How not to escape the ‘ANC rate of growth’

WHAT is the “Hindu rate of growth” and why does SA seem to have it, even though Hinduism has only a small following in SA and it doesn’t seem to apply in countries that are, in fact, Hindu. The term was the result of a kind of intellectual desperation. It was coined by Indian economist Raj Krishna in the 1980s, according to Wikipedia. Krishna was trying to understand the difference between India’s low rate of economic growth and the exploding growth rates of countries in the region. Throughout the 1980s and beyond, China, Singapore, Korea and Taiwan were all going gangbusters. Their average gross domestic product (GDP) growth rates were 7% or more, and many other countries in the region were not far behind.

Yet India stood out. In the 1960s, the per-capita GDP of the average Indian was about 5,6% of the average American. Incredibly, it got progressively worse, all the way through to the 1990s, until the Congress Party was ousted and everything changed.

During all this time, India had a staunchly socialist government dedicated to serving the poor. Well, theoretically. Actually, it was very corrupt.

Anyway, Krishna’s explanation for the regional differences lay in culture. The fault lay not with the beloved government of India, which had evolved out of the magical name of Gandhi, but with the fatalistic undertones of Hinduism. The argument was essentially that by stressing karmic interaction with the world, the Hindu way of life had inadvertently fostered inaction, passivity and acceptance. This was in contrast with the active and participative demands of a growth economy.

It sounds logical but, as it happens, the theory was debunked by an important figure in Indian history, politician and journalist Arun Shourie, who pointed out that the socialist polices were implemented by a secular government and had nothing to do with Hinduism. In fact, India’s low growth rate should have been called the “socialist rate of growth”. It seems obvious now but it was an amazingly brave insight, as it put him at odds with the revered Congress Party.

That socialist rate of growth was between 3% and 4%. How strange that this is precisely the average rate of growth that has been achieved in the African National Congress’s term of office. Oddly, it was also the average rate of growth during the PW Botha presidency. Before that, SA’s rate of growth was as explosive as the Asian Tigers’ growth is now.

This is pertinent because people are beginning to notice the similarities between the Congress Party’s honeymoon in India and its associated low growth rate, and the ANC’s honeymoon and its associated low growth rate. On this page this week, author and economist Ruchir Sharma noted that “India’s performance was so doggedly weak that economists looking for cultural explanations came to call 3% the ‘Hindu rate of growth’.”

But, he says, “In SA, no-one is looking to explain the ‘ANC rate of growth’, much less protest against a system that produces such modest economic progress.” The reason for the lack of urgency is that SA’s black majority is forever grateful to the ANC for overcoming apartheid, “so it may take a new generation to adopt a critical view. This, too, is reminiscent of India: after the fall of the old regime, the sense of relief endures, and it can take decades for a real opposition to materialise,” he wrote.

His interpretation makes sense, but I would disagree on one aspect. I think there is a growing dissatisfaction with the “ANC rate of growth”. This dissatisfaction is splitting the country. A small minority is beginning to tire of the ANC’s growth promises. As a result, we are seeing small gains in the popularity of the Democratic Alliance.

But the bigger issue is that the ANC is not locating the problem in the modest socialism of the existing party; it is identifying the problem as an insufficient belief in and application of socialism. In other words, because half-socialism has not worked, it now wants to go the whole hog. The only question now is whether the party recognises quickly enough that intensifying a failed policy doesn’t make it work, it makes it worse.

Cohen is contributing editor.