Hinting at change

2010-02-23 00:00

LAST week, the Minister of Finance, Pravin Gordhan, presented his maiden budget speech with much aplomb. He exuded confidence and peppered his speech with wit and humour. While the liberal press celebrated the fact that Gordhan kept the inflation targeting mandate of the Reserve Bank untouched, parts of the speech are worth revisiting because they suggest that there may be a shift in economic policy gradually taking place.

In politics, it is not just the dramatic change that must be watched closely, but also the small and seemingly inconsequential steps towards a new policy discourse. When listening to master wordsmiths like Gordhan, we should open ourselves to the possibility that innocent words are pregnant with meaning beyond the obvious.

I think the liberal press and orthodox economists may have wrongly conditioned their minds to scan the speech for “danger” phrases such as “jettison inflation targeting” and “nationalisation”. Not finding these phrases, these economists and journalists surmised that no shift had happened. While correct in saying that there is more continuity than change in the budget speech, the Congress of South African Trade Unions (Cosatu­) also missed the subtle changes, changes it campaigned for. In a way, both sides underestimated Gordhan’s ability to begin a shift in the discourse on economic policy in a non-dramatic fashion.

Neither group has prepared its mind for inconspicuous policy shifts. These are changes to economic policy that are made all the more inevitable by lessons being learnt from big economies that we emulate as they come out of the economic crisis. The message coming from major centres of the global economy is that macro-economic frameworks that, until recently were sacrosanct, are subject to review and change. It would be unwise for South Africa to buck the trend and stay the course of jobless growth. This would not only pose long-term risks to the economy, but would also render Polokwane a non-event.

Three ideas indicate the shift I see. Having committed the government to building on the solid foundations laid by the Nelson Mandela and Thabo Mbeki governments, Gordhan said: “We will also have the courage and humility to do things differently.” This could mean a new balance of forces in the trilateral engagement with business and civil society, one that may favour civil society more than in the past. The approach to engagement with social partners may open the policy space for partners to improve their influence in the constructivists’ sense. The idea that the creation of the developmental state goes beyond what the state has control over, namely public policy and action, but encompasses the shaping of a new national identity and responsible citizenship, also creates space for civil society to influence public policy outcomes better.

The second idea is that a new growth path is being forged, “a path in which equality and narrow self-interest give way to a longer-term, inclusive and broad-based development path”. Gordhan made a telling choice of words when he said that the common purpose established in the nineties laid the foundations he builds upon, but this now faces the challenge of disagreement on the “way forward”. This suggests that the new path will seek to reconcile the differing perspectives of interest groups that are bickering over what should happen to the economic policy that has produced waves of jobless growth and a few affluent tenderpreneurs in the sea of poverty.

The third element to scrutinise carefully is the idea that the Reserve Bank should not ignore broader economic and social questions when deciding on lending rates and monetary policy statements. It would be false to say that simply because inflation targeting was not jettisoned, the Reserve Bank has exactly the same mandate as it did under Tito Mboweni­. It seems to me that the Reserve Bank has been drawn into the complex task of using the instruments at its disposal to curb unemployment and poverty, its first move towards a developmental role. It may become necessary for the bank to bring social and political analysis into the body of evidence it bases its decisions on.

The closing statements reflecting on Amartya Sen’s The Idea of Justice also signal change. Gordhan­ took an interest in Sen’s challenge to economists and authorities­ to look beyond figures and ratios, and focus on lived experiences of people, when making their determinations about how to cause development to happen. By seeing the budget as a quest for social justice measured in improved conditions for all, Gordhan prepares us for more details on the new growth path that he is likely to present during his next budget speech, which will effectively be his first budget. He has already indicated that this year’s budget was prepared several months ago and so next year’s will be “markedly different”.

Gordhan has attempted to infuse humanist ideas into what is usually a terrain for economists fascinated with macroeconomic indicators, ratios and statistics. If Gordhan succeeds, he may disappoint ideologues on both sides of the ideological divide, but set us on a path in which the needs of the ordinary citizens and the poor predominate. Time will tell whether Gordhan will have the stamina and tenacity to navigate the arduous space between the right and the left extremes in our ideological battlefields.

• Siphamandla Zondi is the executive director of the Institute for Global Dialogue, but writes in his personal capacity.

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