Thursday, November 04, 2010

Some reflections on the new growth path—

Some reflections on the new growth path—

Floyd Shivambu—

November 2010

The celebrated new growth path was in a manner reminiscent of GEAR unveiled by the Minister of Finance on the 27th of October 2010 after a special cabinet meeting which deliberated and adopted the strategy. There were of course many expectations on what was going to be new in the growth path, which cabinet had to convene a special meeting to adopt. The Medium term budget policy statement presented by the Minister revealed that there is completely nothing new in the new growth path, because the same neo-liberal ideological underpinnings of South Africa’s economic planning are once again parroted in the growth path. This should concern all of us because since the adoption of the Growth, Employment and Redistribution (GEAR) strategy in 1996, there continues to be refusal to accept that economic policies of “growth first and the rest shall follow” have failed South Africa and widened the gap between the rich and poor.

The not so new growth path says, “Our central goal is unequivocal: we have to accelerate growth in the South African economy, and we have to do so in ways that rapidly reduce poverty, unemployment and inequality”. The jargon laden GEAR was introduced in 1996 as a form of an integrated economic strategy, which would accelerate economic growth, institute measures to reduce the budget deficit, whilst attaining “6 percent per annum and job creation of 400 000 per annum by the year 2000”. In 2006, government introduced ASGISA as a set of interventions to economic growth constraints. If these constraints are addressed, ASGISA presupposed that government and society in large will be able to meet the social objectives. Consistent with GEAR’s neo-liberal ideological underpinning, ASGISA asserts, “Government’s investigations, supported by some independent research, indicate that the growth rate needed for us to achieve our social objectives is around 5% on average between 2004 and 2014”.

The fundamental problem with economic policies that are obsessed with growth first and the rest shall follow is that they sacrifice everything else on the altar of economic growth. This is inconsistent with what the Reconstruction and Development Programme (RDP) propositioned. The RDP says, “Growth, the measurable increase in the output of the modern industrial economy - is commonly seen as the priority that must precede development. Development is portrayed as a marginal effort of redistribution to areas of urban and rural poverty. In this view development is a deduction from growth. The RDP breaks decisively with this approach”. It is possible and in fact advisable to drive growth through developmental interventions, which should in South Africa’s context, should be highly labour-absorptive.

The RDP took broke decisively from the growth first and the rest shall follow strategy because such has inherent weaknesses. Obsession with economic growth means that you should amongst other things dedicate your energy towards reducing the cost of doing big business through getting your macro economics right, shifting energy tariffs for big business to the people with the hollow hope that such will bear fruits. What distinguished the RDP from GEAR was conspicuously the fact that the RDP emphasised development and reconstruction as means to growth the economy and GEAR preached the neo-liberal gospel that growth first and the rest shall follow. Now, the new growth path is founded on GEAR principles, which have failed our people dismally.

The rest of the propositions are honestly rhetoric meant to deceive society that there is something new, whilst there is nothing. The history of industrialisation and all practical evidence attests to the fact that beneficiation and industrialisation of minerals will not succeed if minerals extraction remains the forte of private multi-national corporations. This does not only apply to minerals beneficiation and industrialisation, but to all other sectors which should be industrialised in a sustainable labour-absorptive fashion. For South Africa to successfully industrialise in a highly competitive global economy, the State should be in control and ownership of key industrial inputs in order to stimulate industrial growth.

Overall, our assessment is that the new growth path is neo-liberal and like GEAR and ASGISA will not achieve all those goals it sets. The State should heavily invest in employment multipliers on services it provides. Like all neo-liberal perspectives, the new growth path is very seductive and will for the coming two to three years make everyone believe that we are on the correct path and we are not. In a perspective titled “The History of Development: From Western Origins to Global Faith”, Gilbert Rist (1997) says of neo-liberal economic strategies, that they are characterised by “power of their rhetoric to seduce, to charm, to please, to fascinate, to set dreaming, but also to abuse, to turn away from the truth, and to deceive”.

Despite these observations, ANC government economic policies cannot continue to be an elite affair, where top level leadership deliberates on key economic challenges inconsiderate of what the ANC and its allies say. Some of the proposals of COSATU’s new growth path for instance are valid and government did not dedicate any attention to those proposals. The proposition that there should be public ownership and control of strategic sectors of the economy should never be dismissed, because all evidence and scientific history of economic development points to the reality that the State should play a leading role. This should not only happen through legislations, because the dismal failure of empowerment charters in South Africa are a great lesson that real economic transformation cannot and will not be realised through toothless legislations. From the experiences of GEAR and ASGISA, the ANC government should by now have learned that economic policies that are not embedded are never durable. The ANC 53rd National Conference should give guidance on these central questions of development and economic growth, because what we presently have is politically apocalyptic due to the hollow hopes it generates in society.

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