Ideology Trumps Pragmatism As Lockdown Bites

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Lockdown South Africa

Some observers may have been surprised when President Cyril Ramaphosa used the language of ‘Radical Economic Transformation’ to describe the post-COVID 19 economic strategy. This is after all the language of those presumed to be his opponents, the ‘state capture faction’ primarily, along with – at least for those who see the president as a pragmatic, business-friendly reformer – the left-leaning ideologues in the ruling party.

While it might be difficult to pin a dictionary definition on RET, its implications are clear: the widening of state discretion and interference in economic decisions, the degrading of private property rights, more intrusive racial policy measures. Private interests will be appropriately disciplined, the ruling party ‘hegemonic’, and the way will be open for a possible move to socialism.

It is important to understand this, as much has been said, written and assumed about what the pandemic will mean for South Africa’s economic direction.

In an echo of the enthusiasm with which Ramaphosa’s ascent to the presidency was greeted – not least by the business community – this was the moment for decisive action on getting South Africa on track. Decisions on policy could no longer be delayed. The pandemic would end the prevarication and demonstrate the importance of a cooperative relationship between business and government.

The evidence of action would suggest something different. If one can understand RET as the subordination of economic decisions to political decisions, the current period is one in which it is being pursued with some energy.

Most obviously, there has been the lockdown of the economy. It doesn’t take an indifference to the critical health challenges – or even to oppose the idea behind the lockdown – to recognize the damage that it has done to the economy, or to be concerned that some aspects of it are driven by agendas other than combating the pandemic.

So, the minister of trade and industry objected to re-opening e-commerce out of a commitment to ‘fair competition’ – not, by any explanation proffered, as a means to deal with the virus.

Then there was the determination to use B-BBEE criteria in distributing relief to struggling businesses. Firms that had not implemented a discretionary policy, but had nonetheless paid taxes and provided livelihoods to their employees were to be denied government assistance. This is grotesque.

The Department of Employment and Labour (jn an economy with sharply falling levels of the former and scant demand for the latter) has indicated that it intends to go ahead with a plan to prescribe racial quotas for businesses.

ANC deputy Secretary-General General Jessie Duarte, meanwhile, penned a Freedom Day opinion piece which both punted RET and lauded small business. The COVID-19 pandemic, she said ‘displayed the bias our political economy has towards big business and not to SMMEs’. That that ‘bias’ has been underwritten by a hostile regulatory system that government seems now intent on intensifying is not discussed.

There is a truly dreadful reality bound up in all this; at some level, businesses are not seen for the commercial operations that they are (and that they must be), but as moral-ideological abstractions. They are not the products of practical application and difficult choices, but signifiers of ‘transformation’. They are be evaluated not by their own success or failure, but by the extent to which they reflect the priorities of a bureaucracy and political caste that has scant understanding of how a business works, and not much more interest in acquiring it.

Perhaps a career politician or a minister whose pay check is funded by taxes (that come from somewhere ‘out there’) can afford to think like this. For a business owner, it’s crippling.

(As an aside, in the midst of the pandemic, with the fiscus bare, government has determined to keep South African Airways alive – with ongoing bailouts handed to South Africa’s taxpayers. It’s the stuff of an ideological obsession.)

All of this bodes ill for South Africa’s future. The pandemic may have shown weaknesses in South Africa’s political economy, but has done little to change them. The RET agenda pushes on.