SANE Views

Vol.3 No.10, 25 March 2003

Courage to Think Radical and Alternative

By Margaret Legum

A comprehensive review of government economic policy over the past five years, by Quentin Wray of Business Day (10.3.03) shows the 'strategic brilliance' of our Finance Minister in using every mechanism known to conventional economics for positioning our economy to grow. Yet it has made no serious impact on the appalling poverty, exclusion and deskilling of that half of our population that gains nothing from the prosperity of the rest. All the research shows that the 'expansion' promised through the last Budget cannot remotely address the need. Similar measures have failed throughout the world.

Tiny comfort is taken from the pitifully small increase in formal employment - which does nothing to address the annual new entrants to the job market, let alone the accumulated unemployment over a decade - and from the 0.6% reduction in food prices from annual inflation of 15.5% to only 14.2%. That will hardly be received with joy among those who compete for food with scavenging animals and watch their children die of cold, in an economy where others throw away food, take luxury holidays and routinely upgrade their cars for hundreds of thousands of rands, and where tax concessions are made to the rich imprisoned behind razor wire against the crime-driven poor.

The only possible explanation for our government's continued espousal of a system that reliably fails our people is that they believe they have no alternative. They are not callous people; they are not without personal experience of the horrors of economic deprivation; they are certainly not fools. They are internationally lauded for the delicacy of the various balances they have to strike in preparing our economy for successful competition in the global market. In doing so, they have gone a long way to undermine the intrinsic racism of the 'markets'.

The belief in a lack of alternatives derives from the advice of, and the pressures from, that powerful global elite that gains from the unregulated global market in capital and trade. Their interests are served by being allowed to move their capital at will to places where labour is cheapest, governments are most amenable to their continued privilege and civil society is most docile in matters of environmental protection. Their interests are served by opening every nation's markets to their goods - since they already have technological advantages, as well as those of scale, experience and skill.

Their interests, and not ours, are served by the pretence that trade always benefits everyone, and that capital always flows from the rich to the poor. Logic as well as researched experience shows that neither of these is true. Trade benefits only those powerful enough to set the rules of trade, and those who are already ahead in competing for markets. Capital flows from poor areas - where it is least effective - to rich areas where it is most profitable. It stands to reason, and it is born out by experience. Look around you; and note the concentration of wealth and power internationally and nationally.

But they have persuaded us that we are deceived and that their theories are correct. They have persuaded us, against all the evidence, that they will change the rules of trade so that we have a chance to compete on equal terms with them in their markets. Neither the French nor the Americans have any intention of unravelling their agricultural subsidies - which cost Africa something like $7 billion a year - but they allow us to think that they will.

Or at least they have persuaded us that are so powerful that they cannot be opposed. And there lies the rub. Our government, even if open to the evidence before their eyes, believes that it is too dangerous to oppose the global power elite. A small news item tells us that the Malawi government's decision to set up a new Ministry of economic planning and development had 'caused the donor community to demand in the interests of the international community, an explanation for the formation of the new ministry'. It went on 'Donors have withheld $75 million of budget support to the Malawi government, until the IMF approves the nation's budget 'In this case 'donors' means an IMF-led coalition, which arrogates to itself the right to approve Malawi's budget.

We are more powerful than Malawi. But the People's Budget Coalition of COSATU and civil society, with its painstakingly researched proposals for local economic regeneration and real inclusive growth, gets no attention from the government. We remain trapped in outdated and patently ineffective theories of economic growth.

But it is not simply courage that is lacking. It is an understanding that there are viable alternatives. These will be the subject of the next series of articles from SANE.