Over a hundred years ago Alfred Marshall, the pioneer of neoclassical economics, described the industrial character of South Africa as follows:
“South Africa has shown great energy under difficulties. Her gold and diamonds bring wealth, though they do not greatly develop industrial leadership of a western type: but the solid strength of the British and Dutch population, now happily united, may pioneer new and more successful methods of intimate cooperation between white and black races (my emphasis). Her distances are great, and her means of communication still slender; but her resources are vast: Ex Africa semper aliquid novi.”
This quote from Marshall’s historical study, Industry and Trade (1919), is remarkably accurate, profound and still valid. It is not only historically descriptive but also concerned with what ought to be.
Marshall accurately noted that South Africa’s quintessential issue is to address the issue of racial cooperation. The methods to achieve this, together with ways to address the limitations of the South African economy, are through using good transport systems, although we have a current logistics crisis (Transnet, ports, rail and roads).
South Africa needs improved communication and must address the problem of uneven high-speed connectivity and regulatory constraints on new entrants.
Marshall’s requirements, together with a market reform of the economy, will enable the industrialisation and monetisation of South Africa’s resources. The big challenge is to pioneer new and more successful methods of intimate cooperation and fulfil the prediction that “Ex Africa semper aliquid novi” (Out of Africa there is always something new).
Marshall predicted that economic progress would be limited unless the racial order allowed more systematic, mutually beneficial collaboration between whites and blacks in industry and labour.
Marshall’s use of the phrase, “intimate cooperation” is in a strictly economic sense, and not the way contemporary social science typically uses intimate contact.
Ordinary cooperation becomes intimate cooperation through black and white joint operations and collective action, in a close relationship characterised by mutual thought and feeling.
Cooperation means a joint operation, with each party contributing. There is concurrent effort or labour; every party has something to gain or something to lose, depending on the outcome.
Skin in the game
Cooperation requires a norm of reciprocity in the operations contributed by each party. In modern jargon, each participant must have skin in the game.
In Francis Fukuyama’s book Trust: The Social Virtues and the Creation of Prosperity, the concept of spontaneous sociability can explain how to achieve intimate cooperation.
He sees spontaneous sociability as a subset of social capital. He considers the most useful kind of social capital as not the ability to work under the authority of a traditional community or group, but the capacity to form new associations and to cooperate within the terms of reference they establish.
Spontaneous sociability is based on shared values rather than contract, kinship or coercion. What needs to be done is Identifying and promoting these shared values.
Fukuyama observes that governments may often step in to promote a culture of community when there is a deficit of spontaneous sociability, but state intervention poses distinct risks, since it can all too easily undermine the spontaneous communities established in civil society.
South Africa’s BEE policy and the Employment Equity Act are examples of state intervention which many economists argue have had mixed or detrimental effects on economic growth. I shall address that evidence in a separate essay.
To achieve spontaneous sociability, Fukuyama requires people to work together for common purposes in groups and organisations. In addition to skills and knowledge, a distinct portion of human capital has to do with people’s ability to associate with one another.
The ability to associate depends in turn on the degree to which communities share norms and values, and can subordinate individual interests to those of larger groups.
Fortunately, there has been significant success in intimate cooperation and spontaneous association, without the need for racial quotas or regulations, in organisations other than businesses.
Examples include churches, schools, and many sporting teams. Without doubt, our national teams have become sites of cross-racial identification. Among major parties, the DA has the most racially diverse support base, drawing significantly from white, coloured, Indian and black voters.
Spontaneous association
It has achieved significant intimate cooperation and spontaneous association through its shared values of freedom, fairness, opportunity and diversity characterised by non-racialism. It is thus potentially the political group most capable of providing the leadership needed to release the economic potential identified by Alfred Marshall.
In Helen Zille’s autobiography, Not Without a Fight, she recollects a conversation she had, with Henry Kissinger stating that no party in the world, in comparable circumstances, had ever succeeded in doing what the DA was attempting to do: building a new majority across deep historical divisions, based on a new value-set of defending each other’s rights, and enabling each person to determine their own identity with sufficient opportunity to chart their course in life.
Kissinger’s question was: ‘How was the DA managing to build a party that was based on common values, that transcended racial and ethnic boundaries in a deeply divided society?’ He had previously said this was a goal impossible to achieve in Africa, but the DA was doing what he had predicted could not happen.
Alfred Marshall’s optimistic prediction is being fulfilled: “Ex Africa semper aliquid novi.”
Through its policies of free-market principles, tempered by civil liberties, the DA is achieving the intimate cooperation necessary between the races to develop South Africa’s vast resources and get all of South Africa working for the benefit of all.
It is not at all certain that the DA will achieve Marshall’s prediction, but the will is there to do the work that this requires.
[Image: by iLixe48]
The views of the writer are not necessarily the views of the Daily Friend or the IRR.
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