Nationalisation should be discussed together with inequality

I recently attended a conference on ownership, inequality and class (first week of August 2011). What a fantastic idea to combine these themes. All of a sudden the attention is shifted away from ownership (alone) and directed to more fundamental questions. The attention shifts to outcomes, that is, the issue of the critical economic and social outcomes from ownership arrangements and changes. The conference was co-ordinated logistically and otherwise by SPII but was also initiated by government (its Economic Development Department) and the Frederick Ebert Stifting.

This conference firstly took stock of the need for ownership changes per se. Ownership change is an important imperative in our society. A social consensus is in place that in areas such as land and in the corporate world – “the commanding heights of the economy” – meaningful changes in ownership patterns are reqiured. The RDP policy document of 1994 argued that a central objective was to "deracialise business ownership and control completely". The telling verdict, however, is that, both in terms of BEE and in terms of significantly increasing the level of black ownership of land, there has been astonishing lack of progress.

Secondly, the conference called for ownership changes to be leveraged to accelerate greater inclusiveness in the economy. It asked: how can we rearrange patterns of ownership in a manner that contributes (a) in substantial ways to reducing inequality and socio-economic exclusion and (b) that ensures sustained or increased economic vibrancy?

The conference looked at the overall economy and at key areas. It diagnosed broad-based BEE, examined state-owned enterprises, probed co-operative ownership, reviewed land and agriculture and asked searching questions about banks and other financial institutions. Zooming in to household and the community-based levels, the indaba also reviewed transfers such as RDP houses and ownership formation through SMMEs.

It noted that in all cases, regardless of who owns, more incisive strategies are needed in terms of sharing benefits as well change in business and operating practices, both with the aim of addressing the rampant inequality in our society.

Clearly ownership changes can be a major lever for bringing new social segments as players into the economy – the conference favoured a broader base of ownership. But ownership change on its own is insufficient. In many cases, sectoral practices and issues such as access to markets, competitive practices, supplier policies as well as cost of finance needed to be addressed. Ownership change often also needs to be accompanied by a reengineering of the upstream and downstream factors that impose a constraining or liberating effect on economic functioning.

At another level, economic restructuring was required, delegates agreed, and the state needed to play a role to encourage investment in key sectors, to incentivise labour based practices, to address spatial and gender issues, and to facilitate access to global markets. At community-based level, strategies were needed to ensure that relevant capabilities and empowerment were present to allow benefiting households to use their new assets in dynamic ways and thereby to improve their economic position.

Much of the debate around nationalisation can be misplaced. This is particularly so to the extent that participants fail to discuss outcomes related to the urgent need for reduction of inequality and for revved-up job creation. The conference has, correctly, sought to link the imperatives of ownership change with the drive to create a stable and sustainable society by driving economic inclusion.

It is hoped the conference organisers will, in greater detail and in a more formal way, release information about the conference in the near future. Such an announcement will also, through the proper channels, indicate the names of all the speakers at this important conference.

Against the backdrop of the conference, the following points can be made:

a) All options/types/models of ownership need to be considered. State ownership is not taboo. Instead of muzzling a proposal for state ownership, time could better be spent debating how state ownership might or would contribute to inequality reduction or economic growth. We could also be usefully grappling with how government, donning the ownership mantle, will do better than current owners to share benefits with immediate communities (and more widely), and to take responsibility for environmental impacts.

b) It should be noted that the private sector (investors) are a hardy bunch and have been known to find ways of doing business under a wider variety of policy circumstances and regimes. The capitalists have remained to do business in situations where severe import controls are applied, have in the old days stayed put despite apartheid constraints and have easily entrenched themselves where states own vital mineral resources. Major capitalist players have even helped communist governments to industrialise their economies. They are not easily fazed. But the following is also true and an important a consideration: capitalist investors dislike uncertainty – it interferes with their adaptive capacity and leads to hesitation and erratic capitalist behaviour that causes problems all around. It is therefore important to clearly set out the way forward on issues such as land and ownership of the mines, regardless of the strategic direction selected.

c) Social and economic inequality requires different strategies at different levels. It underlines the role of the state, foregrounding the need for a developmental state – one with the capacities, knowledge and strategic capabilities to intervene through leadership, regulation, major resource mobilisation, long-term planning, investment in key areas, clear-guided macro-economic policies and other means. As far as households and communities are concerned, ownership can be a life changing benefit; at other times it can, especially in the context of joblessness and lack of income, be a poisoned chalice bringing burdens and costs that further erode quality of life. In this regard, issues of timing and support systems are critical.

d) South Africa needs to urgently accelerate planned and intended redistribution through ownership changes and other means. In areas such as land and agriculture, for example, failure to remove the bottlenecks to more rapid redistribution creates conditions for violent confrontation (in the future). In addition, BEE policies and strategies need to be critically reviewed and re-engineered to ensure more meaningful and sustainable change in the economy as well as greater economic inclusion of black people. Growing inequality is currently the greatest threat to our democracy.

Serageldin: Participation, equity & social cohesion are needed to create a just world

During his visit (21 to 23 July 2011) to South Africa and the Nelson Mandela Foundation to give the 9th Annual Lecture (23 July), Professor Ismail Serageldin addressed a wide range of issues about how society might organise itself to ensure that dignity and justice was more universally shared among people.

His visit came at a time of great uncertainty. At a time when the world is plagued by mis-governance, by concerns about energy and climate, by multi-dip recession as well as by persistently high levels of inequality and poverty. It is a time when many feel the world has lost its way and that new directions are needed to ensure progress towards a better, more sustainable and just world.

To address these, Serageldin favours a return to values. He recommends this not as an anodyne response to the challenges; he adds substance and meaning by referencing values to ‘higher purpose’ and by providing examples of possible strategic shifts. He punts notions such as democracy, justice and fairness as well as respect for diversity. In his application of democracy, he agitates for wide citizen participation; he also calls for majority decisionmaking to be preceded by debate and careful listening to the views and perspectives of minorities. His views on justice lead to trenchant critique of the dominant (free market) economic model. He says fairness in terms of opportunity (equal opportunity, so to speak) is insufficient; attention has to be given to equitable outcomes as well. In valuing diversity, Serageldin notes that all nations are becoming “rainbow nations” and should deal with this reality positively by embracing diversity. He invokes the notion of cosmopolitanism. He waxes nostalgic when he refers to Alexandria in the 19th century when cosmopolitanism reigned supreme and Greeks, Syrians, Italians, French, British, Armenians, Turks and Arabs shared an Egyptian identity.

More in an interview than the lecture, Serageldin applied his views regarding justice to the economy and economic issues. He expressed concern about a situation of too little regulation in a context of monopoly capital. Even though he cautions against overzealous regulation that could stifle entrepreneurialism, he argues that the global economic malaise calls for a restating of the “central” role of the state. In his lecture, he noted that a good social system would balance a system of reward and profits ('equality of opportunity') with one of basic rights (some equality of outcome). Seemingly addressing himself directly to the capitalists, he states that excessive inequality is inefficient and corrosive, and ultimately leads to “class war”.

Serageldin, in the lecture per se, delivered at the Linder Auditorium in Johannesburg, underlined the importance of social cohesion. He cautions, as far as trends go, that in certain cases the pull is as strong in the opposite direction. In this regard, he refers to the splitting up of Czechoslovakia to accommodate the aspirations of Czechs and Slovaks. In his view, social cohesion refers to the interconnectivity between human beings. This may of course be taken further, especially in our situation, where we may gain if the interpretation of social cohesion is closely aligned to social capital. In such an interpretation, the bonds between people are harnessed to maximise strategies and efforts for addressing social problems.

Serageldin ended his lecture on a rousing note, extolling the role of youth in social change. Pointing to the decisive role of youth in the Arab Spring as well as in the use of technology to connect and access information, he lauds youth as a social grouping and looks to it as a key to a positively transformed future. He calls on youth to continue to play a key role in creating a so-called “new country” based on justice and social cohesion.

The professor’s speech has many points of application for South Africa. South Africa is renowned for promoting the rainbow nation idea and for getting diverse groups to accept a shared political settlement, but the society remains fractured along racial and other lines. Much work needs to be done, not just to ensure that a warm fuzzy feeling is sustained, but in terms of getting people to deploy connectivity and joint action on issues that matter. The government, through the Department of Arts and Culture, has prioritised a programme of social cohesion. It has launched a campaign called 'South African @ Heart: Working together to build a Caring Nation'.

Issues of the economy are also pertinent. At present various social forces, including key national organisations of the youth and workers, are calling for fundamental changes in the economic system so that inequality is reduced and for systems & processes that reproduce marginalisation to be dismantled. There are also calls  –  in South Africa and globally  –  for greater accountability in business for excess, for damage to the environment, for factors that perpetuate social exclusion, for corruption and for reckless actions that damage entire economies.

Serageldin’s points about ‘participation’ as a way of deepening democracy also resonate. South Africa has been through a period in which the formal mechanisms of democracy have been prioritised. However, alongside this (necessary) consolidation, we have seen growing evidence of pockets of popular disenchantment that accompanied by feelings of marginalisation and disempowerment. Our society can only move forward if we encourage, nurture and support additional means of civic participation. Indications are South Africa as a country needs to support, endorse and value the existence of vibrant forums, associations and organisations – ones in which citizens make their voices heard to a greater degree. This is critical if South Africa is to move forward to greater achievements and to more effectively dealing with challenges such as poverty, inequality, joblessness and crime.