Left-leaning economists must stop hiding and challenge peddled misconceptions

Crisis stations: A minimum wage of R20 an hour is not much but will help to uplift households, the writer says. Photo: Naashon Zalk/Bloomberg

Crisis stations: A minimum wage of R20 an hour is not much but will help to uplift households, the writer says. Photo: Naashon Zalk/Bloomberg

Right-wing economists get way too much airtime in South Africa. This is both because of laziness in the media and because left-leaning economists appear to take a vow of silence on crucial political economy debates.

The effect is that one has to listen to the likes of Dawie Roodt, for example, going completely unchallenged in claiming that the exploitation of hundreds of thousands of workers is not exploitation and that it makes economic sense.

Take the debate on the proposed national minimum wage as an example. The amount of R20 an hour is what most of the stakeholders appear to be signing up for.

Labour federation Cosatu hasn’t done so yet but agrees that a minimum wage is necessary. They remain worried about the exact figure and how it is to be implemented. Or, at least, that is what they are mumbling when queried about why they have not yet signed the deal.

If you look at the labour market, we currently have hundreds of thousands of workers who earn less than R20 an hour. We are not going to break the back of poverty nor massively reduce inequality by protecting these workers with a legally enforceable minimum wage level of R20 an hour. But it certainly will make some difference to many families for whom, literally, every single cent counts.

Right-wing economists pit the jobless against the exploited workers. They insist that the only way for a farm labourer’s unemployed cousin to get employed is not to impose any minimum wage on the farmer.

That is sheer madness. Obviously, if a business owner has no regard for a fair distribution of the value that is created in his or her business and economic sector, they will try to keep down their wage bill.

Cost structures are minimised by capitalists to maximise profits and ensure the greatest levels of returns on shareholder investment. That is the very essence of capitalism. A labour market that is not regulated by the state has no regard for considerations of fairness or justice. Markets are, at best, efficient allocative mechanisms and, at worst, treated as if they have the agency and authority of actual human beings who dare not question where these markets settle the cheapest unit price of labour.

The result is that gross income inequality would go unchallenged if labour markets were to be fetishised as inherently fair. They are not inherently fair. Fairness is not built into market dynamics. Markets are simply a device for supply and demand to find each other.

In a country with our history, in which workers have very little real negotiating power, it is bonkers to pretend that an individual worker has the meaningful freedom to negotiate a fair wage for herself. In unskilled job sectors in particular, workers are “wage takers”. In that context, it is crucial that we approximate a living wage by topping up what the unit price of labour is determined by the market.

We are not even, mind you, talking here about a “living wage”. There is a gigantic gap between the proposed R20 an hour minimum wage figure and what is required to afford to live decently. And still the right-wing economists callously disregard considerations of justice in their framing of these trade-offs.

There is also, of course, a reality here about the relationship between the unemployed and the exploited worker’s social relations that is overlooked. When you introduce a minimum wage, you help to scaffold the burden of the exploited worker whose wage is shared in a household of other poor workers and unemployed relatives.

Because right-wing economists do not live among the people they theorise about, they make theoretical assumptions that do not track reality.

You do not have, in one corner, a group of people called “unemployed South Africans” and, in the other, “employed South Africans”. In one family, you will find a mix of people who are unemployed, whose sole “income” is a social grant, and the odd person who is an unskilled or semiskilled worker earning an appallingly low wage.

This means that, in the real economy, an imposed minimum wage will actually uplift the entire household. It won’t fatten the unskilled worker and leave the unemployed cousin outside the hut, perishing.

Obviously, we need to break the back of the unemployment crisis too. We have the unenviable crisis in our country of simultaneously having to grow the economy, reduce unemployment and ensure that labour markets are structured as fairly as possible.

We cannot disregard urgent historical questions about immoral labour practices just because the unemployment levels also need to be solved. We must increase productivity, regulate gross profit distributions to the top tier of workers in the economy, protect the exploited at the bottom of the employment rung, and scaffold small and medium enterprises.

The public debate would be enhanced if left-leaning economists would stop hiding. These lefties should also leave the ideology talk for us liberal arts types and rather challenge right-wing economists’ numbers and models.

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