Failed Neo-Liberalism Sees SA Sleepwalking into a Revolution Focus on Policy
BYLINE: Redge Nkosi
Before the financial crisis, the South African economy was growing at about 5 percent a year, and averaged about 4 percent since 1994. Credited with the political miracle of 1994, an economic miracle was in sight, or so we hoped.
Touted as a paragon of macro-economic prudence, the country was lauded by London, Washington and their influential financial institutions as vindication of the success of the International Monetary Fund (IMF) influenced and backed economic policies enshrined in the "non-negotiable" Gear (Growth, Employment and Redistribution) programme. The hope was that growth in gross domestic product (GDP) would redound to the benefit of all citizens by way of reduction in unemployment, poverty and inequality. But who benefited from this growth?
A closer look at this growth revealed that the financial services sector grew at phenomenal paces of about 8 percent while the rest of the economy ambled at an average rate of about 3 percent. The sector outpaced manufacturing to be the largest contributor to GDP. Growth was entirely jobless. Joblessness increased. As growth was surging to over 5 percent after 2004, South Africa was eclipsing Brazil as the most unequal economy. The economy was deepening its rentier character.
Of the Brics (Brazil, Russia, India, China, South Africa) economies, South Africa was the worst affected by the financial crisis. The crisis helped lay bare the structure of the economy and the pile of sand upon which it is built - a highly financialised and rentier economy. Five years into the crisis, the economy remains fickle, wobbly and of little promise. South Africa has, it appears, learnt nothing from the crisis. What we are being loudly told is that what ails the economy is largely its labour protection laws. We are told that there is no lack of analysis, but the will to act.
Two decades into democracy the outcomes of our economic system and its policy framework are unambiguous: increased poverty, increased inequality, increased unemployment, escalating costs of living and doing business. How else does one measure the success of any economic model if not on its ability to provide sustainable increases in the well-being to the majority of its citizens? If it does not, as is so abundantly clear, why should a people continue to labour under such a system with such outcomes - even when there is impressive economic growth?
Attributing such dreadful outcomes to labour laws, policy uncertainty and infrastructure constraints smacks of intellectual poverty, political naivete and leadership vacuity on the part of the nation. To make matters worse, we have drawn up a 20-year National Development Plan (NDP) based on the same failed policies, backed by the same Bretton Woods institutions. We are told to pile our hopes on this plan.
The recent medium-term budget speech elevates the NDP and evangelises growth. We are all praying and wishfully thinking that miraculously we will be able to turn things around by following the same failed economic policies. It surely calls for a great deal of collective blind faith to think this way. The nation as a whole appears to have been shackled to this faith-based ideological hubris: neo-liberalism.
While political and business-dominant elites don't see themselves as acting ideologically and react with hostility when ideological labels are pinned on them, the fact remains that this current economic model, whatever its name, is a disaster and will consistently yield negative outcomes, even if we were to grow beyond 5 percent.
It may be intellectually discomforting for those in power to accept they have failed the nation by blindly adopting this economic model. With social ferment across the nation, the current economic model has become a serious national security risk. …