The Centre for Development Enterprise is committed to a strong role for the state in creating the environment for growth and development, says Ann Bernstein
In his attack on the Centre for Development Enterprise (CDE) publication Policy Making in a New Democracy: South Africa’s Challenges for the 21st Century, Jeremy Cronin misrepresents the CDE’s conclusions and arguments (“A not-so- charming political policy”, September 17 to 22).
Not surprisingly, the South African Communist Party’s deputy general secretary fails to understand both the nature of leadership in a democracy and a nuanced approach to the role of the state and the market at the end of the 20th century.
He sees a fair assessment of the first five years of African National Congress rule as sycophancy and because of the peculiar nature of the alliance has to attack the CDE for statements that are direct quotes from the ANC president. He is at least honest about his own state of confusion, admitting that much of what the CDE advocates is “probably right” – a conclusion that must be uncomfortable for a man committed to an ideology that has failed dismally with respect to democracy, human rights, sustained development and basic decency.
It’s time to call the bluff on those who mount easy sloganistic attacks on the direction and toughness of government economic policy. The facts are that South Africa has lost more than 500 000 jobs in the past five years; unemployment is more than 30% of the workforce; the government spends far too much of its budget on recurrent staff costs; and the country has a declining level of domestic savings – thus making us more and more dependent on foreign investors to finance economic development. The government’s delivery successes will not be sustainable into the future unless there is economic growth to provide the additional resources available for social and development policy and the strengthening of local government capacity.
The international experience is clear. Macro-economic reform is hard. Success requires a strategy for building the political support necessary to sustain the reforms long enough for them to deliver. A critical ingredient is the identification of new allies for a growth strategy and the linkage of social policies with economic reforms. Thus far this strategic concentration of policy energy is precisely what the government has not achieved. Although they have acted boldly in sticking to fiscal discipline, South Africa has yet to achieve the investment flows essential for an expansion of jobs and growth. High growth and maximum job creation must become the lodestone against which all other policies are tested and alliances for delivery built.
In order to do this the ANC government is now faced with some difficult questions. These include:
l How does a former liberation movement imbued with a socialist world view transform itself into a political party that will turn South Africa into, in President Thabo Mbeki’s words, “the world’s most promising and exciting emerging market”?
l Is it possible to achieve sustained high growth with what is probably the developing world’s most powerful and protected labour movement?
l Is it really possible for the ANC to establish South Africa as a successful market-driven economy while it has an ambiguous, suspicious approach to businesspeople, both black and white?
l Is it possible to continue with socialist rhetoric and attacks on the market, and attract significant domestic and international investment?
What worries Cronin the most is that the CDE’s arguments could be taken seriously by the government. The CDE has not joined the chorus of attacks on the growth, employment and redistribution strategy (Gear) from the left but developed a well-researched and compelling argument for a more intensive and comprehensive approach to macro-economic reform.
And although he would like to dismiss the CDE as a heartless “free marketeer”, our policies and track record show that we are committed to a strong role for the state in creating the environment for growth and leading the way in complementary, sustainable development and poverty strategies. Perhaps most threateningly of all, the CDE is arguing that a partnership with the interests in South Africa with most resources and skills to offer, provides the country with a far better prospect for achieving the realisation of the ANC’s own agenda for growth and development than an alliance with the SACP.
There are two possible perspectives on the future of South Africa. One view holds that South Africans can muddle through and continue governing on the basis of a compromise between competing sources of power and influence – at its starkest, a compromise between the competing visions and priorities of socialism and transformation on the one hand, and the requirements for global competitiveness on the other. This scenario sees continuity, holding the alliance together and “a little bit for everyone” as both a possible and desirable route forward.
The second view (which the CDE strongly supports) sees South Africa as a nation yet again faced with a series of hard choices. The country must have sustained economic growth building up to at least an average of 5% per year. Without growth, the skilled population will decline, resources will shrink, and South Africa will not be able to deal with its own many challenges of poverty and development, never mind lead an “African renaissance”. A tough global marketplace will simply leave South Africa behind.
For this to be avoided, the government has to make some decisive choices and choose resolutely to go for growth. This will not be easy, but then neither will dealing with the consequences of inadequate growth. The Mbeki government must lay the foundations of a South African economic miracle. This will require moving away from being a “liberation front” towards a pragmatic partnership for growth and development.
Ann Bernstein is executive director of the Centre for Development Enterprise
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