Gigaba’s adviser not wrong
THE appointment of Professor Chris Malikane as adviser to the Minister of Finance, Malusi Gigaba, reminded me of two things.
One was a demonstration of where power is located in the global political economy, and the double standards that keep power intact. Another was how difficult it is to effect systemic change in the world.
Let me add, before the stupid train arrives, that there are very many of Gigaba and Malikane’s ideas that I do not agree with. Just to be clear, there are also very many ideas of my favourite thinkers in history that I don’t agree with.
Much of the criticism of Malikane and Gigaba centred on their opposition to “orthodoxy” in economics.
Indeed, when they stated their opposition to the orthodoxy that has shaped economics for more than 70 years, it rattled a segment of South African society.
This criticism is, however, not new or unique. It is shared by some of the most prominent and respected figures in the world, from institutions of global governance and Nobel Prize laureates to central bankers.
The reaction to Malikane’s comments, in particular, reminded me of the shock and horror after then president Nelson Mandela appointed a township activist, one Trevor Manuel, as finance minister in 1996.
Consider, just incidentally, if Mandela had appointed a white male who was educated at Cambridge or Harvard, what “the markets” would have said.
That’s another discussion. Suffice it to say that Mandela’s decision turned out just fine.
Back then, to especially Malikane, and when he disturbed middle-class sensibilities (so neatly wrapped, as they are, in Oxford button-downs, college ties and crested blue blazers) by questioning the way that free market orthodoxy has shaped the world for more than 60 years.
Very many people could not bear the thought that Malikane (or Gigaba) dared to criticise the free market orthodoxy that has ravaged the world for the better part of 30 years. Yes, it created prosperity, but at what cost, and who has had to bear that cost?
Never mind that this orthodoxy has brought the world to the worst crisis in the global political economy since the Great Depression.
Never mind the fact that the Bank of England’s governor, Mark Carney, warned about the continued obsession with the current “low-growth, low-inflation, low-interest rate equilibrium” model.
Never mind that the Bank for International Settlements (which helps central banks achieve monetary and financial stability and foster international cooperation) has warned about increased instability, and unsustainability, and low growth for several years to come – on the back of the global crisis.
Never mind, also, that even the International Monetary Fund, for more than 50 years the purveyor of economics orthodoxy, was itself retreating from neoliberalism.
Three of the institution’s most senior economists were quite blunt. The economics orthodoxy that the IMF had peddled, at least since 1980, was broken.
In its wake, it has left a world that is marked by inequality, masses of unemployment, and a generation of people living on the edges of society.
Orthodox economists continue to cling to power.
It is worth stating, somewhat lengthily, a passage by Paul Ormorod, in The Death of Economics (I first read it 20 years ago): “Markets and profits are crucial to increase economic welfare, but the pure free market model is deeply flawed.
“Criticisms of the relevance of the equilibrium model to the real world have been made for many years.
“Indeed, there appear to be so many violations of the conditions under which competitive equilibrium exists that it is hard to see why the concept survives, except for the vested interests of the economics profession and the link between prevailing right-wing political ideology and the justifications equilibrium theory provides.
“The orthodoxy of economics, trapped in an idealised, mechanistic view of the world, is powerless to assist in resolving the world’s economic problems and crises.”
More recently, very many scholars and thinkers identified, in great detail, the intended or unintended consequences of economics orthodoxy, especially for the way it shaped neo-liberal policies.
Malikane and Gigaba were, therefore, not out of step with the most progressive thinking in the world today.
They are, however, not allowed to question the structure of power in the global political economy.
How, then, does one change structural power?
‘ The orthodoxy of economics ...is powerless to assist in resolving the world’s economic problems
The answers are not easy. What does seem clear, nonetheless, is that there is a set of standards for the European world, and another for Europe’s others.
Malikane and Gigaba highlighted this double standard.
To conclude, I should, for once, nail my colours to the mast.
I would prefer any combination of Pravin Gordhan, Mcebisi Jonas, Lungisa Fuzile, and Lesetja Kganyago (or Manuel and Nhlanhla Nene) in charge of fiscal, financial and monetary policy.