Mboweni’s dictum

Reserve Bank Governor Tito Mboweni poured scorn on the labour “left” in a speech at Rhodes University today. He was speaking to the issue of whether the “Washington Consensus” was dead. Though he didn’t say in so many words: from where he sits, it’s not only alive, it ought to be kicking.

The concept refers to the neoliberal policies promoted by the Reagan and Thatcher administrations for “developing countries”. The phrase was initially coined by John Williamson, and designates 10 principles for economic development based on free-market ideology.

One is a free and unsubsidised trade regime — something, of course, never applied in either the US or Europe when it comes to agriculture.

(Interesting aside: Mboweni complained about Cosatu “demanding” a seat on the Reserve Bank board, when – he said – he’d offered them one back in 1998, and never had any response then).

While acknowledging cases of growth through “unconventional policies” in China and India — “some would say the Beijing consensus” — Mboweni spoke solidly in favour of market-driven development.

He even joked about having left a voice mail for South African Communist Party boss Gwede Mantashe, to the effect that the message was from the governor of the Reserve Bank and the champion of neo-liberalism.

In his remarks, Mboweni stressed property rights and trade liberalisation among the panoply of Washington Consensus prescriptions. He criticised Zimbabwe for taking short cuts by removing property rights, saying the result “was a total disaster”.

Citing his own life, the “Guv” said he’d planted 200 avocado trees on a plot in Limpopo, knowing that he had security of tenure and would see the results in 10 years’ time. (But he also then acknowledged that he saw results much earlier — the trees died because he had neglected to research whether the soil was suited to them!)

Left out in his stress were the more social-democratic aspects of an augmented Washington Consensus perspective — such as a safety net and targeted poverty-reduction strategies.

While the governor pointed out the political difficulties of removing subsidies and of liberalising trade, he argued that ultimately clothing and footwear prices in South Africa had stayed low precisely because of cheap imports.

It emerged from his discussion that, for him, the biggest problem with the Washington Consensus points was failed implementation, rather than the principles themselves.

Underpinning the perspective all was what he dubbed “Mboweni’s dictum”: according to which “a left-leaning political party must always have conservative economic policies”.

This was “a view we developed in the 1980s”, and it had proved to be very successful — in terms of fiscal discipline, the institution of an independent central bank and the shift from budget deficit to budget surplus.

Answering questions, Mboweni noted that market forces alone were not the answer to economic growth, as shown by the US subprime banking problems.

Yet he left undiscussed the extent to which more recent Keynesian-oriented policies (including expanded social grants) are responsible for our recent growth, something that was absent under the Gear promotion of “Washington Consensus” principles.

And here’s also wondering what he thinks about George Bush having buried the WC with an even more ideologically based perspective: neocon thinking.