South Africa will not achieve economic development without addressing racialised inequality. (David Harrison/M&G)
This year marks 30 years since the country transitioned to a democratic political system, which aims to preserve fundamental rights for all. These liberties are spelled out in the Constitution and cut across various human development areas. Detractors believe there has been minimal socio-economic and political transformation since the 1990s transition era, while others acknowledge the transformative effect of government policies in their lives. The pre-election political context has heightened this debate, especially regarding socio-economic and governance.
One of the most contentious themes in elections manifesto debates is race-based socio-economic redress legislation and its effect on economic development. The Democratic Alliance (DA), ActionSA and other liberal commentators argue that these legislative measures impede economic development. They equally associate racial redress policies with corruption and rent-seeking, with specific reference to the Zondo state capture report and other procurement-related criminal investigations.
These perspectives remind us about the perverse effects of corruption on policy implementation, as well as some shortcomings in South Africa’s racial redress legislation. But it is illogical to advance an argument for removing race or racial redress from economic development strategies so that markets function freely. This proposition overlooks the following core political and socio-economic realities.
First, racial capitalism developed on the basis of constructed race, class and gender inequalities in various socio-economic structures. State and non-market institutional power played a crucial role in embedding these inequalities throughout society. Consequently, access to Africa’s cheap labour, dispossessed land, minerals and other global commons sustained racial capitalism. Marxist political economy contributions in the 20th century outlined this complementary relationship between authoritarianism and racial capitalism well. A market-led approach, with minimal redress measures, is not sufficient for addressing persistent racialised inequalities. It overlooks the crucial role played by government legislation and non-market institutions in establishing racial capitalism.
Second, South Africa will not achieve economic development without addressing racialised inequality. Both researched and policy-making literature emphasises this point, drawing from experiences around the world. Even the market friendly World Bank and International Monetary Fund concede that intersectional inequality (race, class and gender) is the fundamental structural faultline in the economy. Socio-economic disparities stifle demand across the economy, limit access to public goods and lower human development levels in society. All these negative outcomes associated with persistent race-based inequalities co-exist with historic disparities, which still shape the post-apartheid economy. This necessitates a shift in how the country approaches socio-economic redress. But these reforms cannot be based on neo-liberal policy prescripts articulated in the DA and Action SA election manifestos.
South Africa needs to link racial redress with broader economic reorganisation strategies, which fundamentally transform income redistribution, ownership patterns, apartheid spatial development and market structures in the economy. It is necessary to go beyond the finance-led minerals-energy-complex (MEC) that has formed the basis of racial capitalism for centuries. Economic transformation that prioritises racial demographic changes in the limits of existing MEC structures has failed. The past attempts at racial redress are based on a legitimate political objective, yet these policy measures have not decreased inequality substantially. The problem lies in the delink between these policy interventions and economy-wide restructuring, which changes the overall class structure associated with racial capitalism. In other words, racial address is imperative but it must be based on a political economy logic that challenges neo-liberalism while exploring different ways to structure the country’s economy. Some examples include: connecting racial redress with strengthening public goods, decreasing wage gaps, supporting the care economy, fiscal justice, as well as exploring contemporary anti-neoliberal economic models.
Last, corruption and rent-seeking market failures are characteristics of the capitalist system. The assertion that these features are peculiar or inherent in racial redress policies is flawed. Political economy literature from both developed and developing economies illustrates how these two phenomena exist in different policy contexts. Thus, black economic empowerment, affirmative action and other forms of set-asides cannot be perceived as outlier causes of corruption. Rent-seeking related corruption is prevalent and systemic in different capitalist political economies. The real issue is to ensure that interventionist redress policy measures or economic rents are not exploited for non-developmental ends.
The criticism levelled against racial redress from both liberal and conservative advocates is not legitimate. It is drawn from generalisations about corrupt laden redress policies and underlying biases towards market-led development. This perspective in the South African context reinforces racialised socio-economic conditions in different ways. Racial redress is important for democratising the economy and addressing inequalities. But it must be embedded in wider strategies aimed at fundamentally restructuring the economy.
Dr Khwezi Mabasa is a researcher, author, educator and public policy analyst.