/ 29 April 2024

PART ONE: Rise Mzansi promises social democracy, but delivers neoliberalism

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Songezo Zibi (Rise Mzansi national leader) flights the organisation's first election posters in Soweto on February 27, 2024. (Photo by Fani Mahuntsi/Gallo Images via Getty Images)

Seeking to gain momentum from the disastrous failures and empty promises of the ruling ANC, political parties are once again desperately selling hope.

Whether assuring us they will end crime or overcome load-shedding, political parties, old and new, are promising to be South Africa’s salvation in the upcoming national elections. For voters who can resist the temptation of apathy and instead crave change, hope can be rejuvenating. But the potency of hope has also proven itself to be a dangerously intoxicating weapon in the hands of politicians lusting for power.

To avoid optimism subduing our capacity for critical thought, we have to ask ourselves: what do new political parties — in terms of their ideological principles and policies — have to offer a country riddled by crisis, decline and decay?

Founded in April 2023 and led by Songezo Zibi, Rise Mzansi has emerged to contest South Africa’s seventh general elections. The party’s campaign rhetoric tells citizens that with regard to governance, South Africa is not in need of new ideas. Rather, Rise Mzansi has thrust itself onto the electoral landscape to solve the crisis of leadership that has plagued the ruling party. Rise Mzansi assures prospective voters that its members will provide the effective and ethical leadership that will build a “safe, prosperous, equal and united” South Africa in one generation.  

What political programme of reform, expressed through policy and legislation, would breathe life into these ideals?  When reading Rise Mzansi’s People’s Manifesto, it becomes clear that the party is not the transformative agent South Africa needs to bring such ideals into reality. 

 A contradiction reveals itself throughout the manifesto: a rhetorical commitment to the values of social democracy while proposing neoliberal economic policies as the solution to South Africa’s crises. 

Why does this ideological contradiction matter? Rise Mzansi has committed itself to realising the country’s constitutional values, those being equality, integrity, solidarity and justice. Yet, the past 50 years of neoliberal economic policy — in South Africa and around the world — have demonstrated how neoliberalism not only forges but nurtures the injustices that social democrats would want to drastically curtail or diminish. 

In varying degrees depending on the presidency, neoliberalism has remained an abiding feature of the ruling government’s economic policy. In South Africa and across the world, this political project and its economic practices have heightened inequality, nurtured mass unemployment, disempowered workers and eroded public goods all while gradually stifling democracy.

Ideological distinctions matter

 But before I can firmly categorise Rise Mzansi as a neoliberal party, distinctions must be made between the economic practices and ideologies of neoliberalism and social democracy. 

In a socially democratic state, the government is an active agent of economic reform, steadfast in regulating and intervening in the economy towards the advancement of the public good. In terms of policy this would entail an extensive social welfare system, measures to redistribute wealth towards the poor and public investment via progressive taxation, universal access to basic needs (for example, healthcare and education), strong regulation over economic activity and public ownership over major or strategic industries. One could accurately characterise Nordic countries such as Finland, Sweden and Denmark to be adherents to the model of social democracy.

Neoliberalism however, as defined by author David Harvey, is “a theory of political economic practices that proposes that human well-being can be best advanced by liberating individual entrepreneurial freedom and skills within a framework characterised by strong property rights, free markets and free trade”. Examples of neoliberal policies would include the privatisation of public assets, the commodification of basic services, cuts to expenditure on public goods and social welfare (otherwise known as austerity), the deregulation of industrial activity, the liberalisation of trade, the enforcement labour market flexibility and tax cuts for the rich.

Today social democracy manifests as welfare capitalism, which attempts to shield the public from the exploitative and socially de-stabilising practices of capitalist enterprise. This is achieved through giving agency to the working class by pursuing equitable economic development, public ownership and extensive social welfare. On the other hand, neoliberalism has functioned as “a political project to re-establish conditions of capital accumulation and restore the power of economic elites” and under neoliberalism “the role of the state is to create and preserve the institutional framework” in alignment with sustaining the dominance of economic elites. 

If one asks why South Africa sustains the highest levels of inequality in the world, the answer lies in the ruling ANC structurally re-designing our economy to put profits over people, and maintain the power of the rich few over the poor many. 

To further explore Rise Mzansi’s ideological contradictions (which render the goals of their political programme unattainable), three key electoral issues will be of focus: unemployment, economic growth and the energy crisis. 

Rise Mzansi does not break with policy status-quo 

One of Rise Mzansi’s priorities is combating mass unemployment through achieving equitable economic growth. Specifically, the party plans to implement reforms that will grow GDP by an annual rate of 6% a year and to achieve this the party claims South Africa “needs visionary, focused and capable leadership in all spheres of government and in parliament. It also needs a professional civil service.” 

Rise Mzansi’s proposed reforms lack an ambitious blueprint for economic growth. Moreover, the party’s manifesto fails to recognise the systemic nature of unemployment and advances policies which remain within the framework of neoliberal ideology. A shortage of skills alone cannot explain South Africa’s incredibly high rate of unemployment.  The crisis of unemployment emanates from a structural flaw in the economy: the ANC has not seriously pursued a programme of social development and industrialisation, while keeping the country on a path of export oriented growth, dependent on resource extraction, high consumption by the affluent portion of the population and low wages across economic sectors. 

Following the wave of globalisation in the 1990s, the ANC opened up South Africa’s economy to competition on the international market, seeking to be an attractive sight for foreign investment. But through the neoliberal policies encased in the Growth, Employment and Redistribution plan (Gear), the country underwent a premature deindustrialisation. This resulted from structural adjustments such as the removal of import surcharges that protected local industries or, as argued by sociologist Patrick Bond, “joining the World Trade Organisation on adverse terms, as a “transitional”, not developing economy. This led to the destruction of many clothing, textiles appliances and other labour-intensive firms”. In 2019, GroundUp reported that up to 309 000 jobs had been shed in the manufacturing sector, while the finance sector (the least labour intensive) has become the largest sector of the post-apartheid economy. 

Moreover, the reforms of Gear and subsequent policies have left the country’s economy vulnerable to the shifting interests of investors while also making our economy overly sensitive to global events that impact and shock local economies. In one year mining companies can report stunning profits and in the next year rising costs and international price fluctuation can threaten the loss of thousands of jobs

Sustainable industrialisation, equitable economic growth and social development requires a capacitated state that can effectively plan its interventions and stimulation of economic activity. But the policies embraced by Rise Mzansi are self-defeating in this regard. This is evidenced by the party maintaining the myth (probably a result of corporate media and the treasury’s fear-mongering) that “the government simply does not have the funds needed to pay for our expanding priorities”’. This was a disappointing assertion to see in a supposedly socially democratic manifesto. 

The myth of the government reaching a “fiscal cliff” serves two insidious purposes: first, to undermine the potential of forging a state with the democratic orientation and institutional capacity to facilitate economic intervention, growth and social development. Second, the absence of a capable state creates justification for the private sector to undertake roles and responsibilities that should be fulfilled by the government. 

Reports of an immediate fiscal crisis have been overstated to justify the austerity measures implemented by the treasury. These short-sighted and severe cuts to government expenditure on basic services and social security are a key element of a broader agenda of structural adjustment in pursuit of a liberalised energy sector, a reduced public sector and a precarious but cheap labour force. According to the Institute of Economic Justice (among numerous civil society organisations researching issues of political-economy) “the budget mismatch (on both revenue and expenditure ends) is within historical norms, considerably below recent revenue windfalls, and well within government’s ability to close without resorting to chaotic budget cuts”. The chaos referred to here is evident in our understaffed hospitals, decaying infrastructure, overwhelmed police services and debilitated education system. 

The growth of South Africa’s public debt — specifically the debt-to-GDP ratio — is not a minor concern. But, as highlighted by numerous critiques of the treasury’s 2023 medium term budget policy statement, majority of public debt is owed in rands, massive public funds are available for concessionary lending and as argued by the Alternative Information and Development Centre “the debt-to-GDP ratio is in line with the average of middle-income and emerging economies”. 

Rise Mzansi’s subscription to the treasury’s fear-mongering exposes the party’s lack of imagination and its lukewarm approach to the country’s economic stagnation. If the government is indeed broke, and if Rise Mzansi aims to remove constraints to economic growth, then one must ask: what is the party’s fiscal strategy? In other words, how would it raise resources to tackle crime, education, improving the civil service or Eskom’s dysfunction? So far Rise Mzansi has no compelling answer to this question and so its ambitions for development and economic growth appear as intangible pies in the sky. 

The poor answer Rise Mzansi does provide is mobilising private sector investment, specifically “private investment in public assets”. Such a strategy is likely to result in increasing government debt, weakening state capacity, diluting economic sovereignty and rendering public goods or basic services inaccessible. Why? Because private investors are accountable to their shareholders, not the public, and seek investment that yields profitable returns. This means providing incentives and a regulatory framework attractive to private sector players often at the cost of the public good. 

One would assume that a party that claims to embody values of social democracy would advance progressive fiscal policies in the interests of South Africa’s poor and unemployed majority. These progressive revenue raising strategies could include an increase in the corporate income tax rate (which once sat at 40% in 1994,  and has declined to 27% in 2024). Moreover, recent research has demonstrated that a graduated wealth tax on the richest 1% of the population, between 3% and 7% could raise R140 billion in annual revenue. An effective complement to these tax measures could also include a progressive tax on inheritance alongside the erasure of tax incentives (such as medical aid tax deductions and inflationary relief annually provided to high-income earners) in favour of the rich minority and big business. Rise Mzansi proposes no changes to a tax regime and fiscal framework that has for years served the narrow interests of the rich and corporate elite. 

Redistribution is vital to South Africa’s short-to-medium term economic growth, but so is mobilising resources towards investing in economic production. A socially democratic government would, as many did after World War II, invest in public ownership of key assets and industries, using extensive public works programmes to not only create dignified jobs, but boost skills supply and create the kind of well-functioning infrastructure that is crucial to sustaining investment and business confidence. And let us not forget, a capable state and effective government is indispensable if a country wants to retain or heighten its economic sovereignty. A weak state and public sector create opportunities for developing countries like South Africa to be coerced (by, for example, international finance institutions, foreign investors and finance capital) into pursuing economic policies that are not in the best interests of its citizens.

Without a fiscal strategy for social development, industrialisation and economic growth, the crises of corruption will continue to endure. If there is no way to absorb the ambitions of emergent industrialists and new players in the private sector, the state will continue to be perceived and treated as a site of kleptocratic accumulation.  

Beyond curtailing irregular and wasteful expenditure (and introducing a progressive fiscal framework) a truly social democratic party would discipline the private sector for its corporate crimes and use some of the sector’s financial resources towards improving the socio-economic priorities highlighted in its manifesto (education, food security, healthcare, social services and policing). 

The United Nations Convention on Trade and Development reported in 2023 that South Africa is losing more than R62 billion a year to illicit financial flows. This refers to a form of illegal capital flight that occurs when money is illegally earned, transferred or spent. It can come in the form of tax evasion, profit shifting or base erosion. Other estimates place South Africa’s illicit outflows from 2009 to 2018 at $20 billion. It is absurd that the most unequal country on Earth allows for such corporate impunity. 

What Rise Mzansi fails to acknowledge is that domestic resource mobilisation is possible (to drive public investment, ownership and employment) and the choice to not to tax the rich and discipline the private sector, is a political one born out of a neoliberal economics unsuited to South Africa’s needs. 

Rise Mzansi continually (and naively) advocates not for new solutions or transformative policy alternatives, but for neoliberal technocracy. In other words, we don’t need to change patterns of inefficient and unjust ownership, don’t reform government expenditure in the interests of the poor majority, don’t curtail the destabilising power of multinational corporations or domestic big business — just continue running a neoliberal economy, with more technically competent leaders and salvation will await us on the horizon. Good leaders are desperately needed, but they are not enough. We need a new economy. 

Andile Zulu is with the Alternative Information and Development Centre in Cape Town.