Whoever owns land, owns means of production and can make obscene money from state failure, has the ear — and holds the arm — of government.
Most countries have a market-led economy, which means the state is not in control of growth sectors and does not set the development agenda. The state is reliant on the market to dictate and implement policy, finance these policy initiatives and set pricing. However, this is not how the market is supposed to function.
In SA, a combination of austerity and a lack of fortitude has brought us to a point where the private sector has shouldered the burden of the state, in a way that the private sector has now become predatory in nature.
What started off as corporate social investment has now become the private sector being responsible for rolling out the municipal infrastructure development plan through its capex programmes.
Through economic development initiatives or aid, the private sector is expected to provide healthcare, education and sector growth in agriculture, energy and automotive. The private sector is also expected to provide food, water, electricity and numerous other facets of society’s needs. We then should not question when high tariffs and prices are imposed on us for the provision of those services.
Any economy that functions well needs to look at its natural resources and how to expropriate those in a sustainable manner for the betterment of society at large. SA is too big and too complex to follow a market-led approach, because we have the highest levels of unemployment and inequality and because we risk creating economies that benefit the 1%. And that is why the rich have been getting richer and the poor have been getting poorer.
According to a World Bank report, low-income workers spend 51% of their net wage on transport. A decade ago this stood at 30%. During this time there has been a limited increase in public transport initiatives and most of those efforts have been sabotaged. A reminder that taxis do not constitute public transport but are privately owned.
A household is considered energy poor if it spends more than 10% of its income on energy. However, the poorest income quintile sometimes spends up to 27% of its income on energy.
That’s already 75% of a poor person’s income being spent on transport and energy — before food, accommodation, education and childcare — yet we still don’t see the fallacy in a market-led economy for SA. We are expecting people who rely on government food parcels and free basic electricity to function in a world where the highest bidder gets what they want. This has a spillover effect on municipal revenue collection, Eskom debt, service delivery and eventually voting decisions. This system is not palatable and is dangerous.
In a state-led economy, the government plays a pivotal role in steering economic growth to ensure broad-based benefits for society. The state prioritises robust economic planning and targeted investments in sectors such as infrastructure, education, and healthcare. This approach aims to foster sustainable development and reduce inequality.
The state also implements policies that ensure fair wages and job creation, particularly in underserved and rural areas. By investing in affordable housing, sustainable electricity, water and public transportation, the state ensures that residents have access to essential services and opportunities close to where they live and work.
Moreover, a state-led economy leverages natural resources responsibly, ensuring that their exploitation benefits the entire population rather than a select few. Through strategic subsidies and incentives, the state can drive innovation in energy and other technologies, contributing to long-term economic growth.
• Mashele, an energy economist, is a member of the board of the National Transmission Company of SA.
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