A SOCIALLY JUST ECONOMY NEEDS TO BE ANCHORED IN SOCIAL COHESION

by Joanmariae Fubbs
MSc in Public Policy and Management, 2012 (University of London), Postgraduate Diploma in Economic Principles, 2000 (University of London), MSc Development and Planning, 1993 (University of the Witwatersrand), BA Hons degree in Clinical Psychology, 1990 (UNISA), BA Political Science and Psychology 1980 (UNISA)

OCCASIONAL PAPER
4/2020

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Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or those of their respective Board or Council members or Members.

ABSTRACT

In the midst of growing inequality, poverty, and unemployment South Africans were hit by the Covid-19 pandemic which exacerbated the socio-economic decline. To make matters even worse, corrupt officials played havoc with the Covid-19 funding, with no thought for the impact it would have on the vulnerable and the economy broadly. So, what can be done to arrest this erosion of the objectives of a better life for all, and a prosperous society with an inclusive economy? What measures can we employ to significantly reduce and then eliminate poverty? Surely, there is a need to adopt realistic targets and implementable policies that can be monitored and measured to track outputs and outcomes. Statistics South Africa (Stats SA) enjoys an enviable reputation. The statistical tables, graphs and figures it produces are backed by current research and are readily available. One of the issues that Stats SA has identified as highly relevant to the current stagnant economy is the deficit in trust. No amount of money can establish trust. However, this paper attempts to show that through the establishment and pursuit of social cohesion by all spheres of government, departments and entities, business and corporates, trust can be re-established. Poverty and inequality can then be confronted with a multi-dimensional approach but from a strong social cohesion base backed by a social compact.

The struggle for economic, social, and political freedom has reached a defining moment in South Africa. Many South Africans fought for this and established a constitutional people’s democracy which encompassed the conception of democratic socialism within a mixed economy. Today, we live not only in a Covid-19 environment, but worse, in a contaminated moral environment. Nevertheless, the struggle for socio-economic and political freedom pursued by the African National Congress (ANC) is enshrined in the Constitution and should continue to drive transformation.

The 2008-2009 financial crisis emphasised that unregulated markets are unsustainable, and that the intervention of the State is essential for the well-being of the population and the long-term eradication of poverty, according to Edigheji (2010:1). This view is echoed by Ben Fine (2010:171) who in contrasting the “political school” with “economic school” raises the danger of the latter’s pre-occupation with exclusively correct economic policies.

Income inequality has been rising as evidenced by 2011 and 2014 statistics (Statistics South Africa, 2011; 2014). Unfortunately, the growing tendency and subsequent trend to resolve unemployment, service delivery, strategic skills development, poverty, poor educational outcomes, and deteriorating health of people in low-income groups focused largely on using purely economic measures. Former Statistician General Dr Pali Lehohla, in the Indlulamithi 2020 Scenarios this year, responding to this approach re-emphasised those issues related to unemployment, poverty and inequality, and low growth are complex and best resolved socio-politically, not purely economically. To “build back better” we need to examine the superiority of the “multi-dimensional poverty lens”, after which we should be more specific with our solutions, by developing “believable employment” figures and lower poverty and inequality rates (Lehohla, 2020).

THE ANC IDEOLOGICAL PROGRAMME

The ANC deems itself a force of national liberation in the post-apartheid era; it officially defines its agenda as the National Democratic Revolution. The ANC is a member of Socialist International. In 2004, the ANC declared itself to be a social and national democratic party.

Socialism theory had its genesis in Europe in the revolutionary theories of Karl Marx (1818-1883), the evolutionary theories of Eduard Bernstein (1850-1932), and in Africa, socialism was interpreted by the philosophical theories of Kwame Nkrumah (1909-1972). Nkrumah’s (1970) theory of consciencism draws together strands from the three main traditions that make up the African conscience: Euro-Christian, Islamic, and African. Nkrumah characterises traditional African society as essentially egalitarian, arguing that a new African philosophy must draw its nourishment chiefly from African roots. Supporters of the idea of a more just society were given the umbrella term socialists and included social democrats and democratic socialists.

Peter Lamb, in his book Socialism: Key Concepts in Political Theory (2019), identifies the key ideas and principles of socialism and explores different (often conflicting) interpretations that have appeared in Europe, Asia, Africa and the Americas, from the early nineteenth century until today.

Social democracy is a political, social, and economic philosophy within socialism that supports social, political, and economic democracy. Many countries, from Sweden to Ghana and New Zealand, consider themselves as enjoying a social democratic form of governance, and consequently there are just as many definitions. The instruments used in a social democratic government include ensuring strong workers representation, support for trade unions and parliamentary processes all aimed at achieving a better society.

Democratic socialism evolved to include both reformist and revolutionary forms of socialism arising from the pursuit of reform measures and those that evolved from revolutionary measures. Today, the ANC, which is pursuing the National Democratic Revolution, is arguably advancing modern day social and national democratic values.

A strong thread links the 1943 African Claims, 1955 Freedom Charter, 1969 seminal Morogoro Conference, 1979 Green Book, and the National Development Plan first drafted in 2012, and with its workshopped 2030 vision of “unfolding learning” knowing that social cohesion is anchored in our strategies to provide services to the people. It seeks to refocus South Africans on what they have in common rather than their differences.

Furthermore, South Africa should, as Joel Netshitenzhe put it, “join the progressive humanity in fashioning a more equitable world order from the ruins of the Covid-19 pandemic” (2019). Social democracy has been in “terminal decline in the last decade”, reflected in the lack of voter support for social democratic parties in Europe (Servaas, 2020). However, since the 2008-2009 financial crisis, socialism has made a dramatic comeback in the 21st century. With rising inequality and social decay, socialism is becoming more relevant as people become disillusioned by the lack of ethical good governance and hope of a better life. The Covid-19 pandemic has simply underlined the challenges of inequality, social and economic justice, and poverty. In South Africa, the land issue is directly linked to socio-economic justice and poverty.

As Nyerere said: “To us in Africa land was always recognised as belonging to the community” (Lamola, 2018). The land question can therefore be understood as a socio-economic issue. The “forced seizure of land led to the disintegration of the African social and economic fabric” (Lamola, 2018:8). The land question is historically linked to the basic principles of socio-economic justice which can be traced back to the Land Act of 1913, which legally disposed the indigenous population of their land. The Freedom Charter also states that those who work the land should share it. Land was the fundamental source of income for black Africans who were dispossessed without compensation.

ESTABLISHING AN INCLUSIVE SOUTH AFRICAN ECONOMY

The establishment of an inclusive economy demands that we first address the many inequalities that are becoming more pervasive every year, whether it is income disparities, gender anomalies or the accumulation of wealth through unproductive means. In the last decade, a young economist, Thomas Piketty, shot to prominence because he tackled the growing inequality, in his book Capital in the Twenty-First Century (2013). His studies went back two centuries and showed that the rate of return on inherited wealth will always grow faster than the income one earns through one’s compensated labour.

However, in his following book – Capital and Ideology – Piketty roots inequality in ideology (2019). He argues convincingly that societies justify this through their political-ideological environment, which shows that inequality is not a natural phenomenon and can be reshaped when confronted effectively through socio-political mobilisation. When one examines the modern legacies of colonialism and slavery, whether in Brazil, South Africa, or China, it becomes clearer that inequality can be transformed if the legal, fiscal and education spheres are confronted effectively. This is the intention of the national democratic struggle as South Africa pursues the establishment of a society in which social, economic, and educational justice prevail.

The Constitution provides a solid foundation from which to launch the fight against inequality. The crisis generated by the devastating effects of Covid-19 offers South Africa the opportunity to use more focused strategies to overcome the growing inequality in the country and to track its impact. This is achievable first through the deployment of regular robust oversight institutions from the legislature, civil society, and the executive, and second, by the identification and use of appropriate technical tools that shine light on the multifaceted nature of poverty and the development phenomena.  

BALANCING SATE POWER WITH PEOPLE’S RIGHTS

Rights and responsibilities are balanced in a social democracy; therefore, the citizens can expect the government to do things for them like providing protection, health services, education, and housing. Citizens also have responsibilities like obeying the law and paying taxes to the state. The rights of the majority in a social democracy are also balanced with the protection of minorities, for example those of the Khoisan community. Thus, social democracy is about achieving a greater balance in society, which arguably South Africa’s system of representative and participatory democracy provides.

However, neither the Constitution nor legislation can protect South Africans from corruption, only a paradigm shift in the mindsets of all the people can predispose us to an environment in which integrity, a commitment to serve the people and ethical good governance can create such an enabling environment. Former Statistician General Dr Pali Lehola called this “the eye of the needle” approach, referring to the ANC document which focusses on the disciplined and selfless character of the kind of cadre required to lead. More than 50 years ago, when the balance of forces had shifted against the forces of change and the ANC and other progressive movements were being assailed on all fronts, the Morogoro Conference took place.

Three key themes characterised this seminal conference: first, the methodology to be used in assessing and managing the balance of forces in a given conjuncture. The conference took place during the international context of transition to a socialist system following the breakdown of the colonial system, as a result of national liberation and socialist revolutions. The ANC leadership at the conference acknowledged this and realised that their first strategic objective then was to change the methodology in assessing the balance of forces during a given conjuncture.

The second strategic objective required the contextualisation of these global changes so that the complex challenges that faced the “people’s government” could be addressed. The leadership during the Morogoro Conference appreciated the urgency demanded to meet the economic needs of the oppressed people, which could only be done if all basic resources were “at the disposal of the people” as a whole and not manipulated by sections or individuals, black or white.

The third theme and strategic objective revolved around the national question which Joel Netshitenzhe quotes from the document: “The main content of the present stage of the South African revolution is the national liberation of the largest and most oppressed group – the African people. This struggle must govern every aspect of the conduct of our struggle.” As the document points out, if “properly channelled and properly led”, this would not be in conflict with the principles of internationalism but rather become the foundation for a lasting and more meaningful cooperation that would be self-imposed (Netshitenzhe, 2019).

This recognition of a stronger social content had first been raised in the 1943 African Claims and again in the 1955 Freedom Charter. Together with the Morogoro Conference, these documents reinforce the organic social and national democratic character of the ANC. The current inequality arising from distortions in the socio-economic environment that continue to plague South Africa is at the root of unemployment, poverty, and distorted spatial patterns, which threaten to destroy the soul of South Africa. South Africans and people all over the world no longer trust their governments. So, what can be done to overcome this disillusionment?

Early this year, in February, Minister Nathi Mthehwa reiterated that “social cohesion can never be separated from economic justice”. To achieve this, Minister Mthethwa believes that a social compact between business, government, labour, and civil society, who agree to “work together to bring about future change”, needs to be put in place (Polity, 2020).

DEVELOPMENT NEEDS SOCIAL COHESION

In the last ten years or so there has been growing recognition globally and in South Africa that social cohesion in communities, and regions, can rebuild people’s trust in their political leaders. Social cohesion draws upon a broad body of studies and research across the social sciences and is leading to a more effective understanding of “its effects on the economic life” (Ritzen, Easterly & Woolcock, 2000). “Social cohesion” according to them is central to development as it relates “to an inclusive civil society and responsive political institutions” (Ritzen, Easterly & Woolcock, 2000).

So how do we define social cohesion? Having read a number of studies on this subject, I believe it relates to the cooperation in a neighbourhood, community, city, and even a geographical area as large as a country. Defining social cohesion, Prof Klaus Boehnke, who has undertaken research across continents including Africa, Asia, America, and Europe, stated that the “commonality of values remains at its definitional core” (2018). As Minister of Arts and Culture Nathi Mthethwa stated in his briefing to the media prior to the Social Cohesion Compact Convention early this year, if it does not “seek to bridge the past divisions and simultaneously deal with the whole question of improving material conditions of the previously marginalised communities … it cannot succeed” (Polity, 2020).

University of Cape Town’s Poverty and Inequality Initiative (PII) also identified social cohesion as a significant factor in poverty and inequality and concluded that it is an important policy goal for South Africa. The research argues that without finer definition and measurement it would, however, be to formulate polices that could promote cohesion. An overview of the current environment in South Africa exposes the high incidence of not only poverty and inequality but also violence, gender conflicts and mistrust. These are all factors that influence social cohesion and inclusive development. Alongside other academics the PII project recognises that social cohesion is “multi-faceted” and therefore requires a multidisciplinary approach which includes history, economics, political science, sociology, law, and psychology (UCT, 2018).

Through the establishment of an active network of researchers and practitioners whose work speaks to the issue of social cohesion in South Africa, the project aims to engage effectively with policymakers in achieving the vision of the National Development Plan 2030. This research project also recognises the relationship between social cohesion and economic inequality and asks, what kinds of institutional change does South Africa need to promote social cohesion and reduce inequality? It also raises the growing intergenerational divide.

Isaac Khambule and Babalwa Siswana, both of the Human Sciences Research Council, argued in a paper on how inequalities are undermining social cohesion in South Africa (2019). The “triple socio-economic challenges of poverty, unemployment and inequality” have been compounded by the high unemployment rate of more than 27 percent, with a youth unemployment rate of more than 50 percent. This has undermined the campaign promise of a “better life for all” and widened the gap between rich and poor (Statistics South Africa, 2014; International Labour Organisation, 2014). This in turn has impeded the country’s aspirations to eliminate poverty through doubling the GDP as noted in the 2030 National Development Plan.

Statistics continue to reflect the widening gap between wage disparities, which impacts directly on inequality, along racial lines. According to research done by Uslaner, as quoted by Khambule and Siswana, social cohesion is undermined “because of the racial socio-economic disparities and … the fight for resources with foreign nationals” (2019). Inequalities are not unique to South Africa but are reflected in countries such as Brazil, also identified by Piketty. The South African situation is different by virtue of its high inequality in comparison to other countries. This toxic relationship between inequalities and social cohesion is reflected by the measure of “trust by Statistics SA showing that only 34 percent of South Africans trust” local governments.

According to the World Bank in its 2019 Overview of South Africa, it projected a growth of 1.3 percent and accelerating to 1.7 percent in 2020, but that was before the full impact of Covid-19. Unfortunately, progress towards poverty reduction has “slowed”, which is put down to structural challenges and the weak growth since the global financial crisis of 2008. However, there is also a reference to the strategic skills deficit and the reality that South Africa with its dual economy continues to have one of the highest inequality rates in the world, with the Gini coefficient standing at 0.63 in 2015.

Again, there is the gap between the top 10 percent of the population, which holds 71 percent of the net wealth, and the bottom 60 per cent holding only 7 percent of the net wealth.

The World Bank also confirms that a further negative social cohesion factor, namely intergenerational mobility, continues to pass down its inequality from generation to generation (2019). Again, Ritzen, Easterly and Woolcock of the Development Unit of the World Bank in Paris 2020 refer to the four dimensions of social exclusion: firstly, the economic dimension which it linked to poverty. Secondly, the social dimension, where in some societies, unemployment deprives one of not only income but also of status.

Exclusion, according to Ritzen, Easterley and Woolcock, also has a political dimension. This third dimension directly affects “women, ethnic, racial, and religious groups, especially minorities, who find access to their rights being limited”, or impeded in some countries. The fourth dimension, in which South Africa led the way with its identification of “non-sustainable modes of development”, is reflected in the Constitution and the Bill of Rights, where First degree and Second-degree human rights are expressly acknowledged. It is also recognised that unsustainable modes of development “compromises the survival of future generations” and it is this that leads to generations living in poverty, because of their exclusion from the benefits of valid and robust development.

CONCLUSION

In times of significant transition and in the face of harsh global economic challenges, social cohesion in a social and democratic society will create space for the government to manoeuvre. Given that South Africa is pursuing a national social democratic path, there is hope that this trajectory of inequality can be changed, but only if we can re-establish trust in our institutions and political leaders.

South Africa has a National Development Plan which already identifies the need to address the manifestations of inequality and poverty by anchoring its strategies in social cohesion. People are planet Earth’s custodians and as the NDP has emphasised, social cohesion should anchor the country’s strategies to overcome the increasing poverty, deprivation, and to reduce inequality.

The stagnant economy and persistent energy challenges existed before the advent of Covid-19, so a socially just economy with tangible prospects for a better life for even the most vulnerable should be the focus. Strategies that simply offer scenarios that existed pre-Covid-19 are not a potential solution. Instead, a stagnant and socially unjust economy needs a fresh approach that will generate an inclusive economy.

Focusing on social cohesion offers a realistic and fresh approach to re-establishing trust upon which to generate implementable policies.

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This report has been published by the Inclusive Society Institute.

The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions separately from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy.

The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development, and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values.

Whilst the institute undertakes research through the lens of social and national democratic values and principles, it is pragmatic, not dogmatic, in its approach.

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