Africa is slipping in terms of international rankings concerning corruption (55th out of 180 rated by the WEF in 2009, one place lower than a year earlier)10 and was ranked 90th in terms of labour market efficiency and 121st in terms of labour-employee relations. South Africa also did exceptionally badly with regard to perceptions of the health of its workforce (127th), and the business costs of crime and violence (133rd), with there being little confidence in the ability of the police to provide protection (106th).
Although global competitive indicators reflect the views of international business, the latter set of rankings lend support to the notion that the foundations of the reform bargain are subsiding, for they indicate that South Africa’s two worlds – of rich and poor, capital and labour – remain as divided as ever. To put it another way, how long can South African industry continue to compete globally if the economy is unable, simultaneously, to make major inroads into the highly inter-related issues of unemployment, poverty and violence? And will not failure to successfully address these challenges undermine democracy?
The very posing of such questions points to the urgent need for an alternative to the present economic trajectory. We may highlight four major challenges.
First, there is a need for a reshaping of the ‘reform bargain’. Taylor’s formulation of the original bargain revolved around business getting most of what it wanted in terms of market reforms and access to international opportunity in exchange for the ANC’s getting most of what it wanted politically. Yet the terms of the bargain were somewhat paradoxical, for the more that South African capital gained access to the international market, the more capital in South Africa has become internationalised. In other words, to secure ‘growth’, the government is increasingly dependent upon acceding to the whims of ‘the market’ which, in reality, is composed of foreign financial institutional investors and multinational corporations which have little interest in the conditions of South African society except insofar as they impinge directly upon short-term profitability. Thus the outcome has been continued white domination of the private sector and an investment pattern that has failed to match growth to jobs, to compensate for which the government and ANC have turned to the mantra of the developmental state which, willy-nilly, implies the need for greater state intervention in the economy. Now, while the present shift towards devising ‘industrial strategy’ records a welcome nod to long-term thinking, transformation of South Africa into a developmental state implies a state (and human resources) capacity (for picking ‘winning strategies’ and implementing them) which the country seems not to have. Reviving the ‘reform bargain’ in these circumstances is therefore very difficult, but it would seem to involve, at a minimum, business committing much more seriously than hitherto to meaningful empowerment and to job creation in exchange for commitment by government to providing market security. While some progress has been made towards BEE becoming more ‘broadly based’, far greater effort needs to be made by large scale capital to the processes of sharing ownership with employees, skilling the work force, procurement and serious engagement with small companies, and promoting employment. Similarly, land reform, hitherto pretty much a dismal failure, is only likely to be made to work through the forging of a genuine partnership between government and commercial agriculture if the dangers of ‘Zimbabweanisation’ are to be averted (Atkinson below).
Second, there is urgent need for large-scale capital to join with government, labour and civil society in addressing the appalling levels of social inequality. It may well be that the starting point for such a societal commitment will come from appeal to common sense, the notion that the social conditions for production, inclusive of safety of persons and property, cannot be secured unless the drift to widening inequality is reversed. Pragmatically, there is much that could be done. After all, if South Africa is as relatively attractive to international investment as the global competitiveness ratings cited above indicate, there would seem to be considerable scope for government to drive harder bargains with business to promote employment: if business won’t hire more people directly, then corporations can cough up more to enable government itself to launch employment schemes and, in turn, this may require the union movement to re-think its opposition to greater labour market flexibility. (Gordhan’s 2010 budget made a useful start here with proposals for lower paid temporary employment for first time job seekers.) Yet more than pragmatism is required, for ‘the disposition to admire and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition ... is ... the great and most universal cause of the corruption of our moral sentiments’. These words of Adam Smith (cited by Judt 2010) indicate the need for a vigorous collective commitment to realising the moral, as well as the economic, value of social justice. The social coherence that South Africa lacks flows ultimately from poorer citizens’ sense of social exclusion from the fruits of democratic society.
Achieving greater social equality will require, third, a move away from the political economy of ‘entitlement’ and easy money. The debate about entitlement has hitherto focused almost entirely upon the notion that, because of the racial inequality embedded in South Africa’s past, (many) blacks feel ‘entitled’ to company ownership, high salaries, good jobs, and public assets, with such feelings promoted by policies of ‘demographic representivity’ (Johnson 2009). However, the debate about entitlement needs to be seriously widened. Nothing has been more damaging to capital’s reputation than the revelations of the obscene salaries and benefits claimed by CEOs, supposedly justified by their market worth, alongside exposure of market collusion by companies in anti-competitive practices that ramp up prices for the poor. Yet equally damaging to the cause of democratic politics has been the sense of entitlement which numerous politicians have exhibited by plunder of public funds compounded by displays of arrogance to the people who have elected them. Much is made (although apparently little achieved) in contemporary South Africa of making both business and government more accountable. Fortunately, there are some signs that public disgust with excess is causing constituencies in both sectors to re-think. But at root is the far, far more difficult exercise of challenging the broader paradigm whereby we live.
The path pursued by South African since 1994 has been an unashamedly capitalist one which has equated ‘growth’ with ‘development’, substituted ‘deracialisation’ for greater social quality, and fostered private consumption over public welfare. In this, South Africa has followed international neoliberal trends far more than the socially egalitarian ethos which is at the heart of the historical mission of the ANC. Ever more, the outcomes look disastrous. As argued here, the
