South Africa: Fixing the Economy - the Quest for a 'Social Compact'

analysis

Ignoring the radical economic transformation rhetoric, and the EFF's tactics of divide and conquer, the state, labour and private sector could find each other in the quest to forge a social compact.

Nothing focuses the mind as much as a gaping hole in public finances and an unemployment rate that if unchecked will reach 50% of the population, tipping South Africa into a spiral of social unrest and repressive state control that will do untold damage.

The ANC, Cosatu, business, and other political parties are urgently looking at how best to reconstruct South Africa's battered economy post the crisis.

And they are all talking about a "social compact".

The question is, can they find each other?

In an economic document released on the weekend, it is clear that the ANC foresees an increased role for the state in driving South Africa's economic recovery. While this includes pushing ahead with a state bank and a government-owned pharmaceutical company, ideas that may horrify libertarians, this stronger "developmental state" does not necessarily mean increased state ownership of productive assets, according to a presentation given to the National Executive Committee by ANC economic policy head Enoch Godongwana.

"A narrow and flawed understanding...

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