Finance Minister Pravin Gordhan announced a “new growth path” for the South African economy — one that would signify a “turn-around” and “achieve the kind of transformation required to draw the millions of unemployed into the economy”. The finance minister envisaged the current budget to be “labour-absorbing”, “to raise employment of young school-leavers by … 500 000 by 2013” and one that will “transform the structure of our economy”. The South African state has apparently adopted a “new growth path” through tackling what is considered its key challenges: job creation, poverty reduction and faster economic growth. Is the current budget a launching pad for a new growth path? More importantly, what is the framework of this “new growth path” and is it likely to help “constructing a more just economic order” in South Africa? Will the poor, the down and out in South Africa, have a fairer deal in the economy?

The old path — a neoliberal framework
There is nothing in the new budget that did not appear in the anti-poor, neoliberal macroeconomic framework of the last two-and-a-half decades. We find here the same old echoes of a commitment to a competitive exchange rate, the same old quest for an industrial policy (only now there exists an action plan to ensure the economy is “transformed into a labour-absorbing … one”), the same tired commitment to “expanded public works”. In all essentials, the Gordhan budget is a restatement of the neoliberal framework of South Africa’s economic priorities. The growth in real terms of public spending is now 2% over three years (lower than the 5% committed in February 2009). Now, if the South African economy registered a growth of almost 5% a year from 2005 to 2008 without any significant job creation, shrank by nearly 7% in the first three months of 2009 (shedding nearly 1 million jobs), contending with unemployment of above 40% (if you include those who gave up looking for jobs), how will a budget, restating the fundamental path of neoliberal economic development contribute to a fairer world of work? The short answer is it won’t. Assurances of a commitment to job creation in the same sentence as (an equally strong) commitment to inflation-targeting makes nonsense of any intention to create a more just economy.

Twaddle of shared commitment
The minister’s (and therefore the state’s) response to the deepest systemic crisis the world of capital has seen since the Great Depression is conjuring some shared values between the financial elite and the poor. The talk of “shared intent to expand income and employment”, “shared appreciation … for … investment … underpinning growth” and the call to “put aside our differences” for “a shared vision of a new economy” is, to say the least, simply empty twaddle. Here, in a few deft strokes, is outlined the government’s commitment to confuse the poor into accepting a path where those (capitalists) who are responsible for throwing them into unemployment become part of a solution for undoing their economic and social injustice. Beyond bizarre, this is. The intent of the ruling class had always been (and remains) to turn the creation of workers and the middle classes against them in tyranny; what underpins their appreciation for investment is profits and this almost always translates into paltry wages, bad working conditions and estrangement from social amenities. Pronouncing common interests between the primary class antagonists does not amount to that. Divergence of interests is cemented into the fabric of this class society and is expressed, presently, in the figures of unemployment and the actions underlying these figures. The poor and down and out have no objective interest in suspending differences with South Africa’s economic elite.

A new path
The 2010/11 budget is an announcement of austerity measures for the South African poor and middle classes. Someone must bear the burden of the bailouts (which, by the way, took a different path than elsewhere in the world. US and Britain — and the rest of mainland Europe — used their state budgets and direct borrowing to bail out banks and other private concerns. The South African government, in wisdom defying anything common sense, privatised the bailouts and in so doing nursing the reactionary argument of not having resources to carry out large-scale service and social delivery). Underlying this approach is a tacit commitment to austerity measures. This new path of growth is nothing other than a path of escalating the social and economic war on poor people; of preparing new conditions of profitability for the financial elite and hoping this can be achieved in class-neutral terms.

The budget of 2010/11 heralds a brand new era of neoliberalism run amok, it affirms, in its essential political and economic choices, a stepped-up assault by the South African government and employers on the working conditions, wages and social security gains of the working class, rural poor, youth, unemployed and even the middle class. There is no new growth path here. Just an overwhelming feeling of deja vu.

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Steven Lamini

Steven Lamini

Steven Lamini is a specialist adviser in one of the key policy fields troubling modern-day Europe and works across a range of equality fields, advising on policy and strategic approaches to cohesion. His...

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