Essop Pahad
11 July 2004
opinion
Johannesburg — What balance should South Africa seek between markets and state; between individualism and communitarianism? Opposition leader Tony Leon says that President Thabo Mbeki "has pledged to move South African economic policy away from the free market and towards state control".
This he contrasts with the Democratic Alliance (DA) policy of unbridled market dominance, with such elements as "a deregulated labour market, privatisation, enterprise zones, opportunity vouchers and the like"; as well as a nation made up of "individuals with a unique outlook on the world, who construct their own meaning and who are best placed to apprehend their own truth, or truths".
In fact the President has pledged, as he has repeatedly done during the last decade, to strengthen the developmental capacity of the state to meet the needs that markets alone cannot reach.
For his fear-mongering, Leon needs to set up a false dichotomy between "the market" and "the state". No economy, not even the old Soviet economy, was entirely state-driven; nor was any economy, certainly not the US economy, ever entirely market-driven.
Every market requires a stable framework of state rules. A major success of the 20th- century US economy, the New Deal, was a state-driven campaign against the poverty that arose from the market failures of the Great Depression.
The most recent American economic failures are likewise those of market fundamentalism: California's deregulated electricity market that led to chaos and blackouts; and the associated collapse of Enron, which was a major California electricity market-maker. In fact, one of the most instructive global lessons of the past decade is that the worst form of fundamentalism can in fact be market fundamentalism.
Despite this reality, Leon still seeks "as much market as possible, and as much state as necessary". He instinctively enthuses about market space and instinctively begrudges the space of the democratic state. This is mere ideological preening rather than sober, fact-based analysis.
Leon denies that he seeks a minimalist "night-watchman state"; he denies the neo-liberal essence of the DA's policy thrust. Yet his market fundamentalism is combined with his vaguely defined "individualism" in which groups disappear and onstage comes a horde of decontextualised individuals. This combination collapses into precisely the neo-liberalism that he seeks to avoid.
To state the problem boldly: governance as such has nothing to do with the uniqueness of individuals. The core function of government is not the ideological expression of "individualism" on your behalf (who are we to dare do that?) but rather the practical implementation of society's collective aspirations. Governments must ensure the distribution, to defined groups rather than individuals, of the fair benefits and burdens of society.
In the US, the constitution explicitly prohibits individualised laws: all laws must be "laws of general application" or else they are invalid. The practice of politics seeks a set of collective interests; our election results are the tally of such interests.
Thus the idea that a citizen looks to a political party or a government as a vehicle to express his or her uniqueness is grossly oxymoronic and a reversal both of common sense and of constitutional wisdom.
Therefore, when Leon dismisses Intelligence Minister Ronnie Kasrils as a "token white" he is not only offending the minister's individualism but also his collective identification with the African majority. When he objects to our interest in the Haitian people, he offends against our individual and collective identification with the African diaspora. Collective identities are finally part of the self-fashioned individuality of each of us. The denial of this is yet another of Leon's famously false dichotomies.
But the mother of these dichotomies is his denial of the necessary interplay between the markets and the state, an interplay that Adam Smith well understood. As detailed by the economist Emma Rothschild of Cambridge University, Smith himself "proposed elaborate policies of government intervention" designed to rectify "the limitations of commercial processes".
In our own country, the market, if left to operate merely according to its own inherent logic, will not be able to solve the problem of poverty and underdevelopment. In fact it can deepen the levels of exclusion, and precipitate social instability.
The state has to facilitate the transfer of resources to the poorer part of the economy, as the European Union itself does, in transferring some à 30-billion per year to poorer regions of the Union. The EU does this in spite of its developed capitalist market.
"Society cannot exist unless a controlling power upon will and appetite be placed somewhere," said American President Theodore Roosevelt. For Adam Smith and for Roosevelt, as for ourselves, that controlling and enabling power is the democratic state and its progressive institutions.
This is what the ANC has sought to pursue: in negotiating a constitution that puts equality and equity at the top of the national agenda; in pursuing macroeconomic balances that allow for sustainable development; in shifting state expenditure to provide better social services especially to the poor; and now in setting out a programme for the second decade of freedom meant to expedite the bridging of the gap between SA's two economies.
If the logic of this approach has been misunderstood in the past 10 years, the blame must be laid at the door of those who identified u-turns where none existed - the same people who today pronounce "a shift to the left".
In 1995 President Mbeki quoted a Chinese proverb: "A falling tree makes more noise than the growth of an entire forest."
The latest campaign is a crashing distraction from the national agenda recently ratified by our electorate in its collective wisdom.
Pahad is Minister in the Presidency
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