How to avoid an economic war

Jawaharlal Nehru, the first prime minister of India said “Life is like a game of cards. The hand you are dealt is determinism; the way you play it is free will.”

Nehru led a nation of hundreds of millions of poor Indians groaning under the postcolonial legacies that had shaped the subcontinent. Colonialism was not the only burden Nehru’s people had to bear. They also carried the deterministic consequences of a worldview that accepts the trappings of ones birthrights and birth-wrongs as cosmological inevitability — if you are born poor it is karma, the sum of one’s actions in past lives. Life, they believed, is an ordered consequence of one’s own good and evil acts. This is Dharma. Neru however had a deeper view of human nature and individual agency and understood the immense untapped power of free will.

In his independence day speech Nehru proclaimed, “Freedom and power bring responsibility … the past is over and it is the future that beckons to us now … that future is not one of ease or resting but of incessant striving … as long as there are tears and suffering, so long our work will not be over. And so we have to labour and to work, and work hard, to give reality to our dreams … this is no time for petty and destructive criticism, no time for ill-will or blaming others.”

Nehru may as well have been addressing the South African nation who too often is caught up in one form of determinism or another. Either by virtue of “global economic conditions” or by the vice of colonialism and apartheid, our collective blaming crowds out our individual agency and this is extremely dangerous.

Beyond politics of exclusion
I spent two hours of Family Day chatting to a group of Economic Freedom Fighters mobilising in my neighbourhood. They were clearly surprised when I approached, starting first with appeasement such as, “We are fighters, but we do not fight” and “It’s tough gaining members here in the suburbs”. Why they felt the need to assure me of non-violence I’m not sure. There we were on the sidewalk of the local shopping complex debating economic policy and the merits and demerits of nationalisation.

EFF supporters at the celebration of the party’s second anniversary on July 25, 2015, at the Olympia Park Stadium in Rustenburg. (AFP/Stefan Heunis)

The ANC took a beating for “narrow patronage, corruption and losing touch with the grassroots”. “The Reconstruction and Development Programme was fine”, they explained, “but once we adopted the Growth, Employment and Redistribution policy, the ANC became captured by capitalist interests”. When I asked about the likelihood of the ANC reforming itself and making a new start under the likes of Deputy President Cyril Ramaphosa and friends, the critique was acute: “Between the deputy president and his capitalist brother-in-law they no longer have the influence in the ANC to turn things around … they are not fighting for the ANC, they are fighting for control to feather their own nests.”

What matters is that these are the thoughts of a young black emerging middle class. There I was watching a group of twenty and thirty-somethings in militant-worker garb telling me that they must seize power to regain the moral high ground in the realm of national governance so that they may kickstart a new socialist project for the excluded. It mattered little to them that the cars in which they arrived, the cellphones on which they WhatsApp-ed local supporters and the bright new sneakers they were wearing, were brought to them by capitalism, not socialism. “We must be willing to learn to sacrifice and share for the sake of our cousins in the townships.” Brave and idealistic, I thought.

The real danger of the current political discourse is that it is framed as politics of inclusion and exclusion with an in-built propensity for extremes. Unlike Nehru, who wanted to steer away from determinism to agency and responsibility, the sense on the street is that the game is rigged and the best starting point is to change the rules no matter the cost. History has shown that when nations seek to address their internal difficulties from a premise of internal heroes and villains the result is breakdown and destruction, not widely shared prosperity.

If South Africa is to avoid an escalation of conflict over finite resources, the path to peace will have to be one where our leaders take us beyond the politics of exclusion, to the politics of interdependence and collaboration.

Beyond market-driven economics alone
So how would South Africa transcend the mire and rise like a phoenix once again from the ashes of economic stagnation?

We would not be the first nation to grapple with the apparent paradox of social goals versus economic expediency. In post-WWII Germany the utter destruction of the economy created a vacuum in which thoughtful solutions had to be nurtured that would simultaneously stimulate economic growth and development while addressing the social alienation experienced by many in the inter-war period. What the Germans developed was a comprehensive approach to “social market economics” and “institutional order policy”. In essence the approach would bring together the social demands for equality and fairness with the pragmatic acceptance that the market is the most powerful mechanism by which to create efficiency, productivity and prosperity.

A form of restrained competition amid personal and corporate liberty within the context of values-based institutional boundaries that guard against unfair monopolies and the dangerous centralisation of power, both in the sphere of government and that of the market. Naturally the Germanic propensity for order and procedure bolstered the likelihood of their success and the consequence has been that through the period of reunification Germany has held its own as the economic engine of the European Union.

Perhaps there are lessons for South Africa in the German experience.

Of concern first though should be the resonance of South Africa’s current trajectory with that of the German nation prior to the war. We should consider the ideological seeds from the likes of Johann Gottlieb Fichte, who called for a national revolution. His populist nationalism dreamt of a Volkskreig (People’s War) and provided the conceptual setting in which Nazism was bred. Unlike Germany, we do not have to pass through the throws of war to develop a shared path to prosperity.

Worryingly, today we hear the amplification of calls for “decolonisation” to purge South Africa of influences other than that which fits a historic romanticism of what is African. Debates against “state-capture by elite families” are quickly morphed into the quasi-criminalisation of particular families whose racial profile and pattern of wealth accumulation match this broader narrative of South Africa’s ongoing occupation by predatory elites from elsewhere.

It took Germany a walk through the valley of death to realise that social justice and economic progress must be tackled simultaneously and symbiotically. That social justice for the in-group cannot be achieved via the militarisation of the state to repress the out-group.

Against the current backdrop of reviews by ratings agencies and a beleaguered presidency, South Africans would do well to take a breath and take stock of what is at stake. The Wall Street Journal carried a story in 2014 titled “South Africa’s Central Bank Warns of Capital Flight Risk”, citing the widening current-account deficit as a risk to the stability of the domestic financial system. The piece ended by quoting the Reserve Bank’s semi-annual review as stating, “The significant gap between rich and poor threatens social and political stability as well as economic development and financial stability”. Let us not say we weren’t warned – we have been warning ourselves for years.

In light hereof, opinion leaders who write for the business segment of our media need to come to terms with the educational deficit of their readers and perhaps stop ranting about poor governance in the public sector and its impact on private capital and rather begin to counsel their readers about the risks of a blind affinity for market-driven economics alone in a socio-economic context such as ours.

Nehru also said, “The only alternative to coexistence is codestruction.”

Any reasonable person would want to see South Africa evolve from a middle income and deeply unequal country to a prosperous and increasingly just society. Like Nehru’s appeal to the nation he led, the appeal to our nation if we are to avoid the inevitable conflict contained in the cards we have been dealt, will be to set aside our determinism and differences and create a political economy where the son or daughter of a domestic worker can become a banker in their lifetime and see their grandchildren read to them and write their own future, as contributors of a society we can all be proud of.