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Eugene King
 
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EFF economic policies are superior to all others

09 April 2014, 13:06

In the not so distant past, I wrote a piece titled “South Africa and Socialism: a native’s nostalgia”. At the end of that piece I promised I would write a follow up, in which I will argue why I thought Socialism is the best economic option for our country today.

Back then I had envisioned writing a more nuanced piece with a bit more details, but I have since decided to write the simplest argument I can make, which is very narrow in approach.  

In my discussions with various people on the issue of economics, there are times where we simply miss each other because of basic misunderstanding of the concept under discussion. I am not an expert in economics; however I have a basic understanding of it.

For example, a person that is deeply indoctrinated in the neo-liberal economic outlook will easily call a person with a Marxist/Socialist economic outlook ‘economically illiterate’. The issue at play in this situation is not really economic literacy or the lack thereof, but simply a collision of two contradictory worldviews or economic outlooks.

It is also appropriate to note from the onsets that both neo-liberalism and Socialism are concepts that were firmly constructed in academia, therefore a person holding one over the other has little to do with their level of intelligence, but has everything to do with their basic understanding of their context and how it relates to the world around them.  

I find it appropriate to start this piece by firstly defining some terms, so that we can have some working definitions of the terms being used here. The words under scrutiny will be economy, economics, and economic system/framework.

Economy – An economy consists of the production, distribution or trade, and consumption of limited goods and services by different agents in a given geographic location.

Economics – Economics is the social science that studies the behaviour of individuals, groups, and organizations (i.e. economic agents), when they manage or use scarce resources, which have alternate uses, to achieve desired ends.

Economic System – An economic system is the system of producing and distributing goods and services and allocating resources in a society.

There are so many things one can talk about when it comes to EFF’s economic policies, from land, all the way to nationalisation, but I choose to make this simple, and simply focus on just this aspect; People before or ahead of Business/Profits.

Ultimately, the main difference between Socialism and Capitalism is that, that is the point of departure. In Capitalism, business is the most important player in the economy, whereas in Socialism people are the most important players in the economy.

All main political parties in this country promote Capitalism. They may differ on many superficial things here and there, but the overarching ideology is that Business is boss. They all work from the proposition that in order for the economy to grow effectively, it has to be built from the top down. Big business has to maximise profit, which will eventually ‘trickle down’.

EFF, armed with its Marxist economic framework, works from the simple logic that anything that is built to be firm and sustainable, has to be built from the bottom up. In other words, people are actually the most important players in an economy. Business is ultimately dependant on the people for its sustenance and growth.

All the political parties talk about ‘stimulating the economy’, to create jobs, and all of them employ the top down approach. There is very little talk about ‘the people’, but business. The people are an afterthought in which after ‘business’ is well fed, the people will supposedly benefit from the ‘trickle down’ effect. This is a very flawed way of thinking, and it is no surprise that it hasn’t worked for us in the past 20 years. 

Let us go back to the definition of economy, and imagine those three pillars of the economy (i.e. Production, Distribution and Consumption) as a tricycle. In this analogy, we will argue that Consumption (i.e. people on the ground) is in fact the very front wheel of this tricycle. A tricycle will not move (as it should) unless one starts pushing peddles on the front wheel.

Let me explain why this analogy is appropriate.      

Ordinary people are consumers of good and services. In other words, all goods and services which are produced at the top are, in the final analyses, produced for consumption by ordinary people on the ground. Therefore the level of production at the top is ultimately determined by the level of demand at the bottom. Production houses will not waste time producing goods and services that are not in demand at the bottom.

Even if, for argument sake, people on the ground where in need of these goods and services, it would still be a useless exercise if they are not in a position to afford those goods and services.

Basically, this is the point of departure between EFF and all other parties.

EFF believes that in order for us to meaningfully grow an inclusive economy, we have to do so by primarily, and of first importance, developing our productive forces (i.e. ordinary people). This can only be done by opening doors of access to recourses needed for this development. This includes among others, access to land (for residential, industrial, and agrarian development), basic living wages, and a collective ownership of the means of production.

It is important, and to all our advantage, for our people to receive basic living wages, for example. When people have basic wages, it means that they can afford more basic goods and services. By doing so, we are increasing our aggregate demand. This means that even more goods and services will need to be produced to meet the increasing demand. The knock on effect will lead to the creation of a lot more other jobs.

By investing in the development of our productive forces, and increasing our aggregate demand, we start rolling the wheels of our economy, by triggering both the production/manufacturing sector and the distribution sector.

This makes a whole lot more sense than what the other parties are telling me. Investing in the development of human beings is not bad for the economy; it is actually a good thing for all parties involved, including business itself.

The EFF’s bottom up approach to our economic development makes much more sense, and it is, in my view, the most practical and achievable plan to deal with our stagnating economy, rising levels of poverty, unemployment, underemployment and iniquities.

Obviously, this picture cannot be looked at in isolation. In our policy manifesto, we also call for nationalisation of our natural resources for local beneficiation, and a heavy re-investment in developing protected industries in our economy. But this is a story for another day.

Follow Eugene on twitter @geno_brown

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