There will be a discussion about South Africa’s future economic growth path over the next few months. I hope that the discussion progresses beyond labelling and empty rhetoric. The media and many politicians have promoted a cheapening of the debate on South Africa’s economic future. We have name-calling between left and right within society and within political parties and alliances.
Further, media coverage of economics is usually limited to short-term concerns, such as day-to-day changes in the exchange rate and the interest rate. As a society, we have to tackle the big questions. Ultimately, we have to decide on the type of capitalist system we want in South Africa.
The debates, all too often, misrepresent all sides of the economics discussions. The term ‘capitalism’ is often mistakenly interpreted as meaning that free markets should prevail. We are told that we get certain outcomes as a result of the logic of the markets. In the minds of the wealthy and the impoverished, the capitalist system has come to be viewed as an unfair system where very little can be done about inequality and poverty because the “markets have decided”.
The capitalist system gets distorted into something where a mistaken version of Darwin’s notion of ‘survival of the fittest’ prevails. In truth, there are many different ways in which capitalist systems can function. A capitalist system can function with or without a democratic political system in place. Certain interests can prevail within a capitalist system and cause it to operate in a certain manner. During the apartheid era, people in government and business who benefited from a system of racial oppression managed to shape the form of capitalism.
Over the past three decades, the financial sector has managed to become more dominant and to influence the shape of capitalism in industrial countries and many developing countries. The captains of finance have managed to rig the rules in their favour, to the point where they influence how we think capitalism should work. However, before the 1970s, capitalist countries grew and thrived because they had very tight regulation and control of finance. Without controls on finance, we have a world where capitalism is seen as increasingly unstable and prone to regular economic crises; we have a world where financial capitalists can act with disdain because they know that they will be bailed out by the State. They pay themselves huge bonuses in the middle of a financial crisis, while their countries experience negative economic growth and accelerating unemployment.
Over the next few months, we should all think about the type of capitalist system we want in South Africa. It will have to be a system that can operate within a strong democratic State because, as a society, we have to build a stronger democracy as well. It has to be a system where we can tackle the socioeconomic ills in our society, such as inequality, poverty and unemployment. Job creation and industrialisation will be key goals. Therefore, it will have to be a capitalist system that has a strong element of social democracy and makes provision for an active role for the State and private business.
We will have to decommodify important basic services, including health and education. It is a system that will have to ensure that economic power does not lead to excesses. We cannot allow monopolies and cartels to exploit their downstream customers and to hamstring the eco- nomy. We cannot allow our financial system to become too powerful and as corrupt as those in some of the developed countries. Society will have to agree on the rules and regulations for capitalism to work in South Africa.
