Why South Africa can’t deliver on the social contract set out in the Constitution

South Africa is facing a cluster of crises.

There is a crisis of legitimacy around President Jacob Zuma. A crisis around the validity of the pre-1994 settlement which has not delivered on its initial promises. There is a generalised political crisis within the governing African National Congress (ANC) and tripartite alliance. There is a crisis in the labour movement and its institutions. There is a crisis of growing populism.

There is the economic crisis of rising unemployment, stagnating social mobility and a growing population of unskilled youth. There is the crisis of low economic growth. There is the lingering crisis of the degrading poverty and social breakdown in communities, crime, abuse of women and children, vulnerability and despair.

There is a deep systemic crisis in all levels of education, where significant government resources are budgeted but where the situation for the majority of young people has worsened over time.

South Africa’s problem is that its constitution is a perfect brochure of the nation it aspires to be. But the contractors entrusted with its future have an entirely different project in mind.

None of these crises are fundamentally new. But they all have their origin in long-standing legacy issues rooted in South Africa’s apartheid and colonialist past.

These legacies have precipitated a mismatch between South Africa’s political-economy, the nexus of political and economic power, and the society whose aspirations the system is meant to address. Democracy unlocked a path to political rights for all South Africans. But socio-economic rights have remained illusive for millions.

This dire reality has been masked, for a time, by the progressive fiscal spending of the state. Since 1994 this has favoured the poor in the form of social grants and enormous social infrastructure programs for access to basic rights. But none of this has translated into long term economic upliftment.

The state’s approach to disbursements has meant that dependence on the state has ballooned in terms of direct cash transfers as well as rapid growth of the government wage bill. At the same time state efficiency has been degraded.

Coupled with other weaknesses in the state, South Africans have increasingly become frustrated with the low pace of change. People have expressed their dissatisfaction in the form of mounting protests. And in latest local government elections they also withheld their vote for the ANC, or voted for opposition parties.

Only a few enjoy economic benefits 
At the same time South Africa’s highly consolidated economy has increasingly benefited only the elite at the exclusion of the unskilled. Except for a small club of politically connected beneficiaries, most people have looked to the state rather than to business for relief. This has translated into economic growth without expansion in the labour market.

In addition, poorly performing state owned enterprises such as Eskom have precipitated the impact of rising energy costs while rising demands from labour have put old business models under cost pressures. All this has led to a lack of investment locally.

In addition, the stubborn spatial divides precipitated by apartheid policies have meant that millions of the most vulnerable South Africans are structurally excluded from participating in the formal economy. Even if there were jobs, they would come at great personal expense in the form of travel time and costs. And while the informal economy has grown, the influx of migrants from neighbouring states and countries such as Ethiopia and Pakistan has introduced vigorous competition between traders in the informal sector.

More recently a destabilising youth bulge, a cohort of South Africans increasingly indifferent to the pre-and post 1994 “Rainbow Nation” narrative has come to the fore. This is manifest in the emerging #Fallist culture, calling for change in the form of #RhodesMustFall, #AfrikaansMustFall and more recently #FeesMustFall. This is a groundswell that I believe has only just begun.

New economic regime needed
There are competing narratives of why the status quo has emerged.

The narrative emerging from the ANC and its alliance partners, the South African Communist Party and the Congress of South African Trade Unions, is that corporate South Africa, and big business in particular, have not demonstrated a patriotic loyalty to South Africa. This, they argue, would translate into investment and higher growth and more rapid racial transformation.

In turn big business has argued that the failings of the political establishment and grotesque shortcomings of the current executive have been at the root of its reluctance to invest.

Narratives from civil society have included criticism of the middle class and previously advantaged communities for refusing to share in the wealth of the country. And emerging on the left has been a narrative, increasingly echoed by the youth, that South Africa’s negotiated settlement was a victory for white monopoly capital at the expense of the legitimate claims of the black majority.

The hard truth is that South Africa has limited options for developing its economy to address its social ills. This is because of the historical interdependence of the country’s economy on its large industrial state-owned enterprises for cheap production inputs, in addition to its more recent openness in terms of foreign investment in securities and the currency.

In essence, productive capital is in the hands of a few who do not depend personally on South Africa’s long-term stability. On the other hand political power is centralised in the hands of a small elite which is now interdependent on the holders of capital domestically and abroad. Individuals in this elite rely on their political positions to sustain their economic advantage.

This means that the bulk of South African society is excluded both economically and politically from the means to address their plight and often lack the conditions suitable to taking an entrepreneurial route to upward mobility.

In essence, South Africa’s post-apartheid economy is unable to deliver on the social contract enshrined in the Constitution. In its current form, the political economy of the country simply cannot address the discrepancies between the society envisioned in the constitution and the lived reality of citizens rapidly enough.

South Africa’s choices are not between clear and simple “left” versus “right” economic ideologies. Rather, its future rests on an intricate set of inter-dependencies that match opportunities for capital with inefficiencies in the national development system. And South Africa needs a new economic regime that, over time, dynamically matches the structure of its labour market as skills are developed.

But neither the social capital nor the institutional mechanisms exist to bring this about.

As far as I can see, the only path out is for the sleeping giant of civil society to awake to this reality.

Marius Oosthuizen, Full time faculty, Gordon Institute of Business Science, University of Pretoria

This article was originally published on The Conversation. Read the original article.

The Conversation

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