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Professor Chris Malikane Is Intelligent, But He Is Wrong

His analysis of SA’s class structure makes for captivating reading - but as intelligent as his political assessment is, he's wrong on the economy. 

24/04/2017 03:59 SAST | Updated 25/04/2017 12:01 SAST
MUJAHID SAFODIEN / AFP / Getty Images
Protesters are framed through an improvised barricade blockading an intersection during a service delivery protest, on July 22, 2016 ahead of August 3rd municipal elections.

By way of metaphor, his analysis is like that of an old Tata unaccustomed to the internet, sitting on a bus watching children play virtual reality computer games on mobile handsets, connected through Wi-Fi to unimaginable worlds of possibility. To the old man, the children are doing magic. His own paradigm of ancestral spirits, mystical powers and sangoma voodoo, colours the lens through which he sees the phenomena before his eyes. The old man does not understand how it is that children can with such simplicity and ease, engage one another unconstrained by the boundaries of soil, dust and sweat. He does not understand why they are so captivated and how they will ever be of use in the "real world". To him, the youth are useless. To them, the old man is a dinosaur in a world of self-driving cars and social media emojis. The global economy is becoming virtual and digital, Professor.

The Professor is looking at the South African economy from the perch of an old-fashioned, out-dated and deeply flawed paradigm of analysis - one imbued with regressive Marxisms and statist rhetoric, dressed up as progressivism.

Class, Control, Capital, Conglomerated Interests

No one can deny that South Africa is in a socio-economic crisis. The economy is highly consolidated, while societal degradation and systemic poverty is highly dispersed and entrenched along racial lines. Any thinking South African would agree that this must be changed. Even the NDP, the "cornerstone of government policy", acknowledges this. However, the Professor seeks to employ a blunt political instrument to solve a complex systemic socio-economic problem. This mistake has already been made by the USSR, the Chinese, East Germany and more recently, Venezuela. Seemingly, the Professor uses Marxism to understand the socio-economic system that gives rise to prolonged and the now worsening systemic exclusion of the black majority from South Africa's wealth creation capacity, which gives him little by way of pragmatic economic insight.

The Professor uses "class" as the unit of analysis to understand South Africa, and this produces a neat, though oversimplified, assessment of reality. He sees the elite and bourgeoisie, the middle class, the working class and the poor, and then slices up each into race groups. Conveniently, the black elite are a slice of the bourgeoisie, the black middle class another slice etc. This mental construct looks reasonable, but it is flawed. As a society in transition, it's likely that every black man or woman in the elite or middle class has a long and wide family tree who still live in a township or under working class conditions. They pay black tax, or are pressured to do so. This is made even more complex by marriage across so-called class and ethnic lines among working people.

As for the poor, of course they are largely black and their relative poverty compared to their white counterparts, remains a tragic and lingering legacy of colonialism and apartheid. However, a seizure of wealth in one community will not amount to a reversal of centuries of injustice. Quite on the contrary, given the interconnectedness and interdependencies between South Africa's myriad communities, will likely have the reverse effect. These factors, upend the logic of the Professor's argument.

The Professor dreams of "control" of the economy, which was typical of the Marxist statists. They looked at the power of the upper class and imagined that these Lords and Ladies control the world around them like gods. This view fails to account for the role of the market, the stock markets and phenomena such as the Great Depression and now Great Recession. The elites learned that they do not control their glorious world. Global prosperity and wealth in the last two centuries has actually occurred on the back of liberalisation, and not through centralisation and control. It is the absence of control, not draconian technocracy, that has unlocked wealth-creation. The Professor, like the Tata on the bus, nostalgically longs for a simpler world that never really existed.

Unbridled capitalism produced the global economic crisis and cost working people their homes and pensions. Sadly, the Professor seeks to throw the monetary baby out with the bathwater.

The Professor is sceptical of "capital", and rightly so. Unbridled capitalism produced the global economic crisis and cost working people their homes and pensions. Sadly, the Professor seeks to throw the monetary baby out with the bathwater. For instance, in South Africa we talk in the Freedom Charter of the "wealth under the soil", as we should - proudly pointing to our natural endowments. But platinum or gold or coal or chrome under the soil is only shiny dirt, until capital equipment is placed over the soil, and minerals are extracted, trucked and shipped to a site of productivity where value is added to them, in order to sell them to someone in a form other than jewellery. Value addition through is what unlocks wealth, such the creation of electricity in the case of coal, not raw materials alone.

Capital, dear Professor, is an input in a value-addition process, not the Tokoloshe.

The way the Professor navigates this conundrum is to argue that the state should "control capital" and intervene in the market to "control" what gets produced. This is like building a dam along the Limpopo to irrigate the farm belonging to the Premier - it can be done, but it will kill the livelihoods and the crops of everyone downstream. State intervention, as we now see with a bankrupt SAA, a cancerous Prasa and an exploitive Eskom, is only useful if it is efficient, ethically managed and makes sense given market conditions. Even in the energy sector, the declining cost of renewables is challenging the old hegemony of energy parastatals.

The Professor imagines that a broad church of conglomerated interests between the poor, the working class and the black bourgeoisie is the key to changing the status quo. It sounds familiar - that's been the recipe of the tripartite alliance and it has certainly delivered political power to the majority. That, in and of itself is a good thing and to be celebrated. But imagining that the interests of the many segments of our society, especially those of the individual persons who constitute them, can be turned into a unitary mandate, leveraged by the state to remake the world, is a pipe dream. The product will be stagnation, corruption and inter-generational poverty, except for the ruling party's politburo (of whom the Professor is now a part). This latter point must excite the newly appointed Advisor to the Minister of Finance but it should worry the millions of South Africans who have to vote and wait for a better life.

Let me acknowledge that Karl Marx was a superb social commentator in his day. He analysed the social consequences of early industrialisation with profound insight, and commented on the ethical impoverishment of the system. Marx lived at a time when the nation-state was coming into its own, like a young bull newly introduced in the kraal of public affairs, full of promise and potential. Marx, and many of his contemporaries, believe that the state held the hope of a prosperous and equal society. Marx was largely correct in his assessment of unbridled capital and the alienation thereby of the working poor, but he was wrong about the benevolent powers of the state.

What the Professor wants to do is to seize control of capital, using mass popular support, whereby the state replaces the white monopoly boogie man and delivers a "better life for all". He calls this nationalisation. Former President Nelson Mandela knew better after interaction with his global peers. The world had changed while he was in prison, and Marxism had become largely abandoned. There is a reason that which the Professor dreams of has not happened anywhere else in the world. The Professor is either naïve, ill informed or has not added a study of history to his study of Marxist economics. The solution to South Africa's problems is not state-led economic control, but innovation-led economic participation.

Entrepreneurship, Productivity and Equality of Opportunity

There is a different formula at work in the nations who have created wealth and can simultaneously boast high levels of equality. They have harnessed entrepreneurialism, the willingness to take risks, and turned this into productivity orientated investment. Those who are more equitable, such as the Scandinavians, have emphasised equality of opportunity without stifling the former. They have undertaken this within a framework of fair labour legislation and broad regulatory regimes. Only on the back of this engine of inclusive economic growth, is the state able to exercise a measure of responsible redistributive policy, over time.

The fact is, if South Africa had sustained a growth rate of 3% - 5%, and former President Thabo Mbeki had played the politics within the ANC and alliance more astutely, and if the state had efficiently delivered on its duty in the education system, we would not be having this conversation. If monopoly capital, which I acknowledge as a problem, had earlier taken up the challenge of black empowerment through internships and shared-ownership schemes in their supply-chains, the minister would now be called out for the leftist ideologue that he clearly is.

Instead, the ANC's internal squabbles and policy ambivalence, coupled with poor delivery and corruption, along with the private sector's predictably self-interested track record, have given birth to a desperate attempt from the ANC to dampen the demands of a virulent black nationalism that has taken hold in our public discourse. The Professor is simply surfing this wave of discontent and urgency, singing to the young ambitious choir in the party elite. Unfortunately, as well-intentioned as it may be, his analysis is wrong and the advice it implies, poses a danger to the whole project of a democratic and prosperous South Africa.

Black Industrialists versus SMMEs

From a policy point of view, government has flirted with the idea of supporting the creation of large numbers of SMMEs, who each employ a half-dozen able citizens, but the elite seem to have bought into the notion of creating "black industrialists" hook, line and sinker. Minister Lindiwe Zulu, a proven party loyalist, has as a result, put up a brave SMME front, while receiving little real attention or budget to drive her formally assigned agenda. Either the ANC does not believe in the capability of the entrepreneurs in their midst, or the apparent short-cut to big underserved wealth through state-funded industrialisation projects looks more attractive.

Competitiveness: the search for Black Excellence

The only way to deracialise the South African economy, from a proportional ownership point of view, is to enhance the competitiveness of the green shoots of black excellence in business that are already visible. There is no shortage of black talent, black ingenuity and black work ethic in SA. There is however a disproportionate amount of white education, white business acumen, and as a consequence of those – access to what the Professor calls "white capital". I argue strongly in favour of a more responsive financial services sector that looks to nurture entrepreneurs. This, coupled with the deconsolidation of some of our sectors, including energy, construction and manufacturing, is the preferred growth path for the country.

Capital most effectively produces wealth and prosperity when it is employed in pursuit of an economically viable business venture.

Critically, what the Professor fails to understand, is that capital is not white, black, pink or yellow. Chinese capital, like Russian capital, like American capital or that from Frankfurt or London, is colour-blind. Capital most effectively produces wealth and prosperity when it is employed in pursuit of an economically viable business venture. Particularly, when capital is efficiently and effectively employed in such pursuit. The unmatched investment by the American capitalists in China, and the ballooning investment of Russian and Chinese capitalists in the US, is evidence to this phenomenon. It is we Africans that have to wake up and smell the post-Cold War cocoa beans, as our West African and East African counterparts have begun to do.

South Africa's problem is not a lack of state intervention in our capitalist system. It is the poor level of efficiency and effectiveness in the state's monopoly intervention where it already has control, which undermines our economy. Capital, the use of resources for investment, is not the enemy of black South Africans. The enemy, the danger to their economic emancipation, is the politicisation of capital. The Afrikaner nationalists used capital, through a racialised worldview, to enrich a small white minority through exploitation. This produced a skewed system on the back of a now acknowledged crime against humanity. The Professor is proposing we repeat the mistake, this time in favour of a small black minority. No thank you, Professor. We want real liberation for all South Africans.

There is a better alternative. It is an alternative where white education, white excellence and white business acumen is seen for what it actually is – a South african asset in the form of capability, proficiency and competitiveness that can be harnessed for all. Many whites understand this and have welcomed the chance to build the country and an inclusive future. If black affluence and equality is what the Professor wants, it's partnership that he needs not repression.

I'm afraid the Professor's love affair with the state has created a blind-spot in his judgement. Rather than nationalise the banks and the mines, he should be advocating that the gentleman and gentlewoman of the Black Business Council (BCC), and those of the Black Management Forum (BMF) , and even those of the Progressive Professionals Forum (PPF), get a room with the old guard from the Afrikaanse Handelsinstituut and the like, and have a conversation about partnering for co-creation. Their collective entrepreneurial offspring will be formidable. If they do not, these elites will be misleading the nation, and what the Professor called an "economic war" among the elite, might spill over into a real one, the devastation of which will take lifetimes to undo.

South Africans want peace and prosperity, not war and deeper poverty. As a nation, we could be a Singaporean success-story in Africa. We are not Singapore with its small population and proximity to Asia, but we already have small "Singapores" within our borders in the form of Gauteng, the Western Cape and KwaZulu Natal, with proximity to growing African markets. Our future, if it is to be a prosperous and equal one, lies in unleashing the ingenuity of all our people, not in eating out of the heavy hand of the state.