South Africa, a thriving welfare state supported by a market economy


NELSON MANDELA, far from being a bitter man, presided over the creation of a thriving welfare state which today supports some 16 million social grant beneficiaries. Although inequality and vast discrepancies between the poorest of the poor and the super-rich exist, South Africa is far from being a failed state as depicted by public commentators such as Magnes Heystek and .

Heystek in a column for a popular financial website opined: “the end is near for what is described as a constitutional democracy.” Complaining about a ratings downgrade and the erosion of civil liberties under the Zuma administration, Heystek foresees the literal “death of the rainbow nation.”

Žižek on the opposite side of the economic debate, writing in the Guardian notes the “miserable life of the poor majority broadly remains the same as under apartheid” and says that Nelson Mandela must have died a bitter man, with his vision for the country not fully realised.

For Heystek, the solution to the countries ratings failure is the dismantling of regulation, financial controls and opening markets. For Žižek, the solution is socialism, of the kind practiced by South American countries.

Both commentators fail to note the manner in which millions of ordinary South Africans have been raised out of extreme poverty by economic policies that have allowed the growth of the market on the one hand, and the creation of a welfare state on the other.

Admittedly, the manner in which infant mortality rates have slowed while the countries Gini coefficient remains unacceptably skewed in favour of the wealthy, means the gains of the past twenty years of democracy are easily overshadowed by the current economic crisis.

A crisis not entirely of our own making, in which apartheid-era volkskapitalisme, has been replaced by the ruling parties dirigiste economics with its emphasis on state enterprises known as parastatals — unsustainable policies which have retarded growth and which require massive annual bailouts. (See South Africa’s Welfare Debate)

The manner in which the state electricity provider Eskom has failed to accommodate growth in the economy is an abject lesson of why certain socialist policies adopted by the regime are unworkable and have failed. What has worked is Nelson Mandela’s own experiment with a mixed economy in the form of the welfare state modeled on the Scandinavian example.

With 80% of the world’s platinum supply and ample mineral resources South Africa can afford to take a broad view when it comes to building its economy. The real question is rather how to maintain civil liberties amidst a red tide of Marxist-inspired tinkering while building the next economy based upon knowledge instead of simple beneficiation of resources.

Mandela, the father of a secular state and a constitutional democracy would thus frown on the short-term views of his critics.

Mandela’s new state is one in which tax rands fund basic services and a social wage in the form of a pension, disability grants and child support. The country is in the process of rolling out national health insurance, a major feat for a developing nation.

Ending poverty will thus come about by expanding the social wage into an unconditional basic income grant while growing the economy, not via the kind of shock-tactics advocated by Žižek and Heystek.

Neither socialism nor capitalism provide solutions for the country.

It is this simple truth which presents us with a different picture of Mandela, a founding father of a secular democracy who stands taller than any particular ideology.

South Africa deserves better than its critics.

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5 comments

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