SA’s ideological divide: Only business can end poverty – Andrew Kenny - Biznews

The recent election turmoil highlights deep ideological divides in South African politics between capitalism and socialism. Despite economic concerns like inequality and unemployment, voters seemed driven more by opposition to corruption, tribal loyalty, or personal grudges. The potential ANC-DA coalition faces strong opposition, especially from leftist factions. The debate underscores the argument that government intervention hampers economic growth, advocating for a free market to alleviate poverty and unemployment.

Andrew Kenny

The turmoil and angry arguments in the aftermath of the election of 29 May demonstrate the profound division in the ideology of South African politics. This is between those who believe in a free market (capitalism) and those who believe in a regimented economy (socialism, communism). 

Under capitalism, all people, rich and poor, can trade amongst themselves as they please. Under socialism, a ruling elite tells everybody else whom they may trade with and under what conditions. Capitalism is free choice, socialism is coercion. I believe our problems of massive inequality and catastrophic unemployment have been caused by socialist intervention in the economy, and that only business and a free market can end our poverty and unemployment. But politics is not only about economic ideology. In this election it might not have been of much concern to most voters.

Why did people vote as they did last week? Nobody knows exactly, including the voters. Each voter certainly did not say, “I am now going to cast my vote in such a way as to bring about a hung parliament.” I heard some people say that the vote would be a vote against corruption. In that case why was the biggest winner the most corrupt man in South African history? 

Was the vote tribal? In some parts of the country, yes, but not in others. Identity voting happens in every country. Was the vote for a better life? In that case, did the voter vote for a party that had delivered good government and services (the DA) or for a party that had not, but now made extravagant promises to do so (the ANC)? It is difficult to tell when you look at voting patterns. Was the vote simply against the politicians you hate most? Many people probably did vote that way – and not a bad thing either. How did they vote on economic policies? I don’t think they had strong views on this – but politicians and activists after the election certainly do.

Right now, the central debate on economic ideology is this question: should the ANC and the DA form a coalition? (At my time of writing nothing has been decided about the shape of the new government.) Such a possible coalition was immediately denounced by the SACP, COSATU, NUMSA and senior ANC figures such as Dr Zweli Mkhize and Dr Mathews Phosa. Julius Malema says, “We can’t share power with the enemy.” By this I guess he means the DA, although knowing Malema it could mean anyone from Jacob Zuma, whom he adored not so long ago, to Cyril Ramaphosa to John Steenhuisen. Except for Malema’s, the reasons the others gave for opposing a coalition with the DA was that it was “business-friendly”, “liberal” and “pro-West”, that it would “threaten the many gains the ANC has made over the last decade”, including “progressive and race-based legislation”.

I heard a curious argument from “progressive” commentators who were angry because “neo-liberals” said that only the DA would soothe international financiers and that the “doomsday coalition” of the ANC and EFF would put them off. Why are they angry? They hate capitalism and so surely don’t want international capitalists investing here.

I was interested to see that the Patriotic Alliance (PA) of Herman Mashaba and Michael Beaumont has left the Multi-party Charter (opposition parties united against the ANC) because it says the DA promised not to join the ANC in any way and now is negotiating to do just that. I rather agree with it. 

I am emotionally opposed to any coalition between the ANC and the DA, although I can’t quite think my way through it rationally. The most convincing rational argument I have seen against this coalition comes from Hermann Pretorius of the IRR, who speaks of the ANC’s powerful patronage groups, especially in the public service, who could well sabotage any reforms the DA might want to bring about.

The reason our economy is performing so badly and why our unemployment is so high – 42%, including those who have given up looking for work – is because there is so much government interference and so little free market. Our economy is hostile to small business and hostile to the poor. Our restrictive labour laws and minimum wages shut the poor out of the formal economy. 

They do not allow poor people to choose to take jobs. They shut poor employers out of the economy. Since most poor people are black, these laws are innately racist. They make it impossible for a poor black man in the townships to start up a factory in the townships, employing poor black people, providing cheap goods for poor black customers. They force small black employers out of business, force poor black people into unemployment and sometimes make goods so expensive that poor people cannot afford them. (Sometimes big business, through economies of scale, can provide cheaper goods, but sometimes small business, through shorter supply chains, can.) The privileged hypocrites who pass these laws pose as saviours defending the poor.

Another way the rich shut the poor out of the economy is through bargaining councils with mandatory powers over non-participants. In each sector of the economy, big, rich businesses sit down with fat-cat trade unions to decide terms of employment. Then they order the minister of labour to impose these terms on small, poor businesses outside the bargaining councils, who cannot afford these terms, and so go out of business or never start up in the first place. 

The bargaining councils, along with the labour laws and minimum wages, make the rich richer and the poor poorer. The establishment that enforces them on the people calls them “progressive”. When they speak about the “hard-earned rights” of the workers, they mean the hard-earned rights of the privileged to force the poor into unemployment. When they say they are “pro-poor”, they mean they are “pro-rich”.

Socialist commentators group together as “progressive” the ANC, the EFF and MK, which together won 64% of the vote – to the DA’s 21%. These three not only have the same basic policies, Marxist state control and elitist African nationalism, but their leaders also behave in the same way personally: driving BMWs and Mercs, using private health care and private education, gorging themselves on capitalist luxuries, keeping as far away from the working classes as they can, and so on – all apparently consistent with revolutionary orthodoxy. If there is a coalition between them, it will represent how most people voted but not necessarily what most people want.

How people vote in an election and how they vote with their feet are two different things. Working class people always want to move from a communist country to a capitalist one, and never the other way round. Workers will risk their lives fleeing from Cuba to the USA, from North Korea to South Korea, from the USSR to the West. The reasons are obvious: the more capitalism, the better off everybody is, especially the poor people.

Here is the fundamental problem with the misunderstanding of capitalism. Almost every angry attack on DA economic policy by the “left-leaning” commentators illustrates this. Over 200 years ago, Adam Smith explained the astonishing success of capitalism, but most people still do not understand it or, more likely, hate the central premise so much they refuse to understand it. 

Any businessman, acting out of pure greed and self-interest, cannot help benefiting all of society – as long as he operates in a free market under the rule of law. He can only make profits by offering better and cheaper goods than his competitors. It works every time. In South Africa it would rescue the poor, reduce unemployment and deliver prosperity to all. It infuriates socialists.

A corollary of our horrid labour laws are our horrid racial preferment laws, also described as “progressive”, also harming poor black people and enriching only a small black elite, also causing immense damage to the economy. These include BEE, affirmative action, cadre deployment, employment equity and all the rest of the noxious rubbish. The progressive establishment that passes them does not believe in them itself. The left-leaning leaders of the ANC, the EFF, MK and COSATU know that affirmative action and employment equity in education is a disaster, which is why they send their own children to schools where most of the teachers are white and there are no black affirmative action teachers. 

Why don’t they allow everybody else to choose freely on matters of race? Why can’t everybody decide on the race of their teachers, employees and employers? Even better, why can’t everybody be free to ignore race altogether, as survey after survey shows that race is of very low concern to ordinary people? The problem with the DA is not that it wants to get rid of the race laws but that it is much too timid in saying so and does not explain why they are so damaging to poor black people.

I am not clear at all about the benefits and costs of a possible ANC-DA coalition, although I am emotionally against it. But I am crystal clear about what economic policies work best – which the DA best represents. Only business can end poverty in South Africa, but it must be in a free market, where big business has no power to enforce its conditions on others and where small businesses can start up without restrictions, as the employers wish and as the employees wish.

Andrew Kenny is a writer, an engineer and a classical liberal

https://www.biznews.com/rational-perspective/2024/06/09/sas-ideological-divide-andrew-kenny

This article was first published on the Daily Friend.