02/03/2017 05:03 SAST | Updated 02/03/2017 06:12 SAST

Pravin Gordhan's Budget Was So Radical, Nobody Even Noticed

South Africa, two decades of neoliberal orthodoxy have failed to create a more equal society or even to sustain growth at a satisfactory rate.

Sumaya Hisham / Reuters

What if you made history and nobody noticed?

Pravin Gordhan presented a budget that surveyed the destructive turbulence of the reigning economic paradigm and charted a path forward. The speech was, at the same time, a sharp rebuke of the president, and to anyone who would use the mantle of 'radical economic transformation' as cover for malfeasance. "The 2008 financial crisis and its aftermath," Gordhan announced, "exposed deep fault-lines in the world economy and in the distribution of income." Note the verb, 'exposed', not created.

Far from being an effect of the crisis, global and national inequality was in fact a condition of the crisis, most famously in the collateralisation of sub-prime housing debt in the United States. "Economic recovery has been slow. In several countries affected by unrest or war, there has been great hardship and dislocation of people. The impact of trends in trade, technology and commodity markets has been uneven. These forces have heightened social and political pressures for change. Global strains manifest in various ways, including the rise of strident economic nationalism and protectionist policies."

Look around, the world is a mess. But the upheaval follows a logic. Globalisation has made the world's poorest less poor, and the global elite even richer, but it has also hurt the workers of the richer nations, who demand change. Donald Trump's xenophobic, anti-trade campaign, Brexit's promise to kick out the migrants and reserve British jobs and social services for British people, are no accident.

In South Africa, two decades of neoliberal orthodoxy have failed to create a more equal society or even to sustain growth at a satisfactory rate. Channelling Piketty, Gordhan reminds us that growth and equity are structurally linked: "We need to transform in order to grow, we need to grow in order to transform. Without transformation, growth will reinforce inequality; without growth, transformation will be distorted by patronage."

Our underperforming economy is not simply the consequence of poor governance, but poor governance is also to blame. At a fraught political moment, Gordhan explodes this rhetorical binary: we need accountability, transparency and inclusivity. These ideas are not original to Gordhan. That they are becoming a sort of received wisdom, is one reason the speech is a historic, if tentative, notice of a shifting paradigm. The other reason is that the shift was pronounced on behalf of Treasury, the department of state tasked with upholding the financial integrity of the Republic.

A transition is not a revolution, and Gordhan warns that inclusive growth depends on the accountability of our institutions. "Let me say clearly and emphatically; sound public finances, the health of our financial institutions, investment-grade credit ratings and our competitive public procurement processes are valued elements in the sustainability and integrity of our transformation path." Gordhan's radical act was to expand the scope of enquiry, to look at the processes by which the world entered its present turmoil, in order to diagnose the problem and present a holistic solution.

Yes, we need to create jobs, but policy should also account for 'considerations of justice' and track the real lives of ordinary people.

Historical inquiry is dangerous because it risks breaking the spell, revealing neoliberal truisms as narrowly located contingencies, or approximations, or convenient fictions. It was for a while fashionable to mock the use of 'neoliberal' as an adjective. I'm not entirely sure why. Yes, the term is thrown around a little loosely, but why wouldn't it be when it explains so much? It is profoundly theorised, precise and has very broad applicability. As a definition, neoliberalism is not simply an analytical term, but a historical-analytical term, an account of changes over time and a ledger of the successes and failures of these changes.

How are these changes to be measured? In a valuable and timely column, Eusebius McKaiser exhorts left-leaning economists to be more vocal about the effects of right-wing (seemingly, libertarian and orthodox neoliberal) economic policies on ordinary people. Yes, we need to create jobs, but policy should also account for 'considerations of justice' and track the real lives of ordinary people. It is a testament to orthodoxy's sway that even sympathetic commentators see the legitimate role of leftish economic critique to be a kind of moderating influence, a balancing of means to ends, rather than debunking those means.

But being on the left isn't a question of injecting sentimentality into rational analysis, and besides it is not just the left who voice concern for the suffering of the impoverished. If it is in fact the case, that a minimum wage, and labour protection, and social grants and progressive income taxes suppress growth, reduce the wealth of a nation, cause job losses and ultimately hurt the poor, and that it is necessary to tolerate significant inequality in order to lift millions out of grinding poverty, then the advocate of laissez-faire can also argue persuasively that she is proposing the most socially just of all possible policies.

The best rejoinder to those claims is not to insist that permitting poverty wages or cutting grants causes suffering, though it does, but to demonstrate that those claims are incorrect.

Of course, one needs to be allowed to make that case, and the relegation of arguments about means to economic ends to the realm of soft-headed moral hand-wringing has more to do with the power of those for whom it is convenient, and is only very partially a failure of the left. But still, the South African left-leaning commentariat has failed, due in part perhaps to hopelessness, and partly because much of what is characterised as leftist discourse is little concerned with the economic realm. (Though to be fair, labelling charitable and empathetic neoliberals as 'the left' is not the left's fault.)

Communities resisting eviction or demanding basic services will likely achieve more by taking to the streets than writing letters to Business Day citing the latest World Bank findings. And the EFF are proving the value of mobilising first and theorising second. But these are not voices that are allowed to weigh in on policy, and won't be until they force themselves into the centre. If the mobilisation of the working class for a more egalitarian future alarms you, consider the alternative. Surveying the ruins of a heretofore apparently robust global economy, Pravin Gordhan charted a more inclusive, hopeful South Africa.

If you wish to save capitalism, you ought to fight for its reform before we enter a future that is darker than any of us dreamed of.

Contrast Donald Trump's inauguration speech:

"We've made other countries rich while the wealth, strength, and confidence of our country has disappeared over the horizon. One by one, the factories shuttered and left our shores, with not even a thought about the millions upon millions of American workers left behind. The wealth of our middle class has been ripped from their homes and then redistributed across the entire world."

This is no mere lie, it is the opposite of the truth. Over decades the US imposed on the world a financial system in its image, and the effect was an unprecedented accumulation and concentration of wealth amongst American elites, such as Donald Trump. The American middle class have a right to feel aggrieved, but Trump's phony diagnosis entails a dangerous remedy.

South Africa is never not in crisis, but the relative stability of our skewed economy, and of the global system in which it participates, have permitted the illusion that the acts of despair, and violence, and rage, and resistance that occasionally irrupt into our suburban media are anomalies rather than evidence of our fundamental condition.

Some other day I will try to persuade you that only socialism can save us. For now, I will say only that if you wish to save capitalism, you ought to fight for its reform before we enter a future that is darker than any of us dreamed of.