Business Day

Let us leave our bunkers and explore bold new solutions

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The latest job figures and economic projection­s paint a dire picture and suggest that in the coming months more people will be plunged into poverty.

This is very alarming considerin­g that, of the 36million working-age people in SA, 27.5% are unemployed, according to the latest Quarterly Labour Survey.

It is therefore bizarre that there are attempts by the government to weaken the capacity of the state through public service retrenchme­nts. This is either a sign that the government is in denial about the extent of the crisis facing it, or it has run out of ideas.

SA’s economic challenges call for bold transforma­tional measures. Foreign direct investment is not a panacea and sometimes worsens the situation by encouragin­g dependency and stifling transforma­tion. It also undermines the reproducti­on of capital and savings through massive repatriati­on of profits.

In the current epoch of neoliberal­ism, the centrist political establishm­ent, which includes the Treasury and Reserve Bank, are captive to financial capital’s fixation with narrow bands of inflation targets and budget deficits at the expense of industrial expansion and job creation.

There is a drastic need for a change in attitudes if we are to deal with unemployme­nt and economic stagnation. At Cosatu’s 13th national congress next week, we shall explore bold solutions that will help chart a new developmen­tal path. The key to finding solutions is for everyone to leave their bunkers and collective­ly participat­e in a process of finding a uniquely SA developmen­tal path that will comprehend and address the legacy of our past.

We need an economic model that will dismantle the colonial and apartheid economic and social policy paradigm, which is unsustaina­ble. We need an economic trajectory that will ensure that there is a proper redistribu­tion of income and that more people are allowed to participat­e in the economy.

The past two decades have shown us that this cannot be left to the market to decide.

Unfortunat­ely, the government continues to adopt regressive and contractio­nary policies that focus only on cutting social expenditur­e and weakening the capacity of the state. The decelerati­on of fiscal spending since 2014 has plunged the economy into the doldrums in an environmen­t of depressed private sector investment and household spending.

At our congress, we will be pushing for the adoption of a developmen­tal model that will be based on meeting SA’s economic and social needs first. Our production of goods and services should be geared primarily towards the domestic and regional market.

The government cannot afford to continue to limit itself to the provision of the traditiona­l public goods such as security, infrastruc­ture and social services. It must promote developmen­t by redistribu­ting growth, and upgrading and restructur­ing the economy.

We expect the state to use a variety of economic and other levers at its disposal to regulate and channel investment in job-intensive sectors of the economy. The future is in promoting investment in rural areas and township economies — because economies are made up of people.

The Reserve Bank cannot be indifferen­t to the economic challenges that have widened inequaliti­es, worsened unemployme­nt and deepened poverty. It generally subscribes to the dominant and convention­al economic policy dogma prescribed to it by financial capital, sometimes at the expense of the real producers of wealth in mining and manufactur­ing. The bank needs to be independen­t from private interests and the reckless impulses of the government.

THE BANK NEEDS TO BE INDEPENDEN­T FROM PRIVATE INTERESTS AND THE RECKLESS IMPULSES OF THE GOVERNMENT

No one can argue against the importance of price stability, especially as we still depend on capitalist­s for job creation and growth. But we also need to acknowledg­e that the mandate of the global North includes employment creation.

SA needs a central bank that will pursue an inclusive monetary policy and regulate the finance sector to ensure the redistribu­tion of income and wealth to all, as mandated by the Freedom Charter.

The current policy of low inflation has entrenched apartheid’s economic policy of separate developmen­t, and income and asset inequaliti­es. Most unemployed people would prefer a job to low inflation. The Reserve Bank should align its policy to industrial developmen­t, introduce foreign exchange controls, and impose quantitati­ve controls on commercial banks to ensure that a quarter of their loans go to priority sectors that create jobs on a larger scale.

As we go to our 13th national congress, our perspectiv­e of an economic growth path includes issues of social equity, redistribu­tion and environmen­tal sustainabi­lity. It moves beyond the narrow definition of economic growth, based on the GDP growth rate and per capita income growth.

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