The majority of South Africans would agree that the pursuit of economic transformation in South Africa has been an unambiguous failure. However, what we understand economic transformation to mean differs, and this is evident in how it is assessed.
In order to measure progress of economic transformation, there is a self-defeating habit of looking at the demographic profile of the owners of JSE listed companies and those who occupy executive positions in companies and institutions broadly. The theory is that in an economically just society these outcomes would reflect the racial demographics of the population. This is of course not true.
It is entirely possible, as will surely one day be the case, for there to be ‘black’ majority ownership of the JSE and for the majority of executives to be ‘black’ while economic injustice persists. In fact, we can go as far as saying that there can be 100% ‘black’ ownership of the economy and for the economy to still exclude the majority of South Africans, as it is possible for economic injustice to exist in racially homogenous societies. Indeed, many South Africans reject the idea that replacing a white economic elite with a black economic elite equates to economic justice. And yet, we obsess with indicators that can only inform us about the racial demography of the ‘1%’.
We need to find a way of focusing the measurement of transformation away from elite gains towards measuring the ability of all in society to earn an income and build wealth. It is for this reason that the DA’s draft economic justice policy is a key discussion point for the upcoming policy conference.
The stark realities we are confronted with now, require concessions from a wide variety of stakeholders:
- Established businesses cannot continue to take part in setting up a regulatory edifice within which new companies cannot compete, that kills innovation and aids cronyism. It has not worked out for South Africans for big businesses to spend eyewatering amounts to sit in close proximity to some or other minister who whispers sweet nothings in their ear. Sweet nothings which either never materialize or which materialize at the expense of South Africans. Executives walk away from these conferences drunk on imagined influence. The result is always premature talk of renewal and greenshoots, only to be disappointed. That disappointment reaches its zenith just in time for another conference where the Kool-Aid overflows.
Critically, the official policy of trickle-down redress i.e. coopting the politically connected onto boards and ownership of companies, will not work as a plan to include the majority of South Africans into the economy. And thus, ultimately it will fail as a way to buy businesses the social license to operate which many seek. There will continue to be mass resentment from the majority excluded from the economy.
- The economic left and dominant unions will need to confront the fact that there is no decent work without work. Decent work is impossible if nobody actually has any work. And so, we must balance labour demands with the need to get as many people as possible into work. It is imperative that we reduce the transactional costs related to doing business in South Africa, to grow the economy, and to increase the jobs available and suited to the labour force we possess. There is nothing decent about mass unemployment.
- The economic right and chanters of ‘pull yourself by your bootstraps’ will need to acknowledge that if we are not deliberate about improving the opportunities available to all, meritocracy can reinforce inequalities and place a cap on economic mobility. Meritocracy is a fine principle, the idea that our success in life is to be determined by our performance i.e. a combination of hard work and our innate abilities. This is in stark contrast to a society based on nepotism, aristocracy or inherited status, or even cadre deployment. And indeed, selecting the best society has to offer has benefits for all not just the individuals themselves.
However, how merit is assessed at various stages (e.g. extra-curricular activity, university attended, referees for job referrals) can be elitist. And we must be concerned about how we ensure that everyone has a reasonable opportunity to nurture innate talents and develop strengths. There also needs to be recognition that some may never possess or have not been able to develop, through no fault of their own, any monetizable ability. And thus, we need to provide a floor below which no human being, no matter how vulnerable their situation can fall beneath.
- Analytically we must view the drivers of economic exclusion as multifaceted and that they work in reinforcing ways. Focusing on ownership, executive management of companies, and the awarding of contracts reduces economic exclusion to one predominant assumption: that were it not for the recalcitrance of ‘white monopoly capital’, the majority of South Africans would be better off. This could not be further from the truth. Economic exclusion is a heady combination of succumbing to illness and disease due to poor public healthcare, the high cost of transport which reduces mobility and increases reservation wages, low levels of savings and savings in low return investment vehicles, unaffordable housing close to areas of economic activity, unreliable and costly energy, digital disconnect, poor educational outcomes etc. All of which contribute to a cycle of deprivation which is difficult to escape. We need a concept of economic justice which tackles economic exclusion as a basket of deprivations.
Balancing the realities highlighted above, and no doubt numerous others, is the primary work of the DA policy conference to be held on the 5th and 6th of September 2020. The future of South Africa depends on successfully challenging the current hegemonic view of economic transformation. Absent any policy change, South Africa will continue to be characterized as an economy of outsiders and insiders.