The increased levels of inequality in post apartheid South Africa highlighted in the Oxfam Report titled “Even it up: time to end extreme inequality” was a trending recently. Almost every newspaper had its own take on the report with most emphasizing “the great democratic disappointment” – that instead of narrowing, the gap between the rich and the poor is actually widening under democracy. Some of the facts highlighted in the report include the disheartening reality that two of the richest South Africans, Johan Rupert and Nicky Oppenheimer who are worth R82.35 and R72.6-billion respectively, have the same wealth as the bottom half of the population. It would take 228 years for Rupert to expend his riches while a platinum miner would need to work for 93 years just to earn the average CEO’s annual bonus. Although we should all be worried, there is hardly anything new about its findings on inequality. In 2006 the World Development Report documented chilling statistics of inequality in South Africa. A black female had a 7.2 percent chance of dying in the first year of her life as compared to 3 percent for a white male and a white male was expected to live for 18 years more than a black female. Our own statistics show us that white households take the lion’s share of national income, earning R365 134 per annum - six times the amount earned by African households. To make it worse, our CEOs get paid on average 140 times more as the average worker and occupy the fifth position on the global pay list. This must be measured against reports that more than 50% of workers earn less than R3500 per month. These facts go a long way in explaining the discord in our society and why race relations are so strained two decades after the demise of apartheid. In our discomfort with this reality, we should not miss an important point made by the Oxfam report. The report is a serious indictment on global institutions of neoliberalism. It presents irrefutable evidence about how the reign of the market and the withdrawal of the state from the economy have worsened inequality across the globe. The report cites various economic crises that have plagued the world economy in different times and contends that market fundamentalism, with its principles of deregulation, privatization, labour market flexibility and less state intervention is the common denominator in all these crises. From the Latin American debt crisis, Asian financial crisis and the recent global economic meltdown – the idea that the market must be left to its own devices is to blame for global misery. There is a salient narrative that runs through this report and that is, the IMF/World Bank’s policy prescriptions are responsible for the increasing economic inequality that has become such an entrenched part of our reality today. Pushed into a corner by technocrats whose sole mandate was to assert the supremacy of the market, many African countries caved in to the dangerous logic of market fundamentalism. Governments in the developing world moved swiftly to privatize national assets and relax exchange controls, lower tariffs and cut social spending on education and health as per the dictates of the IMF and the World Bank. Recently, the same institutions made the admission that cash transfers to the poor such as the child support grant, old age grant provide a crucial safety net for the most vulnerable. But the reality is that we would not have the benefit of hindsight had we followed their blue print to development which preached against the same practice. After the collapse of Wall Street, the IMF announced that the agency had no objection to capital controls – a policy option it had vehemently opposed in the 1990s! In fact, countries that have a successful account of reducing inequality and poverty are those that have gone against the grain and pursued vigorous state intervention in the economy. Brazil is but one example. For how long will countries continue to treat policy “advice” emanating from these institutions as articles of faith when it is clear from history that the only consequences are greater economic inequality, poverty, unemployment and the attendant social unrest? While the Oxfam report does not make any new revelations about our economic situation, it does make a compelling case for radical economic transformation. It enjoins us to move towards real interventions aimed at changing the structure of our racialised economy that reproduces poverty and inequality. Institutions parading the power of the market as the only option in development are experiencing a legitimacy crisis. We can only hope that homegrown institutions that derive their ideological line from the IMF/World Bank will take serious note of the report and internalise its findings. Phindile Kunene – Spokesperson, Gauteng Economic Development
Posted on: Wed, 12 Nov 2014 17:52:02 +0000
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