Can we change South African capitalism from within?

Henley Business School Africa Dean Jon Foster-Pedley

The Organisation for Economic Co-operation and Development (OECD), a 35-strong group of mostly advanced economy countries, has a cool tool with which you can compare stats about its members. The Better Life Index (BLI) is an attempt to move conversations about national wealth aware from the overly broad metric of GDP, and instead focus on material well-being of citizens. The BLI focusses on individual measurements such as Housing, Income, Jobs, Safety and Work-Life Balance, things which have a direct effect on people, rather than an abstract interpretation of economic health.

The fun part of the BLI is that you can create your own rankings: a personal list of priorities for development, which gives weight to the indicators you deem most important. The not-so-fun part about it from a South African point of view is that it doesn’t actually matter. Whichever indicators you look at, we score lower than any of our peers. Even in Civil Engagement, which may surprise those who see South Africa as a deeply politicised and activist society.

Fair enough, you might say. South Africa is a long way from being Denmark or New Zealand when it comes to social equality. But what about others in the list, like Brazil, Mexico or Turkey?

To make things worse, the OECD also reckons that we work more hours in the week than almost anyone else too. We slog harder, and longer for lower rewards. Isn’t it about time we recognised that we’re doing something wrong?

What the BLI hints at is something many of us have suspected for a long time: modern capitalism isn’t fit for purpose in South Africa. There are plenty of reasons to be optimistic about the state of the world today – absolute poverty is on the decline and the number of women who die during childbirth is almost half what it was 30 years ago.

But here in South Africa we need to be honest about the things that haven’t changed.

The unemployment rate, for example, is more or less the same as it was at the turn of the century, and real-world wages for the vast majority of workers are unchanged since 1995.

Just like most of our OECD peers, wealth distribution in South Africa is more unequal than it was 24 years ago too – except that not only has reducing inequality been, ostensibly, the main social goal here, but we started out at such an obscenely high level that it seemed impossible it could actually get worse.

And the mainstream solutions to our social ills are still derived from one of two philosophies: either the trickle- down economics based on unfettering business from responsibility, or state planning via the likes of the National Development Plan (NDP). These are not working. The taps are off for trickle down – that wealth gap is growing, not shrinking, because revenue generation is not enough to create shared value – and the state has been broken to the point where it is fundamentally inactive or impotent in almost every area that counts. It will take years to heal. The NDP provisioned for a million new jobs in agriculture by 2030. The reality is that there are more or less the same number of people working in the sector now as there were 10 years ago (and few are willing to bet on big investments being made until there are resolutions about land reform).

It’s no wonder that people are embracing extremism of all flavours in South Africa today. When positive change seems impossible via reasonable means, what else should we expect? Instead of coming together to discuss and find solutions, we’re falling into the same traps that gave rise to Trumpism and Brexit – we’re so desperate to have our voices heard that we’re forgetting how to listen, and learn, and change our point of view based on the lived experiences of others. Instead of discussing and debating and learning, public forums are becoming polarising.

To paraphrase Paul Saffo, strong opinions should be loosely held – certainty is an illusion. When we allow ourselves to be challenged and our points of view to change, we develop new insights. Today in South Africa, the business community must adapt this mantra and learn to question, honestly, the very reason for its existence – only this will lead to long term prosperity.

It’s not my intention to paint a picture of a dystopia. I’m an optimist and firm believer – based on experiences of the people I meet – that the majority of people, including business leaders, are desperate for a positive social contract that is both hopeful and practical to implement. Optimism is an essential ingredient for success in business and entrepreneurship, and I see that being reflected in the desire of the students we teach, who are overwhelmingly keen not just to create profit, but to have a positive impact on society. Optimism means hope, experimentation and constant improvement.

Adam Smith, in Wealth of Nations, argued for regulators because he was convinced that business people couldn’t be trusted with the planet. They would always be self-interested to the point that they would maximise profits until they became “an absurd tax upon the rest of their fellow-citizens”. This is, indeed, is the behaviour we see from some of the players in of Net1 CPS, KMPG, Steinhoff or any of the players in the Gupta saga.

But on the whole, the young generation of future leadershave a very different view. They are hungry for new ideas about how businesses should be run and what the measure of their success should be. They realise that in the long run, it’s social stability that is the best indicator of economic success. That JFK’s famous aphorism about economics – “a rising tide lifts all boats” – simply isn’t true. It submerges those who can’t swim and leaves some yachting off with their treasure chests stuffed full to the exclusive clubs of Dubai.

They don’t realise it, but they often echo the words of Oxford economist Kate Raworth, one of the pre-eminent voices on the future of capitalism.

“20th century economics assured us that if growth creates inequalities,” Raworth says, “Don’t try to redistribute because more growth will even things up again. If growth creates pollution, don’t try to regulate because more growth will clean things up again. But as it turns out it doesn’t, and it won’t.”

Raworth’s vision of “post-capitalism” is one in which distributed knowledge and technology empowers the many, not the few. In which organisations with the values of Wikipedia – open source, peer-to-peer, bottom-up – thrive, but “corporations that still pursue maximum rate of return for their shareholders, well they suddenly look rather out of date next to social enterprises that are designed to generate multiple forms of value and share it with those throughout their networks.” I know this seems daunting, and impossible. But we are brave in South Africa and pioneers – let’s get courageous and excited and free up our activist genes. Let’s go for it.

What will post-capitalism look like in South Africa? Different again, and wildly unpredictable. What’s important for those of us involved in cultivating the next generation of leaders is what we can do to shape it.

Daily Maverick

By dean and director Jon Foster-Pedley, Henley Africa on The Daily Maverick 13th September 2018