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South Africa must leave old ideas behind to move forward

Brian Levy
By Brian Levy

Professor of the Practice of International Development, Johns Hopkins University

Posted on Monday, 9 August 2021 18:10

A member of the Confederation of South African Trade Unions (COSATU) holds a placard during a march against job losses in Durban, South Africa, February 13, 2019. Reuters/Rogan Ward

In the preface to his great book, The General Theory of Employment, Interest and Money, written in the 1930s at the height of the Great Depression, the renowned economist John Maynard Keynes suggested that the obstacle to decisive change: "lies not so much in developing new ideas as in escaping from old ones."

In this moment of crisis, South Africa urgently needs decisive action. But all too often South Africans of all political stripes seem trapped in stale discourses. These are not anchored in South Africa’s political, economic and social realities. Nor do they offer any practical, timely strategy for getting from here to there.

This piece explores how the country might break loose from old, unhelpful ideas in four areas, each introduced below with a question.

The first question concerns the interactions between policy, inclusion and growth. In recent years, even before Covid-19, South Africa’s economy had come to a standstill. Most South Africans acknowledge that a renewal of growth, with the private sector playing a key role, is necessary for the country’s turnaround. And that policies that destroy confidence, undermine hope and block entrepreneurial energy are counterproductive. But:

Question one: What economic policies are pro-growth?

The standard South African discourse has a very business-lobby-oriented perspective of what it means to be pro-growth. It is one preoccupied with reducing restrictive regulation, keeping taxes low and containing government spending.

This dichotomy between pro-growth and pro-inclusion policies is false. For one thing, an acceleration of growth will do less to address South Africa’s challenges of poverty and inequality than champions of the narrowly pro-business agenda suggest.

In a recent discussion of economic policy in South Africa, Harvard University’s Dani Rodrik reflected on: “the mismatch between what South Africa produces and what the country’s factor endowments are – a production structure largely biased towards skill-intensive sectors, while the labour force largely is unskilled … [A crucial challenge] is to stimulate labour-intensive production … This is structural transformation in reverse. It requires an industrial policy that promotes relatively low-productivity perhaps informal activities that are mostly services … This takes us into such new terrain that it is not entirely clear how to proceed …”

For another, in South Africa’s current circumstances pro-inclusion policies may be necessary to kickstart growth. Albert Hirschman’s classic analysis of Latin America’s “changing tolerance for inequality” lays out the logic: “It can happen that society’s tolerance for increasing disparities may initially be substantial [for example, South Africa in the first 15 years of democracy post-1994].”

He continues: “Tolerance for inequality is extended in the expectation that eventually the disparities will narrow again … Nonrealisation of the expectation that my turn will soon come will at some point result in my ‘becoming furious’, that is, in my turning into an enemy of the established order…”

Hirschman distinguished between: “Two principal tasks or functions [that] must be accomplished in the course of the growth process. The first is the unbalancing function, the entrepreneurial function, the accumulation function … Increasing social and income inequalities are an important part of this picture.”

Once hope has curdled into anger and despair, renewing growth will depend on: “the ‘equlibrating’ distributive, or reform function … to correct some of these imbalances, to improve the welfare and position of groups that have been neglected or squeezed, and at redistribution of wealth and income in general.”

Viewed from this perspective, employment subsidies, basic income grants and other social interventions to address poverty and improve prospects for upward mobility all become part of an (extended) pro-growth policy. These don’t come free. They will require a move away from pro-austerity fiscal policies. And, in time, some tax increases on higher-income earners. A hike in taxes will be dependent for its legitimacy on the likely effectiveness with which the public sector implements the social agenda. (More on this in the discussion of questions three and four.)

Question two: What economic policies are ‘pro-worker’?

On the surface, this question has a straightforward answer: pro-worker policies are the policies advocated by organised labour. But beneath the surface, things aren’t that straightforward.

In recent decades, the composition of South Africa’s trade-union membership has shifted from blue-collar workers, predominantly in the private sector, to white-collar public sector employees. In addition, within the public sector, wage gains have gone predominantly to middle-management cadres. There have been limited gains for teachers, nurses and other frontline workers.

A recent study sorted South Africa’s population into five broad income categories. It highlights a cliff. At the bottom of the cliff, about half of the population is chronically poor. At the top is the affluent elite, comprising a little more than 3% of the population, plus an additional 20% in a stable economic middle class.

In between are a “vulnerable 15%” that hover on the edge of the middle class, plus a “transient” 12% that move in and out of poverty.

It is not for me to pronounce on the strategies adopted by South Africa’s trade unions. Nevertheless, in the spirit of this article’s exploration of “the things we know that just aren’t so”, the following can be said: if South Africa is to effectively address its twin challenges of poverty and inequality, the focus of attention cannot be on competition for status and further wealth accumulation within the elite.

Or on the pursuit of further gains for the already stable middle class. Rather, it must be on the chronically poor and (especially, I would argue) on enhancing opportunities for accelerated upward mobility by the “vulnerable and transient” groups.

This would also bring hope of a better life to the populace more broadly. Indeed, continuing extreme barriers to upward mobility comprise perhaps the greatest failing of the first quarter century of democracy. Thus the question arises: on whose behalf does organised labour advocate?

Question three: How can public-sector capacity be mobilised?

To reinvigorate growth and make inroads into inequality, South Africa urgently needs a nimbler, more results-oriented and more efficient public sector. On this, there’s both bad news and better news.

Here’s the bad news. South Africans of many ideological hues have in their minds an image of the public sector as a well-oiled, top-down machine.

In other words a capable, “developmental” state, always effective in delivering on clear goals set by planners and political leaders. But that kind of well-oiled public sector machine isn’t going to appear any time soon.

The dream that the public sector can readily become a well-oiled machine is based on a misconception of the relationship between politics and bureaucracies. This relationship has been explored in depth by professor of politics and international affairs Atul Kohli, and numerous other scholars.

As they show, always and everywhere, even in places where bureaucratic “insulation” seems to prevail, public administrative systems are embedded in politics.

In some settings, the ways in which politics support top-down bureaucratic machines – the repressive authoritarianism of the apartheid state, or of a comprehensively planned economy and society – aren’t ones that most South Africans want.

In other settings, very benign initial conditions provide the basis for bureaucratic insulation – high incomes, reasonably equitable societies, and deeply rooted, broadly accepted institutional norms and practices. Such conditions are very far from South Africa’s current realities.

Here’s the better news. South Africa’s current public-sector challenges are anything but unique. The 2019 Worldwide Governance Indicators located South Africa in the 66th percentile globally for “government effectiveness”.

And in the 59th percentile for “control of corruption”. This is well below the rankings for, say, Spain and Portugal. They ranked around the 80th percentile for both indicators.

But per capita incomes for Portugal and Spain are four times that of South Africa. And there is abundant evidence globally that per capita income and governance quality improve together. For both indicators, South Africa’s 2019 percentile rank remained above those of other middle-income countries – for example, Brazil, Colombia, Mexico, Thailand and Turkey (all countries with higher per capita incomes than South Africa’s) – as well as almost all countries with lower per capita incomes. Examples include India, Indonesia and Kenya.

Rather than indulge in unachievable fantasies of some well-oiled public machine, South Africa would do well in this moment of crisis to look for lessons on how to mobilise public-sector capacity from the many places that have managed to achieve gains in the midst of messiness.

One set of lessons comprises the value of shifting focus away from an exclusive preoccupation with strengthening systems towards a more targeted, learning-by-doing, problem-driven approach. (These lessons have been synthesised in an influential recent book on building state capability by a group at Harvard’s Kennedy School.)

Avoid empty initiatives – endless plans for reform, endless upstream processes of consultation that are performative rather than practical, too general to lead anywhere.

Strengthen “pockets of effectiveness”. Focus in a more action-oriented way on specific problems, specific departments (or individual state-owned enterprises) within government.

A second set of lessons highlights the importance of context – of letting go of a preoccupation with unimplementable “best practices”.

Instead, look for a good fit between policy design and implementation on the one hand, and the prevailing political and institutional context on the other.

As the economist Mushtaq Khan put it in a recent briefing paper on “strategic realism”: “Look at data, but look also at the organisation of the society and sector to assess the relative power of relevant organisations, their interests and capabilities and their likely support for or resistance to particular solutions … While some powerful groups are inevitably going to lose out, there are powerful supporters who may in their own interest support the implementation of the policy.”

Underlying both of these lessons is a fundamental insight on how to effect change: focus on the human factor, the evocation of agency. Prioritise people and problem solving over systems reform.

In a brilliant book, professor of government Daniel Carpenter explores how motivated mid-level bureaucratic managers, acting as “public entrepreneurs”, can foster change by working to strengthen both internal capability and external alliances.

The principal internal task is to get the organisation’s staff to embrace the developmental mission. As Francis Fukuyama puts it: “All good managers (private and public) know that it is ultimately the informal norms and group identities that will most strongly motivate the workers in an organisation to do their best… They thus spend much more time on cultivating the right ‘organisational culture’ than on fixing the formal lines of authority.”

Innovative public managers use external alliances to resist pressure to deflect the organisation away from its developmental mission. “Successful bureaucracies,” says Carpenter, “practise a politics of legitimacy … Leaders build reputations for their organisations … They ground this reputation in a diverse coalition … [As a result] political authorities see it as in their interest to defer to agency action … because failure to do so would forfeit the publicly recognised benefits of agency capacity, and/or because the agency can build coalitions around its innovations that make it costly for politicians to resist them.”

This has profound implications for how civil society organisations engage, which brings us to:

Question four: How can civil society become part of the solution?

This question has a seemingly obvious answer: the task of civil society is to hold government to account. Such a focus aligns well with the crucial role that civil society activism played in the overthrow of apartheid.

It also is a natural response to a difficult lesson of the first quarter century of democracy – that scaling back activism (or joining the public sector) and embracing the dictum that “government should deliver” left a vacuum within which impunity could thrive.

However, a narrow preoccupation with holding government to account comprises, at best, a constricted vision of the role of civil society in a democracy. Indeed, it can sometimes have the unintended consequence of fuelling cynicism and despair. In turn deepening dysfunction. Learning from experience elsewhere can enrich the repertoire of ways in which civil society might engage.

One set of lessons was recently summarised by the Global Partnership for Social Accountability. It highlighted how less confrontational approaches can add value: “We have learned that focusing only on scrutinising and verifying government actions can have limited value in our problem solving. When they engage to focus on the problem at hand, civil society, citizens and public-sector actors are better able to deliver solutions collaboratively – especially when they prioritise learning. When social accountability mechanisms are isolated from public sector processes they are not as effective as collaborative governance. Collective action requires efforts that build bridges.”

Learning-by-doing in partnership with committed reformers within the bureaucracy enables civil society organisations to move beyond small self-contained non-governmental initiatives, and to leverage public resources and effect change at scale.

A second set of lessons, under the rubric of “strategic social accountability”, explores how civil society engagement can help reshape power dynamics by building new cross-cutting coalitions.

This could be among civil society reformers and reformers within the public bureaucracy, across national, provincial and local levels. As per Carpenter, investment in such alliances can help developmentally oriented stakeholders overcome resistance to change, including by pushing back against predation.

A third lesson is, at least in part, an affirmation of a more traditional dictum of champions of holding government to account: sunlight can indeed be the best disinfectant. Transparency in how civil society engages with officials in the public sector can reduce the risk that coalitional governance becomes a vehicle for corrupt collusion. Transparency vis-à-vis outcomes can signal to citizens that public resources are not being wasted but are helping to improve results.

The combination of participation and transparency can help enhance social solidarity and legitimacy of the public domain. Kenya’s education sector offers a striking example of how this can work.

Here is how Ben Piper, a seasoned educational specialist and long-term resident in Nairobi, described the “special sauce” that accounts for the country’s unusually positive learning outcomes: “In rural Kenya there is an expectation for kids to learn and be able to have basic skills … Exam results are far more readily available than in other countries in the region. The ‘mean scores’ for the Kenya Certificate of Primary Education and its equivalent at secondary school are posted in every school, and over time so that trends can be seen. Head teachers are held accountable; paraded around the community if they did well, or literally banned from school and kicked out if they did badly.”

A participatory approach to improving outcomes, along the lines of the Kenya example, currently is not part of the DNA of South Africa’s policymakers and activists.

But need this continue to be the case? Back in 1932, the United States was trapped deep in the economic and social disaster of the Great Depression.

The president at the time, Herbert Hoover, unable to look beyond the blinders of the American ethos of rugged individualism, failed to craft an effective response. Franklin Delano Roosevelt defeated Hoover by a landslide, by embracing (and then as president following through with) a radically different governing vision.

His description of his approach speaks directly to South Africa’s current crisis: “The country needs and, unless I mistake its temper, the country demands bold persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all try something.The Conversation

Brian Levy, Professor of the Practice of International Development, Johns Hopkins University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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