Things to watch in 2022 that could make or break FREEDOM in South Africa: Numba 3 – Whose economy is it anyway?

Those who believe in the centralised control of the command economy consider the economic system to be something like an engine, a machine with nuts and bolts, gears and levers, parts that can be replaced. And, in a way, who can blame them? For essentially a hundred years economists have been tooting their own horns, telling the world that they are really economic scientists who can measure and weigh an economy like a mechanic or an engineer. You need a bit of something different here? No problem! Replace this fuel cell with that fuel cell, this gear with that one, this pulley with that lever. Or perhaps, like a physicist mastering the ‘laws of nature’ – gravity, the speed of light, atomistic forces, and so on – they claim to be experts in the study of the ‘laws of economics’.

How can policymakers and ordinary people hear these smart people go on about the smooth workings of an economy being akin to a system, engine, or scientific study subject to strict controls of environment and function, and not buy into their explanations of the economy? After all, their explanations are so neat, so tidy, and their answers making it sound as if fixing some part of the economy is just like putting new batteries into an old remote. If someone is offering us an explanation so tempting, is it a mystery why so many people and politicians are tempted to buy into their thinking?

It's this sort of thinking, imagining the economy as a machine or motor or system adhering to strictly fixed laws understandable only to the gurus and experts, that sits behind so many policies that might sound good, but end up being utterly, utterly useless. Especially in South Africa, we’ve seen this sort of thing happening for basically a hundred years.

Said the apartheid governments: “We don’t like these gears and levers, these batteries and pistons – they’re not the right colour. We want to use these other gears and levers, these other batteries and pistons – they are the colour we like.”

Did things go as well as the apartheid economic mechanics and physicists wanted? No.

Say the ANC governments of the last two decades: “We don’t like these gears and levers, these batteries and pistons – they’re not the right colour and the previous owner of this machine put them in, and we want to take them out. We want to use these other gears and levers, these other batteries and pistons – they are the colour we like.”

Have things gone as well as the ANC’s economic mechanics and physicists wanted? No.

It’s interesting that we don’t really have to guess about whether economic policies work. History provides everything we need to understand when economies succeed or fail. For example, it’s telling that in the first decade or so after the ANC came to power Mzansi experienced the greatest sustained period of the economy actually doing well. Looking at this time gives us very good reason to conclude that the apartheid economy, despite the claims of apartheid politicians, wasn’t very healthy. How do we measure this? Well, we can look at how the supposed economic beneficiaries of apartheid did economically during and after apartheid.

White South Africans, the group unashamedly and unjustly given very preferential treatment by apartheid governments, actually became better off economically after 1994 when more and more South Africans were given the opportunity to participate in productive economic activity. Far from white South Africans becoming poorer while other South Africans became richer after the end of apartheid, all South Africans saw their economic circumstances improve, including white South Africans. From this simple and irrefutable conclusion, it’s very safe to say that while the economic ideas of apartheid governments made white people better off than people of other races, these very same ideas also kept white South Africans poorer than they would have been, were it not for apartheid. In fact, were it not for apartheid, all South Africans would have been much, much better off. The successful economic policies between 1994 and 2007 show this. And, if you think about it, it makes perfect sense.

Let’s say you start a pub in a town of one hundred people, not counting kids. You’re pretty convinced you’ve got a good business idea going – people need a place to unwind after a tough day at work, a place where they can meet friends, a place near the middle of the town where they can eat lekker oily food from your kitchen. Sounds good – you’ve got a client base and a source of business and income ready to go. Then the government comes and does something weird: it makes a law that makes it illegal for sixty out of the hundred people in the town to be anywhere near your pub after work. In one foul swoop, your client base is reduced to a fraction of what it could be, so too your income and your ability to look after your loved ones.

This was one of the ways in which apartheid governments made people poorer – they basically made it illegal to sell goods and services to your whole potential client base. And the reason? Well, the politicians in charge looked at the economy as an engine-like system, and decided they didn’t like some of the gears (read ‘clients’) or fuel cells (read ‘customers’) that were in the system when they took control of it. The politicians didn’t like the noise the gears made or the look of the pistons. So, if an engine can still sort of work if you take out some unliked parts, why not just remove them? True, the system might not work as well as it would have done, but at least the people in charge (read ‘politicians’) get rid of those pesky parts they don’t really like.

By viewing the economy as some engine that could be managed and tuned and pimped and changed and stripped down, apartheid politicians made the whole economy weaker and less able to give business owners access to potential clients. This take-out-put-in, engine approach to the economy briefly took a back seat after the 1994 elections. But in the last two or so decades, it has come chugging back. Just like the apartheid governments, the current government doesn’t like some parts of the economic engine as they see it.

Employment equity policies, policies that give the government a whole dump of the power over economic decisions in people’s lives, are aimed at taking some parts of the economic engine and replacing them with parts that the politicians of today like more – these parts are, you see, the right colour or nationality. Again: the engine might not work as well as it could, but at least the people in charge like the look of the gears and pistons as they whirr and whine.

This approach is stupid, folks. And it’s stupid because it fundamentally misunderstands what the economy really is: it’s not an engine system – it’s an ecosystem.

Let’s apply the engine-approach to economics to an ecosystem.

The lions might enjoy hunting buck A, but the game rangers in charge decide to put up a fence between the lions and buck A. Instead, they put a lot of buck B in the lion area. Sure, the lions now eat buck B, but these bucks are perhaps quicker runners or contain less of this or that vitamin or protein that the lions actually need. Slowly, but surely, the lion population shrinks because hunting has become more difficult due to the speed of buck B and hunting has also become less rewarding in terms of nutrition for the lion prides.

Or the birds by the river like berry A – it’s sweet, juicy, easy to see, and wholesome. But the game rangers decide that they don’t really like berry A. They dig up all the bushes that carry berry A and move them a few kilometres away from the river. The river birds now have to fly further, resulting in more energy being used to get food, and greater risks from leaving nests and eggs unattended for longer periods. Just as in the lion example, the river birds begin declining in number: birds can’t feed all their young anymore because they themselves need more energy to get to and from the berry bushes, and the longer periods away from nests give predators extra time to find them and their unattended eggs.

One component change in our two ecosystem examples, and already we’re starting to see what engine-based economic thinking does to something that is actually closer to an ecosystem.

If we think about it, it should be obvious that an economy is more ecosystem than anything else: it’s the collection of all the choices of living things in it on how to get food and survive. This is something the engine-based approach simply fails to understand: where parts in an engine can by stripped or replaced and the engine can still sort of work, organisms in an ecosystem must survive as individual components of the system by fulfilling their needs. The component parts of an engine have functions whereas the component beings of an ecosystem have needs.

Think about this for a second. How would you describe a human being? As an engine part that has functions or as an organism that has survival needs? The answer should be easy.

So, why this long schpiel about systems in an article about ‘who gets to work’? Well, simply because already we’re seeing more and more laws and policies coming from government stating their clear intentions to treat our economic ecosystem like an engine, taking out parts they don’t like.

Which parts, you ask? Businesses they don’t like; foreigners they don’t like; races they don’t like.

Government has massive plans in 2022 to make it more and more difficult for businesses to be managed the way business owners choose through jacking up employment equity and BEE (Blatant Elite Enrichment) requirements. Instead of letting businesses hire the people they need to serve their customers or clients, government is planning to put up fences in our economic ecosystem. Instead of letting all people work to earn a living by providing problem-solving, needs-meeting services or goods to clients, government is planning to tell foreigners who want to work and help that they simply are not allowed to because the government doesn’t like them. Instead of ending Blatant Elite Enrichment, a policy that has actually seen unemployment among black South Africans increase while making ANC cadres and cronies millionaires many times over, government is planning to double down on this destructive policy that has clearly and catastrophically failed.

Will the government get away with this? Will you allow them to treat our economic ecosystem like an engine they can strip and pimp to their wishes? Will you allow the politicians to keep thinking that the economy is about centrally commanded functions of machine parts, or will we step up and claim the instinctive truth that economics is about the freedom to work and fulfil our needs?

Well, this is all up to you, up to us – up to whether South Africans are willing to take a stand. If our economic ecosystem is destroyed, freedom will die with it. Will you allow this to happen?

Cover image adapted from here.