Gigaba’s pursuit of rewards will leave Marxist in the dust

What possessed Malusi Gigaba to appoint Wits professor and Marxist economist Chris Malikane as his economic adviser?

Gigaba wants to succeed as finance minister and win the respect of investors and the market. But this appointment sends the opposite message. His team argues that Malikane’s appointment is a strategic decision intended as a message to the left that Gigaba is open-minded. And, they say, Malikane as an adviser won’t make policy and his influence will be more than balanced by the Treasury’s “conservative” public finance experts.

But why appoint him at all if his advice is seldom to be taken? Can Gigaba really think that it is possible to play both sides and look left while walking right? Malikane is one of only a few left ideologues in SA who can provide an internally coherent economic argument of the concept of radical economic transformation. His plan, though, would be ruinous for the economy.

Malikane argues that the economy and all social institutions are in the grip of white monopoly capitalism, due in large part to the fact that the government depends on big business for tax revenue. The current phase, he argues — not without a degree of truth — is characterised by a fight between the emerging black middle class (which makes its money out of tenders and the “bribes scheme” known as black economic empowerment) and the traditional owners of the economy.

To break the power of white monopoly capital, a broad front led by the black middle class and supported by the masses is required to demand a new economic plan. The plan would involve land expropriation without compensation; expropriation of mines, banks and insurance companies; free, quality social services and the remodelling of the racial and colonial labour market.

It would indeed be radical economic transformation. But what would the economy look like after investors have fled?

It is hard to believe that Gigaba — or President Jacob Zuma — really wants to throw out economic orthodoxy. I expect that a good deal of Malikane’s “advice” will fall by the wayside. Neither Gigaba nor Zuma can afford to set off down the road to Venezuela.

Unlike Malikane, who is serious about radical economic transformation, Zuma and his cronies are not. What they want is unfettered access to public resources. For public resources to exist in the first place, they need the economy to keep turning over. Their model of radical economic transformation is what Malikane says he abhors: tenderpreneurship and ever greater equity stakes in established firms for a handful of black businessmen and women.

Of all the measures set out in Malikane’s plan, the only one under serious consideration is land expropriation, which is a potential risk on the horizon.

MALIKANE’S ‘ADVICE’ WILL FALL BY THE WAYSIDE. NEITHER GIGABA NOR ZUMA CAN AFFORD TO SET OFF DOWN THE ROAD TO VENEZUELA

However, the Zuma camp sees the land issue more as a political solution to their waning support than a viable part of an economic plan. Whether they would take a chance and do it is another question entirely.

So, if Malikane is there as a token radical, where do the real dangers of Gigaba’s tenure lie? They lie in the enforcement of the Public Finance Management Act. It and the regulations that accompany the law require the minister’s signature for a broad array of transactions.

This is where Gigaba is really expected to do the work for the rent-seekers who appointed him: sweet deals for cronies from state-owned enterprises and government departments.

Rather than a radical change, it will be a slow burn as public finances are gradually undermined.