In one of his replies to questions in parliament in 2019, President Cyril Ramaphosa said the State should be at the centre of the development of the country and should take a more entrepreneurial role.

The State should indeed be at the centre of the development of the country, but in one respect and one respect only: it should create the space for others to develop the country.

There is nothing in the governance of the African National Congress (ANC), in the past decade in particular, that shows it has any capacity to be the centre of development and entrepreneurship.

The State under the ANC has shown little capacity and even less appreciation of what is needed to make a country economically successful. None of this has been at the forefront of its collective mind. Corruption and incapacity have ultimately defined the State’s role.

The ‘State’ in the form of the ANC has failed as the guardian of the citizenry’s well-being. The State should absolutely not take on a more entrepreneurial role. The people are the State, not government and certainly not the ANC.

And there is no doubt that this regime cannot innovate in any meaningful way. Ramaphosa uses as an example how the United States (US) government ‘spearheaded the development of Silicon Valley’ and how the military contributed to the creation of the internet. The US military certainly played a role – but it could. Denel can’t even afford to pay its staff salaries! Denel is South Africa’s state-owned aerospace and military technology company established in 1992. It was originally part of Armscor, until all the manufacturing divisions were split off into Denel.

Everyone who matters in the ANC’s current National Executive Committee was in government when the State was hollowed out. Somehow it ‘just happened’ under Jacob Zuma. The fact is that Ramaphosa and his colleagues are responsible for the dire state of the economy and the disintegration of state-owned enterprises (SOEs).

It beggars belief that Ramaphosa is actually suggesting that the ANC should run more, not less. The government has no right to take more of the citizenry’s money without having the skill to manage it properly.

This doesn’t mean that public/private partnerships shouldn’t happen. Of course they should, but Ramaphosa must remember that the citizens own the SOEs and the government is duty-bound to provide the services of the SOEs to the best benefit of the citizens; not of the ANC or the government. If the private sector can partly or entirely provide what is necessary, then that is what the government must support.

Ramaphosa suggests that there has been a lack of commitment by the private sector. The private sector is a great risk-taker, but it’s not stupid; it’s going to take risks that guarantee that its investment and effort are not frittered away by corruption, red tape and incompetence. Risk is not about throwing good money at almost certain failure.

This is something Ramaphosa should have learnt in over a decade in the business sector. He cannot expect the private sector to invest in a Ramaphosa-led government unless it can guarantee that it won’t interfere.

Ramaphosa said the State must work with the private sector and lead the private sector to invest more in the country. There must be a symbiotic relationship between the government and the private sector, but it must be understood that the government can only encourage the private sector to invest more if it does more of what the private sector needs in order to justify its investments. Business doesn’t want the State to fail: if the State fails then so too will business.

Ramaphosa needs to acknowledge that the growth of the American economy, with the private sector at its core, is what led to its becoming the most powerful nation in the world. That was not because the State appropriated for itself the chief role of invention and development. It didn’t. Its role was complementary to the role played by the private sector. Freeing markets, which drove American success, is what the Chinese have done, thereby achieving their astonishing growth from poverty-stricken backwater to the second largest economy in the world. 

As uncritical admirers of everything Chinese, the ANC would do well to note that 60% of that country’s GDP is produced by the private sector.

As for the National Development Plan (NDP), Ramaphosa is correct; the NDP is a lodestar not a concrete plan as such. It is currently being updated, but to what extent it will acknowledge the practical constraints of the country rather than the ANC’s quaint ideological limitations is yet to be seen.

[Picture: decade_null, https://commons.wikimedia.org/w/index.php?curid=7003812]

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4 COMMENTS

  1. Nothing proves Cyril’s unsuitability for leading a developmental state more than his incomprehension of “Silicon Valley”.

    Silicon Valley was driven by:
    • Stanford University, “a private research university … founded in 1885 by Leland and Jane Stanford in memory of their only child, Leland Stanford Jr., who had died of typhoid fever at age 15 the previous year. Stanford was a U.S. Senator and former Governor of California who made his fortune as a railroad tycoon… Following World War II, Provost Frederick Terman supported faculty and graduates’ entrepreneurialism to build self-sufficient local industry in what would later be known as Silicon Valley” [Wikipedia]
    • Hewlett-Packard, private company which began making electronic test and measurement equipment and has reinvented itself several times since then
    • Apple — the Steve Jobs & Steve Wozniak company which began making illegal “blue boxes” to hack the phone system before commercialising the personal computer.
    • Intel — the pioneer in the integrated circuits which power the “IT revolution”

    Where the US government did play a role was in creating the Arpanet, the forerunner of the Internet & world-wide web and in *funding* military, space, health and other scientific research. (Much of “Silicon Valley’s” startups were financed by venture capitalists.

    A history of Silicon Valley reveals that picking winners — which would be the function of a development state — is impossible, few today have heard of the CP/M, once the leading operating system or Netscape Navigator, the first browser to dominate the “www” market. Market forces, sometimes strangely, sort out winners and losers far more efficiently (and with less corruption) than any government could. Even deciding the “best” programming language, a relatively simple decision, is impossible as new ones come on to the market and needs change.

    President Ramaphosa should rather ensure that our schools produce kids who are literate and computerate, the first essential for a developing state and the the meagre funding given to universities and research institutes (CSIR, HSRC, HRC, MRC) is increased and rely on their fruits to drive new industries.

    The difference between a socialist and market economy and between a developMENTAL and developing state is that in the former, there is mistrust between rulers and denizens while in the latter, there is greater trust between administrators and citizens, hence less government intervention is required.

  2. Right – but here is a rough explainer on the ANC relationship to the state drawing from undergraduate political science.

    Political revolutions or if you like negotiated settlements of the nature we had in 1994 poses a legitimacy crisis to the state of which some class group will take advantage (Skocpol). The question becomes what class interest will occupy the new state. This is certainly how the ANC sees the question and we see many political questions often framed in this context from the ANC. (This is already a super long reply – but explaining and understanding liberal societies entails looking at the same struggles and their accommodation).

    If you see the ANC more as a political movement than a political party (it sees itself as such) and also understand state formation and democracy theory – you gain some insight into politics post-1994 and the challenge it was always going to face.

    For South Africa to make a successful transition it had to make a settlement between powerful interest groups supported by the middle classes – important for democratic consolidation (Barrington Moore on role of bourgeoisie in democracy). This largely happened and was ratified on one side (referendum and constitution). However, the ANC did not have a middle class of its own. It had an elite and poor disfranchised working / poor under strata that constituted the majority of South Africa. Hence the importance of Marxist rhetoric in the ANC and influence of the SACP even post 1990 btw apart from the ideological history – it still was / is an attractive explanation.

    It is also peculiarly that the South African settlement was really one between elites first and a minority middle class second but no broader majority middle class.

    Any way back to social movements. Worthy, unity, numbers and commitment (WUNC) is often evoked as important for social movements. It is what is incorporated into their political struggles and symbolism all the time. (think about this or if you like how the NDR speaks to this…). Democracy is often seen in this context for radical social movements, so it represents something broader than representation and institutions. Especially radical social movements based in oppression and marginalisation. Democracy further encourages organisation around these themes. Even although it might lead to undemocratic outcomes (Charles Tilley on contentious politics and social movements).

    So, what this was always going to entail was the ANC resorting to some form of WUNC symbolism. Lacking a middle class, the state as a vehicle to mobolise elite and the working / poor was always going to be attractive. Especially if couched in lots of Marxist / NDR rhetoric to explain it within and outside the social movement. Often essentially having to making reference to a lumpen proletariat’s false / mistaken class consciousness when pressed to defend certain policies.

    You could argue TM best understood that it was essential to create its own black middle class counter-weight through BEE / AA civil-service middle class / elite aristocracy if you like to consolidate democracy, modernise the ANC and protect the “revolution”. The fact that SA lacked this important component on one side of the settlement, explains so much of the policy after 1994, the state’s central role in it as the only lever of power for the ANC and why the part will continue to receive support if they are seen as the most realistic vehicle for this despite the track record. (For as long as WUNC symbolism matters / holds – again think NP during Apartheid’s obvious failures outside the in-group and eventually for the in-group).

    In a nutshell often what you see from the ANC through the state is really a WUNC project of legitimisation and democratisation from the perspective of a radical social movement. If it doesn’t work / lead to democratic outcomes is rather beside the point in the context of the importance of the WUNC part of it. (You can add the IRR’s NDR stuff in here as well because it is reads well in this context).

    I think this is what people miss in arguments like these, is that it is difficult for the ANC as a social movement to leave it to markets not just because of ideology (NDR / Marxist influence) but also because it sees itself as a social movement. So do many of its supporters. So what is obvious for “outsiders” is not so simple for “insiders”, especially given the trust deficit between grous. Again which would have been much lower if we could have reconciled two middle classes or build a middle class coalition on healthier grounds. (Here I think IRR surveys reflect an important growing consensus on paper, but I am not so sure it translates neatly in real life)

    What is important therefore is to constantly signal to black people as a social movement that claims to present black people that they are worthy, united, have the numbers and are committed to presenting them through the state, whilst building a middle class (also mostly through the state as its only source of societal power) to consolidate its middle class support going forward. (Again this is less important in liberal democracies with healthy civil society and pluralism all possible because they had large middle class buy-in in their settlements / transition to democracy and essential nationalism that reconciled from the start along shared believes and values).

    It can only really modernise if it has a solid middle class, which you could argue it was trying to do and still aiming for in the long run, but also is now up against the consequences and institutional culture created by the WUNC / NDR project.

    So liberals and the article is quite right about what the ANC should not have done and the consequences of doing so for South Africa in theory. However, it lacks insight into just how difficult it was always going to be in practice… That we have no idea if being more resolute in the modernisation project would have worked. Why did TM lose? Would TM instead of JZ have led to a different path?

    To understand why the ANC did not modernise or moderate earlier (or relapsed if nice to TM) you have to understand that it lacked essentially a middle class support base or worse talk about the legacy of Apartheid in symbolic terms as a potential restraint on policy options. Get into a lot of space liberals don’t want to talk about…The kind of stuff that overwrites economic arguments time and time again in politics across the world – including countries with liberal traditions.

  3. Great article Sara.
    I am afraid that Cyril and his ANC acolytes will not understand it. They are steeped in state control. Well illustrated by the NHI efforts, and the latest attempt to exert TOTAL control over the running (ruining?) of all sport and recreation, plus their reluctance to allow private power generation and supply.
    I am not at all hopeful that the scales will ever be pulled from their eyes…..

  4. We live in what George Ayittey calls a vampire state. Most African nations are vampire states, so why should we be any different? Vladimir Putin, Robert Mugabe and Nicolás Maduro among others have found how profitable it is to suck the blood out of an economy.

    Cyril is no better than the Zuptas. He made his fortune via play for pay: give me a major shareholding free gratis and for nothing or you’ve had your last government contract. Coincidentally he is a game farmer and the first properties earmarked for EWC are… White-owned game farms.

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