ANC stuck in an ideology that’s crippling growth

This article features on page 15 of Friday's Cape Argus - click here to read it on the IOL website.

Driving back to Joburg from the coast on Saturday, my wife and I tuned in to coverage of the ANC’s 103^rd birthday celebrations in Cape Town. It dominated SAfm programming for most of the day. As our journey progressed I realised my holiday was well and truly over and politics was once again foremost on my mind.

But contrary to our journey forward the narrative from Cape Town, in particular President Zuma’s speech, was firmly stuck in the past.

 Zuma used the Freedom Charter, sixty years old this year, to frame the ANC National Executive’s 2015 policy statement. Laboriously reciting experpts from the Charter’s preamble and ten chapters, he linked them to ANC policy past and present, thereby reclaiming the document and its heritage for the ANC.

As he spoke it became clear to me that the ANC is stuck in the liberation groove, with precepts of long-dead ideologies prevailing over more modern thinking that has moved the world on.

Zuma’s references to the chapter “The people shall share in the country’s wealth” are particularly pertinent to the country’s most pressing problem, that of reviving the economy to create jobs.

Back in 1955 the Congress Movement led the struggle for freedom from oppression so its emphasis on sharing the country’s wealth is understandable. But today, the priority for the ANC government should be on ways the country can create wealth. Without its creation, there is nothing to share.

Sadly the ANC and its allies, COSATU and the SACP, remain fixated not on wealth creation but on wealth distrubution.

President Zuma proudly referred to the ANC’s membership of Socialist International, which is the worldwide organisation of social democratic, socialist and labour parties, broadly, those of the “left”. Such parties grew to represent workers’s rights and in more radical cases to bring about full-blown socialism. Workers parties, often backed by powerful trade unions, adopted policies founded on variants of Marxist-Lenninist ideologies which regarded capitalism as the enemy to be destroyed. Wealth must be transferred to “the people.”

This was the socio-political milieu in which the Freedom Charter was written. To be sure, many workers’ demands were valid, and mid-20^th century reforms led to the creation of the welfare state which today is accepted as the norm for developed societies.

As history has shown, however, untamed socialism, its sister communism and its ugly half-breeds national socialism and fascism, led many countries which embraced them to disaster in the 20^th century. The balance shifted too far to the left. “The people” lost out as the state grew into a Leviathan, controlled by power-hungry and self-serving elites. It took the West winning the Cold War, the break up of the Soviet Union and China’s admission into the World Trade Organisation to bring them back to their senses.

I remember growing up in the UK in the 1960s and 70s when the Labour Party and its ally the Trades Union Congress (TUC) nearly bankrupted the country. Britain was the sick man of Europe. The Tories, elected in 1970 under Edward Heath with the manifesto “A Better Tomorrow”, tried to tame the unions but the unions were too strong. Nationalisation was here to stay.

We had rolling electricity blackouts – not, as in South Africa today due to poor energy planning, but to the miners union holding the country to ransom. The Tories’ 1974 election slogan, “Who Governs Britain?”, backfired when the electorate called Heath’s bluff and returned a minority Labour government to power.

Such was the socialist consensus, which sent the economy reeling and Prime Minister James Callaghan running to the IMF for a bailout in 1976. Labour hung on a further two years until the 1978/9 “Winter of Discontent”, public service strikes and rubbish uncollected on the streets for weeks, persuaded the electorate a new direction was needed.

The Tories reflected the electorate’s frustration with its election posters showing long lines of unemployed under the headline “Labour isn’t Working”. Mrs Thatcher’s Tory administration implemented root and branch reforms, privatising inefficient state companies, reducing union power, abolishing exchange controls and unleashing the Big Bang which returned London to its pre-eminent status as the world’s financial centre.

Thatcher’s legacy is still with us, and she found an enthusiastic ally in Ronald Reagan. Together they shifted the concensus back towards the need for wealth creation and rewards for entrepreneurship. The Washington Consensus, as it became known, reasserted the power of markets over the state as the more efficient allocator of capital and resources.

Though the economy stuttered and unemployment rocketed in the early-to-mid 80s as structural reforms took hold, this was soon replaced by strong economic growth which saw Britain overtake France as the world’s fourth largest economy in the early part of this century.

When the Labour Party under Tony Blair was returned to power in 1997 it had shed its hard-line socialist policies as the consensus moved back to the centre. Most of the Tories’ economic reforms remained in place while Labour’s focus was reforming the health service and education, devolution and re-establising relations with Europe.

In Britain and most of the developed world, regular changes of government have ensured extremist policies of the left and right are tempered. The Tory-LibDem coalition that has governed Britain since 2010, after Labour ran up massive deficits and nearly brought the country back to ruin, shows the centre is where mature, successful democracies settle.

Looking back at the 1970s I have a strong sense of déjà vu as South Africa buckles under the stranglehold of socialist thinking and union influence. The ANC-COSATU-SACP Alliance has governed for two decades, and it shows. Policies of the left have led to economic stagnation and too-great a focus on the state as the economic driver.

Minister of Trade and Industry Rob Davies, an avowed Communist, says the role of the state is to steer, not row the economy. But he is wrong. The state should set the ground rules for the economy to prosper and leave it to private enterprise to create the wealth we need to fund taxation to provide public services and safeguard society’s most vulnerable.

South Africa’s elites, be they in government, business or the unions, have had it their way for too long. Their mutually-reinforcing relationship, fuelled by BEE and restrictive labour laws, have entrenched an economy in which 35% of job seekers cannot find work. As in Britain in 1979, labour isn’t working for there’s no work to be found.

South Africa needs a new concensus which does not try to fuse together the mutually incompatible Freedom Charter with the National Development Plan. Jacob Zuma went out of his way on Saturday to pretend these two foundational documents share the same ideology. That he did so shows the ANC’s internal struggle between advocates of a state versus a market-driven economy is being waged with ever-heightened desperation.

For the economy to emerge from the doldrums this make-believe fusion has to give way to a more honest appreciation of what economic growth requires.

Correctly, commentators have noted the threat the EFF and other left-leaning, dirigiste parties pose to the Alliance. To head them off, on Saturday President Zuma made much of the need for radical economic transformation. On that point he is correct, but the method he and other left-of-centre parties propose is misguided. What we need is a re-balancing of the economy where the rights of workers are balanced with the rights of the unemployed and aspirant entrepreneurs. For this, big business and big unions need to give in equal measure.

Far from being progressive, the ANC is now retrogressive. The new consensus South Africa needs must discard the tired notions embedded in the Freedom Charter and fully embrace the more enlightened and forward-thinking vision of the NDP which, for all its faults, the DA supports.

The new concensus needs to establish policies and programmes based on market-driven thinking, not on the ANC’s mistaken socialist, Freedom Charter-inspired approach. These will unleash enterprise, choice and opportunity for individuals, families and communities while avoiding the excesses that led to the 2008 crash. They will certainly avoid the chimera of “economic freedom” EFF-style, which will lead to economic ruin.

We live in a very unequal society. Contrary to the socialist consensus, inequality is reduced when people get richer and they do so when the economy grows as a whole, creating new businesses which provide jobs which feed, clothe, educate and house families.

As the ANC fractures, splinters will break away, some of which will re-form with their erstwhile opponents, creating conditions for the new consensus to emerge. The 2016 elections will soon be upon us. It is then that members of the new consensus must put their hands up and shout: “the past is history, the future is ours.”