JANUARY 2016 – 08:02

The writer argues that racism risks undermining the empathy South Africans need to negotiate workable responses to a global economy that demands policies focused on competitiveness. Picture: SUNDAY TIMES

Competition and integration must defeat patronage and the scourge of poverty, writes Shawn Hagedorn

BIOLOGISTS and political theorists concur: altruism is proportionate to shared genes. Brothers and sisters favour each other ahead of cousins. Racial biases are as natural, and as limiting, as stone tools.

As employment opportunities fade in resource extraction and manufacturing sectors, prosperity relies on information and investment flows leading to workers becoming relevant and aligned far beyond their national borders.

History offers incongruent lenses in that it was the pre-and early-industrial versions of global trade that compounded tribal rivalries into racial prejudices leading to an imperial world order. Then the global trade revamp of a century ago failed so spectacularly that the world order was fundamentally recast a generation later, leading to today’s economic order inspiring more co-operation and opportunities than conflict and oppression.

The outliers are resource-endowed nations. The lavish lifestyles enjoyed by their political elites require high commodity prices and impoverished rural populations grateful for meagre aid.

Investments in education and policies leading to widespread prosperity are avoided in resource-rich countries. Kinship-laced tensions simmer. The prospects for such countries have tumbled recently, echoing sharply contracting demand for industrial resources — perhaps permanently.

The term “imperialism” is often employed in SA and elsewhere as a verbal icon for colonial abuses. This is merited. Yet such tactical political messaging provokes anti-European racism when SA’s economy cannot grow and transform without overcoming the source of the nation’s defective political economy: huge resource endowments that encourage patronage and racial divides, while discouraging competitiveness and global integration. Foreign investments, global integration and investment in people are nonnegotiables.

SA’s state of political-economic dysfunction is exemplified by its inability to identify appropriate economic goals. Focusing on jobs or gross domestic product is like a student’s career plan being to work in an office and make lots of money. Countries today, like companies and workers, must compete through specialisation and integration.

“Colonial imperialism” was displaced by a world order that encourages trade — not through coercion, but amid institutionally grounded respect for sovereignty.

Flaws notwithstanding, abundant progress has flowed from institutions enshrining national sovereignty while providing investor protections along with workable multinational dispute mechanisms.

This has been aggressively exploited by a long parade of ruling elites in resource-endowed countries. In recent months, this has become far less viable. The final challenges of transitioning to a postimperial world are now in play.

Today’s institutionally anchored world order has benefitted about 3-billion people, most of them Asian. It has failed more than a billion people living subsistence existences within countries or regions in which political elites capture resource rents, while declining to develop human resources….

SEEMINGLY racist remarks often express economic fears. Huge, and mostly desperate, migration into Europe from the Middle East and Africa signals a troubling finale for the era of colonial imperialism. Meanwhile, investors and shoppers from economically robust former colonies are welcomed across Europe and elsewhere.

East Asia showcases the benefits of competitiveness amid regional and global economic integration. Conversely, desperate migration flows from Africa and the Middle East stem from natural resources funding political elites who fail to foster competitive commercial environments.

The central shortcoming of today’s global order — respect for national sovereignty encouraging clientelism — now threatens not just many resource-endowed countries but also, through huge immigrant flows, European integration.

The advent of the nation state is frequently explained by the quote: “The state makes war, and war makes the state.”

Prior to the industrial age, kings and chiefs became wealthy by accumulating their era’s major economic inputs, land and labour. Over the past two centuries, rural land has been a lousy investment.

Most of the world’s food-stressed families today are smallholding farmers. In food-abundant North America, less than of 1% of families rely on farming versus nearly two-thirds in Africa.

A similar shift away from industrial to service-led growth is accelerating. Land and industrial-use resources have lost tremendous economic relevance generally, but they remain central to how elites entrench their patronage machines in commodity-focused economies, thus suffocating economic development.

Today, interests among countries are in the main quite compatible. Battles are mostly economic, and sustained success requires blending: competitiveness, specialisation and collaboration. Meanwhile, many resource-rich but generally poor countries and regions remain vulnerable to armed conflicts.

Globally, conflict deaths and poverty have plummeted over several decades. Since the end of the Cold War, conflict deaths have been heavily concentrated in Africa, followed by the Middle East, reflecting rampant poverty mixed with political elites focused on capturing their country’s resource wealth.

Prior to sailing ships circumnavigating the globe, distant peoples were routinely glamorised by painters and poets, while innovations were rare and affluence usually involved local forms of oppression. As riverboats and ocean-going ships advanced, trade’s importance expanded in such a context. Producing enormous crop surpluses could be of negligible value without boats, buyers and bartering. Early intercontinental traders became imperialists when they found they could avoid bartering and negotiating disputes through recruiting their governments’ coercive capabilities.

Depicting distant societies as inferior made home governments more pliable. Religions could be exploited by portraying peoples as “nonbelievers”. Such messaging typically accompanied extensive abuses.

A generation ago genetic research revealed that everyone is related. Religions remain faith-based. Expressions perceived as racist regularly trace to woefully inadequate economic opportunities.

As SA’s economy is poised to stagnate, racial tensions are likely to rise with frustrations and political opportunism. Much of the white vitriol critical of SA’s government is inspired by fat cats supping as the nation wobbles. Such criticisms are valid; what is odd is how “white empathy” for apartheid scars slips in and out of focus.

Despite controlling the country’s profound natural resources for decades and marginalising black people, the National Party did not achieve broadly exceptional education outcomes for white people….

THE various pockets of excellence achieved in that era should not be overstated. Nor, however, is it inherently racist for white people to decry the state of education in SA today.

Democratic processes induce compromises by grouping interests into factions leading to empathy-inducing dialogues. SA’s underlying disconnects are economic, but it suits opportunists to peddle prisms that emphasise colour differences while blocking illumination of shared insights. Racial tensions are manipulated to delegitimate genuine interests.

Without broad economic transformation, SA’s political transition remains incomplete. Racism risks undermining the empathy required to negotiate workable responses to a global economy suddenly far less interested in SA’s traditional exports and demanding competitiveness-focused policies.

The African National Congress (ANC) is an amalgamation of anticompetitiveness, antiglobal integration factions. Unions, communists, socialists, populists and cronies are all threatened by the deterioration in the country’s terms of trade.

SA’s leaders must accept why top global economists routinely speak of “the new normal”, “stranded assets” and “secular stagnation”. As the relevance of the Democratic Alliance’s (DA’s) commercially minded policies expands, so will efforts to label the party racist.

The “finmin” debacle — SA’s three finance ministers in four days last month — further distances patronage, populist and pragmatic factions in the ANC. This benefits the Economic Freedom Fighters (EFF), which discourages a necessary ANC shift towards procompetitiveness policies.

The coming municipal elections are likely to produce coalition arrangements, with ANC-DA alliances more likely than ANC-EFF or DA-EFF alignments.

The DA should redouble its efforts to bridge the differences between big business and the ANC, while cajoling the ANC towards a competitiveness-focused stance. The rather obvious issue to assemble around in pursuit of finding areas of agreement is small business development.

All South Africans should associate “race” with team work to compete globally.

Published in Business Day