South Africa's Economic Growth Path and the Limits of Imagination

By Ebrahim-Khalil Hassen · 21 Sep 2010

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Picture credit: valkyrieh116
Picture credit: valkyrieh116

Imagination is absent in the conventional spaces of South Africa’s economic growth path.

Conventional wisdom equates increasing economic growth to around 7%, as an important target. In political speak, the growth target is of course a “necessary” and not a “sufficient” condition. What it In fact does is reflect orthodoxy. This policy stance is premised on the fiction that we can grow ourselves out of a situation of high unemployment, poverty and inequality.

The alternative position is to focus on building economic inclusion so that, as growth ramps up, so too, do employment growth and a concomitant reduction in poverty and inequality occur. Enter COSATU’s economic proposals contained in “A growth Path Towards Full Employment.”

The proposals straddle an old style debate on economic growth, but more imaginatively, offer a set of propositions that open the space for a new discussion on economic policy. In so doing, it accepts as foundational, the structural nature of poverty, unemployment and inequality. 

Economic commentators have been critical of these proposals. The major response has been that the COSATU proposals would herald economic catastrophe because they are too ideologically grounded in a socialist perspective. A softer criticism is that COSATU’s strong focus on macroeconomic policy fails to deal with the challenges of the micro economy. In this vein, Hillary Joffe of Business Day argues that greater focus is needed to understand the incentives of private investment decisions.  

Seasoned commentators on the left, like columnist Terry Bell, argue that the proposals mark a continuation of a failed strategy centred on reaching an economic consensus based on corporatist deal making. The justified criticism is that current versions of a social compact would be inadequate to meet the developmental challenges we face. Thus, COSATU needs to build power. All said, the criticisms indicate that COSATU’S views are important enough to be contested. 

COSATU however has its supporters. After the formal launch of its growth path proposals, civil society and private sector organisations provided an instructive account of why COSATU’S proposals will resonate in the “real economy.” More to the point, why those struggling in the economy understand the proposals in a deeper manner than the majority of economic commentators. 

First, the COSATU proposal for government to play the role of “employer of last resort” resonated with the experience of NGOs that provide services. For example, community health workers are employed by NGOS to provide care and counselling to communities ravaged by HIV and Aids. These NGOs provide services that should be delivered by government. They asked whether the proposals would see community health workers employed by government, or if government would support NGOs more aggressively. 

The broader debate on the size of the public service, the cost of employment and related matters; thus takes a backseat. The important factor is that the discussion is focussed on both how to improve services and increase employment. The prospect of labour absorbing public services based in communities is thus an important theme, with the costs of employment of these community workers open for debate.

Second, emerging business saw value in the proposals. Traditional healers outlined their frustrating experience with government policy and asked for COSATU to intervene. Traditional healers are small businesses without a strong voice, asking COSATU for support to get their voices heard.

Emerging miners took a more practical approach, proposing an issue-based coalition with COSATU. COSATU’s response was counter intuitive - it would seek to build support amongst emerging business because at present there was more that they had in common. What organised workers have in common with emerging business is that without a deconcentration of the economy, both are excluded from building sustainable livelihood strategies.

Littered throughout COSATU’s document are policies that support small business through better competition policy, procurement and financing. However, whilst COSATU’s proposals on emerging business are underdeveloped, the trade union federation has opened this space, and with it, recognition that it must understand the small business sector better. 

Third, COSATU’s industrial policy stance breaks new ground, and refines its support for manufacturing. A strident criticism of COSATU’s industrial policy is that wide scale blue collar manufacturing jobs are impossible in the current context.

COSATU’s substantiation for manufacturing as a lead sector is however instructive. According to its calculations, manufacturing not only results in higher employment, but there is also a strong correlation between specific manufacturing sub-sectors and rapid economic growth. Yet, it recognises that without changes to the value of the rand, manufacturing will face significant challenges. A proposal supported by manufacturers themselves. 

However, the “global balance of forces” has changed. The green economy and the care economy have been identified as job creating and high growth areas, especially given the global economic crisis. In greening the economy and caring for people, employment can be created argues COSATU’s document. The “care industry” would increase employment amongst black women in particular, currently representing a very marginalised group in the economy. 

Fourth, political realism is evident. In an impressive critique of COSATU’s document at its formal launch, a representative of a student organisation asked about the relationship between this document and building a socialist economy. COSATU’s leadership answered in the parlance of the ANC. The response was that “the transition to a socialist economy, in our theory, is that at this stage we need to deepen the National Democratic Revolution (NDR). The proposals are not a socialist manifesto but deepen the NDR.” 

I would decode this response to mean that given the social crises, practical steps need to be taken, which deepen democracy and economic inclusion. That, of course, does not mean that COSATU will not seek to deepen equality swiftly in our society, but rather that in policy selection, practical realities are important.  

Fifth, COSATU is speaking to more than its members. COSATU speaks about the de-commodification of services and in so doing acknowledges the work of social movements. Their proposal on opening economic opportunities resonates with organisations organising street traders through a project to strengthen the “social solidarity economy.” Similarly, proposals in each of the industrial sectors will resonate with emerging business.

In doing this, COSATU is taking initial steps to speak for the “working class for a whole.”

Conventional critiques offer a reading of the document that fail to acknowledge the detail of the proposals. However, COSATU’s proposals resonate outside the corridors of power and have presented the imagination of a future tied to an emancipatory project. Yet, COSATU must buttress this with practical action and review its policies, as it engages society. It will need to build evidence of the real economy to convince society of its views.  

Only then can we begin to look forward to what shop stewards call a “redistributive compact.”

Hassen is the founder of Zapreneur and Proposal Desk, both websites aimed at answering the question, "Can the Internet help South African small business?"

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Comments

Moe
30 Sep

Empty Analysis

There is no substance to this "analysis" merely empty statements that provide no logic, facts or value to the debate. This is creative repetition of an important proposal. The author offers no unique insights and passes off disjointed commentary & praise for the proposal as serious analysis of a complex topic. Dissapointing.

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Ebrahim-Khalil Hassen
1 Oct

Alternatives

Hi Moe. Thanks for writing.

What I attempted was to share the commentary from the floor after the presentation from a range of sectors, which I found really interesting. Personally, I think that is an important role to play.

Please give us your take.

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