Whither (wither?) the ANC? Final thoughts on South Africa as a developmental state and the crisis of leadership

Like most of my overseas trips, my recent visit to South Africa resembled an intensive rolling seminar, as debates with brilliant Oxfam staff, partners and academics spilled over from conferences and meetings into cars and bars. Before it all recedes into the mists, I wanted to capture one of the recurring themes. The role of the South African state and the ANC.

Discussions on the developmental state are vibrant in South Africa. They are also very confusing. Often, the term is bandied about to describe anything a state should do to pursue development. But the term’s original meaning is much more specific, rooted in Chalmers Johnson’s attempt to explain the Japanese economic miracle of the 1960s and 70s. That includes a starring (and steering) role for a semi-autonomous technocracy, able to pursue a long term industrial upgrading project without succumbing to the short term demands of interest groups. Would anyone seriously compare that to what is currently happening in South Africa, where every day newspapers splash on the latest stories of chaos, intrigue and incompetence within the state machinery?

Actually, there is one part of the South African state machinery that is renowned for its efficiency and transparency – the South African Revenue Service (SARS, unfortunate acronym). One staffer at an Oxfam partner even said ‘if SARS was a party, I would vote for it’. Not often you hear that level of affection for the taxman.

But there are other points of comparison – Japan was certainly not free of corruption. More importantly, South Africa does have an activist state and that began long before the ANC. A questioner from the floor caused a stir at one seminar when he said ‘the closest South Africa has come to a developmental state was under apartheid’. The state provided for whites, and the non-white labour  it required. I was struck by the amount of state housing for all ethnic groups – rows of identical brick two bed houses are dotted around the chaotic sprawl of self-built ‘informal settlements’.

That tradition of state provision continues under the ANC. Housing, education and health have improved, though there is an awfully long way to go. But this prompts heated debates on whether the South African style of provision encourages passivity and dependence. Anti-state types love the dependence narrative as it provides a perfect excuse for cuts, but not everyone who worries about it can be written off as a bloodthirsty fiscal hawk.

what happens after he's gone?

On housing for example, I was struck by the different approaches in some places in Latin America, where the state supports (rather than replaces) self-build, eg by providing an engineer to advise, or by building only one room and leaving spaces for shanty-town dwellers to add their own (as they inevitably do). Does that approach increase agency as well as produce more housing per dollar?

In the end, all conversations came back to the state and fate of the ANC. The party suffers from Beatles syndrome – applauded outside the country, but much less popular at home. The headlines are all about corruption, which seems widespread, but in many ways patronage is more of a problem than plain theft. Not only does that benefit ‘tenderpreneurs’ who use their connections to win state contracts, however incompetent the execution; it also leads to the wrong people in key jobs – ‘someone who has never been to school becoming a mayor’.

If the ANC is to rekindle its waning legitimacy, it has to tackle some big headaches. How to redistribute land without destroying agroexports? Could it nationalise parts of the mining sector, and if it doesn’t, does it risk a Zimbabwe style split between party and trade unions, as Cosatu loses patience?

Overall the level of political paralysis and growing inequality and unrest means the ‘ANC is tiptoeing on a land mine’. How might it all end? Random speculation over a beer Deep and thoughtful analysis suggested a few possibilities:

• Rising expectations both among the poor (growing protests over poor quality services) and the middle class (‘I’ve got my degree, now where’s my job?’) leads to a broad protest movement and some kind of Arab Spring type meltdown.
• Possibly linked to this, the party splits and South African politics becomes genuinely competitive and multi-party. All parties have to sharpen up, both in terms of corruption and competence, if they are to get elected.
• Alternatively, the lack of opposition removes any incentive for party discipline. Politics becomes a vehicle for grabbing the spoils of power, and leads to increasing infighting within the ANC and a slow slide into chaos and incompetence (call it Nigeria on a bad day).
• The ANC pulls back from the brink, finds new, dynamic leaders, and regains its appeal by attacking South Africa’s malaises of inequality, unemployment and poor administration.

Any other plausible scenarios?

The other posts from South Africa were on Women on Farms and the recent farmworkers’ strike; Brazil v South Africa on inequality; How to build local government accountability and How can South Africa promote citizenship?

The Democratic Developmental State: Goal, Utopia, or somewhere in between?

There’s nothing more disturbing than belatedly realizing that you’ve written two papers in close succession that contradict each other. Does it make you an open-minded liberal, or just a confused dimwit? Judge for yourself based on these two papers: one, an internal paper for Oxfam, tries to capture and update the argument of From Poverty to Power that development arises from the interaction of active citizens and effective states. The other, a chapter for the latest Commonwealth Secretariat annual  ‘Commonwealth Good Governance’ is much more cautious about the difficulties in achieving a ‘democratic developmental state’, born of precisely that combination. I suppose you could argue that they represent the clash between respectively optimism of the will and pessimism of the intellect. Or that I’m really out of my depth. Either way, it’s been niggling away at me for years. See what you think and if anyone can shed light on how to reconcile the will and the intellect, bring it on.

Excerpt from How Development Happens

‘Why focus on effective states? Because history shows that no country has prospered without a state than can actively manage the development process. The extraordinary transformations of countries such as South Korea, Taiwan, Botswana, or Mauritius have been led by states that ensure health and education for all, and which actively promote and manage the process of economic growth. After twenty years of erosion by deregulation, one-size-fits-all ‘structural adjustment programmes’, and international trade and aid agreements, many states are weak or absent. But there are no shortcuts; the road to development lies through the state, and neither aid nor NGOs can take its place.

Why active citizenship? Because people working together to determine the course of their own lives, fighting for rights and justice in their own societies, are critical in holding states, private companies, and others to account. As an integral part of ‘development as freedom’, active citizenship also has inherent merits: people living in poverty must have a voice in deciding their own destiny, rather than be treated as passive recipients of welfare or government action.

True development emerges from the interaction of effective states and active citizens. Economic growth is not enough if it comes at the expense of other freedoms. The system – governments, judiciaries, parliaments, and companies – cannot deliver development merely by treating people as ‘objects’ of government or other action. Rather, people must be recognised as ‘subjects’, conscious of and actively demanding their rights, before true development In its full sense can come about.’

Excerpt from ‘The democratic developmental state: Wishful thinking or direction of travel?

“We are left with an unpalatable conclusion. While effective states, in the Commonwealth as elsewhere, are historically a sine qua non for economic development, measured in terms of income per capita, active citizenship and democracy are equally essential to achieve development in the wider sense – an accumulation of freedoms ‘to do and to be’ (Sen, 1999).

But there are likely to be trade-offs between these two goals, even though its nature and extent is probably changing over time, in response to cultural shifts on attitudes to human rights, technological changes in access to information, decentralisation and the partial encroachment into national political spaces of international governance norms. High levels of growth are more likely to be achieved with the sacrifice of some freedoms, and vice versa.

Yet, at the very least, it seems plausible that the transition from an exclusive to an inclusive state can occur earlier in a country’s development trajectory than in the past. Aid can help or hinder this process (and most likely do both). Moreover, on this occasion, the author hopes his analysis proves unduly pessimistic, and that Mkandawire’s fiery optimism carries the day:

The experience elsewhere is that developmental states are social constructs consciously brought about by political actors and societies. As difficult as the political and economic task of establishing such states may be, it is within the reach of many countries struggling against the ravages of poverty and underdevelopment. The first few examples of developmental states were authoritarian. The new ones will have to be democratic,and it is encouraging that the two most cited examples of such ‘democratic developmental states’ are both African – Botswana and Mauritius (Mkandawire, 2001).”

Any thoughts?

Can South Africa build a developmental state?

Ha-Joon Chang recently sent me an interesting paper of his on ‘How to ‘do’ a developmental state’, his contribution to a book on the prospects for building a democratic developmental state in South Africa. In it, he does one of his typically fascinating comparisons of the ways various other countries have build ‘developmental states’ (which he defines as ‘a state that intervenes to promote economic development by explicitly favouring certain sectors over others’) and draws out some possible lessons for South Africa.

Some highlights:
‘While it practices free trade and welcomes foreign direct investment (although selectively), the Singaporean government owns almost all the land in the country, supplies 85% of housing, produces 22% of GDP, and runs one of the most draconian forced saving schemes in the world (the Central Provident Fund). Unless you actually know these things about Singapore, it is difficult to break out of the conventional wisdom that free trade, private ownership of enterprises, and freedom of individual choice are all necessary for any economic success.’

Within East Asia, he holds up Korea as the most extreme exponent of selective industrial policies, followed by Japan. Taiwan compensated for its lack of large private companies by using state-owned enterprises and state-financed R&D to pursue upgrading. Singapore also used its massive SOE sector.

Outside East Asia, France used sectoral industrial policy along similar lines to Japan and Korea, whereas Scandinavia practised ‘developmentalist welfarism’ with some selective industrial policies, but not on the scale of Korea or Japan.

So what does this mean for ‘doing’ a developmental state in South Africa or other emerging economies? In terms of the politics, the case of Scandinavia shows that the state doesn’t have to be right wing or coercive, (ditto the importance of radical post-World War Two land reform in the take-offs in Korea and Taiwan).

The organizational methods of building a developmental state are diverse. Korea and France (and to a lesser extent Japan) used all-powerful pilot agencies to drive forward their industrial policies. Ha-Joon reckons South Africa’s Department of Trade and Industry might be a candidate for such a role. But coordinating committees in Taiwan or SOEs (everywhere except the US) offer other options.
He identifies the South African government’s lack of control over the banking sector as a serious weakness, as is the lack of support for R&D, but thinks both could be corrected.

Finally, he warns against employing too many economists – the Japanese and Korean miracles were led by lawyers, Taiwan by engineers. He actually thinks the return of battalions of Korean PhDs from US economics faculties is a disaster for his country.

The book looks great, with chapters from Omano Edigheji, Peter Evans and Thandika Mkandawire, among others. And it’s freely downloadable. Looks like another bad day for the Oxfam Printer…….