EFF are not the solution

jujuTHE Economic Freedom Fighters (EFF) may appear like a bunch of attractive radicals but the party’s policies are Marxist fantasies that will take South Africa’s economy in the wrong direction. Our country has already experienced a ‘dirigiste’ economy with nationalised corporations called parastatals. Eskom and Telkom had to be bailed out last year with billions of taxpayers money. SAA and the Post Office fared no better.

Telkom posted one of the biggest non-mining losses in the South African economy last year with a 11.6 billion rand write down. The net loss for the year through March 2013 compared with 216 million rand a year earlier. Eskom’s losses are even more startling. The parastatal made a loss of R10.7bn through supplying electricity to Hillside, the bigger of the two aluminium smelters at BHP Billiton and is heading towards a R350bn debt trap. 2012/13 saw the SA Post Office post a net loss of R179 million, while SAA was bailed out to the tune of R550 million*.

South Africa’s experiment with the dirigiste economy has thus, largely failed. At very least, its parastatal dimension has ceased to be relevant in terms of economic growth. The resulting 25 billion rand plus  annual drain on the treasury is nothing to be sneezed at. Paradoxically, direct investment in the economy by the state in the form of the Public Investment Corporation (PIC) has seen growth of 18% pa with R1.40 trillion in assets under management to date, including a range of equities publicly traded on the Johannesburg Stock Exchange.

Ultra-leftist political parties like the EFF opposed to the economic status quo, ironically continue to operate under the ruse that nationalisation is the answer to the supposed “neoliberal economy”. Quixotically promoting the old-fashioned command-style economics that characterised the policies of the former Soviet Union.  These party factions fail to take into consideration the extent to which dirigiste interventions by the ruling party have already guided the development of the South African economy. The term dirigiste emerged in the post-war era to describe the economic policies of the French economy, which included substantial state-directed investment. The term usually denotes an economic system where the state exerts a strong directive influence in the form of a central authority as opposed to a merely regulatory, role for the state.

EFF selling economic fantasies to gullible voters

Expanding the uncompetitive and failing parastatal sector, and issuing new economic directives, for all their success and failures over the past 20 years in which the ruling ANC has maintained power, is not the recipe for job creation. In fact jobs and common land ownership, the rallying cry of South Africa 25% unemployed, may not be all that desirable. In an age of mechanisation and digital networks we are fast approaching the proverbial ‘end of work’ and a new economic paradigm termed, post-scarcity in which goods, services and information are universally accessible.

Another paradigm shift is the emergence of what is known as the “sharing economy” in which goods and property are shared or co-owned in innovative and new ways.

A different post-capitalist economic wisdom must therefore prevail. Think what would happen if the sovereign wealth of this country, invested in the private sector via the PIC, was redistributed in the form of a citizen co-ownership dividend? An unconditional basic income grant to all citizens funded via investment in a thriving market economy. Freeing citizens to become more than simply workers, we would end up with a sizable arts and culture sector along with unbridled academic and scientific inquiry.

Norway which reinvested profits from its oil and gas fields in the form of a sovereign wealth fund, has turned each and every Norwegian citizen into a millionaire. Switzerland recently voted to grant all its citizens a guaranteed monthly income of $2800. South Africa already has the means to do this, since the country has 80% of the world’s platinum supply and 50% of global gold reserves. This is more mineral wealth than is sitting in the bank vaults of Switzerland. If there is not enough money to pay our citizens each and every month, then why not a quarterly or biannual dividend? A real step-up, awarded in perpetuity, instead of a once-off sop to the prevailing discontent with our economic and political system.

Instead EFF plan to limit private ownership and state investment in the private sector by implementing regressive nationalisation policies that will take South Africa backwards. Zimbabwe is a case in point. The country has failed to correct its economic distortions and represents an abject lesson in failure, precisely what not to do so far as South Africa’s economy is concerned.

Supporting a party of commandeerists, who are thin on the wedge when it comes to individual human rights and who favour the same economic policies that have made ZANU-PF unpopular with investors, makes absolutely no sense. Economic directives too readily translate into directives aimed at undermining individual liberty. Bellicose party leader Julius Malema known for his often acerbic comments regarding South Africa’s white population has already expressed xenophobic views attacking South Africa’s Asian community while belittling Chinese investment. The EFF is thus feeding calls by black businessman to exclude Indians from state tenders. The apparent leftist overtones of the party disguise an essentially right-wing agenda in a political front whose ‘intellectuals’ are as prone to demand a totalitarian dictatorship as they are, the end of multiparty democracy.

Much like Don Quixote tilting at windmills, the playwright Mike Van Graan has endorsed the EFF, as the only party able to sock it to the ruling ANC. To provide some insight into Van Graan, I interviewed the man back in the day when the ANC was advocating policies very similar to today’s EFF. He might therefore be a little stunned to observe the manner in which age has changed his own political outlook, since the candid interview clearly shows how Van Graan is the kind of person who will be the first to cry foul when EFF cultural commissars start dictating the content of dramatic works, to redact such works in line with party centralisation and Marxist ideology.

The EFF are not the antidote to the ruling party’s lackluster performance. South Africa may need a radical adjustment to an under-performing economy trapped in slow growth mode, but this means moving away from the state-directed policies that have hampered growth and held-back development. Embracing a market economy balanced by a social democratic welfare state is the better solution.

* SAA posted a R3bn operational loss in 2012/2013 financial year

SEE: Malemanomics and the crass politics of nationalisation

  1. Of course, it all depends on your view of the situation and your personal experience of the South African democracy.

    For me, a middle class white man born during the twilight of apartheid, nothing much has changed, but then again, neither has it for the majority of poor black people still stuck in the slums and townships around the country. The Apartheid Government did nothing for them and the ANC is not doing that much more for them currently, so the EFF’s promises are looking pretty darn good. The fact is that they simply don’t care about investor confidence and all that other hoo-ha that seeks to preserve the status quo and, by extension, white privilege. Think what you will about Motormouth Malema, but he speaks the language of the poor better than anyone alive in this country today.

  2. Is your thinking that leading our country to a banana republic, what your stated is out of order and most importantly unfounded.
    Fear is not good for you , get out of ignorant and face the reality that the change is coming for a better South Africa not for corrupt or arpatheid country

  3. Losses and bailouts that the South African taxpayers have had to carry for the poor economic performance of parastatals such as Eskom, South African Post Office, Telkom, etc., are insignificant – less than a drop in the bucket – when compared with the staggering fortunes that the taxpayers in neo-liberal democracies such as the USA, UK, and others, have had to dock up to save predatory financial institutions in recent times.
    The American banking system that triggered the global financial crisis, the slipstream of which continues to rock the world economies some six years on, represents the structural failure of a neo-liberal economic system that relied on the “guiding hand” of the free market to keep it on course.
    In 2011 it was estimated that the cost of saving the British banking system to the British taxpayer was some £850 billion, while in the USA, the initial helpline to the banks millions in fact tens of millions others in the system was over $700 billion. This figure was subsequently augmented with further assistance. The USA government has been extremely reluctant to reveal the exact cost of the bailouts, but various financial commentators estimate that the final figure could be in excess of a whopping $17 trillion.
    To really rub salt into the wound, even after the failure of the banks, and the many, many millions of dollars of taxpayers money used to prop up the institutions, they still paid out millions – in fact tens of millions – as bonuses to the people who ran the system into the ground!
    The whole episode was/is an absolutely disgraceful example of the cynical contempt and callow disregard that the neo-liberal kings and captains of finance have for the ordinary working public.
    And, as for dishing out money on the strength of the value of the country’s unexploited mineral wealth, that is simply asking for a licence to print money. Or, subscribing to a system where people don’t have to work as they can simply spend the wealth beneath their feet!

    1. If you call a R25 billion loss, insignificant, where do you live? South Africa is far from being a shining neoliberal democracy. It is stunted by big government and statist policies which have directed development at the expense of the private sector. There are only two methods of gaining remittances so far as the state is concerned, tax and dividends. Cutting off dividends from the private sector and having a predatory state results in deformed state capitalism that is unable to supply the demands of its citizens. The state should not be in business, in the same way that monopoly capital should not be allowed to operate in a vacuum. If there was a better economic system I would be advocating for such a system, until a better system arrives, we are stuck with the market economy, I will continue to propose welfare state as the necessary corrective, but over-regulation kills the goose that lays the golden eggs. South Africa has long way to go before it can be considered a developed economy.

  4. You sound pretty much like you’re defending a pro-capitalist neo-liberal system. Something like the right wing DA’s economic policy. Or am I wrong?

    1. Not at all. I am defending the gains South Africa has made over the past 20 years while criticising the maintenance of volkscapitalisme. I am also advocating for an unconditional basic income grant for all citizens regardless of economic position.

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