THE impatience of those who have been excluded and want to see a change in the look and feel of our economy and society is gaining momentum. This implies that the hand of the government grows ever more visible and dominant.
Speaking to talk show host Tim Modise in June 2013, former president Thabo Mbeki made the interesting admission that the lack of transformation in SA could be blamed on the compromise during the negotiations leading to democratic elections and today’s constitutional order.
More pointedly, he said the negotiators may have overestimated the will and power in the hands of the white establishment, and thus did not move for more concessions in terms of economic ownership.
What we are seeing now in the streets is that such anxiety may no longer matter.
The government also remained insecure about issues of capital flight, worrying that white South Africans would export their capital, and thus needed an insurance policy in the form of exchange controls.
Although the government considered stepwise relaxation, Mbeki conceded in an interview with the Financial Times that they were still concerned about the meaning of what foreign business owners said were peculiarly large cash reserves held by their South African counterparts.
In this sense, Mbeki commented that, “If tomorrow you said, okay, all of these foreign exchange controls have gone, because of that kind of residue of uncertainty about the future … they might say let’s take as much out of the country as we can.”
In many ways, what we see in government policy today reflects many attempts to transform the economy while at the same time holding it together. This is becoming very difficult to achieve as tension and contests emerge with increased regularity.
The government has now announced ambitions to create a programme of black industrialists. This is a huge departure from what has characterised black economic empowerment (BEE), which has been ownership of existing large firms, rather than the actual industrial and productive participation of black people.
This programme requires an enormous effort on the part of the government. It will require that the government move a lot more strongly in removing kinks and distortions in the market that have prevented black business from transitioning from small to industrial status. It will also require a change of mind-set from black entrepreneurs and would-be industrialists, who have come to know one market for their goods and services — the government and its procurement processes.
This sort of social engineering is no small feat because it almost leaps to a much more direct role for government in the planning of industry and its outcomes. That very blurry space between market failure and government intervention is always open for exploitation. Such exploitation requires further regulation and intervention on the part of the government, leading to slower economic outcomes and progress.
In its attempts to liberalise markets after the dissolution of the Soviet Union, the Russian government unwittingly created what came to be known as oligarchs, who saw and took the opportunity to rapidly acquire wealth through the government’s efforts to open the economy.
In many ways, we have seen this in SA in terms of BEE.
Whatever one’s view is about the government’s efforts, it should be clear that when markets fail to include everyone with the will to participate, governments are likely to intervene.
We have seen this with BEE, which further developed into broad-based BEE, which necessitated refining of regulations and codes of practice. This after the government noticed these were open to exploitation and distortion.
It must be emphasised that the problems we face in terms of economic transformation and progress are far more complicated than many analysts and commentators admit. It is not enough for the government to relax labour laws in order to make doing business easy in SA and thus to achieve higher levels of employment. The balance of power and social distrust still persist.
Simply providing financial support to a township car mechanic and panel-beater is not enough to help them succeed.
The fears held by Mbeki and his peers then may still be legitimate, but today’s news reports suggest we should also fear the actions of the poor and disenfranchised majority.
There are no easy answers, yet our dithering on the questions holds us back. Will business lead in terms of liberalising the economy and opening opportunity up to all, or will we rely on the government?
• Payi is lead researcher and economist at Nascence Research Insights.