Between recovery from the hangover of South Africa’s 21st birthday celebrations and Workers’ Day, political analyst EBRAHIM FAKIR considers whether “economic freedom” is appropriate in helping address the problems inherited from our past and the developments that may lie in our future.
The deceptive term “economic freedom” is in vogue yet again. President Jacob Zuma, as recently as 27 April 2015, invoked the term in his widely (mis)reported Freedom Day speech.
Apart from that, an entire political party, the Economic Freedom Fighters (EFF) use it as their moniker. There was even recently a bitch fight between the EFF and the (remnants of) the ANCYL over who could lay copyright claim on the term. Neither of them can. But this doesn’t matter because it is a cruel deception anyway. Eusebius McKaiser and I have argued to this effect previously.
We argued that it is deceptive because “economic freedom” is a misused term, given a meaning it does not have. It is a cruel term, which pretends that genuine economic freedom is attainable. It is not. It merely makes desperate people believe in an impossible dream – instead of a realistic one.
By invoking economic freedom, there is an attempt to equate it with political freedom. But the political and the economic, although related, are different. Imposing the word freedom on them both will not render them the same.
Freedom is related to liberty and carries with it the most positive meaning of all political words. Because of this, it is among the most misused and abused of all words in political language.
Freedom, in one sense, means quite simply the absence of external limits or constraints. In another, it means that nothing in society’s laws and rules prevents people from doing or acting as they please. This second sense, which draws from the first, elaborates every person’s independent ability to do what they choose. Quite simply, freedom means agency or ability.
In the political arena then, this means that every individual is entitled to enjoy the right to speak, to think and believe what they want, as well as organise and associate with whoever they like, so long as they don’t cause harm to anyone else in the process. This applies equally to all people.
Freedom in this context also means that people ought to be able to have an equal chance at acquiring and exercising individual power and influence over decisions that affect them in the society at large, in the workplace and in life generally. This means having effective voice to express and believe whatever you like. It also implies choice: having the information and resources available to choose between doing different things.
That one cannot always do this in practice does not really matter. That we ought to, does. That is why a struggle for political rights and freedoms when people do not have them, is an appropriate and just struggle. Rights, as a political resource, are almost infinite. They are limited only to the extent that may cause harm to others.
The same, however, does not apply in the economic realm. This is so for very good reason. The word “economic” means different things. One meaning is about the frugal, efficient and effective use of resources for maximum benefit. That is, making wise choices and how one uses the limited resources one has to do the kinds of things one wants. Because the resources we have are not infinite, we cannot just do an unlimited and infinite number of things with what have. So obviously, “economic freedom” in this sense is impossible.
The other and most common use, refers to the total sum of exchanges of goods and services that occur in a society. The sites at which, and through which, the exchanges (whether of money or a bartering of other goods or services) takes place, is the market.
So, a free market means an unrestrained and unconstrained ability to engage in exchange. But we know that some people are more powerful and resourceful than others, and can engage in these exchanges in an exploitative way which takes advantage of other people. Hence, we need laws and appropriate protections from the exploitative practices and people.
Those in South Africa calling for economic freedom do not mean economic freedom in the sense of the exploitative, unlimited, uncontrolled and, therefore, unregulated exchanges between those who can and are able to engage in trade and exchange, to the exclusion or exploitation of those who cannot. If they did, it would be objectionable because it would lead to greater social and economic exclusion and injustice, rather than promote rights to participate in the economy and create the ability of people to more or less do so.
We know that very few of us want economic freedom in the sense of a complete free for all, or economic freedom in the sense of an unregulated and unrestrained, exploitative free market.
We, however, continue to stare into a difficult conundrum when we impose the word freedom onto the word “economic”, particularly the choice aspect of freedom. Everything depends on the nature of what is being chosen and what resources are required in order to make that choice possible, but it is obvious that no one has an unlimited amount of resources to make whatever choices they like, whenever they like.
It may well be a grand utopian ideal to strive for this, but even utopianism must be tempered by the limits of what is possible. Resources are finite, and a finite set of resources cannot allow for an infinite number of possible choices. This is why the notion of economic freedom is a conceptual impossibility, a nonsense term that South Africans should best avoid.
However, there is a close link between the political and the economic. Applying justice and inclusion to them would be appropriate. Freedom would not be. This is why the use of the term economic freedom, equated with the term political freedom is cruel. It creates an equivalence between the notions political and economic, where there isn’t any.
The pursuit of social and economic justice through a better life for all is a more meaningful response. What is common to both the political and the economic realm is the notion of rights – in politics the right to freedom and equality – and in the case of South Africa, socioeconomic rights to ensure a reasonable and meaningful standard of living.
In the economic domain, the right would apply to the right to engage in an exchange in the market, and creating the conditions and the ability for people to actually be able to do so. Here both the government and the private sector have a duty and responsibility.
We know that depending totally on the market cannot maintain a fair distribution of resources or help fight poverty and reduce inequality or create decent jobs. The government’s role in the economy is to ensure adequate socioeconomic development. What South Africa requires is not just an effective state whose interventions deliver the promises of our constitution; we also need a government that delivers local government services, education, health and housing, and orients public enterprises to meet their mandates.
At the same time, South Africa requires a society-friendly private sector that shifts its logic away from solely pursuing a high accumulation path towards sustainability and job creation. For example the private sector, even in years of 5% GDP growth was creating jobs only at the rate of 2%. With growth rates down over the last three years to 2%, jobs growth has been a measly 0.5%.
Yet GDP growth should be shadowed by jobs growth. We have evidence of this having taken place in certain sectors of the economy between 2001 and 2011, when output growth was accompanied by growth in job creation – in financial services growth was at 5.4% and employment growth, 5.3%.
Social justice and economic ability and inclusion should be our aim in addressing the unemployment and inequality problem, not the dud of economic freedom. We need to grow and diversify the economy, modernise production, increase productivity anmd worker performance, especially in the public sector, and redefine relations of production and consumption in society.
To do so, the state needs to embark on a more appropriate activist and interventionist role in the economy. It needs symmetry between its policies and serving growth and job creation and to narrow the inequality gap by engaging in distributive governance. But this can only happen if we trust the state to do what it is supposed to, rather than what it is not. The state cannot create jobs on its own. The private sector must also play its role.