Radical Economic Transformation: Bureaucratic Hurdles to an Innovative State

It is well-established that from the perspective of black professionals and entrepreneurs transformation in the private sector has failed; that with a few exceptions it was met – not only by direct resistance – but by various forms of sabotage and subterfuge. From the very onset of the new democracy affirmative action and black employment equity was met with paranoia and dissent from white South African society and opposition politicians such as Tony Leon. My generation directly experienced the fronting, tokenism, use-and-discard, obstruct and marginalise, ‘make-examples-of’ style of obstructionism that white middle and upper management employed to ensure that transformation – as a project – was doomed to failure in the spaces that were under their control.

The central message was that transformation was only acceptable if it occurred on their terms. This has bred profound levels of resentment and disenchantment amongst black professionals in particular over the past 22 years. So the support for a radical transformation agenda is understandable. The central theme running through it, however – which many white South Africans have not grasped as yet – is that what makes this agenda radical is that it represents a profound change of direction i.e. a complete decoupling from the white-run private sector. It is radical because it seeks to disengage entirely and “go it alone” so to speak. The ultimate aim of going it alone is to mount an attack on the white run private sector from a black business base that is capitalised by the state (i.e. through procurement funding from the state and state-owned-enterprises).

The conversations occurring between black professionals and entrepreneurs now is about setting their own agenda, strategy and rules, and moving ahead without the white-run private sector entirely. Attempts to recast radical economic transformation as empty, populist sloganeering are hence deeply misplaced, and proof of this is that for the first time black professionals are not even bothering to explain themselves or attempting to correct the misconceptions that white society may harbour over the new agenda. The way they see it, the time for ‘asking for permission’ has long passed, and no explanations are necessary. This train is leaving town, and fast.

And while it is difficult to find a black South African who would not agree that some form of radical economic transformation is necessary, it is a greater truth that this is essentially a battle being launched by the professional class. It is they who are fed up with existing elites – both the black comprador class who benefited from the transition as well as white run business – and have the power to effect change. The political ‘beauty’ in this agenda, however, is that it finds easy appeal amongst the black majority – who have endured the worst effects of unemployment, inequality and poverty in the new dispensation – and advances the interests of the black professional and political class at the same time.

This is not to suggest that there aren’t real thinkers, activists, academics and political leaders formulating sincere ideas for broader societal change through this agenda [1], but merely to make an analysis of how the popular discourse around this agenda is emerging. It is self-evident that the current moment is ripe for it, but it would be folly to think of this as just simply an opportunistic moment. It has incubated slowly over the past 22 years and has matured beyond the point of return. Even if President Jacob Zuma and his entire patronage network are systematically removed from their positions of power within and outside of the state, the sentiment and desire for radical economic transformation is now well seeded and will continue to grow.

Yet the fundamental narrative that underlies radical economic transformation – as espoused by the new Minister of Finance Malusi Gigaba – warrants closer scrutiny. This narrative poses that the R500bn annual budget for procurement can and should be leveraged to support black business and entrepreneurs, so as to fast-track the growth of black ownership and participation of the broader economy. Central to this plan is the vision of creating 100 black industrialists, who it is hoped, will essentially yield trickle down effects to the larger black populace through employment, support for small to medium scale black business and entrepreneurs, and the participation of black business in the productive economy where goods are produced, services rendered and value chains created (as opposed to the comprador classes’ participation in the financial economy i.e. owning shares and stakes in white run business and sharing in white capital).

So the key question regarding what is radical about this agenda – as I have argued in a previous piece – is simply, why this neoliberal response to the transformation challenge? Relying on outsourced functions of the state and state owned business to catalyse black business, that is; using state procurement funds as a ‘stimulus package’ for BEE, essentially plays within the rules of neoliberal economics. It does not challenge it in any substantive way; it just challenges white run and owned business on the same terms that many would argue has led to the deep inequality, widespread unemployment and poverty that the radical economic transformation agenda purports to challenge.

Indeed, when the president stated that radical economic transformation means that “nobody will go hungry”, many would have assumed that he was referring to a state led response to the troubles affect the black working class and poor. They would not have immediately assumed that he was referring to another trickle down economic strategy as a solution for poverty and unemployment. Indeed, he expounded on the definition as meaning, “fundamental change in the structure, systems institutions and patterns of ownership, management and control of the economy”. Yet, if one looks at who has championed this cause most vociferously and faithfully, it has been the Economic Freedom Fighters party, who challenge the status quo not just on matters of ownership, but on the structural basis of the economy and society’s institutions.

While it is true that left-oriented proposals for nationalising the banks and mines have been put forward in the debate – even by the Minister of Finance’s advisor Professor Chris Malikane, amongst others on the left – the reality is that the minister has decisively announced that it is not ANC policy to pursue this route. If we observe that the National Empowerment Fund and the IDC have been merged to support the programme to develop black industrialists, alongside the efforts to establish a state-owned bank in Kwazulu-Natal, and combine this with repeated and concerted efforts to establish control over the National Treasury, it is clear that the programme for radical economic transformation primarily targets the black professional and entrepreneurial class; a class that is intimately tied up with the black political class.

So what we are in fact being sold is radical economic transformation ‘lite’, one which plays within the establishment rules to mount an offensive on the establishment itself (what left commentator Jeff Rudin terms “BEE on steroids”). The question is, why this middle of the road response?

The answer, in part, is that resistance to change in South Africa lies not only within the private sector, but also within the bureaucracies of the state itself. It is true that the state is well transformed along gender (52% women) and racial lines (77% black African), and is constituted of a high proportion of highly educated professionals. Yet to look only at these figures is to overlook the essential nature of the South African state bureaucracy. As a bureaucracy the state has not been able to unlock itself from its history as a colonial and Apartheid apparatus.

Despite the very many restructurings and changes the state bureaucracy has endured over the past 22 years it proceeds with the same set of logics regarding how its functions, controls and processes are constituted and exercised. So, in my view, the central question that should be posed at this juncture is; what prevents the bureaucracy from remaking this new ‘radical’ agenda in their own image?

In order to understand a bureaucracy, it is critical to look to its initial conditions, as it reveals how its history informs the memory it carries with it. Bureaucracies are not clean slates, they have histories and these are important. When the bureaucracy is designed for a set of purposes, all of which are focused on maintaining the status quo at the very least, and allowing for incremental changes at the worst, then what are the chances that a radical agenda will successfully be implemented by it?

In the case of South Africa, leadership mirrors the Fanonian analysis of nationalist leaderships’ in Africa, in that while their rhetoric is radical their actions are relatively timid, even mundane in their reproduction of the status quo. Indeed, the economic policies of post-Apartheid South Africa were designed to fit in well with the global Western neoliberal economy and its key institutions (e.g. the IMF and World Bank), and has changed very little from that trajectory over the past 20 years.

Moreover, within the bureaucracy – i.e. from functionaries to middle managers to leaders – the bureaucracy of the liberated post-colony shares an unmistakeable reticence to embark upon new trajectories, precisely because they necessitate deviating from the norm. And this norm brings comfort to the urban middle and lower classes, as well as the urban proletariats. This unfolds while the rural proletariat – and religious and social conservatives – experience the rapid disintegration of their traditional way of life and commensurate value systems.

So a radical change is underway, but it is a different process, one of urban modernity – mislabelled in a reductionist manner – as ‘liberalism’. The reason it is not plain liberalism is that it is a product of spatial, demographic, class and identity changes that are intimately linked with the processes of modernity and urbanisation. The only true radicals that emerge in this context are so extremist in their bearings, arguments and convictions that they strike the fear of God into all reasonable people, who in turn shrink from them and tighten their reigns on whatever small realm of control they possess.

This facilitates the middle class ‘stop the rot’ motivation to block all change, and the office bearers and job-holders within the bureaucracies adopt reactionary positions that steadily erode and outpace attempts to introduce anything radical to the functions, controls and processes they oversee. In turn, leaders respond with authoritarianism and autocratic leadership, and attempt to force through programmes of action, which is then scuppered at different levels within organisations. It appears as though incompetence is the reason for the failure of these new programmes, but that does not tally well with the fact that the public service is generally highly skilled and educated. Something else is occurring; tacit resistance has taken hold.

Here, the bureaucrats draw on their knowledge of process, ‘best practise’ and institutional memory to weigh down radical agendas. The memory of bureaucracy, which is so deeply conditioned within its structures and processes, acts against change, or at least slows it down. The tacit values, beliefs and norms that underlie the functions, controls and processes of bureaucracy, continue to inform practise despite what new policies are put in place. In other words, the bureaucracy is resilient; it resists change, and vary rarely transforms wholly except under extreme pressure or on its own terms.

In cynical terms, the South African state bureaucracy hosts an organisational culture of rules and procedures that is strictly enforced when it is least necessary, yet is loosened when it is most important. That is, it is inflexible when flexibility is necessary and vice versa, and this can facilitate rent-extraction strategies. In the long term this can also facilitate parallel state activities that emerge in response to the restrictions of bureaucracies. The essential point I am making here is that it is not simply constitutionalists versus the proponents of radical change; there is a deeper, underlying constraint on change in the South African state, its bureaucracies.

So in order to adopt a truly radical trajectory, one that seeks to challenge the global and local economic status quo, the key questions that need to be asked need to revolve around what constitutes an innovative state, and what kind of bureaucracy is necessary to facilitate that? That is, a state that can create space for flexibility and adaptive capacity in how it goes about pursuing change.

A senior, renowned colleague of mine at the CSIR in the 2000's used to say,

“You know, the CSIR is great at developing solutions. Then they throw them over the wall and hope they hit a passing problem.”

This statement goes to the heart of the matter. State bureaucracies can do innovation for innovation’s sake, and do it exceptionally well, but they often fail to adequately or competently harness these innovations to create broader impact and change in society at large. This same colleague of mine hence advised me that the only way to go about innovation in the CSIR was essentially to bend the rules and act as a “maverick” would (his words).

This has relevance for the new agenda for radical economic transformation, as its response to the challenges of bureaucracy in South Africa has also been to bend the rules, even violating them outright where necessary (as they see it). Moreover, in response to the bureaucratic resistance they face they have responded by proposing a strategy that responds with the privatisation of key functions and services of the state. Simply put, the process of privatisation become central to the transformation agenda because it takes those functions and services outside of the realm of control of the bureaucratic state to a large extent (i.e. the state becomes a mere collection of executive managers of outsourced functions).

Yet there are many dangers that accompany this kind of approach. It has the potential to erode state capacity instead of transforming it substantively and enabling it to act in innovative ways in support of a radical agenda. This can fast become a self-reinforcing effect, leading to a situation where the state is overly dependent on private sector actors to fulfil its societal mandates. If these private sector actors grow into sizable monopolies and can exert significant power upon the state in turn, the state can essentially be held ransom by the private sector even more than it already is.

Neoliberal capitalism, whether practised by black capitalists or white capitalists, tends to follow the same trajectory; it steadily erodes the capacity of the state under the guise of improved efficiency and lower cost when in reality it inflates cost, drops safety standards and pursues profit as a its central driving principle. One only has to look to failures in privatised education, healthcare, transportation and the like in the USA, for example, to understand the dangers of such an approach. It is not a radical agenda that ensures that ‘nobody goes hungry’; in reality it will likely have the reverse effect.

So the question of what is required for radical economic transformation in South Africa requires closer scrutiny of the structural constraints within society’s institutions, and central to that question is the nature of state bureaucracies that the democratic dispensation inherited from the Apartheid and colonial states. These state bureaucracies were originally premised on an agenda to facilitate extraction of resources of the country so that they can be administered amongst a small minority. These bureaucracies enforced and upheld racial capitalist exploitation and political oppression of the majority in service of that same minority. They are, by their vary original nature, designed to resist changes that seek to effect a redistributive agenda, except on terms that they dictate, and at a pace of change that they feel comfortable with.

Simply overcoming this by moving functions of the state outside of it, and conducting parallel state activities within patronage networks is not the answer to South Africa’s pressing developmental challenges. The answer lies in embarking upon a truly radical transformation of the institutions of society and the state as a whole, so that a new footing can be established from which to move forward, one that significantly breaks with the colonial and Apartheid traditions, and not one that replicates it. 

In that spirit, I will leave the reader a quote to ponder on, from a writer and journalist who has personally witnessed over twenty odd revolutions firsthand: 

"In every revolution, a movement grapples with a structure. The movement attacks the structure, trying to destroy it, while the structure defends itself and tries to extinguish the movement. The two forces, equally powerful, have different properties. The properties of a movement are spontaneity, impulsiveness, dynamic expansiveness—and a short life. The properties of a structure are inertia, resilience, and an amazing, almost instinctive ability to survive. A structure is rather easy to create, and incomparably more difficult to destroy. It can long outlast all the reasons that justified its establishment. Many weak or even fictitious states have been called into being. But states, after all, are structures and none of them will be crossed off the map. There exists a sort of world of structures, all holding one another up. Threaten one and the others, its kindred, rush to its assistance. The elasticity that helps it to survive is another trait of structure. Backed into a corner, under pressure, it can suck in its belly, contract, and wait for the moment when it can start expanding again. Interestingly, such renewed expansion always takes place exactly where there had been a contraction. Structures tend toward a return to the status quo, which they regard as the best of states, the ideal. This trait belies the inertia of structure. The structure is capable of reacting only according to the first program fed into it. Enter a new program—nothing happens, it doesn’t react. It will wait for the previous program. A structure can also act like a roly-poly toy: Just when it seems to have been knocked over, it pops back up. A movement unaware of this property of the structure will wrestle with it for a long time, then grow weak, and in the end suffer defeat."


—Kapuscinksi (Shah of Shahs, 1982)


*** Note that this piece is a product of the thought processes I have been undergoing while writing my next book, which critiques the role of bureaucracies in post-colonial African democracies, as well as in large aid, development and donor organisations that operate on the continent.

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[1] For a range of sincere, thoughtful contributions to the debate on radical economic transformation please see the following links:

a) http://firstthing.dailymaverick.co.za/article?id=88602#.WRWGAdqGNdg

b) https://www.dailymaverick.co.za/opinionista/2017-04-26-on-the-side-of-the-angels-or-the-predators-big-business-and-its-role-in-the-current-crisis-part-two/#.WRWGR9p95dg 

c) https://www.dailymaverick.co.za/opinionista/2017-04-13-radical-economic-transformation-padlock-to-poverty-or-key-to-prosperity/#.WRWHg9p95dg