Inequality will derail our democracy

The magnitude of the problem of inequality in our country, compounded by the painful reality of unemployment and poverty, will hobble any future development prospects unless we seriously debate the efficacy and appropriateness of our policy responses in post-apartheid South Africa. Let me put the problem in context.

It had always been clear in the minds of the National Party leadership during the latter part of the apartheid era that a transition to a new political order in line with the vision of the liberation movement was inevitable and that political power would be in the hands of the black majority. But they were also prepared to push this eventuality as far out into the future as possible. However, a confluence of global political changes beginning with the collapse of the Soviet Union and the re-ordering of the global balance of power accelerated the demise of the apartheid regime. Inevitably, very few options were available to the National Party leaders and the need to preserve the lifestyles and wealth accumulation gained and enjoyed during apartheid dominated their mind-set and approach as it became clear that transition negotiations were inevitable.

It is important to recall that the rationale for the apartheid policy was, through the use of state power and resources, to enforce preservation of opportunities for wealth accumulation and development on a racial basis for the sole interests of the white people and to the exclusion of the black majority population. The racially structured inequalities that characterised apartheid South Africa were the outcome of this policy and strategy. The rigid labour market and spatial planning policies that were rigorously implemented were designed to provide cheap black labour to the business sector.

The post-apartheid reality is such that political power relationships have changed dramatically and yet the undeserved wealth accumulated by whites under the protective apartheid system remains untouched. In fact, for many, the value of wealth that was accumulated has been massively increased by the global opportunities brought about by democratic South Africa.

On the other hand, the economic power relations that rendered apartheid unfair and unjust have continued in the democratic South Africa. The undeserved poverty and inequality suffered by the black majority continue to exist and in fact, they have increased on a number of measures. We are now the most unequal society in the world as result of the policy decisions we made post transition.

The following perspective by Ronnie Kasrils is instructive: “All means to eradicate poverty, which was Mandela’s and the ANC’s sworn promise to the ‘poorest of the poor’, were lost in the process. Nationalisation of the mines and heights of the economy as envisaged by the Freedom Charter was abandoned. The ANC accepted responsibility for a vast apartheid-era debt, which should have been cancelled. A wealth tax on the super-rich to fund developmental projects was set aside, and domestic and international corporations, enriched by apartheid, were excused from any financial reparations. Extremely tight budgetary obligations were instituted that would tie the hands of any future governments; obligations to implement a free-trade policy and abolish all forms of tariff protection in keeping with neo-liberal free trade fundamentals were accepted. Big corporations were allowed to shift their main listings abroad. In [Sampie] Terreblanche’s opinion, these ANC concessions constituted ‘treacherous decisions that [will] haunt South Africa for generations to come’.”

Ben Turok (2008) underscores the enormity of the challenge: “The ANC inherited a strong market economy, whose acceptance was part of the negotiated settlement. However, a market economy is not designed for the equitable sharing of national resources. It always favours the strong, and in South Africa that means the entrenched and still overwhelmingly white economic power block.”

Several surveys have demonstrated that our society has become more polarised along class structural lines that reflect the continued narrow class interests of the “entrenched and overwhelmingly white economic power block” and political elites. A deconstruction of the driving motives behind the so-called “service-delivery protests” and other negative social phenomena, points to a society that is showing growing signs of revolt by the poor. This must be worrying. Adam Habib warns that “inequalities polarise societies, and it is hard to imagine South Africa sustainably addressing its social pathologies — violent crime, the abuse of women and children, racial tension — or even HIV and Aids and the service-delivery crises without a sustained reduction in both inequality and poverty”.

The debate about inequality requires the following questions to be raised: Did the liberation alliance movement have a transition strategy going into the negotiations that matched the avowed mission of the “social democratic revolution”? What were the critical elements of this purported “revolution” and what benchmarks were set for evaluating its progress? If our constitutional democracy and the electoral system that underpins it represent the reversal of political power relations, what benchmarks were set in the transition strategy to represent “corrective justice’ in economic power relations? The temptation to cite BEE as a shining example would be patently false as it was designed to benefit a few politically connected people and fails to pass the basic test of “corrective justice”, which would require some form of wealth alienation on the part of those that were selectively favoured by the apartheid system. Michael Fargher declares that “this raises difficult questions of blame, guilt and how one practically ensures restitution in the face of intergenerational justice”.

What we have done well is put in place a very extensive social-welfare network in order to mitigate the effects of poverty. But we have not thought of a radical and fundamental approach to deal with the question of wealth inequality and lack of opportunity. The question that I continue to battle with is the following: Is it possible to say that comprehensive democracy has been achieved if the political economic power relationships that existed during the apartheid period remain intact? Furthermore, is it possible to address the question of wealth inequality without considering wealth transfer from the rich to the poor in one form or another?

In my view these are the real questions that need to be debated and yet they have been conveniently avoided because of our belief that economic growth on its own will be the miracle solution. Some form of wealth transfer is a small sacrifice to achieve equity and redress. As a magnanimous gesture by those who were selectively advantaged by apartheid system. It may serve as acknowledgement that first, the grotesque system was unjust and second, some form of reparation or redress is morally justifiable. It may also serve to manage the growing unrest in the country and strengthen efforts towards nation building. What I am proposing is that the question should be transferred to a national platform for debate by all stakeholders and away from the irresponsible rhetoric of the political platforms.

What I have suggested above is not new. Many prominent people have proposed a similar strategy but I detect a fear to think out of the box on this matter. Habib has argued that if Germany could have instituted such a tax in 1991 to rebuild East Germany, how is it, that South Africa could not do so even though “black South Africa” was in a far worse position than East Germany.

It is necessary to caution though that wealth transfer by itself will not be the silver bullet needed to solve our triple ills of inequality, unemployment and poverty. What is clearly necessary and urgent is a need to have a comprehensive dialogue by all stakeholders on an appropriate and shared growth path for South Africa.