LUKANYO MNYANDA: ANC vision of state’s role shoots too low

I was discussing the ANC’s draft “post-Covid” policy with a friend, and the sad conclusion we came to was that this could have been written at just about any point in SA’s history.

In fact, we might as well be in our 20s again and back at Rhodes University going through any number of policy documents that were doing the rounds then, from Ready to Govern, the policy guideline from 1992, to the Reconstruction & Development Programme, which briefly guided the economic policy of the first democratic government.

The point wasn’t to thrash the documents or their prescriptions, most of which were never implemented, but to lament a lack of new thinking. From those documents to the more recent development plans and finance minister Tito Mboweni’s growth strategy document released in 2019 — to reactions from alliance partners that ranged from lacklustre to outright hostile — the ANC could never claim to have been deprived of ideas and advice.

It has just never shown the political will to do what it set out, which of course the latest document doesn’t recognise. Much of it looks as if it was written by activists rather than a party that has been in power for more than a quarter of a century. For example, it says Covid-19 has created space for “for progressive policies”, which raises questions about the party’s assessment of its own actions.

False argument

The only conclusion one can draw, based on the ANC’s own words, is that it hasn’t been a force for progressive change, but then it doesn’t attempt to provide a thorough enough analysis of why that is the case. There are some clues with references to things such as “subjective weaknesses in cadreship”, which may or may not be a reference to the so-called lost decade.

The documents and some of the reactions to it have also revived a pointless and somewhat dated debate about the role of the state and private sector. The “state is bad and private sector worse” stereotype has long been shown to be a false argument. There isn’t a successful system anywhere in the world that is completely one or the other.

The state using its scarce resources to start a new bank, or an airline or a pharmaceutical company, wouldn’t meet anyone’s definition of big and ambitious thinking

Mariana Mazzucato, one of the world’s most renowned economists and a member of President Cyril Ramaphosa’s advisory council, showed in her book The Entrepreneurial State, first published in the wake of the European sovereign debt crisis, that even the US cannot be described in such binary, private vs public sector terms.

Without the active leadership role of the US government, the internet may never have been created. She also showed how the success stories that have been used to show the superiority of private enterprise to drive innovation — from Apple’s I-phone touchscreen technology to Elon Musk’s Tesla — owe much of their success to public money and technological innovation.  

ANC leaders are said to be fans of her work — Ramaphosa and public enterprises minister Pravin Gordhan definitely are — and they would do well to read it again. Then they might decide that the first question SA needs to settle is what kind of state it needs and then develop a clearer idea of what it can achieve.

While Mazzucato’s case studies are mainly in the West, what she writes about will also be evident to anyone who has studied the transformation of Asia’s tiger economies from their relative poverty in the 1960s to the powerhouses they are now. Based on these, the potential of the state as a positive source for innovation and growth-enhancement should not be under debate.

The problem with the ANC’s document isn’t too much ambition regarding the state’s role. It’s the opposite, because it is too focused on narrow policy prescriptions and sees public resources as tools to do nothing more than revive state-owned enterprises that have failed either through mismanagement or dated business plans.

A favourite quote of Mazzucato, judging by the number of times she uses it, is from John Maynard Keynes. The important thing, he wrote in the 1920s, is not for government to do things individuals are already doing, but “to do those things which at present are not done at all”. In other words, it needs to think big.

Far from being a driver of innovation, the government here has shown itself to be its enemy, guided by short-term interest and lobbyists’ influence, which have slowed reform in key areas from energy to telecommunications.

The state using its scarce resources to start a new bank, an airline or a pharmaceutical company wouldn’t meet anyone’s definition of big and ambitious thinking. Considering the number of players in these sectors, at least before the Covid-19-related lockdown grounded commercial airlines and accelerated SAA’s demise, these are probably areas in which the state could limit its role to correcting perceived market failures.

There might never be a better time to do this, especially regarding the banks, which are vulnerable and can’t afford to ignore the government nudging them to do things differently. Why should a government facing a historically challenging fiscal position choose to squander money on a new bank when it has a much cheaper option?

The ANC’s Enoch Godongwana and his advisers would spend their time better thinking about how to build a state that can “guide” markets. Lessons from Asia point to some basics. The debate shouldn’t be about “stimulus vs austerity” or “active vs passive” states. That the state has a crucial role to play is a given; in SA the question is how we build such a state.

There are basic conditions such as a need for it to be competent and honest. So “weaknesses in cadreship” needs more than a passing reference. Like any other enterprise, such a state will make investments that will often bomb, and it therefore cannot exist without public trust and confidence.

The ANC has so far given the public very little reason to suggest it deserves such confidence.