10 DECEMBER 2015 – 13:04
SA’s geographic isolation and its geological abundance promote the rise of debilitating patronage
Across the world for millennia, social stability was achieved because peasants accepted their inferior status and because they had a strong sense of duty to their lords and chiefs.
Then the political and economic needs of industrialisation became incompatible with the acceptance of routine poverty. Purchasing power needed to expand to consume industrial output.
Leading political thinkers and economists responded by inventing and merging modern democracy and capitalism. Yet, elections can provide worse outcomes than a monarchy if they result in patronage machines beholden to different groups, but never focused on the long-term or broad national interests.
SA’s geographic isolation and its geological abundance promote the rise of debilitating patronage. Sharp commodity price declines are now highlighting how the nation’s transformation challenges have been dangerously underestimated.
The politics of farming economies reinforced the strong exploiting the weak across the planet for several thousand years. Control of the land cemented the ability to bequeath political and economic dominance for generations. Such traditions have not been exorcised, while SA’s abundant mineral wealth and industrialised economy is a rare mix — and a recipe for trouble.
In the West, a strong sense of duty was anchored by religious doctrines and traditions. Then revolutionary political theorists and generals used pens and guns to purge pre-industrial social touchstones.
Peasant obligations to God and “their betters” were reshaped to tap into self-interest as expressed through voting and shopping. People had not previously presumed that everyone was imbued by their Creator with certain inalienable rights including the “pursuit of happiness”.
Religious piety and the acceptance of servitude by peasants was displaced with a large middle class and the pursuit of happiness through the material accumulation necessary to fuel industrialisation’s mutual dependency.
The political freedoms that industrialisation helped inspire remain replete with imperfections, but their wide adoption reflects the ability of a constitutional democracy to encourage sustained economic growth rather than having national wealth be narrowly captured.
SA’s apartheid government perverted constitutional structures for the benefit of a racial minority. Apartheid’s sustainability was tied to commodity prices and helped by Cold War politics. Democratic elections did not cancel the deeply embedded patronage biases of SA’s political economy reflecting commodity wealth and isolation.
Farming and extraction-based economies inspire rent-seeking behaviour as reflected by the thousands of years of feudal and chieftain structures. In SA today, prospects for commodity export earnings have been diminished sharply. Domestic consumption is constrained by overindebtedness and few of SA’s value-added exports compete effectively in the global marketplace.
Thus, the country’s patronage machine has suddenly become greatly mired by its own weight. The economy must focus on increasing competitiveness alongside vastly more effective transformation, but this runs counter to the benefits a patronage machine is able to exploit.
The interests of patronage machines are not advanced by investing in people, but rather by instilling a sense of obligation through dependency.
When crops failed, the barons would feed the masses with food they had previously demanded from them. Mineral wealth provides a preferred basis for creating patronage. The risk is that demand is permanently stifled, say, from a shift to an information-focused economy reflecting broad environmental strains.
SA is in an odd place. The industrial era has been slowly ebbing, but in the past many months, the shift has become abrupt — as reflected by commodity prices. SA’s next wave of ruling elites will have to accept that patronage politics has become unworkable. The 1994 political shifts were a dress rehearsal.
There will be no option but to invest in people and genuinely support SA’s business community. The moment of broad realisation is creeping into focus, led by student protests. Older voters and rulers are still grabbling to make sense of the changes, while those born in the 1990s can see clearly how dim their prospects are.
The great successes of capitalism and democracy trace to the systems working together through people voting and shopping and aligning within political parties and companies to more effectively advance their interests. Such a focus on advancing self-interests has guided almost all the world’s nonresource societies towards democracies and large middle classes replacing aristocracies dominating peasants.
SA’s political transformation is stumbling as its economy chokes because the nation’s ruling elites have created a vast patronage system that is not checked by voters. The society’s politics and economics are not grounded by an effective tension among individual and collective self-interests.
Notions of fairness and victimhood spur expectations and obligations that, on a human level, are understandable. Yet in terms of realpolitik amid a hypercompetitive, integrated global economy, they undermine national interests through slowly dousing ambitions, while serving to entrench unsustainable patronage.
Asian political and economic leaps followed those in the West, but Asia’s successes have been no less formidable. While justice has played an expanding role, and as Asians tend to accept suffering as part of life, notions around fairness ideals have not slowed the region from developing its enormous potential.
SA’s political economy is deeply flawed. Economic transformation is a political and social imperative that was only ever possible through achieving high sustained growth. SA’s resource wealth was never sufficient to fund all-race material comfort. Its value has now been marked down such that it will not even fund the current patronage machine.
Patronage is different from corruption. Large social grant programmes and a bloated public service are examples of using the public purse to create loyalty. Such patronage can be perfectly legal, while its ultimate costs can greatly exceed those of rampant corruption.
The industrial era created tremendous demand for natural resources that were often buried below societies distant from those that were quick to build manufacturing centres.
More recently, having people form groups to advance their self-interests through elections and marketplaces has created a huge expansion in the global middle class. This works only when politicians seek to accommodate the interests of both businesses and workers. Even when commodity wealth is truly extreme, this requirement cannot be relaxed.
Venezuela might have the world’s largest oil reserves, but its political economy is an abomination. The other top-tier oil reserve country is Saudi Arabia, where harshly priced stability is purchased through throwing stones and wielding swords.
SA’s political economy was not shaped by apartheid, but rather in the 1860s, when diamonds were found in Kimberley, the Japanese chose to industrialise and the Suez Canal was built.
China’s economic restructuring today is forcing SA to wean itself from its commodity dependence. That Japan led East Asia to become a powerhouse economic region is a permanent feature of the global economy, as is the fact that the Suez Canal reinforces SA’s trading-route isolation.
The bad news is that SA’s problems are political, economic, geographic and geological. The good news is that there are no longer any options but to work together and invest in people. SA now has no choice but to integrate across historic divides at home and internationally. This is obvious to students, while “leaders” seem lost.
Published in Business Day