Thursday, 4 May 2017

Radical Economic Transformation: Political Spin or Radical Agenda?

The past three decades of political spin doctoring has left us with a populist politics that no longer seems to have a centre that holds. Disarray and uncertainty characterises the political domain. At the global level Brexit and Trump have left centrist politics and the global political establishment reeling from shock. Locally, South Africans are caught up with the “Zupta” phenomenon, a term that describes the close relationship between President Jacob Zuma and the Indian born business magnate Gupta family who have quickly become household names, accused of aiding – even mastering – the Zuma-aligned patronage network’s efforts to “capture” the South African state. “State capture” is on everyone’s lips these days in sunny South Africa.

Perhaps it was naive to assume that years and years of neoliberal era spin-doctoring wouldn’t eventually send politics itself spinning spectacularly out of control. And despite the best efforts of moderates and progressive centrists, the gyre seems to be an ever-widening one. Spectacle ‘trumps’ substance in this new political terrain, where the performative has displaced the substantive, and where ‘truth’ is whatever one makes of it. Facts, expert opinion and the like has all come to be profoundly distrusted. It is difficult to steer a course through the noise and turbulence of the politics of the early 21st Century.

So it is of paramount importance to interrogate the new trajectory that the ANC has embarked on, one that promises “radical economic transformation” as a solution to the desperate and critical challenges that South Africa faces 22 years into its transition to a democratic dispensation. Radical economic transformation currently means different things to different people.

To its supporters radical economic transformation seeks to use the state’s large procurement system to boost black industry and business. It is a long overdue intervention in an overly centrist, neoliberal growth programme that has seen inequality widen and unemployment reach disturbing proportions amongst the black working class and the poor (especially amongst the youth) in particular. It is couched in quasi-socialist rhetoric and is delivered with a touch of Fanonist romanticism; as the President recently explained, radical economic transformation means that “nobody will go hungry”.

To its detractors it has been cast as just another ploy to complete the “state capture” program so that the Zuma-led patronage network can enrich themselves at the cost of the nation. It is nothing more than a ruse to deceive ordinary black South Africans that the ANC is acting solely in their interests, and that the infamous Bell-Pottinger public relations machine, and the Gupta’s media outlets – The New Age newspaper and ANN7 satellite television station – have been deployed to spin out the rhetoric of “white monopoly capital” and “radical economic transformation”. In reality, they claim, this is all part of a programme to take complete control of the state’s resources and to administer it for personal gain.

So it is a profoundly binary casting of radical economic transformation that dominates the political spectrum as it currently stands. Perhaps this is to be expected, as the manner in which it has been introduced appears sudden and forceful. Until recently, radical economic transformation was the cause of the ultra-left Economic Freedom Fighters, and was dismissed as populist rhetoric (even fascist) by the ANC government, so there is reasonable cause for cynicism at this recent twist of events.

What radical economic transformation means is a work in progress, and it is clear that while there is a conceptual foundation that underlies it – for example, when listening to the new Minister of Finance Malusi Gigaba articulate it in a recent interview at the World Economic Forum in Durban – there is a lot of work still to be done in fleshing it out. So it should come as no surprise that it is currently a framework that is riddled with contradictions.

One of the central contradictions within the new push for radical economic transformation is its overt dependence on the state procurement system. It is contradictory because it effectively amounts to an overwhelming endorsement and promise to expand and privatise the state, that is; where key functions and services are increasingly outsourced to the private sector. In that sense it is a whole-hearted endorsement to neoliberalism as a political and economic ideology; privatisatisation of the state is a key prescription of the neoliberal agenda.

Moreover, in the South African context, this is occurring in tandem with a bloating of the state, and not a shrinkage of it. The state bureaucracy will be expanding while it likely grows its procurement based BEE ‘stimulus package’ at the same time. This presents the very real danger of an expanding but inefficient state taking root due to a top-heavy reproduction of unnecessary bureaucratic agencies that ostensibly oversee outsourced functions and services, but which tend to self-replicate across the state in a self-serving manner. 

This can result in both an excess of rules and procedures, as well as an excess of bureaucrats, placing unnecessary constraints on entrepreneurs, investors and the like. In turn, this would also hamper and unduly constrain the ability to deliver on key public sector functions and services. While regulatory frameworks are critical for ensuring quality of delivery, it is a common rent-seeking practice to over-engineer regulatory frameworks so that rent extraction becomes normative. In order to get things done, one has to have access to those who directly control processes, and they require favours and 'compensation' in order to do so.

While on the surface radical economic transformation may appear to be ‘radical’ in that it creates the perception of a left-orientated programme to take control of the state in order to better distribute the country’s resources and administer the benefits from them (i.e. more equitably), in reality it is far from a leftist approach. Rather, it is one in which the state expands as a giant corporate executive that oversees a range of outsourced public functions and services. Critically, this new programme of radical economic transformation does not seek to build state capacity to deliver services, perform functions and deliver public goods by itself.

As alluded to earlier, introducing inefficiencies of this potential magnitude into both the state and the private sector creates space for rent-seeking and the manipulation of bureaucratic processes and systems, for example; ‘reverse fronting’ (i.e. BEE 'tenderpreneurs' acting as brokers for public sector work to the broader private sector) and other negative tactics such as kickbacks, bribes, etc. The business of BEE may become more to do with administering state resources rather than addressing the needs of those who are most in need of state support, that is; growing black business and entrepreneurship, alleviating poverty, stabilising household budgets, improving and ensuring service provision, protecting citizens from risky financialisation practises, creating employment, expanding the skills base, ensuring welfare, and guaranteeing safety and security.

One worrying scenario is that the 100 black industrialists that are touted to be created by the procurement based ‘stimulus package’ are unable, or do not attempt, to expand into the broader non-state related private sector, precisely because the fundamentals of the skewed market have not been addressed at a systemic level. Banks, for example, may lend to a new black industrialist who is covered by state guarantees in their dealings with the state, but they may be reticent to throw their support behind the new black industrialist when they decide to make an attempt at penetrating the broader market. Should this prove to be the case, it is conceivable that the new 100 black industrialists may become more focused on the state to facilitate their growth, resulting in increased competition for state led deals, eventually resulting in the growth of black state-dependent monopolies. As a system, neoliberalism is notorious for how well it supports oligarchic and monopolistic systems, so it should come as no surprise that a stimulus package that – at its core – is devoted to outsourcing state functions and services, would result in their monopolisation.

Moreover, if the outsourcing of state functions increases, then it makes sense that the size of the state should decrease. The alternative – which is important to consider here – is an expanding professional state that retains significant capacity to deliver its key services and perform its key functions. A professional state that can deliver services from policy to planning to delivery (i.e. the entire delivery chain) is an substantively different entity from one that is configured as an executive that manages outsourced functions and services. 

Which way to go requires serious debate, and anyone who is truly left-oriented would be extremely troubled about a ‘radical’ empowerment program that is premised on the neoliberal drive towards privatisation. Simply put, the longer the chain of delivery, the less efficiency and the more the opportunities for rent-seeking; predatory capitalism does not care whether it exploits the state or the consumer, as long as the profits keep flowing.

Moreover, while an efficient state is necessary, efficiency should not come at the cost of the states’ capacity to deliver services and perform key public sector functions in the long term. That is, I am not making an efficiency-based argument for the regulation of state functions and services by ‘market’ oriented principles. Yet efficiency is important i.e. if we seek to deliver a realistic and workable new socio-economic compact where everyone enjoys equitable access, mobility and opportunity, where services – especially critical ones such as healthcare and education – are unquestionable rights, a society where everybody enjoys a basic quality of life that is fair and ensures human dignity, one where the resources of the country are effectively leveraged in service of its people, and where historical injustices are unquestionably acknowledged and faithfully and effectively acted upon.

In order to deliver on such a mandate, it is more or less certain that an efficient and competent state is required, so that the government that relies on it to oversee radical changes in society can do so in reality (as opposed to merely rhetorically). That is, to go beyond intention and actually deliver on this kind of radical vision, it is only reasonable to expect that a professional state – and not just an executive state – would be a prerequisite. So in the current context, that is – a bloated state that increasingly outsources its functions and services – it is not immediately conceivable that the desired kind of radical economic transformation is possible.

Yet if one looks to the public sector, it has clearly been expanding at a fast pace. Public sector employment grew from 2.16 million in 2008 to 2.69 million in 2014 (i.e. 2.37 million jobs in government and 322,960 in state owned enterprises). Between 2001 and 2012, while the primary sectors lost 720,000 jobs, while the tertiary sector grew by 2,72 million jobs. Most of this tertiary sector growth was in community, social and personal services i.e. in the public sector. Growth in employment in the public sector has consisted, in large part, of finance management positions, while growth in engineering and professional positions has been modest and has remained stagnant in some cases. This reflects a trend towards building executive and not professional capacity within the state.

The public sector procurement budget is around R500 billion (it was over R800 billion for the 2010-2011 period), and the public wage bill is estimated at over R500 billion (i.e. a third of the overall budget or around 12% of GDP). While the public service is generally highly educated, admirably gender transformed (52% women) and racially transformed (i.e. 77% black African) and averages at 41 years old, and hence already plays a critical role in the transformation agenda of the country as constitutionally endorsed, it’s sheer size and scope of outsourced functions requires closer scrutiny and attention, especially in light of the stated means through which radical economic transformation is being proposed. If only the state and state-supported businesses are transforming, then can transformation be spoken of in real societal terms?

It is clear that the path that radical economic transformation is taking may be unsustainable, in that it may not produce the results in the private sector that it desires, and that it may result in unnecessary ‘bloating’ of the state. So it is important to distinguish political spin from a real political agenda when it comes to talk of radical economic transformation. Political spin is typically when a political agenda is presented to people in order to mask the real agenda, or at least to dress it up differently so as to make it palatable.

In the political moment we find ourselves in there are many truths that can explain how we arrived at this point. One such truth is the abject failure of transformation in the private sector and in former white institutions of various kinds throughout society (e.g. in the higher education sector), and even in many parastatals. The dismally skewed ratios of white senior managers, fronting, high black staff turnovers, lack of diversity oriented transformation and plain structural and systemic racism that goes largely unacknowledged; is itself largely to blame for the emergence of this new vision for radical economic transformation. In short, the lack of transformation in the formal economy and institutions in society has led (some would say forced) black professionals and entrepreneurs to throw their support behind an agenda that gives up on integrating into historically white businesses and institutions altogether.

This should send alarm bells ringing within white society, but they are drowned out by the sirens that warn of the impending “Zanufication” of the ANC. Already begrudging and disgruntled, especially with BEE, affirmative action, and the uncertainties associated with political upheaval, social change and economic uncertainty – which threatens their security, assets, investments and savings – they are unable to discern the clear signal that is being sent to them. That is, their rejection of affirmative action is finally being returned in kind; black South Africa is tired of knocking on their door and is now going their own way with the power and resources that is immediately available to them.

As a minority, white people still own a large proportion of the economy (i.e. around the same percentage of the stock market as blacks do, although the percentage of black South Africans outnumber white South Africans by an order of magnitude i.e. approximately 80% to 8% respectively). White society, however, is oblivious to its special position in South African society, and where it is inherited from (i.e. structurally and racially unjust, exploitative systems such as colonialism and apartheid). White society is too occupied with their own fears to think about what role they have played in generating this new radical trajectory. Their tacit, but systematic resistance to transformation and change over the past 22 years, and their insistence on accommodating transformation only on their terms, has contributed – in great part – to the emergence of both the  populist rhetoric of exclusion and the proposed substantive program for radical economic transformation.

The ‘deafness’ that has persisted is perhaps no surprise. White society in South Africa is largely emotionally and spatially removed from black South African society. And when they do endure honest encounters with black South Africans they are uneasy and defensive, quick to dismiss experiences of discrimination and systemic and structural racism. They often simply cannot move beyond denial and are hence wholly unable to 'put themselves in the shoes' of their countrymen. They retreat, as they have the privilege of being able to do so.

For black african South Africans in particular, the realities are too stark to bear, and too densely and intricately woven into their experience of South African society to retreat. They have to confront it. On the other side of confrontation they envisage substantive liberation. So they must move forward and make radical changes if necessary. The profound departure from the rainbow nation narrative is precisely that black people have come to believe that only they alone can bring about the changes that they so desperately need and desire.

Yet how we find agreement on what those radical changes are, and how we are to go about it, is an equally important question. If we are to call ourselves a society or a nation, then we should all have a say and play a role in constructing our future. That is plain common sense political realism and not altruistic fantasy. Surely we should be inviting the best ideas about how to achieve a new society? Or are we to allow are futures to be determined by elites who decide what is best for us?

There is surely going to be a lot of political spin in this moment. The question is whether we allow ourselves to become so tightly spun that we separate and occupy different orbits, different realities, and lose the ground beneath our feet, eventually spinning out of control; where the centre does not hold, is neither here nor there, and only those who profit out of chaos and division have a viable interest in our new future.

Thankfully, there are some well-thought through conceptual contributions doing the rounds, attempting to make sense of a way forward towards a society that has successfully broken with its historical legacy of dispossession, exploitation and exclusion. The question is whether the debate on radical economic transformation will be opened up to allow for a diverse representation of perspectives, views and creative insights, or whether it will become the prerogative of a few elite individuals and power-brokers who lock themselves away and design our future for us.  



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