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It is time for a bold new model of economic prosperity.
Notable in public discourse over the past few months was the uncertainty about whether the masses would finally benefit from the imminent changing of the guard in government.
Some of my uncertainty stems from how leaders manage and perhaps prioritise stakeholders and the role of education in embedding norms for individual economic progress.
In particular, let us consider three groups – our local elite, including senior management in business and government; in broad terms, our local people; and international corporates in Western and Brics nations.
I propose that we need a bold and astute leader who can manage all three groups to benefit South Africans.
In other words, we hope that our leader will establish ways to sway elites to prioritise the people of South Africa, which may be a difficult task considering that we are dealing with borrowed norms of behaviour.
I will highlight a few sources of my uncertainty about whether the masses will benefit, despite the coming change in government leadership.
For an African example, let’s look at Nigeria and Tanzania.
It is possible for a country to increase its wealth, as indicated by gross domestic product (GDP) per capita, but retain its stubborn inequality.
For example, the GDP per capita of Nigeria through its oil exports skyrocketed from the mid 1970s to the mid 1980s, but living conditions for the majority remained on par with those of poorer, non-oil exporting countries such as Tanzania.
Facilitators – for example, a major bank or multinational enterprise – with the help of local elites, appear to play a significant role in diverting large amounts of capital away from public benefit to instead reach capital interests in the West and Brics.
Local elites’ vulnerabilities may be traced to a background of poverty.
But I suspect that this may be simplistic.
What has changed in the norms of once poor individuals who survived as a collective? As an educator, I often reflect on the role of education in altering the norms of local elites.
The brilliant minds of our elites, and their educators, may come into doubt considering their often uncritical application of so-called universal norms for attaining economic success as individuals, organisations and societies, despite large differences in socioeconomic contexts.
For example, up and coming elites exit our education system and are attracted into a job market with entrenched norms about how to attain material success.
Youngsters trained to enter capital markets are easily seduced and willing to take on the role of facilitators representing capital interests located in either Brics or Western power blocs.
For example, a youngster with a cum laude in finance may use his skills to design the financing of taxis in South Africa.
An aspiring taxi entrepreneur purchases his first vehicle by borrowing money from the bank.
His original capital loan of R300 000 can easily reach R1m of total debt and, if he cannot pay, his vehicle can be repossessed and recycled to generate wealth via a similar scenario from another budding taxi entrepreneur.
What makes a youngster from a communal upbringing develop norms that this is the way the world works?
Why are our youngsters not motivated to use their sharp intellect to develop ways to solve local economic development challenges and still make profits for the stakeholders they represent?
Vulnerabilities
For me, we need not look too far to solve the problem.
We need not blame Brics and Western power blocs for their role in unethical business behaviour here in Africa.
We need to look at the root of the vulnerabilities within our own elites in business and politics; vulnerabilities that, at the end of the day, continue to leave our local people without opportunities, which leads us to experience increases in per capita GDP, but retain persistent inequalities.
The problem is likely to continue if our education system continues to train our youngsters to join the ranks of facilitators of capital interests, according to unchallenged world views as to how monetary systems and capital markets ought to work.
Out of universities come brilliant young minds vying to enter a Goldman Sachs without questioning the material success philosophy of these large players.
Communal youngsters are processed through our education system to survive in the world, this time with a communal survivalist orientation displaced by an individualistic survivalist one.
This is why you can experience a banking elite developing in South Africa that can, in response to the plight of the poor, say: “F**k them, f**k them.”
Karl Marx and Adam Smith used their mental capacity to come up with two very different systems to progress the society they lived in.
Today, our thinkers simply copy a system without the tough analysis of our local context.
Of course, one’s own vulnerabilities and stakeholder influences continue to play a major role.
For example, if a leader were to be bold enough to implement particular solutions to favour local people, he or she would have to be astute enough to manage powerful stakeholders from Western and Brics power blocs who may not respect our sovereignty.
Look to Latin America and the assassinations of its leaders as examples of what happens if one does not cooperate with capital interests in power blocs.
For other examples that expose the roles of local elites, look to mining and how local elites behave when given the opportunity to manage the interests of local labour versus those of Western capital.
For another scenario, look to local manufacturing and how local elites behave when given the opportunity to develop local manufacturing enterprises versus the interests of Chinese locomotive manufacturers.
Notably, our youngsters may look to these elites as role models.
Astute leaders
It’s time to select astute leaders with the intellectual and emotional abilities to manage this complex terrain with the goal of decreasing inequality.
Our traditional view of business to improve society is to look to profitability, which can facilitate growth, and reduce unemployment and inequality.
What if we turned this on its head to instead make the primary target a decrease in inequality, which can facilitate individual profitability and quality of life, which can in turn be aggregated to firms and society.
For an example, look to the models of returns to labour versus returns to business owners among the firms of continental Europe.
For too long now, we have looked to English-speaking nations for exemplars of how to attain economic prosperity.
History will judge our leaders on the progress made in putting a dent in our high Gini coefficient.
Reddy lectures at the University of Johannesburg
