While Globaphobes, Third Way/Progressive Governance authors, including South African President Thabo Mbeki (“Markets can’t do it alone”, July 18) and Compassionate Conservatives aim to chart new ideological waters from different perspectives, liberal capitalism remains the defining political economic paradigm of our time as part of the legacy of the end of the Cold War. It inhabits and increasingly defines the political centre, as “left” and “right” begin to lose their labelling and substantive value.
As political parties from the traditional left have moved closer to the political centre — where the votes and therefore the power and continuation in office lies — they have found themselves drifting towards liberal capitalism and are finding it hard to reconcile their left-wing historical legacies with the prevailing paradigm.
For New Labour in Britain this has meant aiming to cast a new ideological mould and opting for a third way. This third way aims to chart the middle ground between liberal capitalism and social democracy and the tenets of the welfare state. This ideological reinvention of New Labour is significant as it purports to create a template for the global ideological reinvention of the family of political parties of the traditional left which, in the South African context, obviously embraces the African National Congress, South African Communist Party and Congress of South African Trade Unions (and the newly added New National Party) alliance.
While the third way is continuously altering its path and all but changing its name to Progressive Governance, it remains, largely, an evolving set of ideas and does not yet constitute a coherent and integrated set of policy alternatives to dislodge liberal capitalism.
Indeed, in large part, the third way and its successor appear to lean more towards the tenets of liberal capitalism than towards its not-so-new efforts to construct an “enabling state” to remain true to the legacy of the left.
The progressive governance conference, at which President Thabo Mbeki spoke and attacked the “market”, renewed its focus on an “enabling state” versus the “flawed market”. It held out the concept of the “enabling state” to curtail market failure. The “enabling state” is not a new concept.
As Professor J. Bradford De Long at Berkeley argues: “Once upon a time development advisers, politicians, economists, and others argued that social democracy was the proper road for developing economies.
“A strong, active government to build infrastructure and redistribute wealth to ensure that growth would benefit all — or so the argument went.
“But over the past two decades cynicism has set in. A consensus has formed that outside already developed nations (and indeed inside some) an activist developmental state has entailed too many coups, too much corruption, too many business leaders deciding that the road to profits is not capital investment, but marrying the chief financial officer to the daughter of the vice-minister of finance.”
Experience suggests that, far from constructing an “enabling state”, the philosophers and soothsayers of progressive governance on the left frequently produce the stifling control-freakery state.
While Mbeki declares roundly his suspicion of the “market” and proclaims that capital has no soul, the global business community is increasingly engaging the concept of corporate social responsibility as part of creating a sustainable business climate.
It is incomprehensible that Mbeki should attack “the market” and expect to inspire confidence in the South African economy.
We have to ask whether our president falls into the category of passive closet anti-capitalists who continue to accentuate the negatives of modern capitalism while his government adheres to and implements its very prescripts? It is therefore not only odd, but undesirable, that Mbeki should lash out at “neoliberalism” when his government’s fiscal and monetary policies — correctly and admirably — follow a market-oriented approach. It is undesirable that he decries the “market” when in the arena of free trade he rightly points out that free trade is a misnomer until such time as developed countries end their double-speak and put paid to protectionism in their economies in the global quest for true trade liberalisation.
Perhaps Mbeki hopes to silence his critics on the far left by co-opting their rhetoric.
Mbeki also distorts the so-called “neoliberal” approach to development, more commonly referred to as the Washington Consensus.
There is not a single “neoliberal” economist who would argue that capital must be given free rein without any government intervention. That is the libertarian position, not the liberal or so-called “neoliberal” view. The liberal view is that in addition to opening up the economy, the government must play a key role in regulating the market economy and provide a clearly targeted social safety net for the poor — not the welfare state of general application favoured by social democrats.
Mbeki wants to have it both ways: to be regarded by business leaders as a responsible economic manager, and by the political left as a champion of the downtrodden.
This is not an impossible task and perhaps the global political left will still craft a comprehensive, internally coherent and intellectually defensible alternative to modern capitalism in the form of the “enabling state” touted at the progressive governance conference in London.
While neoliberals do not decry regulation entirely, as has been indicated, the line that divides the enabling state — which sounds benign enough— from a stifling state (which stifles innovation and swaddles the economy in red tape) is a fine one indeed.
It is a line that few governments of the historical left, racked by closet passive anti-capitalism, have been able to tread with any measure of success. Surely the historical track record must carry the seeds of the predictability of its failure as a “new” ideology yet again.
Raenette Taljaard is an MP and Democratic Alliance spokesperson on finance.