“Don’t worry, we’re communists”
When a politician says, “We’re not sending out a threatening message,” you can be sure that’s exactly what they’re doing. Especially if it’s a communist.
There was “broad consensus” at the African National Congress’s (ANC) policy conference in Midrand on the need for a developmental state with more government intervention, but ratings agencies need not worry, the party said on Thursday.
“We’re not sending out a threatening message. That’s not what we intend to do,” ANC national executive member Jeremy Cronin told a media briefing at the conference.
Thus reports the Mail & Guardian. It continues:
Cronin, who is also deputy general secretary of the South African Communist Party, and fellow national executive committee member Joel Netshitenzhe were reporting on the 1 500 delegates’ behind-closed-doors debates on the draft ANC strategy and tactics document.
“There is broad consensus that we need to construct a developmental state,” Netshitenzhe said, adding that the ANC is “not satisfied with the current order of things”. Such a state should have the capacity to intervene in the economy in the interests of national development, higher rates of growth and social inclusion.
There was no resistance to this sort of leadership from the labour movement or capital, “so the ratings agencies have got nothing to worry about”, he said. International ratings agencies issue assessments of countries’ risk, which affects how much their governments pay for loans.
The article proceeds with the usual justification for this kind of policy. The markets haven’t worked. “Monopoly capital” is at fault. Of course, the most egregious monopolies in South Africa are wholly or partly state-owned, and protected by law. No mention of those.
But let’s just break down the assumptions here. The South African economy is partly free, but also features extensive state control, bureaucratic red tape, regulation to achieve social goals, and other interventionist policies. Now if the “current order of things” is unsatisfactory, why conclude that market freedom is at fault? Why not identify the lack of market freedom as the problem? Why not recognise that the interventionist measures already in place are what hampers growth, institutionalises unemployment, hampers trade and limits opportunities? More intervention will only make matters worse. You can’t fix broken regulation with more regulation.
The developmental state is another of those roads paved with good intentions. It sounds nice and sells like hotcakes, but it is nothing more than cheap populism. It works neither in theory nor in practice. By contrast, those countries that have opened up their economies to trade, that have removed the rules restricting the economic activity of their citizens, and that have forsworn interventionism and central planning, are the countries where poverty and unemployment have reduced and standards of living have risen.
Rating agencies might have nothing to worry about. But South Africans, both rich and poor, do.
