South Africa’s mission does not end with populist sloganeering designed to inspire misdirected anger and expectations among the poor, but a strong developmental state that has to be efficient and capable, says Minister of Finance Trevor Manuel.
But a leader of the Congress of South African Trade Unions (Cosatu) says public economic policies have fed the constituency of the conservative opposition, Democratic Alliance — while the poor have grown poorer.
Manuel and Western Cape Cosatu regional secretary Tony Ehrenreich have taken each other on over the demands of the modern South African state — and how best to run the economy — in a new magazine, Mindshift, brought out by the University of Cape Town graduate school of business and Ince. The launch copy of the bi-monthly magazine has just been published.
Manuel, who writes under the headline “Modernism, the development state and progressive governance” says transforming South Africa from its apartheid legacy to a people-centred democracy “is a formidable task that, in true [ruling] African National Congress tradition, requires the commitment and unity of all progressive democrats who understand the nature of the challenge and are willing to engage with it with a passion and ethical resilience that will not be sacrificed on the altar of opportunism and populism”.
However, Ehrenreich — who writes under the headline “Populism, a democratic imperative for all people” — argues that South Africa has adopted a new form of policy-making that entails “bowing at the alter of free-market fundamentalism” reflected in the growth, employment and redistribution (Gear) policy, which does not reflect the popular choice of the Reconstruction and Development Programme and the Freedom Charter backed by the ANC’s popular mandate.
“These policies [Gear] are more aligned to the [official opposition] Democratic Alliance than to the ANC, and eight years later, it is the DA constituency which has been the main beneficiary of government economic policy.
“The white elite has benefited handsomely along with the black elite, who try to use their struggle credentials to give legitimacy to the apartheid ownership structure,” says Ehrenreich.
The policy choice has seen unemployment rising from 20% in 1996 to 36% in 2004, while the level of inequality has increased with the bottom 60% of society today earning nearly 7% less of the national wage than they did in 1996.
In addition, the absolute level of poverty has increased despite increased social delivery, while cuts in taxation have seen nearly R60-billion given to upper-income earners and corporations in the form of tax cuts.
“These tax cuts come in the face of a steadfast refusal from government to spend R30-billion to provide a basic income grant of R100 a month to the unemployed people,” he noted.
Trade liberalisation has seen thousands of jobs lost owing to tariff cuts, import parity pricing and bilateral trade agreements. High interest rates designed to keep inflation low “are in part the reason for the high cost of capital domestically, as well as [having] the impact on the strengthening of the rand, which has had a negative effect on exports,” notes Ehrenreich.
Manuel counters Ehrenreich by saying the debate is not about neo-liberalism.
“We cannot bask in the luxury of Boss suits, Gucci bags and BMWs and at the same time engage in populist rhetoric designed to inspire misdirected anger and expectations among the poor,” says Manuel.
“Perhaps we should say ‘progressives of all countries unite … to unite around a perspective, informed by the need to achieve the right power balance between capital on the one hand and the working people and the poor on the other.
“I believe that, in joining that progressive struggle to achieve that power balance to depart from this paradigm which gives this dominant place to capital so that all of us become market fundamentals, the central progressive goal must be that we must put the people first throughout the world.
“We are aware that the raw forces of capitalist greed and consumption threaten every day to weaken our resolve and challenge the very values we struggled for.”
However, Manuel says that “notwithstanding this contestation, we are determined to achieve higher economic growth, poverty alleviation and job creation”.
“These programmes include macro-economic and exchange rate stability, accelerating public investment in infrastructure, improving the quality of our housing and community environment, improving productivity and lowering the cost of job creation, improving the effectiveness of industrial policy and strengthening public administration.”
The editor of the new publication, Monica Graaff, says that sharp as the disagreements in this debate are, there are key areas of agreement. Both agree that the terms populism and modernism define their differences. They agree that Gear has played a role in strengthening the country’s economy, she believes.
They disagree about the extent of this role and about the capacity of the policy to achieve acceptable levels of social transformation.
She also says that they agree there is a huge disparity between rich and poor in South Africa and this is cause for concern.
“This means that there is some agreement about the nature and extent of the social problem, although there is disagreement about ways to resolve it.” — I-Net Bridge