An interesting article by Redge Nkosi appeared in the business report section of the Cape Times of 18 November 2013, titled, ‘Failed neo-liberalism sees South Africa sleepwalking into a revolution’
After the political miracle of 1994, the country was lauded by London, Washington and their influential financial institutions as vindication of the success of the International Monetary Fund (IMF) backed economic policies enshrined in the ‘non-negotiable’ Gear (Growth, Employment and Redistribution) Programme. It was hoped that the growth in Gross Domestic Product would be to the benefit of all citizens by reducing unemployment, poverty and inequality. The question? Who benefited from this growth?
According to the author, financial services grew by about 8%, while the rest of the economy ambled along at a rate of around 3%. Of the Brics countries, South Africa was the worst affected by the global financial crisis of 2008, which laid bare the structure of the economy and the pile of sand upon which it is built, - a highly financialised and rentier economy. Local economists continue to lay the blame at the door of restrictive labour protectionist legislation to the exclusion of all else. The author goes on to lament the lack of evidential improvement in the economy, and asks why we should continue to support these policies. He cites the 20 year National Development Plan, (NDP) as based on the same failed policies, backed by the same Bretton Woods institutions. The nation has been shackled to this faith based ideological hubris, neo-liberalism. He states that it may be intellectually discomforting to those in power to accept they have failed the nation by blindly adopting this economic model. How can the whole nation allow its key policies to be subtly dictated or defined by foreign institutions and governments and their domestic cheerleaders whose interests are at variance with the nation’s he asks.
He calls for reforming our monetary and banking system as a priority. Growth in South Africa is growth in economic rent and in private and sovereign indebtedness. Agree wholeheartedly with that statement. Another brilliant point he makes is suggesting that we review the manner in which we embrace and manage globalization. We should assess what policy/ies are to our benefit and if it will serve our interests, rather than blind acceptance of any resolution that emanates from the IMF, World Bank, and United Nations et al as we do currently. He mentions that pragmatic leadership in Malaysia defied the IMF and successfully imposed capital controls during the Asian crises. The IMF later did a U-turn and supported Malaysia.
According to another website source, in 1993 the IMF granted South Africa a $750 million loan on condition they adopted neo-liberal economic policies. So we sold out?
The choice surely is just not between adopting socialism or the imperialist policies dictated by the West. Time to forge a third way that is in our own economic interests and welfare, that requires some lateral thinking, not the mindless application of policies that don’t, and won’t work for us.
In ending, an appropriate comment by a leading British economist. “The power to issue its own money, to make drafts on its own central Bank, is the main thing that defines national independence. If a country gives up or loses this power, it acquires the status of a local authority, or a colony”. Wynne Godley, 1992.
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